An introduction to regenerative business models

Post Date
10 January 2024
Author
Petra Parizkova
Read Time
5 minutes
  • ESG advisory

We know that being a regenerative business is about shifting the dial from doing “less harm” to adopting a more systems-based approach, focused on the creation of value across whole value chains. Or, put more simply, it is about actively replenishing natural resources, social and economic capitals.

Due to this being closely linked with nature regeneration, the regenerative business concept seems to have been most embraced by companies working in the agriculture, forestry, fishing, mining, manufacturing, energy and construction space, where the focus is largely in relation to supply chain practices.

A 2023 poll of 800 executives, undertaken by Kearney, highlights that over 58% of C-suites see the development of more regenerative business models as an opportunity for their business, with 56% stating significant work needed to be done to get there. The research also reveals that for a business to be regenerative, the business must consider more than just its supply chain, with 58% of respondents recognising the importance of an action-orientated leadership, and 60% acknowledging the importance of a regenerative culture.

So how can companies start thinking about what may seem an almost utopian concept? Some companies lean towards frameworks and guidance when considering new approaches, but in the absence of a globally recognised regenerative business model, we are seeing the emergence of a plethora of frameworks being used to meet similar ambitions. These include:

Protocols – Capitals Coalition

Capitals Coalition has published the Protocols, which are decision-making frameworks that enable organisations to identify, measure and value their impacts and dependencies on natural capital, as well as social and human capital. The aim is to empower organisations to make decisions based on this analysis.

Circular Economy model – Ellen Macarthur Foundation

This model is a systems-based framework, focusing on keeping products and materials in circulation to help decouple economic activity from consumption of finite resources. The focus is on supporting nature regeneration, and following the natural systems-thinking where there is no waste in nature.

Transformation Compass – Forum for the Future

This model is a guide for businesses working to adapt to a regenerative mindset, helping them to identify and shift their current mindset. There are four mindsets identified:

  • Be less harmful
  • Do no harm
  • Repair and replenish
  • Build capacity for justice and regeneration

There is guidance on each mindset for the typical actions being undertaken, helping businesses to understand where they are positioned, and what next steps they can take to move up to the next level.

Regenerative Mindset Wheel – ThinkPlace Institute for Regenerative Design

This model outlines the six elements that are essential in building a regenerative mindset. These are:

  1. Adaptive mindset to foster a growth-orientated mentality.
  2. Systems thinking to understand the interconnectedness and interdependence of different parts of a system.
  3. Strategic design thinking to create meaningful, impactful experiences and deliver measurable results that align with the goals of the organisation.
  4. Ecological health – understanding basic concepts and principles of natural living systems, and ecosystem dynamics.
  5. Sociological health – understanding sociology principles, and the dynamics and types of social systems to achieve a particular outcome or result.
  6. Economic health – understanding new economic models of value, such as degrowth, collaborative advantage and regenerative economics, moving away from extractive business models.

Framework for regenerative business models – Maastricht Sustainability Institute

A recent study published by the Maastricht Sustainability Institute (entitled Towards regenerative business models: A necessary shift?) looked to create a framework containing key elements of a business model: the value proposition, value creation and delivery, and value capture mechanisms. The model outlines different stakeholder groups, and recommends that at each stakeholder level, a regenerative business model proposes value, creates and delivers it in sync with nature, and enables value capture.

Each of the above models will provide value to companies considering how to develop their own regenerative mindset and business models. They also reflect a departure from the status quo, and require that a new systemic thinking approach, typically centred on stakeholder engagement, becomes the enabler of success. Businesses should study the concepts that have been made available, and use these to prompt discussions both internally and externally about what is, and is not yet, feasible for their own set-up, given the impact of their size, sector, geography and the complexity of their supply chains will be unique. There is no simple switch that can be flicked on to help set the transition to a more innovative mode of operation, and the jump from ambition to action may look daunting. However, collaboration is, as always, key, and companies may look to initially pilot any regenerative model via a single product or service line to better manage risks and evaluate opportunities.

SLR's experts are on hand to help you on your regenerative business model journey. Get in touch to discuss your starting point, or next steps.

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