WRI Publications Feed: Corporate Ecosystem Services Review

Nature in Performance:Integrating Ecosystem Services into Business Performance Systems

Kevin Lustig — Wed, 08 Feb 2012 09:37:16 -0500

Executive Summary

In 2008, the World Resources Institute (WRI), in collaboration with the World Business Council for Sustainable Development (WBCSD) and the Meridian Institute, published the Corporate Ecosystem Services Review (ESR). The ESR is a structured method that helps managers develop strategies to address business risks and capture opportunities arising from their company’s dependence and impact on ecosystems.

Over the course of the past few years, a number of business managers have inquired about how to integrate the ESR or, more fundamentally, considerations of ecosystem services into their existing business performance systems. Business performance systems are the range of tools, methods, techniques, approaches, and practices used by managers to guide, measure, monitor, and improve corporate performance. Examples include corporate strategy development procedures, product design guidelines, environmental management systems, environmental impact assessments, environmental and social impact assessments, environmental audits, and sustainability reporting.

Most companies already have their own established business performance systems. The question managers are now asking is “How can considerations about ecosystem services and their impacts on the bottom line be integrated into our existing systems?” This publication tackles this and a series of related questions. Key messages include:

Ecosystems provide businesses—as well as people and communities—with a wide range of benefits known as ecosystem services. Ecosystem services matter to companies because they are intimately linked in two fundamental ways. First, businesses depend upon ecosystems and the services ecosystems provide. Second, businesses impact ecosystems and the services ecosystems provide. These two linkages can pose a number of operational, regulatory/legal, reputational, market, or financing risks and opportunities to a company.
Basic principles that guide how to integrate ecosystem service considerations into business performance systems, regardless of the system, include: (1) consider all ecosystem services; (2) assess dependence; (3) identify opportunities; (4) look beyond the company boundaries; (5) engage stakeholders and experts; and (6) manage with incomplete data.
Ecosystem service considerations are relevant to a variety of business performance systems, including corporate strategy development processes, product design guidelines and life-cycle assessments, environmental and social impact assessments, environmental management systems, corporate sustainability reporting, and investment screening processes.
The ISO 14001 guidance on environmental management systems contains at least four components into which ecosystem service considerations could be readily inserted: (1) environmental policy, (2) aspects review, (3) objectives and targets, and (4) management review.
The Global Reporting Initiative (GRI) reporting framework contains at least four guidance components into which ecosystem service considerations could be readily inserted: (1) materiality, (2) sustainability context, (3) organizational profile and strategy, and (4) performance indicators.
For further guidance and reference, a number of scientific assessments, business tools, and working groups exist and can help business managers integrate ecosystem services into their business performance systems.

The Corporate Ecosystem Services Review: Guidelines for Identifying Business Risks & Opportunities Arising from Ecosystem Change

Suzanne Ozment — Tue, 07 Feb 2012 16:32:54 -0500

Summary

Ecosystems provide businesses with numerous benefits or “ecosystem services.” Forests supply timber and wood fiber, purify water, regulate climate, and yield genetic resources. River systems provide freshwater, power, and recreation. Coastal wetlands filter waste, mitigate floods, and serve as nurseries for commercial fisheries.

However, human activities are rapidly degrading these and other ecosystems. The Millennium Ecosystem Assessment— the largest audit ever conducted of the condition and trends in the world’s ecosystems—found that ecosystems have declined more rapidly and extensively over the past 50 years than at any other comparable time in human history. In fact, 15 of the 24 ecosystem services evaluated have degraded over the past half century. The Assessment projected further declines over coming decades, particularly in light of population growth, economic expansion, and global climate change. Left unchecked, this degradation could jeopardize future economic well-being, creating new winners and losers within the business community.

Ecosystem degradation is highly relevant to business because companies not only impact ecosystems and the services they provide but also depend on them. Ecosystem degradation, therefore, can pose a number of risks to corporate performance as well as create new business opportunities. Types of risks and opportunities include:

Operational

Risks such as higher costs for freshwater due to scarcity, lower output for hydroelectric facilities due to siltation, or disruptions to coastal businesses due to flooding
Opportunities such as increasing water-use efficiency or building an on-site wetland to circumvent the need for new water treatment infrastructure

Regulatory and legal

Risks such as new fines, new user fees, government regulations, or lawsuits by local communities that lose ecosystem services due to corporate activities
Opportunities such as engaging governments to develop policies and incentives to protect or restore ecosystems that provide services a company needs

Reputational

Risks such as retail companies being targeted by nongovernmental organization campaigns for purchasing wood or paper from sensitive forests or banks facing similar protests due to investments that degrade pristine ecosystems
Opportunities such as implementing and communicating sustainable purchasing, operational, or investment practices in order to differentiate corporate brands

Market and product

Risks such as customers switching to suppliers that offer eco-certified products or governments implementing new sustainable procurement policies
Opportunities such as launching new products and services that reduce customer impacts on ecosystems, participating in emerging markets for carbon sequestration and watershed protection, capturing new revenue streams from company-owned natural assets, and offering eco-labeled wood, seafood, produce, and other products

Financing

Risks such as banks implementing more rigorous lending requirements for corporate loans
Opportunities such as banks offering more favorable loan terms or investors taking positions in companies supplying products and services that improve resourceuse efficiency or restore degraded ecosystems.

Unfortunately, companies often fail to make the connection between the health of ecosystems and the business bottom line. Many companies are not fully aware of the extent of their dependence and impact on ecosystems and the possible ramifications. Likewise, environmental management systems and environmental due diligence tools are often not fully attuned to the risks and opportunities arising from the degradation and use of ecosystem services. For instance, many tools are more suited to handle “traditional” issues of pollution and natural resource consumption. Most focus on environmental impacts, not dependence. Furthermore, they typically focus on risks, not business opportunities. As a result, companies may be caught unprepared or miss new sources of revenue associated with ecosystem change.

The Corporate Ecosystem Services Review (ESR) is designed to address these gaps. It consists of a structured methodology that helps managers proactively develop strategies to manage business risks and opportunities arising from their company’s dependence and impact on ecosystems. It is a tool for strategy development, not just for environmental assessment. Businesses can either conduct an Ecosystem Services Review as a stand-alone process or integrate it into their existing environmental management systems. In both cases, the methodology can complement and augment the environmental due diligence tools companies already use.

The Ecosystem Services Review can provide value to businesses in industries that directly interact with ecosystems such as agriculture, beverages, water services, forestry, electricity, oil, gas, mining, and tourism. It is also relevant to sectors such as general retail, healthcare, consulting, financial services, and others to the degree that their suppliers or customers interact directly with ecosystems. General retailers, for example, may face reputational or market risks if some of their suppliers are responsible for degrading ecosystems and the services they provide.

This publication describes the five steps for performing an Ecosystem Services Review. It provides an analytical framework, case examples, and helpful suggestions for each step. It concludes by highlighting a number of resources managers can use when conducting an ESR, including a “dependence and impact assessment” spreadsheet, scientific reports, economic valuation approaches, and other issue-specific tools.

As of 2012, an estimated 300 companies have used the Ecosystem Services Review. In addition, complementary tools and guidance now exist to help companies more fully assess business risks and opportunities emerging from ecosystem change. For example, in 2011 the World Business Council for Sustainable Development released the Guide to Corporate Ecosystem Valuation (CEV), which provides information on how to quantitatively, or in some cases monetarily, assess risks and opportunities related to ecosystem services. CEV can therefore be a logical next step after undertaking an ESR. The Economics of Ecosystems and Biodiversity (2010) highlighted new examples of the linkages between business and ecosystem services. The ESR remains a fundamental starting point for companies to assess business risks and opportunities related to ecosystem change.

Global degradation of ecosystems and the services they provide threatens to alter the landscape in which business operates. The Ecosystem Services Review is a proactive approach for companies to manage the risks and opportunities that are emerging. Furthermore, by helping companies make the connection between healthy ecosystems and the bottom line, it will encourage not only more sustainable business practices, but also business support for policies to protect and restore ecosystems.

WRI developed the ESR in collaboration with the Meridian Institute and the World Business Council for Sustainable Development (WBCSD). Five WBCSD member companies—Akzo Nobel, BC Hydro, Mondi, Rio Tinto, and Syngenta—road-tested the methodology, providing feedback and case examples. Since 2008, an estimated 300 companies have used the Ecosystem Services Review. Yves Rocher, Lafarge, and CEMEX have also contributed ESR case studies to demonstrate the experience and results of the method.

Ecosystem Services Review for Impact Assessment

Maggie Barron — Tue, 15 Nov 2011 15:30:06 -0500

Overview

Lending and government institutions, such as the International Finance Corporation and the US Council on Environmental Quality, now require the explicit consideration of ecosystem services in impact assessment.

Overview
Downloads
Get Involved
Timeline

More Information for Practitioners

Conceptual Framework
Why Use the Ecosystems Services Review for Impact Assessments?
Ecosystem Services Requirements in new IFC Performance Standards

However, according to a survey carried out by WRI, the guidance documents currently available for addressing ecosystem services in Environmental and Social Impact Assessment (ESIA) are seen by practitioners as insufficiently detailed to move ESIA practices forward.

To fill this gap in practical guidance, the Ecosystem Services Review for Impact Assessment (ESR for IA) provides: (1) A conceptual framework of how the project, ecosystem services and human well-being are linked and (2) step-by-step instructions (PDF, 172 Kb) to systematically incorporate ecosystem services

Downloads

Working Paper 1 - Ecosystem Services Review for Impact Assessment: Introduction and Guide to Scoping (PDF, 1.1 Mb)
Impact Scoping Tool (Excel, 5.7 Mb)
Dependence Scoping Tool (Excel, 2.1 Mb)
Seven Steps to Address Ecosystem Services in Impact Assessment (PDF, 172 Kb)

Get Involved

We invite you to send us feedback and suggested improvements to the methodology.

Complete our survey. Practitioners are invited to share their feedback on the ESR for IA through this short online survey. The authors would like your opinion on the overall ESR for IA framework and your suggestions for improving the guidance.
Join our LinkedIn discussion. The authors are leading a guided discussion on the ESR for IA with the Business & Ecosystem Services Professionals group, which links managers, consultants, and thought leaders around pressing issues at the nexus of business and ecosystems. The forum allows members to share recent news and best practices, discuss important issues, and connect with peers.
Road-test the ESR for IA. From December 2012 to December 2013, the authors will work with selected project developers and impact assessment practitioners to road-test the ESR for IA on actual ESIA processes. This opportunity is ideal for environmental and social practitioners who work for companies that wish to identify more effective ways to mitigate negative impacts on ecosystem services, meet the new IFC Performance Standards, or establish themselves as leaders in addressing ecosystem services in environmental and social impact assessment. If you would like your project to be considered for road-testing, contact Florence Landsberg with a short description of the project and the planned ESIA timeline.
Contact us. You are also invited to share your general feedback on the ESR for IA directly with the authors.

Timeline

The ESR for IA will be presented in two successive working papers (WP): Ecosystem Services Review for Impact Assessment: Introduction and Guide to Scoping (available above) and Complementing Environmental and Social Impact Assessment to Address Ecosystem Services: The Ecosystem Services Review for Impact Assessment. WP 2 is due in the first quarter of 2013. It will provide a revised version of WP 1 and instructions to conduct the ESR for IA at the Impact Analysis and Mitigation Stages. It will also incorporate the comments from six retrospective road-tests (i.e. implementation of the ESR for IA on completed ESIAs).

Conceptual Framework

The ESR for IA’s conceptual framework builds on the elements and causal relations of the original Millennium Ecosystem Assessment (MA) Framework (Figure 1). By explicitly recognizing the causal interactions between the project, human well-being and the indirect and direct drivers of ecosystem change, the ESR for IA framework supports an integrated assessment of elements commonly assessed separately in an ESIA.

Figure 1: Conceptual framework for assessing project impact and dependence on ecosystem services (Click to Enlarge)

Why Use the Ecosystems Services Review for Impact Assessments?

The ESR for IA helps social and environmental impact assessment practitioners deliver the following:

Systematic integration of environmental and socio-economic issues.
Assessment of project dependence on ecosystem services.
Consideration of multi-scale impacts and dependence.
Identification of indirect and cumulative impacts.
Identification, communication, and negotiation with stakeholders.
Comply with the new International Finance Corporation (IFC) performance standards.

Ecosystem Services Requirements in new IFC Performance Standards

Starting January 2012, IFC investments will be screened systematically for ecosystem service risks and impacts, which are mandated in multiple performance standards. These ecosystem service changes to the IFC standards are comprehensive and affect screening, mitigation, and compensation rules for future investments. They also include increased resources to strengthen IFC’s internal management capacity to assess ecosystem service risks and impacts. These additions to the performance standards complement existing requirements for safeguarding biodiversity and supporting sustainable natural resources management to reflect the importance of the environment for people’s health, culture and fundamental human rights.

The new standards include the following specific ecosystem services requirements:

Performance Standard 1-Assessment and Management of Environmental and Social Risks and Impacts – Identify all reasonably expected risks and impacts related to ecosystem services and use a broader definition of a project’s area of influence, which now includes indirect project impact on ecosystem services upon which Affected Communities’ livelihoods are dependent.
Performance Standard 4-Community Health, Safety, and Security – Assess and manage health, safety, and security risks to communities resulting from direct project impact on provisioning and regulating ecosystem services such as the loss of buffer areas (e.g., wetlands, mangroves, or upland forests.
Performance Standards 5-Land Acquisition and Involuntary Resettlement – Assess impacts on and compensate for loss of provisioning ecosystem services resulting from land acquisition and involuntary resettlement.
Performance Standard 6-Biodiversity Conservation and Sustainable Management of Living Natural Resources – Carry out a systematic review (including participation of Affected Communities) of all ecosystem services a project will impact or is dependent upon to identify priority ecosystem services, and avoid, minimize, and mitigate impacts on priority ecosystem services for which a client has direct management control or significant influence.
Performance Standard 7-Indigenous Peoples – Assess provisioning and cultural ecosystem services when examining projects affecting Indigenous Peoples.
Performance Standard 8-Cultural Heritage – Maintain or restore any ecosystem processes and ecosystem services when replicable cultural heritage is removed.

Business and Ecosystems Issue Brief: Ecosystem Challenges and Business Implications

admin — Wed, 01 Nov 2006 00:00:00 -0500

Over the past 50 years human activity has altered ecosystems faster and more extensively than ever before in human history. That is the main finding of the Millennium Ecosystem Assessment (MA), a four-year, international, scientific appraisal of the condition and trends in the Earth’s ecosystems.

The MA classified ecosystem services, the benefits people and businesses obtain from ecosystems, into four categories, including provisioning services such as food, water and fiber; regulating services that affect climate, floods, disease, wastes, and water quality; cultural services that provide recreational, aesthetic or spiritual benefits; and supporting services such as soil formation, photosynthesis and nutrient cycling.

The MA assessed 24 ecosystem services and found the majority to be degraded.

The MA also identified six interconnected challenges that are of particular concern for business as these further affect the integrity of ecosystems and their capacity to provide services:

Water scarcity
Climate change
Habitat change
Biodiversity loss and invasive species
Overexploitation of oceans
Nutrient overloading.

This Issue Brief explores the six challenges, discusses their implications for
businesses and provides examples of corporate responses.