A guide to designing and developing more holistic, regenerative and circular businesses.
Between January and June 2021, 340,534 UK-based businesses were launched (approximately 80 every hour) an increase from the 257,243 started over the same time period in 2019. While it's encouraging to see so many fellow entrepreneurs cross the threshold and back their business idea, the last thing we need is more linear and degenerative business models that profit while causing greater problems for people and the planet.
Pizza, Yes. This plastic thing that is chucked away instantly only to contaminate ecosystems for a further 450 years... I'll let you decide.
With that in mind, the purpose of this article is to provide a starting point for entrepreneurs, business leaders, coaches, consultants, start-ups, incumbents and anyone else who finds it useful, a series of templates that will act as a catalyst in supporting you to design the holistic, circular and regenerative business models we desperately need.
The Brutal Facts
Just to check we’re all on the same page, let’s take a brief de-tour to bluntly confront the collision course we're on and the need for transformational change.
Earth’s life support systems are breaking down at a shattering pace and without transformational changes to how we live (and do business) we will deplete our 1.5C carbon budget by approximately 2030. This is a level of warmth incompatible with civilisation as we know it. We're also on track to cross a series of other ecological tipping points. Simply speaking, with business as usual the planet will survive - your business won’t.
If you're struggling to visualise the impact of this, imagine a huge comet flying towards us.
What is a Net Positive Company?
Let’s start with what it’s not. It’s not a company that switches to LED lights, parades plants around the office, uses a carbon tracker overflowing with emojis to ‘engage’ employees or donates the Christmas raffle in-take to a local charity, all the while operating a degenerative and linear business model.
Any business wishing to remain relevant in the 21st century must move beyond a sprinkling of surface level changes ("we're doing our bit" ) towards fundamentally transforming their business models – they must become Net Positive.
A Net Positive company is by design, regenerative and circular, which in laymen's terms means it seeks to: design out waste; keep materials and products in use for as long as possible; and regenerate natural systems (it gives life rather than destroys it). It achieves all of this through its products, services and operations which are designed to improve the wellbeing of people and the planet.
So called business experts have for too long oversimplified the relationship between business and the living world. A classic example is branding the toxification of water ways poisoning local communities and the mental health deterioration of employees as ‘externalities.’ Not only is this illogical, it’s unacceptable in a world facing a smorgasbord of interconnected social and ecological crises.
As Paul Polman and Andrew Winston state in their new book, it’s time for companies to take ownership of all their impacts on people and the planet and internalise their externalities. This canvas aims to support that by raising awareness to the economic, social and environmental impacts of a business model from the offset.
This canvas builds on the work of Osterwalder and Pigneur, who published the original business model canvas (BMC). Although used extensively, it fails to account for the social and environmental impacts of a business model. Recognising this, Joyce and Paquin (2016) developed the Triple Layer Business Model Canvas (TLBMC) which does incorporate the social and environmental impacts of a business model.
I draw on the work of Joyce and Paquin extensively throughout, while adding in a fourth layer and re-framing it as the Net Positive Business Model Canvas in attempt to shift the mindset from playing not to lose (“we’re doing our bit”) towards playing to win (regenerative business).
For each section on the canvas layers, I offer prompt questions, explanations and examples, alongside a brief completed version of Vivobarefoot's model created using the information from their impact report.
Importantly this is primarily a creative design tool, it’s not an impact assessment. I’d recommend complimenting this with free tools, such as the B Impact Assessment, to provide more granular detail on your business impacts.
Finally, to avoid confusion please note the difference between Net Positive companies and Net Zero emissions (see image). Net Zero refers to the balance between emissions produced and removed from the atmosphere. Net Positive accounts for the entire business model and its impacts on people and the planet (including emissions). While prioritising your impacts is crucial, a tunnel vision focus is a grave mistake. Oversimplifying complex systems led us here.
Sourced from LinkedIn - creator unknown
The Net Positive Business Model Canvas
For those already familiar with the original business model canvas developed by Osterwalder and Pigneur (2010), the economic layer remains the same. Since its publication over a decade ago, it has been widely adopted highlighting its value in helping business leaders understand, communicate, and develop their business model. However, as established, business leaders must embrace a more holistic view of their impacts which cannot be facilitated by the economic layer alone.
If you’re seeking a deeper understanding of the economic layer, click here to see a short video which explains it further.
The purpose of this layer is to raise your awareness of the positive and negative environmental impacts of your business model and to guide you in making changes accordingly.
Embedded within this layer are the key components of a life cycle assessment (production – use - end-of-use), which allow you to take a broader perspective as opposed to focussing on isolated parts as well as moving you towards developing a more circular business model.
What is the primary product or service offered by your company?
Establishing this provides a clear focus for examining the environmental impacts. Of course, many companies sell more than one product or service, but focus on your primary offer first.
What materials are used in delivering your functional value?
Although the original BMC considers resources, the emphasis here is on the renewable and non-renewable materials currently required to create the functional value.
The materials used in delivering your functional value may be more obvious to a product-based business than to a service provider. For example, a coffee shop would consider where they get their beans from, what materials they use to serve their drinks in, etc.
If you provide a service, consider materials such as IT equipment, clothing and other physical materials required to deliver your service.
In all instances, think about where you source these materials from, are they natural materials, can they be re-used, are they coming from a recycled source, etc. To get started focus on the main materials which you think have the largest environmental impact.
What are the environmental impacts from producing your functional value?
This section is an extension of the ‘activities’ part in the original BMC but with a focus on the environmental impact of the key actions taken to create the functional value.
In the instance of a product-based company, focus on the impact of transforming materials into products (e.g., for a coffee shop, how much water and energy is consumed in turning the beans into coffee). For service providers think about the amount of energy consumed to run your IT equipment.
Again, to get started, focus on the core activities which you think have largest environmental impact.
Supplies & Out-Sourcing
Who is in your value chain and what is their environmental impact?
This area represents all other materials and production activities necessary to the functional value but not core to the company. Continuing with the example of a coffee shop, in this section they would note down where they source their beans from, cleaning chemicals, cutlery and so on. Generally, the sourcing of water and energy would fall in here for most service and product-based companies.
How do you get your product or service to the end-user? How do employees travel?
Consider distance travelled, mode of transport, the weight of what’s travelling and the company you travel with or use to distribute your products. If applicable, consider the materials used to package your products (e.g., single-use plastic, recycled paper, etc.).
What are the environmental impacts when your product or service is used?
Think about areas such as energy, water and biodiversity. You may be wondering, why does a company need to take into account its use-phase impact?
Two main reasons, firstly a Net Positive company takes ownership of all its impacts across the entire life cycle.
Secondly, understanding the impact of your product or service in the use-phase can reveal unintended consequences. For instance, many sports teams are cheering about the fact their kit is now made from recycled plastic bottles which sounds great when you only consider the materials and how it's produced. However, from a full lifecycle perspective, it’s hard to ignore the thousands of microplastic fibres re-polluting the ecosystem when the garment is washed – creating an even greater problem for people and the natural environment.
A Scottish Rugby Store located in the home of COP26, promoting their new sponsor (Peter Vardy - Car Dealers) and 'eco fabric' shirts.
What happens to your product once people are finished using it? What happens to the materials used in your service? What more could you do with these materials?
Think about who you could partner with to extend the use of your products / materials? What actions do you need to take in the other sections to allow for your business model to be more circular? Elvis and Kresse are a great example of this – they use retired fire hosing to create luxury accessories.
For a service-based business, think about how you could extend the use of the products and materials you use in delivering your functional value? For example, if you need to update your IT equipment, could you donate your current equipment to a company that re-purpose the materials? Could you buy up-cycled equipment? Do you need to buy this equipment, or could you lease it?
Negative Environmental Impacts
After going through each section, what are the negative environmental impacts your business model on areas such as biodiversity, water, emissions, plastic pollution, etc?
Positive Environmental Impacts
Where is your product or service regenerating the natural environment?
This section may be blank to begin with, but the fact you are aware is crucial. The original TLBMC allows businesses to celebrate where they’ve had a reduced environmental impact (e.g., 50% reduction in single-use plastic).
I disagree with this approach, it encourages incremental change and winning slowly is the same as losing in the breakdown of our life supporting ecological systems. Only celebrate the good, not the less bad.
The aim of the social layer is to help you develop a business model that, by design, improves the wellbeing of people across your business. At the heart of this layer is the stakeholder approach to business model design and management.
Simply speaking, how does your company benefit its stakeholders and society at large?
For instance, a company selling e-bikes may claim they are helping to improve physical and mental wellbeing of people by encouraging a broader range of individuals to take up cycling.
How does your company impact your employees physically, mentally, financially, socially and professionally?
There are multiple factors you could consider here, such as the diversity of your staff (e.g., gender, ethnicity, sexuality and education), pay, professional development, happiness at work, etc.
What is your legal structure (non-profit, community interest company, limited company, etc), how do you engage and communicate with stakeholders? Is your organisation structured internally as a hierarchy or more of a team of teams model? How do you promote transparency within the company and to the outside world?
What are the social, economic and environmental impacts of your value proposition in the communities you touch?
For example, an e-bike company may contribute to increased physical activity among the communities that use their bikes (social) and improve local air quality (environmental), while also creating employment opportunities where the bike is produced and through partnering with bike-repair shops (economic).
On the other hand, the company may discharge toxic chemicals from the production of its bikes into the local atmosphere and waterways, creating a negative impact in that community. Or may not have a plan to deal with the batteries post-use.
While technically speaking this is the social layer, the reality is more complex so there’s no need to over compartmentalise impacts. Go as broad as you want.
How does your business impact society as a whole? Do your values and purpose drive us towards a more equitable world?
For example, Facebook could claim to foster a culture of connectedness by facilitating communication between people across the globe through its platform. On the flip side, their algorithms have been heavily linked to deteriorating mental health, particularly among teenagers, as well as driving polarisation across multiple issues. Therefore, in a company aiming to become part of the solution and thrive by giving more than it takes, this would need to be addressed.
At Sustainable Pathways, we’re building a global collective of independent professionals because we believe bound by trust and a common cause, we go further and faster together. Through this model we could argue we're promoting a societal and business culture of thinking abundantly and collaboratively, over a scarcity mindset.
Scale of Outreach
What is the quality and scope of the relationships your company has with individuals, companies, and communities it encounters?
For instance, a small coffee shop will touch the lives of people in the community it operates in, but it will also have an impact on coffee bean farmers. Simply having an awareness of these relationships is a good place to start to help you consider what actions you could take to improve the wellbeing of a range of stakeholders, not just those you have direct contact with.
How does your company’s value proposition improve the wellbeing of the person/s who use it?
Again, an e-bike could help to re-engage people who have traditionally not cycled, in turn improving their overall physical and mental health. Likewise, a personal development coach may benefit their clients by helping them overcome the limiting beliefs that were previously holding them back from making positive changes to their life.
Negative Social Impacts
Summarise the negative social impacts of your business model across your value chain and for all stakeholders.
Positive Social Impacts
Summarise the positive social impacts of your business model across your value chain and for all stakeholders.
"The Engine in your Heart"
Knowing why you exist and what you believe in is crucial, it will drive you when your backs against the wall and should be reflected in your decision-making. Being able to express your values and purpose will also improve your ability to attract, engage and maintain relationships with your stakeholders.
Why does your company exist?
This should be a future statement or vision that does not exist yet, but one you will commit your company to build. According to Simon Sinek, a strong purpose or ‘just cause’ is made up of three components:
It’s resilient - it can withstand cultural, technological and political changes
It’s inclusive - anyone can read it and see how they could contribute towards it
It’s service-orientated - the primary aim is to benefit others, not yourself
For example: “We’re in business to save our home planet” (Patagonia)
What are your core beliefs?
These will underpin your actions and the decisions you make. For example:
Humility - we will have confidence in our strengths, while acknowledging we've got more to learn
Authenticity - we will be true to ourselves, others and our principles
Creativity -we will think outside the box, break boundaries and find ways to solve the ‘impossible’
When we say, “its businesses" that need to change we are dehumanising the issue and depleting our sense of agency. Fundamentally, it’s the mindset, behaviour and habits of the people within them that needs to change, and any change process starts with awareness.
At their core these canvases simply intend to raise awareness of the social and environmental impacts of a business model, so people designing, developing and operating them can start making changes.
I’d urge you not to view the development of Net Positive business models as a sacrifice. Like any transformation, we will have to leave things behind but this is also the greatest opportunity for entrepreneurs, leaders, employees – for people – to solve real problems and find a sense of meaning.
This is a call to action to use business as a vehicle to guide us towards a world where everyone thrives in harmony with earths life support systems.
If that’s a world you want to live in then confront the brutal facts, cross the threshold, think now and future, and do what needs to be done.
To download the canvas, click here.
Hawken, P., 2021. Regeneration. 1st ed. Penguin.
Joyce, A. and Paquin, R., 2016. The triple layered business model canvas: A tool to design more sustainable business models. [online] Available at: <https://www.sciencedirect.com/science/article/abs/pii/S0959652616307442> [Accessed 1 January 2022].
Polman, P. and Winston, A., 2021. Net positive - How Courageous Companies Thrive by Giving More Than They Take. 1st ed. Harvard Press.