Regenerative capitalism holds the key
‘Green swans’ are taking flight – and it’s time for business leaders to step up or get out of the way, says Louise Kjellerup Roper, CEO of Volans, which helps firms make sense of the emergent future
All sustainable businesses share a common challenge when it comes to the bottom line: what happens if doing good comes at a cost? Better measurement of sustainability helps, but isn’t always the silver bullet.
We have good companies that can see the way ahead, yet don’t know how to tell investors they’re going to have to go through some major transformation that will likely reduce their quarterly profits.
How do you overcome that and help investors see the long-term picture? A lot of finance is about managing risk rather than looking at impact, but figuring out how to shift from one to another is really important.
Minimising harm is no longer enough. We’re reaching a tipping point for regenerative capitalism, which is a system that encourages companies to add value by regenerating the economy, the environment and their communities.
It can’t be a side project, it has to be built into the business model. Climate change is the key driver, but we’re also in the middle of a big generational shift as more millennials enter the workforce.
Our inquiry, Tomorrow’s Capitalism, examines the kind of business practices needed to build a resilient, regenerative and responsible economy. It’s important to share examples of what this would look like – and the questions that companies should be asking themselves to move in the right direction.
Our work with the Scottish Environment Protection Agency, for example, looks at what it will take for Scotland to become a living example of such an economy.
All industries are going to be significantly shaken up: things that we think are impossible will become inevitable; multinationals will become networks of companies that operate on a much more local level
The number one reason why we might fail to make our economy more sustainable, more regenerative, over the next decade is if we fail to redirect money fast enough and at sufficient scale away from companies that have no regenerative future to those that do.
This will be a decade defined by exponential change, but my fear is that if we invest billions without being mindful of the consequences, we could end up supporting industries that should be declining rather than those that could drive exponential growth in the future. We need a complete reset.
We have to be cautious talking about opportunity amid the Covid-19 crisis, but more people than ever have come together and acknowledged that there are wider issues that need to be tackled.
The hope is that the pandemic will focus minds, but, in reality, it could either accelerate the rate of change or slow it down tremendously.
Unfortunately it’s not obvious to everybody that business as usual is not an option. One possible benefit, however, could be that the response to the pandemic shows collaboration is possible in different ways. It could help smooth over the silos we’ve had within business, politics and the financial system.
True transformation demands a truly different kind of collaboration and mindset; it requires companies to reset how they work with clients and collaborators, and to see collaborators who may not even be on their radar.
What is certain is that all industries are going to be significantly altered. Things that we think are impossible will become inevitable.
Multinationals will become networks of companies that operate on a much more local level. We’re not going to stop travelling, but the world will deglobalise more significantly than we can imagine. Our job – my own at Volans and for all CAs – is to help advise companies on what to do now to prepare for what comes next beyond their three- or five-year plan.
If you’re entering the accounting profession, it’s important to adapt your mindset. Learn the tools of your trade, but also learn how to deal with problems and change, as the business landscape is going to shift radically.
Keep taking a systemic view so you can anticipate change. And be more regenerative – if you want to boost your resilience for the future it is not just a bonus, it is a necessity.
This article first appeared in the May 2020 issue of CA magazine.