New Guide Boosts Business Case for Valuing Ecosystem Services

Failure to properly recognize and manage ecosystem services costs corporations billions of dollars annually in lost natural capital. Photo credit: flickr/Brian Wolfe

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.”

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.