Leading companies are learning the value of ecosystems services, to the environment and to the bottom line.
Ecosystem services – the benefits humans derive from nature – can present both risks and opportunities to business. Agribusiness depends on the freshwater, soil quality, and erosion control that ecosystems offer. Insurance companies benefit from coastal protection provided by coral reefs and wetlands, while fishers rely on these habitats for commercial fish species. A decline in any of these services can substantially affect the bottom line. And, if a company plays a role in damaging an ecosystem service, it exposes itself to regulatory, reputational, or other forms of risk.
Managers have only just begun integrating considerations of ecosystem services into corporate decision-making processes, but they are making progress with the Corporate Ecosystems Services Review (ESR). This structured method has now been used by over 200 companies to manage their dependence and impact on ecosystems.
Who Uses the Corporate Ecosystems Services Review?
Since its release in March 2008, the ESR has been translated into five languages, 15,000 copies have been printed, nearly 30,000 copies have been downloaded, and over 200 businesses have put it to use. 94 percent of World Business Council for Sustainable Development (WBCSD) members that have used the ESR say they would recommend it to peers.
“The ESR is not a tool where data is put in one end, and results are produced at the other,” says Ian Jameson, senior environmental advisor for the South African power firm Eskom. “Rather, it provides a thought process for strategically considering environmental issues.” It is valuable to senior executives looking at an organization’s long-term strategy as well as to line managers responsible for product development, risk analysis, or day-to-day plant management.
Experience to date indicates that conducting an ESR can help business managers improve the bottom line in at least four ways:
1. Strengthen corporate strategy
In 2008, Mondi, the international paper and packaging company, wanted to address the impacts that its plantations had on freshwater and biodiversity in water-scarce South Africa. The ESR helped Mondi contextualize many of the known drivers of water scarcity in the region, such as the spread of invasive species, inefficient irrigation practices, climate change, and the increasing water demands of a developing nation. The ESR also expanded the water scarcity analysis beyond the scope of Mondi’s existing environmental management systems, prompting new solutions and the establishment of a comprehensive freshwater strategy – stretching from their plantations management to their community engagement through to Mondi’s government relations.
2. Identify new products and service
3. Strengthen corporate decision-making processes
Companies find that the ESR draws attention to environmental aspects of decisions that existing processes often exclude and deepens their analysis of a business unit’s dependence on ecosystem services. Among other practices, the ESR can improve companies’ Environmental Impact Assessments, environmental policies, water-use planning, and sustainability assessments.
Environmental policy: Eskom, the South African power company, is weaving the ESR into some of its corporate-wide standards and policies, including its biodiversity policy and its ISO-based biodiversity standard.
Environmental Impact Assessments (EIA): ERM Ltd, a global environmental consultancy, is beginning to use the ESR to embed ecosystem service considerations into its EIAs.
Water-use planning: “Sustainable use requires the integration of social, financial, and ecological considerations,” notes Dr. Scott Harrison, a senior environmental specialist with BC Hydro. “The ESR provides a framework for enhancing discussions about ecosystem services within existing processes, such as water-use planning.”
Sustainability Assessments: AkzoNobel, the world’s largest paints and coatings company and a major producer of specialty chemicals, used the ESR to improve its sustainability assessments by catching issues difficult to include in a quantitative Life Cycle Assessments or Eco-efficiency Assessment.
4. Reduce risk of reputation and supply disruptions
Yves Rocher, a global cosmetics firm, used the ESR to identify and respond to several reputational and long-term supply concerns related the company’s dependence on essential oils from a rare tree species.
Improving Corporate Performance and the Environment
While these examples cover only a portion of ESR-use to date, they demonstrate the value that conducting an ESR can bring to a business. Most importantly, the ESR can help managers uncover new business risks and opportunities that, in turn, improve corporate strategy, policy, and other decision-making processes; help develop new products and services; avoid reputational risks; and avert supply chain disruptions.
More about corporate use of the ESR can be found in the United Nations Global Compact International Yearbook 2010. The ESR and supporting tools can be found at http://www.wri.org/ecosystems/esr.