The Five Capitals model provides
a strong platform for sustainability, but is not enough on its own. While there
are many alternative names for the five capitals, (physical capital, knowledge
capital, intellectual capital, spiritual capital, organizational capital, etc.)
it seems the main point of this framework is to encourage decision-makers to
pursue a much more balanced approach to business. I think this is an
intelligent approach that can help businesses look through the sustainability
lens and learn new ways to create value, but I also think the creator of this
framework, Forum for the Future, could do more to allow the idea to be
effectively utilized by business. However, perhaps the simplicity of the
framework permits a degree of freedom for the user making it more useful to a
larger crowd in the end.
In the context of business
and the economy, these five capitals: natural, human, social, manufactured and
financial, have the potential to make waves in any community. My initial
impression upon reading the Five Capitals Model document (https://forumforthefuture.org/sites/default/files/project/downloads/five-capitals-model.pdf)
was that it is pretty obvious THIS is what business needs to be doing to
survive and make a positive impact. It all comes down to striking a balance,
just as we humans need to eat a balanced diet, exercise, sleep sufficiently,
and socialize with family and friends among other things. A few questions that
arose in my mind were:
- How can a company define for itself which capital it should
capitalize on (save financial) while still keeping the others in tune?
- Is it possible for a business to survive on just enough and
fulfill its purpose, or is it written into the mission of every business to
maximize on all fronts?
To run an organization as
a machine as if all it depended on were inputs and outputs and to seek one
goal, profit, is completely shortsighted. To make this even clearer, businesses
exist because of humans, are run by humans, and interact with everything that
is living either directly or indirectly. So, the five capitals model is a step
in the right direction for business and the economy, but there is so much more
to be accounted for than just what falls into these five categories.
Natural capital sustains
all other types of capital, but I believe it is also part of all other types of
capital as well, most notably human and social capital. This means businesses
would do well to focus MUCH more on their interactions with nature because it
directly affects their long-term survival and the good of the economy.
Furthermore, the enhanced relationship with nature would serve as a compass for
strategy and major decisions. For example, as seasons change and nature
provides varying levels of resources, businesses would be more adept at
predicting where to utilize assets and how to reduce costs. Educating employees
on how a company relates with the natural environment would create a pool of
ideas for business practice improvement and generate a healthier workforce.
Kevin -
ReplyDeleteI agree with you that the Five Capitals Model is not enough on its own, but I also agree that it is a good platform to start with. Like you said, the platform is "generic" enough that each business can use it as a guide to help them create their own sustainable strategy as they plan for the future.
Like you struggled with how businesses would know how much and what to invest in each capital so to speak and I still do not have a clear answer. I think that sometimes these capitals will work together in unison to move things forward from a business perspective and sometimes they work as opposing forced to create a balance. I think the polarity discussion from LPD is another way to look at this dilemma. We will never find one specific allocation that will work for extended periods of time, but rather play a constant adjustment game in search of balance. Thank you for the great thoughts.
- Anna
Kevin,
ReplyDeleteTwo things stood for me in this post, the simplicity of the Five Capitals document, and its obviousness. I find it interesting that the shifting nature of content consumption to digital formats seems to further soundbite ideology. Quick and succinct data points may actually be closer to our natural processing mode, or they be be the dumbing down and ruination of our culture, as many claim. One this is likely, that we'll see the answer as movement in that direction seems inexorable. To the other point, I find that information which when heard suddenly seems obvious, to be good information!
Thank you!
Stephen