SYPNOSIS OF NATURAL CAPITALISM
This concept is initiated by three leading business visionaries in a book titled “Natural Capitalism”. They explained how the world is on the verge of a new industrial revolution—one that promises to transform our fundamental notions about commerce and its role in shaping our future. Natural Capitalism describes a future in which business and environmental interests increasingly overlap, and in which businesses can better satisfy their customers’ needs, increase profits, and help solve environmental problems all at the same time.
Natural capital refers to the natural resources and ecosystem services that make possible all economic activity, indeed all life. These services are of immense economic value; some are literally priceless, since they have no known substitutes. Yet current business practices typically fail to take into account the value of these assets—which is rising with their scarcity. As a result, natural capital is being degraded and liquidated by the wasteful use of such resources as energy, materials, water, fibre, and topsoil.
The first of natural capitalism’s four interlinked principles, therefore, is radically increasing resource productivity. Implementing just this first principle can significantly improve a firm’s bottom line, and can also help finance the other three. They are: redesigning industry on biological models with closed loops and zero waste; shifting from the sale of goods (for example, light bulbs) to the provision of services (illumination); and reinvesting in the natural capital that is the basis of future prosperity.
Citing hundreds of compelling stories from a wide array of sectors, Natural Capitalism shows how these four changes will enable businesses to act as if natural capital were being properly valued, without waiting for consensus on what that value should be. Even today, when natural capital is hardly accounted for on corporate balance sheets, these four principles are so profitable that firms adopting them can gain striking competitive advantage—as early adopters are already doing. These innovators are also discovering that by downsizing their unproductive tons, gallons and kilowatt-hours, they can keep more people, who will foster the innovation that drives future improvement.
Natural Capitalism’s preface states: “Although [this] is a book abounding in solutions, it is not about ‘fixes.’ Nor is it a how-to manual. It is a portrayal of opportunities that if captured will lead to no less than a transformation of commerce and of all societal institutions. Natural capitalism maps the general direction of a journey that requires overturning long-held assumptions, even questioning what we value and how we are to live. Yet the early stages in the decades-long odyssey are turning out to release extraordinary benefits. Among these are what business innovator Peter Senge calls ‘hidden reserves within the enterprise’—’lost energy,’ trapped in stale employee and customer relationships, that can be channelled into success for both today’s shareholders and future generations. All three of us have witnessed this excitement and enhanced total factor productivity in many of the businesses we have counselled. It is real; it is replicable…”
Eco-efficiency, an increasingly popular concept used by business to describe incremental improvements in materials use and environmental impact, is only one small part of a richer and more complex web of ideas and solutions. Without a fundamental rethinking of the structure and the reward system of commerce, narrowly focused eco-efficiency could be a disaster for the environment by overwhelming resource savings with even larger growth in the production of the wrong products, produced by the wrong processes, from the wrong materials, in the wrong place, at the wrong scale, and delivered using the wrong business models. With so many wrongs outweighing one right, more efficient production by itself could become not the servant but the enemy of a durable economy. Reconciling ecological with economic goals requires not just eco-efficiency alone, but also three additional principles, all inter-dependent and mutually reinforcing. Only that combination of all four principles can yield the full benefits and the logical consistency of natural capitalism.