by Kate Raworth
These pioneering examples are inspiring but they still prompt important questions. For instance, Park 20|20’s buildings are made of recyclable materials – but will they, one day, actually be recycled? Sundrop Farms’ greenhouses are mostly powered by the sun but occasionally rely on a back-up gas boiler on cloudy days: could they still succeed without it?35 If Newlight’s production of plastic from methane were significantly scaled up, might it give rise to unforeseen ecological impacts? Too many village-level solar energy initiatives have, to date, ended up with panels lying out of use and no one to fix them: can that trend be turned around? And can enterprises turning food waste into organic compost earn enough revenue to provide decent jobs, while doing so on the scale required? Nascent technologies and enterprises like these need to be tested and adapted as they go to scale, but they also – crucially – need to be enabled by an economic system that makes them feasible as investments, and that is where the twenty-first-century economist has a key role to play.
In search of the generous economist
Despite the potential of circular manufacturing and regenerative design, today’s pioneering industrial and urban designers face a formidable challenge: working with business, finance and governments that are still trapped within the mindset and metrics of degenerative economic design. Janine Benyus knows the frustrations of this challenge at first hand. While collaborating with a large commercial land developer on designs for renovating the suburb of a major city, she proposed constructing buildings whose biomimetic living walls would sequester carbon dioxide, release oxygen, and filter the surrounding air. The developer’s first response? ‘But why should I provide clean air for the rest of the city?’
It’s an unsurprising question, indicative of the near ubiquitous business mindset that has arisen from the design of contemporary capitalism. And that design is the opposite of generous. It is focused instead on creating just one form of value – financial – for just one interest group: shareholders. While regenerative designers now ask themselves, ‘how many diverse benefits can we layer into this?’, mainstream business still asks itself, ‘how much financial value can we extract from this?’ Of course there may be some overlap of those two ambitions – since being regenerative can sometimes be highly profitable – but if that area of overlap is all that business is interested in pursuing then regenerative design will fall very far short of its potential.
This partial embrace of regenerative design by many mainstream businesses is certainly visible in the way that they have so far put circular economy thinking into practice. Corporate interest in forging ‘circular advantage’ is growing fast, and companies leading the pack have adopted a niche set of circular economy techniques such as: aiming for zero-waste manufacturing; selling services instead of products (like computer printing services instead of printers); and recovering their own-brand goods – ranging from tractors to laptops – for refurbishment and resale. These are excellent strategies for efficient resource reuse and they can be highly profitable too. By recovering and re-manufacturing key component parts used in their products, the construction equipment company Caterpillar has increased gross profit on those product lines by 50% while cutting water and energy use by around 90%.36 That’s impressive (surely they should rename their re-manufacturing division Butterfly?), and many other circular economy corporate initiatives are too, as far as they go.
The trouble is, they just do not go far enough, and there is a clear reason why. Shaped to fit in with existing corporate interests, circular economy strategies to date have typically been: top down, driven by large corporations; in-house, with companies seeking to establish control over their used products; opaque, thanks to patented materials and proprietary technologies; and fragmented into disconnected parts, within and across industries. That is by no means a strong foundation for building a regenerative, let alone distributive, industrial ecosystem. Take one illustration: a growing number of manufacturers are seeking to recover their used products, such as cars and clothing, in order to reclaim and reuse their parts and materials. But with the average Westerner owning more than 10,000 objects made worldwide, such an individualised approach is highly unlikely to succeed, and furthermore it would lead to highly concentrated corporate control over the economy’s material round-flow.37 Here’s the nub of it:
Regenerative industrial design can only be fully realised if it is underpinned by regenerative economic design.
… and that is currently sorely missing. Making it happen calls for rebalancing the roles of the market, the commons and the state. It calls for redefining the purpose of business and the functions of finance. And it calls for metrics that recognise and reward regenerative success. Taking on this redesign task is surely one of the most exciting opportunities for twenty-first-century economists. And – as you would expect in a complex, evolving economy – it is a redesign process that will emerge not from textbook theories, but from the innovative experiments of those who are trying to bring it about.
The circular future is open
The glaring gap between the regenerative potential of the circular economy and its narrow efficiency-focused practice by corporations has inspired the launch of an Open Source Circular Economy (OSCE) movement. Its worldwide network of innovators, designers and activists aims to follow in the footsteps of open-source software by creating the knowledge commons needed to unleash the full potential of circular manufacturing. Why a knowledge commons? Because, as those in the OSCE movement point out, the full regenerative potential of circular production cannot be reached by individual companies seeking to make it happen all within their own factory walls: it is an illogical and unfeasible basis for creating a circular economy.
Like the biomimicry movement launched by Benyus, this movement takes nature as a model to learn from: a seed in soil grows into a tree and decomposes to become soil for new trees – but a single tree cannot make this happen alone. It depends upon a rich and continual interaction of many living cycles, from fungi and insects to rainfall and sunshine, and it is the interaction of all of these that creates the forest’s self-renewing ecosystem. Likewise in industry: if every tractor, refrigerator and laptop manufacturer attempts to recover, refurbish and resell all and only its own-brand products within proprietary cycles of material flow, the system-wide regenerative potential will never be achieved.38
Sam Muirhead, one of the instigators of the Open Source Circular Economy movement, believes that circular manufacturing must ultimately be open source because the principles behind open-source design are the strongest fit for the circular economy’s needs. These principles include: modularity (making products with parts that are easy to assemble, disassemble and rearrange), open standards (designing components to a common shape and size); open source (full information on the composition of materials and how to use them); and open data (documenting the location and availability of materials). In all this, transparency is key. ‘For whoever has the product at the end of its use, the recipe should be open source so anyone can see how to reuse its materials,’ Muirhead told me, and since that open recipe allows anyone to improve or adapt the product to their needs, ‘It means you have a distributed R&D team around the world made up of expert users like local repair shops, customisation specialists, and innovative designers. These principles give rise to a set of circular business models that work not despite being open source but because they are open source.’39
So what’s going round in the emerging open source circular economy? Early pioneers include AXIOM, the open-source video camera for film makers, made by Apertuso (the ‘O’ stands for ‘open’), which uses standardised components so it can be customised, reassembled, and continually reinvented by its user community.40 Look, too, at the fast-evolving OSVehicle – the open-source future of 100% electric cars – whose parts can be quickly assembled to make an airport buggy, a golf cart, or even a smart city car.41
The OSVehicle was developed in Silicon Valley but open-source circular manufacturing is thrivin
g in far more surprising places too. In the Togolese capital of Lomé, architect Sénamé Agbodjinou and colleagues set up Woelab in 2012, a ‘low-high tech’ workshop making its own design of open-source 3D printers using the component parts of defunct computers, printers and scanners that have been dumped in West Africa. ‘We wanted to make our 3D printer from the resources we have at hand – and electronic waste is now practically our primary material available in Africa,’ says Agbodjinou. The project is exploring the most useful local applications for 3D printing. ‘Doctors have told us that when a little piece of equipment breaks, it takes at least two months for the replacement parts to come from Europe or the United States,’ he explains. ‘With this technology – if we can master it – we can create these parts, repair the equipment faster, and perhaps help to save a life.’42
These open-source innovations are impressive but still fledgling, and to many the movement may look unfeasibly utopian. So remember the 21-year-old Finnish computer student, Linus Torvalds, who in 1991 was writing the kernel of an open-source operating system – just for a hobby, he said – which quickly morphed into Linux, now the most widely used computer operating system in the world. At the time, Microsoft’s CEO Steve Ballmer called Linux ‘a cancer’, but today even Microsoft has embraced the movement by using Linux in its own products.43 ‘The story of open-source software is a little portal to the future for us,’ Muirhead told me, and he is optimistic. ‘Once you put something in the commons, you can’t take it away,’ he explained, ‘so every single day the knowledge commons grows and becomes more useful. Once people get the idea – and see its circular economy potential – they really want to create solutions for it.’44
That same spirit of building the knowledge commons inspired Janine Benyus to launch the website Asknature.org, which makes the long-held secrets of nature’s materials, structures and processes open-source for all – such as how a gecko clings without glue, how butterflies make pigment-free colours, and how mussels glue themselves to watery rocks. Almost two million users, from high-school design students to research scientists, have learned from and contributed to the site since it began in 2008. Every contribution to its database helps to deter individuals and companies from seeking bogus patents with false claims of novelty on innovations that nature came up with billions of years ago. Benyus’s ultimate aim for Asknature.org, she explained to me, is to keep nature’s genius in the public domain so that life can teach us how to build, feed, travel, power ourselves, and even manufacture in life-enhancing ways. ‘With nature-inspired structural blueprints,’ she said, ‘we can add extraordinary function to the planet’s most ubiquitous polymers such as cellulose, keratin, chitin, and lignin. These are the building blocks for the open-source circular economy.’45
An open-source basis for regenerative design is certainly compelling. But if mainstream business is unlikely to embrace its full potential, what kind of enterprise would be intent on making it work? There are of course many ways to design business, some of them far more regenerative than others, as visionary entrepreneurs have learned the hard way.
Redefining the business of business
‘The social responsibility of business is to increase its profits,’ said Milton Friedman back in 1970 and the mainstream business world willingly believed him.46 But Anita Roddick had a different take on that. In 1976, before the words to say it had been found, she set out to create a business that was socially and environmentally regenerative by design. Opening The Body Shop in the British seaside town of Brighton, she sold natural plant-based cosmetics (never tested on animals) in refillable bottles and recycled boxes (why throw away when you can use again?) while paying a fair price to the communities worldwide that supplied cocoa butter, brazil nut oil and dried herbs. As production expanded, the business began to recycle its wastewater for using in its products, and was an early investor in wind power. Meanwhile, company profits went to The Body Shop Foundation, which gave them to social and environmental causes. In all, a pretty generous enterprise. Roddick’s motivation? ‘I want to work for a company that contributes to and is part of the community,’ she later explained. ‘If I can’t do something for the public good, what the hell am I doing?’47
Such a values-driven mission is what the analyst Marjorie Kelly calls a company’s living purpose – turning on its head the neoliberal script that the business of business is simply business. Roddick proved that business can be far more than that, by embedding benevolent values and a regenerative intent at the company’s birth. ‘We dedicated the Articles of Association and Memoranda – which in England is the legal definition of the purpose of your company – to human rights advocacy and social and environmental change,’ she explained in 2005, ‘so everything the company did had that as its canopy.’48
Today’s most innovative enterprises are inspired by the same idea: that the business of business is to contribute to a thriving world. And the growing family of enterprise structures that are intentionally distributive by design – including cooperatives, not-for-profits, community interest companies, and benefit corporations – can be regenerative by design too.49 By explicitly making a regenerative commitment in their corporate by-laws and enshrining it in their governance, they can safeguard a ‘living purpose’ through times of leadership change and protect it from mission creep. Indeed the most profound act of corporate responsibility for any company today is to rewrite its corporate by-laws, or articles of association, in order to redefine itself with a living purpose, rooted in regenerative and distributive design, and then to live and work by it.
Finance in service to life
A business that is built on a living purpose may have strong foundations, but without a source of finance that is aligned with its values it is unlikely to survive and thrive. Regenerative enterprise needs the support of financial partners seeking to invest long term in generating multiple kinds of value – human, social, ecological, cultural and physical – along with a fair financial return. But current finance culture is still narrowly focused on driving short-term financial value, such as through share buybacks or increasing dividends instead.
Anita Roddick certainly found this out the hard way. When the Body Shop first issued shares in 1986, she quickly encountered the clash between her regenerative-spirited enterprise and the narrow demands of shareholder finance. ‘One of the biggest mistakes I made was to go public and on the stock market,’ she recalled a decade later. ‘I think there’s a fascism attached to financial institutions, which only look at a very unimaginative bottom line. Profit is the law of business: that has to be considered, but not at the expense of human rights, environmental standards and community.’50 Roddick’s frustrations no doubt resonate with many like-minded entrepreneurs. Because whether or not a regenerative enterprise can deliver on its living purpose depends in good part on how it is financed. And the challenge of figuring that out is, of course, another great redesign opportunity waiting for the twenty-first-century economist.
One unlikely financial rethinker who is taking on this design task is John Fullerton, a former managing director at JP Morgan. He walked away from Wall Street in early 2001 on an instinct that something was profoundly wrong with the way it worked and he started reading widely. Gradually, he says, ‘I came to the understanding that the economic system is actually the root cause of the ecological crisis, and that finance is what drives the economic system. So as a twenty-year finance veteran hotshot, I had some rethinking to do.’51 Starting with eight key principles that he believes underpin all complex living systems – including: taking a holistic view of wealth; being in ‘right relationship’; and seeking balance – Fullerton began using them to design what he calls ‘regenerative finance’ with the aim of creating finance that is in service to life.
When finance is in ‘right relationship’ with the whole economy, he explains, it will no longer be driving it, but rather supporting it by turning savings and credit into productive investments that deliver long-term social and environment
al value. That means, first, that the global financial system as we know it needs to shrink, simplify, diversify and deleverage – a transformation that will make it more resilient in the process, rather than ever-prone to speculative bubbles and crashes. Policies for heading in that direction, suggests Fullerton, include: separating customers’ deposit accounts from the speculative activities of securities firms; introducing taxes and regulation that make it unprofitable to be too big, too leveraged and too complex, and a global financial transactions tax to rein in high-frequency trading.52
Reining in short-term, speculative finance is a crucial start, but equally important is replacing it with long-term, investment finance. State-led development banks have an obvious role here in offering ‘patient capital’ for long-horizon investments such as renewable energy technologies and public transport systems. But there is a role, too, for private investors, ranging from the personal saver to institutional investors like pension funds and endowment funds. Community banks, credit unions, and ethical banks may sound like small players but they have taken the lead in this space. Take the Dutch bank Triodos, for example, whose mission – or living purpose – is ‘to make money work for positive social, environmental, and cultural change’, and which has over half a million customers across Europe: savers and investors, entrepreneurs and companies who share those values and aims. Or look to Florida’s First Green Bank, established in the depths of the 2008 recession, which has set out to be ‘a regenerative bank’, and is working with the support of Fullerton and his team at the think tank Capital Institute to explore what it will take to make that happen.53
Finance that is in service to life, however, goes beyond redesigning investment to redesigning currency. Just as a currency’s design – its creation, its character, and its intended use – can be distributive within a community, as we saw in Chapter 5, it can also be regenerative of the living world. The Belgian complementary currency guru, Bernard Lietaer, loves this kind of challenge. ‘Give me a social or environmental problem,’ he once told me, ‘and I will design a currency to solve it.’ One city in his home country took him up on that offer, inviting him to Rabot, a run-down district of Ghent. ‘I was given an impossible task: the worst neighbourhood in all of Flanders,’ he recounted with a twinkle in his eye, as he described the district: densely populated tower blocks housing a diverse and divided community of first-generation immigrants, surrounded by dilapidated public spaces. The challenge? ‘Can we create a nice neighbourhood to live in – where people say hello to each other – and which is “greening”, one of the priorities of the city?’