Embracing Regenerative Business Practices to Transform Economies

The current global economic system is increasingly strained under complex and mounting challenges. Even without the upheaval of COVID-19, today’s environment is marked by environmental degradation, rising inequality, and resource scarcity—all of which threaten long-term economic stability. As the world grapples with climate change, biodiversity loss, and social inequality, businesses face pressure to adopt sustainable practices that foster resilience.

For decades, the drive for profit and growth has often overlooked these broader consequences. However, as environmental risks intensify and societal expectations shift, businesses are finding that traditional growth models are unsustainable. Bank of England Governor Andrew Bailey has emphasized the critical need for companies to address these issues, which are essential to maintaining economic stability.

Progress on Sustainability, but More Is Needed

While corporate sustainability has advanced over recent decades, the pace of change remains insufficient. Environmental legislation in the 1980s, the rise of corporate social responsibility (CSR) in the 1990s, and heightened green consumer awareness in the 2000s brought social and environmental issues into the corporate spotlight. More recently, stronger regulations, consumer demands, and financial market interest in environmental, social, and governance (ESG) criteria have positioned sustainability as a key driver of growth.

Yet, despite these advances, the rate of change has not kept pace with the gravity of the crises we face. Warnings from scientists suggest that without drastic action, climate warming may reach 2.4°C to 2.8°C by 2100, with severe consequences for ecosystems and human societies. Social inequality is worsening, with a widening wealth gap and declining biodiversity further threatening stability. Incremental steps are not enough; a transformative approach is needed.

Introducing Regenerative Business Practices

Regenerative business practices take sustainability to the next level. Instead of merely reducing negative impacts, regenerative businesses seek to create net positive outcomes for people and the planet. They aim to understand their broader role in society, focusing on reshaping economies to promote human well-being, equity, and environmental health. The World Economic Forum defines regenerative business as an approach that emphasizes “systems thinking to protect, restore, and replenish both human capital and natural resources.”

How Regenerative Business Differs from Traditional Sustainability

1. Positive Impact: Regenerative businesses aim to achieve net positive outcomes, such as enhancing biodiversity, improving community well-being, and sequestering carbon.

2. Systemic Focus: These businesses address the entire system in which they operate, considering how their actions influence interconnected social, environmental, and economic systems.

Through regenerative practices, companies can play a transformative role in promoting sustainability on a national and global scale. This approach represents a fundamental shift from focusing solely on reducing negative impacts to fostering a holistic model that restores and revitalizes resources, people, and ecosystems.

Building a Regenerative Business

Few companies are fully regenerative today, although some are taking steps in that direction. Examples include:

• Nestlé: Supporting regenerative agriculture by offering premiums for crops grown using sustainable practices, which improves soil health and boosts farmers’ incomes.

• Unilever’s Knorr: Initiating regenerative agriculture projects that aim to reduce emissions, water usage, and enhance biodiversity.

• Ecosia: Using revenue from search engine ads to fund reforestation projects, capturing CO2 while restoring natural habitats.

These companies demonstrate that regenerative practices are feasible and impactful. However, building a truly regenerative business requires companies to reimagine their role in society and adopt strategies that prioritize systemic change.

Key Steps for Companies Transitioning to Regenerative Practices

For companies seeking to embark on a regenerative journey, here are five essential steps:

1. Define a Vision for Systemic Change
   Develop a clear vision aligned with systemic impact. This North Star should guide the company’s purpose and clarify its role in fostering economic and environmental well-being.

2. Map Systems and Identify Leverage Points
   Analyze both internal and external systems to understand how your business influences broader societal and environmental factors. Identify leverage points where focused actions can create substantial positive impacts.

3. Establish a Regenerative Strategy
   Create a strategy centered around regenerative goals. Focus on areas where your business can deliver value by enhancing social equity and restoring natural resources. A well-crafted strategy aligns with both shareholder interests and environmental and social priorities.

4. Reevaluate Business Models
   Assess how regenerative practices can be embedded into existing products and services. For instance, shifting to product-as-a-service models can reduce waste and encourage circular economies. Aim to design models that prioritize value delivery over resource extraction.

5. Define and Measure Value Creation
   Regenerative businesses need robust frameworks to measure the financial and social value of their actions. This includes understanding the broader impacts across ecosystems and stakeholders. Clear metrics enable companies to demonstrate value beyond profit, supporting long-term business viability.

The Opportunity to Shape a Sustainable Future

Embracing regenerative business practices offers companies a unique opportunity to lead the transformation toward a sustainable economy. Regardless of industry, businesses willing to innovate can create a new paradigm that prioritizes ecological and social health alongside profitability.

Through regenerative business models, organizations can contribute to positive change in areas such as biodiversity, resource management, and community well-being. By focusing on value creation for all stakeholders—including customers, communities, and the environment—companies can build resilient foundations that support long-term growth while addressing today’s most pressing challenges.