How might we reframe ESG for more meaning using the Five Capitals model?

How might we reframe ESG for more meaning using the Five Capitals model?
I doubt that I am the only one thinking that the term ‘ESG’ doesn’t help its cause. Here is how I will try to see it from now on 👇

The challenge I see with the terminology is that the aspects of Environmental, Social and Governance are too broad and unrelatable to start thinking in concrete solutions.

Some time ago I stumbled upon the Five Capitals model, described in 2007 by Jonathan Porritt in 'Capitalism as if the World Matters'. Interestingly, it takes the concept of 'capital' - mostly viewed from the financial viewpoint - and extends it into multiple dimensions that I think could be super useful for an ESG approach.

When used by organisations as a compass for decision-making, this model could support a path towards genuinely sustainable outcomes, as a sustainable organisation needs to maintain and, wherever possible, enhance these stocks of capital assets, rather than deplete or degrade them:

❶ Natural Capital: This refers to the environmental resources and services we rely on. In real estate, this includes the land, raw materials, water, air quality, ecosystem services, climate regulation, and biodiversity. How can we ensure our structures are in harmony with the natural world, minimizing harm and, wherever possible, enhancing it?

❷ Human Capital: Our buildings are, at their core, for people. This capital emphasizes the skills, health, and knowledge of those who build, manage, and occupy these spaces. Are we promoting well-being, equity, continuous learning, and personal growth?

❸ Social Capital: How do our properties and developments contribute to the community's cohesion and social networks? From designing communal spaces that foster interactions to supporting local initiatives and encouraging local spending, this capital reminds us that buildings are part of a larger societal tapestry.

❹ Manufactured Capital: This pertains to the physical assets and infrastructure. It's about ensuring our buildings are designed and built with longevity, adaptability, and sustainability in mind, using the best available techniques and materials to create long lasting value and being able to recover that at the end of their usable lifetime.

❺ Financial Capital: The traditional measure of value, but in this framework, it's linked with all the other capitals. Profit doesn't stand in opposition to sustainability; rather, true financial success in real estate considers and benefits from the long-term value generated by the other four capitals.


ESG, with this framing, becomes not just a standard to meet but a holistic lifecycle approach to create lasting value - for investors, for occupants, and for the broader ecosystem we're all a part of.