Natural Capitalism: definition & examples - YouTube

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!

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