Building Businesses for a Better World

Building Businesses for a Better World

Modern-day business is a tale of two realities. The maniacal pursuit of profits above all else is enriching C-suites and investors, while at the same time draining and impoverishing our planet. Businesses seek growth, but are increasingly straying away from a greater purpose, too often abdicating any responsibilities other than what they owe to shareholders.

But our people and our planet are paying the price. Though different businesses and industries each carry varying levels of environmental damage, business activities by and large create or contribute to myriad environmental issues. Businesses generate an incredible amount of pollution into our air, water, and soil; greenhouse gasses being of particular concern given they lead to a warming planet and cascading consequences. Corporations often use excessive amounts of natural resources – using the linear business model of take, make, and waste – depleting our ever-shrinking natural stock. Industrial production affects biodiversity, ecosystem health, and human health. Businesses create massive waste, which accumulates across our oceans and land and emit highly harmful methane. The list goes on.

Yet too often – despite the clear laundry list of environmental offenses – we give these businesses a free pass. We don’t blink an eye. Because in our society, business is king and profits prevail, regardless of the consequences. 

Let’s just look at corporate carbon emissions as a singular case study. According to a recent study, the average cost of corporate carbon damages equates to 44% of companies’ profits. In other words, if a major business actually had to pay for the cost of damages caused by its carbon emissions, they’d need to hand over nearly half of their profit to do so. Externalizing this cost is of course nature’s subsidy, and one that can’t go on forever. So how are we holding businesses to account? How are we meaningfully incentivizing them to change behavior?

Well in the United States, the Securities and Exchange Commission (SEC) proposed new rules nearly two years ago that would require public companies to disclose a robust set of climate-related disclosures, including direct (Scope 1) and indirect (Scope 2) carbon emissions, as well as emissions from upstream and downstream across a company’s value chain (Scope 3). But the recently approved rule is a significantly weakened version, dramatically decreasing what businesses must disclose. The reason: Intense corporate pressure to water down the regulation. It’s a microcosm of our society’s historic chain of command. We may say the environment is important. But in practice and when the rubber meets the road, business interests trump all. 

But what if it doesn’t have to be that way? What if we fundamentally redesigned businesses so that they work in harmony with the planet, not in contest? What if, as Deval Patrick once said, climate change was not seen as a “necessary evil” for keeping the lights on? What if turning a profit could go hand in hand with restoring the environment?

It will require radically different thinking and a fundamental mindset shift – along with entirely new business models. But it’s possible, and it’s necessary.

Tenets of past and future business models: Traditional business models vs reimagined business models.

Under these new innovative models, businesses will - from their onset - strive to work in concert with the planet. As they build and scale, they’ll carefully consider questions such as: How do we source materials and from whom? What is the impact for the communities we interact with? How are our goods moved and distributed? What are the impacts on human health and on ecological health? What are the end states for our products and physical materials? Who are considered owners or shareholders?

We’re already seeing pioneering businesses implement these reimagined business models. So-called “social entrepreneurs” like Blake Mycoskie of TOMS or Bill Drayton of Ashoka are constructing completely new frameworks for how businesses can and should operate. Companies in our own portfolio - from Atlantic Sea Farms to The Jackfruit Company - similarly embody the modern tenets of vertical integration, supply chain awareness, and regenerative practices, prioritizing not just investors, but employees, communities, and natural ecosystems. 

If we want to move beyond talking about improving our planetary health and toward legitimate action, it starts and stops with business. Though it will require creativity, unlearning, and iteration, we have the ability to develop new ways of doing business that will prioritize both financial returns and environmental stewardship. 

In coming months, keep an eye out for follow-up blogs where we’ll further unpack practical advice for building these new business models, implications for various stakeholders (from investors to entrepreneurs), examples, and more.