INSIGHT 9: Communities and ecosystems are a BUSINESS responsibility

WHAT do SME operators need to know?

Continuing to treat ecosystems and communities as passive externalities is a business risk. 20th century sustainability approaches of “business as usual – with a bit more compliance and some charitable contributions” is unlikely to generate innovation or long term prosperity in the third decade of the 21st century.

Treat the ecosystems and communities that host your business as the active STAKEHOLDERS they are, not as passive suppliers.

Expand your opportunity scanning and business planning to include the needs of these key stakeholders (and the consequences to your business their failure could cause).

It used to be a long term perspective – but the time horizons of both threats and opportunities are getting shorter by the week.

Your host ecosystems and communities deliver:

• Food
• Water
• Air
• Materials
• Communications
• Energy
• Waste disposal

Degraded ecosystem * degraded community = degraded BUSINESS

Retrofitting is expensive after-the-fact

Whether it’s a product, a process or a system – if you don’t design a feature or function IN to something, you’ve most likely designed it OUT. If you want to add it, you’re likely to do some pretty expensive retrofitting.

For example, if you didn’t insulate your house as you built it, it’s going to be a whole lot more expensive to do it later. This goes for many aspects of home design – from passive solar orientation to draft prevention.

The same principle applies to business. If you don’t considered ways to regenerate your host ecosystems and communities as you develop your business, 21st century realities are likely to demand you retrofit.

Long term, considering key stakeholder needs up-front makes good business sense.

Today’s leading commercial innovators have been designing regeneration IN for decades – and treating their host systems as active stakeholders

Patagonia

Outdoor equipment maker Patagonia has restructured to make the planet their primary shareholder. As the founders looked forward, they wanted to make sure that a future change of management wouldn’t compromise the business purpose.

So they changed its legal structure so that all voting stock is held by the Patagonia Purpose Trust to protect the company values, while the non-voting stock is held by the Holdfast Collective, a nonprofit that uses profits to fight the environmental crisis.

Nike EasyOn

When Nike responded to a request from young disabled person, they ended up with a whole new range of adaptive footwear – and uncovered a much broader market from the elderly to pregnant women.

Interface

In the first 12 years of their quest to “climb Mount Sustainability, Interface put $393,000,000 on their bottom line. Today they’ve already achieved “Mission Zero” and are exploring ideas like Factory as a Forest to identify how their industrial facilities can function as ecosystems.

Not for Profits are doing some amazing enabling work

Terrain Natural Resources Management is a change-enabling organisation in Australia’s wet tropics. They work to help local people – particularly farmers – make their bit of the world better “empowering local communities to actively shape a sustainable future.”

Terrain work in a “traditional” Not-For-Profit structure – but their out-of-the-box thinkers have contributed to everything from on-farm drainage improvements to creating the financial offsets program Reef Credits that funds silt-prevention in the Great Barrier Reef catchment.

Newer Not For Profits like Build Like a Girl and the Maggie Beer Foundation are addressing a range of social issues, from equality in the construction industry to Aged Care nutrition.

These local action groups are indicators of opportunity

They’re addressing needs and systems issues – and that’s an indicator of demand. They’re in the game of systems innovation at some level – so why not explore aligned groups?

New structures have been developed to allow business to design community and ecosystem benefits IN

The existence and the growth of these new structures are indicators of the growing importance of regenerative design and regenerative economics.

In addition to traditional Not-For-Profit structures – which can sometimes limit investment sources, business strategy and innovation – there are other forms of regenerative operational structures gaining traction. Some examples include:

• B-corps – organisations legally permitted to deliver benefits to stakeholders other than shareholders.
• Cooperative structures – legally incorporated entities designed to serve the interests of their members.
• Employee cooperatives – run by the people who know the business best – and offering a path to retirement to ageing SME operators.

Australian examples of B-Corporations include Who Gives a Crap and – in 2024 – R.M. Williams.

Cooperatives are happening in all sorts of sectors – such as Yackandandah Community Development Co, formed to save the local petrol station / hardware supplier. The group also kicked off Totally Renewable Yackandandah’s community energy group, who have gone on to start the community energy cooperative Indigo Power.

A developing trend

Beneficial, regenerative business structures are a developing trend around the world – indicating that continuing to operate on “profit first, good later (if we can afford it)” could be risky.

SMEs run by individual operators and partnerships have the advantage of flexibility and adaptation that bigger organisations that can need structural legitimation to maintain their purpose. This gives them freedom to explore for innovation and opportunity within their current structure.

Doing good is great for getting and keeping good people

“People come to us for a job – they stay because we’re changing the world”
– Ray Anderson, Interface.

Doing good is driving a whole wave of 21st century business and technology innovation

Things that were “expensive” just 10 years ago are increasingly affordable – from bioplastics to renewable energy and EVs.

We have more than specific technologies – we have design solutions and innovation approaches that de-risk sustainability and develop business-building solutions.

One example of this is the development of Circular Economy models – and tools like the Circular Design Guide and Cradle to Cradle Product Innovation.

Circular Bega is using this approach to develop awesome gins that help deal with oyster shell waste from local fisheries.

Proven, accessible tools and structures exist to “do well BY doing good”

Today you can build on existing structures and approaches – using them to de-risk your initiatives. We have far more information than ever before about how to support successful community and ecosystem development, innovation and regeneration projects.

The fundamental strategic business upgrade required is to:

1. Make sure you’re NOT treating your host ecosystem and community as “externalities” – passive resource providers and waste dumps.
2. START engaging with them as active, contributing stakeholders you can work with to innovate and regenerate.

The tools and approaches and structures to do this are increasingly available. Businesses waiting for “government policy change” risk getting left behind.

The businesses leading this shift and congruently sustaining it over time typically:

• Find more opportunities
• Motivate their workforce, increasing engagement and innovation
• Find and keep quality can-do people
• Do better business in a thriving community and healthy ecosystems