Ecosystem Services - Ecosystem Services and Business

Ecosystem Services and Business

Ecosystem services degradation can pose a number of risks to corporate performance as well as provide business opportunities through ecosystem restoration and enhancement. Risks and opportunities include:

Operational

Risks such as higher costs for freshwater due to scarcity or lower output for hydroelectric facilities due to siltation

Opportunities such as increasing water-use efficiency or building an on-site wetland to circumvent the need for new water treatment infrastructure

Regulatory and legal

Risks such as new fines, government regulations, or lawsuits from local communities that lose ecosystem services due to corporate activities

Opportunities such as engaging governments to develop policies and incentives to protect or restore ecosystems that provide services a company needs

Reputational

Risks such as retail companies being targeted by nongovernmental organization campaigns for purchasing wood or paper from sensitive forests

Opportunities such as implementing and communicating sustainable purchasing, operating, or investment practices in order to differentiate corporate brands

Market and product

Risks such as customers switching to other suppliers that offer products with lower ecosystem impacts or governments implementing new sustainable procurement policies

Opportunities such as launching new products and services that reduce customer impacts on ecosystems or participating in emerging markets for carbon sequestration and watershed protection other products

Financing

Risks such as banks implementing more rigorous lending requirements for corporate loans

Opportunities such as banks offering more favorable loan terms or investors taking positions in companies supplying products and services that improve resource use efficiency or restore degraded ecosystems

Many companies are not fully aware of the extent of their dependence and impact on ecosystems and the possible ramifications. Likewise, environmental management systems and environmental due diligence tools are more suited to handle “traditional” issues of pollution and natural resource consumption. Most focus on environmental impacts, not dependence. Several newly developed tools and methodologies can help the private sector value and assess ecosystem services. These include Our Ecosystem, the Corporate Ecosystem Services Review (ESR), Artificial Intelligence for Ecosystem Services (ARIES), the Natural Value Initiative (NVI) and InVEST (Integrated Valuation of Ecosystem Services & Tradeoffs)