Effective Mission Integration: A Triple Bottom Line Canvas for Impact Business Model Innovation

Abstract

While there is a growing consensus that firms should consider their social and environmental impact in addition to their financial performance, many find it difficult to integrate social and environmental impact missions with their profit mission. The mission integration challenge is particularly acute when the beneficiaries of the impact missions are not the same as the firm’s customers and when additional activities and resources are required for the intended impact to materialize. Yet, there are few business model design tools specifically designed to facilitate mission integration in impact business models. In this chapter we introduce a new tool developed for to support impact business model integration, the ‘Triple Bottom Line Canvas’ (TBLC). By supporting mission integration, the TBLC should help converting impact missions from profit drags (impact mission comes at a cost to profit) to profit drivers (impact mission drives profit).

Introduction

Firms increasingly seek to deliver a social and environmental impact in addition to pursuing financial performance (Bocken et al., 2014; Geissdoerfer et al., 2018; Lüdeke-Freund et al., 2018). For instance, Lego, the world’s largest toy manufacturer, has invested $150 million to develop sustainable materials for its products and packaging, aiming to replace plastic by 2030. While this focus can seem idealistic where purpose is prioritized over profit, it has been shown by both experience and research that firms can ‘do well by doing good’ (Kramer & Pfitzer, 2022; McNulty, 2013). For instance, IKEA, the world’s largest furniture retailer, has launched a buy-back scheme that allows customers to sell their old furniture back to the company, which then resells or recycles it. Similarly, Adidas, the global sportswear brand, has partnered with Parley for the Oceans to create shoes and apparel from recycled plastic waste collected from the oceans. Both these examples have been highly successful both from a financial and social and environmental impact perspectives.

Integral to ‘doing well by doing good’ are impact business models which enable firms to ‘incorporate a triple bottom line approach and consider a wide range of stakeholder interests, including environment and society’ (Bocken et al., 2014, p. 42). We follow Geissdoerfer et al. (2018, p. 407) and define an impact business model innovation as the ‘conceptualisation and implementation of an impact business model’. There are a wide range of potential impact business model innovations given the scale of the environmental and social challenges (Ferasso et al., 2020), although they all feature the ability to deliver superior customer value propositions while resolving resource issues and combatting the dominant linear ‘take-make-dispose’ business model (Bocken et al., 2016). Bocken et al. (2014) have identified eight major types of impact business model innovations: those that maximize material and energy efficiency; create value from ‘waste’; substitute with renewables and natural processes; deliver functionality rather than ownership; adopt a stewardship role; encourage sufficiency; re-purpose the business for society and the environment; and develop scale-up solutions.

While such impact business model innovations are valuable, most impact business models still exhibit relatively low levels of ambition, merely seeking to ‘do less harm’ rather than deliver a lasting positive impact by ‘building a better future’. To ‘build a better future’, firms need to be encouraged to integrate more ambitious social and environmental impact missions into their profit missions, and easy-to-use and compelling tools are required to facilitate the explicit definition and integration of social and environmental impact missions with the firm’s profit mission. Perhaps the best-known business model design tool is that of Osterwalder and Pigneur (2010). Known as the ‘Business Model Canvas’ (hereafter BMC), this canvas is composed of nine components that collectively describe the creation and delivery of the firm’s value proposition and the capture of value from this process. However, the BMC was developed for for-profit businesses, with no consideration for the social or environmental impact.

Some scholars have introduced business model canvases that integrate environmental and social aspects (Joyce & Paquin, 2016; Upward, 2013; Wit & Pylak, 2020). For example, Upward (2013) explored sustainable business models through a systemic design science approach, and identified what is required for a meaningful sustainable business model canvas. Joyce and Paquin (2016) and Wit and Pylak (2020) developed sustainable business model canvases that layered social and environmental aspects onto the original BMC, focusing on the customer, functional, and social value delivered. In doing so these canvases introduced important social and environmental components to the BMC, but did not provide a systemic means of integrating the social and environmental mission with the profit mission beyond a subsequent vertical coherence analysis.

This is an important gap, since both research and practice have shown that firms can find it difficult to integrate environmental and social impact missions with their profit mission, with the discouraging outcome that the adoption of impact missions tends to suppress firm financial performance (Santos et al., 2015). For instance, H&M, the global fashion retailer, has faced challenges in implementing circular initiatives, such as collecting and recycling used garments, as the firm’s core business model contradicts its circular ambitions, resulting in increased costs and reduced profit margins. Furthermore, they also face the risk of reputational damage due to accusations of ‘greenwashing’ and ‘social washing’ (de Freitas Netto et al., 2020; Du, 2015; Yang et al., 2020). As another example, Wheat Thins, the American snack brand, was mocked for launching a campaign to support the fight against Lyme disease, as this move was interpreted as a cynical attempt to exploit a social cause and divert attention from the negative health impacts of its products.

Examples such as H&M and Wheat Thins illustrate the difficulty of reconciling environmental and social sustainability missions with the firm’s profit mission—a dilemma elaborated by Santos et al. (2015). Yet, the only truly sustainable business model is one where the impact and profit missions live in harmony and reinforce one another instead of cannibalizing one another. To help facilitate the design of truly sustainable business models, we introduce and illustrate a tool developed for this purpose, the ‘Triple Bottom Line Canvas’ (TBLC). By providing an effective tool that assists firms in integrating their social and environmental missions with their profit mission, we believe that our TBLC canvas has the potential to be a game changer by assisting and supporting firms both to ‘do less harm’ as well as ‘build a better future’ (see Fig. 6.1).

Fig. 6.1

Triple Bottom Line Canvas

The Triple Bottom Line Canvas

Designed by the first author, the Triple Bottom Line Canvas (TBLC) builds upon and extends the original BMC of Osterwalder and Pigneur (2010) and has drawn inspiration from many sources, including Anthony Upward’s Flourishing Business Canvas.¹ The TBLC differs from previous canvases (e.g., Joyce & Paquin, 2016; Wit & Pylak, 2020) by adopting an explicit design approach that emphasizes mission integration and synergy creation across profit and impact missions, rather than enabling independent analyses of social, environmental, and profit business models. Instead, the TBLC was designed to support the articulation of explicit social and environmental impact missions in the firm’s business model and facilitate their integration with the firm’s profit mission. This means that the three missions can be considered simultaneously on the same canvas, rather than through a later analysis that moves between different layers (cf. Joyce & Paquin, 2016; Wit & Pylak, 2020).

As such, the TBLC is designed to make environmental and social impact missions explicit in the design of the firm’s business model. Three general principles have guided this design. First, TBLC subscribes to the principle that given today’s pressing global challenges, no business can afford to focus purely on its profit mission without any consideration of its environmental or social footprint. Planning tools are required that support the shift from an exclusive shareholder profit maximizing approach toward a stakeholder approach that includes also social and environmental stakeholders among the stakeholder groups that the business seeks to benefit (Freeman & Velamuri, 2021).

Second, TBLC subscribes to the principle that the firm’s impact missions do not necessarily need to conflict with its profit mission. On the contrary, by making these missions and their delivery mechanisms explicit, we hope that the TBLC will support the design of strongly sustainable business models where the social and environmental impact missions are well integrated with the firm’s profit mission (Santos et al., 2015). This way, the TBLC should help maximize synergies between the three missions and convert the impact missions from profit drags (where the impact missions suppress profit margins) into profit drivers (where the impact missions help drive profit margins).

Third, we adhere to the principle that to be truly sustainable environmentally and socially, the business must make a profit. Only a profitable operation can deliver its social and environmental impact missions on a long-term basis. Although there are many businesses whose continuity is guaranteed by charitable donations, for such businesses to scale their impact, they first need to secure further donations, a requirement which inevitably constrains their ability to scale. In contrast, if the business succeeds in converting its impact missions into profit drivers, this constraint is removed, and the impact missions become automatically scalable. Therefore, we conjecture that to create a truly sustainable and scalable impact, impact entrepreneurs must pay particularly close attention to their profit mission.

To integrate the social and environmental missions with the profit mission, the TBLC adds four elements to the conventional BMC of Osterwalder and Pigneur (2010) (see Fig. 6.1). First, it adds an Environmental Impact Mission to complement the for-profit mission of the business. This mission defines how the business reduces the environmental footprint of its own operations or that of its industry, and how the business helps repair damage caused by others. Like BMC, TBLC defines key partners to its environmental impact mission, its key activities, key resources, ecosystem beneficiaries, ecosystem relationships, and ecosystem impact channels.

Second, it adds a Social Impact Mission that defines how the business helps improve people’s lives and how it contributes to different social and societal stakeholders and the communities they operate in. For this mission, too, TBLC defines key partners for the social impact mission, key activities, key resources, community stakeholders, community relationships, and social impact channels.

Third, the TBL canvas adds Surplus Streams, which defines how the business creates surpluses to support its environmental and social impact missions. Surplus streams may be financial, such as extra profit margins made possible by higher customer willingness-to-pay (WTP) for environmentally sustainable products, and non-financial, such as recovered raw materials for recycling or repaired used products for reuse.

Finally, the TBLC adds Mission Integration, which describes how the company ensures continued focus on its environmental and social impact missions alongside with its profit mission. This component consists of the governance structures and procedures that ensure that these impact propositions are appropriately incorporated in the corporate decision-making processes. Mission integration mechanisms include, for example, dedicated seats in the company board earmarked for representatives of environmental and social stakeholders, incentive structures rewarding social and environmental impact generation, corporate status enshrining social and environmental impact missions, and recruitment practices that emphasize commitment to social and environmental impact generation.

To illustrate our TBLC, we use two cases.² The first is Patagonia, a well-known outdoors apparel and garment company that produces high-quality environmentally friendly garments that command a significant price premium over competition (see Fig. 6.2). Patagonia’s environmental impact mission not only entails donating to environmental causes and reducing the impact of its own production through sustainable and circular initiatives, as Patagonia is also seeking to facilitate an industry-wide impact by openly sharing sustainable practices, technologies, and materials it has developed to promote sustainable practices within the garment industry more widely. Patagonia’s strong reputation as an environmental sustainability leader is synergistic with its profit mission, as it increases customer willingness-to-pay and enables Patagonia to maintain substantially larger profit margins than its competitors, thereby allowing the company to keep developing and investing in sustainable technologies, practices, and raw materials. Thus, Patagonia provides an example of a company where the environmental and social impact missions operate as profit drivers and not as profit drags.

Fig. 6.2

Triple Bottom Line Canvas for Patagonia

Riversimple, our second case, was founded in 2001 by Hugo Spowers (see Fig. 6.3). Riversimple designs and manufactures hydrogen-powered fuel cell electric vehicles. Riversimple’s environmental mission is to reduce the environmental impact of personal transport, by promoting hydrogen as the primary energy source powering automobiles. Riversimple does this by developing a hydrogen-powered card and its supporting (fueling) infrastructure to demonstrate the viability of the concept and the superiority of hydrogen-powered cars over electric vehicles from an environmental sustainability perspective. Its entire business model has been optimized for minimizing negative environmental and social externality, under a ‘whole system design’ philosophy. Under this philosophy, Riversimple does not sell its cars but leases them, retaining ownership of the vehicle and associated end-of-life responsibilities. It also uses innovative ‘materials as a service’ model, under which many parts of the car, such as the hydrogen fuel cells, are similarly leased by Riversimple from the fuel cell manufacturer, who retains ownership. To ensure that Riversimple does not lose sight of its environmental impact mission, it has implemented a governance structure that features six ‘custodians’ to represent the interests of Riversimple’s various stakeholders including the local community and the natural environment.

Fig. 6.3

Triple Bottom Line Canvas for Riversimple

Value Offering

In the original BMC, the value offering section describes the key resources, activities, and partnerships that the company leverages to create its value proposition (Osterwalder & Pigneur, 2010). In addition to the profit mission, the TBLC adds to this section the key activities, resources, and partnerships the company harnesses for its social and environmental impact missions. The degree to which these are separate depends upon the overlap between the company’s profit mission and its impact mission(s) (Santos et al., 2015). If the company’s profit mission directly drives its social and environmental impact, in the sense that the company’s customers are also impact beneficiaries and no extra activities are usually required for the impact to materialize, no additional activities, resources, and partnerships are required for impact delivery. This would be the case of Riversimple, for example.

However, if the intended impact does not materialize automatically (say, when Patagonia needs to collect used garment for repair, reuse, and recycling), then the firm needs to harness additional resources, activities, and partnerships. Similarly, if the customers of the business are not the same as impact beneficiaries (as would be the case for the natural ecosystems targeted by Patagonia’s environmental campaigns), additional activities, resources, and partnerships may be required. The more additional activities and resources are required for the impact missions, the more complex the governance challenge tends to become, and the closer attention needs to be paid to the generation of surplus streams and mission integration.

Customer Value Proposition

The customer value proposition component builds upon the Jobs-to-be-Done framework by Christensen et al. (2016). In this approach, the ‘job’ is shorthand for what the customer seeks to ‘get done’, to accomplish in any given circumstance. As per Osterwalder et al.’s value proposition canvas (2014), the value proposition is defined on the basis of the job itself and related ‘pains’ and ‘gains’. Here, ‘pains’ relate to alternative, existing ways of getting the customer job done. For example, Uber’s personal mobility value proposition would compare against inconveniences and difficulties in using alternative mobility services such as public transport, conventional taxi services, or, say, cycling. A ‘pain’ in personal mobility service could be, for example, slow and infrequent public transport service or an unreliable taxi service. ‘Gains’, on the other hand, would describe features of the company’s value proposition that the customer did not necessarily set out to accomplish at the outset, but which nevertheless add value to the customer experience. An example would be the ‘estimated time of arrival’ (ETA) feature of the Uber application, which allows the user to send an ETA estimate of their travel. Although such a feature is not part of the core job to be done, it will delight the user nevertheless.

The pains and gains depend on the context where the job is to be done. The gains are never simply about function, as they can have powerful social and emotional dimensions. An important aspect of the ‘job’ is that it is solution agnostic, and it is important to understand what makes the focal value proposition distinctive relative to others. In the case of Patagonia, the value proposition is focused on well-designed garments and apparel for outdoor activities produced in a socially and environmentally sustainable fashion and adhering to triple bottom line principles (Reinhardt et al., 2010). Patagonia’s product offerings are distinguished by their responsible, life-cycle approach and their commitment to repair and recycle products no longer used by the customer. In contrast, Riversimple’s value proposition is focused on an ecologically sustainable personal transport as an all-inclusive service (hydrogen-powered car, fuel, and service) under which Riversimple assumes end-of-life responsibilities for its cars and their constituent components (Wells, 2018).

In both cases, the environmentally conscious value offerings enable the firms to charge a price premium over similar offerings that do not emphasize environmental and social sustainability. In the case of Patagonia, this price premium can be up to one-third relative to similar brands that do not emphasize sustainability. In the case of Riversimple, it has a long waiting list of prospective customers who want to subscribe to a sustainable personal mobility solution. This price premium allows both companies to continue advancing environmentally and socially sustainable practices without sacrificing profit.

Social Impact Mission

This component considers the social impact mission of the business and describes how the organization intends to make the world a better place for its social and societal stakeholders. Such stakeholders may be both external and independent of the business (e.g., socially disadvantaged demographics and communities) and internal ones (e.g., employees and suppliers). As part of documenting the social impact mission, it is necessary to understand how the firm demonstrates good citizenship, contributes to the local community, and improves people’s lives and the general societal well-being beyond the core business mission. In the case of Patagonia, they advance socially sustainable business by promoting fair trade practices and applying a social stakeholder perspective in their business governance. Internally, Patagonia has been a pioneer in introducing socially beneficial employer practices such as subsidized healthcare at or near its office location and generous maternity and paternity leave (Reinhardt et al., 2010). Patagonia has also pioneered practices to improve the well-being of its suppliers through various certification arrangements. In the case of Riversimple, social impact is mainly delivered at the level of local communities and flows directly from its business mission, as its personal mobility solution helps reduce pollution and noise caused by conventional automobiles (Wells, 2018).

Environmental Impact Mission

The environmental impact mission describes how the business delivers a positive impact on the natural environment, either by reducing negative footprint or by helping restore and regenerate environmental damage already caused. An environmental impact can be delivered in many ways: first, by reducing negative externality caused by the firm’s internal operations (e.g., materials use, energy use, and so on); second, by helping reduce the negative externality generated by industry participants more widely (e.g., through the introduction and dissemination of environmentally more sustainable raw materials and practices); and third, by helping reduce and repair damage already caused through non-business activities such as campaigns, restoration projects, charitable donations, tree planting, and similar. Patagonia actively seeks to mitigate the environmental footprint of its own operations, to minimize the negative footprint caused by its products, to influence garment industry practices more widely, and to conduct environmental campaigns that seek to ameliorate the state of specific targeted ecosystems. Examples of Patagonia activities include investing in R&D to develop more environmentally friendly materials and chemicals (e.g., dyes, organic cotton) and openly sharing these with competitors to promote the adoption of sustainable solutions within the garment industry (Reinhardt et al., 2010). Patagonia also conducts active marketing campaigns to promote environmental awareness in specific ecosystems and also more widely. It has also set up a foundation to donate grants for environmental causes, and it offers its employees leave to participate in environmental campaigns. In the case of Riversimple, its profit mission directly supports its environmental mission of providing mobility at zero cost to the planet.

Key Partners (Profit Mission)

The key partners component describes who the business works with to create and deliver its value proposition. As noted above, the extent to which extra partners are required for the social and environmental impact missions depends on how closely the firm’s profit mission drives its social and environmental impact missions. For the profit mission, Patagonia partners or has partnered with numerous stakeholders, mostly for R&D purposes. Patagonia’s technology partners include Gore-Tex and Beyond Surface Technologies. In comparison, Riversimple’s profit mission partnerships are considerably more extensive. This is because Riversimple’s mission is to help develop, in essence, a new paradigm of personal mobility that is powered by hydrogen. This being a technology-intensive mission that requires the development of hydrogen-based power sources for vehicles, as well as supporting infrastructure, Riversimple has maintained an extensive network of technology partners, with composite materials developers, fuel cell developers, tire manufacturers, and more (Anonymous, 2016).

Key Activities (Profit Mission)

The key activities for the profit mission component is essentially the same as the BMC and describes what the business does by itself to deliver the customer value proposition. For Patagonia, this involves apparel design, apparel manufacturing, R&D, sales, and marketing and branding activities. For Riversimple, for-profit activities include R&D, R&D collaborations, component outsourcing, assembly, and servicing activities.

Key Resources (Profit Mission)

The key resources component for the profit mission is also the same as the BMC equivalent component, and it describes the tangible, intangible, and financial resources the business draws upon to deliver the value proposition. For Patagonia, key resources include Patagonia relies upon their minimalist durable product design capabilities, their business premises including retail outlets and offices, their intellectual property, and their dedicated and committed workforce (Reinhardt et al., 2010). For Riversimple, their key resources include their intellectual property, their car designs and brand, their R&D center and their customer sign-ups, as they have a waiting list of customers waiting for regional releases of the vehicle (Wells, 2018).

Key Partners (Social Mission)

The key partners for social impact mission box describes any additional partners required to create and deliver the social impact. Extra partners may be required particularly if the company’s profit mission does not directly drive social impact for its customer groups. In the case of Patagonia, social impact is materialized mainly among its own and its suppliers’ employees and local communities. To create and deliver social impact, Patagonia has chosen to work with certification, training, and social advocacy organizations such as Fair Trade, Fair Factories Clearinghouse, and Fair Labor Association (Reinhardt et al., 2010). For its part, Riversimple does not partner with external organizations for social impact delivery, as its social impact is directly driven by its profit mission.

Key Activities (Social Mission)

The key activities for the social mission list any activities that the company undertakes, above and beyond its profit mission, to deliver its social impact mission. Additional activities may be required when the beneficiaries of the company’s social mission are different from the customers of its profit mission, or when the company’s profit mission does not directly deliver its social impact, or both. In the case of Patagonia, such activities include supplier check-ups for their labor practices, advisory and training activities to help suppliers upgrade their labor practices, social impact campaigns, and the adoption of pioneering employer practices to set an example for others (Reinhardt et al., 2010). All these activities help amplify the social impact of Patagonia’s business activities but are not, as such, strictly required for its profit mission. As for Riversimple, the social impact of its operations is a direct outcome of its profit mission—namely, elimination of the environmental impact of personal transport in local communities.

Key Resources (Social Mission)

The key resources for social mission list resources that the company harnesses to help materialize its social impact in situations where the key resources for the company’s profit mission alone do not suffice. In the case of Patagonia, key resources supporting its social impact mission are its knowledge base for environmental and social activism and its commitment to donate 1% of its profits to the planet (Reinhardt et al., 2010). This commitment supports Patagonia’s fund that provides grants to support social and environmental campaigns. For Riversimple, no separate resources are required for its social impact mission delivery, as its profit mission directly drives its social impact.

Key Partners (Environmental Mission)

The key partners for environmental mission box describes any additional partners required to create and deliver the environmental impact of the business. Patagonia’s environmental impact mission is delivered both through internal operations (reduced footprint) and externally oriented activity (consumer and industry influencing, ecosystem campaigns). Accordingly, Patagonia has partnered and partners with numerous environmental advocacy organizations such as the Sustainable Apparel Coalition, the OIA ECO working group, The Conservation Alliance, B Lab, Textile Exchange, and social influencer partnerships (O’Rourke & Strand, 2016). As Riversimple’s environmental impact is driven by its profit mission, no additional partnerships are required for the environmental impact mission.

Key Activities (Environmental Mission)

The key activities for environmental mission describe any additional activities required to deliver the desired environmental impact. For Patagonia, this entails numerous activities due to the breadth of its environmental impact goals. The most important of these are Patagonia’s ‘5R’ activities to enhance circularity in its business model: Reduce, Repair, Reuse, Recycle, and Rematerialize. Other key environmental activities include sustainability-oriented R&D, product design emphasizing simplicity, durability, and multi-purpose use, and sustainability-oriented marketing campaigns and environmental campaigns (Reinhardt et al., 2010). For Riversimple, no extra activities are required to deliver its environmental impact.

Key Resources (Environmental Mission)

The key resources for environmental mission box describes additional resources required to deliver the environmental impact. For Patagonia, these include IP for environmentally sustainable raw materials such as more sustainable dyes and de-odorants and similar. Consistent with its mission to change industry practices, Patagonia does not use its IP to impose exclusivity rights, but instead openly shares its sustainability-related IP to encourage the adoption of more sustainable raw materials by its peers (O’Rourke & Strand, 2016; Reinhardt et al., 2010). Other key resources for the environmental mission include recycle and repair centers, energy-efficient buildings, the environmental activism knowledge base, Patagonia brand reputation, and its Footprint Chronicles. For Riversimple, no extra resources are required for the environmental impact mission.

Value Delivery

The value delivery section of the BMC defines how the business delivers value and to whom. In the basic BMC, value delivery is described in terms of customer groups, customer relationships, and customer channels. The TBLC adds corresponding boxes to describe social and environmental impact delivery. For the social mission, the TBLC describes social impact beneficiaries, community relationships, and social impact channels. For the environmental impact mission, the TBLC describes ecosystem beneficiaries, ecosystem relationships, and ecosystem impact channels.

Customer Groups

For the profit mission, customer groups describe the specific market segments the company delivers value for. While this is mostly straightforward, for multi-sided business models there may be many different customers (which is why we call it ‘groups’ rather than ‘segments’). It is sometimes also necessary to distinguish between ‘users’ (e.g., Facebook users—who would also be their key resource) and paying customers (e.g., advertisers). For instance, Patagonia’s customer groups are outdoor enthusiasts, those who are environmentally and socially conscious, well-off, politically liberal, and educated city dwellers, typically 25–55 years old (Reinhardt et al., 2010). For Riversimple, the customer groups include environmentally conscious local commuters who commute within a 30-mile radius (Anonymous, 2016). This definition derives from Riversimple’s business model, which envisions the gradual build-up of hydrogen gas station infrastructure and the use of the car primarily for local personal commute.

Customer Relationships

The customer relationships component describes the nature of the relationship the business maintains with its different customers. These can include transactional relationships, long-term relationships, personal relationships, automated self-service, and community nurturing, for example. In the case of Patagonia, their customer relationships tend to be long-term and personal, and Patagonia actively cultivates its customer communities. It has adopted an end-to-end approach over the product life cycle from garment purchase to its eventual return for repair and recycling (Reinhardt et al., 2010). Riversimple envisions a subscription relationship under which the customer subscribes to hydrogen-powered personal mobility as a service (Wells, 2018). Here, the subscription customer gets exclusive use of the car, the ownership of which remains with Riversimple. The subscription agreement also includes the hydrogen fuel and car maintenance service.

Customer Channels

The customer channel component describes how the business reaches its customers, including a possible multi-channel strategy. However, beyond marketing communications, this component also describes how the business integrates with customer routines. For instance, Patagonia reaches its customers through physical retail outlets that are mostly owned by Patagonia, as well as through their online retail. Patagonia’s retail outlets invite customers to spend time in the shop, thereby extending its customer engagement (Reinhardt et al., 2010). Patagonia’s Footprint Chronicles constitute an important channel, since they describe Patagonia’s sustainability actions and thus bolster the credibility of its sustainability claims. Riversimple uses crowdfunding campaigns, word of mouth, publicity, and social media to spread the word about their missions and invite interested customers to join the waiting list for its service.³

Social Impact Beneficiaries

The social impact beneficiaries box describes the beneficiaries of the social impact mission. This analysis may surface both direct beneficiaries and secondary beneficiaries who experience secondary benefits such as greater prosperity, lower unemployment, and reduced crime rate. For instance, Patagonia’s community stakeholders include their employees, suppliers, the employees of suppliers, as well as the targeted communities (Reinhardt et al., 2010). Patagonia’s social impact is mainly delivered through improved employment practices and as direct and secondary community benefits that are created by its ecosystem campaigns. For Riversimple, its social impact is mainly delivered as an indirect benefit through the reduction of the negative footprint of personal commute in localities.

Community Relationships

The community relationships box describes the relationships the business maintains with the local communities where it operates or conducts campaigning activity. For Patagonia, this means active participation in supplier communities, where the social impact is delivered through enhanced working conditions for supplier employees. For Riversimple, community relationships are maintained through its custodian structure, as described below in the Mission Integration segment (Anonymous, 2016).

Social Impact Channels

The social impact channels box describes the channels through which the social impact mission is delivered. For Patagonia, its social impact is partly delivered through its partnerships such as the Fair Trade partnership, which advocates worker empowerment, living wage practices, and trade-specific practices such as fair trade sewing (Reinhardt et al., 2010). Another key channel is created by Patagonia-initiated and Patagonia-sponsored campaigning activity, which is more temporal and campaign-specific in nature. For Riversimple, the channel for social impact would simply be the reduction of the footprint from personal mobility. Riversimple also cites its ambition to bring job creation to regional communities by distributing its manufacturing activities.⁴

Ecosystem Beneficiaries

The ecosystem beneficiaries box describes the beneficiaries of the environmental impact mission. These can be living things, such as targeted ecosystems and biophysical resource stocks, and non-living ones, such as ecosystem resources like air, land, water, and minerals. In the case of Patagonia, the ecosystem beneficiaries include targeted ecosystems, the environment generally, biophysical resource stocks, water, and land. Riversimple’s ecosystem beneficiaries would be regional ecosystems benefiting from reduced stress due to personal mobility.

Ecosystem Impact Channels

The ecosystem impact channels box describes the channels and mechanisms through which the business delivers its impact on the ecosystem beneficiaries. Many of these can be internal, particularly for circular business models that include recycling, repairing, and dematerialization. However, others can also be external in that they involve participation in specific ecosystem initiatives. In the case of Patagonia, they maintain, as best they can, a closed-loop supply chain, and they are also actively involved in campaigns supporting the environment. Riversimple delivers its ecological impact through reduced resource consumption because of MaaS model, as well as the resultant shift away from the use of fossil fuels. There is also a reinforcement effect if a wider adoption of hydrogen fuel cell designs is achieved, which would amplify these impacts.

Value Capture

The value capture section of the BMCs describes the cost structure and the revenue streams of the business. The TBLC adds two additional boxes to consider. One is Surplus Streams, which describes funding streams that the business channels to impact missions, and also, how it creates value from its impact activities. The other is Mission Integration, which describes how the company ensures that it does not ‘drop the ball’, or experience mission drift away from its impact missions during challenging times.

Revenue Streams

The revenue streams box addresses how the business generates revenue. This box can describe, e.g., revenue models (say, product sales or a subscription model), pricing models, and primary and any secondary sources of revenue such as the monetization of data resources accumulated during primary operations. In the TBLC canvas, it is also important to consider the ways, if any, the company’s impact missions help drive revenue. In the case of Patagonia, their primary revenue stream is from retail sales of their outdoor garments and apparel. It is also important to observe that Patagonia can generate a roughly 20% price premium over comparable peers (Reinhardt et al., 2010). It can charge this premium because of its strong brand reputation as a sustainability leader, which increases customer willingness-to-pay. Increased customer willingness-to-pay is usually the primary mechanism through which sustainable business models convert their impact missions from profit drags into profit drivers. In the case of Patagonia, available estimates suggest that even after accounting for extra costs due to its impact missions, Patagonia net extra margin over comparable peers may be in the region of 10–15%. Riversimple currently has no revenue from its profit mission, and it funds its operations mainly with government grants and crowdfunding. Its envisioned revenue model would take the form of subscription revenue, as customers sign up for its hydrogen-powered Mobility as a Service (MaaS) service (Anonymous, 2016).

Cost Structure

The cost structure box describes both the direct costs of the company’s profit mission plus any additional costs caused by the company’s impact missions. For example, in addition to normal business costs caused by the sourcing of materials and supplies and by its for-profit activities (apparel design, manufacturing and sales, R&D, and marketing and branding), Patagonia carries extra costs due to its impact missions. Relative to its peers, Patagonia carries significantly higher R&D expenditure due to its mission to develop more sustainable raw materials such as fabrics and chemicals. It also experiences higher field-testing costs and extra expenditures due to supplier vetting and training, smaller manufacturing patches, and the higher cost of sustainable fabrics and raw materials relative to non-sustainable ones. It also incurs higher costs due to its funding of environmental campaigns (Reinhardt et al., 2010).

On the other hand, Patagonia also experiences significant savings due to its prominent impact missions. For example, Patagonia’s personnel turnover is significantly lower than that of its competitors, as its reputation as a sustainability leader and a great employer has allowed it to hire highly committed workers who stay with Patagonia for longer and are more productive in their work (Reinhardt et al., 2010). Low turnover rate means that employee hiring and training costs are substantially lower for Patagonia. Patagonia is also benefiting of its brand reputation in the form of free publicity and positive press, which both boosts its brand strength and allows it to generate significant savings in marketing expenditure—a significant cost item for its peers. Overall, such savings, combined with higher customer WTP, allow Patagonia to enjoy a more profitable operation than its peers.

Surplus Streams

The surplus streams box elaborates how the business generates specific surpluses that support its social and ecological impact missions. These can be donations by customers, or the share of profit allocated to social and environmental goals. In the case of Patagonia, they donate 1% of their profit for environmental activism under their “1% for the Planet” commitment (Reinhardt et al., 2010). This money is allocated to Patagonia’s environmental activity fund, which provides grant funding to support specific impact projects. Patagonia also generates surplus streams because of greater customer willingness-to-pay, as described above, which allows Patagonia to charge higher prices for comparable garments relative to peers. Note that this aspect is intimately connected to Patagonia’s customer focus, which is well-educated, high-income, environmentally, and socially conscious outdoor enthusiasts, who are willing to pay more for products that are proven to be environmentally sustainable. Although this focus inevitably limits the direct environmental impact Patagonia is able to generate through its own product sales, the higher profit margins allow Patagonia to invest in R&D for sustainable raw materials, the IP related to which Patagonia openly shares with its peers, thereby facilitating an industry-wide impact through peer adoption of more sustainable practices (Reinhardt et al., 2010). As for Riversimple, the likely surplus mechanism will also be higher profit margins due to increased customer willingness-to-pay, once it starts generating steady-state revenue.

Mission Integration

The mission integration box describes how the company ensures consistent focus on its impact missions alongside with its profit mission and thus prevents ‘mission drift’. Thus, this box describes any governance structures and procedures that ensure that these impact propositions are appropriately incorporated in the corporate decision-making processes. This can be achieved both through formal and informal governance devices.

In the case of Patagonia, they have a strong company ethos and culture, which is reinforced by their highly selective hiring practices and HR policies such as allowing leave for environmental campaigning and surf breaks when the tides are good. Patagonia even maintained a bail fund to bail out employees who might have been arrested while campaigning for environmental causes (Reinhardt et al., 2010). Patagonia’s participation in environmental sustainability initiatives and alliances also help reinforce its sustainability commitments. For several decades, Patagonia was able to resist quarterly reporting pressures due to its status as a privately held company. More recently, Patagonia sealed its mission integration structure by transferring its ownership into a dedicated non-profit foundation whose charter is to regenerate environmental damage caused by harmful industry practices (Gelles, 2022). This foundation structure means that Patagonia is now ‘owned’ by the Planet and ensures Patagonia’s mission integration for the foreseeable future. For its part, Riversimple integrates its mission through a board of ‘custodians’ that comprises environmental activists, users, neighbors, staff, investors, and commercial partners. Their mission integration structure also features a ‘steward’ that represents the custodians in the company’s executive board (Wells, 2018).

From Profit Drags to Profit Drivers: Using the Triple Bottom Line Canvas

We now discuss how to best use the TBLC to maximize synergies between the company’s profit mission and its impact missions, thereby increasing the chance that the company’s impact missions can be turned from profit drags to profit drivers. As noted in the introduction, to be truly sustainable, a business needs to make a profit. Because impact missions may require resources and activities that are additional to those required by the company’s profit mission, tension is often created between the missions. This tension leads to a coordination challenge between profit and impact missions that tends to grow stronger as a function of, first, the amount of non-profit activities and resources required to generate the desired impact, and second, the degree of separation between the intended beneficiaries of the impact missions and the company’s customers (Santos et al., 2015). These two aspects are therefore defining for the mission integration challenge.

As the TBLC was designed to help recognize, pre-empt, and proactively resolve such tensions and ensure true business sustainability, the following heuristic applies to the implementation of the TBLC exercise, both for new and existing businesses. For new businesses, the TBLC can be used as a good starting point to identify alternative approaches for organizing different elements of the business model, identify potential synergies, and thus inform the assumption identification, experimentation, and validation roadmap. In particular, it provides a method for start-ups to not simply focus on ‘do less harm’, but instead be able to seek to craft more radical sustainable business models that are ‘building a better future’. For existing businesses, the TBLC can be used as a useful device to move beyond ‘do less harm’ sustainable business models, and articulate their social and environmental missions and identify potential synergies with the profit mission. In doing so, the TBLC will enable mature businesses to strengthen the overall cohesion of their business models and be better equipped to ‘build a better future’.

As a first step, it is necessary to describe the company’s customer value proposition and its social and environmental impact missions. If this exercise is done for a new start-up, it is important to perform at least some experiments to validate the intended customer value proposition before proceeding further. Once the customer value proposition has been validated, it is useful to assess the mission integration challenge: who are the intended beneficiaries of the impact missions, and do they overlap with envisioned customer groups for the profit mission?

Building from an understanding of the degree of separation between impact beneficiaries and customer groups, the next step is to list the key elements of the value creation section of the profit mission: key partners, key activities, and key resources. Who is the business going to be working with, what are they going to do themselves, and what resources do they require to perform those key activities? This step provides important grounding for the next step, which helps further crystallize the mission integration challenge.

The next step in the process is mapping the key partners, activities, and resources for the social and environmental impact missions. Is there a need for additional activities for the impacts to materialize? And do these additional activities require additional resources? The more extensive additional activities and resources are required, the more important it becomes to think through mission integration devices and how the business is going to create the surplus streams to support the additional activities and resources.

Once the impact value creation side of the TBLC is complete, the next step is to complete the value delivery side of the canvas, notably, customer relationships and channels and impact relationships and channels. Usually, this section carries fewer mission integration challenges than does the value creation side of the canvas, so this step should be relatively straightforward in most cases. It is important to think through these elements, since if not well thought through, they may undermine the cohesion and integrity of the business model.

As a final step, it is necessary to consider surplus streams and mission integration, in conjunction with the cost structure and revenue streams.⁵ By this step, there is usually quite a lot of detail to help assess the mission integration challenge and how much additional cost pressure the impact missions are likely to create. The key to achieving true sustainability is harnessing the social and environmental impact missions such that they help generate surplus that funds those missions and even adds to overall profitability. In many cases, such as those of Patagonia and Riversimple, the conversion loop operates through increased customer WTP due to the positive impact of sustainability missions on brand reputation. This helped Patagonia ultimately create 10–15% extra profit margin after the additional cost of its impact missions was taken into account. Also, Riversimple’s vision is to ultimately generate healthy profit margins to recover the sunk cost of R&D. Another way to achieve the same could be to collect unwanted products or convert waste into raw materials so that they can be sold for profit. The best way to generate surplus streams depends on the nature of the firm’s profit and impact missions. The same applies to mission integration. Here, the general rule is that the more complex the mission integration challenge is, the larger the number and the greater the formality of the mission integration devices should be.

Benefits of the Approach

Impact business models are not only beneficial for society and environment but can also make a good business case. First, people have grown more aware of environmental aspects and increasingly take environmental issues into account when making consumption and employment choices. For instance, a survey by Deloitte UK found that 73% of consumers are more likely to buy from brands that are transparent about their environmental and social impact, and 43% are willing to pay a premium for sustainable products.⁶ Similarly, a survey by IBM found that 71% of employees are more likely to apply for and accept jobs from companies that have a strong sustainability agenda, and 44% are willing to take a pay cut to work for such companies.⁷ These findings suggest that consumers and employees are increasingly demanding and rewarding sustainability from businesses, creating opportunities for differentiation and customer and employee loyalty.

Furthermore, our TBLC enables businesses to move beyond shareholder thinking to a more comprehensive stakeholder thinking approach. Not only does this drive the identification of social and environmental stakeholders, but it also means that businesses can start to move beyond the competitive context to thoroughly and actively consider the triple-layered context (economic, social, environmental) in which they are operating. By using the TBLC, businesses can align their value proposition, value creation, value delivery, and value capture dynamics with the three dimensions of sustainability: profit, people, and planet (Hubbard, 2009; Innocent & Innocent, 2014; Wit & Pylak, 2020). It can help them identify opportunities and challenges for creating and delivering value that is not only economically viable, but also socially and environmentally responsible. Moreover, by applying the TBLC, organizations can effectively communicate their sustainability vision and strategy to their internal and external stakeholders, and pre-empt accusations of greenwashing (Yang et al., 2020).

Our TBLC also provides a means for circular, social, and environmental missions to become organic, built-in, and synergistic elements of the business model, rather than being added as afterthoughts. This enables the successful establishment of an appropriate governance system to reinforce social and environmental impact missions within the business (Bosselmann et al., 2008). A governance system for sustainability is a set of written and unwritten rules that link the values and goals of the firm with the institutions and norms of governance. It can help the firm to align its strategy and operations with the expectations and needs of its stakeholders, as well as to monitor and report on its sustainability performance and impact. One example of a governance system for sustainability is Iberdrola’s Governance and Sustainability System which seeks to integrate its for-profit dimension with economic, social, environmental, and governance business activities.⁸

A further benefit of our TBLC is that it extends the basic systems thinking of the BMC to provide a more integrative approach that enables the nurturing of a synergistic system where the three missions reinforce one another. By applying the TBLC, businesses can nurture synergies between the economic, social, and environmental dimensions of their business models (Miller, 2020; Wit & Pylak, 2020). Patagonia has several revenue streams that support and leverage the circularity elements of their business model. For example, the service aspect of their offering (including repair shops) connects their 5Rs to their profit mission. In so doing, they have integrated their profit mission (sales of garments), their ‘take-back-system’ for recycling their garments, their branded repair shop, as well as partnering with eBay to launch a brand shop. This further encourages customers to sell or acquire used Patagonia gear, following the ‘reuse’ principle. With such mission integration, their bundling of the profit, social, and environmental value creation and value delivery activities helps amplify their ability to capture value with their impact business model (Miller, 2020; Wit & Pylak, 2020).

Finally, our examples illustrate how impact missions in themselves can operate as a source of innovation and new revenues, particularly when a suitable business model is found (Hopkinson et al., 2018). For instance, Queen of Raw, a New York-based start-up, has created an online marketplace that connects buyers and sellers of unused fabrics, reducing textile waste and saving water, energy, and carbon emissions, while creating value from waste and tapping into a new market opportunity.⁹ Similarly, Mercedes-Benz Formula E, the electric racing division of the German carmaker, has leveraged its technology and expertise to develop innovative solutions for sustainable mobility, such as battery recycling, smart charging, and renewable energy integration.¹⁰

Future Directions

While the TBLC can be used today, there are some future directions that research and practice can consider. A first direction is the application of the TBLC and development of additional case studies for all types of impact businesses. Particular focus should be on addressing the eight major types of impact business models of Bocken et al. (2014). While we have no doubt that the TBLC provides insight for impact business model innovation, its systematic application will help further validate its theoretical and practical value and extend its use cases.

A second direction is for scholars to continue to adopt the TBLC in their teaching and practitioner outreach activities. By introducing business students to the insight that the TBLC is able to offer, they can help drive wider adoption of the tool and the generation of radical impact business model innovations.

A third direction is focus more on the important role of mission integration in impact business model innovation. A culture of sustainability is required for the success of impact business models (Galpin et al., 2015), and while there has been research into sustainability and governance (see Naciti et al., 2022 for a review), this has mostly focused on reporting (e.g., Amran et al., 2014), governance strategies (e.g., Barnett et al., 2018), and board composition (e.g., Rao & Tilt, 2016). There is much less work into the specific formal and informal governance structures in impact business model innovation. Future research could consider, the example, the critical role of mission statements (e.g., Aris et al., 2016; Lee et al., 2013) and different types of governance structures that ensure that social and environmental impact missions are considered in corporate decision-making processes.

A related fourth direction concerns how effective mission integration shapes, and is shaped by, incremental (‘do less harm’) and more radical (‘build a better future’) impact business model innovations. Incremental and radical impact business model innovations often feature different organizational forms, with ‘build better future’ which is most often seen in start-ups, whereas ‘do less harm’ is more often applied by established companies. It may be, for instance, that ‘doing less harm’ has potentially a completely different managerial mindset (cf. Araujo et al., 2021) and innovative approach (cf. Keskin et al., 2013) to ‘building a better future’. Future research could investigate how the nature of impact business model innovation varies by managerial mindset and the innovation approach.

Conclusion

In this chapter we have introduced the TBLC, a business model design tool that allows business practitioners to systematically design impact business models. We hope that the TBLC will prove valuable for both business practitioners and to researchers and consultants who seek to discover and facilitate more effective and innovative approaches to combining social and environmental impact missions with the profit-making mission of the business, thereby advancing the adoption of truly sustainable business practice.