One Minute On:  #4 – the Five Capitals Model

Published On: 27 May 2023Categories: Insights, One Minute On

The Five Capitals Model considers sustainability using the economic concept of wealth creation or ‘capital’.   It was developed by Forum for the Future’s founder, Jonathan Porritt, in his book ‘Capitalism As If The World Matters’.

The primary focus of business is financial capital, money.  However, organisations use five types of capital to deliver their products or services:  financial, natural, human, social and manufactured.

Natural capital is the energy and materials that produce goods and services and the natural processes that make them safe.  It includes sunlight, rain, timber, food, metallic ores, fossil fuels and oceans.

Human capital comprises people’s health, knowledge, skills, and motivation.  Factors that support productivity and help organisations survive and thrive through disruption.  It is enhanced through education and training.

Social capital is how we support each other through leadership, organisations, networks, and communications.

Manufactured (infrastructure/built) capital comprises material goods and services that contribute to the production process rather than the output—for example, machines, buildings, and digital and transport networks.

Financial capital is the connector between the other capitals, enabling them to the owned and traded.  It is representative of other capitals rather than having value itself—for example, shares and currency.

A sustainable organisation seeks to maximise the value of all five, to achieve long-term sustainable and resilient outcomes for itself, the planet, and people.

Our big challenge is that we are consuming stocks of natural, human, social and manufactured capital faster than they are produced.   For a resilient future, we need to control consumption.

Share with others