Published 14.8.2024
Perhaps you have seen the buzz word “regenerative” being used in different contexts and wondered what it really means? There are probably several interpretations of what regenerative business entails, but the overall idea is that you go from limiting negative impacts to achieving positive impact, i.e. being net positive. This blog summarizes views from selected scientific articles on regenerative business (see references), distilled into the most relevant aspects.
Regeneration = Net Positive
Most businesses today want to be sustainable, with a focus on reducing the footprint of the operations. Some businesses aim for circular business models, meaning that they strive to close, slow and narrow resource loops, resulting in a resource efficient and self-sustaining system. If the target is regenerative business, this means incorporating strategies that go beyond limiting negative impacts to restoring, preserving and enhancing natural and social systems, resulting in net positive impact. 1
Generating Value for all Stakeholders, Not Just Shareholders
A regenerative approach requires a holistic view on the business environment and operations. Three main principles for regenerative business include: 2
- Generating value for all stakeholders rather than just shareholders
- Capturing value across natural, social, and cultural capital, at every stage of production. This includes not only measuring your negative impacts, i.e. footprint but also the positive impacts, i.e. handprint.
- Internalizing costs for externalities* arising from producing products and services in order to reveal the true pricing of products.
What’s In it For the Business?
Linear and degenerative business models with overexploitation of natural resources have reduced the natural regenerative capacity of the planet. Making all operations sustainable and circular is not enough anymore, instead we need to aim for regeneration to ensure the future welfare of the planet and our civilisations. But what’s in it for the business?
There is a strong business case for adoption of regenerative business strategies, as it provides resilience to withstand future stress factors, such as climate disasters and associated conflicts. It is also an opportunity to discover synergies with partners and new business opportunities. In other words, considering how a business relates to nature and society, and finding a pathway to become net-positive is a way to future-proof the operations. To have a completely regenerative business while existing in a larger linear system may not be possible, but with more and more businesses taking small steps in that direction, we can in the end create larger systemic shifts.
Examples of Regenerative Business Models
How a business can transition to regenerative business models depends on the type of business and environment. Here are different examples of regenerative business practices already applied globally. 1
Regenerative leadership by helping suppliers transition to regenerative practices can be a good way of changing the impact of an existing value chain and business model. Transparency of supply chain can enable consumers to make better informed decisions about the goods they are purchasing. Reinvesting profits into nature and society, and advocacy are ways in which businesses can use their profits and social influence to regenerate the world around them.
Responsible sourcing help to empower and strengthen suppliers and their communities. This can include e.g. supporting small businesses and farmers within a supply chain, providing fair compensation to farmers, and ensuring the traceability of ingredients and raw materials. Long-term commitments between businesses and their suppliers help reduce risks that might otherwise hinder economic investment within a supply chain.
Nature regeneration consists of a series of actions that aim to improve the health of the natural world. It can for example include regenerative agricultural practices to increase the health and resilience of the soil, or restoring forests so that flora and fauna can thrive. Social regeneration is aimed at regenerating human ecosystems. Examples of concrete actions include fairtrade practices and involving communities along the supply chain in decision-making processes, providing just and equitable working conditions and creating conditions for communities to thrive.
Businesses can impact customers positively by developing products that promote human health & well-being. This could be using natural, organic and, or safe, ingredients, or creating products that improve the living conditions.
Businesses that have an employee level focus improve the working conditions, lives, and wellbeing of their employees. Most often this includes fair wages, just labour conditions and the possibility to take part in decision-making. It can also include services that contribute to employees physical and mental health. In some cases, businesses can hire and train people that otherwise have difficulties finding employment.
Who are the Frontrunners in Regenerative Business?
Regeneration is most often associated with business sectors that are dependant on natural capital and ecosystem services. Thus, companies already applying regenerative business models are predominantly found in the food, consumer goods and fashion sectors.1
Most regenerative business case examples are found among either small companies or very large companies. Small businesses need to differentiate themselves from competition and can do that by finding new ways of generating value. Larger businesses in turn can afford to experiment with new business models.
There is No “One Size Fits All” Solution for Regeneration
How to incorporate regeneration into business strategy depends on the type of operations and the environmental and societal setting. For some companies, regeneration can be incorporated into the core purpose of the operations and applied at all levels. For others, the right way to proceed is to implement regenerative initiatives for a gradual transition, starting from the most relevant area to take action on.
These are the three key steps in implementing regenerative practices:
- Know your starting point and set targets: The best way to start is to assess the status and context of the business. This includes mapping relevant stakeholders and understanding what dependencies and impacts the business have in relation to the surrounding world (read more about e.g. nature assessments). When the starting point is known, it is possible to prioritize and set relevant targets.
- Find your partners: Successful regeneration strategies require engaging several parties and stakeholders in collaboration. Relevant partners could be the public sector, non-governmental organizations (NGOs), or other businesses. Finding good partners gives you additional expertise and the possibility to address issues beyond company boundaries.
- Implement and verify outcomes: Impact verification of regeneration actions and outcomes is crucial to avoid empty promises and greenwashing. Common ways of communicating impact are annual sustainability reports or various certifications. Frameworks for how to report on impacts are available, and e.g. the Corporate Sustainability Directive (CSRD) imposes requirements (directly or indirectly) on companies for how to report (read more).
* Externality means a cost or benefit caused by a producer to external parties. The most common example of externality is environmental pollution.
References:
- Das, A., & Bocken, N. (2024). Regenerative business strategies: A database and typology to inspire business experimentation towards sustainability. Sustainable Production and Consumption, 49, 529–544. https://doi.org/10.1016/j.spc.2024.06.024
- Konietzko, J., Das, A., Bocken, N., 2023. Towards regenerative business models: a necessary shift? Sustainable Production and Consumption 38, 372–388. https://doi. org/10.1016/j.spc.2023.04.014
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