The term ‘regenerative’, as it applies to business and our economy, has been around for decades. Most widely known for its application in agriculture and, at its simplest, means to restore and revive what has been lost. Whether that be natural nutrients in the soil on a farm or equality and fairness in social systems. Modern systems and top-down thinking have taken a lot of the ‘goodness’ away, and regenerative approaches look to put it back, and keep it that way.
Despite being a well-established and well-respected way of being, Regenerative Business or Economics is still relatively unknown when compared to its more accepted cousins; Sustainability and ESG. The reasons for this are easy to understand. It’s hard. It requires change to deep-seated and firmly established ways of working and living, not the easy change we all like to occupy ourselves with. As quoted by the World Economic Forum back in March 2023:
“This approach requires a fundamental shift in business practices and is integral for any organization with ambition for positive impact and growth.”
Though when we say it’s hard, it’s hard because of the global systems, infrastructure and cultures that we have built, that centre around volumetric growth and linear consumption and it is these embedded systems that would need to be redesigned to move towards a regenerative economy.
Indigenous populations have often practised regenerative ways of living and, where these populations still exist, they still are. So why then do we need a paper from EY to point out how things need to change?
Because, no matter how much we reflect on history and how we got to where we are, our economy is not sustainable let alone regenerative. The markets reward growth measured by quarterly returns and therefore reward the people within them with higher financial and social status. To achieve these returns, companies need to hit short term financial goals with little or no regard to the negative impact that it has elsewhere (or to future generations). Attempts to temper this with ESG reporting and environmental calculations, although an important step, do not remove the core issue – if companies were instead encouraged and rewarded for focusing on their long-term and holistic impact then they would make different and better decisions today. But they aren’t, so they don’t.
And this is why this paper from EY is so important. Because they are part of, and a significant actor within, that very system. There is no doubt that organisations such as EY have played a significant role in creating the current system. Having a multinational company such as EY highlight that the focus on overconsumption, short-termism and a fixation on financial growth has played a leading role in creating the current ‘polycrisis’ is a significant moment.
Up until this point, companies such as Greenheart and many others have been quietly working away building and promoting regenerative businesses. There have been some significant gains for regenerative economic concepts over the last decade that are now heading towards mainstream. These include Donut Economics, Wellbeing Economy Alliance, Future-Fit Business and Circular Economics. Even regulation areas such as CSRD and frameworks like Science Based Targets initiative for nature have all played, and continue to play, a significant role: however these concepts all still operate in the current system and the current system is what is driving humanity to live beyond the means of the planet.
“There can be no such thing as a sustainable company in an unsustainable system” – A New Economy, Exploring the root causes of the polycrisis and the principles to unlock a sustainable future, EY, 2024
The EY paper proposes a new system. One that rewards and supports:
- Sufficiency – production and consumption at a level to stay within planetary boundaries
- Circularity – turning linear production into a circular one reducing pressures on nature and natural resources
- Systems thinking – less thinking in silos but as living, dynamic ecosystems each playing its own role and supporting others to effectively perform theirs
- Redefining value – moving away from a world that favours financial but one that balances this with social and environmental good
- Creating shared prosperity – sharing this flourishing, thriving new economy fairly with everyone
Once you redefine the working world in these terms, most businesses would need significant transformation across all operations to adopt these principles.
Here are some hypothetical questions:
- If you’re a marketing agency or a consumer brand how much of your effort and budget is used encouraging people to buy more stuff? Even if that ‘stuff’ is sustainable, it’s still encouraging consumption
- If your organisation is a significant processor of raw materials or energy, how much of your business planning involves working out how you can put back what you’ve extracted in good time?
- If your business invests in others, how much of your decision-making criteria is based on short-term returns as opposed to the potential to create a long-term legacy?
Over the next few weeks we will be sharing how we apply our own version of these principles and use them to measure an organisation’s progress towards becoming regenerative. In the meantime though, we would encourage you to read ‘A New Economy’ particularly the reflection questions throughout.
To discuss how regenerative business practices could be adopted in your organisation, email us contact@greenheartbusiness.com.
