As the effects of ecosystem decline become more obvious, businesses are learning to more accurately assess and better manage the risks connected with ecosystem change — as well as identifying new opportunities.
The health of the world’s ecosystems is in rapid decline, jeopardizing both biodiversity and bottom lines. Business depends on the services that nature provides — in fact, all organizations depend on ecosystem services somewhere in their value chain. The good news? There are new, comprehensive tools and methods to help corporations assess and manage the risks of ecosystem change while uncovering opportunities.
Many businesses have yet to make the connection between the health of ecosystems and corporate performance, though in some cases the linkages are obvious: a beverage company, for example, is dependent on reliable, clean and affordable sources of fresh water. Other dependencies may be less clear-cut — in a very literal sense. For instance, when forests that had controlled erosion were cut down in Costa Rica, increased sedimentation lowered river flows and dam reservoir levels so much that Enel Latin America (then known as Energia Global) was unable to produce hydroelectric power.
The impacts that businesses have upon ecosystems (and the services they provide) can pose new kinds of risks. And recognition of these risks by both the insurance and financial industries is causing a change in access to funding for projects that have potential for environmental impact. Recently, the International Finance Corporation (IFC) began requiring clients to assess new projects for both their dependence on and their potential impacts upon ecosystem services.
The Corporate Ecosystem Services Review 2.0 (ESR), developed by the World Resources Institute, the Meridian Institute, and the World Business Council on Sustainable Development, is a 5-step process that helps managers develop strategies to deal with the risks — and opportunities — that develop from ecosystem changes. Road-tested by WBCSD member companies, including Rio Tinto, Syngenta, and BC Hydro, the tool has been used by over 300 companies. The many benefits of doing so include anticipating new markets, influencing government policies, and framing and giving added urgency to risks or opportunities that have already been identified, but may have slipped on the agenda.
WRI ESR 5 Steps
The international paper and packaging company Mondi, for example, with substantial forest holdings in South Africa, selected three of its plantations for the scope of its ecosytem services review (ESR). After analyzing its dependence and impact on a number of ecosystems, Mondi identified six priorities, including fresh water, biomass fuel, and global climate regulation. Using both in-house and external experts to compile and analyze risks and opportunities, it developed a three-year plan to, among other things, increase its supply of fresh water and reduce operational costs. The company has since realized many benefits, including turning a costly process — removing weedy plants — into a savings, by using the biomass to generate power.