Can capitalism be sustainable and earth-friendly?

Capitalism is an economic & political system where a nation's industry & trade are owned, executed & controlled by private individuals with a profit motive, instead of the state's machinery. As a primary profit motive drives these vehicles – the business owners, industrialists may or may not be directly concerned about the ecosystem they operate in. Let's explore the various facets of whether Capitalism can be sustainable & earth-friendly.

Capitalism is a cornerstone of prosperity. Without trade & commerce, the world would still be living in an agrarian economy with a really very limited scope of existence. Industrialisation was a period of rapid socio-economic alterations that transformed our society, us from farmers to manufacturers & industrialists. It involved the complete overhaul of existing economies to the purpose of mass production. This change started in modern-day United Kingdom (Great Britain) in a phase known as the Industrial Revolution (the late 1800s to 1900s) & was the prototype for modern industrial development in Europe & United States of America (USA).

The term earth-friendly broadly means being benevolent to our nature, Mother Earth. It means we leave nature better than when we started using it. This entails basic care for our own actions, preventing ourselves from taking the easy way out by degrading the environment. Being conscious of our actions is one of the major ways we can start on the path of creating a difference. Being sustainable & earth-friendly means leaving the natural resources of the Earth, its ecosystems alive & able to cater to the needs of the generations to come.

How Capitalism affects the Environment and Ecosystem, it operates in?

A deep-dive into the various ways' businesses affect the environment yields the following concerns –

1. Accelerated Natural Resource Consumption

This includes cutting down vast swathes of rainforests or even burning them to clear land for agriculture or build industrial complexes, overexploitation of the natural resources due to poor & corrupt mining practices. The fertile land is often left barren due to pollutants.

2. Noise Pollution

Big machines are noisy & the noise scares away the animals who called that natural habitat their home. Animals exposed to the high intensity of noise showed elevated levels of stress hormones – making them unfit for human consumption.

3. Air Pollution

Airborne pollutants like respirable particles, synthetic & organic solvents, sulphur dioxide (SO2) & nitrogen oxides (NOX) – are the top pollutants that factories & industrial establishments release into the air. Mainly an effect of corruption & non-adherence to set environmental standards – it can become a serious menace to the human society – causing respiratory problems like asthma, bronchitis & silicosis.

4. Water Pollution

Factories dump their harmful by-products into the local water bodies – poisoning the local flora & fauna. Leakage of radioactive waste, heavy metals contaminate & kill the aquatic creatures & consuming them releases these poisonous chemicals into the human body. Due to biomagnification, human beings are the worst affected.

5. Land Pollution

Land Pollution due to poor waste management practices is quite common in urban & industrial areas. Dumping of household & non-bio-degradable waste creates landfills which are sources of methane and other greenhouse gases. Also, they emit a really foul smell due to decomposition which causes health issues to anyone living in the area.

6. Aesthetic Damage

Examples of forests being ruined for industrialisation like the forest fires in the Amazonian Rainforest – the lungs of the Earth are still vivid in our memory. Concrete jungles spewing venomous smoke is not a pretty sight. Hyperlocal industries like tourism which depend upon tourists visiting the place for their meagre income are spoiled outright when industrialisation affects the tourist spots.

7. Social & Cultural Damage

Industrialisation in the hands of corrupt contractors displaces local indigenous people who have called the forest their home for centuries. They are threatened, sometimes tortured or forcibly thrown out, even killed for resisting. As these happen in remote places, the spread of the news is quite easily controlled by corrupt businessmen. This leads to loss of their cultures, ways of living and indigenous knowledge which were valuable to the country's social fabric.

8. Loss of Forest Cover

9. Commercial & Biomedical Waste Mismanagement

Eco – Capitalism

Eco – Capitalism or Green Capitalism says that all capital which exists in the market is natural capital. All wealth depends on ecological yields. Thus, it is the onus of the governments to employ market policy instruments to solve environmental issues.

With its roots in the 1960s, the popularity of Eco – Capitalism has risen over the years. It was a group of eco – capitalists who first proposed the idea of Emissions Trading. Emissions Trading is a market-based approach which allows polluters to be assigned permits instead of their actions which have harmed the environment. The funds thus generated can be used to better the ecosystem in some part of the globe where the need is dire. International Emissions Trading formed the base of the discussions of the Kyoto Protocol in 1997.

The ideas of eco-capitalism help businesses commodify the act of addressing environmental issues. This ideology satisfies two fundamental propositions:

• The Profit Motive of capitalist businesses
• Need for urgent & meaningful actions to solve a critical ecological issue caused by human activity

The other common principles of Eco Capitalism are:

1. Accounting for free market failure

By externalising pollution, Eco-Capitalism allows the market to minimise accountability while internalising the cost of taking corrective action. The government may regulate business practices by regulating carbon emissions forcing the companies to reduce their pollution rates.

2. Green Consumption

The idea of green consumption is that - not only producers but also consumers need to bear the responsibility of environmental regeneration. It ideates the use of green technology, green labelling, green taxes & eco-conscious purchasing to a more environment sensitised capitalistic society.

3. Progress Indicators

Regular measures like GDP repurposed to measure pollution by a country was not a good measure of the amount of ecosystem damage done. Specific KPIs were designed to measure environmental progress indicators.

4. Carbon Trading

A credit-based system for pollution. Efficient & effective at reducing global greenhouse gas emissions.

5. Full Cost Environmental Accounting

Explains the actions of the business on the basis of triple bottom line framework - "people, planet, and profit". It considers the social, economic & environmental costs of corporate action & intends to hold them responsible for it.

As to what strategies can be used to achieve these ideologies, here are 5 top ways:

1. Identify and incorporate risks with highly polluting assets. For instance, carbon-intensive assets like coal-fired power plants can be made prohibitively expensive to demotivate businesses from using these.
2. Integrated reporting to be made mandatory to disclose environmental, social & human resources performance with financial results.
3. Reduce the incentives for executives and investors to decide the best course of action by looking at short-term profits instead of long-term goals.
4. We are aligning compensation of top management & board members based on long-term sustainable performance, including environmental and social goals.
5. Encouraging long-term investing with loyalty driven securities gives the company an opportunity to deliver on their long-term goals.

To conclude the idea of sustainable Capitalism can very much be a reality, provided each individual governments of member countries do their part.

Also read:

1) How to become Environment Friendly?
2) What are Organic & Eco-friendly Products? How to start this business?
3) What is sustainable business marketing?
4) Do You Consider Yourself to be Eco-Friendly? Let’s Check!