The Idea in Brief
The earth’s ability to sustain life is in peril—as companies consume natural resources in ways that prevent ecosystems from regenerating our air, water, and food supplies. For example, clear-cutting forests for wood fiber damages forests’ ability to store water, provide animal habitats, and regulate climate.
Why such rampant exploitation? Unlike the value derived from consuming natural resources, the value of ecosystems’ most crucial services don’t appear on balance sheets. Yet that value is worth $33 trillion a year.
You can capture some of that $33 trillion and help restore the planet by practicing natural capitalism—conducting business profitably while also protecting natural resources. Some strategies suggested by Amory Lovins, Hunter Lovins, and Paul Hawken: Adopt technologies that extend natural resources’ usefulness. Design production systems that eliminate costly waste. And reinvest in nature’s capital; for instance, by planting trees to offset power-plant carbon emissions.
Work with nature, and you boost profitability—pulling ahead of rivals who continue to work against nature.
The Idea in Practice
The authors recommend these steps to natural capitalism:
Increase Natural Resources’ Productivity
Develop dramatically more efficient production processes that stretch natural resources—energy, minerals, water, forests—5, 10, even 100 times further than they go today. You’ll ensure that these resources pay for themselves over time. And you may save on initial capital investments.
In its new Shanghai carpet factory, Interface redesigned their process for pumping liquids by using fatter-than-usual pipes, which created less friction than thin pipes do. The move cut power requirements by 92%. The new system also cost less to build, involved no new technology, and worked better than traditional systems in all respects.
Imitate Biological Production Models
In nature, nothing goes to waste. Ensure that every output of your manufacturing processes is composted into useful natural resources or recycled for further production. You’ll preserve ecosystems while eliminating the cost of waste disposal.
Interface invented a new floor-covering material, Solenium, which can be completely recycled into the identical floor product, reducing landfill waste. Solenium lasts four times longer and uses 40% less material than ordinary carpets. It’s toxin-free and stainproof, resists mildew growth, and is easily cleaned with water. Between 1994 and 1998, Interface’s revenues rose by $200 million. Of those revenues, $67 million has been attributed to the company’s decreased waste.
Change Your Business Model
Your customers don’t necessarily need to own your products. Often they merely need to be able to use them. Therefore, consider shifting your business model from selling products to providing services.
Interface realized clients want to walk on and look at carpets—not necessarily own them. So it transformed itself from a company that sells carpets into one that provides floor-covering services. It leases its service for a monthly fee, taking responsibility for keeping its carpets clean and replacing worn carpet tiles. This business model vastly reduces the amount of carpeting sent to landfills. And it improves customers’ productivity by eliminating the need to close offices and remove furniture to replace entire carpets.
Reinvest in Natural Capital
Reinvest in restoring, sustaining, and expanding your natural habitat and biological resource base. You’ll gain a public reputation for environmental responsibility—which translates into profitability.
Engineering company Living Technologies has developed a system that uses linked tanks of bacteria, algae, and plants to turn sewage into clean water. Its approach yields cleaner water at a reduced cost, with no toxicity or odor (making it compatible with the company’s residential neighborhood).
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Copyright 2007 Harvard Business School Publishing Corporation. All rights reserved.
Further Reading
Articles
Scorched Earth: Will Environmental Risks in China Overwhelm Its Opportunities?
Harvard Business Review
June 2007
by Elizabeth Economy and Kenneth Lieberthal
In China, where environmental degradation has reached alarming levels, practicing natural capitalism has become particularly urgent. The authors suggest ways in which multinationals doing business in China can avoid hazards associated with environmental crises (such as lack of usable water) by factoring those risks into their corporate strategies. The article also provides ideas for reducing your environmental footprint in China. For example, Coca-Cola’s bottling plants in China operate with no net loss of water resources. Finally, Economy and Lieberthal explain how to help China restore its environment in ways benefiting your company, too. For instance, GE works with Chinese scientists to develop clean-coal technologies it will use elsewhere.
Beyond Greening: Strategies for a Sustainable World
Harvard Business Review
January 1997
by Stuart L. Hart
Three decades into the environmental revolution, many companies in the world’s industrialized nations have recognized that they can reduce pollution and increase profits at the same time. But beyond corporate “greening” lies an enormous challenge: how to develop a sustainable global economy that the planet can support indefinitely. Hart identifies three stages of environmental strategy: 1) pollution prevention through minimizing or eliminating waste before it is created, 2) product stewardship, or reducing all environmental impacts associated with a product’s full life cycle, and 3) development of clean technology, such as power systems that eliminate or neutralize greenhouse gas emissions.
