Five Capitals Model
The Five Capitals Model provides a basis for understanding sustainability in terms of the economic concept of wealth creation or ‘capital’. Any organisation will use five types of capital to deliver its products or services. A sustainable organisation will maintain, and where possible enhance, these stocks of capital assets, rather than deplete or degrade them. The model allows business to broaden its understanding of financial sustainability by allowing business to consider how wider environmental and social issues can affect long-term profitability.
The Five Capitals Model is put forward to be used by organisations to develop a vision of what sustainability looks like for its own operations, products and services. The vision is developed by considering what an organisation needs to do in order to maximise the value of each capital. However, an organisation needs to consider the impact of its activities on each of the capitals in an integrated way in order to avoid ‘trade-offs’. Using the model in this way for decision-making can lead to more sustainable outcomes.
Learning journal activity
This activity is required for students seeking formal credit. Other students may complete a learning journal but it will not be assessed.
- Download and read this more detailed overview of the Five Capitals Model and contrast it with the other models you’ve looked at in this Learning Pathway.
- Answer the following questions in your learning journal:
- What do you consider to be its strengths?
- How well does it align with the Natural Step’s four sustainability principles?
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The Five Capitals Model provides a basis for understanding sustainability in terms of the economic concept of wealth creation or ‘capital’. Any organisation will use five types of capital to deliver its products or services. A sustainable organisation will maintain, and where possible enhance, these stocks of capital assets, rather than deplete or degrade them. The model allows business to broaden its understanding of financial sustainability by allowing business to consider how wider environmental and social issues can affect long-term profitability.
The Five Capitals Model is put forward to be used by organisations to develop a vision of what sustainability looks like for its own operations, products and services. The vision is developed by considering what an organisation needs to do in order to maximise the value of each capital. However, an organisation needs to consider the impact of its activities on each of the capitals in an integrated way in order to avoid ‘trade-offs’. Using the model in this way for decision-making can lead to more sustainable outcomes.
Learning journal activity
This activity is required for students seeking formal credit. Other students may complete a learning journal but it will not be assessed.
You must be logged in to post to WEnotes.
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