Impacts and Dependencies

Many businesses have impacts on the environment through the natural resources they use and the pollution they may produce. At the same time businesses depend on ecosystem goods and services for their continued operations and long-term sustainability. These goods and services are the products of healthy biodiversity and ecosystems.

The raw materials required by many businesses (e.g. water, timber, rubber, agricultural crops) are produced by the functioning of ecosystems, or ecosystem services. For example, crops rely on healthy soils which are produced by the breakdown of plant and animal matter by organisms, and on water which is generated and regulated by intact forests. Many crops require services such as insect pollination to reproduce. These critical ecosystem services are all underpinned by biodiversity.

Yet the environmental footprint of many business operations threatens the services on which they depend. This represents potentially significant business risk to reputation, operational sustainability and legal compliance. The expansion of agricultural lands at the cost of tropical forests, for example, can lead to significant alterations in the quantity and pattern of rainfall that crops (and people and wildlife) depend on. In contrast, appropriate management of farms and farming landscapes opens opportunities for increased market access, access to investment and security of supply.

Biodiversity and ecosystem services (or BES) are inseparable and BROA uses the term biodiversity to refer to both.

Risks

Biodiversity presents a range of risks and opportunities for businesses. Risks take various forms:

  • Operational, such as scarcity of raw materials (e.g. timber) or key ecosystem services needed to produce them (e.g. pollination of crops)
  • Regulatory, such as through the imposition of stricter regulations and government policies that a business may struggle to comply with
  • Capital investment-related. Financial institutions are adopting stricter lending criteria. For example, the Equator Principles or IFC Performance Standard 6 set out environmental standards that businesses or projects seeking funding must meet to obtain finance
  • Reputational; a business may come under pressure from NGOs, media, or other groups for real or perceived negative environmental performance

Opportunities

Businesses can seize varied opportunities through managing biodiversity:

  • Efficiency savings. Reducing resource use through the introduction of new technologies or streamlining of supply chains can offer financial as well as environmental benefits
  • Access to new markets. Consumer demand is growing for ethically and environmentally produced goods, so demonstrating environmental credentials can win new customers
  • Long-term security. Maintaining and enhancing the biodiversity and ecosystem services a business relies on can act as an insurance policy against future stresses to production systems and supply chains
  • Improved stakeholder relations. Managing biodiversity risks on a landscape level requires interaction and collaboration with a range of stakeholders that a business might not ordinarily deal with. Articulating and working towards a shared vision of a sustainable landscape can improve stakeholder relations and strengthen a business’s license to operate

Biodiversity

The value of biodiversity and business has been well articulated in the past. See for example Convention on Biological Diversity (CBD), and the International Union for the Conservation of Nature (IUCN).

The relationship between agriculture and biodiversity is crucial. Agriculture depends on ecosystem services delivered by biodiversity to produce crops (soil formation, nutrient recycling, pollination, water supply, pest predation). Yet the continued expansion and intensification of agriculture puts at risk the very services it relies upon.

Agriculture and livestock production have the greatest impact of any sector on terrestrial biodiversity. These impacts occur through the clearance of natural ecosystems to expand production, and through the application of agrochemicals that can have damaging effects on biodiversity and ecosystems.

It is vital that the biodiversity of agricultural landscapes is safeguarded, and businesses are well placed to take the lead on ensuring these landscapes are healthy and sustainable.