This page describes the rationale for conducting a corporate ESR in four sections:

1. Risks and opportunities that ecosystem degradation poses to corporate bottom lines
2. Making the connection between ecosystem degradation and the ESR
3. Business benefits of the ESR
4. When to use the ESR
   

Ecosystem degradation poses risks and opportunities

Ecosystems provide businesses with numerous benefits or “ecosystem services.” Forests supply timber and wood fiber, purify water, regulate climate, and yield genetic resources. River systems provide freshwater, power, and recreation. Coastal wetlands filter waste, mitigate floods, and serve as nurseries for commercial fisheries.

The Millennium Ecosystem Assessment—the largest audit ever conducted of the condition and trends in the world’s ecosystems—found that ecosystems have declined more rapidly and extensively over the past 50 years than at any other comparable time in human history. In fact, 15 of the 24 ecosystem services evaluated have degraded over the past half century. The Assessment projected further declines over coming decades, particularly in light of population growth, economic expansion, and global climate change.

These trends are highly relevant to business because companies not only impact ecosystems and the services they provide but also depend on them. The degradation of ecosystem services can thus pose companies with a number of operational, regulatory, reputational, market, and financing risks and opportunities.

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Making the connection

Unfortunately, companies often fail to make the connection between the health of ecosystems and the business bottom line. 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 often not fully attuned to the risks and opportunities arising from the degradation and use of ecosystem services. For instance, many tools are more suited to handle “traditional” issues of pollution and natural resource consumption. Most focus on environmental impacts, not dependence. Furthermore, they typically focus on risks, not business opportunities. As a result, companies may be caught unprepared or miss new sources of revenue associated with ecosystem change.

The Corporate Ecosystem Services Review (ESR) is designed to address these gaps. It consists of a structured methodology that helps managers proactively develop strategies to manage business risks and opportunities arising from their company’s dependence and impact on ecosystems. It is a tool for strategy development, not just for environmental assessment. Businesses can either conduct an Ecosystem Services Review as a stand-alone process or integrate it into their existing environmental management systems. In both cases, the methodology can complement and augment the environmental due diligence tools companies already use.

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Business benefits

Companies applying the ESR have realized a number of business benefits such as:

• Identifying new business risks and opportunities arising from a company’s dependence and impact on ecosystems and the services they provide.
• Framing and giving added urgency to risks or opportunities previously identified by management.
• Anticipating new markets and influencing government policies that will emerge in response to ecosystem degradation.
• Strengthening existing approaches to environmental impact assessment by filling gaps traditional due diligence tools may not consider.
• Improving stakeholder relationships by improving a company’s understanding of how stakeholders value different services coming from the same ecosystem.
• Demonstrating leadership in corporate sustainability by proactively addressing the degradation of ecosystem services.

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When to use

The ESR can support various businesses decisions and processes including:

• Corporate business unit, or market strategy development
• Planning processes for corporate infrastructure projects such as mines, wells, pipelines, plantations, and facilities
• Identification of new markets, products, or services
• Identification of new revenue streams from corporate landholdings
• Investments in projects or companies
• Policy-maker engagement strategies
• Environmental impact assessments
• Environmental reporting

Download ESR Guidelines & Supporting Tools

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