Natural Capitalism

Also known as eco-efficiency1, the Natural Capitalism framework was developed by three luminaries of sustainability: Paul Hawking, Amory Lovins, and Hunter Lovins (see Figure 3.1). It is described in detail in their influential book 2002 Natural Capitalism. It is a frame­work for rethinking the value of social and natural resources in the context of business. Easy to understand, it creates a quick founda­tion for understanding the value of sustainabil­ity and the new perspectives around sustain­able design and development. [4]

Value Ecosystem Services


Radical Resource Productivity(achievable now)

FIGURE 3.1. http://www. flickr. com/photos/rosenfeldmedia/3258855507

The Natural Capitalism framework.

Strengths: Clear, simple model of capital and value. Covers social, environmental, and fi­nancial issues. Business-relevant and friendly. Integrates well with design and business func­tions. Easy to address in the development pro­cess. Easily combined with other frameworks.

Weaknesses: Doesn’t describe a development process. Not deeply detailed. [5] [6]

industry that aren’t found in nature. This includes all intellectual property (IP), and it is where the bulk of value contributed by designers is found.

• Financial Capital is money and the many forms it comes in (such as cash, credit, stocks, bonds, options, and so on). Finan­cial capital is an incredible invention that al­lows us to use and invest in the other forms of capital in more effective and innovative ways.

In this framework, four primary shifts are pro­moted: [7]

at times. It is responsible for the dramatic reductions in energy use per capita in the state of California over the past 30 years.

For example, refrigerators use about a fourth the energy they did three decades ago, and homes use much less energy for heating. This shift is merely the continuation—and acceleration—of what we’re already so good at doing (designing efficient solutions). Included in this shift is a reduction of toxic materials throughout the product life cycle.

• Shift 2: Ecological Redesign shifts our perspectives and processes to biologically – inspired models. Biomimicry describes one such approach. By better understanding na­ture, which has been creating and improv­ing solutions for millions of years, we can create better solutions that efficiently use all four forms of capital. [8]

can often deliver better function, value, and relationships from services—even if there is an object involved in some way. Solutions like rental cars and downloadable music de­liver better efficiency, as well as new func­tionality, than the product-oriented models they replace (in these cases, everyone own­ing his own car or music CDs).

• Shift 4: Investing in Natural Capital

builds a stronger resource base, as well as a more resilient world. The authors of Natu­ral Capitalism often remind us that we use natural resources as if they are infinite and that our development in the world acts as if the world itself doesn’t matter.[9]

Natural Capitalism clearly convinces us that we can have a huge effect on the efficient use of all forms of capital now, using technologies we already know well. We don’t have to wait for new advances to make a radical difference,

although there are many wonderful advances on the horizon that will only improve things further. Instead, we simply need to make effi­ciency a priority. Natural Capitalism prioritizes the most important sectors of energy and ma­terials use, like transportation, home heating, electricity generation, water use, and food, in order to make the most gains as quickly as pos­sible. However, it also notes that all pollution is inefficiency at work, so while it triages around the most critical issues, it’s also inclusive of most of the issues important in the other frame­works.

We don’t have to wait for new ad­vances to make a radical difference… we simply need to make efficiency a priority.

Critics of Natural Capitalism point to its failure to challenge some basic tenants of produc­tion, consumption, and waste that should be rethought. For example, proponents of the Cradle to Cradle framework (described next) would still characterize Natural Capitalism as a

“cradle to grave” approach, meaning that while efficiency may go up and waste will be low­ered, there is still waste of some kind (and any amount is too much). The idea of waste doesn’t appear, for example, in nature. The outputs of one process are the inputs of another. This is one of the fundamentals of Biomimicry (see the framework that follows). Furthermore, it is possible to develop manufactured capital that can be fully recycled into materials of like qual­ity when they reach the end of their usefulness. This differentiates waste or “cradle to grave” thinking from “cradle to cradle” thinking. (See the next framework.)

Nonetheless, it’s not likely that our society will suddenly jump from deeply-ingrained “cradle to grave” solutions to revolutionary “cradle to cradle” solutions in one step. The progress will be gradual, and Natural Capitalism represents an important framework for improving effi­ciency and effectiveness on the road to deeper frameworks, like Cradle to Cradle.

Natural Capitalism’s four types of capital are easy to understand, but they aren’t the only model describing forms of capital other than financial. There are several lists of capital you may encounter and while some list four, five, seven, or even nine types, all are compatible in that the same basic categories are simply broken into finer subcategories in some:

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As you can see, all of the forms of capital from every system include National Capitalism, Financial Capitalism, and several different categories of Human Capitalism.

Many Types of Capital (continued)

The difference in numbers of types of capital can be accounted for in the system’s differentiation of capital. To understand some of the finer subcategories of capital, use these descriptions:

• Natural Endowments (location, soil, assets, forests, climate, water, etc.)

• Financial Resources (savings, reserves, etc.)

• Humanly Made Capital (buildings, infrastruc­ture, roads, telecommunications, assets, etc.)

• Institutional Capital (legal protections, intan­gible property, shareholder value)

• Knowledge Resources (patents, IP, etc.)

• Human Capital (skills, insights, capabilities)

• Cultural Capital (music, language, ritual, at­titudes, perspectives, values, etc.)

Forms of Capital:

Natural Capitalism Natural

Many Types of Capital (continued)




Progressive Economics Natural Human Social



Michael Fairbanks: Changing the Mind of a Nation Elements in a Process for Creating Prosperity

Natural Endowments (location, soil, assets, forests, climate, water, etc.)

Financial resources (savings, reserves, etc.) Humanly Made Capital (buildings, infra­structure, roads, telecommunications assets, etc.)

Institutional Capital (legal protections, intan­gible property, shareholder value)

Knowledge resources (patents, IP, etc.)

Many Types of Capital (continued)

Human Capital (skills, insights, capabilities) Cultural Capital (music, language, ritual, at­titudes, perspectives, values, etc.)

LASER Manual Social Capital

Cultural and Historical Capital Human Capital Institutional Capital Financial Capital Potential Exchange Capital Built Capital Technological Capital Natural Capital

Updated: September 27, 2015 — 7:51 pm