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Capitalism Vs Natural Capitalism

Capitalism is a financially profitable, nonsustainable aberration in human development as it doesn’t completely conform to its own accounting principles and liquidates its capital and calls it income (Hawkins & Lovins, 1999, p. 5). Though this is true, the natural resources and living systems, as well as the social and cultural systems that are the basis of human capital, must be categorized as valuables in a system of natural capitalism due to the neglection of assigning any value to the largest stocks of capital it employs (Hawkins & Lovins, 1999, p.5). Natural capitalism therefore implies proper use and maintenance of the natural system while efficiently deploying human capital for production. Natural capitalism is also a deviation from traditional capitalism as it recognizes human and natural resources without the limitation to currency and goods.

Natural capitalism is an idea that would issue the possibility of a new industrial system and open up numerous opportunities for all of society. In the concept of natural capitalism, misconceived or badly designed business systems, population growth, and wasteful patterns of consumption are the main causes in natural capital loss (Hawkins & Lovins, 1999, p. 9). In order to obtain a sustainable economy, these conflicts must be addressed. In this strategy, it is implied that the environment is “an envelope containing, provisioning, and sustaining the entire economy,” and that the limiting factor to future economic development is the availability and functionality of natural capital, in particular, life-supporting services that have no substitutes and currently have no market value (Hawkins & Lovins, 1999, p. 9).

The environment provides us with beneficial resources, but change must be issued in the ways companies produce. With the depletion of our natural resources, the strategies of radical resource productivity, and service and flow economy (Hawkins & Lovins, 1999, p. 10-11) are important in improving the economy by providing benefits including increased resource production and reduced waste of materials. The examination will be on the company Interface Inc. Interface Inc. has adopted the concepts of radical resource productivity, and service and flow economy in effort to becoming a sustainable corporation. Its simple yet realistic approach has seen the company take progressive steps in energy conservation and sustainability. The corporation has its own individual department that is exclusively interested in seeking its aggressive sustainability strategy.

B. Strategies of Natural Capitalism (1) Radical resource productivity Substantial downsizing of resources regarded as destructive or wasteful could be viewed as a major business opportunity. Restructuring the production technology and design could see natural capital such as water, minerals, and energy increase in vast quantities. A company that wishes to use this natural capitalism approach has two options to choose from. Other than undertaking a holistic system design, the organization can interpret new alternative technologies that improve natural processes. The idea of whole system design is directed by the model of expanding returns.

This indicates that the new system design will cost the company less while providing resource conservation. The lean manufacturing is the ideal example of how the concept of whole system design can be used by a corporation to lower production costs while improving their resource savings. Interface Inc. is a major interior manufacturer for corporate, institutional and residential clients. Interface’s engineer, Jan Schilham, implemented two simple design changes that would cut the power requirement by a reduction of 92% and in addition, this redesigned system cost less to construct, involved no new technology, and worked better in all respects (Hawkins & Lovins, 1999 https://hbr.org/2007/07/a-road-map-for-natural-capitalism).

Opting for much fatter and wider pipes allowed less horsepower to be required for the factory because the new pipes would “create much less friction than thin pipes do and therefore need far less pumping energy” (Hawkins & Lovins, 1999 https://hbr.org/2007/07/a-road-map-for-natural-capitalism). They also switched from having long and crooked pipes to short and straight ones. Schilham’s short, straight pipes were easier to insulate, saving an extra 70 kilowatts of heat loss and repaying the insulation’s cost in three months (Hawkins & Lovins, 1999 https://hbr.org/2007/07/a-road-map-for-natural-capitalism).

These simple changes helped the company by reducing costs and providing the desirable quality without having to involve any introduction to new technology. Companies and corporations tend to benefit from at least 18 economies by incorporating changes such as the use of premium efficiency motors instead of the basic ones. Innovative technologies is one other option that companies have used to reduce waste. This strategy is appropriate only when remodeling is required. In a situation like this, the entire system is replaced by a completely different technology.

With Interface Inc., this approach was not needed since the company could use the implements from before and realize greater savings while sustaining quality in their products. (2) Service & flow economy The other natural capitalism strategy that companies can adopt in order to get the most efficient results is the change of its business model. This includes a change from the traditional design of transacting and functioning to a design that minimizes wastes and secures better savings. Interface Inc. has succeeded in ensuring that its form of doing business, selling carpets, is one that doesn’t leave the environment in a state of vulnerability through the increase of waste.

The classic approach of many carpet companies includes selling the floor carpet to clients and leaving the waste disposal responsibility with them. Interface Inc. realized this and chose to lease the carpet as opposed to selling it. Evergreen Lease, their lease program, allows its customers the comfort that comes with owning a carpet while reliving the trouble of disposal of the product when it becomes a waste. The client is allowed periodic inspection and replacement of worn out parts of the carpet for only a monthly fee. The main reason why this idea has delivered satisfaction to the customers is because they never have to worry about disposal (Epstein and Roy, 2001). The corporate clients obtain benefits as well since they get a tax advantage as the carpet is viewed as a deductible expenditure and not a capital expense.

C. Sustainable living outcome #1 Corporations must involve all stakeholders if they wish to achieve success. They should create enabling environment for all stakeholders to freely express their ideas on how sustainability can be promoted without compromising the quality of the products. In his address to the employees in 1994, Ray Anderson, the founder of Interface Inc. planned for the company to “be the first company that, by its deeds, shows the entire world what sustainability is in all its dimensions: people, process, product, place and profits- and in doing so become restorative through the power of influence” (Interface Inc., 2014).

The company has been able to include people in a bid to ensure that their environmental sustainability efforts beat fruits. The stakeholders that have engaged with the company in its efforts include the owners, employees, suppliers and customers. Through constant consultation, the company has been able to introduce better products and processes that ensure sustainability. For instance, it is through its engineer, Jan Schilam, which it was able to change its pipes and reduce the horsepower needed for carpet manufacturing.

The company recognized that the customers did not particularly have any need for the carpet. Instead, they needed the “comfort and beauty the carpet offers” (Erin, 2008). They therefore solved this social problem by the Evergreen Lease. – Sustainable living outcome #2 There needs to be a sustainability strategy in place if a company wants to succeed it its natural capital preservation. These strategies should be long term in nature but divided in executable short term basis. The strategy should start with identification of key areas that pose substantial impact on sustainability. These areas might include, but not limited to, energy consumption, labor and diversity in the workforce (Epstein and Roy, 2001). It is along these issues that plans and programs are to be formulated.

The challenge is always presented in the event where the short term objectives become inconsistent with the overall long term sustainability strategies. Interface Inc. (2014) points out in their ‘Mission Zero’ that their mission is to “eliminate any negative impact the company may have on the environment by the year 2020”. This long term plan has been broken down to practical activities. The company decided to do a sustainability study and identified disposal of waste as a major concern. For this, they formulated the Evergreen Lease. This alongside all its plans in its aggressive sustainability strategy all lead to the accomplishment of the goal it set out to reach in 2020.

– Sustainable living outcome #3 As part of ‘sustainability actions’, a company has to design appropriate structures and systems. This implies that they have to put in place systems and structures that will ensure that company minimizes waste. To do this, the company needs to invest in new technologies or complete a whole system restructuring. A combination of the social aspect, economic betterment and environmental consciousness were put into consideration while developing these systems. In the case of Interface Inc., the whole system restructuring was sufficient. By restructuring its manufacturing process, the company was able to reduce energy consumption by about 90%. This method ensured reduction in costs while simultaneously reducing resource wastage using the already available technology. By including a strong human element in the formulation of the system, the company managed to present a holistic solution to a problem.

D. Sustainable economic system To develop a sustainable economic system, the society needs to start by developing an aggressive, yet realistic, sustainability strategy. When developing such strategy, a holistic approach has to be taken. This implies incorporating the technological, economic, social and environmental aspects in the strategy. The first stem will involve identification of key sustainability areas. After doing so, the society will formulate plans and processes that will ensure that the areas of concern are sufficiently addressed. Other than including all stakeholders from the formulation to implementation phase, the society also needs to ensure that these plans, structures and systems are consistent with the society’s capabilities and resources. The long term aggressive sustainability strategy should also be consistent with the short term plans.

E. Conclusions/Recommendations Just like any other factor of production, natural capital is important to all business and institutions. This is sufficient reason for the need for conservation of such important factor of production. The natural capitalism strategies are a good point to start this process. It is important that each element, environmental, economic, social and technological, are included in all strategies aimed at ensuring sustainability. Such holistic approach ensures conclusive and sustainable results.

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