Ignore Degraded Ecosystems at Your Peril, Corporations Warned

OXFORD, UK, November 24, 2006 (ENS) - Scarcity of raw materials, higher operating costs, government restrictions, and reduced flexibility are just some of the difficulties corporations will encounter if they do not change their operations to account for the ongoing degradation of ecosystems and the vital services they provide.

The warning comes in a new publication released on Monday by a business group and three conservation organizations that encourages companies to adapt to the rapidly changing environmental conditions brought on by global warming and depletion of natural resources.

The publication, produced by the World Business Council for Sustainable Development, Earthwatch Institute Europe, IUCN-World Conservation Union, and the World Resources Institute, is based on global scientific facts and forecasts from the United Nations' multi-year Millennium Ecosystem Assessment.

Björn Stigson, president of the World Business Council for Sustainable Development, said, "Business simply cannot function if ecosystems and the services they deliver - like water, biodiversity, food, fiber and climate regulation – are degraded or out of balance. There must be a value attached to natural resources, and businesses need to start understanding this value."


Temperatures in most Australian wine regions are projected to increase by between 0.3 to 1.7 degrees Celsius by 2030, affecting the suitability of growing regions for different grape varieties. (Photo courtesy CSIRO)
The study, "Ecosystem Challenges and Business Implications," offers a detailed examination of the implications that water scarcity, climate change, nutrient overloading, biodiversity loss, habitat change and the overexploitation of oceans will have for the future of business.

It warns companies to prepare for these risks by measuring their impact and dependence on ecosystem services, taking advantage of emerging business opportunities and reducing their operational footprints.

"Human impact on the natural environment has quickly led us to the limits of the earth’s carrying capacity," says Nigel Winser, executive director of Earthwatch Institute Europe from his office in Oxford, England. "Business, working in partnerships and by transforming current practices, must be part of the solution."

Businesses can turn these difficulties into opportunities, the report finds, if they will conduct systematic reviews of their dependence on ecosystem services and the impacts their operations have on natural resources.

Corporations can develop new technologies and products that will serve as substitutes, reduce degradation, restore ecosystems or increase efficiency of ecosystem service use.

They can identify and participate in new markets such as water quality trading, certified sustainable products, wetland banking and threatened species banking.


Reforestation of a degraded area by the Brazilian Agricultural Research Corporation - Embrapa. Embrapa Agrobiology supplies seedlings, consulting services and develops projects. (Photo courtesy Embrapa)
They can engage in new businesses such as ecosystem restoration and environmental asset finance or brokerage.

And finally, companies can develop new revenue streams for assets currently unrealized, such as wetlands and forests, but for which new markets or payments for ecosystem services could emerge.

However, the report finds that most companies fail to recognize the link between healthy ecosystems and their business interests.

"Leading businesses have always adapted to new realities," said Janet Ranganathan, director of the People and Ecosystems Program at the World Resources Institute, based in Washington, DC. "The new reality is that ecosystems are losing their ability to produce some of what businesses value most."


Mountaintop removal mining for coal in the Appalachian region of the United States degrades the surrounding ecosystem by dumping tons of rock and dirt into streams. (Photo courtesy Duke University)
A meeting of business leaders, government officials and scientists held by Earthwatch Institute in London in September 2006 to discuss the business and ecosystems agenda found that executives may feel more comfortable responding to ecosystem challenges when other business leaders are doing the same.

Meeting participants agreed that early adopters of environmentally sensitive operations may hold the advantage over their competitors. As ecosystem management becomes integral and widespread among businesses, benefits in terms of competitive environmental advantage may be reduced.

They agreed that development of an "ecosystem marketplace" that is widely accepted and encompasses both ecosystem investments and payment for ecosystem services is crucial in adopting a response of suitable scale.

The companies interviewed for this publication were Interface Europe, Skanska, Syngenta, Novozymes, Unilever, Rio Tinto, Mondi, Shell, Thames Water Utilities, Novo Nordisk, SAB Miller, Reed Elsevier and Cadbury Schweppes.

Each company contributed insights based on its own experiences with ecosystem degradation. Andy Tomczynski of Thames Water Utilities is quoted as saying, "We are removing nutrients from the water cycle, but we need to go further back to address especially agriculture and diffuse pollution management to ensure that excess nitrogen and phosphorus do not go into the system in the first place."

The publication is the first of three to be produced by the four partners. The second will focus upon how new business models, markets and entrepreneurs can profit from responding to ecosystem challenges and the third will help business executives identify their dependences on ecosystem services and ways to retain them for the long term.

The 20 page publication, "Ecosystem Challenges and Business Implications," is online. Click here to view.