Insights

What’s most important – how cheap or how much value?

A framework for decision making to deliver sustainable outcomes.

Recent announcements from the UN and the UK government on Net Zero Carbon targets have highlighted the urgency of delivering on sustainability commitments. But often the biggest challenge is how to decide what’s important – cost or value. We think a clear framework within which to make these value-based decisions helps organisations to decide on their sustainability priorities.

K2 uses the Five Capitals model to provide that framework. It enables sustainable value to be defined. It helps provide a balanced view of priorities and forms the basis for a costed sustainable development strategy, supporting selection of the best design options.

The approach gives due weight across all the capitals to provide a balanced view of priorities. The aim is to ensure that all five capitals are well managed so they provide a robust basis for a sustainable development strategy.

The five capitals are intrinsically linked. Projects can achieve successful outcomes across multiple capitals, often with a single solution.

Decisions based on sustainable value, not just cost

The Five Capitals framework enables informed choices that are not based simply on how cheap a service or project can be bought, but by how much value is created – allowing wider social, economic and environmental outcomes to inform decision-making and enhance whole life performance, rather than just cost.

Assessing the best design option

The model is used by K2 to test different design options and to understand the genuine value created and how that aligns with our client’s project objectives. The client’s design brief must be informed by the model, using it as the basis for the development strategy.

Is cost saving more important than creating community benefits or carbon reduction? Can the project improve biodiversity and does the development enhance the local area and support community priorities? Using the model a full range of objectives, priorities and concerns can be explored and costed, then incorporated into the brief and used to determine the best design option.

Five Capitals in practice

This approach has been applied to many projects including the current Hardess Yard sustainable development which is targeting Net Zero Carbon through on-site and off-site reductions. K2 supported the creation of developer London Green’s value profile using the Five Capitals approach. It was initially trialled with the same developer on Mitre Wharf in West London which is the transformation of a canal-side site into a high quality, sustainable mixed-use scheme – part of a masterplan of 25,500 new homes.

Aligning with benchmarks such as BREEAM

In applying the Five Capitals model the need to relate to other models of sustainability is recognised, such as BREEAM. BREEAM is then used to communicate the interrelated concepts to the market and stakeholders.

Is sustainability a priority?

Some businesses have grasped the scale of the sustainability challenge and are responding with vision using the Five Capitals model. An organisation with sustainability as a priority objective will maintain and, where possible, enhance these stocks of capital assets, rather than deplete or degrade them.

There are five types of sustainable capital from where we derive the goods and services we need to improve the quality of our lives:

The big picture

We are facing a sustainability crisis because we’re consuming our stocks of natural, human and social capital faster than they are being produced. Unless we control the rate of this consumption, we can’t sustain these vital stocks in the long-term. We believe that by managing our projects in this way we can live off the ‘income’ without reducing the ‘stocks’ of the capital assets.

Find out more

If you want to explore the concept of the Five Capitals model or you’re struggling to define the value of the sustainable outcomes you want to see from your project, get in touch – info@k2consultancy.com

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