Green Business models support the development of Products and Services with Environmental benefits.Green business growth models can either rely on Technological overhaul of the existing systems or can develop Innovative Business models utilizing the existing systems itself. For example, a Refrigerator Manufacturing company can sell a Number of Cubic feet of space with a lowered temperature for a (certain period of time as long as the customer needs it),while the company owns the Unit.The incentive is to save the life cycle costs including Energy savings, Maintenance and Disposal.Such Innovative new solutions can radically change the Green growth story.
Key Challenges to the Green Models are -
1.Knowledge gap about the real benefits and the costs among Suppliers,Financial institutions and Customers.
2.Need for a change in the mindset of both the companies and the public institutions to be more open to create new solutions through public private partnerships.
3.Policy efforts have to be coordinated and regulated.
However, there are certain Green Business Models which are being adapted in a steady fashion.According to a paper - 'Green Business Models in the Nordic Region' some of the Business models are as follows
1.Product and Service Based Model
This is a revolutionary concept of 'Owner less Consumption'. The Refrigerator example stated above clearly exemplifies this concept.Green Product and Services model increases the Manufacturers market potential,increases the differentiated product services provided by them and increases customer loyalty too. However both manufacturers and customers are often concerned about the risk absorption methodology here as well as the challenges in determining the right costing of such services.
2.Energy Saving Companies (ESCO's)
In this model an Energy saving company is Financed by a third party institution such as a Bank.The company accomplishes energy saving projects of its client in exchange of a Fee.An example of an ESCO project could be where an ESCO installs a new heating system, insulation and a temperature control system in an old school. The ESCO makes the investment and the energy savings are split between the school and
ESCO. Drivers for such projects are country specific and depend on the country's market maturity,size etc.However cost minimization and rising energy prices remain the key concern for such projects.
3.Sharing Business Model
The key driver for such a model is improved Resource efficiency and intensive resource utilization.Some of the examples of Sharing models are Car Sharing,Holiday Cottage and Time sharing, Washing centers and so on.Also the cost savings related to sharing products allows the product provider to profit on the business model.However, key barriers to such a model is High frequency requirement of customers,tendency to own a product rather than to share it and availability of the shared good.
According to Jill Fehrenbacher, CEO,Founder Inhabitat, some of the Green Businesses that are booming even in these tough economic times are
Bicycle Sharing Shops - A smart business model based on Product and Services.
ZIPCAR - Community based resource sharing where cars services are shared among its users.According to some estimates the car sharing services is expected to $3.3 Billion approximately by 2016.
Green Construction- Such projects are in high demand due to increase in consumer consciousness towards the Environment.
Eco Fashion - Recycle and Reuse is the new mantra for New age fashion industry.
Green growth is inclusive of economic growth and protection of natural resources and the environment. Existing technology and consumer behavior is expected to produce positive outcomes upto a certain point, and therefore innovation is the key to create new ideas.But Green business models are still relatively new to industry and policy makers. A bigger knowledge and better understanding of emerging practices is needed to create appropriate policies and to encourage the industry.