A critical review of the interplay between policy instruments and business models: greening the built environment a case in point

Policy instruments introduced with the aim of promoting environmental sustainability are often designed and evaluated in terms of their impact with regard to facilitating technological change. Most 'green' policy instruments that have emerged in recent decades have targeted facilitation of the development and adoption of greener processes, goods and services. Concurrent business models have sought to create and capture value arising from this policy-induced transition to more environmentally sustainable practices. Both such policy instruments and the business models are, however, often evaluated more in terms of their impact on the development and adoption of innovations and less in terms of their impact on behavioural change. This paper provides a critical review of the interplay between green policy instruments and green business models from a behavioural perspective. Instead of looking at policy instruments from a technology-push and demand-pull perspective, this paper samples them in terms of 'sticks', 'carrots' and 'sermons' and then provides a critical review of business models that have emerged in response to these types of policy regimes. The paper finds that most green business models that have emerged in the built environment - in response to sticks - may be characterised as buck-passing, i.e. passing costs to others and skirting around the stick of regulation. Those that emerge in response to carrots as opportunistic carpet-bagging aimed at capturing a temporary gain. Finally, those that emerged in response to sermon-orientated awareness campaigns, show a tendency to diffuse even in the absence of supportive fiscal conditions. (C) 2014 Elsevier Ltd. All rights reserved.