Low-carbon business models: Review and typology

Abstract

Global efforts to solve the climate crisis are forcing companies to decarbonize their operations, realign their business models with the low-carbon paradigm, and contribute to net-zero objectives. Despite the urgency and scale of this transition, particularly in B2B, we lack a focused understanding of the low-carbon business models that companies could harness to create value for their customers and make a profit while decarbonizing their value chains. Extant studies on sustainable and circular business models provide some guidance, but research integrating value creation and business model conceptualizations into low-carbon settings and decarbonization is scarce. Therefore, we develop a typology of low-carbon business models. By reviewing 143 peer-reviewed articles and 49 industry reports and policy documents, we conceptualize 10 low-carbon business model types that enable companies to propose, create, and capture value stemming from internal decarbonization, downstream decarbonization, or decarbonization facilitation within the value chain. Our study contributes to the B2B and sustainable business and value creation literature by developing a typology of low-carbon business models along with a definition, conceptual model, and research agenda. The findings can help companies harness low-carbon business and assist scholars and policymakers in proposing business models that can mitigate climate change.