What is the legitimate licence to operate for business on a finite planet?

In a world threatened by climate change and mass extinction, do we have to change our view of what business is for?

There is a rising response from the business community to external pressure on its role in creating the multi-faceted global challenges we face. That response is beginning to acknowledge what many of us have known since 2008 — that the neoliberal economic model has had it’s day and that we need a new view of what business is and can be, and what economics can and should be — in the 21st century.

We’ve seen the US’s Business Roundtable step up to redefine the role of corporations. We’ve see the editor of the Financial Times publish a full page ad this week that suggests that neo-liberalism now need a serious reset.

“….in the decade since the global financial crisis, the model has come under strain, particularly the focus on maximising profits and shareholder value. These principles of good business are necessary but not sufficient.

The long-term health of free enterprise capitalism will depend on delivering profit with purpose. Companies will come to understand that this combination serves their self-interest as well as their customers and employees. Without change, the prescription risks being far more painful. Lionel Barber, Editor, FT.

Enough wise leaders have told us by now that we cannot solve our global challenges with the same approach we have taken that got us into difficulties in the first place. A global economy based on constant (and often exponential) growth is incompatible with a planet under threat of social breakdown due to the potential impacts of climate change.

We have a good idea of strategies that might mitigate our current existential threat.

• Leave fossil fuels in the ground.
• Shift to a clean, green energy economy.
• Move to a circular economy in which we recycle and reduce extraction of vital materials from our earth.
• Regenerate our soils to ensure we have more than the predicted 40–50 years of productive soil left.
• Eradicate the harmful impact of plastic pollution in our waterways and oceans.
• Reduce consumption.

All of the above ideas have an impact on how we do business but it is the last one — reduce consumption — with which the existing model of business struggles the most; especially consumer brands. Although many global brands are implementing circular economy strategies, or aligning behind the UN Sustainable Development Goals, these strategies do not change the fundamental principle of constant growth. Most companies, especially manufacturing brands, exist based on the principle of more. Make more, sell more, grow more profit. And then make more, sell more and grow some more.

If we are to actively encourage less consumption, then it logically follows (at least in my mind) that we must produce less and sell less. What kind of business model is one where we abandon the cherished notion of growth? How do we find legitimacy if not in the delivery of value through growth and profit? And if we recognise the need to deliver value through purpose, what kind of governance model does that demand?

I have long believed that there is no good reason for any business to exist and no licence to operate, unless it is prepared to play a part in creating a regenerative future in which creating the conditions conducive to life sits at the centre of strategy. But what does that look like? What things do we need to consider?

I don't have a clear cut answer to de-consumption or limits to growth. But I do have a number of different pathways organisations could consider to shifting the emphasis of their business away from internal success evidenced by growth to a model that is more focused on creating the future conditions conducive to life. I’ll use the inspiration I took from Joanna Macy:

Pathway 1: Protect & Preserve

Protect & Preserve are holding actions which — appropriately — hold back the tide of degenerative and extractive environmental destruction and social harm. This is traditionally the domain of charities, social enterprise, philanthropic models, corporate social responsibility, companies who choose to sponsor social & environmental challenges in their locality or domain of infuence.

A sound environmental, social and governance strategy (ESG) is a solid foundation on which to build legitimacy. Supporting your local community through initiatives like volunteering, sponsorship, sharing knowing with schools are all part of an established CSR practice that has been in place for decades. Let's not be misled into thinking that every business has even these basics in place. I still work with many SMEs who are at the very start of their journey into managing their environmental and social impact. It's extraordinarily difficult for them to leap from a wholly commercial business model to a regenerative practice.

Operating in the container of protect and preserve plays a valuable role in establishing a basic practice but they’re rarely transformational initiatives. Anand Giridharadas took apart philanthropic effort in Winner Takes All. I wouldn’t go as far as he does because I think it’s important that we have ‘bridges’ towards the future we can’t yet imagine, and holding actions are those bridges. They mean we might have a few more species preserved, a little less rainforest lost, more people who have been the victims of encroaching climate change and war, cared for and protected, a reduction in slave or child labour. So they are still important.

At the very least organiations can step up their collaborative relationships with organisations that are dedicated to some form of protect and preserve. They can put aside greater percentages of their profits to such philanthropic efforts — whilst they begin to look at the legal, financial and governance models that would allow them to radically transform into new forms of business.

Pathway 2: Creating Systems Change

Changing the big complex systems that surround everyday life — energy, transport, education, the financial/investment markets, water, waste, politics, economics, gender equality, colonialist business models, the food system, ownership, land management, ocean health, the business system itself — is an enormous task. All the systems that surround us are dependent on and driven by, neoliberal economics.

How can companies play a part in changing the very system in which they operate? There are many options. Too many to list here in one post but here are three big categories I define in my forthcoming book Renewal.

Can you shift to a different legal accountability or ownership model?

The foundation of organiational and economoic design is the combination of the global stock markets and the limited liability company framework. The limited liability company, limited by shares, is the most common organisational legal form and is a foundational pillar in driving the idea of constant economic growth. We buy and trade shares for one reason only — to generate profit. The share trading system cannot work without constant growth because no-one is going to sell shares in a company at a loss. The whole idea is to sell at a profit, and that can only happen with organisations that are demonstrating constant growth. That is a huge system to unpick, but I believe it will be necessary for a regenerative economy to be born.

John Fullerton from The Capital Institute has put forward a vision of a new fiscal model in his papers Finance for A Regenerative World.

We also need new legal frameworks which change the nature of ownership. These are already emerging and have been for some time. From benefit companies in the form of B Corporations, to cooperatives and collectives like The John Lewis Partnership in the UK, leaders are recognising that a new legal form of organisation which puts responsiblity to people and planet into the articles of association by law — is a necessary part of transforming accountability on social and environmental impact.

One of the best books I ever read on the subject of ownership is Owning Our Future by Marjorie Kelly. Read it, it could transform how you think about your business.

Can you incorporate deliberately developmental cultures or change the face of business education?

In order to encourage new generations to think differently about how we design businesses, new education models are emerging. Organisatons like The Green School in Bali, to Gaia Education, and Mission Hill School in Boston are brilliant examples. They help young people to understand the intrinsic relationship with the natural world and with social and environmental responsibility. One of the most pressing and urgent areas to re-imagine education is business education. Most lauded business educational institutions - from Harvard to INSEAD — haven’t yet gone beyond the economic model of neoliberalism. Management and leadership training may still incorporate the mechanistic, behavioural and human potential models but none have yet opted for a regenerative paradigm.

Regenerative business expert Carol Sanford and deliberately developmental leaders like Robert Kegan are some of the few voices to embrace and practice a more emergent way of doing business. Carol’s recent series on Medium on Language, Leadership and the Four Wisdoms are really worth reading. If you were thinking about launching a new business, a regenerative education enterprise would certainly be an option. It's a gap.

Can you take a bioregional approach to regeneration?

New economic thinking to de-globalise economies through glocalised strategies where resilience is the responsibility of bioregional networks. Inspired by legendary systems thinker Donella Meadows, bioregional learning centres are emerging all over the world. I am forming one in the south of england. We already have one in the west country, and there are many emerging around the world who are affiliated to Regenerative Communities Network, founded by The Capital Institute.

Visionary thinkers are experimenting with this kind of business approach in tourism for example. The recent Travel to Tomorrow conference held by Visit Flanders and curated by Anna Pollock is looking at the future of tourism from a completely inverted perspective of place-making.

Only last month I attended a bioregional learning journey hosted by The Bioregional Learning Centre in Devon in which multiple organisations, businesses and people came together to talk about future water resilience for the first time. In conversation between resource managers, farmers, urban citizens, food producers, wildlife conservationists, scientists, coastal flood defenders, local authorities — we could see a clear bioregional strategy emerging to make this small area climate resilient in the future.

Can you play a part in regenerating soil and land?

Regenerative agricultural practices are the global response to our deeply degraded soils which threaten the future of our food system. This threat is every bit as existential as climate change and intimately linked to it. This is perhaps the area in which regenerative strategies are emerging most strongly. Companies like Danone, now a B Corporation, are committing to transforming its supply chain to ensure only businesses with regenerative practices are included in the future.

Companies like IKEA have taken the important step to recognise that they are not only in the business of interior design but also in the business of forestry. If they don’t act to preserve the forests for the future, they won’t have a business. Other than the obvious, what other business are you in?

In a webinar for my Regenerative series on Connectle, The Savory Institute and Wrangler Jeans spoke about the global effort to reconnect business to regenerative land-based practices that reduce impact on soil and waterways.

Pathway 3 — The Shift in Consciousness

We are recognising that we can’t do the vital tasks of changing systems without changing the level of consciousness with which we approach that change. This is a vastly complex subject for a blogpost and I cannot pile into it all the stories and research of the last 5 years. I regret you will have to wait for the book on this.

So it will have to suffice to say that I have remarked that leaders who are pushing forwards a regenerative approach to business — whether that is from a social perspective of being deliberately developmental like Atlassian, Next Jump or Ampelmann who I worked with this year, or an environmental perspective such as Interface, Patagonia or Fab City — are far more likely to be led by leaders who would map to a ‘higher’ level of consciousness than leaders only just stepping their organisations onto the first rung of sustainability.

There is a direct correlation between the ability of an organisation to take on board the responsibility to change its business model to be regenerative rather than degenerative to the advanced conscious development of its leadership teams or its ability to release developed consciousness through its approach to ground-up organisational design.

Future fit organisational designs that are being used by such leaders include those which unleash autonomy and creativity, and replicate natural living systems. They include transformation models such as Natural Step, Future Fit Benchmarks and biomimicry’s Life’s Principles, but also take advtange of change processes like Theory U and self-managed designs such as sociocracy.

Can you play a part in accelerating a shift in consciousness inside your organisation or outside through your brand?

What do brands need to do to participate in a regenerative future?

There are some simple steps and there are some complex steps any brand could take. The first and most difficult is to ask itself the question that leads this article. What is our licence to operate on a finite planet under existential threat? Everything stems from that one question.

Once that licence came from shareholders and investors. Today it comes only from future generations as yet unborn as Jeffrey Hollender recognised at Seventh Generation. Are you contributing to a future in which future generations — and all other life — can enjoy the same planetary conditions or better, than you have had? Or are you detracting from that possibility?

Let's take a crystal ball look at some of the questions you could ask.

If you’re a brand that produces products or services for women, what can you do to take responsibility for elevating the level of consciousness of women? What can you do that is beyond quotas and targets to activate a society that incorporates feminine psychology in its design (see my previous articles for a deeper explanation)?

If you are in the business of food, what can you do to ensure you reduce your impact on soil, water, land, forests, air quality? How can you ‘glocalise’ your once global system? Can you step back if you’re a global commodity business — like cocoa or soy — and redesign your business model to be less about colonial extraction from the global south to the global north and more about regenerative local partnership? Hard I know. But could you?

If you are in the business of manufacturing fashion, what can you to do ‘glocalise’ production once more so that you are regenerating your locality and strengthening your ability to place-make? Can you revitalise cloth production in your region? Can you bring distribution to the most central spot on your footprint so that you minimise the impact of transport?

If you are a drinks brand, can you do something other than providing great-tasting refreshment? Can you incorporate phsyical or mental health into your reason to exist, over and above a sponsorship or CSR programme? Can you exist to change the face of fruit production or collaborate with laboratories to eliminate all the multiple additives that go into making canned drinks taste great but deplete the planet?

If you are in motoring or transport, can you design new models beyond Uber which are about shared value rather than ownership — as Clever Shuttle does in Germany? If you are in ocean freight, what could you do to transform your impact on the ocean through adopting clean fuels or reducing engine noise to reduce impact on ocean wildlife? Could you take a drop in profit to use routes that aren't in direct competition with migrating cetaceans if your customers would accept it?

If you are producing home cleaning products, could you get together with your competitors and agree that we don’t actually need yet another variety of washing powder or liquids, cleaning fluids or even cloths! Could you abandon the very idea of competition for pre-competitive collaboration on product development too — in the way many global brands are doing to address global issues like plastic?

If you’re in the business of white goods can you abandon in-built obsolescence in favour of new business streams for repair and renewal?

What can you do to change the accountability model inside your business? What legal form could make you more responsible to people and planet rather than shareholders? What brands that can never be regenerative could you divest?

What entrepreneurial accelerators can you support or create that are focused on business models that address only global challenges? We need more Unreasonables.

It might sound like a utopian unachieveable set of questions. But the generations that came out on the streets of multiple capitals all over the world these past two Fridays are asking those questions of business.

Where once a good corporate social responsibility programme, a reasonable sponsorship or affiliation, or a half decent sustainability strategy was enough to be deemed acceptable to its audiences, now most brands face an increasingly demanding public in Millennials and Generation Z who want more from business than business is prepared, or able, to give. Who demand from their employers more than green-washing or purpose-washing. A generation who, on the wave of people power inspired by Greta Thunberg and Extinction Rebellion, live in both fear and anger for the future they perceive to be evaporating in front of their eyes.

The struggle to attract and retain the best and most unique talent in the future, may rest on an organisation’s capacity to accept that it must reinvent itself to act for future generations rather than shareholders and stakeholders.

Our ability to deliver a regenerative economy which can cope with the limits to growth we need to impose upon the entire planet, may depend on each inividual company’s willingness to embrace fundamental transformation.

That fundamental transformation will mean shifting from a business whose legitimacy was given by the shareholders, investors and financiers prepared to support and encourage exponential growth and consumers prepared to buy into every attempt to create a scarcity need in their personal psychology, to being a business whose only legitimacy is delivered by its willingness to play a role in addressing the global challenges we face. From being a business that provided jobs and therefore relative security for some, to being a business that provides security of future for life on earth.

If you would like to hold internal conversations among your leadership or strategy teams to explore any of these questions, I would be happy to help you design and curate the containers that can hold these explorative journeys into the future. You can find me here on LI.

With grateful thanks to Anneloes Smitsman who put this question into my mind on one of my many brilliant conversations about the future with her.