Responsible Entrepreneurship, European Style

At age 27, Adrien Pagès is no stranger to entrepreneurship. As a recent graduate, this alumnus had already launched Fairbird, an alternative to plastic packaging, with the support of the EDHEC Entrepreneurs incubator at Station F. Three years later, after selling the startup, he developed Morfo, a large-scale solution for restoring forest ecosystems in tropical regions. Morfo is a prime example of what’s called the “regenerative economy,” whose purpose is to restore and renew environments and natural resources rather than deplete them. 

‘One of our operating principles is to never optimise our income at the expense of our impact on ecosystems. For instance, we switched the payment system for seed collectors from a gig-economy model (like Uber, Deliveroo, etc.) to a system where people are paid throughout the year, providing job security and continuous training to improve their skills. This change incurs a cost, which Morfo covers because it’s fundamental to our impact — showcasing forest communities, preserving existing forests, and creating quality green jobs,’ explains the entrepreneur. This example illustrates the interconnectedness of ecosystems and the need to manage rebound effects to achieve a net positive global impact.

Sowing the Right Seeds from the Start

By integrating these issues from the outset, Morfo is a perfect example of a “Responsible by
Design” company, to echo the name of the model developed by EDHEC to support the growth of these green jewels.

The starting point for this model? A study entitled “Startups and Responsible Entrepreneurship,” conducted in France in March 2022 in partnership with Station F. The survey revealed that 96% of startups plan to act on a sense of responsibility within the next 12 months, but only one in four feel competent enough to create a concrete action plan. ‘To better support entrepreneurs, we have developed the RED (Responsible Entrepreneurship by Design) methodology, the result of more than 10 years of experience within the EDHEC entrepreneurs incubators. In this model, the startup consciously integrates global performance challenges into its business and operational models, building the company on the healthiest foundations possible,’ explains Yasmine Machwate, head of the EDHEC Entrepreneurs incubators. In other words, startups don’t need to wait until they have more resources to take action!

To date, the RED framework has been used by over 1,000 companies across Europe, thanks to
the distribution of a free guide outlining more than 60 actions to be implemented from the
outset. It is consulted not only by entrepreneurs but also by schools, incubators, professors
and investors. The framework offers a wide range of actions, from a shareholder agreement
model incorporating these issues to simple measures such as travelling exclusively by train or buying recycled IT equipment. ‘All this helps to avoid building up ESG [environmental, social, and governance] debt. Like technical debt, this refers to the accumulation of negative externalities that a company generates as it grows if it hasn’t anticipated these issues,’ says Ludovic Cailluet, Associate Dean, Centre for Responsible Entrepreneurship.

A Different Path for Europe

As human civilisation has already crossed six of the nine planetary boundaries, all our active forces must be mobilised to address the great challenges of the future, whether through newly created companies — like the emblematic Yuka, 900.care, The 8 Impact, or Dooda, all startups supported by EDHEC — or existing companies.

‘The state alone cannot solve this equation, although regulations such as the Pacte Law in France are steps in the right direction. They are redefining the role of companies in society, by
linking taxes and subvention to their level of commitment or by changing public procurement rules,’ highlights Justine Soudier, Deputy Director of the Centre for Responsible Entrepreneurship. And while France has made considerable progress on these issues, the better news is that it’s not alone in Europe. ‘Italy has also developed a similar model, as have the Nordic countries. Hopefully, we’ll see the emergence of a European model for purpose-driven companies that could then inspire the world,’ she adds.

This momentum is also driven by European regulations such as the CSRD (Corporate  Sustainability Reporting Directive), adopted on 10 November, 2022, which requires large companies to produce non-financial reports. This requirement will inevitably trickle down to smaller companies, which often act as suppliers to larger firms.

In contrast, American entrepreneurs and business leaders struggle to tackle this topic, since ESG is seen as a politically charged issue associated with the Democratic Party. Recently, the
Republican-led state of Tennessee even filed a lawsuit against BlackRock, accusing the asset
manager of ‘aggressively pushing controversial environmental, social, and governance (ESG) goals in its managed assets.’

‘Europe has a unique opportunity to make its voice heard, especially as China has followed suit by setting a carbon neutrality target for 2060, ten years after ours,’ adds Justine Soudier. This new European paradigm would no longer see hypergrowth as an end in itself, prompting a rethink of profit as summed up by Frédéric Laloux, a former McKinsey partner: ‘Profit is like the air we breathe: We need air to live, but we don’t live to breathe

................

This article is taken from EDHEC Vox magazine no. 15 on the subject of net positive companies.

To read it in full, click here:

In English - online (Calaméo)

En français - en ligne (Calaméo)