Midsized Companies Hold the Key to Scaling Up Climate Solutions

The answer to the world’s environmental and social problems is not just to rectify big business. It’s to focus on the solutions being championed by medium-sized companies.

This was the feedback I heard over and over again after spending two years on the road interviewing over 30 medium-sized companies who are building better businesses focused on regenerating communities and the environment. The entrepreneurs I spoke to—across industries—told me there was an alternative solution. And it may even be more viable (and fruitful) for the future than trying to “clean up” big business.

Sebastien Kopp, co-founder of Veja, an ethical French footwear brand, told me: “Replication is the answer. Not necessarily scale. We need more medium-size companies that are thinking about regeneration, traceability, equity. We don’t want to be the biggest ethical shoe brand in the world. We want a world full of dozens, if not hundreds, of Vejas.”

As a writer who has focused on sustainability for the past 10 years, I’ve seen that much of the frustration and anger has been towards publicly traded companies or global brands for their manufacturing plunders, supply chain woes, or poor leadership. And rightly so.

Yet, these companies operate on a different financial structure: they have to maximize profits every quarter. For them to steer the ship in a different direction requires a massive change from the top down. Are they willing to take on less CEO pay and disperse that to their employees? Are they willing to invest more in their supply chains? Are they willing to rethink the focus on growth?

Perhaps. But that’s a tall order. And if the leadership at the top is not interested, it’s an even harder sell. Rather, these companies continue to operate based on the mantra that more is better: grow, grow, grow. When one market starts to cool off, they shift their attention to another market to achieve their financial goals. That quest for infinite growth is what’s problematic.

So, what would an alternative model look like that Kopp and others are hinting at?

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There are over 400 million small and medium-sized businesses globally. According to the International Labour Organization, SMEs represent more than 95% of all businesses around the world. Moreover, they’re responsible for up to 70% of employment and global GDP (a midsized company employs some 50 to 500 people). If these companies were to adopt a more regenerative outlook on business, we could see real impact. Smaller companies can often pivot more quickly when it comes to changes in manufacturing, implementing new workplace policies, or rejigging supply chains, to name a few.

Don’t get me wrong. Scale is necessary. But to what point? Veja, for instance, launched with less than $15,000; it was Kopp and his co-founder Francois Ghilian who self-funded the business. Today, it pulls in over $200 million. The company has grown. It has scaled. But it is nowhere near Nike’s global revenue of more than $50 billion.

Veja’s growth has been slower, more methodical, and with its bumps in the road. In 2005, when it came out with an ethical, fair-trade shoe, Kopp and Ghilian were told it would not work. But the founders persisted, slowly building a traceable supply chain in Brazil that uses organic cotton, Amazonian rubber, and manufacturers in the same country—almost unheard of in fashion. Instead of investing in advertising and influencers, they put money into the production of the shoes; they cost about five times as much to make than other brands, but those costs are offset by lean marketing budgets. Plus, the company doesn’t overproduce, have overstocked inventory, and then sell it off in deeply discounted sales.

All of that was possible because Kopp and Ghilian were not rushed into growth. Because Veja is independently owned, it was able to take on more risks, focus more acutely on its impact, and challenge the industry on its norms. Thus, if more companies operated with this mindset, be it in apparel and fashion or other industries, we could start seeing broader change.

It fundamentally comes down to how much is enough: How much growth, profit, scale is enough? Do all businesses need to aspire for global domination? No. Positive impact can still happen if millions of medium-sized companies adopt more restorative practices collectively.

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And these examples are not limited to just fashion, or to self-funded ventures. It can be done even if you have investors. In my research for Working to Restore, I came across a number of innovative midsized companies actively making a difference.

Toast Ale, for example, is a U.K.-based beer brand. It has been repurposing leftover bread at commercial baking factories into beer. Started by a food activist and a social entrepreneur in 2016, the company is redefining what a beverage company can do. It was such a captivating idea that in 2022 Heineken came knocking and wanted to invest. Today, it’s sold in grocery stores, pubs, and cafes across the U.K.

Another company worth looking at is Falcon Coffee, a specialty coffee trader which supplies coffee to well-known roasters across Europe and the U.S. In a move towards transparency, it started sharing data with buyers to ensure that there’s traceability in the coffee supply chain. Moreover, seeing that coffee farmers need better funding options to take on regenerative agriculture, or improvements on the farm, the company has backed loans for coffee farmers when even banks wouldn’t step in—and those coffee producers have turned out award-winning coffees. Falcon wants to change the culture of how business participates in rural, fragile agricultural supply chains.

Meanwhile Ethique, a personal care brand out of New Zealand, started making plastic free shampoos and beauty products over a decade ago in 2012. It was one of the first companies talking about plastic waste in the bathroom. Today, its products are sold in nearly 7,000 stores globally, and it has inspired a slew of other companies to introduce their own shampoo bars as well, all of which hopefully encourages more customers to forgo plastic bottles for a zero-waste option instead.

These may not be ubiquitous global brands. But these medium-size businesses have enough reach to make a dent in the conversation, in supply chains, and how consumers look at shopping. That is valuable. They’re offering real solutions. They’re not waiting for policymakers, regulators, or anyone else to write a new model for capitalism. They’re doing it. They just need support, and more like-minded entrepreneurs to bring these ideas to new geographies.

So yes, let’s keep an eye on what the big businesses are doing (or not doing). But that cannot be our whole focus.

Esha Chhabra is a writer focused on global development, the environment, and business. She is the author of Working to Restore: Harnessing the Power of Regenerative Business to Heal the World.