The future state of humanity and the natural environment still remains to be decided, with this decade being the crucial turning point in history whether to make a change or face imminent environmental consequences (Foster 2011; Sweezy 2004). Research on Natural capitalism and sustainability is extensive, with studies from numerous scientists around the world having congruent results on the social and environmental deterioration of the planet and its occupants. These studies were to increase the awareness and importance of sustainability to push for change, however, are often ignored by governments and corporations who could make valuable change. Research from Sweezy (2004) highlighted that majority of the environment’s destruction has emerged in the last three centuries with the introduction of the Industrial Revolution which instigated the unsustainable development movement and helped establish Traditional Capitalism (Lovins and Lovins 2000). As capitalism has expanded over the last few centuries and resources depleted, it became expected that the effect of the environment would not be permanently affected, with the actions from companies absorbed by the environment’s ‘limitless’ resilience (Sweezy 2004). However, this is not the case with over 60% of ecosystems degraded over the past 60 years, as well as 85% of coral reefs having been destroyed or under threat of destruction in the next 30 years (TheWorldCounts 2014). Traditional Capitalism, driven by profit and growth does not consider impacts on society socially or environmentally (Hunter-Welborn 2000; Sweezy 2004; Mulraj 2016). Therefore, the transition to Natural Capitalism is required now to mitigate the impact for future generations (Marien and Sales 2017). To do this, companies are implementing initiatives like Environmental Management Systems (EMS) to monitor compliance, utilising the conscious practises of recycling, waste and energy reduction as well as introducing social initiatives in regards to employee rights training and charity sponsorship. These initiatives are some ways in which a business can shift to Natural Capitalism and reduce their impact on the environment to strive towards a society of sustainable development. This essay will examine The Natural Step (TNS) process to highlight why sustainable development will become the future standard as well as the benefits natural capitalism offers over its traditional counterpart.
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Traditional Capitalism can be seen as production that is only concerned about immediate and tangible results (Foster 2011). Alternatively, Natural Capitalism is about restoration and integration, due to the recognition of the relationship between the supply of capital and capital (Rao 2003). The ideas within Natural Capital have been adopted to TNS system, a framework created for businesses to implement and reach significant levels of sustainability. It outlines four system conditions, the first condition being “In a sustainable society, nature is not subject to systematically increasing concentrations of substances extracted from the Earth’s crust” (Dhakal 2019). This system condition acknowledges that businesses can only reach a sufficient level of sustainability if natural resources used are able to be replaced (Lovins and Lovins 2000). The main argument of this condition is that companies need to rapidly increase resource efficiency, treating commodities as irreplaceable (Lovins and Lovins 2000). An example of condition one is the palm oil industry which has caused extensive deforestation in Indonesia. Dr. Wich, a writer for the United Nations Environment Programme specified that “the current policies for land conversion on Borneo are simply unsustainable” (M2 Presswire 2015). However, due to the growing population and the increased demand for palm oil and wood products, it is more important than ever to develop and utilise forests more sustainably. In this market, global government regulation is non-existent. For deforestation to become a sustainable practise in the future, strong enforceable regulations have to be created and until then sustainable development cannot occur with this being the downfall of traditional capitalism. Nonetheless, businesses can reduce their reliance on non-renewable products and increase their recycling efficiently in their product cycle to mitigate the impacts on the environment. Natural capitalism highlights that individuals and businesses can benefit from a ‘cradle to cradle’ system in that products can be reused and recycled and therefore lower their contribution to landfill. This can involve companies that find it difficult to transition due to cost and can instead restructure and/or make change to product designs to substitute capital for renewable resources (Vlachou 2005). From implementing strategies and the first condition will allow businesses to improve their efficiency and ensure resources are not depleted in the future (Lovins and Lovins 2000). Increasing a business’s efficiency will not only increase profits and lower costs but benefit society environmentally (Ledewitz 2002).
TNS is a widely adopted framework that has been applied to businesses to benefit their bottom line. The second systems condition explains that “In a sustainable society, nature is not subject to systematically increasing concentrations of substances produced by society.” (Dhakal 2019). Therefore, markets are not able to manufacture chemicals that put either humanity or ecosystems at risk as a means of making a profit (Dhakal 2019; Marinova, Annandale, and Phillimore 2007). The production of chemicals that are not easily broken down or managed have a permanent effect on ecosystems, for that reason it is important for businesses to substitute unnatural compounds for ones that will break down easily in nature (Marinova, Annandale, and Phillimore 2007). Ganellen Pty Ltd is a construction company which was criminally convicted over cement and oil contamination into council stormwater systems (Northern Beaches Council 2018). The actions of this company had irreversible consequences on the environment and effected both ecosystems in the area and the surrounding community. The company focused on the capitalism mentality of maximising profits and did not dispose of these toxins correctly due to the cost involved. TNS second system condition encourages businesses to find alternative compounds that are biodegradable, recyclable and safe to break down in nature (Rosenblum, 2000). These processes will decrease the amount of toxins that affect nearby populations as well as reduce waste which will improve business eco-efficiency. Natural Capitalism performs its role in to help companies reduce their omissions and substitute chemicals within their production/supply cycle. Patagonia is a company dedicated to reducing emissions and investing in natural capital (Loughman 2016). Patagonia is actively reducing packaging from product lines from plastic to 100% recycled paper board, which reduced both their plastic pollution and production emissions from entering the environment (Loughman 2016). Also, Apple Inc. has made it their mission to become one of the most sustainable companies both in retail and supply sectors. By adopting a goal to eliminate harmful chemicals like mercury and PVC from all their products going forward (Apple 2019a), as well as finding sustainable alternatives when they become available and implementing them into the supply chain around the world (Apple 2019b). Both companies are recognised as ‘leaders’ in their market and both have successfully implemented various sustainable practises within their business which resulted in record growth and profit each fiscal year. The implementation of TNS into a company does not have to reduce company profits, as shown above, the correct execution of system conditions will not only benefit the environment but can significantly increase a company’s reputation, growth and profit.
Utilising multiple TNS conditions will help businesses reach environmental goals more efficiently to further their goal to sustainability. The third system condition is “In a sustainable society, nature is not subjected to increasing degradation by physical means” (Dhakal 2019; Marinova, Annandale, and Phillimore 2007). In other terms, society cannot follow traditional sustainable development patterns at the price of biodiversity loss as this is a requirement to make earth liveable and maintain our existence. By focusing company attention onto the conservation of natural resources, biodiversity and the regeneration of natural capital (Senge 1999) as without the regeneration of resources and the capabilities that it provides us like waste processing, soil fertility, clean air and water (Senge 1999), the entire system will fail. This condition can be efficient for businesses as natural capital regeneration will allow for a sustainable and constant flow of resources to utilise if managed effectively. This can be achieved by business activities that contribute to deforestation, exploitation of marine life and non-renewable energy sources like gas and coal being reduced (Longo et al. 2016). For example, Deforestation in tropical regions is one of the most detrimental impacts on biodiversity loss and natural resources globally with upwards of 155,000 km2 of forest being transformed into agricultural land per year (Critchley and Bruijnzeel 1996). These further increases in land use has made deforestation become one of the leading contributors to both biodiversity loss and emission generation globally (Hansen et al. 2013). Increased land clearing is due to an increased demand for agriculture and wood products to manufacture goods like furniture. Ikea is one of the leading retailers of furniture and operate in more than 52 markets around the world (Ikea n.d), with 75% of Ikeas raw material originating from forests. Ikea have adjusted to TNS model by actively engaging in sourcing wood from sustainable companies as well as hiring employees which regulate suppliers, verify that sustainability practises are implemented and offer alternative processes and/or suppliers when they do not adhere to Ikeas strict procedures (Ikea 2019; Rosenblum 2000). Ikea and other businesses that have implemented Natural Capitalism have increased their revenue and bottom line by driving innovation to create change and which has influenced change in consumer behaviour (Senge 1999). The argument for companies being unable to change their procedures due to costs being detrimental to the long term are untrue, with Ikea having an increased revenue of 4.5% in 2018 compared to the previous year (Inter IKEA Holdings 2018).
In order for businesses to implement TNS into their corporate strategy, it requires the recognition of human capital and their important contribution to sustainable development, a concept which traditional capitalism does not account for. The fourth system condition is “in a sustainable society, people are not subject to conditions that systematically undermine their capacity to meet their needs” (Dhakal 2019; Marinova, Annandale, and Phillimore 2007). The social injustice that are faced among cultures and people must not be disregarded in development; people need to adhere to their basic human needs including dignity and respect (Rosenblum 2000). Traditional capitalism does not take this into account with corporations exploiting employees with minimal work conditions and regulations to make a higher return of investment to satisfy stakeholders (Marien and Sales 2017). It can be argued that condition four is the most vital to TNS concept as sustainability and ecological change is impossible without prioritising the social relationships of the environment and humanity. Increased pressure on resources and capital are caused due to population increases (Sweezy 2004) and this is not able to be addressed without change to both resource allocation and resource ‘bias’. This condition is therefore divided into two parts; Technical and Social (Rosenblum 2000). This can be achieved by having companies adopt natural capitalism, whom advocate for reduced consumption, waste efficiency and recycling management. An example of this is Patagonia. Patagonia who promote natural capitalism is a company that supports a service and flow economy, by adjusting consumer and producer behaviour from the purchase of materials and goods to one that supplies services. Patagonia launched a recycling program ‘Worn Wear’ in 2005 to repair old Patagonia apparel including jackets and shorts (Engel 2018). Patagonia in the fiscal year of 2017 made 50,295 clothing repairs (Engel 2018) and doing so allowed consumers to recycle old garments which reduced carbon emissions, lowered consumption and spared resources that now can be allocated elsewhere. To lower resource ‘bias’ or the social aspect of condition four, capitol needs to be distributed fairly amongst populations and countries to allow for equal access to these resources (Rosenblum 2000). Foxconn is a manufacturing company situated in Taiwan and has partnerships with Apple Inc. for the production of iPhones and other products. Foxconn has been under scrutiny for their employment practises, like underpaying employees, no sick/leave pay as well as being laid off without wages during lower production times (Condliffe 2018), which has even led to deaths of employees (Merchant 2017). Apple being a major leader in both social and environmental sustainability has outlined strict guidelines to suppliers to ensure that social injustices do not continue to occur, by removing suppliers from the supply chain if found guilty of overworking employees or violating rights (Apple 2019b). While the importance for both producers and consumers to act more responsibility to drive down consumption, reduce emissions and act environmentally ethical, the social aspect of human well-being is argued to be the most important and acts as the glue that allows for sustainability to actually occur (Rosenblum 2000; Senge 1999).
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In conclusion, the shift to natural capitalism should be taken more seriously with more of an effort needing to be made in order to support this paradigm shift. Businesses have only recently become concerned with the natural environment, with many highlighting the unsustainable practises of businesses and governments which allowed for humanity to accept that changes towards natural capitalism are required. What Senge (1999) argues remains true with the concept of natural capitalism, “what business would not want to eliminate input costs, and thereby increase profits?”. Traditional capitalism although being cost effective in ‘some cases’, is continuing to cause problems to both the environment and humanity effecting the goal to reach sustainability. Natural capitalism is a shift in both producer and consumer behaviour by suggesting changes to processes and ‘ways of thinking’ to push for a service and flow economy and cradle to cradle system of consumption, which both are beneficial in the long term. By breaking away from these traditional processes will allow for the regeneration of natural resources, which will in turn, allow a more equal distribution of capitol to humanity. TNS system outlines the way businesses can transform society both environmentally and socially to achieve sustainability, however, does not explicitly give ways in order to resolve current problems (Rosenblum 2000). This was intentional as TNS not being a checklist, but rather a guideline allows for businesses to not only choose what sustainability strategies to implement, but it allows for further innovation and greater opportunities to occur (Senge 1999) which in the long term will benefit both the company and the globe. TNS was developed to suggest new ways in order to benefit society and helps to answer what could happen if humanity continued down the path of traditional capitalism and did not innovate or improve. The benefits of being cost effective in the short term can only be an excuse exploited for so long, the way in which businesses operate as a whole is unproductive and counter intuitive and for the sustainability of our world this will have to change. Scientists and businesses have been discussing the relationship between economic growth and sustainability for decades yet as time goes on nothing has changed and the situation has become worse (Longo et al. 2016). Therefore, corporations must create goals, develop processes and implement change to ensure that humanity benefit and reach sustainability both socially, environmentally and economically.
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