Ecological transition and urban regeneration: the role of business

On the topic of urban regeneration, Soft&Green wanted to hear the opinion of Francesca Ricciardi, Professor of Business Organization and Chair of the Course in Digital Business Administration and Management at the University of Turin.

In recent times, there has been a lot of talk about urban regeneration and shared value: you have also been involved in the management of common assets as part of your academic work for years. What role can businesses play in this phase of major environmental and social transformation?

In general, all organizations either directly or indirectly influence the (re)generation and availability of resources of common benefit. Some companies, corporations, public agencies, or nonprofits, produce true common resources, such as Wikipedia content or the cleanup of a public park. We can, however, no longer devolve responsibility for the common good solely to the organizations that generate or regenerate it directly and by statute. Today, all businesses are called upon to develop a shared awareness with respect to the resources of common benefit that they consume or are able to influence. An emotional and cognitive posture that can be summarized as, “This is a resource of common benefit and, if we do not make our contribution to regenerating it and making it available where it is needed, things will get worse for us all.” I am convinced that this kind of shared awareness is an essential cultural basis for developing the new sustainable business models and social responsibility actions we need to face the future.

An interesting change is found in the relationship between business and the region. What do you see as the evolution of this relationship?

Over time, three different visions of the relationship between businesses and regions have emerged, one after the other. These three visions are not mutually exclusive, but they do overlap.

According to the first view, the region is a market or rather a set of markets for a business. This view is consistent with a classic approach to the economy, in which the region is: a supply market where a business finds its suppliers as well as known and predictable terms of supply; a labor market, where a business can find and even train the skills needed to keep them steadily available; and an outlet market, of course, for the goods and services that businesses produce. From this first point of view, the relationship between a business and the region is essentially an economic exchange, characterized by flows of money in the two directions.

The second view of the relationship between businesses and regions, on the other hand, leverages stakeholder theory. The stakeholder concept goes beyond classic market relations. Stakeholders have something to bring to the table in their relationship with a business: for example, a local citizen may be a stakeholder who fears that a company’s activities will generate pollution and threaten health. If dissatisfied with the behavior of a business, the stakeholder may react by “harming” it directly or indirectly. On the other hand, if sufficiently satisfied, the citizen will support the business in various ways, such as providing money, legitimacy, data, and expertise. The shift from a classic to a stakeholder-centered view is a Copernican revolution in approaches to managing the relationship between businesses and regions. The evolution of thought did not, however, stop there.

A third view of the relationship between businesses and regions that is emerging sees a region not only as a container of stakeholders but as a true system of common benefit that, as such, obeys the laws of those entities known in the anglophone world as commons. In this view, businesses are immersed in the region as direct and indirect receivers of its system of common benefit and, to survive in the medium and long term, they must help develop and maintain its regenerative capacity over time.

How do these three visions of the business-region relationship complement one another?

We can say that they focus on increasingly complex problems, which in reality are ‘nested’ within each other. In practice, the health of the common benefit system is the long-term precondition for the effectiveness of the relationship with stakeholders, and the effectiveness of the relationship with stakeholders is the long-term precondition for the effectiveness of the relationship with markets. Only if the region’s economic, social, and technical system functions, and is thus able to continue to regenerate the resources of common benefit that businesses also make use of, is there a solid basis for focusing on stakeholder management, including regional stakeholders, as proposed by stakeholder theory. Only if a sufficient balance is struck between the interests of businesses and their stakeholders is there a solid basis for focusing on markets, including regional ones.

How can Europe stimulate interventions for the regeneration and redevelopment of urban spaces?

Urban regeneration is becoming a key word for everyone also as a result of what European policies provide. One aspect that is emphasized by Europe is the need to carry out significant interventions for a transformation of the urban environment with the creation of green infrastructure in cities as well. Of particular interest, for example, is the New European Bauhaus initiative, launched in 2020 to link the grand challenge of the Green Deal to specific initiatives to improve the built environment. The initiative has the ambition to provide a platform for connecting science and technology, as well as art and community, to make tomorrow’s living spaces more sustainable, affordable, and inclusive. Co-design and active involvement of all, which are the approaches at the heart of the New European Bauhaus philosophy, are based on the idea that we live immersed in common assets and cannot thrive without them. They are often vulnerable assets due to the neglect and ineptitude of the very people who benefit from them. Thus, to protect common assets, we need to focus on the economic, social, and technical system that can regenerate or destroy them.

To conclude, do you think businesses will pay more attention in the future to contributing to the transition of regions towards increasingly sustainable development?

In order to be defined as “sustainable”, businesses will have to contribute to the environmental transition and act as active members of the community. This involves many challenges at the level of values, organizational culture, thinking capacity, and systemic action.