Kate Raworth: Businesses must redefine their models – not just their products – to be sustainability leaders
Oxford economist Kate Raworth, the creator of the Doughnut Economics theory, has urged businesses looking at circular economy principles to go beyond redesigning products and redesign their “board, finance, governance and ownership” to create holistic change.
Raworth was speaking at the Ellen MacArthur Foundation’s annual summit in London today (5 July), alongside Dame Ellen MacArthur herself and Biomimicry 3.8 co-founder Janine Benyus. The theme of the summit for this year is ‘regenerative by design’ – in other words, moving from an economic system which is harming nature at scale, past one in which the harm is minimised, to one in which the impact on nature is positive.
Before that panel, the Foundation’s chief executive Andrew Morlet (pictured) took to the stage to encourage business representatives in attendance to push for systems change rather than seeing circular economy principles and nature regeneration as a “bolt-on”.
He said: “Ask yourselves: What have you done today that has had a regenerative impact on nature? I suspect that several of you will think ‘I’ve done a few things to reduce my impact’. But, what have you done today to have a positive outcome for nature? Personally, I have done nothing. Most days, for me, it is nothing. For most people, it’s nothing. Living in today’s linear economic world, it’s a tough thing to do.
“Importantly – ask yourself what your business or organisation has done today to regenerate nature? What have you done through the products and services you provide? Have you changed how you design them, and produce them? How have you worked with your suppliers?”
Morlet argued that there are only a “few notable exceptions” of businesses with a regenerative impact at present, stating that for most, it is “just not part of business values, consciousness and mindset”.
Raworth agreed. However, she believes a step-change is coming. During her panel, she said : “I reflect on the long journey that we are all on regarding the mindset we are told that business should hold. We’ve come from a place where business was asking how much it could get away with, to asking how much it needed to do [for compliance]. Now, it’s a completely different question, the question of how much it can give back.
“I think that, if we’re going to make that transition [to a place where this is the most common mindset], the frontier of design is beyond products. It is in the design of business itself. This is the space where really important and exciting innovation is going to happen and is just beginning.”
Change taking root
Raworth acknowledged that, at present “we haven’t yet learned” how to adopt a fully regenerative economy at scale, whereby humanity thrives within the limits of the natural world and whereby nature is restored at scale.
She said: “We are one of the richest nations in the world, in the history of humanity. And yet, we still are told by politicians and economists that the solutions to our problems lie in yet more growth. There’s an insanity to this. We need to learn how to thrive. We need to create policies and business models and businesses that serve this goal. It’s really easy for me to sit here and say it. It’s really hard to do and we should not talk lightly about regenerative design.”
However, Raworth also noted that there has been an uptick in businesses talking about stakeholder models rather than shareholder-only models since the start of the Covid-19 pandemic, with this talk now crystallising as action at some businesses – especially smaller, more agile businesses designed with a sustainable development purpose.
Raworth said: “Young entrepreneurs, start-ups, will talk to you about the design of their service and product and then immediately about how they design their board, finance, governance, ownership. This is locking in value so purpose can’t get turned into a ‘nice-to-have’ or branding exercise. That’s where the future is.”
This was not explicitly covered by the speakers, but it bears noting that even for larger incumbents movements such as B Corp and the push for a Better Business Act in the UK growing. New initiatives, like the Vatican’s Council for Inclusive Capitalism and Prince Charles’ Terra Carta, are also being launched regularly.
Dame Ellen MacArthur also provided her thoughts on the precise role she sees businesses playing in the creation of a regenerative and circular economy.
She said that taking these concepts from theory, to pilot, to scale at pace, will require “business-led innovation and design, because business is the majority of the economy, so that is absolutely vital”. Coupled with this, she sees collaboration and policies as the two other key ingredients.
She elaborated: “We live in a business ecosystem and a natural ecosystem and the natural ecosystems have been with us for billions of years – they’re actually quite good… We talk about the value chain. But a situation where things fall off the end of that chain can never work.
“Thirdly, we have to have enabling policies. This is critical…. Business can’t capture all of [the doughnut]. If business is pulling in one direction, with innovation and design towards a circular economy, that’s very different as a scenario for enabling policy to come along. It’s a win-win situation. If business is over here but policy is over there, that’s a different situation.”
Dame MacArthur acknowledged that not all businesses will be the “front runners” but that those who see themselves this way, or wish to adopt this stance, should not “undervalue” their potential for impact. Much of this impact, she highlighted, will be realised through contact with stakeholder groups like suppliers, employers, customers and competitors. The Foundation’s 3,500+ supporters collectively have more than 38 million employees and generate $2.2trn of revenues, it was noted.
Biomimicry 3.8 co-founder Janine Benyus agreed, calling on business leaders to help by “putting out arrows”. Arrows show other stakeholders what kind of future they should be looking to create and how to do this. For example, pilot projects can serve as good case studies. Scaling them will almost certainly require new or expanding partnerships in most cases. Biomimicry 3.8 has played a key role in helping Interface develop its ‘forest as a factory’ concept, which has now received support from tech giant Microsoft and automaker Ford. To maximise the regenerative impact of business in a region, Benyus said, these firms will need to collaborate with others using the same natural resources such as the same watershed.
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