Sustainability is not good enough anymore

SCIENTISTS delivered a “final warning” late in March in the Intergovernmental Panel on Climate Change (IPCC)‘s latest climate change report, calling for drastic and swift action to avert irrevocable damage to planet earth. The comprehensive study that took hundreds of scientists eight years to compile has a simple but important message – act now, or it will be too late.

We know that the state of the global economy and the pressures it has placed on resources, people, and companies in the pursuit of growth and progress have been key reasons for this climate emergency. We recognise this as a global community, and have indeed acted to understand and address these pressures and embrace climate action.

Asia-Pacific, in particular, has shown immense growth in climate consciousness in the past decade. For instance, close to 3,880 companies across the region opted to disclose their emission targets and climate action in 2021, representing 14 per cent of global market capitalisation and marking a 29 per cent increase from 2020, according to a report by CDP and South Pole. Also, green bond sales have been consistently on the rise in the region, with BloombergNEF reporting that Asia grew the fastest in green bond issuance – its share of total issuance rose from 14 per cent in 2020 to 24 per cent in 2021.

Despite this shift in ethos, the climate continues to deteriorate. At current rates, even a best-case scenario shows global warming of 2.4 to 2.8 degrees Celsius by 2100 with devastating consequences. On top of this, there is a growing biodiversity crisis, with the United Nation’s Food and Agriculture Organization predicting that as much as 42 per cent of all species in South-east Asia could be lost by the turn of the century.

Hence, despite progress, one sentiment is clear: To have a genuine and lasting impact, a different approach is needed – one that goes beyond managing symptoms to addressing systemic challenges.

A systemic shift is needed

Business leaders need to recognise that actual climate action comes from a good understanding of the systemic implications of their internal initiatives, alongside strong ambition for positive value impacts.

In other words, businesses need a regenerative approach that focuses on “systems thinking to protect, restore, and replenish both human capital and natural resources”, according to the World Economic Forum. An approach that goes beyond sustainability to achieve net positive impacts, rather than just the reduction of negative impacts. An approach that focuses on the wider system within which it operates, and not only on the direct impacts of the business.

A regenerative approach could thus involve actions including circular economy solutions that help reduce the use of materials, employment practices that place well-being at the core, or human rights approaches that place the needs of local communities first.

Charting the next steps

A willingness to reflect and consider the effects of their actions on the world is certainly the first instinct companies must have for a genuine and lasting impact on the state of our world. Recognising that what we have been doing in good faith is not enough to make meaningful change for us and our children will build a resolve that will sustain our efforts as we approach the big seas. Here are five pointers for companies to consider as they embark on their journeys to a regenerative business culture.

Firstly, they should plan the voyage ahead by articulating their vision for systemic change, and establishing a clear understanding of purpose, impact and influence. In other words, companies should spell out their North Star – areas where they believe they can help to reshape and rework economy and society.

This should be followed by the mapping of different systems – from internal processes, operations and value chains to the macroeconomy – to analyse their role in the wider system. This can help highlight key actors’ abilities and capacities to make systemic change at various levels by informing strategic resource allocation.

Upon setting a baseline for action, the planning phase to onboard regenerative practices can commence. Setting a broad but tangible regenerative strategy gives an opportunity to deliver value at pace from the get-go. By harnessing information gathered through system mapping, companies can define how they can deliver value through regenerative outcomes. By understanding their key areas of impact, they can deliver value to all shareholders and stakeholders.

Crucially, onboarding a regenerative approach does not mean legacy practices will become futile. Assessing existing products and services, and reviewing how value can be delivered through regenerative practices within legacy systems, can lead to innovations in processes that can enable regenerative outcomes. For instance, through a thorough review of business models via product-to-service models, where the focus is on the value of service provided rather than the number of goods sold, companies can propel regeneration.

Nonetheless, taking these steps would not mean much if the changemaker does not define what value means to them. The world undoubtedly needs more sophisticated approaches to understand value creation that takes into account the value delivered across the entire ecosystem, to all stakeholders. Therefore, understanding and appreciating that regenerative approaches can drive financial value creation, by virtue of seeking to achieve net positive impacts and focusing on the wider system by appreciating interdependencies, will drive the success and durability of this evolution.

It is also key to appreciate that any business willing to rethink its approach to value can contribute to this evolution, irrespective of its starting point. While providing an opportunity to lead and leapfrog sustainable businesses through financial value, regenerative thinking, crucially, also offers the potential to create a fundamental new paradigm for businesses that can drive positive change to the planet and society.

Taking these steps rightly will aid companies in their move from resilience to regeneration in their decarbonisation journeys. Articulating vision, mapping systems, strategising, reviewing and defining value will help companies maximise net positive impacts by recognising the wider system they operate in. Through this, companies can operationalise regenerative thinking by prioritising sustainable practices that maximise benefits and expand the understanding of value to their bottom line.

So this Earth Day, we urge businesses to go beyond sustainability thinking and move towards regenerative-systems thinking to future-proof their operations. The IPCC’s final warning about the climate emergency warrants urgent macro shifts. Regenerative business practices and their “glocal” hybrid approach – local solutions, scaled globally – will be key in driving this shift.

The writer is regional head and chairman, Asia-Pacific, at Kearney.