Regenerative by design

Earth Day marks how we humans totally depend upon – and severely impact – our planet.

It’s also a timely reminder of the need for every part of the economy and all levels of society – finance, government, business and citizens – to turn the tide on overconsumption, overproduction, and the reckless use of the world’s resources.

And there has been progress.

There are increasingly ambitious targets from companies to reduce their environmental impact, from net zero emissions, to zero wastewater, to supporting nature positive by 2030. The number of certified B Corporations is increasing year on year, now reaching 6,500 companies representing half a million employees.

Governments are following a similar path, setting emission reduction targets in line with the Paris Climate Agreement, and with the new Global Biodiversity Framework. They are legislating for sustainable and responsible business practices, including ever-more stringent ESG reporting to help drive action.

For now, these are targets; the real progress will be in their implementation. But the voices of stakeholders, including shareholders, employees and customers, are growing louder as they call out greenwashing, and demand meaningful, science-based action. For example, 2022 saw a record number of shareholder activism campaigns in Europe, up 36% on the previous year.

No time for complacency

Despite these encouraging signs, there’s still a long way to go in our quest for a sustainable future, and we need to step up the pace of change.

Take circularity, which, today is an emerging trend because of the need to decarbonize scope 3 emissions, comply with disclosure regulations in Europe and the desire from executives to double the share of revenue from circular products and services by 2030.

But it is far from widespread. Currently less than 8 percent of the world’s economy is circular, and even more worryingly, this figure has been declining in recent years. Annually, we already take 70 percent more raw materials than the Earth can safely replenish, yet the amount extracted is forecast to rise from 100 billion tonnes a year today to 170 billion tonnes by 2050.¹

The overexploitation of resources, and the traditional methods of manufacturing, farming and construction, are putting an impossible pressure on nature and threatening biodiversity on land and sea, through pollution, deforestation, water usage, overfishing, food and plastic waste, and landfill.

We can’t continue with this current linear economic model. We won’t just run out of materials; it can also create severe geopolitical tensions like mass migration, climate change ecological disaster, and intergenerational conflict. All of which has the potential to disrupt our economies and societies.

More and more companies acknowledge that sustainability calls for a radical overhaul of their entire business model. Some of the sectors most at risk and most impacted by the regulations, such as construction and infrastructure, automotive (especially electric vehicles), consumer electronics, fashion and textiles, or plastic materials, already show promising circular solutions at scale, offering encouraging future sustainable business models.

As for what a “nature positive” business could look like, this is still in a work in progress. A range of groups including the World Business Council for Sustainable Development, the EU Business for Biodiversity Platform and the IUCN’s IMEC Group are working to define the core principles of a nature positive business and provide pathways for different sectors to start their transition.

To help achieve the circular, nature-positive world, the entire notion of “value” should be reappraised. This means looking beyond traditional, narrow notions of economic value – such as the price of a product or brand value – to encompass natural and social capital, making business regenerative by design.

There is no shortage of regulations, frameworks and pledges for businesses to align to. Boards must now be bold and go beyond compliance, seeking to transform their business for good.
 

Footnotes:- ¹ _{The Circularity Gap Report 2023}