Session 10 A Road map for natural capitalism

Idea : the earths ability to sustain life is threatened by the way the different stakeholders use earths resources capitalism needs to be revamped Problem at a company point of view : companies are interested in using exploitable resources of the earths ecosystem. However, they dont take into account what ecosystem services offer for free. The purpose of this article is to provide an approach considering not only the biosphere protection but also the improvement of profit and competitiveness. The idea is to make resources more productive.

Definition of natural capitalism : What capitalism might become if its largest category of capital-the natural capital of ecosystem services-were properly valued

Earth

Resources

Ecosystem services

The issue today is that the concept of cost of destroying ecosystem services emerges often too late Example : deforestation in Chinas Yangtze basin in 1998 flooding that killed 3,700 people Why are companies and governments so prodigal with ecosystem services? -Value of ecosystem services doesnt appear on their balance sheet! -Nevertheless, according to journal Nature : earths ecosystem services= $33 trillion a year

Journey to natural capitalism, 4 major shifts : Dramatically increase the productivity of natural resource. The purpose is to develop dramatically more efficient production processes. Shift to biologically inspired production model. The purpose is to manage to have an activity without any waste like in nature. Change your business model. The firm needs to considerate to shift from a selling product business model to a providing services one. This model entails a new vision of value. Reinvest in natural capital. It is the ultimate stage. The purpose is to reinvest in restoring, sustaining and expanding the natural habitat and biological resource base of the firm. It could help it to gain public reputation for environmental responsibility. This will translate later into profitability. The different steps to the journey to natural capitalism seem to be crystal clear However, some pending issues : Lets considerate how companies make purchasing decisions. Decision making is based on initial cost rather than full life-cycle cost waste Often, saving resources represent a very small percentage of total costs executives pay really little attention to saving resources Many executives think they have already shifted from inefficiency to efficiency in the 1970s previous organization was revamped because of oil shock Rewards for some jobs create perverse incentives example : architects and engineers are rewarded for what they spend and not for what they save Why is natural capitalism so important for companies? Pioneer will have an undeniable competitive advantage. The other companies will be lagging behind.