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CHAPTER 15 1 2 3 Once Upon a Planet 4 5 Cassandra meets Dr. Pangloss — Expert’s dilemma — Blues and 6 reds, greens and whites — Assembling the operating manual — The 7 world’s largest movement — A hidden curriculum — Reversing sev- 8 eral hundred years — Reclaiming the future — Mandates, principles, and declarations — Because it is possible 9 10 11 12 13 THE ENVIRONMENTAL DEBATE IS CONDUCTED IN A PREDICTABLE CYCLE: 14 Science discovers another negative human impact on the environment. 15 Trade groups and businesses counter, the media reports both sides, and 16 the issue eventually gets consigned to a growing list of unresolved prob- 17 lems. The point is not that one side is right and the other wrong but 18 that the episodic nature of the news, and the compartmentalization of 19 each successive issue, inhibit devising solutions. Environmentalists 20 appear like Cassandra, business looks like Pandora, apologists sound 21 like Dr. Pangloss, and the public feels paralyzed. 22 The Worldwatch Institute’s  State of the World report again 23 reported that the trend in environmental indicators was downward: 24 “Forests are shrinking, water tables are falling, soils are eroding, wet- 25 lands are disappearing, fisheries are collapsing, rangelands are deterio- 26 rating, rivers are running dry, temperatures are rising, coral reefs are 27 dying and plant and animal species are disappearing.” 28 Predictably, Worldwatch’s critics argued that the report was unduly 29 gloomy. “In every single report in  years, [Worldwatch has] said we 30 are outgrowing the planet’s capacity. For  years, that’s proved to be 31 absolutely in every way false [sic],”retorted Jerry Taylor of the libertar- 32 ian Cato Institute. Taylor cited increased life expectancy, decreasing 33 child mortality, and improved nutritional intake as proving that stan- 34 dards of living improve as population grows.1 35 Ignored by the media is the likelihood that both sets of data are cor- 36 rect. It is unquestionable that humanity has made astonishing progress. 37 Average life spans continue to increase, a middle-class person can travel 38 S the world, and people in developed countries have the highest standard 39 R

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310 NATURAL 1 of living in history. But those facts do not make the Worldwatch obser- 2 vations wrong. Seemingly contradictory trends in the environment and 3 society should not be portrayed as mutually exclusive. Both sets of data 4 are credible and can be explained by the concept of overshoot: the abil- 5 ity to exceed temporarily the carrying capacity of the earth can help 6 people to live longer, but put our natural into decline. Stated in 7 another way, the ability to accelerate a car that is low on gasoline does 8 not prove the tank is full. 9 Although such debates make good fodder for reporters and can help 10 expose gaps in knowledge, the cacophony has unfortunate effects. One 11 is the “expert’s dilemma.”If you went for your annual physical and were 12 diagnosed by two doctors who fought and argued every step of the way 13 as to whether you were sick or healthy, you would come away confused, 14 numbed, and probably angry. When citizens who are not experts in cli- 15 matology watch Nightline and hear one scientist state that automotive

16 emissions of CO2 could lead to killer hurricanes and massive crop loss 17 while the other says that not using carbon-based fuels will signal the 18 end of Western civilization, the citizens are left confused and disheart- 19 ened. Mediagenic arguments allow little room for consensus or shared 20 frameworks. Though great for ratings, such media-devised wrangling 21 ignores the possibility that innovative, pragmatic solutions might exist 22 that can satisfy the vast majority of Americans and make the wrangling 23 irrelevant. 24 Remembering Einstein’s dictum on mind-sets, cited at the begin- 25 ning of this book, it might be useful to review a matrix of four world- 26 views on the emotional and intellectual frameworks that business, 27 citizens, and governments use to negotiate and choose about econom- 28 ics and the environment. Biophysicist Donella Meadows, adjunct pro- 29 fessor of environmental studies at Dartmouth College, outlined them 30 in The Economist. She stated that she has become less interested in win- 31 ning the environmental debate and more concerned with the “intransi- 32 gent nature of the discussion.” Each of the worldviews discussed 33 below — which are color-coded with only a slight bias — is a systems 34 view reflecting a perspective common among business, labor, environ- 35 mentalists, and synthesists, in that order.2 36 The Blues are mainstream free-marketers. Such people have a posi- 37 tive bias toward the future based on technological optimism and the S38 strength of the economy. They are armed with a strong statistical case, R39 based on the vigorous and dynamic economies of Western and (until 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 311

ONCE UPON A PLANET 311 ) Asian nations. Their approach is deeply rooted in conventional 1 economics, and their number-crunching reveals a world vastly 2 improved and rapidly ascending. Blues believe that reliance on innova- 3 tion, investment, and individual freedom will ensure a shining future 4 for humankind, and a level of material well-being that has strong 5 appeal to virtually everyone in the world. Their optimism also extends 6 to the environment, believing that in most cases, markets will send 7 strong and appropriate price signals that will elicit timely responses, 8 mitigating environmental damage or causing technological break- 9 throughs in efficiency and productivity. 10 The Reds represent the sundry forms of socialism. Although one 11 might expect them to have been discredited by the downfall of the erst- 12 while Soviet Union, their worldview is very much alive. They find vali- 13 dation in the chaotic and horrific economic conditions that the rise of 14 bandit capitalism has brought to contemporary Russia, a country 15 whose economic machinery now benefits a minority at the expense of a 16 materially and socially disadvantaged majority. The growing and 17 worldwide gap between rich and poor confirms the Reds’ analyses, 18 which are as accurate about poverty and suffering as the Blues’ observa- 19 tions are accurate about growth and change. While Blues focus on the 20 promise of growth and technology, Reds focus on its shadow and try to 21 discern its root causes. They view labor — one aspect of human 22 capital — as the principal source of wealth and see its exploitation as 23 the basis of injustice, impoverishment, and ignorance. The Reds gener- 24 ally have little to say about the environment, seeing it as a distraction 25 from fundamentally important social issues. 26 The Greens see the world primarily in terms of ecosystems, and thus 27 concentrate on depletion, damage, pollution, and population growth. 28 They focus on carrying capacity and want to bring about better under- 29 standing of how large the economy can grow before it outstrips its host. 30 Their policy focuses on how many and how much, the number of people, 31 and the amount of impact each person can have upon the environ- 32 ment. Greens are not usually technophobes; most see technology as an 33 important tool to reduce human impact. More recently, some have 34 become interested in free-market mechanisms, and want externalities 35 presently borne by society to be fully integrated into producer costs and 36 consumer prices so that markets become, in David Korten’s phrase, 37 “mindful.” The Greens, and to some extent the Reds, host bigger tents 38 S in that they hold a bolder and broader diversity of views. But this also 39 R 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 312

312 NATURAL CAPITALISM 1 keeps them splintered and self-canceling, as Greens tend to unite their 2 enemies and divide their friends, a good formula for political failure. 3 They are often portrayed as caring less for people than animals, more 4 about halogenated compounds than waterborne diseases. 5 The Whites are the synthesists, and do not entirely oppose or agree 6 with any of the three other views. With an optimistic view of 7 humankind, they believe that process will win the day, that people who 8 tell others what is right lead society astray. Since Blues, Reds, and 9 Greens all fall into that category, Whites reject them all, preferring a 10 middle way of integration, reform, respect, and reliance. They reject 11 ideologies whether based on markets, class, or nature, and trust that 12 informed people can solve their own problems. On the environmental 13 level, they argue that all issues are local. On business, they say the fabled 14 level playing field never existed because of market imperfections, lob- 15 bying, subsidies, and capital concentration. On social problems, they 16 argue that solutions will naturally arise from place and culture rather 17 than from ideology. Leadership in the White world is reminiscent of the 18 Taoist reminder that good rulers make their subjects feel as if they suc- 19 ceeded by themselves. Environmental and social solutions can emerge 20 only when local people are empowered and honored. 21 While many individuals have traits of two or more of these typolo- 22 gies, the different views tend to become isolated and to define the oth- 23 ers by their own internal logic. Blues see Reds as anachronistic, even 24 fascistic. Reds return the compliment and neither think much of the 25 Greens, who they say are hindering progress and speaking for a privi- 26 leged minority. Blues win points (among Blues) by lumping Greens in 27 with the Reds. All three tend to ignore the Whites but will take credit 28 when any White-type scheme works in their sphere. Meadows asks: 29 30 What would we see if we were willing to approach the question of human pop- 31 ulation growth and planetary limits purely scientifically? What if we could 32 divest ourselves of hopes, fears, and ideologies long enough to entertain all 33 arguments and judge them fairly? What we would see, I think, is that all sides 34 are partly right and mostly incomplete. Each is focusing on one piece of a very complex system. Each is seeing its piece correctly. But because no side is seeing 35 the whole, no side is coming to wholly supportable conclusions. 36 The Greens are correct: Population growth that causes people to level 37 forests and overgraze lands exacerbates poverty. The Reds are correct: The S38 helplessness of poverty creates the motivation for parents to have many R39 children, as their only hope of providing for themselves. The Blues are right: 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 313

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Economic development can bring down birthrates. The Whites are right: 1 Development schemes work, but not when they are imposed by large bureau- 2 cratic institutions such as the World Bank. Capital can be the scarcest factor of 3 production at some times and places, labor at other times and places, materials 4 and energy and pollution-absorption capacity at still others. The limits the 5 Greens point out really are there. So are the injustices that anger the Reds. So are the market and technical responses the Blues have faith in. And so is the 6 wisdom of the people that the Whites respect.3 7 8 A successful business in the new era of natural capitalism will 9 respect and understand all four views. It will realize that solutions lie in 10 understanding the interconnectedness of problems, not in confronting 11 them in isolation. 12 Moreover, it will seek a common framework of understanding 13 about the functions of the earth itself, and the dynamics of society. 14 While interpretation of data is subject to culture, education, and out- 15 look, the basic principles that govern the earth are well established and 16 commonly agreed upon by all scientists. But you would hardly know 17 that by reading heated op-ed columns or listening to legislative debates. 18 Although you can go to a bookstore and find books that explain the 19 tenets, principles, and rules for everything from golf and dominoes to 20 taxes, judo, and war, there’s no user’s manual for how to live and oper- 21 ate on the earth, the most important and complex system known. 22 David Brower, the éminence grise of the environmental movement, 23 once humorously proposed such a manual years ago. The instructions 24 might read: () The planet has been delivered in perfect working condi- 25 tion and cannot be exchanged for a new one. () Please don’t adjust the 26 thermostat or the atmosphere — controls were preset at the factory. () 27 The biosphere was thoroughly tested and developed during a -billion- 28 year breaking-in period and is powered by a maintenance-free fusion 29 reactor that will supply energy for another  billion years. () Air and 30 water are in limited supply and are not replaceable; they will cycle and 31 purify themselves automatically if there are not too many aboard. () 32 There is only one life per passenger and it should be treated with dig- 33 nity. Instructions covering the birth, operation and maintenance, and 34 disposal of each living entity have been thoughtfully provided, encoded 35 in a computer language whose operation is fully automatic. If these 36 instructions are lost or damaged, the filling of reorders is subject to 37 long delays. () If there are too many passengers and conditions get 38 S crowded, read the emergency load manual and be ever more diligent 39 R 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 314

314 NATURAL CAPITALISM 1 that no foreign or toxic substances are introduced into the air, food, 2 and water.4 3 Why would the inhabitants of earth need a manual? Ideally, it would 4 provide everyone with a shared mental model of the system they are 5 influencing and participating in. A generally accepted set of standards 6 and principles in sports, finance, education, and other sectors enables 7 society to function efficiently, harmoniously, and safely, allowing us to 8 drive in traffic, land jumbo jets at O’Hare, and communicate globally 9 through telephony and computers. A critical difference between a user’s 10 manual for such societal activities, however, and one for the environ- 11 ment is that earth’s operating guidelines are inherent, not imposed. 12 They cannot be made up, only recognized. Author Bill McKibben put it 13 succinctly in a speech to corporate executives: “The laws of Congress 14 and the laws of physics have grown increasingly divergent, and the laws 15 of physics are not likely to yield.” 16 Tens of thousands of organizations in the world have taken on the 17 task of assembling the ingredients of a real operating manual for the 18 planet. Some are specifically addressing the responsibilities and oppor- 19 tunities of business. These include: , The 20 Natural Step, The Wuppertal Institute, World Resources Institute, Sus- 21 tainAbility (London), CERES, Redefining Progress, Product-Life Institute, 22 World Business Council for Sustainable Development (Switzerland), 23 Center for Clean Products and Clean Technologies at the University 24 of Tennessee, United Nations Environment Programme (UNEP) and 25 Development Program (UNDP), Institute for Sustainable Design and 26 Commerce at the University of Virginia (Charlottesville), Forum for the 27 Future (London), International Institute for Sustainable Development 28 (Canada), Businesses for Social Responsibility, and the Stockholm 29 Environmental Institute. They are joined by approximately one hun- 30 dred transnational corporations and tens of thousands of smaller com- 31 panies that have pledged to take an active role in reshaping the role of 32 business in the environment and society. 33 In addition, tens of thousands of institutes, associations, founda- 34 tions, colleges, universities, churches, outdoor clubs, land trusts, and 35 nongovernmental organizations are addressing the complete range of 36 environmental issues. These include such remarkable groups as 37 Ecotrust, Ashoka, the Society for Ecological Restoration, Worldwatch S38 Institute, Friends of the River, Environmental Research Foundation, R39 Development Alternatives (Delhi), Land Stewardship Council, The Just 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 315

ONCE UPON A PLANET 315 Transition Consortium, Instituto de Ecología Politica (Santiago, Chile), 1 International Society of Ecological Economics, International Institute 2 for Industrial (Lund), Earth Island Institute, 3 Congress for the New Urbanism, American Farmland Trust, the Energy 4 Foundation, Southwest Organizing Project, RIVM (Holland), Center 5 for a New American Dream, One Thousand Friends of Oregon, the 6 Cenozoic Society, Indigenous Environmental Network, World Wildlife 7 Fund, IUCN, Friends of the Earth, and many more. Together, these 8 thousands of organizations, however they may be collectively identi- 9 fied, have quietly become the world’s largest and fastest-growing 10 activist movement. Arguably they have now become the world’s real 11 capitalists. By addressing such issues as greenhouse gases, social equity, 12 chemical contamination, and the loss of fisheries, wildlife corridors, 13 and primary forests, they are doing more to preserve a viable business 14 future than are all the world’s chambers of commerce put together. 15 The largest institution addressing mental models is our schools. 16 Colleges, universities, and public schools can change their impact on 17 the environment in two fundamental ways. They create the citizens, 18 MBAs, engineers, and architects that create our world. At the same 19 time, they spend $ billion a year to do so, including $ billion annu- 20 ally in new construction on colleges and universities. Oberlin Professor 21 David Orr, the leading spokesperson for integrating the environment 22 and education, points out that a large segment of that is spent to 23 purchase energy, materials, food, and water in ways that are every bit as 24 inefficient as this book outlines. Orr believes that changing the pro- 25 curement, design, and investments made by our educational systems 26 represents a “hidden curriculum” that can teach, as “powerfully as any 27 overt curriculum, a more comprehensive way of seeing the world that is 28 the foundation for a radically different curriculum than that presently 29 offered virtually anywhere. In every respect this is a challenge of how 30 we think which makes it a challenge for those institutions purporting to 31 improve thinking. Much of the change in outlook and perspective 32 called for will not happen in the time available unless schools, colleges, 33 and education get it.”5 34 Only once in the history of this planet — now — have total flows and 35 movement of materials by one species matched or exceeded natural 36 planetary flows. Humans place more than three hundred times more lead 37 into the environment than can dissipate naturally, twenty-three times 38 S more zinc, and thirty-eight times more antimony.6 Scientific analysis of 39 R 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 316

316 NATURAL CAPITALISM

1 bubbles in the Vostok ice core from Antarctica show CO2 in the atmos- 2 phere at the highest level in , years; it took only  years of 3 industrial combustion to bring this about.7 Global temperatures in the 4 next century are expected to exceed a ,-year record. 5 Traditional forecasting examines prior events and present trends 6 and traces both forward to a probable tomorrow. Most of the time this 7 method works, even with natural events, so long as projections don’t 8 extend too far into the future. Sometimes, however, traditional plan- 9 ning fails catastrophically, as when an unforeseen event changes all the 10 terms of the equation. When the Soviet Empire fell, Southern Califor- 11 nia went into a near-depression as , defense jobs were lost. Real 12 estate prices plummeted, taxes declined, alcoholism and abusive behav- 13 ior increased among the unemployed, and the ripple effects were partly 14 responsible for increased racism, anti-immigration laws, and the social 15 uprising that occurred in South Central Los Angeles. Conventional 16 economic forecasts of Los Angeles’s future proved to be wrong simply 17 because no one had projected an “optimistic” scenario in which the 18 United States finally “won” the Cold War. 19 A big question for society is whether it is willing to place its faith in 20 so-far-so-good forecasts that presume there will be no significant envi- 21 ronmental problems in the future. Increasingly, it makes more sense to 22 take into account possible downsides so that if some environmental 23 crisis does occur, it will have the least possible effect. The rub here is 24 that the environment never really goes “wrong” but merely changes 25 according to the principles of nature. In that context, the most unlikely 26 environmental scenario is that nothing unlikely happens. The biggest 27 surprise would be no surprises. While it is unwise to believe in any one 28 environmental projection of the future, it is important to bear in mind 29 that nature bats last and owns the stadium. 30 Today, comprehensive planning is critical for any institution. Busi- 31 ness faces increasing demands on all fronts, including globalization, 32 shorter product life-cycles, the Internet, overcapacity, complex regula- 33 tions, currency volatility, and changing governmental policies. In such 34 a world, it is critical to have a long-term view that will be responsive to 35 and complement future events. Businesses and governments often 36 avoid the task of planning for issues related to the environment or soci- 37 ety because the time frames for environmental and social change S38 always seem over the horizon, whereas the challenges and modification R39 times required in other areas are measured in years if not months. Yet 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 317

ONCE UPON A PLANET 317 any attempt to form a coherent assessment of the future that does not 1 take into account what is happening to the natural and human capital is 2 incomplete strategic thinking. 3 The lesson of this book with respect to forecasting is simple and 4 clear: No matter what future one believes in, building the principles of 5 natural capitalism into our planning will make the foundations of soci- 6 ety firmer. In scenarios in which the environment begins to change 7 rapidly (or in which its services are clearly declining), resource produc- 8 tivity can also buy time, buffering society against sudden changes. As 9 futurist Peter Schwartz counsels, the best option for an uncertain future 10 is the one that leaves the most options open. 11 University of North Carolina Business School Professor Stuart Hart 12 has asked whether corporations are ready for the natural capitalism 13 revolution. Typically, business revolutions do not arise within existing 14 industries but from forces outside. Hart believes meeting the multitude 15 of challenges facing business and society will bring about economic dis- 16 continuities that are unprecedented in rate and scope and will require 17 business to adopt new approaches. It will have to leapfrog over existing 18 technologies rather than incrementally improve them. This may mean 19 abandoning research in core products while they are still “winners,” 20 simply because new products or systems offer vastly improved perfor- 21 mance. Why would anyone have wanted to create incremental improve- 22 ments in vacuum tubes when the transistor was coming over the 23 horizon? Similarly, the Big Three automakers will have to determine at 24 just what point the internal combustion engine will simply become 25 uneconomical to re-engineer. That point may already be here.8 26 To understand the opportunities offered by the resource productiv- 27 ity revolution and the other principles of natural capitalism, business 28 will need to move across industrial sectors and solicit cooperation from 29 competitors, critics, and perceived adversaries alike. This may seem like 30 something no sane business would ever do, but an increasing number 31 of leading companies are doing just that. Such organizations as World 32 Resources Institute and Rocky Mountain Institute consult regularly for 33 companies as well as for governments and communities. One of the 34 largest forest products companies in the world is meeting with Rain- 35 forest Action Network and Greenpeace, its former archenemies, to for- 36 mulate a strategic plan for their futures. Mitsubishi Electric worked 37 with  nongovernmental environmental organizations to forge a new 38 S vision for the company. 39 R 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 318

318 NATURAL CAPITALISM 1 The success of resource productivity as a societal strategy may augur 2 an entirely new relationship between business and government. Just as 3 traditional industrial activity may no longer be economic when natural 4 capital becomes the limiting factor, relaxed governmental regulations 5 that once “benefited” business may now actually harm it. Once business 6 realizes that its existence is threatened by decreasing functions of 7 ecosystems, it may need to take positions diametrically opposed to its 8 prior stands and even argue for stricter regulations. For example, the oil 9 industry, with few exceptions, has led the fight against global emissions

10 limits for CO2. This strategy makes as much sense as defending type- 11 writers. Although the oil industry faces a cloudy future in the long run, 12 energy companies and especially energy service companies do not. But 13 regulation can exert selective pressures favoring the agile, alert, and 14 green. By fighting the wrong battle, most oil companies delay innova- 15 tion and ensure potent new competition. 16 In contrast, OK Petroleum, Sweden’s largest refiner and retailer of 17 gasoline, fought for higher carbon taxes because it no longer sees itself 18 as being in the petroleum business: It is a clean energy company. After 19 formulating low-carbon gasoline, it found that it was being penalized 20 by the per-liter fuel taxes levied in Sweden. Since the taxes were assessed 21 on the quantity of the gasoline rather than the content of carbon that 22 creates greenhouse gases, OK joined with twenty-four other companies 23 to lobby the government to increase carbon taxes. Those businesses 24 were thinking long-term. Having already achieved large improvements 25 in resource productivity, they wanted a “boost” from incentives to go 26 further. By raising resource prices, Swedish companies also thought 27 they (like Germany and Japan before them) might gain greater advan- 28 tages over their competitors in the United States, rendered somnolent 29 by artificially cheap energy. Similarly, the U.S. firms working to create 30 totally recyclable or compostable carpets are all fierce competitors, yet 31 if they jointly lobbied for prohibitions on landfilling carpet, it would 32 give them a competitive advantage, seriously putting the screws to lag- 33 gards in their industry. 34 Just as businesses are beginning to see the loss of or 35 ecosystem function as harmful to both their short- and long-term 36 interests, they may also come to realize that social inequities are harm- 37 ful to their interests as well. When the African writer Ken Saro-Wiwa S38 and seven of his colleagues were hanged by the Nigerian military dicta- R39 torship after being convicted in a kangaroo court for leading the 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 319

ONCE UPON A PLANET 319 protests against the environmental degradation in Ogoniland caused 1 by multinational petroleum companies, Shell stations in Germany were 2 burned to the ground, boycotts in Holland slashed sales, and employees 3 in London were chastised by family and friends. Since that time, Shell 4 has begun to reexamine all its racial, economic, and environmental 5 policies. Nevertheless, Shell has yet to apologize for its actions in Nige- 6 ria that helped lead to Saro-Wiwa’s execution, and protests against the 7 company continue. 8 While facing such challenges, it is easy to overlook the social part 9 and go straight to the technical. Social issues are human and messy. 10 Social includes children, women, the elderly, the next generation, and 11 government. It is hard to grapple with what may seem unrelated issues, 12 starting with the rights, health, education, and economic opportunities 13 available to women. But the example of Curitiba shows that design 14 integration of social and technical innovations is necessary and can 15 enhance both. 16 It will not be trivial to establish sensible policies. Emphasizing 17 resource productivity will require the reversal of two hundred years of 18 policies in taxes, labor, industry, and trade meant to encourage extrac- 19 tion, depletion, and disposal.9 Trade policies will need to be recast so as 20 to protect environmental capital, cultural heritage, indigenous rights, 21 and social equity.10 At present, worldwide trade policies are going in 22 exactly the opposite direction. The global economy that is presently 23 envisaged and imposed upon the world can, in Wendell Berry’s words, 24 “only institutionalize a global ignorance, in which producers and con- 25 sumers cannot know or care about one another and in which the histo- 26 ries of all products will be lost. In such a circumstance, the degradation 27 of products and places, producers and consumers is inevitable.”11 28 In finance, central banks, lenders, investors, pension funds, and reg- 29 ulatory agencies will need to be engaged so that capital allocations 30 properly account for the loss of natural and social capital. These insti- 31 tutions will need to create a financial system where all value is placed on 32 the balance sheet, and where nothing is marginalized or externalized 33 because social or biological values don’t “fit” into accepted accounting 34 procedures. 35 In a decade characterized by mega-mergers in the banking industry, 36 one hopeful sign has been the vigorous emergence of the community 37 development finance movement. From small-scale loan funds to start- 38 S up banks, and with private and federal support, a whole set of new 39 R 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 320

320 NATURAL CAPITALISM 1 community institutions provide credit in innovative ways at the com- 2 munity level, rebuilding human and social capital in hundreds of towns 3 and cities. Not surprisingly, it is here rather than in mainstream com- 4 mercial banks that banking with a natural capital focus has taken root. 5 Shorebank Corporation, the community development pioneer, teamed 6 up with Portland, Oregon, based Ecotrust to create ShoreBank Pacific, a 7 commercial bank dedicated to community development and environ- 8 mental restoration in the coastal and metropolitan Pacific Northwest. 9 The bank and its nonprofit affiliate Shorebank Enterprise Pacific have 10 together lent millions of dollars to small and medium-size businesses 11 that enhance profitability through improved environmental manage- 12 ment and dedication to social equity. The bank’s loans are backed by 13 “ecodeposits” from all fifty states. 14 In short, business has to begin to take on and engage in questions 15 and dialogue that it has, until now, largely avoided. If natural capital is 16 diminishing while manufactured capital is expanding, business must 17 ultimately create production and distribution systems that reverse the 18 loss and eventually increase the supply of natural capital. That will 19 involve more than product design, more than marketing and competi- 20 tion. It will mean a fundamental reevaluation of business’s roles and 21 responsibilities. 22 As this book has shown, however, business will find large, unexpected 23 benefits. While increasing labor productivity to improve competitiveness 24 requires huge investments in capital, materials, and energy supplies to 25 sustain its momentum, increasing resource productivity frees up large 26 amounts of capital that can be invested in strengthening the company 27 and in rebuilding human capital and restoring natural capital. Businesses 28 that are moving toward advanced resource productivity are also discov- 29 ering an unexpected cultural consequence to their actions. Yes, they save 30 energy and money, create competitive advantage, and help restore the 31 environment. But even more important, they also save people. Not only 32 do they rebalance the roles of workers and of resource-fed machines, but 33 they also create a renewed sense of purpose and mission. For the first 34 time, employees’ activities at work are fully and directly aligned with 35 what is best for their children and grandchildren at home. 36 In a few decades, historians may write a history of our times that 37 goes something like this: Now that the private sector has taken its S38 proper place as the main implementer of sustainable practices, simply R39 because they work better and cost less, the s and s approach of 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 321

ONCE UPON A PLANET 321 micromanagement by intensive government regulation is only a bad 1 memory. Battles between industry and environmentalists are confined 2 to backward countries, where inefficient and polluting industries cling 3 to life beneath a shield of central planning. Today, the central issues for 4 thoughtful and successful industries — the two being increasingly 5 identical — relate not to how best to produce the goods and services 6 needed for a satisfying life — that’s now pretty well worked out — but 7 rather to what is worth producing, what will make us better human 8 beings, how we can stop trying to meet nonmaterial needs by material 9 means, and how much is enough. 10 For many, the prospect of an economic system based on increasing 11 the productivity with which we use natural capital, eliminating the 12 concept of waste, and reinvesting in the earth’s living systems and its 13 people is so upbeat that it calls into question its economic viability. To 14 answer that question, just reverse it and ask: How is it that we have cre- 15 ated an economic system that tells us it is cheaper to destroy the earth 16 and exhaust its people than to nurture them both? Is it rational to have 17 a pricing system that discounts the future and sells off the past? How 18 did we create an economic system that confuses capital liquidation with 19 income? Wasting resources to achieve profits is far from fair, wasting 20 people to achieve higher GDP doesn’t raise standards of living, and 21 wasting the environment to achieve economic growth is neither eco- 22 nomic nor growth. 23 To make people better off requires no new theories, and needs only 24 common sense. It is based on the simple proposition that all capital be 25 valued. While there may be no “right” way to value a forest, a river, or a 26 child, the wrong way is to give it no value at all. If there are doubts 27 about how to value a seven-hundred-year-old tree, ask how much it 28 would cost to make a new one. Or a new atmosphere, or a new culture. 29 What is remarkable about this period in history is the degree of agree- 30 ment that is forming globally about the relationship between human 31 and living systems. The tens of thousands of organizations that are 32 working toward a sustainable world are, on the whole, diverse, local, 33 underfunded, and tenuous. Scattered across the globe, from Siberia to 34 Chile to Kenya to Bozeman, Montana, people and institutions are orga- 35 nizing to defend human life and the life of the planet. Although largely 36 uncoordinated and mostly disconnected, the mandates, directives, 37 principles, declarations, and other statements of purpose drafted by 38 S these groups are extraordinarily consonant. Now they are being joined 39 R 26476 03 p234-322 r4k 9/10/99 5:57 PM Page 322

322 NATURAL CAPITALISM 1 by the deeper voices of international organizations, and companies, 2 large and small. The Brundtland Report (“Our Common Future”), the 3 World Conservation Strategy by the International Union for the Con- 4 servation of Nature, the CERES Principles, the Siena Declaration, the 5 United Nations World Charter for Nature, the Convention on Biologi- 6 cal Diversity and the Framework Convention on Climate Change from 7 the Earth Summit, the Hannover Principles, and hundreds more docu- 8 ments obscure and known are being published, circulated, and acted 9 upon. They are important for three reasons. First, the statements are 10 not just about preferences: Often they suggest practical solutions that 11 flow from the principles of whole-system thinking and design. Second, 12 the statements represent a broad consensus that is emerging from the 13 breadth of society rather than only from its ruling structures. Third, 14 never before in history have such disparate and independent groups 15 created common frameworks of understanding around the world. This 16 has never happened in politics, economics, or religion, but it is happening 17 in the growing movement — increasingly joined now by both religion 18 and science — toward what is being called “.” Business- 19 people and governments should pay close attention. In these statements, 20 the future is writ large and in the plainest of languages. 21 Ernst von Weizsäcker, member of the German Bundestag, has put it 22 this way: “We are entering the century of the environment, whether we 23 want to or not. In this century everyone who considers himself a realist 24 will be forced to justify his behavior in light of the contribution it made 25 toward the preservation of the environment.”12 26 Away from the shrill divisiveness of media and politics, people are 27 remarkably consistent in what kind of future they envision for their 28 children and grandchildren. The potential outcome of natural capital- 29 ism and sustainability also aligns almost perfectly with what American 30 voters are saying: They want better schools, a better environment, safer 31 communities, family-wage jobs, more economic security, stronger 32 family support, lower taxes, more effective governments, and more 33 local control. In this, we are like all people and they are like us. 34 Natural capitalism is not about fomenting social upheaval. On the 35 contrary, that is the consequence that will surely arise if fundamental 36 social and environmental problems are not responsibly addressed. Nat- 37 ural capitalism is about choices we can make that can start to tip eco- S38 nomic and social outcomes in positive directions. And it is already R39 occurring — because it is necessary, possible, and practical.