Natural Capitalism (taking natural capital into account)



Hi Alex here. What is natural capitalism?
It is a way of doing business that recognizes the value of natural and
human resources and life supporting ecological services. Here is a story to
illustrate. In the nineteen fifties in the Atlantic Northwest, equipment and
technology made it possible to fish cod faster than the fish stocks could
replenish. The cod was treated like an infinite resource no financial value was
assigned to cod in the balance sheet but income from selling the fish was. Using financial language, essentially we liquidated our capital of cod and called it income. In 40 short years, the northern
cod biomass fell to 1 percent and in 1992 the Canadian government declared a
moratorium ending the region's five hundred-year-run with the northern cod. As discussed in our triple bottom line video, the economy is part of society
which is part of the environment. This means all economic and social progress ultimately depends on the environment the larger circle. That's natural
capital: the ecosystem services and natural resources that we need to survive and
thrive. The middle circle represents society, or the human capital. Our economy is the smallest circle because it is governed by the rules, regulation and
structures of the other two circles. The economy depends on human capital and natural capital to thrive. In the collapse of the Northern Atlantic cod fishery, the environment circle of cod was destroyed when the fish were gone.
Then the social circle of fishing communities on the eastern coast of
Canada was badly damaged when people were out of work and with it the
economic viability of the cod fisheries. What would a natural capitalism approach to this issue have looked like? Well it would have meant: feeding people and increasing material welfare by providing fish without impacting our resources and
ecological systems. Imitating nature (also known as biomimicry) in the fishing
processes and products. Managing cod as a living resource and making sure it is
not removed from the ocean faster than it naturally replenishes. And focusing
on the service being provided (feeding people) and not only the product that
provides it (the cod). This would have helped to create sustainable business
models that feed people and support fishing communities while culling fewer
fish. In other industries, focusing on the service rather than to product is called "dematerialization" and this will be the subject of another video. Here is another
example about an everyday product that we can all relate to. Say you are a
clothing company making and selling jeans. What would accounting for natural
capital looks like? The value of cotton fabric of course, but also the plants
used to make the dye that gives the jeans their colour, copper and steel for
rivets and zippers, plastic and leather for labels, and even the raw material for
the machinery needed for dying, spinning, weaving, etc. It would also include the value of the
human capital wherever the jeans are made. All of this would be added to the
production costs and compared with the income generated by selling the clothes.
Essentially, natural capitalism means taking good care of the goose that lays
the golden egg: what nature provides for your business should be on your balance
sheet. Businesses all over the world are
innovating and gaining competitive advantage from applying the natural
capital business model. I will share some stories about some of these companies in future videos. I will also be sharing videos on circular economy, biomimicry
and the associated business opportunities so stay tuned! If you enjoyed this video, please
subscribe. Our free sustainability videos are financed with an honour system. If you think, like us, that it is important work, you can contribute the amount of your
choice by clicking on the orange button. Thank you to our patrons and as usual
thank you for watching.




Comments
  1. Will whomever reads my comment – if you can, please tell me where I can find a free PDF of their book.
    Thank you very much.

  2. It wouldn't even make a difference because, the amount of fish culled is determined by the Demand of people, not the fishers.

  3. First of all: kudos for all your great videos … they are great work and a great introduction in the topic and a valuable source for activists and educators 🙂
    While i can fully understand that the concept behind this videos is to make short and easily comprehensive sets, I've been missing out the limitations of natural capitalism. While i fully agree, that that externalities shall be included in costing, I also believe that the idea of offsets and Pay for Environmental Services combined will not be enough (Jutta Kill has summarized this critique really nicely: https://www.rosalux.de/fileadmin/rls_uploads/pdfs/sonst_publikationen/Economic-Valuation-of-Nature.pdf )
    I'm sure, that you are aware about much of these limitations (just seems logical from the course of your videos) and was curious if you have planned to pick this up in any of your future videos?

  4. I noticed that your jeans anaolgy didn't mention that every step that was discussed is dependant on huge amounts of energy. So jeans are really made from energy. See Nate Hagens for an explanation.

  5. What humans are doing now is the same as this according to the video: while we give the golden egg a lot of value, we do not place any value on the hen that lays the egg. 3:29

  6. "Businesses all over the world are innovating and gaining competitive advantage from applying the natural capital business model. I’ll share some stories about some of these companies in future videos."

    That sounds really interesting, I'm looking forward to hearing those stories. Currently I feel a bit confused how companies get a competitive advantage in a society where money takes priority, but I'm hoping those stories will clear it up for me.

Leave a Reply

Your email address will not be published. Required fields are marked *