A road map for natural capitalism by Lovins, Lovins & Hawken

Note to Reader: if citing this work, the majority I have just copied and pasted or paraphrased, these are not my
own words and should be accredited to Lovins, Lovins & Hawken.

The earth’s ecosystem gives services valued at around $33 trillion each year, for most of the services
there is no known substitute. “the economy, after all is embedded in the environment”

To establish the value of natural capitalism businesses must –

 Dramatically increase the productivity of natural resources – reduce waste, destruction and
pollution – through changes in design and technology, stretch resources further, higher
profits, less capital needed

There are two broad ways of increasing productivity – through technology and through design. Both
can be done in a profitable way.

Implement whole system design – bigger savings can cost less (concept of expanding returns)Lean
manufacturing is a good example of whole system design.

Example – Interface Carpets – Factory designed especially for them, made two simple design
changes to the pumping system. Shows how simple changes yield huge resource savings. Very
relevant as pumping makes up for ¾ of energy consumption in industry!!

1. Fatter pipes = less friction therefore less pumping required (size of motor could be reduced)
2. Bends in pipes = more friction therefore pipes were laid straight and the machinery connecting
them were put in places that were convenient for the pipes rather than the other way around
(otherwise it would have meant the pipes had to take more bends to get to the machines)
Furthermore straighter pipes are easier to insulate which saved on heat loss.

Making small changes for example introducing a lighting system which took into account daylight
would have a knock on effect. Save electricity, workers can see better, quality of output goes up etc.
A study showed that employees working in a well-designed, energy efficient building were between
6%-16% more productive. Since an office tends to x100 more for staff than electricity this gain is
worth 6-16 times more than purely saving the electricity.

A way in which to implement design improvements is when renovating properties.

Example – 20-year renovation budget was used instead to replace all of the windows instead. The
flow of heat & noise was reduced by four times and the new windows let in 6 times more light. The
air con system was replaced for a much smaller unit and money was saved on heating and lighting.
Although the new system originally cost more it saved 75% of the building’s energy use!

Cuts ‘downstream’ can create savings further ‘upstream’

Example – eliminating waste paper. There are many ways to reduce the waste of paper but the main
point here is that less paper usage = less raw paper, which in turn means, less pulp. Less pulp =
fewer trees needed.
Example –reducing waste water in a power station. Reducing one unit of water flowing out of an exit
pipe can save ten units of fuel, cost and pollution in the rest of the system.

Improving the efficiency of resources

Example - Davis Energy Group innovated a new type of wood product used in the construction of
houses which simultaneously reduced the amount of wood needed in a stud wall by 70% while
increasing strength, stability and reducing cost. It also eliminated the need for heating and cooling
systems as the insulation was improved two-fold.

Alternative Environmentally friendly Technology

The Hypercar example

Rocky Mountain Institute first introduced this idea in 1993, it uses the best existing technologies to
reduce fuel consumption by 85% and manufacturing materials by 90%! It uses carbon-fiber, making
it lightweight but still strong, aerodynamic design and better tires reduce air resistance by 70% and
rolling resistance by up to 80%, together this saves 2/3 of fuel consumption. 3 rd 30-50% of the
remaining fuel is saved by the introduction of a hybrid electric engine, finally much of the dashboard,
transmission and suspension can be controlled by electronics instead. A pollution free and high
performance car.

 Shift to biologically inspired production models – eliminate waste, closed loop production,
modelled on natures design, waste = food.

Waste products should be composted into natural nutrients or remanufactured into further
production.

Example – Motorola redesigned its circuit board soldering technique to remove the need for
cleaning which eliminated toxic chemicals from its waste.

Example – Interface, its product solenium can be completed remanufactured into the same product.
It is 4 times stronger but uses 40% less material and is a superior product to normal carpeting. The
Chairman of interface describes waste as “any measurable input that does not produce customer
value”. The company spend 4 years hunting down and reducing waste, during this time input
resources remained the same but revenues rose by $200m.

 Move to a solutions based business model – don’t sell goods, provide service instead, e.g.
Interface – carpeting

Example – Interface (again!!) recognised that billions of pounds was being wasted each time a
company had to change its carpets just because certain areas looked worn. They had to take out all
their furniture and close the office while it was being replaced – major disruption. Interface provides
a floor covering service for a monthly fee. Tiles are checked every month and if they become worn
they are replaced. Typically 80% of the wear is found on only 20% of the carpet, therefore by just
replacing the bits that need it Interface reduces consumption by 80%.
Higher profit can come from providing better solutions rather than selling more equipment. Womack
argues that by switching to a service model the volatility in turnover of capital goods will be reduced.
A constant flow of service will create stability and eliminate the need for excess capacity to cover
peak demand. Using a business model like this makes us richer but consume less, stronger but
leaner and more stable.

 Reinvest in natural capital – restore, sustain and expand natural capital, prudent
reinvestment of earnings in productive capital.

Deforestation and climate change have been strongly linked to the increase in frequency and
severity of natural disasters and are the consequences of inefficient industrialisation. The ecosystem
is a key supplier of components for the life of the planet, we must maintain this is we want it to
continue producing products for us.

Companies that are seen to be leading the way in implementing changes that help to protect the
environment tend to gain disproportionate advantage while those that are seen as irresponsible lose
their legitimacy.

Enriching natural capital is not just a public good- it is vital to every company’s longevity.

Example – California Rice Growing Association – After the rice growing season the land is flooded
and farmer s allow the land to flourish into wetland that creates a natural environment for birds and
plants and replenishes fertility. Furthermore the rice straw is now harvested (it used to be burned
and let off silica chemicals) for use in the building industry.

Where are businesses going wrong??

The instruments companies use to set their targets, measure their performance and hand out
rewards are faulty.
Purchase behaviours are wrong – a company will only look at the upfront cost instead of the cost
over a lifetime.
Many companies don’t check frequently how efficient their systems are and so cannot identify cost
saving areas.
In America many laws penalise the wrong way, for example ‘the use it or lose it’ water laws in the
west practically encourage to waste water. Regulated utilities are rewarded for selling more energy
and water. The Industrial revolution was in part caused by a scarcity of people, now there is a
scarcity of nature. No technology or amount of money can substitute for a stable climate and a
productive biosphere.

Natural Capitalism aims to integrate ecological and economic goals – it is both necessary and
profitable, the companies that first makes the changes will have a competitive edge, those that don’t
make the effort will become extinct.