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12.16.2019

A Regenerative Economy and the Future of Business

Batch 64 - Insights - Article - A Regenerative Economy and the Future of Business

by John-Paul Maxfield and Aron Rosentahl

What most people don’t know about Batch 64 is that it is owned by the regenerative holding and operating company called Waste Farmers. I’d like to share a story about how we came to be, the purpose behind the company, and why we believe it can be a model for businesses around the world. My singular objective is that those who dedicate the time to read this will take some of these concepts into their work so that the business community recognizes and acts on our collective responsibility to overcome the world’s most pressing problems and create meaning in what we do.

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When I started Waste Farmers ten years ago, I set out to prove a steadfast conviction that capitalism and idealism can coexist.  Much like ancient Greek philosophies that are the scaffolding of contemporary progressive thinking, I knew that Waste Farmers could harvest some of the earliest indigenous ideals of environmental stewardship and community well-being and also nurture and cultivate the human imagination; and that we could use these as building blocks to construct a business that embodies these values. Timeless wisdoms and human creativity are vital elements that are too often wasted in a world where hyperconsumerism and the cult of material wealth make a mockery of life.  So I did what any reasonable person would: I traded my wife’s car for a pickup, liquidated my IRA, and hired our first employee—my younger sister, Molly[AR1] . With limited resources, boundless determination, and unlimited patience of friends and family, we became the first Waste Farmers.  

When we got started, my objective was to create a solution to a major problem in the city of Denver. In most municipalities, commercial businesses (like restaurants and hotels) throw away mountains of food waste.  At the landfill, this biomass quickly becomes an environmental liability where it releases methane and other greenhouse gasses as it decomposes. But when it’s composted and returned to the agricultural system in the form of rich humus, it can improve depleted soils, retain water, sequester carbon, reduce the need for chemical inputs, and give life to the next generation of plants that feed local communities. The solution to this otherwise wasted resource, and its potential to improve local agriculture, represented an opportunity that we could build a young company around in the form of a B2B compost collection service which would benefit both our local environment and all who depend on it.

When our collection service first became available, we didn’t have economies of scale and our processes were very labor intensive. This meant our operating costs were high and customers would have to agree to pay more for our service than what it was costing them to send their organic waste to a landfill.  We explained to prospective clients what was possible with their waste—and that it really wasn’t waste at all—and discussed with them the environmental implications of business-as-usual versus paying more for our service. It might come as a surprise, but business owners across the city reached deeper into their pockets and signed up for our service. Some of our biggest customers included Chipotle and the Denver Public School District. Schools around the city used the compost bins in cafeterias as a learning opportunity for students and many teachers even invited us into their classrooms to talk with students directly about the role of a healthy soil ecosystem in agriculture.

During this time, we hired more people, harnessed our collective creativity, and used grit and ingenuity to overcome obstacles and map a path forward. We design a first-of-its-kind compost collection vehicle allowing us to haul many tons of sloppy and very heavy food waste. We also equipped the vehicle with a system that allowed us to power-wash compost bins at our clients’ locations which solved a big problem around pests and stench. As we evolved and made improvements, our clients were happier and more signed up. Together, in only three years, our clients helped us become the largest compost collection program in the city.

It wasn’t long before we discovered that our clients were experiencing a financial benefit of our service that was helping offset the higher prices. Some of them were advertising to their customers that they were composting 100% of their food waste with us. This helped them retain sustainably-minded customers and also attracted new ones. In one example, a hotel we worked with was competing with other hotels in the city for a large conference. When the conference’s selection committee learned that of all the hotels it was considering that only our client had the capacity to compost the conference’s food waste, they awarded the hotel their business which was worth over $40,000. Sometimes, doing the right thing makes good business sense and especially when consumers are educated and are given the choice about who they should support with their purchase.

Eventually, we attracted the attention of a large waste and recycling company that understood how offering their clients a composting service would be a profitable third leg of their stool. We have to admit that we were happy to climb down from the truck and use the assets from the sale to create solutions to other problems. But during those first few years, we learned a valuable that we haven’t forgotten: businesses collaborated with us, even when it cost them more, when they learned their decision would benefit the community and the environment.

This is really what I want to talk about today. As we come face-to-face with the realities of global warming, an ecosystem in rapid decline, and an alienated population, how the business community reacts will determine the future of this little experiment called humanity.  I think a lot of people understand this and, like us, would benefit from sharing these types of stories.

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After the sale of the compost route, we quickly got to work creating solutions to other big problems in agriculture. We designed and launched consumer brands and products that use coconut fibers (coir) to provide both small biointensive urban farms and large commercial growers an alternative to peat-based products. Peat, as we know, is a vital natural resource which is mined from wetland habitats mainly for use in the agricultural sector. Globally, the use of peat is responsible for 6% of total anthropogenic CO2 emissions. We recently commissioned a full report on the state of peatlands and peat’s use in the industry which you can read here. [AR2] Compared to peat, coconut fibers are a waste bi-product of the broader coconut industry and bring a fraction of the carbon footprint.

Headquartered in Colorado, we saw firsthand the amount of peat being used by the hundreds of licensed and large scale cannabis operations producing for the medicinal market. We clearly understood these coir-based products could dramatically reduce the carbon footprint of our clients’ businesses and the industry as a whole; and by doing so, we would collectively preserve, and in some cases even help restore, these vital habitats.

Then, Colorado passed its historic Amendment 64 becoming the first state in the U.S. to legalize cannabis for recreational use. And we all know what happened next—sales spiked, growers had to grow more cannabis, and demand for peat skyrocketed as the market exploded.

Although we were already selling to cannabis operations producing for the medical market, current clients would expand production in preparation for recreational sales and many more players would enter the market. It was crucial for us to be able to convince as many growers as possible to use coir instead of peat.  To achieve this, we would have to improve the quality and consistency of our products so that they would, without fail, outperform peat. We would also need to develop the knowledge of a grower’s unique cultivations methods and be able to tailor our products during production to be able to provide grow operations the best blend possible to maximize their cultivation methodologies.  And like the days of our compost route, decisions-makers at grow operations would have to recognize the value-add of our products, and some might even have to pay a little more to source highest quality products that allow them to grow more responsibly. [AR3] Finally, we would need to create a brand that would resonate with the Colorado market. And this is how we came up with Batch 64, a name that pays homage to the amendment now enshrined in Colorado’s constitution.  

So, how did the community of growers react? I’m pleased to say we are now one of the largest suppliers of high-quality coir-based products in the industry and work with some of the largest grow operations in the world in 15 states and 3 countries. All this in less than 5 years since we launched Batch 64.  

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From our first day as a company to the launch of Batch 64, we have tried our best to infuse our decisions and actions with a set of values and established scientific truths that regulate the natural world and give meaning to our lives. As students of nature and the human condition, we are guided by similar philosophies and analytical thinking that have been developed by some of history’s greatest thinkers and leaders.

Here are some values and truths that should be inherent to all businesses and ones that influence how we make decisions and operate.

  1. No one is an island: None of us exists in an isolated vacuum and as business community it would be dangerous to assume we can operate with wonton disregard for the impact we are having on the environment and human populations. Most companies don’t measure the negative externalities of their practices. They are happy to receive the majority of the economic benefit while the lion’s share of the negative consequences caused by unsustainable and shortsighted business practices are distributed throughout the community. As businesses, we must have the courage to measure externalities lest we fall victim to what Garrett Hardin called  The Tragedy of the Commons.

    Furthermore, companies that measure their impact and implement ways to improve their practices will be at less risk as governments pass tighter regulations to reduce environmental impacts. The current administration might be rolling back regulations today, but this is short-sighted and won’t last long.  Business that aren’t proactive will ultimately be forced to improve or they will surely perish.   
  2. There is more than one way to measure wealth: Most companies measure wealth by looking at that bottom line number.  Profit, yes, is important and without it a company obviously can’t survive.  But there are other ways, more important ways, to measure wealth. We are wealth in the flesh and when society is sick and alienated from prosperity people start yelling and breaking things. Our ecosystems are also wealth incarnate.  In fact, the planet is the source of wealth and produces riches beyond the imagination. And it too cries when we abuse it—its protest takes the form of droughts, floods, hurricanes, and mass extinction. Without happy people and a healthy planet, profit don’t add up to squat.  
  3. Stakeholders over shareholders:  Traditionally, all major decisions a company makes are designed to maximize profit for their shareholders. For some companies, prioritizing the  financial well-being of shareholders is required by law no matter the environmental and social consequences.

    Now that we know wealth should also be measured by the well-being of the community and the planet, companies must make decisions that benefit more than just their shareholders and should include all stakeholders such as employees, the community at large, consumers, and the environment. We’re all familiar with the opioid crisis in the U.S. and we are now learning that pharmaceutical companies knew what they were doing was causing an epidemic of addiction and killing tens of thousands of their customers every year. By now, this should come as no surprise and of course these things are motivated by greed. But the larger point is that the people making these decisions have been conditioned to consider
    solely their shareholders. If we lived in a world where all stakeholders were considered in major decisions, this would have surely been avoided. 

     

As we read through these values and truths, a consolidated image begins to take form.  Traditional corporations are fantastic at building giant factories, hiring thousands of underpaid workers, and pumping out billions of cheap widgets in an extraction → consumption → disposal linear model. But eventually, the rapacious consumption of assets like raw materials, energy, and workers will result in environmental, economic, and social crises. We can clearly see how during the last few hundred years this economic model has nearly destroyed the planet and created social and economic inequalities previously unknown to mankind.

A regenerative economy, on the other hand, is one in which business practices and investments are directed to regenerate capital assets so that they perpetually produce environmental, social, and economic prosperity. This includes regenerating raw materials, energy sources, etc[AR5] .; and most importantly, it places the well-being of the planet and the community above all else understanding that our actions today will impact future generations.

As humans who share a collective unconscious, you can assume we are not the only ones working to design and build companies that are guided by these values.  We know many of them and they have both encouraged and inspired me. Many of us have turned to resources like Carol Sanford’s book The Regenerative Business and Peter Senge’s The Fifth Discipline to better understand how to think about the many components of building a regenerative business and these are two great resources for anyone interested in becoming a member of this expanding community of like-minded leaders.

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We’ve spent ten years on this path to discover ways to grow and strengthen our business, empower our employees and improve the well-being of the communities where we work and regenerate ecosystems we’ll likely never see. We’ve been rewarded with becoming a certified BCorp and also a certified carbon-neutral company. [AR6] We enjoy broad support from the community and have won the business of some of the largest growers in the world. We are also privileged to frequently share what we do and what we’ve learned in interviews and publications. And we’ve attracted some of the best investors in the world that support our mission and values and who have helped to strengthen our position in the market.  

But we’ve also been mocked by people who tell us what we’re doing will surely end in failure. Others have said that the very idea of the coexistence of idealism and capitalism somehow contradicts human nature. I’m here to say that these high priests of the status quo are wrong. I’ll also readily admit we have made mistakes and continue to struggle with ironies and contradictions. But the most dangerous belief system is not the one awash with contradictions because this afflicts all belief systems. The most dangerous belief system, rather, is one that disengages from critical analysis and the possibility of reform.  

Thank you for reading our story. If you’re at all inspired to chart a similar path toward building a regenerative business, then I’ve been successful in my task today. Or at the very least, we all hope you are proud to be partnered with one. Lastly, we were helped by so many people in these last ten years and you can count on us to support you in any way we can. If we are to build a regenerative economy, we must do it together.  

Edited by Melissa A. Bolin

Aron Rosenthal
Aron Rosenthal

Aron Rosenthal is an independent researcher, writer and development consultant. He has helped implement some of the most innovative social and economic development programs in Central America designed to support women entrepreneurs. He has also worked closely with Waste Farmers, the makers of Batch 64, on many initiatives over the last 10 years and shares with the team an endless devotion to protecting global peatlands.

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