Natural Capitalism
Natural Capitalism is an U.S.-based social reform trend that wants to make capitalism accountable for its `negative externalities'.
URL = http://www.natcap.org/
Description
From http://www.natcap.org/sitepages/pid5.php
Natural Capitalism is an U.S.-based social reform trend that wants to make capitalism accountable for its `negative externalities'.
"Natural capital refers to the natural resources and ecosystem services that make possible all economic activity, indeed all life. These services are of immense economic value; some are literally priceless, since they have no known substitutes. Yet current business practices typically fail to take into account the value of these assets--which is rising with their scarcity. As a result, natural capital is being degraded and liquidated by the wasteful use of such resources as energy, materials, water, fiber, and topsoil.
The first of natural capitalism's four interlinked principles, therefore, is radically increased resource productivity. Implementing just this first principle can significantly improve a firm's bottom line, and can also help finance the other three. They are: redesigning industry on biological models with closed loops and zero waste; shifting from the sale of goods (for example, light bulbs) to the provision of services (illumination); and reinvesting in the natural capital that is the basis of future prosperity." (http://www.natcap.org/sitepages/pid5.php)
Discussion
An explanation of the role of externalities and why they should be included in true costing. This is one of the key reforms proposed by the Natural Capitalism movement.
Cited by Kevin Carson [1], originally from the 'San Francisco Chronicle':
"CAPITALISM and sustainability are deeply and increasingly interrelated. After all, our economic activity is based on the use of natural and human resources. Not until we more broadly "price in" the external costs of investment decisions across all sectors will we have a sustainable economy and society.
The industrial revolution brought enormous prosperity, but it also introduced unsustainable business practices. Our current system for accounting was principally established in the 1930s by Lord Keynes and the creation of "national accounts" (the backbone of today's gross domestic product). While this system was precise in its ability to account for capital goods, it was imprecise in its ability to account for natural and human resources because it assumed them to be limitless. This, in part, explains why our current model of economic development is hard-wired to externalize as many costs as possible.
Externalities are costs created by industry but paid for by society. For example, pollution is an externality which is sometimes taxed by government in order to make the entity responsible "internalize" the full costs of production. Over the past century, companies have been rewarded financially for maximizing externalities in order to minimize costs....
....The "polluter pays" principle is just one example of how companies can be held accountable for the full costs of doing business....
In the nongovernmental sector, organizations such as World Resources Institute, Transparency International, the Coalition for Environmentally Responsible Economies (Ceres) and AccountAbility are helping companies explore how best to align corporate responsibility with business strategy. Over the past five years we have seen markets begin to incorporate the external cost of carbon dioxide emissions. This is happening through pricing mechanisms (price per ton of carbon dioxide) and government-supported trading platforms such as the European Union Emissions Trading Scheme in Europe. Even without a regulatory framework in the U.S., voluntary markets are emerging, such as the Chicago Climate Exchange and state-level initiatives such as the Regional Greenhouse Gas Initiative. These market mechanisms increasingly enable companies to calculate project returns and capital expenditures decisions with the price of carbon dioxide fully integrated....
As some have said, "We are operating the Earth like it's a business in liquidation." More mechanisms to incorporate environmental and social externalities will be needed to enable capital markets to achieve their intended purpose -- to consistently allocate capital to its highest and best use for the good of the people and the planet." (http://mutualist.blogspot.com/2006/06/signs-of-hope-in-unlikely-places.html)