Healthy ecosystems linked to healthy economy

Failing to protect vulnerable ecosystems can damage business, as well as the environment, according to a coalition of think tanks and NGOs.

Whilst the Stern Review focused on the economic impact of climate change, a new report looks at how a wider range of environmental yardsticks could have on effect on finances.

The report, Ecosystem Challenges and Business Implications, warns that companies must transform business models and operations if they are to avoid major economic losses caused by the current degradation of ecosystems and the vital services they provide.

The publication offers a detailed examination of the implications that water scarcity, climate change, nutrient overloading, biodiversity loss, habitat change and the overexploitation of oceans will have for the future of business.

These include scarcity of raw materials, higher operating costs, government restrictions and reduced flexibility. It further cautions companies to prepare for these risks by measuring their impact and dependence on ecosystem services, taking advantage of emerging business opportunities and reducing their operational footprints.

The research was carried out by Earthwatch Institute, the World Conservation Union (IUCN), the World Business Council for Sustainable Development, and the World Resources Institute and combines the scientific projections from the UN’s Millennium Ecosystem Assessment with interviews with a range of business leaders to take a look at how business might adapt to environmental challenges.

Earthwatch’s Chris Perceval, one of the authors of the report, told edie: “It’s taken the Millennium Ecosystem Assessment findings and translated them into the language of business. It goes beyond the Stern report because it looks at a variety of indicators and not just climate change.

“Through interviews with a number of companies we asked questions about what this means and how business will respond to it.

“We found that the scientific evidence of the MEA hasn’t as yet been sufficiently integrated into business strategy by the multinationals.”

He said it was impossible to sum up the progress, or lack of it, of different businesses with a single sentence but there were general responses that could be of benefit across the board.

“What is for sure is there is definitely a need for companies to go beyond compliance if they want to address the problem,” he said.

“We’re trying to show that there is both a profit motive for acting in the face of these changes but also a moral imperative as well and if the moral imperative isn’t taken up voluntarily by companies, it will have to be enforced by governments.”

While more leadership was urgently required from governments, he said it was interesting to note that it was the leading corporations which were often taking the initiative, pushing political powers to increase regulation to ensure a level playing field while requiring business to ‘do the right thing.

Behaving in an environmentally responsible manner was not simply about protecting a company’s reputation, he said, but about protecting its bottom line.

“It’s not about what companies will have to do to be acceptable in society,” said Mr Perceval.

“It’s about how businesses will have to change to continue to operate. There are aspects of this that will affect all industries.”

WBCSD president Björn Stigson said: “Business simply cannot function if ecosystems and the services they deliver like water, biodiversity, food, fibre and climate regulation are degraded or out of balance. There must be a value attached to natural resources, and businesses need to start understanding this value.”

The publication urges companies to pursue solutions that will help to conserve ecosystems, such as new energy efficient technologies and products, new businesses to undertake habitat restoration, and new markets, such as nutrient trading.

This is the first of three joint reports planned by the four organisations.

The second will focus upon how new business models, markets and entrepreneurs can profit from responding to ecosystem challenges and the third will help business executives identify their dependences on ecosystem services and ways to retain them for the long term.

Sam Bond

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