Integrating ESG Metrics into the Business Model Canvas for Clean Energy Startups
Keywords:
Business Model Canvas, Clean Energy Startups, Green Entrepreneurship, Sustainable FinanceAbstract
Startups in clean energy are particularly vulnerable: their technology is capital-intensive and the time horizon is long, and the sustainability expectations are changing. In order to succeed, they need to match business strategy with Environmental, Social, and Governance (ESG) performance and access sustainable finance. This paper is a literature review on sustainable business models and ESG finance, and a proposed Business Model Canvas (BMC), modified to include explicit ESG metrics in all nine of the building blocks it consists of. We use academic and industry sources to provide an example of an ESG-BMC framework that maps example ESG indicators to elements of BMC. Examples of clean-energy projects (e.g., Kenya M-KOPA Solar and Rwanda Bboxx) demonstrate how the incorporation of ESG into value propositions, partnerships, and revenue models may bring in ESG-decentralized capital. In the analysis, we identify that startups that have clearly factored quantifiable environmental and social impact (e.g., reducing carbon footprint, benefiting the community) into their BMC are more likely to receive green funding and better financing options. We deduce that an ESG-conscious BMC assists clean-energy entrepreneurs to develop sustainable models that will appeal to impact investors based on standards such as the EU taxonomy and sustainability standards. This unification is crucial to unlock sustainable finance (green bonds, climate funds, ESG-linked loans), and accelerate clean innovations, and the triple-bottom-line is much more than a reporting practice and is a business strategy.
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