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Corporate Ecosystem Services Review

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Presentation on theme: "Corporate Ecosystem Services Review"— Presentation transcript:

1 Corporate Ecosystem Services Review
Overview The Corporate Ecosystem Services Review (ESR) is a structured methodology that helps managers proactively develop strategies to manage business risks and opportunities arising from a company’s dependence and impact on ecosystems. The slides in this presentation were developed by the World Resources Institute (WRI) that led the development of the tool, and put together a significant amount of additional background material. For more information and resources about the ESR, go to

2 Definitions The variability among living organisms
Biodiversity The variability among living organisms Within species & populations Between species Between ecosystems Ecosystem A dynamic complex of plant, animal, and micro-organism communities and the non-living environment interacting as a functional unit The benefits society and business obtain from ecosystems The “goods and services of nature” Ecosystem services

3 Types of ecosystem services
Provisioning Goods or products produced by ecosystems Regulating Natural processes regulated by ecosystems Cultural Non-material benefits obtained from ecosystems Supporting Functions that maintain all other services

4 The business case for action on ecosystems
Businesses impact on ecosystems and ecosystem services Ecosystem change creates business risks and opportunities Businesses rely and depend on ecosystems and ecosystem services

5 Corporate Ecosystem Services Review (ESR)
Structured method to develop strategies to manage risks and opportunities arising from dependence and impact on ecosystems WRI/ WBCSD/ Meridian Institute Approx. 300 cies using tool since March ‘08 launch Available in 6 languages In 2008, the World Resources Institute (WRI), World Business Council for Sustainable Development (WBCSD), and Meridian Institute developed The Corporate Ecosystem Services Review (ESR) to provide corporate managers with a proactive approach to making the connection between ecosystem change and their business goals. The ESR is a tool for corporate strategy and can augment existing environmental management systems. WBCSD member companies Akzo Nobel, Rio Tinto, Mondi, BC Hydro, and Syngenta road-tested the ESR and provided feedback during its development. The ESR has been used by an estimated 300 firms.

6 Making the case: the ESR’s value add
Impacts and dependencies New considerations – regulating services New perspective – unites economic & environmental Framework for considering tradeoffs Solutions – regulatory and markets Scientific consensus The ESR provides a number of business benefits such as identifying new risks and opportunities, helping prioritize issues, anticipating new markets, strengthening approaches to environmental management, improving stakeholder relationships, and demonstrating leadership in sustainability. The ESR adds value through: Impacts and dependencies: Companies impact ecosystems, but also depend on them for inputs, infrastructure, social “license to operate,” new revenue streams, market opportunities, and more. Most environmental audits, however, do not consider dependency. New considerations – regulating services: Most traditional environmental management systems assess provisioning ecosystem services and emissions/effluents, omitting regulating services such as climate control, water purification, erosion reduction, and natural hazard protection. The ESR examines a robust set of ecosystem services, helping managers understand the full extent of a company’s interconnections with the environment. New perspective– unites economic and environmental: Ecosystem services are benefits people receive from the environment. The ESR enables these services to be viewed as assets, thereby informing corporate strategy about emerging risks and opportunities resulting from ecosystem change. Framework for considering tradeoffs: Ecosystem services provide a strong practical framework that managers and stakeholders can utilize to improve mutual understanding and explore the complex implications of their actions. Solutions – regulatory and markets: The ESR helps managers develop new solutions to difficult environmental problems. Using concepts from the ESR enables companies to more effectively engage policy-makers to create economically and environmentally sound policies; similarly, markets for ecosystem services offer new revenue opportunities to companies, as well as a cost-effective means of abating environmental impact. Scientific consensus: There is broad scientific consensus that ecosystem services must be a growing part of research, environmental management, and economic development. The remaining question is when they are incorporated into corporate decision making.

7 Forming an ESR team – key members
Environment and sustainability Corporate strategy/research Production/service team Finance External relations Foundation (if related to core business) External experts Ecosystem services Strategic consultants To begin the ESR, discuss the methodology with several business units. Typically, environment or sustainability departments head the project while marketing, research, finance, and others participate. An ESR stimulates inter-departmental dialogues and provides a common terminology that raises the status of ecosystem services in decision-making. Involving external experts allows for immigration of new ideas.

8 5 Steps in the ESR 1. Select the scope
2. Identify priority ecosystem services 3. Analyze trends in priority services 4. Identify business risks and opportunities 5. Develop strategies There are five steps to the ESR.

9 Step 1: Select the scope 1. Select the scope
Step 1: Select the scope, or boundary, within which to conduct the assessment. Candidates include a business unit, product, market, corporate landholdings, infrastructure project, major supplier, or major customer segment, among others. The scope should be strategic, timely, and supported within the company.

10 Considerations when selecting the scope
1. Which stage of the value chain? Customers Company Suppliers Which customer(s)? In which geographic market(s)? What aspect of the company? Business unit Product line Facility Project Landholdings Which supplier(s)? 2. Who and where specifically? The following three questions help managers select an ESR scope: Which stage of the value chain? An ESR could focus on a company’s own operations, providing insight into the direct implications that trends in ecosystem services would pose for the company. An alternative is to look at the value chain. This approach would shed light on the implications of ecosystem service trends for key suppliers or customers, and the business risks and opportunities that these, in turn, may pose to the company conducting the ESR. Select a stage in the value chain where interactions with ecosystems are prominent since these interactions are the most likely sources of ecosystem service-related risk or opportunity. Who and where specifically? Options include—but are not limited to—a particular business unit, product line, facility, project (such as a mine, pipeline, other infrastructure development), or natural asset owned by the company (such as forestland or other landholdings). Choose a specific supplier or customer and perhaps further narrow the scope by selecting a particular geographic market in which these suppliers operate. Is the candidate scope strategic, timely, and supported? Particularly for the first ESR, the scope should be of high strategic importance to the company. Examples include the company’s fastest growing market, an upcoming major product line, or the business unit with the greatest market share. The scope should offer a window of opportunity for the ESR to influence upcoming important business decisions. In addition, there should be sufficient internal management support for conducting an ESR within the selected scope. Be sure to secure relevant senior management buy-in and have staff (or consultants) available to conduct the interviews and analysis required. 3. Is it strategic, timely, and supported?

11 Step 2: Identify priority ecosystem services
1. Select the scope 2. Identify priority ecosystem services Step 2: Identify priority ecosystem services. Systematically evaluate the condition and trends in the priority ecosystem services, as well as the drivers of these trends. While all ecosystem services are related and important to business, typically 5-7 ecosystem services can be identified as critical to business operations. The Dependence & Impact Assessment Tool of Step 2 helps managers identify the most important ecosystem services for their company. This Excel-based tool is available at

12 Go to worksheet The Dependence & Impact Assessment Tool (imbedded file) helps managers evaluate in a structured yet rapid manner the company’s dependence and impact on more than 20 ecosystem services, in order to complete the second step. This Excel-based tool has three pages: Instructions, Questionnaire, and Summary Matrix. On the questionnaire, more than 20 ecosystem services typically important to companies are listed down the left-hand column. Five simple questions listed across the top of the spreadsheet determine the extent to which the business unit depends on and impacts each ecosystem service. There is also a comments section for each ecosystem service to record assumptions, enter data, or even imbed an internal corporate document. A variety of managers from several departments and sometimes consultants should participate in this step. It often involves corporate data, as well as external data and opinions. Conducting the assessment in a diverse group facilitates education and discussion about ecosystem services’ importance to corporate performance. Picture: Screenshot of the Dependence & Impact Assessment Tool Questionnaire Embedded File: Excel-based Ecosystem Services Dependence & Impact Tool. Press ESC and the double click the icon to access the embedded file. Presenters may find it useful to walk through all five questions for one ecosystem service and show how the Summary Matrix changes with different answers into the questionnaire.

13 Step 2: Evaluating dependence
1. Does this ecosystem service serve as an input or does it enable / enhance conditions for successful company performance? No Low dependence Yes No High dependence 2. Does this ecosystem service have cost-effective substitutes? Yes Medium dependence

14 Step 2: Evaluating impact
Does the company affect the quantity or quality of this ecosystem service? No Low impact Yes Is the company’s impact positive or negative? Positive Negative Does the company’s impact limit or enhance the ability of others to benefit from this ecosystem service? No Medium impact Yes High impact

15 Step 2: Select priority services
After completing the Dependence & Impact Assessment Questionnaire, the ESR team uses the Summary Matrix (which is generated automatically) to determine which ecosystem services are priorities for the business unit —those most likely to be sources of business risk and opportunity. Selecting 5 to 7 services keeps the ESR analysis focused and manageable. High impact or dependence is represented by a black dot. Open circles represent moderate dependence or impact. Positive or negative impacts are illustrated with + and – symbols. Also, “?”s identify knowledge gaps where the team may decide additional research is required. Along with the assessment, some companies prepare a summary report to explain the process to those not directly involved in the ESR. Picture: Screenshot of the Dependence & Impact Assessment Tool Summary Matrix, sample from Mondi PLC’s ESR. Note: A full case study on Mondi’s ESR is available at

16 Step 3: Analyze trends in priority services
1. Select the scope 2. Identify priority ecosystem services 3. Analyze trends in priority services Step 3: Analyze trends in priority services. Research and evaluate the conditions and trends in the priority ecosystem services, as well as the drivers of these trends. This analysis is the research-intensive step of the ESR. Many firms use both quantitative and qualitative research, and extrapolate trends to several years in the future. Gathering and synthesizing information on ecosystem change may take up to one month, and usually involves interviews with experts inside and outside the firm. External perspectives in this step are valuable, bringing new ideas into the company. A global directory of ecosystem services experts is available at

17 Step 3: Trends analysis framework
Condition and trends in ecosystem service Activities of others Company activities Direct drivers After having selected the 5 to 7 priority ecosystem services in Step 2, the ESR team analyzes the trends in these priority ecosystem services. The ESR team will likely call upon internal studies, external reports, and interviews with experts. To organize this extensive information, the ESR Trends analysis framework is recommended. It is divided into five sections. Condition and trends (supply and demand, quantity and quality, present and future) Direct drivers (e.g., consider changes in land use and land cover, overconsumption, climate change, pollution, invasive, non-native species) Company activities (how, where, to what degree?) Activities of others (who, how, where, to what degree?) Indirect drivers (e.g., governmental, demographic, economic, technological, cultural and religious trends) ESR teams often distribute a trends analysis report to key managers and consultants from several departments, then convene a meeting or series of meetings to discuss the ecosystem trends’ implications for the corporation. This meeting can be an entrée into ESR Steps 4 and5. Where possible, support the analysis with quantitative or spatial data. The availability of numeric data varies by ecosystem service, driver, and geography. For instance, quantitative information often exists for provisioning services that have formal markets—crops, livestock, aquaculture, capture fisheries, and timber, among others—or for services that many governments measure and monitor such as freshwater. Quantitative information also may be available for some drivers, such as land use change, climate change, and pollution. Quantitative data can be difficult to access or may not even exist for some of the regulating services, cultural services, and drivers. In these situations, using qualitative information and expert advice can be sufficient to inform decisions. Indirect drivers

18 Step 4: Identify business risks and opportunities
Steps in the Corporate Ecosystem Services Review 1. Select the scope 2. Identify priority ecosystem services 3. Analyze trends in priority services 4. Identify business risks and opportunities Step 4: Identify business risks and opportunities. Identify and evaluate the business risks and opportunities that might arise due to trends in the priority ecosystem services. Each trend analyzed in Step 3 presents risks and opportunities to companies. During previous steps, ESR team members may have identified a few immediate risks, as well as strategies to resolve them. Step 4 provides a structured means of organizing past ideas, generating new ones, and providing more assurance that key items are not missed.

19 Step 4: Risks and opportunities
Not exhaustive Type Risk Opportunity Operational Increased scarcity or cost of inputs Reduced quality of inputs Reduced output or productivity Disruption to business operations Increased resource use efficiency Low-impact industrial/manufacturing processes Regulatory and legal Extraction moratoria Lower quotas Fines, user fees Permit or license suspension /denial Lawsuits Formal license to expand operations New products to meet new regulation Opportunity to shape government policy Reputational Damage to brand or image Challenge to “license to operate” Improved or differentiated brand This table categorizes the major risks and opportunities that companies face due to ecosystem change. When conducting an ESR, many firms find it useful to ensure that someone with expertise in each priority ecosystem service is present for a discussion on risks and opportunities. Often, the team leader reviews the major categories and provides examples from the company’s past, its competitors, or the list of examples provided in the ESR. An extended list of examples of ecosystem services-related business risks and opportunities is available at Market and product Changes in customer preferences New products or services Markets for certified products Markets for ecosystem services Financing Higher cost of capital More rigorous lending requirements Increased investment by progressive lenders and socially responsible investment funds

20 Step 4: Risks and opportunities
Priority ecosystem service Potential risks Potential opportunities Freshwater Increased water scarcity due to: Invasive species Nearby farmers Climate change Internal efficiency improvements\ (Co) financing improvements of nearby farmers Biomass fuel Use plantation residue in Mondi generator Sell plantation in biomass-to-energy markets Global climate regulation Emerging markets for carbon sequestration Recreation and ecotourism Ecotourism market potential Livestock Grazing reducing productivity Perceived “under-utilization” of Mondi land by nearby farmers In order to identify and organize the potential risks and opportunities, a brainstorming session is often held. Firms that use the ESR often start the meeting by reviewing trends in priority ecosystem services and the categories of risks and opportunities. Next, they present a matrix containing the priority ecosystem services along the left column and risk and opportunities. The group then populates the matrix cells. After the meeting, ESR team members summarize and distribute risks and opportunities among participants. Often, new ideas arise during the weeks following the meeting. Either through dialogue or an additional meeting, the team selects a few strategies for further research. Picture: Sample matrix used to list risks and opportunities for each ecosystem service.

21 Step 5: Develop strategies
1. Select the scope 2. Identify priority ecosystem services 3. Analyze trends in priority services 4. Identify business risks and opportunities 5. Develop strategies Step 5: Develop Strategies. Outline strategies for managing the risks and opportunities. With the risks and opportunities systematically identified and organized, the final step is developing strategies to effectively respond to them.

22 Categories of strategies
Sector or stake-holder engagement Industry peer collaboration Cross-sector collaboration NGO collaboration Transactions with stakeholders Etc. Policy-maker engagement Tax incentives Subsidy reforms Protected areas Zoning Etc. Internal changes Operations Product strategy Market strategy Procurement strategy Land management Etc. Strategies for responding to ecosystem service-related risk and opportunities fall into three broad categories: Internal changes. Companies can address many risks and opportunities through changes in operations, product/market strategies, and other internal activities. Sector or stakeholder engagement. Companies can also address some of these risks and opportunities by partnering with industry peers, collaborating with other sectors, or structuring transactions with stakeholders. Policy-maker engagement. Not all ecosystem service-related risks and opportunities can be successfully addressed through internal corporate activities alone or through sector and stakeholder engagement. Some require changes in government policy. Many ecosystems of value to companies are controlled by governments. Others stretch across numerous private owners, making engagement inefficient or nearly impossible. Moreover, poor public policies are often indirect drivers of ecosystem services degradation. Therefore, engaging policy-makers and government agencies to establish good policies is a productive corporate strategy for addressing some ecosystem service-related issues. Companies can voice support for (or provide input to) incentives or rules for sustainable management of ecosystem services.

23 Applications of the ESR
Frame ongoing initiatives in an ecosystem services perspective Build and leverage employee knowledge Use the process for other purposes Carry out a gap analysis Embed ecosystem services into Environmental Impact Assessments (EIA) Improve plants and land management Incorporate into product development Analyze supply chains

24 ESR benefits – users told us it helped them…
Provide insights on ecosystem issues Highlight (potential) risks and opportunities Put ecosystems higher on corporate agenda / give added urgency to action on ecosystems Shape ecosystem management plans / integrate ES into corporate planning Strengthen existing approaches to environmental impact assessment Demonstrate leadership in corporate sustainability Communicate ecosystem issues internally and externally Engage non-business stakeholders / improve relationships

25 Next steps: Ecosystem services for corporate decision-making
EIA LCA SME Financial Risk WRI main page on ESR material: WBCSD’s Ecosystem Valuation Initiative, see: While the ESR is an excellent methodology for a wide array of uses, many companies have also indicated that considering ecosystem services in environmental management systems, auditing processes, and due diligence tools would add value to their ongoing efforts. Hence, WRI is working with several companies and associations to formally integrate ecosystem services into existing corporate decision making systems such as ISO 14000, Global Reporting Initiative, and UNEP’s Global Compact Performance Model. Recommendations for these decision making and reporting processes will be publicly available in October In addition, several organizations are advancing complementary efforts: - Environmental Resources Management, an environmental consulting firm, is working to integrate ecosystem services considerations into Environmental Impact Assessment. - Ohio State University is developing the ECO-LCA that integrates ecosystem services considerations into life cycle assessments. - The World Business Council for Sustainable Development is developing guidelines to integrate ecosystem valuation into corporate decision making. Additional information on these developments is being added to Since the launch of the ESR in 2008, WRI and WBCSD have developed numerous supporting resources to streamline and enhance the ESR process. To access these resources, go to To participate in ongoing and dynamic discussions about business and ecosystem services, join the Business & Ecosystem Services Professionals Group on LinkedIn (http://www.linkedin.com/groups?gid= &trk=hb_side_g) The Ecosystem Services Experts Directory is a global online directory that enables businesses and governments to easily find experts in ecosystems and ecosystem services (http://projects.wri.org/ecosystems/experts)

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