I have argued for a long time that VCs getting excited about climate change is scary and that a startup’s goal is to cease to exist. But I haven’t been particularly successful in describing what startup founders can actually do to build a more sustainable company in a world headed for a climate crisis.
Enter Amit Paul and Nils von Heijne, who have spent the last few years thinking about how companies are created and whether there’s an alternative approach we could take. In their native Sweden, the duo has come up with an alternative organizational structure that aims to redefine the way we think about sustainability and regenerative business practices.
It is called a regenerative community organization (RCO), this new organizational model is not just a theoretical framework. aims to be a practical approach to embedding sustainability into the core of operations. Combining regenerative and circular principles in the structure of the corporate structure, this model wants to set a new standard for corporate responsibility and ecological management.
The frame has already received a tentative stamp of approval from the Swedish authorities as the first company to incorporate this model was created. The company, Innrwrks, was founded by Paul and von Heijne and is trying to be the blueprint for how other startups can build on the same model.
Sweden’s tentative acceptance of the RCO model represents a step forward in the global movement towards sustainability and regenerative business practices. It provides a government-backed model in which companies can look for an approach to building more sustainable businesses.
An idea
The genesis of the RCO model can be traced back to a series of discussions between Paul and von Heijne at business school, where they explored the limitations of existing business models when addressing pressing environmental challenges. They recognized that while there was a growing movement towards sustainability, most startups’ efforts remained superficial and failed to address the root causes of ecological degradation.
With a background steeped in environmental science, Paul says he has long been an advocate for practices that minimize damage to the environment and help restore it. His career has been marked by efforts to bridge the gap between environmental stewardship and profitability – he is a fellow at the Environmental Defense Fund and was part of CodeGreen Solutions, which focuses on helping real estate go lower carbon.
Meanwhile, von Heijne is a serial entrepreneur (we counted eight co-founder titles on his LinkedIn) of a wide range of companies merging into troubled spaces that act as catalysts for change. He is also an early stage investor focusing on sustainable startups (as part of Svärd von Heijne).
“I’ve gotten very attached to the culture and the narrative in business school,” von Heijne said. “We’re here to build things and then get them to scale as quickly as possible, and then somebody make money. That’s the end of the story. Somewhere along the line, it became something other than pleasing investors or looking like I’m successful to other people,” he explained.
The RCO model
Paul and von Heijne told TechCrunch+ that the RCO model is inspired by living systems theory, which emphasizes the importance of designing organisms to be adaptive, resilient and able to thrive in harmony with the natural world.
According to Paul, RCO has three unique parts. One part is the constitution, or what the co-founders call the source code—the horizon that a company sees. “This horizon can never be an answer. it’s a question that represents the organization’s charter and guides us,” he explained.
The second part is an association. “The association holds and protects the purpose of the company and helps keep them on track. He can’t tell the company what to do, but in some cases, he can tell the company what not to do,” he added.
The third part, which builds on the other two, relates to the company’s life cycle. “A startup is not a startup forever: the logic of the startup needs to change,” Paul pointed out. “In the beginning a startup has to acquire a ton of resources, but at some point it will start to get more complex and form structures. That’s when it becomes a “real company”. The third aspect of RCO helps us think of the company as a growing and changing organization.”
Drawing parallels between natural systems and organizational structures, the RCO model argues that businesses mimic the resilience, adaptability, and regenerative capacity of living systems. This includes creating efficient and adaptable business operations that can make a positive contribution to the ecosystems and communities they interact with.
The twin pillars of the RCO model are regeneration and circularity. Regeneration focuses on improving and restoring ecosystems, communities and natural resources. Businesses that follow this framework are designed to positively contribute to the environment and go beyond sustainability to actively improve ecological health and social well-being. Circularity is the concept of planning waste and pollution, keeping products and materials in use and regenerating natural systems.
Putting it into action
Applying the RCO model requires businesses to fundamentally change the way they perceive their role in society and the environment. This implies:
- Designing with purpose: Businesses must redefine their purpose to align with regenerative and circular principles, ensuring that every aspect of their operation contributes positively to the environment and society.
- Create holistic value: The RCO model emphasizes the creation of value in all economic, environmental and social dimensions. This includes reviewing the business model to optimize for sustainability and resilience.
- Adaptive governance and leadership: The RCO model requires adaptive governance structures and leadership styles that respond to changing environmental and social conditions.
- Commitment and collaboration: Success under the RCO model is based on stakeholder engagement and fostering collaboration across sectors and industries. Working together, businesses, governments and communities can drive the transition to regenerative and circular economies.
Technology plays a critical role in enabling the RCO model. From advanced materials and renewable energy sources to digital platforms and circular economy technologies, innovation is key to implementing the principles of regeneration and circularity. Businesses must leverage technology to design products and services that are not only sustainable but also regenerative in nature.
The duo’s company, Innrwrks, aims to show how companies can thrive financially by actively contributing to the restoration and revitalization of natural ecosystems, as well as promoting social well-being.
Not a smooth ride
As you might expect, the journey to pioneering and implementing the RCO model has been fraught with numerous challenges ranging from legal hurdles to cultural resistance.
One of the biggest challenges was navigating the complex web of legal and regulatory requirements, the co-founders told TechCrunch. Corporate law is rarely equipped to accommodate business structures that prioritize environmental and social regeneration as core business principles.
Another set of significant obstacles arose from entrenched cultural norms and mindsets that favor traditional, linear operating models. Convincing business leaders, investors and even consumers to adopt a model that fundamentally redefines success is a work in progress.
It is encouraging to see some countries open to change at the corporate structure level, but globally, it will likely be a steep, uphill battle. Challenges will include establishing business standards, navigating regulatory and policy hurdles, and securing the necessary investments for the transition. However, these challenges also present opportunities for innovation, collaboration and leadership.
My main concern is whether this model introduces new risks to businesses. Early stage startups are quite risky, but if an RCO could potentially block an exit opportunity (e.g.
