The global challenges faced this decade, such as climate change, the biodiversity crisis or the erosion of social cohesion, require large-scale solutions. A dramatic shift in thinking about the environment and sustainability is currently taking place. There is a shift from simple sustainability to restorative sustainability and regenerative sustainability. In this post we explain what the regenerative economy is, the economic model that represents an alternative to the current economic system in response to its environmental, social and economic shortcomings.
Dependence on growth and the acceleration of the use of material resources
Overexploitation of Earth’s natural resources has been shown to cause declines in economic growth by compromising the ability of future generations to make use of those resources. Some of the negative impacts highlighted are problems in food supply, degradation of ecosystems or increased “health hazards and risks of natural disasters“. In addition, extractive industries are highly polluting. They are responsible for half of the world’s carbon emissions and cause more than 80% of biodiversity loss. This is according to the most comprehensive environmental account of mining and agriculture ever carried out.
In spite of this, dependence on material resources has only increased, as evidenced by the extraction of natural resources which is increasing annually at an average rate of 3.2 %. This means that the rate of extraction is three times faster than in 1970, despite the fact that the population has only doubled in this period.
This acceleration in the use of material resources is accompanied by a growing dependence on these resources for growth. Today, we measure the development of different economies by GDP. This indicator is extrapolated to quantify the progress of a society. However, GDP is problematically related to other environmentally damaging parameters. GDP growth is directly related to increased material extraction and higher greenhouse gas (GHG) emissions.
To ensure environmental conservation and promote a universal improvement in quality of life, it is necessary to reduce both GHG emissions and the material footprint. The European Environment Agency and Climate for Change’s report reinforces the need to act through systemic change:
The ongoing “Great Acceleration” in loss of biodiversity, climate change, pollution and loss of natural capital is tightly coupled to economic activities and economic growth. Doughnut economics, post-growth and degrowth are alternatives to mainstream conceptions of economic growth that offer valuable insights.
Source: Climate of Change (2021). Towards a wellbeing economy that serves people and nature, p.27.
In this context, approaches such as the Doughnut economics, post-growth and degrowth are particularly relevant. In the same way, the regenerative and distributive economy is another way of putting the brakes on extractive models, which are so harmful to the planet.
Principles of the regenerative economy
Regenerative economics, also known as regenerative capitalism, is a disruptive idea that thinks of ways to adjust and change our current economic model: it seeks to create an economy in which “which the planetary ecosystem and its resources are respected, not depleted beyond the ability to sustain planetary health, and in which the human experience is one which allows humans to achieve their highest potential through constant development and growth.” Regenerative economics forces us to think differently about human action in the environment. It is a basis for good governance, social stability and an economy in balance with the environment.
Therefore, some of the principles of the regenerative economy include:
- Participatory empowerment
- Circularity and sobriety in the use of natural resources
- Local economy and community awareness
- Cooperation rather than competition
- Prosperity that respects planetary boundaries and nature conservation
This economic model advocates that countries, companies, investors and consumers take a nature positive approach. This approach allows us to limit the damage of our economic activities by focusing on the restoration and protection of ecosystems. A nature positive approach enriches biodiversity, stores carbon, purifies water and reduces future pandemic risks among others.
What is a regenerative company?
Regenerative companies are those that take concepts such as humanity and nature into account as a part of their business. They place them at the centre of their decision-making processes and strategic thinking. But what tangible impacts can these considerations have?
Companies in this category look at their entire product portfolio. They consider the most effective ways to turn each of them into a nature positive process. They combine economic, environmental and social criteria to generate innovative solutions to
These types of organisations seek a positive impact on society. They transform traditional models from top to bottom. They adopt new ways of generating and developing their products or services to create value and they do so with sustainability as a central consideration in all facets of their operations.
Other relevant concepts to consider
In addition to the regenerative economic model, there are other relevant concepts that we have mentioned in this article. They are the following:
Degrowth or degrowth theory
This refers to a post-growth economic model. This would be achieved through the planned and democratic reduction of production and consumption in the richest and most polluting regions of the world. The degrowth model appeals to sufficiency, and argues that buying and selling less stuff is a faster and safer path to ecological sustainability. This would reduce environmental pressures and inequalities while improving welfare.
Doughnut Economics
British economist Kate Raworth invented it in a report published by Oxfam in 2012. With this theory, she proposed a new humanist economic model based on two premises:
- World poverty must be eradicated.
- Extraction must end in a world of limited resources.
Its name reflects its graphical representation which resembles a doughnut. The central circle is the social base, the outer circle is the ecological ceiling and the central space is where humanity can progress if the limits of the planet are respected. Both circles coincide with the 2030 Sustainable Development Goals.
Circular economy
The circular economy is an economic model that involves restorative or regenerative industrial processes and economic activities. It is based on recycling, reusing and reducing the resources used.
In short, it is no longer enough to be committed to sustainability. Now, the regenerative economy sets the pace for a more sustainable world. If you want to take your sustainability to the next level, get in contact with our team, or book your free product demo on our website.
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