Beyond sustainability in business: The case for regeneration along value chains
As humanity exceeds most planetary boundaries, we need business practices to go beyond sustainability. And some cases show that prioritizing nature doesn’t mean sacrificing profits.
Climate-related emergencies are increasing in number and severity, their devastating impact felt all over the world. But, while such disasters as the devastating California wildfires make headline news, many other boundaries of nature are being quietly crossed with alarming speed.
Water scarcity, a loss of biodiversity and changing land systems are all significant threats to survival. To overcome these increasingly complex natural challenges, Esade’s Valentina De Marchi says businesses must look past sustainability and focus on regeneration.
Addressing the 2024 ESG Summit Europe in Madrid, the associate professor in the Department of Society, Politics and Sustainability outlined why — and how — businesses must regenerate the resources that have been stripped from the planet for profit, and why they shall look at their value chain for effectively doing so.
Crossed boundaries
A framework developed by the Stockholm Resilience Centre identifies the planetary boundaries humanity needs to stay within in order to thrive. In 2009, seven boundaries had been assessed and three already crossed. By 2023, nine boundaries had been assessed and six of them crossed.
The evolution of the planetary boundaries framework. Licenced under CC BY-NC-ND 3.0 (Credit: Azote for Stockholm Resilience Centre, Stockholm University. Based on Richardson et al. 2023, Steffen et al. 2015, and Rockström et al. 2009
Between 2015 and 2023, freshwater use had significantly exceeded its safe boundary. UNESCO data shows that between two and three billion people experience water shortages for at least one month of the year. Globally, 26 percent of the population have no safe drinking water and almost half of the people in the world have no access to safe sanitation.
The land systems relied on by wildlife have also exceeded safe levels: in the last 50 years, the global animal population has dropped by over 70 percent. In some Latin American and Caribbean countries, this is as high as 95 percent.
False economies
Failing to tackle these issues now doesn’t just come with a social cost. As well as increasing levels of malnutrition, heat-related illness and the impact on mental health, global gross domestic product will reduce by 19 percent within 26 years. This equates to a loss of one fifth of global wealth by 2050 if no action is taken — six times higher than the estimated costs of implementing the change needed to halt the decline.
The impact of these costs is already being felt by business. The European Investment Bank’s 2023 Investment Survey found that 64 percent of firms surveyed had experienced losses due to climate change — but only half of those were taking action to build climate resilience.
With 157 multinational enterprises and the increasingly disrupted supply chains they rely on reported to be responsible for up to 60 percent of global emissions, this is a short-sighted approach. Companies must acknowledge their role in the global crisis and commit to urgent change.
The cure is in the cause
An increasing number of global businesses are implementing sustainability strategies, but these should be viewed as a promising start rather than a definitive solution. To achieve true transformation, businesses must look beyond incorporating efficiencies and lead the way in regeneration, and they need to consider for the entire value chain in which they are embedded rather than just at what happens within their gates.
Companies must be responsible for all of the activities that feed into their end product
This requires a shift in focus from profit to planet. Rather than measuring the firm or its products, the improvement of nature should be the key metric for evaluation. The ecological and social ecosystems within which supply chains are embedded should be prioritized over the quest for financial success, with ideas, resources and activities geared towards repairing the damage already done.
With many industries relying on a complex system of supply chains, this requires a concerted effort to support local systems. Companies must be responsible for all of the activities that feed into their end product, without losing sight of the context of each link in the chain. Value chains are indeed where often the largest part of emissions are generated —potentially up to 11% higher than direct operational emissions— even if where often firms has the latest direct control.
Rather than shying away from the complexity entails into addressing sustainability and regeneration across value chains, companies shall accordingly consider how they can reduce their global footprint by regenerating local eco-systems, joining forces in innovative ways with their supply partners, customers, competitors, NGOs, local associations who can ensure to understand and effectively tackle the local challenges.
Regeneration in action: Global brands are already proving that prioritizing nature doesn’t mean sacrificing profitsPatagoniaWhen outdoor clothing company Patagonia expanded into the food industry in 2012, it committed to “farming and fishing in ways that regenerate and protect our planet”. The company’s Regenerative Organic Certified program sets out three pillars all suppliers must meet: soil health, animal welfare and social fairness. Patagonia is renowned for its ethical approach. Since 1985, it has pledged one percent of all sales towards the preservation and restoration of the natural environment, which it calls its ‘Earth tax’. In 2002, this pledge was extended to create a global alliance of companies. The resulting ‘1% for the planet’ program now has over 7000 members across 4872 countries, including organizations of all kinds, and has raised over $672 million for the preservation and restoration of the natural environment. According to Time magazine, Patagonia’s sales “have quadrupled over the past decade and recently surpassed $1 billion”. |
InterfaceCommercial tile manufacturer Interface, which aims “to become the most sustainable company in the world”, invests heavily in R&D and innovation projects focused on direct action and impact. “How we work is driven by our mission to help restore the health of the planet,” the company declares. This mission includes using carbon as a resource, with closed-loop manufacturing that recycles waste and used flooring, and a circular economy to extract maximum value from products before regenerating waste products and materials. The Net-Works program illustrates the community benefits of the company’s regenerative approach to production, so as the need for cooperation from diverse actors such as global suppliers and local NGOs. Discarded fishing nets that threaten wildlife in small fishing communities are collected, recycled and turned into carpet tiles. As well as cleaning up oceans and beaches, the communities that would otherwise be blighted by the plastic litter gain an income from collecting it. In 2023, Interface reported net sales of $1.3 billion. |
A future beyond sustainability
Regenerating the planet’s drained resources is not an easy task — but it is essential. Businesses must be prepared to make difficult choices: how can global solutions be adapted to meet local ecosystems? How can flood-affected suppliers in South America and drought-hit nations in Africa be supported in meaningful ways while common global standards are maintained?
There is no simple answer. But by aligning goals and resources, seeking out partners with a shared vision, engaging with NGOs and community leaders, and applying global solutions in a local context, the most resilient and courageous companies will lead the way to a sustainable future.