Forests: The ultimate inspiration for regenerative business models

Credits: The Gula Gula Food Forest Programme. Local farmers benefitting from capital used to restore degraded agricultural land

“We are on a highway to climate hell with our foot still on the accelerator.”- UN chief Antonio Guterres speaking at COP27. The impacts of human caused global warming are being experienced now! Beyond the immediate damage caused by droughts, floods, and other extreme weather events, secondary impacts include the displacement of entire communities, food shortages, and the exacerbation of geo-political risks. Industry and fossil fuels are the largest contributors to climate change. Putting the brakes on the extractives industry and working to reduce ecological footprints is simply not enough; we must also get carbon out of the atmosphere and restore resources by regenerating and enhancing ecosystems. Enter regenerative business models.

Regenerative Business

Hahn and Tampe (2021) describe regenerative business as “businesses that enhance, and thrive through, the health of socio-ecological systems (SES) in a co-evolutionary process.” In other words, a for-profit business model that gives back to the planet more than it takes and places humanity and nature at the centre of decision-making. To assist organisations on this quest, Jonathan F.P. Rose presents qualities that can be adopted to achieve regeneration. These are: an integrative world view; a systems enhancing purpose; products that address the fundamental needs of society; an environmentally and socially responsible value chain; a life-enhancing relationship with its people; thriving partnerships and networks; and regenerative use of its profits.

This sounds lovely, but can this be viable?

Competitors and co-operators

To get an understanding of how a regenerative ecosystem practically translates, we can turn to nature. In a delightful and awe-inspiring talk, Suzanne Simard distils over 30 years of forest research and shares that forests are not “simply a collection of trees” but rather they are part of a massive underground system that works to increase the resilience of the whole. Below the surface, a tree’s roots tap into a complex “biological neural network” and exchange nutrients and communicate needs. Within this system, several hub or mother trees can be identified. These are the largest and most connected trees in the forest. Not only do hub trees share nutrients with saplings and other trees, but they have the remarkable ability to recognise and further nurture their own kin. Through this process, hub trees operate as “competitors” and “co-operators.”

Growth and longevity

Traditionally, companies operated using a linear value chain i.e., their role within a value chain would determine opportunity for revenue. Environments were more predictable, and companies could focus on specialisation. However, the nature of business has changed; we now live in a hyperconnected world that is characterised by an accelerated pace of change. Climate change is getting worse, and resources are under increasing pressure.

Humanity is slowly waking up to the reality that a business, long-term, is only as effective as the ecosystems on which they rely and therefore, for security of supply and longevity of commerce, business leaders must evolve their models and the way in which they interact with ecosystems.

Forests- the perfect opportunity!

Forests are perhaps the world’s most undervalued asset, whereas society frequently monetizes and pays for a forest’s carbon potential or timber outputs, they provide so much more. Forests supply essential natural resources for food systems, medicines, and housing, and many of these resources can be circular, long-lasting, and substitute carbon-intensive materials. Forests can sequester, store and substitute carbon — all in one! Beyond these benefits, they can also hold significant cultural and spiritual significance, and are often the cornerstone of local communities; over 1,6 billion peoples’ livelihoods depend on forests!

There are many inspiring examples of forest ecosystems being restored around the world. For example, the Amaz impact accelerator is channelling investments to start-ups to trigger a new economy rooted in forest conservation in the Amazon. Over a 5-to-10-year period, 6 companies will preserve 1 million hectares and recover 3,700 hectares of forest, prevent 700 thousand tons of carbon being released into the atmosphere, and inject more than $55 million into local communities.

Xilva works with companies to ensure that capital is directed to high-quality forest projects; this allows companies to confidently meet climate targets and other nature and social impact goals. The Gula Gula Food Forest Program in the Singkarak river basin, West Sumatra, Indonesia is one such example. Currently, 242ha of degraded agricultural village land is being converted into a rich food agroforestry system using an assisted natural regeneration approach and the carbon income and agroforestry products generated through the project are reviving much needed economic opportunities for the local communities. Fairventures, with a flagship project in Indonesia, is another initiative that is providing climate mitigation and other sustainable development opportunities for local communities and capital providers. Fairventures works to restore and protect forests through a scalable business model that creates income opportunities for local farmers; this is the assisted farming of agroforestry plantations for incorporation into viable value chains. The project land has the potential for 1,200ha of reforestation, 1,200ha for forest conservation, and climate potential of about 300,000t CO2eq. Both the Gula Gula Food Forest Programme and Fairventures are demonstrating that forest projects can generate revenue and restore ecosystems.

Trailblazers

Growing concerns about climate change, the need for conservation, and societal issues are key drivers shifting consumer preferences. A study by BCG found that the COVID-19 pandemic heightened awareness of environmental issues amongst consumers who want to see strong environmental action taken by governments and companies. Regenerative business models can therefore empower customers and the pioneers of such models are experiencing sensational media coverage and brand loyalty. For example, Patagonia, who have committed to distributing dividends to fight climate change, have been hailed as trailblazers in the green economy. Guayakí Yerba Mate (beverage brewed from the yerba mate plant) have also been applauded for their Market Driven Regeneration model; they believe that customers should be empowered to advance social change through their purchasing power and every product purchase has positive environmental and social impacts. Another company that is paving the way for regenerative models is Ejido Verde. They are a pine-resin company “positioned to become a lead supplier in the $10 billion global pine industry.” Ejido Verde works in partnership with indigenous Mexican communities and are committed to climate change and wealth inequality solutions. As of 2021, Ejido Verde had generated 1,037 jobs, sequestered 86,941 tons of carbon, and had 4,577 hectares of plantation under management.

Regenerative models go beyond sustainable business; they are redefining the way we work, generate capital and re-invest in nature. They are moving beyond “self-actualising” to “systems actualising” and, in the process, unlocking opportunities to harness consumer preferences, access new markets, drive innovation, and impact sustainability-focused peers. With a tantalising window of opportunity, in short, they are the future . The question is, will today’s challenger brands and emerging businesses that have embedded ‘regenerative’ approaches to nature in their very DNA, become tomorrow’s incumbents?

[1] Hahn, T., & Tampe, M. 2020. Strategies for regenerative business. Strategic Organization. https://doi.org/10.1177/1476127020979228

[2] Rose, J., 2021. How Businesses Can Regenerate the Global Commons. SSIR.https://ssir.org/articles/entry/how_businesses_can_regenerate_the_global_commons

[3] Simard, S. 2016. How trees talk to each other. TED. https://www.youtube.com/watch?v=Un2yBgIAxYs

[4] “We need to safeguard our forests.” 2020. WWF. https://wwf.panda.org/discover/our_focus/forests_practice/importance_forests/#:~:text=Forests%20provide%20us%20with%20shelter,from%20trees%2C%20and%20so%20on.

[5] Kachaner, N., Nielsen, J.,Portafaix, A., and Rodzko, F. 2020. “The Pandemic Is Heightening Environmental Awareness.” BCG. https://www.bcg.com/publications/2020/pandemic-is-heightening-environmental-awareness