Capitalism is the engine of the world. There are several consequences of capitalism such as climate change, biodiversity loss, pollution etc., which are now driving the world leaders to find a way to patch things up. Though it is undeniable that the core features of capitalism such as private enterprises and competitive markets are vital to cope with the finest societal demanding situations and improve society further. It is high time to reinvent and adjust the economic wheel to deliver Sustainable Development Goals and reap the ambitious goal of 1.5°c rise. One way to reinvent our businesses structurally is through Regenerative Capitalism.

What is regenerative capitalism?

Initially coined by John Fullerton in 2015, the term ‘Regenerative capitalism’ became the focus of John Elkington‘s book Green Swans: The Coming Boom in Regenerative Capitalism in 2020.In the book, it is explained how this new method can provide exponential economic, social and environmental development. Regenerative capitalism favors true value creation rather than just financial value extraction. Through this method, companies can make a profit while also serving a purpose.

Image source: Regenerative economy, Beyond Social.

Regenerative capitalism refers to business practices that restore and construct instead of exploit and destroy. Usually businesses focus on achieving net-zero emissions and carbon neutrality. But this method entails leaving a net-positive impact, which requires companies not just to take responsibility after doing harm, but also to regenerate the natural system and make the eco-system more resilient as a part of business process. Therefore, it will be a mind-set shift for companies from ‘to do less harm’ to ‘do extra good’.

How to implement regenerative capitalism?

The basic design principle of regenerative capitalism is Bio-mimicry, i.e., to reproduce nature. So it will be essential to integrate regenerative activities that can restore nature in all forms of business. For example, to make the tourism sector regenerative, urban farming activities can be included along with traveling. Regenerative farming could be implemented by the industries that deplete natural water and land resources. Recently in April 2021,  PepsiCo announced plans to do regenerative farming in seven million acres of land worldwide which is equal to its agricultural footprint. Although it is difficult to include regenerative activities in a few sectors such as transportation,  it can still be accomplished by rethinking the conventional practices, bringing up innovative strategies and planning sustainably.

Most companies are now moving into a circular economy by producing polymer from renewables and recycled feedstock and by reusing waste as a raw material in production . If regenerative capitalism meets circular economy the flow of materials seen in nature could be emulated. For companies that have their internal and external desires flawlessly aligned,  the aim of turning them into regenerative is definitely doable. Large Investments and coordination from stakeholders will be required to make regenerative capitalism effective.

We are living beyond the planet’s limitations and wrecking its habitat in which we are going to live for centuries to come. This is the right time to take the regenerative path and build cities more resilient to the challenges that climate change will bring. “It is only by regenerating our economies and communities, and the wider biosphere, that we will be able to achieve true resilience”, says John Elkington. Thus, the most sustainable urban development along with resilience could be achieved through regenerative capitalism.

The above article is based on: Regenerative Capitalism/World Economic Forum

Nithya Arumugam

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