How Businesses Can Integrate Ecosystem Services into Performance Systems
Over the past decade, more companies have recognized the value that healthy ecosystems provide to business. Proactive companies have started managing their connection to ecosystems in order to avoid being blindsided by unexpected risks arising from the degradation of ecosystems.
Today, many managers want to know how ecosystem service considerations can be integrated into business performance systems. This issue is addressed in the World Resources Institute’s new report, Nature in Performance, a guide that helps business managers incorporate ecosystem service considerations into environmental management systems, sustainability reporting, and other performance systems.
Why Ecosystem Services Matter to Business
Ecosystems provide business—as well as people and communities—with a wide range of goods and services. For example, forests supply timber and wood fiber, absorb carbon dioxide, and purify water. Coral reefs attract tourists, serve as nurseries for commercial fish species, and protect properties along coastlines from storm surges. Wetlands absorb waste and help reduce floods. These and other benefits from nature are known as “ecosystem services.”
Ecosystem services matter to companies because they are intimately linked in two fundamental ways. First, businesses depend upon ecosystems and the services ecosystems provide. Second, businesses impact ecosystems and the services ecosystems provide. These two linkages can pose a number of risks and opportunities to a company.
For example, last month the International Finance Corporation started requiring new clients to assess their projects’ impact and dependence on ecosystem services. So a project that plans to drain wetlands might have to evaluate and report its potential impacts on long-term water availability, fish spawning areas, and nature tourism. The IFC has taken this step to ensure that its clients look at ecosystem services before a project begins, rather than be faced with unintended business risks after a project starts impacting valuable ecosystem services. Failure to comply with these standards may cost companies their access to financing. This in turn means that the next generation of private sector growth and financing will be considerate of, and manage for, ecosystem services.
Industry groups are also encouraging companies to manage for ecosystem services. The Global Reporting Initiative, International Organization for Standardization (ISO), and IPIECA (a major oil and gas industry association) all explicitly highlighted ecosystem services as a core business issue in 2011.
What is Nature in Performance?
Though corporate interest in ecosystem services is growing, so far there has been little guidance for managers to integrate ecosystem service considerations into their existing business performance systems, including their corporate strategy development procedures, product design guidelines, environmental management systems, environmental impact assessments, and sustainability reporting procedures. Nature in Performance responds to this need by describing:
- The business value of ecosystem services
- Simple methods to assess how ecosystem services impact corporate performance
- Basic principles for integrating ecosystem service considerations into business performance systems
- Specific guidance on when and how to insert ecosystem services considerations into ISO-14001 compliant environmental management systems, as well as into sustainability reporting procedures conforming to the Global Reporting Initiative
- A list of resources for additional guidance and reference.
In 2008, WRI noted, “Climate change may dominate headlines today. Ecosystem degradation will do so tomorrow.” Since then, the world has witnessed mas¬sive flooding in South Asia and the central United States, vast wildfires in Russia, water crises in Australia, and many other environmental challenges. The confluence of climate change, ecosystem degra¬dation, population growth, and rapid economic development in many regions demonstrates that the business conditions of the past half century will not be the same as those of the next. For businesses to be prepared, they increasingly will need to account for nature in performance.