How Puma, Disney and Hitachi use ecosystem services
Thirty-five companies, including AkzoNobel, PUMA, BP, Disney, Coca-Cola and Hitachi, now mention ecosystem services in publicly available materials. Corporate engagement with the issues is clearly on the rise, as documented in a new report from BSR.
This private sector work on ecosystem services covers a wide spectrum. Some companies have crafted corporate policies to have "no net impact" or "net positive impact" on ecosystems or ecosystem services. Other businesses are exploring the issues and pilot testing analytical tools. Some simply state that they recognize the importance of ecosystem services.
Analysis of corporate engagement with this emerging domain, which is conceptually linked to natural capital, reveals a few trends.
Trend 1: A business case for action on ecosystem services is emerging within some industries.
Within some companies in select industries, such as oil and gas, mining, chemicals, entertainment and tourism, there is now a business case for exploring, and in some cases taking action on, ecosystem services issues based on:
• Investors' inclusion of ecosystem services in due diligence processes, such as the World Bank's International Finance Corp. and the 79 Equator Banks.
• National governments' growing attention to the issues, around the world, as documented in a 2013 BSR report.
• Internal corporate culture of sector leadership and the desire to maintain a leading position within their industry on all issues, particularly emerging domains.
Overall, a growing number of corporate representatives state that they see biodiversity and ecosystem services as their next set of issues to address, following on, and related to, carbon and water.
Trend 2: Corporate applications of ecosystem services concepts span the gamut of business decision types, from governance through strategy and operations.
The span of corporate efforts related to ecosystem services is quite broad. A sampling of the different ecosystem services applications that companies are exploring includes:
Note: Please see research report for details.
Trend 3: Moving from ecosystem services concept to action remains a challenge, due to relatively little publicly available information on corporate testing of effective approaches and tools.
Once a company has determined that ecosystem services warrant additional focus, the question becomes how to apply ecosystem services concepts and decision-making aids. At this stage, companies ask: How can we make better capital decisions, enable more efficient operations, manage risk and address customer needs by applying ecosystem services analytical approaches and tools?
The challenge facing corporate managers is the lack of widely agreed-upon, coherent guidelines on specific indicators to track, measure and assess ecosystem services impacts and dependencies -- ideally in a way that meshes with existing corporate environmental assessment processes and protocols (e.g., ESIAs, LCAs, etc.). In addition, the private sector lacks direction on how to consider trade-offs and how to factor in stakeholder requests to prioritize some ecosystem services over others, particularly in cases where key stakeholders disagree about priorities. Specific, private-sector-tailored operational guidance is still very much in development as the field's business applications continue to emerge.
In response to these gaps, more and more players have stepped into the arena. For example, IPIECA has developed detailed checklists for ecosystem services issues during various stages of an oil and gas project's lifecycle. The World Resources Institute is creating an approach for integrating ecosystem services into impact assessments. The IFC is working on the details of applying its performance standards related to ecosystem services, including PS6, which also is now integrated into the due diligence processes of banks that have adopted the Equator Principles.
Academics, environmental consulting firms, multilateral organizations and other NGOs have developed numerous tools for use in decision-making processes. (For details on metrics and tools, please see BSR's 2013 report, "Measuring and Managing Corporate Performance in an Era of Expanded Disclosure: A Review of the Emerging Domain of Ecosystem Services Tools.")
Ultimately, the key to integrating ecosystem services into environmental management will be demonstrating how this work contributes to project managers' goals of delivering projects on time and in budget, with as little risk as possible. The easier it is for companies to integrate new measures or approaches into existing processes, the more likely that it will occur.
All of these issues contribute to a tone of caution among many business representatives who discuss ecosystem services, especially given the challenge of working in multiple countries around the world with relatively little available ecosystem services data and diverse stakeholders who hold a wide range of values, interests and priorities. Significant forward movement on the integration of ecosystem services into decision-making is likely contingent, in part, upon different sectors answering a number of questions, as detailed below.
Trend 4: Many corporate managers' preliminary conclusions about ecosystem services assessments are that they generate insights, particularly around business dependencies that may be at risk within a changing climate.
Numerous corporate managers asserted that an ecosystem services assessment has the potential to yield new insights relative to existing approaches to conducting environmental and social impact assessment. Specifically, corporate representatives reported in interviews that ecosystem services assessments have already drawn attention to:
• Operational dependencies on ecosystem services.
• Potential supply chain risks associated with cumulative impacts on key ecosystem services upon which suppliers rely.
• Threats to local stakeholder livelihoods, particularly in highly natural resource-dependent economies and rural areas.
Yet corporate managers felt that the most fruitful applications of ecosystem services frameworks in private sector settings are still being identified through pilot testing. In addition, the difference between ecosystem services approaches and the insights that they generate, relative to existing corporate environmental assessment processes, remains to be fully assessed.
Overall, private sector experience with ecosystem services concepts and analytical tools remains emergent. Ideally, future applied work within companies will be shared so that corporate decisionmakers can draw from a growing body of experience on applying ecosystem services within the private sector. Hopefully, this work on more systematic examination of ecosystem services impacts and dependencies will spark innovation and effective on-the-ground action to maintain and restore the natural infrastructure upon which we all rely.
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