World Resources Institute

World Resources Institute

World Resources Institute

World Resources Institute

What do these stories have in common?What do these stories have in common?

Companies facing unexpected risks or novel opportunities

arising from their dependence and impact on ecosystems

CulturalNonmaterial benefits

obtained from ecosystems

Regulating

Benefits obtained from control of

natural processes by ecosystems

ProvisioningGoods or products

obtained from ecosystems

Three categories of ecosystem servicesThree categories of ecosystem services

Trends in the world’s ecosystem services over past 50 yearsTrends in the world’s ecosystem services over past 50 years

DegradedDegraded MixedMixed EnhancedEnhanced

ProvisioningProvisioning • Capture fisheries• Wild foods• Biomass fuel• Freshwater• Genetic resources• Biochemicals, natural medicines,

and pharmaceuticals

Timber and other wood fiberTimber and other wood fiber Other fibers (e.g., cotton, Other fibers (e.g., cotton,

hemp, silk)hemp, silk)

Crops Livestock Aquaculture

RegulatingRegulating • Air quality regulation• Regional and local climate

regulation• Erosion regulation• Water purification and waste

treatment• Pest regulation• Pollination• Natural hazard regulation

Water regulationWater regulation Disease regulationDisease regulation

Global climate regulation (carbon sequestration)

CulturalCultural • Ethical values (spiritual, religious)• Aesthetic values

Recreation and ecotourismRecreation and ecotourism

Source: Adapted from the Millennium Ecosystem Assessment. 2005.Source: Adapted from the Millennium Ecosystem Assessment. 2005. Ecosystems and Human Well-being: Synthesis. Ecosystems and Human Well-being: Synthesis. Washington, DC: Island Press.Washington, DC: Island Press.

The Corporate Ecosystem Services Review The Corporate Ecosystem Services Review

Structured methodology that helps managers proactively

develop strategies to manage business risks and opportunities

arising from their company’s dependence and impact on ecosystems

Business benefitsBusiness benefits

• Strengthen existing approaches to environmental managementStrengthen existing approaches to environmental management

• Identify business risks and opportunitiesIdentify business risks and opportunities

• Anticipate new markets and government policiesAnticipate new markets and government policies

• Improve stakeholder relationshipsImprove stakeholder relationships

• Demonstrate leadership in corporate sustainabilityDemonstrate leadership in corporate sustainability

Business decisions and processes the ESR can supportBusiness decisions and processes the ESR can support

• Corporate, business unit, or market strategy development

• Planning processes for corporate infrastructure projects

• Identification of new markets, products, or services

• Identification of new revenue streams from corporate landholdings

• Policy-maker engagement strategies

• Environmental impact assessments

• Environmental reporting

Outline and prioritize strategies for managing the risks and opportunities

5. Develop strategies

Steps in a corporate ecosystem services reviewSteps in a corporate ecosystem services review

Key activity Identify and evaluate business risks and opportunities that might arise due to the trends in priority ecosystem services

4. Identify business risks and opportunities

Evaluate conditions and trends in priority ecosystem services, as well as drivers of these trends

3. Analyze trends in priority services

Systematically evaluate degree of company’s dependence and impact on ecosystem services

Determine highest “priority” services—those most relevant to business performance

2. Identify priority ecosystem services

Choose boundary within which to conduct ESR• Business unit• Product• Market• Landholdings• Customer• Supplier

1. Select the scope

Step

Step 1. Considerations when selecting the scopeStep 1. Considerations when selecting the scope

1. Which stage of the 1. Which stage of the value chain? value chain?

CustomersCompanySuppliers

• Which customer(s)?

• In which geographic market(s)?

• What aspect of the company?

― Business unit― Product line― Facility― Project― Landholdings

• Which supplier(s)?

• In which geographic market(s)?

2. Who and where 2. Who and where specifically?specifically?

3. Is it strategic, timely, 3. Is it strategic, timely, and supported?and supported?

Step 2. Identifying priority ecosystem servicesStep 2. Identifying priority ecosystem servicesECOSYSTEM SERVICES DEPENDENCE AND IMPACT MATRIX

Dependence Dependence DependenceProvisioning

Crops ○ - Livestock ● - Capture fisheries Aquaculture Wild foods ○ + Timber and other wood fibers ● + Other fibers (e.g., cotton, hemp, silk) Biomass fuel ○ ● + Fresh water ● ● - Genetic resources ○ ○ ? Biochemicals, natural medicines, and' pharmaceuticals ○ +

RegulatingAir quality regulation ? ? Global climate regulation ○ ● + Regional/local climate regulation ○ ○ + Water regulation ● ● - Erosion regulation ○ ○ - Water purification and waste treatment ○ - Disease regulation Pest regulation Pollination Natural hazard regulation

CulturalRecreation and ecotourism ● + Ethical values ○ +

Ecosystem services ImpactImpact Impact

Customers Company operationsSuppliers

Key ● High + Positive impact ○ Medium - Negative impact Low ? Don't know

Step 3. Ecosystem service trends and drivers frameworkStep 3. Ecosystem service trends and drivers framework

1. Condition and trends in the ecosystem service

• Supply and demand• Quantity and quality• Present and future

2. Direct drivers• Changes in land use and land cover• Overconsumption• Climate change• Pollution• Invasive, non-native species• Other

4. Activities of others• Who• How• Where• To what degree

5. Indirect drivers• Governmental• Demographic• Economic• Technological• Cultural and religious

3. Company activities• How• Where• To what degree

Step 4. Types of risks and opportunities arising from trends in ecosystem servicesStep 4. Types of risks and opportunities arising from trends in ecosystem services

TypeType RiskRisk OpportunityOpportunity

OperationalOperational • Increased scarcity or cost of inputsIncreased scarcity or cost of inputs• Reduced output or productivityReduced output or productivity• Disruption to business operationsDisruption to business operations

• Increased efficiencyIncreased efficiency• Low-impact industrial processesLow-impact industrial processes

Regulatory and Regulatory and legallegal

• Extraction moratoriaExtraction moratoria• Lower quotasLower quotas• FinesFines• User feesUser fees• Permit or license suspensionPermit or license suspension• Permit denialPermit denial• LawsuitsLawsuits

• Formal license to expand operationsFormal license to expand operations• New products to meet new regulationsNew products to meet new regulations• Opportunity to shape government Opportunity to shape government

policypolicy

ReputationalReputational • Damage to brand or imageDamage to brand or image• Challenge to social “license to operate”Challenge to social “license to operate”

• Improved or differentiated brandImproved or differentiated brand

Market and Market and productproduct

• Changes in customer preferences (public Changes in customer preferences (public sector, private sector)sector, private sector)

• New products or servicesNew products or services• Markets for certified productsMarkets for certified products• Markets for ecosystem servicesMarkets for ecosystem services• New revenue streams from company-New revenue streams from company-

owned or managed ecosystemsowned or managed ecosystems

FinancingFinancing • Higher cost of capitalHigher cost of capital• More rigorous lending requirementsMore rigorous lending requirements

• Increased investment by progressive Increased investment by progressive lenders and socially responsible lenders and socially responsible investment fundsinvestment funds

NOT EXHAUSTIVENOT EXHAUSTIVE

Step 5. Categories of strategiesStep 5. Categories of strategies

Internal Internal changeschanges

Sector or Sector or stakeholder stakeholder engagementengagement

Policy-maker Policy-maker engagementengagement

OperationsOperations

Product strategyProduct strategy

Market strategyMarket strategy

Procurement strategyProcurement strategy

Land managementLand management

Etc.Etc.

Industry peer collaborationIndustry peer collaboration

Cross-sector collaborationCross-sector collaboration

NGO collaborationNGO collaboration

Transactions with Transactions with stakeholdersstakeholders

Etc.Etc.

Tax incentivesTax incentives

Subsidy reformsSubsidy reforms

Protected areasProtected areas

ZoningZoning

Etc.Etc.

What the ESR is notWhat the ESR is not

• It is not dependent upon economic valuation of ecosystem servicesIt is not dependent upon economic valuation of ecosystem services

• It does not identify or address every environmental issueIt does not identify or address every environmental issue

• It is not strictly quantitativeIt is not strictly quantitative

• It does not require a long, multiyear analysisIt does not require a long, multiyear analysis

Supporting tools available in Guidelines and on websiteSupporting tools available in Guidelines and on website

• Methodology “cheat sheet”Methodology “cheat sheet”

• Ecosystem service list, definitions, and examplesEcosystem service list, definitions, and examples

• Spreadsheet questionnaire and tool or assessing dependence and impactSpreadsheet questionnaire and tool or assessing dependence and impact

• Frameworks for analyzing trends and identifying risks and opportunitiesFrameworks for analyzing trends and identifying risks and opportunities

• Case examplesCase examples

• Other resourcesOther resources

www.wri.org/ecosystems/esr