There are five types of sustainable capital from where we derive the goods and services we need to improve the quality of our lives.
Natural Capital is any stock or flow of energy and material that produces goods and services. It includes:
- Resources - renewable and non-renewable materials
- Sinks - that absorb, neutralise or recycle wastes
- Processes - such as climate regulation
Natural capital is the basis not only of production but of life itself!
Human Capital consists of people's health, knowledge, skills and motivation. All these things are needed for productive work.
Enhancing human capital through education and training is central to a flourishing economy.
Social Capital concerns the institutions that help us maintain and develop human capital in partnership with others; e.g. families, communities, businesses, trade unions, schools, and voluntary organisations.
Manufactured Capital comprises material goods or fixed assets which contribute to the production process rather than being the output itself – e.g. tools, machines and buildings.
Financial Capital plays an important role in our economy, enabling the other types of Capital to be owned and traded. But unlike the other types, it has no real value itself but is representative of natural, human, social or manufactured capital; e.g. shares, bonds or banknotes.
We are facing a sustainability crisis because we're consuming our stocks of natural, human and social capital faster than they are being produced. Unless we control the rate of this consumption, we can't sustain these vital stocks in the long-term.
We believe that by maintaining and trying to increase stocks of these capital assets, we can live off the income without reducing the capital itself. But for this to happen, it is the responsibility of every organisation, business or otherwise, to manage these capital assets sustainably.
Sustainable development is the best way to manage these capital assets in the long-term. It is a dynamic process through which organisations can begin to achieve a balance between their environmental, social and economic activities.
The Twelve Features of a sustainable society
By describing what a sustainable society should look like, the ‘12 features’ model helps organisations evaluate the sustainability of their projects.
The features fit into the separate five capitals. If we invest appropriately in all capital stocks, and achieve the flow of benefits, the following statements would be true. They represent the outcome of a successful capital investment strategy for sustainable development - that is, a sustainable society.
of Natural Capital
- In their extraction and use, substances taken from the earth do not exceed the environment's capacity to disperse, absorb, recycle or otherwise neutralise their harmful effects (to humans and/or the environment)
- In their manufacture and use, artificial substances do not exceed the environment's capacity to disperse, absorb, recycle or otherwise neutralise their harmful effects (to humans and/or the environment)
- The capacity of the environment to provide ecological system integrity, biological diversity and productivity is protected or enhanced
of Human Capital
- At all ages, individuals enjoy a high standard of health
- Individuals are adept at relationships and social participation, and throughout life set and achieve high personal standards of their development and learning
- There is access to varied and satisfying opportunities for work, personal creativity, and recreation
of Social Capital
- There are trusted and accessible systems of governance and justice
- Communities and society at large share key positive values and a sense of purpose
- The structures and institutions of society promote stewardship of natural resources and development of people
- Homes, communities and society at large provide safe, supportive living and working environments
of Manufactured Capital
- All infrastructure, technologies and processes make minimum use of natural resources and maximum use of human innovation and skills
of Financial Capital
- Financial capital accurately represents the value of natural, human, social and manufactured capital
These statements were designed in partnership with Keele University, with an ESRC project grant that engaged 60 academics and practitioners.
Download more information about the Five Capitals Model.
You can also read more about the Five Capitals Model in Jonathon Porritt's book, Capitalism as if the World Matters