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Learning from social enterprises In this context, it’s instructive to look at the business models of social enterprises and analyse what can be learned from them because these models will invariably be based around the goal of making a positive societal impact. Generally, social entrepreneurs begin by studying one or more societal challenges and then develop entrepreneurial ideas to address them. Designing a start-up business this way is, of course, easier than implementing the necessary measures that would be necessary to change the model of an existing business. However, sticking to the old business model of making profit at the expense of people and nature is no longer a viable option. Six out of nine ‘planetary boundaries’ that represent the vital geophysical processes for life on Earth have already been transgressed, according to studies from the Stockholm Resilience Centre. One of the boundaries breached concerns the climate, while others relate to biodiversity and the use of fresh water. This not only impacts on the continuity of business, but also affects us all as individuals. It’s clear that mainstream businesses need to rethink their business models, but this isn’t a quick and easy process because it requires a complete change in approach. However, one effective first step is to make the transition towards a circular economy model. This model, as defined by the Ellen MacArthur Foundation, is “designed to eliminate waste and pollution, circulate products and materials (at their highest value) and regenerate nature.” It’s an economic system centred on delivering better outcomes for people and the environment. Companies – and their products and services – are completely dependent on ecosystems. The design and use of computer software, for example, requires hardware that is produced following the mining of raw materials. The software itself runs on energy, the production and cooling of which necessitates the use of further raw materials, as well as water. Using a circular economy model can help ensure that the materials and ecosystem services on which a business is dependent are used in a non-harming way. To implement this approach, enterprises must extend the life of every product by repairing, refurbishing and recycling them, or by melting materials and making new textiles out of them. Businesses also need to ensure that they use renewable energy wherever possible and formulate a ‘giving back’ plan. For example, a business that takes water from aquifers should look at how it can give back that water. One of the largest Coca-Cola bottling plants in India lost its licence to operate for some years, after local communities held the company responsible for aggravating drought-related problems because it drew water from local wells. The plant was only allowed to reopen once the company had developed a plan for restoring water in the relevant aquifers. It did this by collecting water during the monsoon and bringing it back into the aquifers.
STRIVING FOR IMPACT Some companies have already implemented business models and initiatives that are designed, first and foremost, to have a positive impact on the environment, as detailed in the examples below. PATAGONIA US clothing firm Patagonia has a very interesting governance model. Its voting stock is transferred to the Patagonia Purpose Trust, an NGO created to protect the company’s values. Its non-voting stock, meanwhile, is given in its entirety to the Holdfast Collective, a non-profit dedicated to fighting the environmental crisis and defending nature. Any money made after reinvesting in the business is distributed as a dividend to help fight the climate crisis. Although this does not mean that Patagonia is restoring nature directly, it shows a commitment to minimising any negative aspects of its impact. INTERFACE “Weaving sustainability into everything we create,” reads the slogan of international carpet company Interface. The company has implemented recycling initiatives and offers a “carbon-negative carpet tile”. Other measures include picking up fishing nets left in the ocean, which reduces its carbon impact as the company is removing plastic. FAITH IN NATURE Faith in Nature is a hair and skincare brand. It made headlines when it appointed ‘nature’ to its board of directors in 2022. The company overhauled its structure and created a legally binding framework that puts the rights of nature at the heart of its business model. Nature is represented by a non- executive director who is currently Brontie Ansell, a senior lecturer at Essex Law School and director of Lawyers for Nature. If this director doesn’t agree with a decision, the company must explain why it deviated from her advice on its website.
18 | Ambition | MARCH/APRIL 2024
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