Corporate Ecosystem Services ReviewOverview

• The benefits society and business obtain from ecosystems

• The “goods and services of nature”

Ecosystem services

Biodiversity • The variability among living organisms– Within species & populations– Between species– Between ecosystems

Ecosystem • A dynamic complex of plant, animal, and micro-organism communities and the non-living environment interacting as a functional unit

Definitions

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ProvisioningGoods or products produced by ecosystems

RegulatingNatural processes regulated by ecosystems

CulturalNon-material benefits obtained from ecosystems

Types of ecosystem services

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SupportingFunctions that maintain all other services

The business case for action on ecosystems

Businesses impact on ecosystems and ecosystem services

Businesses rely and depend on ecosystems and ecosystem services

Ecosystem change creates business risks and

opportunities

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Structured method to develop strategies to manage risks and opportunities arising from dependence and impact on ecosystems

WRI/ WBCSD/ Meridian Institute Approx. 300 cies using tool since

March ‘08 launch Available in 6 languages

Corporate Ecosystem Services Review (ESR)

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Impacts and dependencies New considerations – regulating services New perspective – unites economic &

environmental Framework for considering tradeoffs Solutions – regulatory and markets Scientific consensus

Making the case: the ESR’s value add

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Environment and sustainability Corporate strategy/research Production/service team Finance External relations Foundation (if related to core business) External experts

Ecosystem services Strategic consultants

Forming an ESR team – key members

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5 Steps in the ESR

5. Develop strategies

4. Identify business risks and opportunities

3. Analyze trends in priority services

2. Identify priority ecosystem services

1. Select the scope

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Step 1: Select the scope

1. Select the scope

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Considerations when selecting the scope

1. Which stage of the value chain?

CustomersCompanySuppliers

• Which customer(s)?

• In which geographic market(s)?

• What aspect of the company?

― Business unit― Product line― Facility― Project― Landholdings

• Which supplier(s)?

• In which geographic market(s)?

2. Who and where specifically?

3. Is it strategic, timely, and supported?

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Step 2: Identify priority ecosystem services

2. Identify priority ecosystem services

1. Select the scope

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Go to worksheet

Microsoft Excel Worksheet

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Step 2: Evaluating dependence

1. Does this ecosystem service serve as an input or does it enable / enhance conditions for successful company performance?

2. Does this ecosystem service have cost-effective substitutes?

Yes

No Low dependence

No High dependence

Yes

Medium dependence

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Step 2: Evaluating impact

1. Does the company affect the quantity or quality of this ecosystem service?

2. Is the company’s impact positive or negative?

Yes

No Low impact

No Medium impact

3. Does the company’s impact limit or enhance the ability of others to benefit from this ecosystem service?

Yes

High impact

Positive Negative

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Step 2: Select priority servicesECOSYSTEM SERVICES DEPENDENCE AND IMPACT MATRIX

Dependence Dependence DependenceProvisioning

Crops ○ - Livestock ● - Capture fisheries Aquaculture Wild foods ○ + Timber and other wood fibers ● + Other fibers (e.g., cotton, hemp, silk) Biomass fuel ○ ● + Fresh water ● ● - Genetic resources ○ ○ ? Biochemicals, natural medicines, and' pharmaceuticals ○ +

RegulatingAir quality regulation ? ? Global climate regulation ○ ● + Regional/local climate regulation ○ ○ + Water regulation ● ● - Erosion regulation ○ ○ - Water purification and waste treatment ○ - Disease regulation Pest regulation Pollination Natural hazard regulation

CulturalRecreation and ecotourism ● + Ethical values ○ +

Ecosystem services ImpactImpact Impact

Customers Company operationsSuppliers

Key ● High + Positive impact ○ Medium - Negative impact Low ? Don't know

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Step 3: Analyze trends in priority services

3. Analyze trends in priority services

2. Identify priority ecosystem services

1. Select the scope

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Step 3: Trends analysis framework

Condition and trends in ecosystem service

Direct driversActivities

of others

Indirect drivers

Company activities

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4. Identify business risks and opportunities

3. Analyze trends in priority services

2. Identify priority ecosystem services

1. Select the scope

Steps in the Corporate Ecosystem Services Steps in the Corporate Ecosystem Services ReviewReview

Step 4: Identify business risks and opportunities

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Step 4: Risks and opportunities

Regulatory and legal

• Extraction moratoria• Lower quotas• Fines, user fees• Permit or license suspension /denial• Lawsuits

Reputational • Damage to brand or image• Challenge to “license to operate”

Operational • Increased scarcity or cost of inputs• Reduced quality of inputs• Reduced output or productivity• Disruption to business operations

Financing • Higher cost of capital• More rigorous lending

requirements

Type Risk

Market and product

• Changes in customer preferences

Opportunity

• Increased resource use efficiency• Low-impact

industrial/manufacturing processes

• Formal license to expand operations

• New products to meet new regulation

• Opportunity to shape government policy

• Improved or differentiated brand

• New products or services• Markets for certified products• Markets for ecosystem services

• Increased investment by progressive lenders and socially responsible investment funds

Not exhaustive

Step 4: Risks and opportunities

Priority ecosystem service

Potential risks Potential opportunities

Freshwater

• Increased water scarcity due to:

– Invasive species – Nearby farmers – Climate change

• Internal efficiency improvements\• (Co) financing improvements of

nearby farmers

Biomass fuel • Use plantation residue in Mondi

generator• Sell plantation in biomass-to-energy

markets

Global climate regulation

• Emerging markets for carbon sequestration

Recreation and ecotourism

• Ecotourism market potential

Livestock

• Grazing reducing productivity • Perceived “under-utilization” of

Mondi land by nearby farmers

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Step 5: Develop strategies

5. Develop strategies

4. Identify business risks and opportunities

3. Analyze trends in priority services

2. Identify priority ecosystem services

1. Select the scope

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Categories of strategies

Internal changes

•Operations

•Product strategy

•Market strategy

•Procurement strategy

•Land management

•Etc.

Sector or stake-holder engagement

• Industry peer collaboration

•Cross-sector collaboration

•NGO collaboration

•Transactions with stakeholders

•Etc.

Policy-maker engagement

•Tax incentives

•Subsidy reforms

•Protected areas

•Zoning

•Etc.

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Frame ongoing initiatives in an ecosystem services perspective

Build and leverage employee knowledge Use the process for other purposes Carry out a gap analysis Embed ecosystem services into Environmental

Impact Assessments (EIA) Improve plants and land management Incorporate into product development Analyze supply chains …

Applications of the ESR

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Provide insights on ecosystem issues Highlight (potential) risks and opportunities Put ecosystems higher on corporate agenda / give added

urgency to action on ecosystems Shape ecosystem management plans / integrate ES into

corporate planning Strengthen existing approaches to environmental impact

assessment Demonstrate leadership in corporate sustainability Communicate ecosystem issues internally and externally Engage non-business stakeholders / improve relationships

ESR benefits – users told us it helped them…

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Next steps: Ecosystem services for corporate decision-making

• EIA• LCA• SME• Financial Risk

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WRI main page on ESR material: http://www.wri.org/ecosystems/esr

WBCSD’s Ecosystem Valuation Initiative, see:www.wbcsd.org/web/evi.htm

Any suggestions, comments, questions? Write to ecosystems@wbcsd.org or sozment@wri.org