WRI Stories Feed: Corporate Ecosystem Services Review

Parceria viabiliza inclusão de serviços ecossistêmicos nos planos de negócios das empresas

James Anderson — Thu, 10 May 2012 14:27:43 -0400

Ver texto em Português OR Read text in English here

Um grupo de empresas líderes brasileiras deu início hoje a uma parceria para incorporar serviços ecossistêmicos em suas estratégias de negócios. A Parceria Empresarial pelos Serviços Ecossistêmicos (PESE) representa um grande esforço para incluir a biodiversidade e os serviços ecossistêmicos na estratégia de negócios das empresas e melhorar o desempenho corporativo no Brasil, país sede da Conferência das Nações Unidas sobre Desenvolvimento Sustentável (Rio+20), no próximo mês.

A ideia é desenvolver estratégias que aliem o desempenho empresarial à gestão sustentável dos ecossistemas. Empresas líderes, como Anglo American, Grupo André Maggi, PepsiCo, Vale, Votorantim e Wal-Mart, estão entre as primeiras companhias participantes desta iniciativa. A parceria é coordenada pelo Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável (CEBDS), Centro de Estudos em Sustentabilidade da Fundação Getúlio Vargas (GVces) e World Resources Institute (WRI), com apoio da Agência dos Estados Unidos para o Desenvolvimento Internacional (USAID).

“A indústria depende dos serviços ecossistêmicos, como produção de alimentos, água doce e limpa, um clima estável, e proteção contra riscos naturais como enchentes, entre outros benefícios,” explicou Craig Hanson, diretor do Programa de Pessoas e Ecossistemas do WRI. “A PESE irá capacitar as companhias brasileiras a gerenciar proativamente riscos e oportunidades nos negócios, decorrentes de suas dependências e impactos sobre os serviços ecossistêmicos.”

A parceria irá impulsionar novas soluções de negócios em meio à larga degradação dos ecossistemas através da aplicação local da Corporate Ecosystem Services Review (ESR), ou Revisão Corporativa dos Serviços Ecossistêmicos, metodologia líder de avaliação de serviços ecossistêmicos, desenvolvida pelo WRI, em cooperação com o World Business Council on Sustainable Development (WBCSD) e o Meridian Institute. Aplicando a ESR, cada empresa parceira da PESE vai desenvolver estratégias para melhor competir e ter sucesso em um mundo que cada vez mais esbarra nos limites naturais dos ecossistemas.

“As companhias que já utilizam a ESR têm sido capazes de descobrir novas estratégias rentáveis enquanto protegem e restauram os ecossistemas. Nosso objetivo é replicar esse sucesso no Brasil,” disse Marina Grossi, presidente do CEBDS (Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável).

Um exemplo de uma companhia que registrou resultados positivos a partir do gerenciamento consciente dos escossistemas em que opera é a Mondi, maior companhia europeia de papel e celulose. A Mondi conduziu a ESR em três plantações de papel na África do Sul, em 2008. A ESR ressaltou estratégias que a companhia poderia implementar para aumentar o acesso à água doce, melhorando as bacias hidrográficas regionais, estreitando relações com a comunidade local e reduzindo custos operacionais.

Aproximadamente 300 empresas no mundo já implementaram a ESR, desde 2008. Conforme essa metodologia ganha força no Brasil, WRI, CEBDS e GVces promoverão assistência técnica e consultoria às empresas parceiras, com o objetivo de assegurar a qualidade e eficiência na aplicação da ESR.

Os parceiros também têm como objetivo criar uma rede de empresas ativas na gestão de serviços ecossistêmicos no Brasil, para comunicar resultados, contribuir com estudos de casos e intensificar as estratégias de sucesso. “Assim como a chegada do GHG Protocol há cinco anos, o lançamento da PESE hoje representa um passo adicional na gestão de serviços ecossistêmicos no ambiente empresarial brasileiro” explicou Mario Monzoni, coordenador do GVces.

O evento de lançamento da PESE aconteceu no dia 10 de maio de 2012, das 17h às 18h, no Jardim Botânico no Rio de Janeiro – RJ.

Para saber mais sobre a PESE, acesse o site http://insights.wri.org/pese

A realização da PESE é possibilitada pelo apoio generoso do povo norte-americano, por meio da Agência dos Estados Unidos para o Desenvolvimento Internacional (USAID). Seu conteúdo é de responsabilidade do WRI, GVces e CEBDS, e não reflete necessariamente a posição da USAID ou do Governo dos Estados Unidos.

Contact (in English)
World Resources Institute
James Anderson; Janderson@wri.org; +1 (202) 729 7600

Contato (em português)
GWA Comunicação Integrada
Kelly Souza; kelly.souza@gwacom.com; (11) 6620-2234

Contato (CEBDS)
In Press Porter Novelli
Tatiana Wolff; tatiana.wolff@inpresspni.com.br; (21) 3723-8095
Suzana Ribeiro; suzana.ribeiro@inpresspni.com.br; (21) 3723-8117

Corporate Leaders and NGOs Form New Partnership to Protect Ecosystems in Brazil

James Anderson — Thu, 10 May 2012 12:47:01 -0400

Read in English below OR Ver texto em Português

A group of leading companies and non-governmental organizations have embarked on a new partnership in Brazil today to incorporate ecosystem services into business strategies. The Parceria Empresarial pelos Serviços Ecossistêmicos (PESE), or Brazilian Business and Ecosystem Services Partnership, represents a major effort to demonstrate how biodiversity and ecosystem services can enhance corporate performance in Brazil, home of the UN Conference on Sustainable Development (Rio +20) next month.

The goal is to develop strategies that align business performance to the sustainable management of ecosystems. Leading companies, such as Anglo American, Grupo André Maggi, PepsiCo, Vale, Votorantim and Wal-Mart, are among the first companies participating in this initiative. The partnership was organized by the Brazilian Business Council for Sustainable Development (CEBDS), the Center for Sustainability Studies at the Getulio Vargas Foundation (GVces), and the World Resources Institute, with support from the U.S. Agency for International Development (USAID).

“Industry relies on ecosystem services, such as food production, clean water, a stable climate, protection from natural hazards, and more,” explained Craig Hanson, Director of the People and Ecosystems Program at WRI. “PESE will empower Brazilian companies to manage business risks and opportunities arising from their dependence and impacts on ecosystem services.”

The partnership will drive new business solutions to ecosystem degradation largely through local application of the Corporate Ecosystem Services Review (ESR), the leading assessment methodology developed by WRI in cooperation with the World Business Council on Sustainable Development (WBCSD) and the Meridian Institute. By applying the ESR, corporate partners will develop strategies to better compete and succeed in a world that is pushing against natural limits.

“Using the ESR, companies have been able to uncover new profitable strategies while protecting and restoring ecosystems. Our goal is to replicate these successes in Brazil,” said Marina Grossi, President of CEBDS.

One example of a company that has already experienced positive results from managing the ecosystems in which it operates is Mondi, Europe’s largest paper and pulp company. In 2008, Mondi conducted an ESR in three of its paper plantations in South Africa. The ESR highlighted strategies the company could implement to increase access to freshwater while improving regional watershed health, strengthening its relationship with local communities, and reducing operational costs.

An estimated 300 companies have already implemented the ESR worldwide since 2008. As this method gains traction in Brazil, WRI, CEBDS, and GVces will provide technical assistance and advice to corporate partners in order to enhance the quality and efficiency of applying the ESR.

The partners also aim to create a network of companies active in the management of ecosystem services in Brazil, in order to communicate results, contribute new case studies, and scale up successful strategies.

“As with the arrival of the GHG Protocol five years ago, the launch of PESE today represents another step towards sustainability for Brazilian business,” explained Mario Monzoni GVces coordinator.

Editor’s Note:

The PESE launch event will take place on May 10, 2012, from 5:00pm to 6:00pm at the Botanical Garden in Rio de Janeiro.

For more information, visit: http://insights.wri.org/pese

PESE is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of WRI, GVces, and CEBDS and do not necessarily reflect the views of USAID or the United States Government.

Contact (in English)
World Resources Institute James Anderson; Janderson@wri.org; +1 (202) 729 7600

Contato (em português)
GWA Comunicação Integrada Kelly Souza; kelly.souza@gwacom.com; (11) 6620-2234

Contato (CEBDS)
In Press Porter Novelli
Tatiana Wolff; tatiana.wolff@inpresspni.com.br; (21) 3723-8095
Suzana Ribeiro; suzana.ribeiro@inpresspni.com.br; (21) 3723-8117

How Businesses Can Integrate Ecosystem Services into Performance Systems

Suzanne Ozment — Wed, 15 Feb 2012 10:30:52 -0500

Over the past decade, more companies have recognized the value that healthy ecosystems provide to business. Proactive companies have started managing their connection to ecosystems in order to avoid being blindsided by unexpected risks arising…

Re-introducing the Corporate Ecosystem Services Review, Version 2.0

Suzanne Ozment — Wed, 08 Feb 2012 11:38:07 -0500

The World Resources Institute and World Business Council for Sustainable Development (WBCSD) are pleased to announce the release of the Corporate Ecosystem Services…

The Forest Company of the Future

Janet Ranganathan — Tue, 23 Aug 2011 12:46:20 -0400

This story originally appeared in the Guardian.

Over the past 150 years, industrialization has taken its…

New Guide Boosts Business Case for Valuing Ecosystem Services

Suzanne Ozment — Thu, 05 May 2011 15:23:04 -0400

Representatives from over 60 organizations convened at the World Resources Institute on May 3 for the launch of the World Business Council for Sustainable Development’s (WBCSD) Guide to Corporate Ecosystem Valuation.

The Guide was motivated in part by the Millennium Ecosystem Assessment’s conclusions that over half the benefits we receive from intact ecosystems have been lost or degraded over a 50 year period. It builds on WRI’s and WBCSD’s Corporate Ecosystem Services Review, a method that helps business managers develop strategies that address new risks and opportunities resulting from the acceleration of ecosystem change.

Janet Ranganathan, WRI’s Vice President for Science and Research, opened the event by giving examples of how ecosystems services and economic development are intimately entwined. “A new highway, or a new mine doesn’t just impact the environment, it also impacts local ecosystems services such as freshwater, which in turn can impact business.” Looking at their operations in this holistic way, and placing a value on such ecosystems services, can help companies improve decision making, she added.

Failure to properly recognize and manage ecosystem services costs corporations billions of dollars annually in lost natural capital, according to WBCSD’s James Griffiths. He touted the new Guide, which provides a framework for valuing ecosystem services, as a tool for businesses to strengthen their performance. “The Guide to Corporate Ecosystem Valuation (CEV) is a way we’re hoping companies get it right,” he said. “Economic growth that delivers on the social agenda and is based on ecological values. This is about leveraging the tremendous value of ecosystems.”

Almost all financial institutions are now concerned with this issue…A healthy environment is the foundation for a strong and sustainable economy. A key challenge for us is to manage the competing human demands [on resources] without undermining crucial ecosystem functions.”

— Kyung-Ah Park, Managing Director of Goldman Sachs’ Center for Environmental Markets

Kyung-Ah Park, Managing Director of Goldman Sachs’ Center for Environmental Markets, used her keynote address to underscore the guide’s relevance for business in a world of depleting resources. “Almost all financial institutions are now concerned with this issue,” she said. “A healthy environment is the foundation for a strong and sustainable economy. A key challenge for us is to manage the competing human demands [on resources] without undermining crucial ecosystem functions.”

WRI, International Union for Conservation of Nature (IUCN), and WBCSD have already collaborated to road test the guide with 14 companies. Representatives of these companies were on hand at Tuesday’s event to discuss their experiences.

“Our mission is to be the most respected company in our sector,” Erica Guerra said of her company Holcim, whose Corporate Ecosystem Valuation road test examined the restoration of wetlands in the United Kingdom. “Our approach is not to be philanthropic, we don’t want to just write a check. We want to engage with the communities we operate in.” Holcim’s project achieved 1.4 million pounds in benefits to the company and the local community.

Representatives from some of the 14 road testing companies discussed their experiences with the Guide at Tuesday’s event. Photo credit: Kathy Doucette, WRI

Mark Weick of Dow emphasized the Guide’s benefit to a company’s bottom line. “[Dow uses] a lot of energy, something like a medium-sized OPEC member. So we’ve been very interested in energy efficiency. But we recognized that we weren’t being efficient with our ecosystem services. We’re making sure we can value ecosystem services properly, not only today, but in the future.

That understanding of a business’s impact reflects the guiding concept of the Guide to Corporate Ecosystem Valuation: businesses both depend on and affect the ecosystems in which they operate.

Mary Beth West of the International Union for Conservation of Nature said that while the CEV provides an important framework for businesses to leverage the value of ecosystems, it must be used in conjunction with other tools, some of which are not yet fully developed. Event participants emphasized the need for collaboration among businesses, NGOs, and stakeholders in order to enhance the feasibility of ecosystem valuation.

“We’ll take a blend of the existing tools that are out there,” Weick said. “Hopefully we’ll be able to learn what is helpful and what is not helpful. We want to engage very strongly in a dialogue by publishing what we’re doing.”

Also looking to the future, Jody Strickland of Weyerhaeuser said that it will be critically important to “link ecosystem value processes to conventional financial accounting…so we can determine how much value an ecosystem can generate and balance the trade-offs.”

The Guide to Corporate Ecosystems Valuation is a companion report to the Corporate Ecosystem Services Review, published by WRI, WBCSD and the Meridian Institute, which provides guidelines on business risks and opportunities arising from ecosystem change.

Over 200 Companies Now Use the Corporate Ecosystem Services Review

John Finisdore — Wed, 04 Aug 2010 08:51:50 -0400

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

Syngenta, one of the world’s leading companies dedicated to agriculture, used the ESR to analyze the risks its customers in southern India face from the degradation of ecosystem services, including soil quality, loss of pollination services, and freshwater availability. The ESR brought renewed attention to the region’s water challenges. In response, Syngenta established a dedicated water team at its corporate headquarters, followed by investments in innovative products and services – such as new solutions to enhance the stress tolerance of plants – to help farmers reduce their risk-exposure to water shortages.

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.

Fact Sheet: Stacking Payments for Ecosystem Services

Nicholas Bianco — Thu, 12 Nov 2009 09:29:42 -0500

Payments for ecosystem services are becoming an increasingly important part of the U.S. business and regulatory landscape. As programs that provide payments for ecosystem services grow, policy makers will need to determine how these various payments should interact with each other.

Download PDF (PDF, 160 Kb)
(includes footnotes & references)
More WRI Climate Factsheets
More resources on Ecosystem Services

Introduction

Payments for ecosystem services are becoming an increasingly important part of the U.S. business and regulatory landscape. Used properly, these payments can efficiently mitigate greenhouse gases, filter pollution from runoff, protect wildlife habitat, and prevent soil erosion. Recognizing this, the American Clean Energy Security Act establishes a cap-and-trade program that allows firms to “offset” their greenhouse gas emissions through practices that reduce or sequester greenhouse gas emissions elsewhere. Some state governments are also expanding water quality trading programs that allow facilities that discharge water pollutants to avoid expensive facility upgrades by, for example, paying farmers to improve land management practices. There are also long-standing federal programs that pay farmers and forest landowners for providing a range of ecosystem services, such as protection of wildlife habitat and prevention of erosion.

As programs that provide payments for ecosystem services grow, policy makers will need to determine how these various payments should interact with each other. This interaction presents an opportunity to expand the suite of services for which an ecosystem is managed. However, it also creates the risk that multiple payments will be made for the same ecosystem services, possibly reducing the efficiency of payments or diminishing the environmental benefits they were intended to provide. This factsheet offers an initial review of these risks and opportunities. It is part of a larger effort by WRI to develop a comprehensive framework for stacking payments for ecosystem services.

For complete text, Download the PDF (PDF, 160 Kb)

Green Taxation

Mon, 09 Nov 2009 10:13:56 -0500

Ecosystem Services is playing a growing role in Brazilian environmental law.

Note: This post is a translation of the original article in Portuguese by Juliana Lopes with Ana Carolina Addario, which appeared on Ideia Socioambiental. It is posted here with permission.

The environmental legal dictionary has a new entry. The word is incentive, an economic benefit granted by the government, through taxes, to stimulate economic, social, and cultural activities. This practice is not new in traditional economic segments such as the automotive and construction industries. However, incentives to stimulate sustainable development are advancing in Brazilian environmental legislation.

Called active control, this new mechanism differs from the command and control methods traditionally adopted by governments and legislators. “Instead of discouraging certain behaviors, we seek to encourage positive attitudes. The establishment of sanctions only, adds nothing in terms of proactive behavior. It is therefore important to prioritize incentives”, says Judge Consuelo Yatsuda Moromizato, a federal judge with significant experience in environmental law.

Examples of Payments for Environmental Services (PES) in Brazil

Proambiente: Family Production Socio-environmental Development Program (Proambiente), created in 2000 by civil society and incorporated by the Ministry of Environment (MMA) in 2003, awards farmers and ranchers with up to one-third of the minimum wage when they incorporate less destructive production practices, such as not using pesticides or introducing sustainable agroforestry systems(SAF’s)
Ecological ICMS: Brazilian states give 25% of the Tax on Circulation of Goods and Services (ICMS) to cities. Some municipalities allocate 5% of these funds for environmental preservation projects
Environmental compensation: companies financially compensate for projects’ unavoidable environmental impacts (for example, testing chemicals at sea for drilling oil). States use these funds to invest in conservation projects
Reforestation: focused on timber companies, it promotes reforestation either through compliance with forest management rules (tree cutting restrictions), or paying for tree replacement, which will fund reforestation in other areas
Tax exemption for Private Reserves of Natural Heritage - RPPNs: exempts RPPN owners from paying the Rural Land Tax (ITR)
In deployment phase: some PES policies are not yet implemented, awaiting approval or regulation. This is the case, for example, of the ecological income tax (IR) scheme, which proposes a tax deduction for expenses on projects with an environmental benefit.

This new logic reflects the evolution of the guiding elements in environmental legislation. “The ‘polluter pays’ principle was initially used as a way to internalize the costs of environmental impacts, which were considered externalities,” she explains. Next, came the principle of ‘the user pays,’ which distinguishes between the polluter and the offender. “This concept envisages compensation for the use of natural resources, as occurs with the law of royalties for oil exploration,” she says.

These tax and fiscal mechanisms play an important role, especially in the transition to a low carbon economy, by encouraging the adoption of cleaner technologies. “It is essential that governments create policies through subsidized financing that encourage and enable the purchase of equipment. This public sector contribution will help promote a technological change by companies that will advance the transition toward a sustainable economy,” says Consuelo.

To Adriano Pires, president of the Center for Infrastructure (CBIE), incentive policies can be important tools for the development of new sources of renewable energy in Brazil. But in his analysis, the government still does not make proper use of these mechanisms. “The country needs policies that define what will be in the energy portfolio of the future. The implementation of these policies requires fiscal and tax mechanisms, which unfortunately are still underutilized. The government has not given any medium nor long-term signals to investors or consumers. Tax policy in relation to energy should be discussed because gasoline, diesel, and other fossil fuels cannot be a priority for the country due to their high environmental costs,” he says.

Other countries’ Payment for Environmental Services (PES) Initiatives

Mexico: The government rewards communities and owners of rural properties for preserving their forests and watersheds
Costa Rica: the government created a tax levied on the consumption of water and gasoline. The amount collected is given to forest owners for providing environmental services (about $80USD per hectare per year).

It is true though, that promoting the uptake of incentives will require a paradigm shift. According to Werner Grau Neto, managing partner at Pedro Pinheiro Lawyers, the best example of this transition is the Legal Amazon. Created in 1953 to be a hub of economic development, the region received a series of stimuli, such as preferential loan rates, designed to expand agribusiness. “Today, the paradigm has changed. The Legal Amazon is no longer an area focused purely on economic expansion; it has become an area of sustainable economic development. Instead of just developing, now it undertakes preservation to develop,” he said.

Environmental Services

Ongoing deforestation in the Amazon is a clear indication that the punitive mechanisms imposed by Brazilian law have not been sufficient to protect the environment. The integration of market instruments and self-regulation into national regulation is imperative, in order to balance long-term economic activity and ecosystem well-being.

This challenge becomes clear when the condition of environmental services is examined. According to the Millennium Ecosystem Assessment (MEA), a scientific inventory led by the United Nations, 15 of the 24 environmental services considered essential to human life are gradually disappearing or losing function. As a result of this trend, fisheries, for example, may be unsustainable by 2040 under current trends.

The pricing of these services has been discussed as an effective way to deter the indiscriminate use of natural resources. Thus, to be effective, it is essential that preservation be more profitable than destruction. Within this logic, the carbon market is one of the pioneering and most successful payment schemes for environmental services. But there are also projects and conservation reserves established on the principle of the non-polluter receiver. “The reasoning is simple: just as those who violate the law receive negative sanctions, those who abide by them should receive economic advantages,” says Consuelo.

Werner highlights the experience of the World Bank and the government of Amazonas state in the design of the JUMA Sustainable Development Reserve, in the city Apuí. “By creating a structure for selling forest carbon credits, the initiative provided the necessary resources for maintaining and monitoring the protected area,” he points out.

The same concept applies to farmers who maintain conservation reserves on their properties. “The conservation reserve is a cost to the farmer. However, with the pricing of environmental services and the possibility of developing projects to generate carbon credits, it becomes revenue. This is where the new concept of producer-receiver emerges. It establishes a paradigm shift in the principles that guide legal rules and future public policies,” he says.

In order to promote this practice, the National Water Agency (ANA), in partnership with The Nature Conservancy (TNC), initiated a program in 2007 called Water and Forest Producers that pays farmers for restoring and maintaining “standing” forests on their properties.

According to Fernando Veiga, Environmental Services Coordinator of TNC, the initiative seeks to enhance environmental stewardship by offering an environmentally friendly alternative to a society that is used to extraction. Paying conservation bonuses to producers is much more efficient, in economic terms, than having to remedy the problems caused by poor maintenance of services. When the forest and its services aren’t functioning well, the producer ends up having to pay to recover them”, he points out. In the context of local initiatives, some Brazilian cities have established an ecological Tax on Circulation of Goods and Services (ICMS), whereby 5% of the 25% of tax revenue that states pass to cities will be invested in environmental protection projects. Although laudable, some experts still have reservations about the mechanism.

According to Mauricio Chapinoti, from Pedro Pinheiro Advogados, even working as a promoter, the ecological ICMS has limitations in that it divides already limited amount of government revenues at the risk of being subject to disputes among municipalities. “For investors or consumers, this instrument does not change anything. But from the point of view of cities, it changes a lot because it increases their revenue. However, as the total collected amount does not grow, the other municipalities do not like this kind of decision,” he explains.

Also according to Chapinoti, the proposal currently in Congress to create a green income tax (PL-5974/2005) is subject to similar risk, because it will be categorized as a mechanism for tax incentives, like the Rouanet Law (a tax incentives for cultural and educational investments). “This bill proposes to deduct part of the income tax allocation for environmental projects. But, as the rule puts all these tax benefits in the same box, setting an overall 6% deduction limit, the adoption of this mechanism will make environmental projects compete with cultural projects without changing anything in the state tax waiver.”

Chapinoti claims that it would be better if each type of project respected a specific limit of deduction, as happens today with the Municipal Fund for Children and Adolescent Rights (FUMCAD).

Tax versus Incentive

Across the country, there are many initiatives in favor of laws promoting environmental preservation. In the “Manifesto in Defense of Environmental Tax Reform,” some public defenders and prosecutors endorse tax benefits that reward environmentally sound processes and products, and on the other hand, higher taxation to discourage those who choose activities with high impacts on the environment.

In the same vein, three months ago Congressman Roberto Rocha (PSDB-MA) proposed an amendment to the Constitution (PEC 353/09) that would lay down general guidelines for an “environmental tax reform.” The PEC is based on an Environmental Tax Reform (ETR), a mechanism of tax reform for environmental purposes adopted by several European countries in the 90’s. According to this notion, the degree of increase or decrease of tax burden levied on a certain business activity must be proportional to the environmental benefits or losses it generates. Ultimately, however, the total tax burden should remain the same.

The proposed Brazilian tax reform brings three major changes to the existing Constitution. It

introduces the principle of environment “extrafiscality” (possibility of using taxes as a mechanism for encouraging or discouraging activities) for the entire set of taxes in the country;
establishes tax immunity in favor of goods and services considered environmentally beneficial; and
distributes tax revenues, among the entities of the Federation, using environmental criteria.

Anticipating trends

Facing an increasing pressure for cleaner processes and products, many companies have revised their production processes. Knowing how their activities impact and depend on environmental services inspires shifts in current business models.

The task is far from simple, since conventional corporate metrics ignore externalities, such as environmental and social impacts.

Considering this, the World Business Council for Sustainable Development, in partnership with the Meridian Institute and the World Resources Institute (WRI), prepared the Corporate Ecosystem Services Review. The methodology helps companies to assess impacts and dependencies on environmental services to better understand future risks and opportunities.

According to Charles Iceland, Associate at WRI, companies are entering an era of “dual flow” [interdependence with the environment] because they rely on environmental services to produce goods and services, while the health of ecosystems depends on corporations for environmental stewardship. “Knowing the risks that will arise as a result of likely changes in government regulations is important. But knowing which environmental services the company depends on is even more urgent since they can determine business success. Identifying risks and opportunities from ecosystem change should guide every company’s decisions “, says the researcher.

Ecosystem Services

Tue, 04 Aug 2009 12:49:11 -0400

Note: this post is a translation of the original article in Portuguese by Ana Carolina Addario, which appeared on Ideia Socioambiental. It is posted here with permission.

Ecosystems are responsible for diverse products and services for humans, as well as the regulation of climate and water and preservation of biodiversity, among other services—whether on a local, national or global scale. Given the importance of environmental services for economic activities, businesses are beginning to develop specific strategies and tools to integrate them into management practices.

According to the Millennium Ecosystem Assessment, an evaluation that measures the state and trends of global ecosystems, environmental services have been degraded faster and more severely in the past 50 years than in any other period in human history. The evaluation predicts yet further decline in the next decades, especially in light of population growth, economic expansion and a changing global climate. Without action, this degradation could put future economic well-being at risk as well.

In order to demystify the relationship between ecosystems and business, the World Business Council for Sustainable Development, in partnership with the Meridian Institute and the World Resources Institute (WRI), has released the Corporate Ecosystems Services Review. The methodology assists businesses in examining impacts, as well as dependencies, on environmental services as a way of understanding future risks and opportunities related to changes in the ecosystem.

According to Charles Iceland, associate member of WRI and author of the publication, we are entering an interdependent era in which business depends on environmental services to materialize production, and the environment also depends on the actions, such as conservation, of companies to continue providing natural services. “Businesses should begin to concern themselves more with their impacts on the ecosystem, as many of them depend on the availability of ecosystem services to carry out internal processes,” says the researcher.

Regarding Brazil, Iceland asserts that the principal measure the country should take would be reducing deforestation on behalf of its water reserves and the ability of its trees to neutralize carbon. “This is something that the global community is encouraging Brazil to address, which could bring in new revenue to the country through foreign investment for reforestation. Thus, forests could sequester carbon and mitigate the problem of climate change,” he says. However, Iceland points to possible obstacles to managing natural resources as a market strategy, such as changes in regulatory mechanisms as well as the lack of regulation in such sectors.

In legal terms, Werner Grau Neto of the Sub-Commission of Climate Change of the Environmental Commission of Brazil’s Order of Lawyers, Sao Paulo branch, and a partner of Pinheiro Neto Advogados law firm, notes that the judicial system is making important transformations in the areas of development, conservation and ecosystem management. According to the specialist, two important vectors are guiding these changes: businesses, now considering how, and not if, they should take sustainable actions; and the public, responsible for expanding the dialogue between economic production and environmental production. “We should stop putting anthropocentrism ahead of environmental issues, in that if the damage is to the environment, the repair is made for the individual. We’re entering a moment in which repairs are beginning to be made to correct damaging effects to and for the environment,” states Werner Grau Neto in an event held by Fundio in partnership with Alcoa to discuss strategies in relation to environmental services.

Other Strategies

Because of the necessity to protect the environment and operate strategically, businesses have perceived that conserving resources can create new opportunities to improve performance and generate profits, as well as strengthening a company’s reputation. As such, initiatives that reward companies or even agribusinesses that promote environmental conservation can be seen as effective incentives. As least that is what many companies find.

In the public sector, one such initiative was that of the Agência Nacional das Águas, or National Water Agency, and The Nature Conservancy (TNC). In 2007 these organizations established the Water and Forest Products program, with the idea of incentivizing rural producers to restore and maintain the forest on and near their properties. The program paid the producers for looking after environmental services, such as protecting water systems and resources used by farmers in the region. “The idea of this concept is to recognize that environmental services have a value to society, and from there, we can begin to reward those who protect, maintain or restore these environmental services” says Fernando Veiga, Environmental Services Coordinator at TNC.

To participate in the program, the proprietors must meet the following conditions: an intention to conserve or restore; a specified quantity of areas prioritized for water production on one’s property; conserved forests on one’s property; and residence within the limits of the project. The initiative aims to establish a dialogue between ecology and the economy, finding ways to value the care of nature and provide ecologically correct alternatives to a society accustomed to excess. “From an economic point of view, paying a premium to the producer is much more efficient than having to pay later to remediate problems arising from poor system maintenance. When the forest and its services don’t function well, the producer stops having to spend money to restore it,” adds Veiga.

Another very successful example in the realm of conservation and environmental services, but in the private sector, is Coca-Cola Brazil’s strategy to reduce the amount of water used in its beverage production. According to Marco Simões, Vice President of Communication and Sustainability for Coca-Cola Brazil, the plan to promote sustainable development for the company follows the 4 R system. The plan consists of reducing, recycling and reusing all of the water utilized in the beverage production process with the aim of not only guaranteeing the a water supply for the production plant, but for the local community that depends on the same resources for survival.