Leveraging business models to drive positive environmental change is happening more and more, and incorporating sustainability into a core business model itself is becoming a prerequisite for long-term competitiveness and survival.
Rather than seeing profit and planet as opposing forces, business is now being leveraged for impact. Consumers are expecting companies to lead on issues like climate change, and investors are seeking genuine impact-focused ventures, but they have to hold weight and be legitimate. The impact investing market now exceeds $1.5 trillion, with an annual growth rate of 21%. This means everyone from entrepreneurs and investors to policymakers and the general public has a stake in businesses that deliver profit and purpose.
Greenwashing is not an option
The chosen impact solution must be viable to execute and capable of sparking a broader movement. Greenwashing, which involves the exaggeration or falsification of sustainability claims, presents a significant obstacle to achieving impact by promoting false solutions and delaying genuine action. To avoid this, companies must back up their environmental promises with data and transparency.
Experts note that to communicate authentically, organizations should be specific about their efforts, support claims with measurable data, and openly share both successes and shortcomings. By rigorously vetting solutions, ensuring they address root problems and don’t merely appear sustainable, businesses build credibility and prevent the erosion of trust that greenwashing causes.
Major environmental challenges (and Innovative solutions)
The scope of environmental problems we face is daunting. From climate change to plastic pollution, we have a lot of needs for innovation, but each challenge is also an opportunity for creative business solutions. Below is a (non-exhaustive) list of major environmental issues that innovative enterprises can, and in some cases are, addressing. These examples highlight the extent of the problems and illustrate how leveraging the structure of business (technology, investment, supply chains, consumer engagement) can amplify positive outcomes.
Climate Change and Clean Energy
The climate crisis manifests in record-breaking global temperatures and extreme weather. As of 2024, the world reached about 1.6°C above pre-industrial levels; alarmingly, the first time a calendar year exceeded the 1.5°C threshold. Each of the past ten years was among the hottest on record, and greenhouse gas concentrations are at an all-time high.
The primary driver is our dependence on fossil fuels. The solution lies in diversifying our energy systems; businesses play a pivotal role here by advancing renewable energy, improving efficiency, and developing new technologies. Thanks to massive investment and innovation, clean energy is becoming cost-competitive, and solar and wind power are now cheaper than fossil fuels in many regions, following unprecedented cost declines (solar PV costs have fallen by ~90% in the past decade alone).
Markets can scale climate solutions quickly when profit incentives align with cutting emissions, and businesses can drive this rapid energy diversification in favor of cleaner alternatives.
Food and Agriculture (Waste & Emissions)
Our global food system is rife with inefficiencies and sustainability issues. Shockingly, about one-third of all food grown for humans, roughly 1.3 billion tons, is lost or wasted each year. This wasted food would be enough to feed 3 billion people, and it also represents a massive waste of resources and energy.
If food waste were its own country, it would be the third-largest greenhouse gas emitter in the world (accounting for ~25% of annual emissions). Meanwhile, conventional agriculture drives deforestation, soil degradation, and water shortages. Innovative businesses can tackle these problems at various points in the supply chain.
Solutions in this sector are ripe for creating better pathways to food cultivation that reduce waste and emissions. Mixing business with food waste and emission solutions is a golden ticket for resilience.
Plastics and Pollution
Every year, an estimated 14 million tons of plastic waste enters the oceans, harming wildlife and blighting coastlines worldwide. Astonishingly, about 91% of all plastic ever produced has not been recycled; instead, it ends up in landfills or the natural environment, where it can persist for centuries. This plastic deluge is not only an environmental eyesore but also a business opportunity for those creating alternatives.
The solution at PATH and for many researchers and scientists is to reuse and make refilling the norm. A move away from single-use is a true course correction.
Entrepreneurs can respond with circular economy solutions. By using marketing and customer engagement, innovators can also create a “pull” for sustainable products, for example, conscious consumers choosing a shampoo brand because it offers refills or uses waste-free packaging like dissolving shampoo and soap squares. These market signals push entire industries toward less polluting practices, which consumers want more of.
Deforestation and biodiversity loss
An aerial view of deforestation shows the line between cleared land and intact rainforest. Humans continue to destroy forests at an alarming rate. Every hour, forests covering an area about the size of 300 football fields are cut down. If current deforestation trends aren’t halted, it’s projected that by 2030, only 10% of the world’s rainforests may remain standing, a statistic that calls for urgent action.
While creating protection laws and conservation efforts are crucial first steps, businesses can also play a pivotal role in solutions. Some forward-thinking companies are already committing to zero-deforestation supply chains. For example, food and cosmetics brands sourcing commodities like palm oil, soy, or beef from certified deforestation-free producers.
Solutions are often achieved by working directly with farmers and investing in traceability technologies (satellite monitoring, blockchain) to ensure their products don’t come at the forests’ expense. There’s also a growing sector of businesses in reforestation and carbon forestry, which ranges from startups that use drones to plant trees at scale to investment funds that finance forest conservation in exchange for carbon credits. These efforts can be marketed to consumers (e.g., planting a tree for every product sold) and to investors seeking measurable climate impact.
Sustainable fashion and resource use
Fashion is now a $1.7+ trillion global industry, and it comes with a significant environmental footprint, responsible for 10% of global carbon emissions and 20% of wastewater, more than the emissions of all international flights and shipping combined.
From water-intensive cotton farming to chemical dye pollution and the tons of clothing that end up in landfills, “fast fashion” represents an unsustainable linear production model. In response, a wave of innovation is beginning to transform the fashion industry’s impact.
Startups and even major brands are experimenting with more responsible materials, such as plant-based or lab-grown fibers (like mushroom leather and bamboo viscose). Others are tackling the waste issue by introducing circular fashion models, including clothing rental services, take-back programs for old garments to be recycled, and resale platforms that extend the life of apparel.
The key is that many of these changes are driven by competition and brand positioning; companies see that embracing sustainability can enhance their image and win market share from conscious consumers. By applying trendsetting and marketing savvy, the fashion sector can set an example of how to reinvent an entire supply chain to be more sustainable, weaving profitability and responsibility together.
Starting an enterprise to propel movement
When businesses tackle environmental problems authentically, they can achieve impact at a scale that matches the enormity of the challenges. That’s what we do at PATH, but success requires diligence, vetting solutions to avoid greenwashing, proving the model is both
environmentally and financially sound, and rallying stakeholders around the mission. The reward is a powerful amplification of impact, which is the difference between a small pilot in one community and a solution reaching millions across the globe.
Resources:
https://hbr.org/2025/05/sustainability-as-a-business-model-transformation
https://earth.org/the-biggest-environmental-problems-of-our-lifetime
https://unece.org/forests/events/sdg-9-fashion-industry-innovation-and-infrastructure
ttps://earth.org/the-biggest-environmental-problems-of-our-lifetime
https://effectuation.org/hubfs/Journal%20Articles/2016/06/jbv-2010-nexus-york-venkat-1.pdf
https://www.aacsb.edu/insights/articles/2023/10/how-to-avoid-the-pitfalls-of-greenwashing