TEEB for Business: you cannot manage what you do not measure

It is easy to forget that all businesses depend on biodiversity and ecosystem services, either directly of indirectly. Many continue to overlook the impacts and dependencies their business has on natural resources, bringing undefined risks and neglecting possible profitable opportunities. The degradation of ecosystems continues because “services of nature are nearly always provided for free and so not valued until they are gone”.

The Economics of Ecosystems and Biodiversity (TEEB) study released its report for business in June this year, highlighting the dependence of business on ecosystems and the economic significance of the global loss of biological biodiversity.

The full TEEB for Business report is available to download and will be published in print by Earthscan in 2011.

Defra minister Richard Benyon welcomed the report in a speech to the Global Business and Biodiversity conference, highlighting its estimate that deforestation costs between 2 and 5 trillion dollars a year in lost services.

Secretary of State Caroline Spelman, speaking at the same conference, identified some key messages from the report:

It shows consumers have growing expectations of business when it comes to biodiversity. It shows the unforeseen effects that business practice can have on our environment and ecosystems, making everything from drought to flooding ever more likely. And it shows that the global impact of business on biodiversity and the environment – for good or ill – is both one of the biggest tests and the best opportunities facing industry today.

The economics of biodiversity loss

A global study on the economics of biodiversity loss was first proposed at the 2007 meeting of environment ministers from the G8 and five major developing economies:

“In a global study we will initiate the process of analyzing the global economic benefit of biological diversity, the costs of the loss of biodiversity and the failure to take protective measures versus the costs of effective conservation.”

In response, the German government and European Commission (EC) launched the TEEB study with Pavan Sukhdev as study leader. TEEB is led by the United Nations Environment Programme (UNEP) with support from the EC, German Federal Ministry for the Environment, and Defra. The final synthesis of phase 2 will be presented at the Convention on Biological Diversity (CBD) in Nagoya in October 2010.

TEEB for business

The TEEB for Business report aims to demonstrate that biodiversity loss and ecosystem degradation present both serious risks and significant opportunities for business. Emphasis on the improvement of growth opportunities is a central focus of the document.

TEEB makes the case for incorporating the economics of biodiversity and ecosystem services (BES) in all business decision-making. By combining science, economics and policy it aims to use the latest knowledge to encourage businesses to evaluate their environmental impacts, in order to provide insights into how they can operate more sustainably and reduce costs.

Business opportunities and environmental services

The creation of new business opportunities can be highly reliant on the provision of free environmental services. For example, bottled water companies make a profit from water provided by nature at no cost.

Opportunities for business growth can also arise from moving to more sustainable practices: global sales of organic food and drink amounted to US$46 billion in 2007, a three-fold increase since 1999.

However, the continued degradation of the environment will begin to provide fewer and fewer opportunities and environmental services, even for controlled business exploitation. This makes it ever more important for companies to assess their environmental impacts or run the risk of negative impacts on their opportunities for growth as a direct consequence of their ignorance.

TEEB for Business advises that generated ecological footprints can be reduced by observing environmental effects sourced through supply chains as well as primary impacts.

Addressing the Social Issues

Social issues must be addressed in conjunction with sustainable commerce:

“The challenge is to reinforce economic development strategies that are ecologically sustainable, socially equitable and good for business”.

TEEB for Business considers Syngenta’s activities as an example of a business initiative that addresses both poverty and biodiversity. Syngenta, a “world-leading agri-business committed to sustainable agriculture”, supports a project with small farmers in Kenya, working in partnership with local NGOs and communities. The introduction of modern agriculture techniques is intended to increase crop yields and income. Conservation-oriented farming practices and better market-access are made available to ensure social benefits for the Kenyans.

Regulatory reform

Regulatory reforms are required both to create the enabling framework for new biodiversity and ecosystem services business, and to ensure environmental protection. Building on experience with global carbon markets, policy-makers are now experimenting with business-oriented reforms to enable the development of markets for other ecosystem services.

Governments have an important role to play in providing the right fiscal environment, by:

• removing environmentally-harmful subsidies;
• offering tax credits for conservation investment;
• establishing stronger environmental liability;
• developing new ecosystem property rights and trading schemes;
• encouraging increased public access to information through reporting and disclosure;
• facilitating cross-sector collaboration.

Input from financial and market experts, as well as from government, is essential to enable efficient markets.

Business leadership on biodiversity and ecosystems

The TEEB report includes a list of seven aims for companies to start showing leadership in sustainability today:

1. Identify impacts and dependencies on biodiversity and ecosystem services (BES)
2. Assess risks and opportunities associated with those impacts and dependencies
3. Set targets, measure and value performance and report results
4. Take action to avoid, minimize and mitigate biodiversity and ecosystem services risks
5. Grasp new BES business opportunities such as cost-efficiencies, new products and new markets
6. Incorporate wider corporate social responsibility initiatives into business strategy and actions on BES
7. Engage with business peers, government, NGOs and civil society to improve BES guidance and policy