Natural Capitalism The next industrial revolution

Document Sample
Natural Capitalism The next industrial revolution Powered By Docstoc
					     Natural Capitalism:
The next industrial revolution
         Session Eight
  Sustainable Business Models
• Industrial Ecology – emerged 1980‟s

• The Natural Step (TNS) – early 1990‟s

• Natural Capitalism – mid 1990‟s

• The Triple Bottom Line – late 1990‟s
Paul Hawken       •Has founded many
                  companies since the
                  60‟s: natural foods,
                  catalogue, software
                  •1993 he wrote the
                  seminal text „The
                  Ecology of Commerce‟
                  •Co-chair of The
                  Natural Step Int.
                  •Acts as a consultant   on sustainability issues
Amory and Hunter Lovins
               •Amory is a physicists
               •Hunter is an attorney
               •Co-CEOs of the Rocky
               Mountain Institute a non-
               profit natural resource think
               tank (1982)
               •Author of numerous books,
               incl. Factor Four (1998) co-
               written with von Weizsacker
               •Consultants to large   corporations and nation
     Industrial Ecology
• Began to emerge in the 1980‟s
• Introduces ecology and systems
  to our understanding of industrial
• Leading proponents Brad Allenby,
  Hardin Tibbs, Frosch and
            Six Principles
1.   Industrial metabolism
2.   Dematerialisation
3.   Life cycle analysis
4.   Energy systems
5.   Biosphere interface
6.   Policy innovation
• Achieve balance and harmony with
• Design closed industrial systems
• Replace linear process with cyclical
• Seek technical and managerial
• Harnesses the innovation, leadership,
  planning and entrepreneurial skills of
• Coined in 1992 by WBCSD
• Producing more with less
• Factor 4 / Factor 10
  – Estimated resource productivity targets
• Encourages business to become more
  competitive, more innovative and
  more environmentally responsible
• Similarities to quality
More than just eco-efficiency
“Natural capitalism is a larger message than just
resource productivity … 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”
                Hawken, Lovins & Lovins, 1999
       Natural Capital
• Resources – water, minerals, oil, trees,
  fish, soil, air, etc
• Living Systems – grasslands, savannas,
  oceans, rainforests, etc
• Ecosystem Services – exchange of carbon
  dioxide & oxygen, water storage, flood
  management, waste processing, buffering
  against extremes of weather, regeneration
  of the atmosphere
Agency-Structure Link
One emerging recognition is that,
however much a single company may
be able to do on the eco-efficiency
front, in the end sustainability will
depend on the progress of entire
concentrations of industry, complete
value chains and whole economies.

   Elkington, 1999, p.237
    Capitalism as if Living
     Systems Mattered
• The limiting factor to future
  economic development is natural
  capital, particularly life-supporting
  systems (no substitutes)
• Must address causes of loss:
  – Badly designed business systems
  – Population growth
  – Wasteful patterns of consumption
Natural Capitalism is ...
• Not a „how-to‟ manual
• NC is a portrayal of opportunities
  – not only concerned with protecting the
    biosphere, but also for improving profits
    and competitiveness
• A systems view of our society and its
  relationship to the environment
• Based on the assumption:
  – What‟s good for nature is good for us
             Principle One
           Resource productivity
•       Increasing resource productivity
    –     Eco-efficiency, or doing more with less, win-
          win solutions
•       New profit opportunity for business
    –     By develop new production techniques
    –     Cleaner technology
•       Result is lean manufacturing
             Principle Two
•       Redesigning business process to reflect
        the circularity of biological systems
    –     industrial ecology model
    –     remanufacturing to closed-looped business
    –     No waste or toxins to be sunk back in nature
    –     Substitute non-renewable with renewable
          Principle Three
              Service and Flow

•       Shifting the measure of affluence
        from goods acquisition toward the
        provision of quality, utility and
•       Service-Leasing business model
    •    From product manufacturers to service
       Principle Four
   Investing in natural capital
• Ecosystem services and natural resources
  need to be restored, sustained and
  expanded after decades of degradation
• Reward and invest in businesses that
  achieve the first three principles i.e.
  sustainable businesses
Questions: Why aren‟t companies doing
this if it is so simple and obvious?

Answer: The economic system too often
 rewards wasteful organisations and
 penalises productive organisations
  – Tax labour and subsidise resource use
  – Utility companies are not encouraged to
    encourage consumer efficiency
  – Investment based on short term payback
  – Tax efficient to waste resources

Referred to as „The Broken Compass‟