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Business model (BM) innovation for sustainability is hampered by a lack of tools for environmental assessment and guidance at the BM level. Conventional life cycle assessment (LCA) neglects the economic and socio-technical mechanisms within a BM, and tools based on the BM canvas (BMC) cannot provide recommendations substantiated by environmental data. Here, a new method, BM-LCA, is applied to a case comparing the selling and renting of jackets, using profit as basis of comparison.Results identify how business parameters influence environmental performance, permitting analysis for decoupling within a business practice. This is made possible by the unique way the method links physical life cycle and the monetary flows of a BM. Usefulness of BM-LCA is discussed relative to BM innovation, business strategy and similar tools. BM-LCA provides insights into a broad range of BM elements and emerges as useful for business strategy. By measuring BM environmental performance, it helps determine what BM to compete with and support critical analysis of business against greenwashing. BM-LCA also enables identification of BM elements in greatest need of environmental innovation. BM-LCA appears as a promising tool for guiding business companies towards sustainability, filling a space between LCA and BMC. The method offers a practical way for business and LCA experts to merge their respective knowledge.

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Recent years have seen much interest in business models as vehicles towards sustainability, cf. [1]. Conventional LCA, however, fails to properly capture the environmental impacts of a business model. Here, we introduce the background and the principles of Business Model LCA, a new LCA methodology for the assessment of environmental performance of business models. Methodological innovations are based on an understanding of the difference and relatedness between product and business. The key innovation is that BM-LCA centres its analysis on the ’business model’ instead of the ’product function’ as in conventional LCA. This requires the functional unit to represent the business (e.g., as ‘profit per time unit’) and the need to couple the monetary flows of the business to the material and energy flows of the product system via a set of ’coupling’ equations. BM-LCA contributes to environmental business analysis and could open up a new avenue of research where LCA and business analysts collaborate on business model innovation for sustainability.