Natural capital is the earth’s ability to provide for our needs. It is the finite resource of ecosystem services, which includes clean air and water, fertile soil, productive oceans and forests, and all of nature’s resources that contribute to human well-being. The more we take from our natural resources without giving back, the less sustainable our world becomes. There are three pillars on which Natural Capital rests: ecological sustainability, economic prosperity, and social equity.
Natural Capital offers us an opportunity as a global society to make decisions about how we govern ourselves in order to create a sustainable future for generations yet unborn. In other words, it asks what kind of planet do you want your children or grandchildren to inherit. It is vital that people, businesses, and governments understand the importance of natural capital in maintaining a healthy planet. By following the three pillars of sustainability, we will get there. It belongs under the environmental and social aspects of ESG.
- The 3 Pillars of Natural Capital
- Why is it important?
- What is an example of natural capital?
- What does natural capital mean to business?
- How is natural capital affected by a supply chain?
- What can we do?
The 3 Pillars of Natural Capital
- Ecological Sustainability: Ecological sustainability means that we must maintain the natural capital that supports life on Earth. Most ecological degradation is caused by unsustainable use of our natural resources. Like any other resource, natural capital can be depleted and lost if it is used faster than it can be replenished. However, unlike most other finite resources, ecosystem services cannot always be easily replaced or substituted with man-made alternatives. Therefore, it is not a matter of moving on to a new resource because there often isn’t a viable alternative to the services ecosystems provide.
- Economic Prosperity: Economic prosperity can be achieved when businesses and governments make smart investment decisions – investments that secure economic returns over the long term. Currently, our economy functions as if we have three Earths. In other words, if we take more from our natural capital than can be replenished, as has been the case for many years, then it is as if we have three planets at our disposal to maintain ecological balance. Businesses and governments must operate with a zero-net gain philosophy in order to achieve long-term viability.
- Social Equity: Social equity refers to fair access to the benefits of natural capital. The wealthy have always been able to invest in environmental safety nets such as recycling, clean air and water, or security from extreme events. Less affluent individuals and nations have not. In order to achieve a zero-net gain, everyone must be guaranteed equal access to natural resources. In other words, the disadvantaged cannot afford to be green and therefore do not benefit from environmental protection. Economic prosperity is one factor that can help to resolve this issue.
Why is it important?
Natural capital is not just about planting trees or buying the right light bulb. It’s about making tough political, economic, and social decisions in order to ensure a sustainable future for generations to come. By being aware of how our natural resources are being used, we can take an active role in protecting the environment and ensuring the future is prosperous.
In the words of Thomas Berry “There are no passengers on Spaceship Earth, we are all crew.” The goal is not to make a perfect world but to create one that is better than the one we have. The good news is that when you love something it becomes easy to do what is best for it, which in turn benefits all involved. Ultimately this understanding leads us to a sense of well-being and fulfilment, both for ourselves and others.
What is an example of natural capital?
Natural Capital is something to be embraced rather than feared because it offers an opportunity for us to live in harmony with nature rather than in constant conflict. Natural resources are not only renewable but they are also highly adaptable. The problem is that many are not aware of just how adaptable they are. One example is the dairy industry, which contributes 14 to 18% of the total global anthropogenic greenhouse gas emissions. This is largely due to cow burping and some flatulence which accounts for 80% of all methane emissions from agricultural activities in New Zealand, Australia, and North America. When organic matter breaks down it releases potent greenhouse gases. In an experiment, scientists altered the grassland growing conditions of a field of cows by increasing both the frequency and intensity of defecation events using a mechanical fluffer device. As a result, more than 96% less methane was produced from the manure of these cows as compared to regular cattle.
This is just one example of how adaptable natural capital is – as long as we manage it for the good of all. We need to discard old ways that no longer serve us and embrace new ways that do.
What does natural capital mean to business?
Businesses are able to make good decisions for the environment by incorporating natural capital into their decision-making. Natural capital is an essential component of solving many environmental problems. The businesses can be a part of this movement by making sure that the business operates in a sustainable manner. One way that businesses contribute to this movement is through waste management practices. The waste management process makes sure that the business is operating in an environmentally responsible way.
Another way they can contribute to this movement is by recycling and reusing materials that were once used again through a new process. Businesses can also find ways to source sustainable products from their suppliers, which would improve the economic sphere of sustainability. Businesses can encourage their employees to recycle, reuse, and find ways to reduce material waste.
How is natural capital affected by a supply chain?
Supply chains can also have an effect on natural capital because they contribute to resource depletion. The only way the demand for natural resources can be met is if there is more of a focus on recycling and reuse of these products. This would reduce the need for the extraction of new natural resources, which would lower the pressure on natural capital.
The management of the supply chain is designed to make sure that we are able to sell products in a sustainable way. The supply chain would also make sure that the materials used for production are locally sourced and recycled, making sure that we are not taking away from our natural resources and affecting our natural capital.
What can we do?
The good news is that there are many things we can do that benefit us and the planet. One of these is composting food waste into nutrient-rich soil enhancers. This reduces greenhouse gases while improving the quality of our soils, which in turn enables better crop growth.
Another way is to grow more trees. Cut on on Earth then we cut down by planting a new tree for every old one we cut down. This is the goal of MillionTreesNYC, which encourages New Yorkers to plant and care for trees throughout the city.
What is biomimicry?
One of the most exciting ways to get involved with natural capital is through biomimicry – an emerging science that unlocks nature’s best ideas and emulates them in business, technology, design, and life. Biomimicry is the imitation of nature’s processes, designs or both to solve human problems. A lot of it involves using lessons from the natural world to solve engineering challenges. A good example is biomimetic architecture, which replaces standard construction with lightweight materials inspired by biological species such as termites or by the structure of natural phenomena such as soap bubbles.
One of the most fascinating ways to do this is through biomimetic landscapes, which take inspiration from nature and its processes in order to solve urban issues. A good example is New York City’s High Line Park, an elevated linear park that has been converted from a disused railway to a world-class public space. It is built from local, sustainable materials and designed to maximize biodiversity.
What are more ways to get involved?
This looks at how natural capital can be used to solve common issues in both the public and private sectors. There are also many other examples of innovative ways that nature’s resources are being used in order to create what is better for all. They include:
- Using natural resources to help solve the issue of water scarcity and heavy metal pollution by using natural enzymes to clean polluted water and using algae to remove arsenic from well water.
- Combining biomimicry with 3D printing technologies in order to produce more sustainable products. This includes creating new recycling methods through which waste plastic can be transformed into a filament for 3D printers, which can in turn be used to make new products.
- Using sustainable materials in order to create more eco-friendly buildings and cities. This includes using biomimetic systems that enable people to grow their own food within cities using aquaponics, hydroponics, and aeroponics.
As with many things, there are examples of both good and bad ways to incorporate concepts of natural capital. What we need is to keep developing these ideas so that we can learn from the mistakes as well as the successes. We also need to change our way of thinking about resources and how much is enough.
What are examples of natural environment capital?
Some examples of natural capital are air, water, soil, forests, oceans, and all of nature’s resources that contribute to human well-being.
What is human and natural capital?
Human capital is the knowledge, skills, and physical capabilities of humans. Natural capital is the finite resource of ecosystem services, which includes clean air, water, fertile soil, productive oceans and forests, and all of nature’s resources that contribute to human well-being. The value of human and natural capital must be used as a standard for sustainable development.
What are examples of how to live sustainably with natural capital?
There are many ways that people can live sustainably with the earth’s ability to provide for our needs, also known as natural capital. Some examples include recycling and reusing materials, reducing or eliminating waste and pollution, and buying locally-grown produce.
What is natural capital accounting?
Natural capital accounting is measuring the value of natural resources such as air, water and soil. It’s calculated into the GDP (gross domestic product), which measures a country’s total economic activity by adding up all goods and services produced in a year.
What is human capital accounting?
This accounting measures the total value of all the knowledge, skills, and physical capabilities of humans. It’s calculated into GDP. Not only does this measure a country’s economic activity by adding up all goods and services produced in a year, but it also shows how sustainable development can be achieved through maintaining and building up natural capital.
What are ways you can take action?
There are many actions that people can take, including recycling and reusing materials, reducing or eliminating waste and pollution, buying locally grown produce, and buying environmentally friendly products that don’t harm the environment during production or use. If everyone lives this way, the human race will be more sustainable.
What are some ways we as individuals can be a part of this movement?
● Use renewable energy sources such as solar power, wind power, and hydroelectricity to reduce your carbon footprint.
● Reduce your home’s energy consumption by installing insulation and high-efficiency doors and windows.
● Start a community garden in your neighborhood to reduce the food miles of the produce you eat.
● Reduce, reuse, recycle! Material goods are made out of natural resources; make sure they get used more than once.
● Use public transportation when possible to reduce gas consumption.
● Write to your local representatives and ask them to take a stand for the environment.
● Put pressure on large corporations to be more environmentally friendly by letting them know you will only shop at their store if they make eco-friendly choices.
● Buy organic food grown without pesticides and farmland chemicals, which can damage ecosystems and cause health problems for consumers.
● Plant a tree. Trees provide shade, reduce air pollution, and give us the oxygen we need to breathe, as well as homes for wildlife.
As an individual, you can make a huge impact on our planet’s future by taking steps to preserve our natural capital. Use the resources you have been given in a way that will promote a healthy economy, society, and environment for generations to come.
The conclusion of natural resources and natural assets
In conclusion, natural capital is all around us. It supports our society and is the Earth’s ability to provide for our needs. It includes clean air and water, fertile soil, productive oceans and forests, and all of nature’s resources that contribute to human well-being. The more we take from it without giving back, the less sustainable our world becomes. There are many ways individuals can live more sustainably and every effort makes a difference. Literally!
Caveats, disclaimers, and ecosystem services
We have covered many topics in this article and want to be clear that any reference to, or mention of assets, human life, capital committee, called ecosystem services, poorly managed, considerations, climate regulation, UK national assessment, cultural services, enhanced human capital, financial, most obvious services, integrate nature, international community, ecological liability, conservation biology, other countries, management interventions, economic liability, potentially leading, human well being, industrial revolution, stressed, monetary valuation, biodiversity loss, nature conservancy, conceptual framework, building materials, artificial intelligence, plant materials, fish populations, resilience decline, world’s stocks, UK government, humans derive or past decade in the context of this article is purely for informational purposes and not to be misconstrued with investment advice or personal opinion. Thank you for reading, We hope that you found this article useful in your quest to understand ESG.
Research & Curation
Dean Emerick is a curator on sustainability issues with ESG The Report, an online resource for SMEs and Investment professionals focusing on ESG principles. Their primary goal is to help middle-market companies automate Impact Reporting with ESG Software. Leveraging the power of AI, machine learning, and AWS to transition to a sustainable business model. Serving clients in the United States, Canada, UK, Europe, and the global community. If you want to get started, don’t forget to Get the Checklist! ✅