Growth, Sustainability 25 January 2022
Towards a Regenerative Economy: Taking Regenerative Agriculture one step further
Continuing our series on the future of value generation, this article explores the way regenerative practices can be understood to feed economic activity that serves long-term sustainability, with better outcomes for both humankind and the planet.
9 minute read
Created in collaboration with The Red Flower Factory.
We as humanity are faced with an existential crisis in the form of climate change. At Sevendots, we look to the future of the CPG industry – but it’s hard to see a future without acknowledgement of this crisis. While there are different ways to approach sustainability, many are looking back at the basic building blocks of human consumption: the land itself. As a result, ‘Regenerative agriculture’ has started to take root in the strategies of the big CPG players. But what is regenerative agriculture, and what role does it play in furthering a more positive future for mankind?
In our recent piece, The Future of Value Generation, we introduced a series of alternative economic frameworks. To achieve one of these potential outcomes – the regenerative economy – a link must be drawn between current efforts to practically improve regeneration in our soil, and the way we start to measure and understand our economic activity more broadly.
In this article, we discuss:
- What is Regenerative Agriculture?
- What are the limits of Regenerative Agriculture?
- What are companies doing already?
- What are consumers saying already?
- An introduction to the Regenerative Economy
- Where does CPG go from here?
- Our final thoughts on regenerative economies
What is Regenerative Agriculture?
We’ve talked before about the difficulties in communication when it comes to sustainability, particularly in our Growth Series report. The phrase ‘regenerative agriculture’ is no less complex. While companies begin to adopt this phrase, there isn’t widespread agreement on a definition of what constitutes a really regenerative practice. In many cases, ideas are blurred with earlier interest in ‘organic farming’, which constitutes a different set of criteria. For the purposes of this article, we take the following as our understanding of the difference between these terms:
Agricultural system that uses ecologically based pest controls and biological fertilizers. These are derived largely from animal and plant wastes and nitrogen-fixing cover crops, reducing negative implications for the environment and personal health.
A conservation and rehabilitation approach to food and farming systems. This focuses on topsoil regeneration, favoring biodiversity, improving the water cycle, increasing resilience in the climate crisis, and strengthening the health and vitality of farm soil.
What are the limits of Regenerative Agriculture?
Speaking with 3LM Co-Founder Sheila Cooke, it has become clear that committing to Regenerative Agriculture demands less of a focus on achieving a clear definition for the term. Instead, measuring outcomes is vital – it’s not ‘what do we do’ but rather ‘what outcome have we achieved’. She says, “There’s loads of ways you can do [regenerative agricultural practices], and it will vary from farmer to farmer, land base to land base, country to country.” Committing to a holistic understanding of land management is more important, particularly as regards regenerating soil. “[With] healthy soil taking care of the plants, the plants will be healthy, and those plants that feed animals like livestock, those livestock will be healthy… the humans [that eat them] will be healthy too.”
A holistic understanding of the land and its management becomes the cornerstone of a truly regenerative approach to cultivation. “To really analyze it, we break it down into four processes,” she says. Namely, natural systems within the biosphere: the water cycle, nutrient flow, energy flow (“How effective are the plants on that land base at converting sunlight into plant biomass?”) and community dynamics. Environmental health becomes essential for human health, and takes into consideration the whole life cycle of production.
3LM are just one hub offering a methodology for measuring outcomes, “through the lens of the Ecological Health Index, which is a scorecard that’s global, but adapted to the local eco region.” By helping farmers compare with others in their region, determine a score, and acquire the ‘Land to Market’ label, they start to understand how best to go about regenerating soil. Brands can be assured that their supply chain adheres to particular standards.
However, one of the big barriers remains the willingness to really get to grips with a holistic assessment of the supply chain behind a particular product – it can be difficult to both understand and then communicate what actual “regeneration” is being implemented by a brand. On this, Cooke says, “What we’re looking at are the dynamics of all life – plants and animals. We’re continually changing. And are we adapting? Do we have complexity? Because the greater the complexity in a habitat in both plants and animals, the greater the ability to adapt to climate change [and] to every erratic thing that is going to come along.”
What are companies doing already?
Large CPG corporations have picked up a version of ‘regenerative agriculture’ and have been launching campaigns for positive impact at scale. Having understood that much of their negative impact is rooted in the agricultural practices of their supply chain, Nestlé recently committed to improving soil health and fertility as well as restoring natural resources such as water and fostering biodiversity. They have understood regeneration as going ‘beyond doing no harm’ (see this article).
Kieren Conroy, Nestle Ireland Country Manager said:
At Nestlé, regeneration is all about developing and putting in place systems, from farm to table, that restore, replenish and flourish and have a positive impact, locally and globally… this will require radical action across our whole value chain, from switching to renewable energy in our factories and offices, to looking for new innovative packaging solutions for our products, to working with our suppliers and farmers on future proofing our food system.
Similarly, Unilever has announced – ahead of last year’s COP26 climate change conference in Glasgow – its aim to implement 50 regenerative agriculture projects across its global supply chain by 2026. The projects range from introducing water-preserving farming techniques to improving soil health and increasing climate resiliency in the US, Spain or France. Likewise, PepsiCo has announced plans to expand regenerative agriculture practices to seven million acres of farmland which would roughly equal all land needed to grow the ingredients for many of the corporation’s products.
While larger corporations are starting to align their efforts with regenerative agriculture practices, many startups already have regeneration at their core: Brazilian startup RizomaAgro, for example, is developing farming systems that are built on crop rotation and agroforestry, building towards improved soil carbon sequestration. Other startups, including US-based Underground Agriculture, develop the tools required for continuous regenerative practices, such as seeding and cultivation tools (e.g., a roller-crimper for no-till farming, a duo seeder for dual crop seeding, and a row tillage tool for weed control), to support farmers.
What are consumers saying already?
With the increasing proliferation of regenerative agriculture projects and declarations by large corporations and startups in both practice and communication, there is also the potential for growing awareness from consumers. Although awareness of these topics is still relatively low as of early 2021 (14% British consumers, May 2021), it will likely be driven upwards by concerns for one’s own health and the planet.
To reduce their environmental impact and increase the safety of their products, more than 60% of consumers are willing to change their shopping habits and pay a premium for brands that invest in new practices. As consumers are demanding a new regenerative standard from their consumption, it becomes evident that the trend needs to be backed up by collective industry action or government mandates, to avoid consumers paying a premium for too long, and to support business transition into regenerative practices. The European Green Deal, for example, already aims to “transform the EU into a modern, resource-efficient and competitive economy” and achieve significant carbon emissions reductions, through emissions trading schemes, stronger regulations, particularly in Land Use, Forestry and Agriculture, as well as the setting aside of social funds (see the factsheet here). More such efforts will be required to support consumer choices.
Introducing the Regenerative Economy
In our last piece on the future of value generation for the CPG industry, we discussed the need to start to understand and implement different kinds of economic activity. We introduced the concept of the regenerative economy, stating:
The Regenerative Economy is based on products and services that not only have zero impact, but that provide a positive impact – the aim for this kind of economy is not to simply remove harm but to improve the current situation.
As such, regenerating the environment becomes the next goal. This goes beyond the notion of a circular economy, taking regeneration from a singular aim that applies in a specific land base, into a holistic understanding of economic activity more generally – by using the principles of regenerative practice, and moving towards regeneration more broadly.
Where does CPG go from here?
Education and legislation
Cooke is a believer that both corporations and consumers bear responsibility in equal measure for how we move forward: “Let’s reward corporations for taking one step in the right direction, instead of punishing them for making other mistakes. We all have to start somewhere. And corporations – they’re us.” By facilitating consumer decision making, brands and individuals can unite towards shared goals. A combination of legislative action (such as the European Green Deal sets out to achieve) and education for consumers, is equally important for achieving a regenerative economy.
In particular, younger consumers routinely list sustainability as a key concern. However, concern only takes us so far – making the right decisions is complex. “We all need the educating, including young people,” Cooke says, “A lot of young people are making mistakes.” But the effort touches all generations: “If I could wave a magic wand over planet earth today, I would have a lot more people raising their own food, growing their own fiber, making their own stuff, having a lot less stuff, than having it be quality.” Supporting consumer understanding when it comes to making more positive choices and evolving the way we consume will help shift demand.
A key consideration when it comes to formulating the next actions on regenerative agriculture concerns scale. The major players in the industry can have a strong influence within a reasonable timeframe. Nestle has gone on to say, “We are committed to advancing regenerative food systems at scale – collaborating with our suppliers and farmers to implement more regenerative practices.” Scale is an important differentiating factor for the big players, who are able to lead the way in creating impact swiftly.
In Russ Conser’s recent Forbes article, he also highlighted the role of entrepreneurs in technology and innovation to help achieve scalable solutions: “In regenerative agriculture, the role of new technology isn’t to replace or fight nature, but to understand and help her.” This extends also to the business models that support this kind of innovation: “Novel business models will be required to get more and different products to more people and places along different supply pathways.” Adaptive innovation must come from within the industry itself.
Redefining the supply chain
On the supply chain, Cooke encourages brands to start examining just one ingredient at a time, to go deep into the production process of this ingredient in order to create a better whole product at the end. “They’ll learn so much through that one ingredient. And then another and another… holistic management would be a way that any corporation [can be] authentic in what they’re doing”
Reconsidering mission and ambition
We need to move from making profits to distribute to shareholders and management (“at any cost”) towards making positive contributions across multiple stakeholders, which includes shareholders, employees, citizens, societies, and the environment. Here is where the collaboration between businesses and governments is key, and while consumers expect business to step in and fill the gap in leadership from respective governments, there is a need for more action being driven from beyond the industry itself.
While stating your mission and defining your Purpose as a business has never been more important, there is a larger need for us to make different choices as a species more broadly. Cooke suggests company-driven empowerment of young people: “How could [companies] help young people make their mark on the world without damaging its ecosystem? Is there a way? That would be a really brilliant question to ask and figure out how to help young people do it.” There is scope to help turn each of us from prioritising only individual success, towards community-minded and consensus-driven values.
Our final thoughts on regenerative economics
We must move further along the continuum that has started some time ago – instead of concentrating on minimizing the negatives or the harms that consumption generates, we must move instead towards always maximizing positives for all living systems. Within sustainability drivers, we’ve already moved from reducing greenhouse gas emissions and fossil fuel use, to reaching net zero, and now working towards positive CO2 emissions.
Part of this challenge will be about redefining economic activity and defining new forms of capital – initiatives such as the European Green Deal already aims to decouple economic growth from resource use.
While Nominal GDP has grown by 30 times in the last 50 years, Real GDP has only grown less than 1% per year – and yet GDP remains the universally accepted measure of growth. We have seen the impacts of economic growth at the expense of environmental outcomes – we’ve gone from equilibrium to consuming twice the earth’s resources, compared to what is being regenerated. A new economy is required.
Disrupting the connection between growth and destructive change is a step in the right direction. The regenerative economy will require us to ensure growth in wellbeing is not at the expense of the environment or the less advantaged portions of society, but rather improves both our social and environmental situation, as well as our entire economic system.
By moving beyond ‘organic’ and towards regenerative systems, we begin this process of truly sustainable development that goes beyond the short-term. Specificity is important: rather than making generic statements on the importance of regeneration and a healthy economy, we need to understand, ingredient by ingredient and from a holistic land management perspective, exactly what outcomes are intended to achieve a regenerative economy. Authenticity, which remains important (particularly to younger consumers), demands transparency and credibility. It will require more than just talk.