Jay Moynihan UW-Extension Shawano County (715) An Overview of the Framework

1. The Problem: A need for an over - all framework. 2. The origin of The Natural Step. 3. What The Natural Step is. 4.The Science. 5.The Conditions. 6.A business example of implementation. 7.Method 8.References

Economy Natural Capital & Services Culture Adapted from a diagram by Jerry Hembd, UW-Extension Northern Center for Community Economic Development.

“Market prices are the signals by which the market regulates itself. … The economic system lacks a well developed mechanism for sensing the condition of the environment in which it is embedded.” Robert U. Ayres, Information, Entropy, and Progress, page xvii, (1994)

“Market prices are the signals by which the market regulates itself. … The economic system lacks a well developed mechanism for sensing the condition of the environment in which it is embedded.” Robert U. Ayres, Information, Entropy, and Progress, page xvii, (1994) In many ways, “sustainability” is a general word for the developing effort to remedy the flaw Ayres pointed out. Sustainability is an attempt to address “market failure”, i.e., the term used by economists for the condition where the allocation of goods and services by a market is not efficient. In this case, a situation where significant costs are externalized to health and natural capital goods and services, without repayment or replenishment, is not sustainable.

Example : “The science tells us that GHG emissions are an externality; in other words, our emissions affect the lives of others. When people do not pay for the consequences of their actions we have market failure. This is the greatest market failure the world has seen. It is an externality that goes beyond those of ordinary congestion or pollution, although many of the same economic principles apply for its analysis. This externality is different in 4 key ways that shape the whole policy story of a rational response. It is: global; long term; involves risks and uncertainties; and potentially involves major and irreversible change.”

Defining Sustainability: It has many definitions now. BUT, the definitions of it that have rigor have shared characteristics.

Defining Sustainability: It is a work in progress It involves a systemic, multi-linear view The economic shares characteristics embedded in and part of the cultural realm. Both are dependent upon natural capital and services for their very existence.

Defining Sustainability: The solution search space addresses not only now. It also requires analysis of the effects of decisions on future generations and conditions, and not limiting future options to adapt to new conditions. The understanding that energy is not only the power to do work. Energy is also, through production and process “embedded” in what we make. Therefore, energy efficiency must address both the conservation and use of power, and the manner of production, recycling, and re-use of that material and energy.

One of the definitions that meets these criteria, and in addition, provides a framework for application to real problems, is

Beginnings… Karl-Henrik Robèrt, M.D., Ph.D was one of Sweden’s leading cancer researchers. Robèrt came to realize that there are basic realities of the environmental problems of the planet that are true for everyone, no matter their political views. Certain facts can be established, based on current knowledge. He realized that if people could agree upon something, it might result in action.

He wrote a paper and sent it to top international scientists, seeking such a consensus. He asked them to correct the errors in his paper. Twenty-two drafts later he had consensus. Robèrt consulted municipalities, businesses, government departments, environmental organizations, and the arts community. He got the support of the King of Sweden. The Natural Step was launched with attendant television coverage and distribution of educational material to every school and household in Sweden.

In 1989, Robert started The Natural Step as a non-stock corporation in Sweden. It spread quickly in Swedish society, including local governments and businesses. A local municipality of 5,000, Övertorneå, in rural Northern Sweden adopted it as part of an ongoing economic development planning process. This has spread to over 60 other municipalities in Sweden. More on this later… In early 1990’s it starts to spread in Europe and Japan primarily via large corporations. Note: A “municipality” in Sweden is the local government, and does not mean “city”. There are 290 of them, grouped into 21 counties. The majority of tax money in the country is controlled at the municipality level.

In 1993, American entrepreneur Paul Hawken (founder of Smith & Hawken, among other businesses), introduced the United States audience to The Natural Step in his book, The Ecology of Commerce. A scientific conference at the Wingspread Conference Center in Wisconsin endorsed it in Hawken and others worked with a group of large corporations (Monsanto, Interface, GE, Toyota, Nike and others).

What The Natural Step is NOT? It is not: A government program A regulatory measure A thing that tells you exactly what to do Only for large corporations A new running shoe, laxative, or diet

The Natural Step is: Based on established science An incremental, “do what you can handle” approach Scalable

TNS uses your creativity and intellectual capital to develop your own solutions. TNS integrates nicely with management models and ideas, (PBB/PBM, TQM, MBO, 5 th Discipline, etc) Has a track record on lowering costs, developing new products and services. Has a track record on improving community services and quality of life. What is The Natural Step?

TNS = 5 scientific points {4 laws, 1 principle} That when considered together, Results in 4 “System Conditions”.

Assumptions All mental frameworks embody assumptions. TNS Assumptions: That it is “good” that humans survive for as long as possible. That the humans inhabit a planet with a biosphere. Methodological Naturalism* (therefore it can operate in any current philosophical, spiritual, or political context) * For pragmatic reasons, the problem/solution space only contains what is capable of being sensed and empirically analyzed, within the “laws of nature”.

TNS: Science 1 Matter and energy cannot be created or destroyed. 1st law of thermodynamics and the principle of conservation of matter. Sooner or later, all matter that is introduced into society will be released into natural systems.

TNS: Science 2 Matter and energy tend to disperse. (2nd law of thermodynamics) Entropy Nature tends from order to disorder in systems, absent an continuing input of energy.

3 Material quality is characterized by the concentration and structure of matter. We never consume energy or matter--only its quality, (the degree of order within energy and matter), purity and structure. TNS: Science

4 Net increase in material quality on earth can only be produced by sun-driven processes. TNS: Science

TNS Scientific Principles Add together the 4 principles, and you get: The cyclic principle Waste must not systematically accumulate in nature, and reconstruction of material quality must be at least as large as its dissipation.

Nothing. Not doing things in cycles is why we have pollution, toxins in products, carbon loading, etc.

What is The Natural Step? From the science and the Cyclic Principle you can derive Four System Conditions The conditions are what describes the key characteristics of a sustainable society. They provide general goals to work towards. Progress towards them is determined by you. You implement your steps as you are able to do so.

Four System Conditions 1 Substances from the Earth's crust must not systematically increase in the biosphere. Fossil fuels, metals and other minerals should not be extracted at a faster pace than their redeposit and reintegration into the Earth's crust, or otherwise confined to the production cycle.

Four System Conditions 2 Substances produced by society must not systematically increase in the biosphere. Substances must not be produced at a faster pace than they can be broken down and integrated into the cycles of nature or deposited into the Earth's crust, or otherwise confined to the production cycle.

Four System Conditions 3 The physical basis for the productivity of nature must not be systematically deteriorated. We cannot harvest or manipulate ecosystems in such a way that productive capacity and diversity systematically diminish.

Four System Conditions 4 Human needs are met world wide. Human needs must be met fairly with the most resource efficient methods possible.

But, does not the free play of the market, individual effort and initiative determine what is “fair”? That last one sounds a little well….Swedish to me.

What I like to call, The Nixon Corollary on the 4 th System Condition: Given the historically normal reaction in humans to a condition of perceived scarcity, conflict will interfere with addressing the first three system conditions. Actually phrased in a more earthy manner, by the President in answer to a rich supporter who questioned his signing of the first Aid for Families with Dependent Children bill. Well….

A Business Example

Interface, Inc. World’s largest manufacturer of modular and tile carpeting Implemented TNS in the mid-1990’s

Often, a necessary first step, is re-conceptualization We sell: Affordable Carpeting that gives our shareholders a good return on investment We sell surfaces: Comfortable under foot Easy to clean Nice for the eyes Affordable Gives our shareholders a good return on investment

Surfaces: Comfortable under foot Easy to clean Nice for the eyes Affordable Gives our shareholders a good return on investment Cyclic Principle 4 Systems Conditions +

New product line: It is not a product line, it is a SERVICE Surfaces: Comfortable under customer’s feet Easy for the customer to clean Nice for the customer’s eyes {always looks brand new} Healthy for the customer {no out-gassing} Affordable for the customer Lasts “forever”, as far as the customer is concerned Does not get thrown out Gives our shareholders a good return on investment

Comfortable under customer’s feet Easy for the customer to clean Nice for the customer’s eyes {always looks brand new} Healthy for the customer {no out-gassing} Affordable for the customer Lasts “forever”, as far as the customer is concerned Does not get thrown out Gives our shareholders a good return on investment

TNS Method Carbon Strategy Energy Efficiency Full Cost Accounting Life Cycle Analysis Ecological Design Industrial Ecology Biobased Production Ecological, and Carbon Foot Prints Green Building Biomimetics Indicator design Problem Goal: Progress towards living within 4 system conditions & return on investment Tools Future State: Progress measured to determine efficacy of effort

Interface, Inc. has made significant strides towards the systems conditions, and made money. They report on their progress, and problems every year.

Four Questions Does my decision or this way of doing something: 1. Decrease dependence on raw materials from the earth's crust? 2. Decrease use of compounds produced by society, that can accumulate in nature? 3. Increase productivity and biodiversity in nature? 4. Increase the efficiency and fairness with which resources are used?

TNS Method Overview Carbon Strategy Energy Efficiency Full Cost Accounting Life Cycle Analysis Ecological Design Industrial Ecology Bio-based Production Ecological, and Carbon Foot Prints Green Building Biomimetics Indicator design + The Funnel Backcasting ABCD Other Tools

Your job is to make it through the funnel TNS Method Overview

Backcasting Similar to the idea of Critical Path Method in traditional project management. Forecasting is the process of predicting the future based on the study of current trends. Backcasting approaches the challenge of discussing the future from the opposite direction. It is a way of planning in which you start with a description of a successful outcome, then link to now in steps to achieve your desired outcome in a strategic way.

ABCD 1.Awareness. Your entire business organization learns TNS science, principles, and systems approach tools. 2.Baseline Mapping. A situational analysis of your community. Gap analysis of stocks, flows, critical issues, and opportunities. 3.Creating A Vision. What does your business look like in a sustainable society? What are its products, services? 4.Down To Action. Using backcasting, systems thinking, and a number of other related tools; you lay out implementation and measure performance and progress towards outcomes. TNS Method Overview

Resources on TNS Books The Natural Step: A Framework by Karl-Henrik Robèrt The Natural Step Story: Seeding a Quiet Revolution by Karl-Henrik Robèrt The Natural Step for Business: Wealth, Ecology and the Evolutionary Corporation by Brian Nattrass & Mary Altomare The Natural Step for Communities: How Cities and Towns Can Change to Sustainable Practices by Sarah James & Torbjörn Lahti The Ecology of Commerce by Paul Hawken Natural Capitalism: Creating the Next Industrial Revolution by Paul Hawken, Amory Lovins & L. Hunter Lovins Mid-Course Correction: Toward a Sustainable Enterprise: The Interface Model by Ray Anderson

While TNS is not mentioned anywhere in them, the two best books I have found for a deeper understanding of the science, the system conditions, and economics

On-line Resources: Extension Eco-Municipality Site: Community Sustainability and The Natural Step tools: