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Helpful prior knowledge and learning objectives
Helpful prior knowledge and learning objectives
Helpful prior learning:
Section 1.1.1 The economy and you, which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems
Section 1.1.4 Regenerative economies, which explains how circular, distributive and caring, needs-based and sufficient economies can meet human needs within planetary boundaries
Section 3.3.1 The deep design of firms, which explains the major transitions that business needs to make to meet human needs within planetary boundaries
Section 3.3.2 The purpose of firms, which explains the purpose of business and the role of profits
Section 3.3.3 The networks and governance of firms, which explains the relationships of business to internal and external stakeholders and how good governance can ensure that value is shared in networks
Section S.1 What are systems?, which explains what a system is, the importance of systems boundaries, the difference between open and closed systems and the importance of systems thinking
Section S.2 Systems thinking patterns, which outlines the core components of systems thinking: distinctions (thing/other), systems (part/whole), relationships (action/reaction), and perspectives (point/view)
Learning objectives:
discuss the role and importance of ownership for regenerative businesses
Kuapa Kokoo, located in Ghana's cocoa-growing region, is a cooperative that shows the impact of inclusive ownership. Formed in 1993, the cooperative's name means "good cocoa farmer" and brings together over 85,000 farmers who produce high-quality cocoa. Kuapa Kokoo not only markets their cocoa, but also co-owns Divine Chocolate, which turns their cocoa into products.
This ownership gives farmers a voice in decision-making and a share of profits. By connecting their interests with the business’s mission, Kuapa Kokoo ensures long-term thinking and protects its purpose.
The cooperative partners with FairTrade, allowing them to charge more for their cocoa. Farmers use FairTrade premiums to improve healthcare, education, and infrastructure in their communities. These projects empower farmers, raise living standards, and strengthen community bonds. Kuapa Kokoo shows how ownership models can drive regenerative business practices that benefit both people and the planet.
Figure 1. Cocoa farmers in cooperatives can work together to support one another, sharing knowledge and leveraging greater power over the price of their cocoa.
(Credit: ICCFO, CC BY-SA 4.0)
What types of business legal and ownership structures are there?
What types of business legal and ownership structures are there?
When businesses register with the state, they must choose a legal structure. This affects which laws and taxes apply.
Part of the legal structure relates to who owns the business. Businesses can be owned by individuals, foundations and trusts, families, workers, customers, or investors. Each ownership type has different priorities and controls. Some ownership models encourage socially and ecologically sustainable practices more than others. So social enterprises, created for a social or ecological purpose, need to pick the right structure to achieve their goals.
Common business types vary by country, but the following are well-known. As you read, consider which characteristics support or hinder sustainable practices.
Figure 2. 90% of businesses are family-owned, employing millions of people.
(Credit: Visual Capitalist)
Sole proprietor/sole trader
A sole proprietor, or sole trader, is a single owner. This is common among small businesses like restaurant owners, tailors, and freelancers. They usually start with minimal financial capital, often their personal savings ,and have unlimited liability, meaning they are responsible for all business debts. The business ends if the owner can no longer run it.
Partnership
A partnership involves two or more people who share ownership and decision-making based on a partnership agreement. Common examples are law firms and medical practices. Partnerships often have more access to financial capital but, like sole proprietors, they face unlimited liability for debts.
Privately held limited company
A privately held limited company is owned by a small group, usually family or friends. Its ownership shares aren't available to the public. Examples include Ikea, Lego, Huawei, and Tata Group. The business is considered a separate legal person (Section 3.2.3) from the shareholders, who have limited liability, they are not personally liable for company debts. Private companies don’t have to disclose financial information publicly.
Publicly held limited company
A publicly held limited company sells shares to external investors through an initial public offering (IPO), called ‘going public’. Famous examples include Apple, Samsung, and Saudi Aramco. Going public raises large amounts of financial capital for expansion, and allows early investors, like venture capitalists and business angels, to sell their shares for a profit (Section 3.3.5). The shareholders, now more numerous than before the IPO, may be paid profits from the business, called dividends. Public limited companies must share financial information regularly. Shareholders have limited liability, and the company can be taken over if enough shares are bought.
What other business types can help support regenerative businesses?
What other business types can help support regenerative businesses?
Any business structure can potentially support sustainable practices, but some are better suited to social or ecological goals.
Nonprofits
Nonprofits aim to improve social or environmental outcomes. Legally, they must reinvest profits (called a surplus in this situation) into the organisation to further their mission. Examples of non-profits include some universities, hospitals, cultural institutions, religious organisations, political parties, labour unions, and professional groups.
Many social enterprises register as non-profits to access tax benefits and special funding sources like grants from foundations or the state. They can also sell products, but all profits must support their mission. Having diverse sources of funding is important for the financial stability of non-profits.
Cooperatives
A cooperative is owned and operated by a core stakeholder group, such as employees, customers, or suppliers. The purpose of a cooperative is to meet the needs or goals of the owner/members. Members share decision-making power equally, and profits are reinvested or distributed among them. Cooperatives can be small, like local community supported agriculture (CSA), or large with diverse businesses like Mondragon in Spain.
Steward-ownership
Steward ownership separates financial ownership from control. Stewards, often employees or others connected to the business’s mission, manage the business. Meanwhile, another group, like a foundation, holds financial ownership, but doesn’t interfere in daily operations. This model keeps the business focused on its social or environmental mission without pressure from shareholders who might only be interested in taking profits.
Steward ownership is becoming more popular, but this legal structure is not available everywhere. More education in business schools and elsewhere, and legal support from states are needed to expand its use. States need to help businesses transition to these models, which offer a middle ground between profit-driven companies and nonprofits.
Figure 3. Who owns the business and makes decisions and how profits are directed impacts whether the business is degenerative or regenerative.
(Credit: Doughnut Design for Business - Core Tool, CC BY-SA 4.0)
Activity 3.3.4
Activity 3.3.4
Concept: Regeneration
Skills: Thinking skills (critical thinking, transfer)
Time: varies, depending on the option
Type: Individual, pairs, and group, depending on the option
Option 1: Evaluating ownership types for their regenerative potential
Time: 40 - 50 minutes
Individually, with a partner or in a small group, consider what you have learned about different types of ownership in this section and their potential for supporting regenerative businesses.
Create a summary table on a piece of paper or digitally, listing the different types of ownership with two additional columns labelled as in Table 1. Which of the characteristics of each type support regenerative strategies and which may undermine them?
Based on your review and the summary table, put each type of ownership on a continuum like the one in Figure 4 below. Draw the continuum on a piece of paper or a digital document and write in where you think each type of ownership goes, relative to one another. You should probably use a pencil if hand-drawing so you can revise your ideas as you go.
Compare your results with another student, or small group of students. Discuss why you put each ownership type where you did, using similarities and differences to get a better understanding of the general factors that impact how well different ownership types might support regenerative business activities.
Try to synthesise these generalisations, perhaps using this stem sentence: “Generally, an ownership structure will be more likely to support regenerative business activities if it…. (finish the sentence with the criteria you would suggest).
Option 2: Ecosia, an example of steward ownership
Time: 30-40 minutes
If you can, look up the website of the search engine Ecosia. What is the business and its mission?
Watch the following 13-minute video interview with Christian Kroll, founder and CEO of Ecosia, a search engine focused on ecological impact.
Take notes on how the steward ownership model helps Ecosia stay true to its mission. Discuss with a partner, small group or as a class after the video is finished.
Video: A founder’s perspective on steward-ownership - Why ecosia now belongs to the Earth
Option 3: Thinking about businesses in your community
Time: 20-25 minutes
Think about the businesses in your local community, and make a list of the ones you know or visit regularly.
Which of these businesses are likely to be sole proprietors, partnerships, private limited companies, cooperatives, or public limited companies. Why would you classify them this way? How could you go about finding out for sure, if you wanted to know?
Ideas for longer activities and projects are listed in Subtopic 3.5 Taking action
Checking for understanding
Checking for understanding
Further exploration
Further exploration
Transferring ownership for a better economy - a Tedx Talk from Armin Steuernagel about the power of steward ownership. Difficulty level: easy
Purpose Economy - The website of an organisation that works with businesses who want to pursue steward ownership models. Difficulty level: medium
Doughnut design for business case studies - a set of case studies of real businesses using regenerative business design. These can be used in the classroom to help students apply their understanding of the five design elements in real cases. Difficulty level: easy/medium
Scene on Radio, Season 7: Capitalism Episode 12 Reimagined Economies - this episode of a full series on capitalism discusses regenerative businesses. The first 40 minutes focuses mainly on the Mondragon cooperative, providing an interesting insight into how worker owned businesses can support their communities. Difficulty level: easy
The Announcement - a three-part podcast series exploring the decision and consequences of Patagonia’s move to a steward-ownership-inspired model.
The Announcement Episode 1: The Decision (42 minutes)
The Announcement Episode 2: Scrutiny (55 minutes)
The Announcement Episode 3: Legacy (63 minutes)
Exit2Community Library - a group of case studies about how businesses can share business value with a wider group of stakeholders. Difficulty level: medium.
Kuapa Kokoo, Ghana - The FairTrade webpage for this cocoa cooperative that works with the organisation and earns a FairTrade Premium for local projects aimed at improving human wellbeing in the region. Difficulty level: easy
Cocoa in Ghana - a video about how cooperative ownership and FairTrade premiums (Section 3.4.4) have improved the wellbeing of cocoa farmers in Ghana. Difficulty level: easy.
REScoop - a short video about cooperative ownership of energy producers in Europe. Difficulty level: easy.
Sources
Sources
Doughnut Economics Action Lab (March 2024). Doughnut Design for Business DEAL’s guide to redesigning businesses through Doughnut Economics – Core workshop Version 1.2. https://docs.google.com/presentation/d/1x8flVhi7JKRRzQClrJnlGkdjd7TpIGXeQiVMQotIH0Q/edit?usp=sharing.
Fairtrade. (2023, February 3). “Kuapa Kokoo, Ghana.” https://www.fairtrade.org.uk/farmers-and-workers/cocoa/kuapa-kokoo-ghana.
Kelly, M. (2012). Owning our future: The emerging ownership revolution. Berrett-Koehler Publishers: Oakland.
Kelly, M. (2013). The architecture of enterprise: Redesigning ownership for a great transition. The Good Society, 22(1).
Raworth, K. (2017). Doughnut economics: seven ways to think like a 21st century economist. London: Penguin Random House.
Sahan, E. (2023, January). Doughnut Design for Business: Introduction to Redesigning Businesses through Doughnut Economics [Video]. YouTube. https://youtu.be/ViHwewmuArI.
Sahan, E. et. al. (2022, November). What Doughnut Economics means for business: creating enterprises that are regenerative and distributive by design. Doughnut Economics Action Lab. https://doughnuteconomics.org/rails/active_storage/blobs/redirect/eyJfcmFpbHMiOnsibWVzc2FnZSI6IkJBaHBBcXNpIiwiZXhwIjpudWxsLCJwdXIiOiJibG9iX2lkIn19--259000ee416367cd44b4e63d37637ded7c89f384/Doughnut%20&%20Enterprise%20Design%20-%20CET_DEAL%20paper%20V.1.0.pdf
Purpose. (n.d). “Steward Ownership. For an Economy Fit for the 21st Century.” https://purpose-economy.org/en/
Terminology
Terminology
Link to Quizlet interactive flashcards and terminology games for Section 3.3.4 The ownership of firms - in order of appearance
cooperative: an organisation owned and controlled by people to meet their common economic, social, and/or cultural needs
infrastructure: large scale physical systems that a society needs to function (roads, railways, electricity networks, etc)
regenerate: the process of restoring and revitalising something
foundation: a type of nonprofit organisation or charitable trust that usually provides funding and support to other charitable organisations
trust: a legal entity that acts as a fiduciary or agent on behalf of a person or business
sustainability: meeting people’s needs within the means of the planet
social enterprise: a business that operates for a social or environmental purpose
sole proprietor: a person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses
financial capital: money that can be used in various ways to earn more money
unlimited liability: the full legal responsibility that business owners and partners assume for all business debts
partnership: a formal arrangement by two or more parties to manage and operate a business and share its profits
privately held limited company: a company that does not issue shares to the public, and where the owners have limited liability
limited liability: a legal status in which a person's financial responsibility is limited to a fixed sum, usually the value of a person's investment
publicly held limited company: a business whose shares are freely sold and traded to the public on a stock exchange, and where the shareholders have limited liability
initial public offering (IPO): offering the shares of a company on a public stock exchange for the first time
venture capitalist: a person who makes financial investments in companies in exchange for a share of ownership, usually with other investors
business angel: a person who makes financial investments in companies in exchange for a share of ownership, usually as an individual
dividend: the portion of a company's profit that is paid out to its shareholders
non-profit: an organisation operated for a collective, public or social benefit where surpluses must be used to increase impact
surplus: the term used in non-profit businesses for profit, or total revenue minus total cost
stakeholder: a person who has an interest in or is impacted by some activity
community supported agriculture (CSA): where people from a neighbourhood or town pool their money to support a local farm; they pay the farmer upfront at the beginning of the season, and in return, they receive a share of the farm’s produce each week
steward ownership: an ownership structure where the company's financial ownership is separated from voting and management rights
steward: to manage or look after something
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