Biodiversity and business: what are the issues?

What is biodiversity?

Socio-economic progress relies on responsible management of our ecosystems. It has been estimated that the total global value of ‘ecosystem services’ is equivalent to $33 trillion per annum.   Ecosystem services include food production, water storage, flood prevention, nutrient recycling, and water purification. These services are essential for life on the planet, and are being continually threatened by the adverse impact of human activity, such as deforestation, over farming of land, overfishing of seas and waterways and pollution, along with the damaging effects of climate change. Whilst international collaborations are raising awareness of the need to protect biodiversity and have encouraged the introduction of national and local biodiversity targets, it is also essential that businesses are fully aware of the risks associated with the poor management of natural resources.  In other words, good practice entails being proactive in implementing measures to mitigate impacts on biodiversity. Such a proactive approach will ensure that risks to their business are reduced and competitive advantage obtained.

What is biodiversity and why is it so important?
Biodiversity refers to “the variety of life on earth”. This could mean variety within a species, among species and comparatively among ecosystems . This variety results in complex interactions, which result in the earth being uniquely inhabitable. We all depend on these interactions, not simply for survival, but also for economic and social growth. In order to promote sustainable development , careful management and conservation of biological diversity is required. Many organisations are now starting to appreciate the importance of practicing a duty of care to the environment and the associated benefits that this could have to their business.

International recognition of biodiversity issues.
There has recently been a significant amount of international attention around issues associated with biodiversity and conservation. This can be seen in the vast number of conventions and initiatives that have been implemented during the last few years. These include: the Ramsar convention, which recognises the importance of wetlands; the Convention on International Trade in Endangered Species (CITES) of wild flora and fauna; and the Convention on Biological Diversity. The Convention on Biological Diversity (CBD) upholds three main objectives: the conservation of biological diversity, the sustainable use of its components and the fair and equitable sharing of the benefits arising from commercial and other utilisation of genetic resources. In response to these conventions, national biodiversity strategies have been developed and countries such as the UK are starting to invest more resources into protecting the natural environment. For example, a few years ago the UK introduced a Biodiversity Action Plan, which highlights priority habitats and species and sets specific targets that will contribute to the overall CBD global target of « achieving a significant reduction of the current rate of biodiversity loss at the global, regional and national level ».

Private sector initiatives
The private sector is also becoming more aware of the risks and opportunities associated with protection of the environment. Consequently, it is becoming more common to attach a monetary value to environmental impact. For example the phenomena of offsetting carbon emissions is now a popular concept for businesses as well as individuals. The same idea is also starting to be applied specifically to the conservation of endangered habitats and species – this is often referred to as “conservation banking”. A conservation bank is a market enterprise that offers landowners incentives to protect habitats of endangered, threatened, and other at- risk species. Landowners can profit from selling habitat or species credits to parties who need to compensate for environmental impacts.  The buyer purchases a credit, which can be equivalent to anything from an acre of land to the amount of habitat required to support a breeding pair. A conservation bank may issue different types of credit to reflect the different types of species and habitats that it is trying to protect and their relative importance.

What links biodiversity and business?
Maintaining a dynamic balance of nature’s complex systems is essential for almost all industries including construction, medicine, food and mining. Some sectors, such as mining and construction, which normally bring about a certain amount of land use change, have a direct impact on the ecosystems in the areas where they operate. Other sectors may indirectly affect biodiversity through the sourcing of energy and raw materials through their supply chains. There are various risks associated with the loss of biodiversity for businesses within all these sectors. These risks include the financial costs incurred by the rising price of raw materials, damage to reputation and a challenge to operating licences. Businesses are under pressure to be more accountable for their environmental performance in order to ensure the continued support of financiers and other stakeholders. A number of banks have started to pioneer portfolios of biodiversity investments. Furthermore, more and more large companies such as Shell are starting to promote environmental sustainability as a fundamental aspect of their business and the achievement of positive bottom line results. Shell emphasises that the protection of biodiversity in particular is essential in building up trust with regulators and key stakeholders, reducing operational and financial risk, increasing competitive advantage and attracting and motivating staff . 

Biodiversity and climate change
Despite all the efforts that are being implemented to protect species and habitats and preserve biodiversity, we are still faced with the ongoing challenge of the impact of climate change. Changes in climate can transform ecosystems and affect their ability to provide vital services. Many studies have been carried out which model the effects of climate change on different types of ecosystem. There is no doubt that, in most cases, a change in climate can result in disrupting the distribution, integration and growth of different species within an ecosystem. Consequently, climate change is considered to be a direct driver of ecosystem change and one that is expected to become more prominent over the next 50 years.

Conclusion
Maintaining a dynamic balance of nature’s complex systems is essential for almost all industries including construction, medicine, food and mining. These industries need to be aware of the impact that biodiversity has on their business and adopt a proactive approach to reducing the risks associated with the world’s declining species and habitats. By appropriately managing these risks businesses will be sending a positive message to their stakeholders as well preventing any unexpected costs and losses.

i)F&C report 2004. Is Biodiversity a material risk for companies?
ii)US Fish and Wildlife FWS Conservation Banking Incentives for Stewardship
iii)Shell website

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