The rise of regenerative businesses

Corporate sustainability efforts, while important, are no longer sufficient to address our world’s pressing challenges. While companies have made strides in reducing waste and emissions through circular economy practices and decarbonization efforts, Navi Radjou – recipient of the Thinkers50 2013 Innovation Award and a Ranked Thinker since 2021 – contends that businesses must evolve beyond just “doing less harm” to become actively regenerative forces in society.

Drawing inspiration from nature’s inherent generosity and resilience, regenerative businesses aim to give back far more to society and the planet than they take. In the following excerpt from his new book, The Frugal Economy: A Guide to Building a Better World With Less, Navi illustrates how companies can simultaneously regenerate people (individual wellbeing), places (community vitality), and the planet (ecological health) while maintaining strong financial performance.

From The Frugal Economy: A Guide to Building a Better World With Less:

In recent years, aware of the worsening climate crisis, companies have multiplied efforts to make their business activities more sustainable. Eager to act “less badly” for the planet, they are focused on lessening their negative impact on the environment by reducing two things: waste and emissions.

To reduce waste, many businesses have embraced the principles of the circular economy. Unlike the linear “take-make-use-dispose” economy, which is resource-intensive and wasteful, the circular economy aims to reduce and reuse resources and recycle waste materials new products. 

Companies are also multiplying efforts to decarbonize their supply chains to reduce their CO2 and greenhouse gas emissions – the main culprits of climate degradation. 

All these virtuous sustainability strategies—curbing waste and emissions and shifting to renewable energy—aim to “do more with less”, that is produce more economic value by polluting less and consuming fewer natural resources like water: see Figure 1. 

Figure 1: Sustainable development, also known as “decoupling”, aims to create more economic value using fewer resources and polluting less

But this “do less harm” (to the environment) stance is not enough given the exploding social inequalities and the worsening climate crisis. 

Businesses need to go beyond sustainability and CSR, which merely strive to “do less harm” to society and the planet. Conscious consumers, employees, and investors demand businesses to get their “skin the game” and actively help build healthy, fair, and equitable societies and restore and revitalize natural ecosystems. It’s high time for businesses to become regenerative. 

The rise of regenerative businesses

According to national surveys conducted by ReGenFriends in 2019 and again in 2020, nearly 80% US consumers prefer “regenerative” brands to “sustainable” brands. Young consumers find the term “sustainable” too passive. They demand that businesses take inspiration from nature and build a virtuous regenerative economy based on renewal, restoration and growth (the three essential qualities of all living systems).

To become regenerative, businesses should learn from nature. 

In her inspiring TED talk How trees talk to each other, Suzanne Simard, a forest ecology professor at University of British Columbia, demonstrates how nature is generous—a virtue you don’t attribute to the hyper-competitive corporate world. Forest trees magnanimously share information and nutrients with each other using an underground network of soil fungi. 

What if companies reinvented their value chains and business models so they operate altruistically like a forest? Then they will think, feel, and act as regenerative businesses that give back 10x and even 100x more to society and the planet than what they take from it. To use organizational psychologist Adam Grant’s analogy, businesses can evolve from “takers” to “givers.”

A sustainable business strives just to reduce its ecological footprint. A regenerative business, however, boldly vies to enlarge its socio-ecological handprint—as Gregory Norris, director of SHINE, a joint MIT/Harvard project, describes it—by boosting the health and the vitality of people (individuals), places (communities), and the planet altogether. 

By adopting this holistic and synergistic approach, which I call triple regeneration, businesses can achieve superior financial performance and impact than their sustainability-focused counterparts: see Figure 2.

Figure 2: A regenerative business increases its socio-ecological handprint while reducing its environmental footprint

Note that regeneration is not superior to sustainability. Sustainability and regeneration are not two rival concepts. Rather, they complement and mutually reinforce each other. 

A regenerative business does better ⊕ with less ⊖: it consciously does greater good to people, places, planet and minimizes emissions and waste simultaneously.

Let me show you how businesses can generate more profit by regenerating people, places, and the planet altogether.

Regenerating the Amazon’s natural and cultural biodiversity: Natura

In the Amazon rainforest, the indigenous tribes cut a palm tree called the murumuru and used its wood to make commodity products like brooms.

It turns out we can extract from the seeds of this palm tree a deeply moisturizing butter that can repair damaged hair. These seeds are seven times more valuable than the wood of this palm tree. Hence, it is 7 times more profitable for the Amazon tribes to keep this palm tree alive than to cut it down !

Natura, a Brazilian cosmetics brand, is working with the Amazon tribes to sustainably extract this murumuru butter to make a whole range of hair care products. 

Through this win-win partnership, Natura is regenerating indigenous communities simultaneously on three levels: economically (by enabling them to earn more), culturally (by maintaining and leveraging their traditional farming knowledge), and ecologically (by preserving the Amazon biodiversity and its rainforest – the ancestral home of indigenous people).

Like Natura, can you become a regenerative brand that is life-enriching ? Think how you can cultivate a field of aliveness where people, places, and the planet can all grow and prosper.

Building factories and stores as forests: Interface and Decathlon

Interface, the world’s leading modular carpet producer, piloted a Factory as a Forest project in Australia as part of its Climate Take Back (CTB) strategy. With CTB, Interface aims to not just fight but reverse global warming and go well beyond net-zero (which Interface became in 2019) and make Interface a regenerative business that gives back more to society and the planet than it takes from them.

In principle, a Factory as a Forest would freely supply the local community with many beneficial ecosystem services (benefits) that the surrounding healthy ecosystems near the factory provide, such as air filtration, biodiversity support, water storage, pollination, carbon sequestration, and nutrient cycling. 

Interface collaborated with Biomimicry 3.8 to apply design interventions based on the knowledge gained from this pilot project in Australia in order to transform its US facility outside of Atlanta, Georgia, into a high-performing ecosystem. Interface vies to replicate this successful regenerative model across the company globally. 

In the same spirit, the global sports retailer Decathlon built a Store as a Forest in Brittany (France) that is designed to revitalize local biodiversity, by creating a natural habitat that supports the development of endemic (local) fauna and flora.

Revitalizing rural America with knowledge-based work: Sparq 

Sparq views small towns across America as a great untapped pool of creative talent that can benefit the entire country, contrary to the belief held by coastal elites that rural areas in the US are destined for collapse. Today, instead of offshoring their IT work to far-flung places like Romania and India, Fortune 500 firms, Big Tech vendors, and US startups outsource their application development and product engineering to Sparq’s experienced IT engineers located in ten locations across the US, situated mostly in rural areas.

Monty Hamilton, CEO of Sparq, told me that his IT engineers in rural and small-town America have a lot of fire in their bellies and are very adaptable, creative, and have strong work ethics. By tapping into these rural IT workers’ Yankee ingenuity, Sparqs’s corporate clients gain in business agility and productivity, save costs, and accelerate their digital transformation. Hamilton estimates that his skillful engineers in small-town America can execute tech projects up to 2-4 times faster than offshore IT workers, cost clients 30% less than big IT service firms in the US and work up to 25% more productively than freelancers.

Sparq regenerates rural communities and small towns in America by creating well-paid local jobs, but also by increasing the long-term employability of engineers, particularly young talent from minority groups, in US hinterland. These talented tech workers choose to stay in their rural hometowns rather than flee to San Francisco or New York seeking better job opportunities. 

Businesses must go beyond sustainability to effectively tackle the triple urgency of our time: the decline of mental well-being, growing social disparities, and deteriorating climate conditions. By evolving into regenerative businesses, firms can spur a virtuous cycle of growth that heals and uplifts people, revitalizes communities, and restores nature.

The content of this article is adapted from The Frugal Economy: A Guide to Building a Better World With Less by Navi Radjou. Copyright © 2024 by John Wiley & Sons, Inc.

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