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Regenerative business

In order for restoration of degraded lands around the world to accelerate, we need the power of business to transform toward more regenerative business cases and business models. This chapter brings lessons learned from several 4 Returns businesses.

 

In this chapter

  • Regenerative businesses have the power to transform economic activity towards restoring the land.
  • Business strategies for landscape restoration include analysing farm business models, collective bargaining, vertical value chain integration, value addition, and creating markets for regenerative products.
  • The main steps to setting up a 4 Returns business include mapping existing businesses and value chains in the landscape, identifying needs and opportunities not met by current market dynamics, exploring historical economic trends for insights, developing a business idea focusing on solving mapped challenges, and scaling up.
  • Lessons learned include: start small and ensure the business model works before scaling; validate assumptions; consider branding and marketing strategies; and the importance of flexibility, quality, landscape partnerships, and co-innovation networks.

Regenerative business is a catalyst

Long-term grant funding is vital for kickstarting landscape restoration. However, only limited private (philanthropic) and public (government) funds are available, and they cannot sustain restoration projects indefinitely. To accelerate the transition and create long-lasting outcomes, attractive regenerative business cases are needed to mobilise investment, enable sustainable financing, and support the work. A successful regenerative business can contribute to all 4 Returns: inspiration, social, natural, and financial.

Our current economic system does not serve the regeneration so desperately needed for our landscapes, communities, and planet to thrive. As a regenerative business, you are part of a movement that is building a new system that we call the regenerative economy. Rather than extracting from the land and each other, this approach emphasises producing, consuming, and redistributing resources in harmony with the planet. To learn more about what this means, and how you can contribute to this new system as a regenerative business, we recommend this report from Circle Economy.

Regenerative businesses can be found in a variety of sectors – regenerative agriculture, agroforestry, real estate, tourism, carbon, and water services – to name a few. On a wider scale, regenerative business transforms economic activity, so the economy itself turns from degrading land to restoring it.

Setting up a 4 Returns business

In this section, we delve into the steps of regenerative business development, drawing insights from the experiences of others who have ventured into 4 Returns business development. While not exhaustive, the guide focuses on aspects specific to the 4 Returns context, providing practical guidance for navigating the complexities of creating businesses that generate returns for nature, society, economy, and inspiration.

Map businesses and value chains

The first step is mapping existing businesses and value chains in the landscape. This helps identify allies, opportunities for collaboration, and gaps and needs. Look at the business activities taking place across your landscape. Map them by sector and activity. Are there natural allies for landscape restoration?

Spot a need that is not being filled by the market or find an existing business that can be altered to fulfil the 4 Returns. Value chains connected to farms are worth looking into – especially to detect business challenges that can be overcome. Other sectors to explore include tourism, logging, and PES schemes, such as water provision or carbon credits.

We also recommend investigating the history of how the economy in the landscape developed; this can deliver valuable insights into what markets and drivers have influenced the landscape.

Many strategies can release revenue from landscape restoration. The following are examples currently used in 4 Returns landscapes across the world.

  • Farm business model Work with farmers to analyse the farm as a business. Regenerative agriculture can save costs, increase productivity, and diversify income – improving the farm’s business model.
  • Collective bargaining Individual farmers often have little bargaining power compared with the buyers of their products. Support farmers to organise to arrange better terms so they can invest in rehabilitation.
  • Vertical value chain integration. In most agricultural value chains, only a small fraction of the price a consumer pays ends up with the farmer. By shortening the route to the consumer, additional revenue can be generated for the farmer. This is known as vertical value chain integration. It cuts out middle actors.
  • Value addition Another strategy is to add value to raw materials through processing or packaging them. More of the ultimate retail value is then captured for the farmer or producer.
  • Creating markets Smart ways of packaging and selling products – such as teas or botanical extracts from agroforestry – can create demand for regenerative products. There currently is no market for a lot of regeneratively produced products. If consumers can be convinced to pay a premium for regenerative products over conventional products this can also create financial incentives to regenerate the landscape. Read more about this in the story ‘Entrepreneurs accelerate the transition’ by Willemijn de Iongh.

To generate revenue, many of the principles of good practice in regular business apply. What sets our mission apart is landscape restoration and the purpose-driven heart of the 4 Returns.

Develop a business idea

This initial scoping prepares you for coming up with a business idea. Address one or more of the challenges that have been mapped, reducing the negative impact, and increasing the positive impact. Simpler is better. Generally, the less you must change, the greater the chance of success. Useful design and workshop tools for this step are the innovation test and prototype toolkit and the business model innovation grid.

"Don’t set up a new business, improve an existing one!"

Gijs Boers, founder & CEO of Grounded

Validate your assumptions

Look closely at the idea you have developed. What assumptions have you made that are critical to its success? In this step, you’ll research the real-world situation underpinning these assumptions. Validate the assumptions underlying your assessment of:

  • The problem
  • The product
  • The market
  • The willingness to pay

Find more information on these steps in the Lean Validation Playbook. If your idea involves regenerative agriculture or landscape restoration, this article in SER (Society for Ecological Restoration) News can be a useful resource to show the validity of investing in ecosystem restoration.

Start building the business model

A business model canvas can help you turn your business idea into a business model. The 4 Returns landscape business model canvas helps you do this in the context of a landscape vision. It has two layers:

  • A landscape layer to zoom out and see the needs and opportunities of the landscape
  • A business layer to zoom into your business to focus on its core, with the landscape vision in mind.

You don’t need to fill in all boxes of the canvas layers at once but seeing these together may help ‘put the puzzle together’.

From your business model canvas, identify the skills and resources you need, and which are still missing in your business. Think about a strategy to fill these gaps. One way to add skills and resources is to find key partners to work with. Map and stay aware of the business cases of your partners (farmers, processors, investors). How can you be of value to them?

The 4 Returns Business Model Canvas allows you to see your business in a landscape perspective, without losing focus on optimising your business model

Get started and make it work

Start small and create good quality. Make the business work, before scaling it up. After launch, making the business work is often the most difficult phase. 90% of start-ups fail. Steer away from high capital investments and lease existing capital, such as processing machinery, if needed. Grow organically with your supply and demand. Read more about focusing on making the business work here.

Making a business work starts with a good idea but depends on the people doing the hard work. Having the right people on the team makes or breaks the business.

The EntreComp framework by the European Commission offers a comprehensive description of the knowledge, skills, and attitudes that people need to be entrepreneurial and create financial, cultural, or social value for others.

The MOOC, Entrepreneurial competencies for landscape restoration, by RSM and Commonland will help you to become an entrepreneurial professional by developing and cultivating an entrepreneurial mindset yourself.

Scaling up

How and when to scale are issues that we won’t explore further here. The essential point is that only where revenue streams are proven, you should consider scaling.

The regenerative story is powerful, and consumers connect with it. It means businesses can sometimes achieve product price premiums which provide an incentive for farmers to join and position their products in a different market.

Create your brand to set you apart from the competition. Marketing needs to address two pillars: the quality of the product itself, and the impact the product has on the consumer (making it desirable) and on the producer (showing it is a responsible product).

"I learn a lot from Wilder Land because they really take it step by step."

Jan Maarten Dros, Programme coordinator ‘Sustainable Income’ at Wij.land

In many of these steps, from problem discovery to strategy to business model validation, the innovation tools by the Board of Innovation may be useful.

Lessons learned from 4 Returns businesses

A group of 4 Returns implementing organisations (AlVelAl, Wij.land, Wide Open Agriculture, Living Lands and Grounded) went on a collective learning journey in 2021 to explore what they have learned in seven years of business development taking the 4 Returns approach. Find below their main lessons learned. To dive deeper, here are five stories by Commonland’s Willemijn de Iongh that capture the topics discussed in more detail.

  • It can be much easier to improve existing businesses – which already have clientele, suppliers, a skilled team, an office, licences, bank accounts, and more – than to set up new ones from scratch. Learn more about this here.
  • Don’t overextend. Setting up a business or changing a business involves a lot of assumptions. Start by validating those assumptions at a small scale first; it is much easier to adapt based on the lessons you learn and much cheaper should things go wrong.
  • Stay flexible because circumstances change all the time. You need to be wary of these changes and adapt to them.
  • Never forsake quality; customers will not come back, even if you have a great impact story, if you don’t have the quality to back it up.
  • Be part of a landscape partnership. Making money is not the sole purpose of a 4 Returns business, but those businesses must be viable. That’s why many 4 Returns businesses operate inside a landscape partnership where each organisation works from its strength towards a common vision. In a landscape partnership, other organisations can absorb the costs of, for example, broad stakeholder engagement or physical restoration work, with businesses left to focus on 4 Returns actions that can turn a profit. Remember – an unviable 4 Returns business makes no impact.
  • It can also be interesting to join an entrepreneurial co-innovation network. Wij.land and AlVelAl, for instance, have set up self-propelling co-innovation networks of business partners who develop regenerative businesses. Read about the lessons learned about co-innovation networks in landscapes in this story.

Wrap-up

Regenerative business has the potential to catalyse the transformation of a landscape. Setting up a business, and making it work in competitive markets and value chains, is not easy. But it is an unmissable part of a holistic transformation and contributes to a regenerative economy.

Landscape story: the first stock listed 4 Returns business

Wide Open Agriculture partnered with Commonland in 2015 to develop and deliver on the 4 Returns for Southwest Australia. It became the world’s first globally listed company that uses the 4 Returns framework, with a market capitalisation of €26 million as of February 2024. It is now Western Australia’s leading regenerative food and agriculture company. In 2019 it launched its commercial food brand, Dirty Clean Food, to build a new channel for consumers to support regenerative farming. It successfully disrupted the food and agriculture market in Western Australia and is expanding its reach globally.

A key learning for both Wide Open Agriculture and Commonland has been that regenerative businesses are just part of the 4 Returns journey. Since 2018, the network of 4 Returns partners in Southwest Australia has grown to include indigenous organisations, conservation entities, universities, and social impact initiatives, that, alongside Wide Open Agriculture, share a vision for the landscape. The shared vision for this landscape partnership includes putting people and land first when it comes to economic development.

This network of partners approach allows Wide Open Agriculture to focus on its key business goal of becoming financially viable, while its social and environmental impact adds value and differentiates it from the competition. Learn more about WOA on its website.

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