What is THE REGENERATIVE COMPANY? — An Overview of an Expanding Movement, from its Three Principles to its Business Areas

*This article was originally written in Japanese. The article in Japanese is here.

Companies play major roles as mechanisms for driving society forward and generating innovation. In the face numerous challenges they have encountered throughout their history, such as the increasing disparities and external diseconomies caused by the workings of shareholder capitalism and failures of governance, we are now seeing the emergence of a movement around the world to reconsider the roles of and framework surrounding companies.

The following excerpts are taken from a comprehensive special feature that appeared in WIRED JAPAN aimed at defining the next generation of companies that are seeking to revitalize connections between people, society, ecosystems, and economic systems through economic activities under the Regenerative Company concept and attempting to explore this major new movement as it begins to take off.

What Do We Mean by “Regenerative”?

Before conveying an overall picture of what constitutes a regenerative company, let’s begin by explaining what we mean by the word regenerative. This word is often used in contrast to word sustainable.

In an ecological context, sustainable refers to the idea of minimizing the environmental impact or burden of an activity so that the activity can be maintained indefinitely without damaging the environment. The concept of sustainable development was originally proposed in 1987 at the UN’s World Commission on Environment and Development, and this term has been adopted with increasing frequency in discussions about the conservation of the natural environment and corporate social responsibility in the decades since.

While the word sustainable is used in the context of achieving continuity and viability, or in other words, sustainability, the word regenerative is tied to the idea of restoring the natural environment’s inherent generative capacity, thereby leading to revitalization or regeneration.

The word regenerative has been attracting considerable attention in recent years, particularly in connection with initiatives such as regenerative agriculture, but at WIRED JAPAN, we have redefined regenerative by giving it the connotation of “re-establishing generative capacity.”

So, what kind of companies or organizations ae capable of achieving such a regenerative state? In order to define the new category of “regenerative companies,” WIRED JAPAN has organized a series of workshops in collaboration with a diverse group of 12 advisors, and summarized the findings from this endeavor into the following three principles.

The Three Principles of Regenerative Companies

Regenerative companies are supported by three principles: (1) they circulate profits to diverse stakeholders including those that have been overlooked in the past, (2) they generate diverse forms of capital beyond purely economic capital, and (3) they seek to reshape complex systems themselves. Going back to the origin of the word company, which derives from the Latin words for together and bread, implying people who meet and eat bread together, we also consider the term company to include legal entities, projects, and protocols as well as corporations.

１．MULTI-STAKEHOLDER
Positively influencing “unrepresented” stakeholders

Future generations, non-human species, and various kinds of natural capital such as rivers and forests have no voice. In future, business activities will need to recognize the existence of these “overlooked” stakeholders and design incentives that positively impact them. In doing so, it will be important to return profits and value to the ecosystem and the community that surround the company through new mechanisms of governance and ownership.

２．PLURAL CAPITAL
Generating and measuring the value of multidimensional capital

These days, it is generally recognized that the various forms of capital do not exist independently of each other, but on the contrary are intricately intertwined. It is no longer sufficient simply to maximize economic capital. Companies also need to redefine the connections between the human, intellectual, physical, natural, and social capital generated by their business activities and to enrich all these kinds of capital. The role of companies in the future will be to actively re-evaluate various forms of capital that have been overlooked so far, and to demonstrate their value to society.

３．SYSTEM CHANGE
Intervening in and repairing complex systems

If the challenges confronting society today stem from the workings of the economic system itself, then pursuing sustainability and resilience, or trying to make up for the deficiencies of the system through philanthropy by using economic capital acquired under the rules of capitalism, will at best only help to prolong the life of the system. What is needed now is to intervene in the system itself and reform it. Because ecosystems and communities are sustained by complex supporting systems, it is important to identify the points of intervention and the underlying issues.

The three principles described above are also summarized in the following diagram.

Stakeholders (Principle 1), include future generations and multiple species, while capital (Principle 2), is generated through activities. When considering how unified or multidimensional a given company may be, regenerative companies are characterized by their being more multidimensional than conventional companies along both the Multi-Stakeholder and Plural Capital axes. In order for a conventional company to shift in the direction of becoming a regenerative company, it is essential for it to undergo the sort of system change outlined in Principle 3. In other words, a regenerative company could be described as an entity that is closer to being a complex and multidimensional “ecosystem.”

The Three Business Areas

Based on the three principles outlined above, WIRED JAPAN VOL.49 lists 50 companies in the following three categories (Click here for the online version).

NEIGHBORHOOD
Regenerating the structure of “connections” and “society”
There is an urgent need to restore the weakened connections between people and rebuild local infrastructures that are currently in danger of vanishing. Next-generation companies are working to enrich the local commons and to build and revitalize new social systems.

ECOSYSTEM
Regenerating “ecological” cycles
In order to overcome the climate crisis, the complex supply chains surrounding food, clothing, and shelter must be restructured and regenerated through the use of deep tech to benefit the Earth. Next-generation companies will balance the restoration of soil and marine ecosystems with proposals for new lifestyles and culture.

COORDINATION
Revitalizing the systems of “work” and “money”
Intervening in complex ecosystems and social systems requires models of corporate ownership, governance, and financing that are appropriate for business. Next-generation companies will support regenerative shifts in society and business and enrich the ecosystem.

The 12 Diverse Advisors

The definition and the selection list of regenerative companies in this special issue were compiled by WIRED JAPAN following a workshop attended by a diverse group of 12 advisors. The list of advisors was as follows.

• Yuki Uchida, urban designer
• Atsushi Hayashi, Founder and Representative Director, Next Commons Lab
• Taka Nakamura, Founder and CEO, taliki Inc./Representative Partner, taliki fund
• Tatsuyoshi Saijo, Specially Appointed Professor, Kyoto University of Advanced Science
• Sachiko Shikata, curator/President, AICA (International Association of Art Critics) Japan
• Itsuki Tsukui, science fiction author
• Akihiko Nagata, Chairman, Real Tech Holdings, Ltd./Chairman, Real Tech Fund
• Arisa Kamada, Co-founder and Co-Representative Director, UNISTEPS
• Miwa Seki, General Partner, MPower Partners
• Kenji Saito, Professor, Graduate School of Business Administration, Waseda University
• Aya Miyaguchi, Executive Director, Ethereum Foundation
• Kento Kajitani, Representative, POSTS

An Award to Recognize Next-Generation Companies that Will Regenerate the Future

With the aim of further expanding the Regenerative Company movement, which is linked to the abovementioned three principles and three categories, in conjunction with its new special feature issue, WIRED JAPAN is launching THE REGENERATIVE COMPANY AWARD, which will recognize companies that are working together to create the future. Details of the application requirements, the selection criteria, and the selection committee members will be announced in an update to this article and also on the WIRED JAPAN website WIRED.jp.

（Illustrations by Jentwo, edit by Kotaro Okada, translation by Tim Groves）

*The Japanese version is here.

In the face numerous challenges such as the increasing disparities and external diseconomies caused by the workings of shareholder capitalism and failures of governance, we are now seeing the emergence of a movement around the world to reconsider the roles of and framework surrounding companies. This comprehensive special issue defines regenerative companies as companies that are rebuilding the future, and captures the major movement that is beginning to take shape! Click here for details.