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Business Solutions
26.09.2024
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Four regenerative business models for a sustainable future
Could one of these models suit your business?
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As environmental and social crises continue to unfold, businesses can no longer afford to focus solely on minimising harm, but are looking to have a net-positive impact through a regenerative business model.
Regenerative business models represent a path toward creating positive impacts that benefit both the planet and communities while ensuring long-term profitability.
According to a
, transitioning to circular economy regenerative business practices could generate $4.5 trillion in economic value by 2030, unlocking significant financial and environmental benefits.
What are regenerative business models?
The Earthly team met Tomrrow's Forests - who are planting trees, creating habitats, and restoring biodiversity throughout the UK.
A regenerative business model emphasises practices that restore, renew or revitalise natural systems, improving the health and functioning of ecosystems while also enhancing social well-being. Instead of merely minimising environmental impact, they actively contribute to rebuilding biodiversity, improving soil health, enhancing water quality and uplifting communities.
The key characteristics of regenerative business models are:
Systems thinking
: These models view the business and its operations as part of a broader, interconnected system of natural and social environments.
Circular economy principles
: Waste is treated as a resource. Materials are reused, recycled, or composted.
Regenerative agriculture and supply chains
: Products are sourced in ways that restore ecosystems, such as regenerative farming practices.
Community involvement and empowerment
: Stakeholders, especially local communities, are involved in decision-making and benefit directly from regenerative efforts.
Continuous learning and adaptation
: Regenerative businesses constantly evolve to improve their environmental, social and economic impacts.
Four key types of regenerative business models
1. Circular regenerative business models
Circular business models are rooted in the principles of the
circular economy
, where the focus is on eliminating waste, extending the lifecycle of products and regenerating natural systems. These businesses are designed to create closed-loop systems where resources are continually reused, recycled, or regenerated.
How it works:
Product design:
Products are designed for longevity, with materials that are easy to repair, reuse, or recycle. Emphasis is placed on modularity and durability to extend the product's lifecycle.
Production process:
Circular businesses minimise the use of virgin materials, prioritise recycled inputs and ensure that waste from production is reintroduced into the manufacturing cycle.
Reverse logistics:
These businesses incorporate systems to take back used products for repair, recycling, or upcycling, closing the loop on the material lifecycle.
Consumer Engagement:
Customers are encouraged to participate in circular systems through buy-back programs, product repair services and educational initiatives promoting conscious consumption.
Key benefits of circular business model
Circular business models offer several advantages, including:
Resource efficiency:
By extending product life and reducing waste, circular models reduce the need for raw materials, lowering both costs and environmental impact.
, adopting circular economy principles in Europe could reduce resource input costs by 32% by 2030, leading to substantial savings for businesses and industries .
Lower emissions:
Recycling and reusing materials significantly reduce greenhouse gas emissions associated with raw material extraction and processing.
Increased resilience
: Circular models make businesses less vulnerable to resource scarcity and market fluctuations by prioritising the use of renewable, recycled, or repurposed resources.
Challenges of circular business model
Transitioning to a circular business model could require a comprehensive redesign of entire supply chains to facilitate product take-back, remanufacturing and recycling processes to enable efficient material flows and create closed-loop systems.
Additionally, consumer behaviour plays a crucial role in the success of circular models; businesses must persuade consumers to return products and choose sustainably designed alternatives.
2. Regenerative agriculture-based models
Regenerative agriculture is a farming practice that focuses on rebuilding soil health, restoring biodiversity and improving ecosystem services such as water retention and carbon sequestration. In regenerative business models, companies source products from farms or lands that adhere to these practices, ensuring their supply chains actively contribute to ecosystem restoration.
How it works:
Soil health:
Regenerative agriculture improves soil structure through practices like cover cropping, crop rotation and reduced tillage. Healthier soils increase carbon sequestration and reduce the need for synthetic fertilisers and pesticides.
Biodiversity enhancement:
Planting a diverse range of crops and implementing agroforestry systems helps restore ecosystems, benefiting pollinators, wildlife and natural pest control systems.
Water management:
Regenerative methods enhance the soil’s water retention capacity, reducing the need for irrigation and preventing soil erosion.
Social impact:
Many regenerative agriculture projects are community-focused, benefiting local farmers through improved yields, better soil management and long-term sustainability.
Key benefits of regenerative agriculture-based models
According to a
, regenerative practices can boost crop yields by up to 30% over conventional farming methods.
Here are some more benefits of this model:
Increased soil carbon sequestration:
Healthier soils act as carbon sinks, helping mitigate climate change.
Resilience to climate change:
Farms using regenerative practices are more resilient to extreme weather events, such as droughts and floods.
Reduced dependency on chemicals:
Regenerative farming reduces the need for synthetic fertilisers and pesticides, which benefits both the environment and human health.
Improved nutritional quality
: Crops grown using regenerative methods often have higher nutritional value, providing more vitamins and minerals. A
found that regenerative farming can increase nutrient density in produce, enhancing food quality for consumers .
Challenges of regenerative agriculture-based models
The main challenges will be the i
nitial costs required to
shift from traditional industrial agriculture methods; and scaling the practice throughout an entire supply chain (particularly in regions with low infrastructure or education on sustainable farming).
3. Collaborative commons
The
collaborative commons
model focuses on decentralising ownership and creating shared value across multiple stakeholders. Businesses within this model are built around the idea of community ownership and participation, where profits are reinvested into the community and decision-making is collective. It intersects with social enterprises and cooperatives where the goal is community empowerment and mutual benefit.
How it works:
Decentralised ownership:
Assets such as land, buildings, or businesses are owned collectively by the workers or community members. This ownership structure democratises wealth creation and resource management.
Collective decision-making:
All stakeholders, including workers, suppliers and sometimes even customers, have a say in key business decisions. Profits are distributed equitably among stakeholders or reinvested into the community.
Community engagement:
Businesses prioritise local needs and reinvest profits into social, environmental, or economic initiatives that benefit the entire community.
Key benefits of the collaborative commons regenerative business model
The collaborative commons model offers a range of advantages that promote social equity and community well-being:
Equitable wealth distribution:
By decentralising ownership, collaborative commons reduce income inequality and distribute wealth more fairly.
Community resilience:
Shared ownership and decision-making create strong, resilient communities that can better withstand economic shocks.
Enhanced social capital:
Businesses foster cooperation and trust within communities, leading to stronger social ties and collaboration on local projects.
Challenges of the collaborative commons regenerative business model
Collaborative commons models face challenges related to complex governance structures, as collective decision-making processes can be slow and require robust frameworks to prevent conflicts among stakeholders. Additionally, scaling these models to a global level can be difficult without compromising core principles, potentially leading to a dilution of their original mission and values.
4. Purpose-driven models
Purpose-driven businesses operate with a mission beyond profit-making, focusing on creating positive social or environmental outcomes. These companies often reinvest profits into projects aligned with their core purpose, whether it’s environmental conservation, social justice, or community development. The model is often seen in
B Corps
and
social enterprises
.
How it works:
Mission-first approach:
Profit is not the primary goal; instead, businesses operate with the intent to solve social or environmental challenges. Revenue and profits are often reinvested into furthering the company’s purpose.
Triple bottom line:
Purpose-driven businesses focus on
people, planet and profit
, balancing financial performance with social and environmental goals.
Stakeholder engagement:
Customers, employees, suppliers and communities are engaged in the business’s purpose, creating shared value and reinforcing trust.
Key benefits of purpose-driven models
Purpose-driven companies tend to have higher employee engagement and satisfaction, as workers feel more connected to the mission and values of the business. These benefits not only enhance the overall performance of the company but also contribute to a positive social impact:
Brand loyalty:
Purpose-driven companies often foster strong customer loyalty as consumers align with their values and mission.
Long-term sustainability:
By focusing on solving global challenges, these businesses create resilient models that are built for the long term, both in terms of financial success and social impact.
Employee engagement:
Purpose-driven companies tend to have higher employee engagement and satisfaction, as workers feel more connected to the mission and values of the business.
Challenges of purpose-driven models
Balancing profit with purpose can be particularly challenging in industries characterised by thin margins or intense competition, where financial pressures may lead businesses to prioritise short-term gains over long-term sustainability. As these companies scale, there is also a risk of mission drift, especially when external investors influence decision-making by pushing for higher financial returns.
Become a regenerative business by investing in nature-based solutions
Rainforest conservation - Sabah, Malaysia. As of 2024, it provides employment for 40 local residents, 50% of whom are women, in activities such as forest patrolling and nursery management, enhancing income and skills.
As we face unprecedented environmental and social challenges, transitioning to regenerative business models is essential for the sustainability and longevity of our planet and communities. The benefits are clear across all regenerative business models - enhanced brand loyalty, increased employee engagement and long-term sustainability - which can bolster a company’s resilience in an ever-evolving marketplace.
, your business can not only mitigate its environmental impact but also contribute to the restoration of ecosystems and the empowerment of communities.
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