The private sector is recognized as an essential actor in supporting development and poverty reduction, and companies themselves are increasingly recognizing the business opportunities associated with engaging in development challenges. However, the complex interrelationship between poverty and biodiversity and ecosystem services (BES) requires that companies take an integrated perspective to these issues in order to make a positive contribution to the sustainable development of host communities. Yet, today many companies have programs that support biodiversity conservation and separate programs that support local economic development, and in some cases these programs are in conflict. To make positive contributions to sustainable development, companies need to integrate the objectives of these programs and unlock the synergies among business, conservation, and poverty reduction.
Poverty eradication, the reduction of unsustainable patterns of production and consumption, and the protection and management of natural resources are frequently cited as both overarching objectives and essential requirements for sustainable development. Achieving these objectives is made more difficult as biodiversity and the ecosystem services that underpin all life on earth are degraded. People have made unprecedented changes to ecosystems in recent decades to meet the growing demands for food, fresh water, fiber, and energy. The quality of life for billions of people has improved, but these changes have weakened nature’s ability to deliver key services such as the purification of air and water, protection from natural disasters, and the provision of medicines. Furthermore, extreme poverty remains a major challenge in many regions of the world, particularly in Sub-Saharan Africa and South Asia, with 1.4 billion people globally still living on less than US$1.25 per day.
The Millennium Ecosystem Assessment (MEA), among many other analyses, has emphasized that the loss of ecosystem services and biodiversity is a significant barrier to reducing poverty, hunger, and disease. Ecosystem services are of particular importance to poverty reduction because a significant proportion of the world’s poorest people rely directly on these services for their well-being and livelihoods. The limited purchasing power of poor people leaves them less able to obtain substitutes for local resources from sources outside their immediate surroundings. As a result, they are highly dependent on the integrity of the local environment for the supply of food, water, energy, shelter, and other basic needs. Therefore, local levels of biodiversity—including the distribution and abundance of wild species, the range of crop plants and livestock, and the diversity of ecosystems that are directly accessible to them—are most important to local communities.
The MEA clearly identifies the fundamental importance of ecosystem services to human well-being and development, and also demonstrates how the relationship also works the other way. Addressing the development needs of the poor can greatly reduce some of the pressures from human activities that drive ecosystem degradation. The environmental assets that make up a significant share of the wealth of the poor are prone to rapid depreciation, unless cared for and regenerated. As a result, many natural-resource-dependent communities are exposed to a high level of vulnerability.
These risks are made particularly acute in locations and regions experiencing rapid population growth. These circumstances can produce a vicious cycle of environmental degradation and increased vulnerability and poverty. The question for business is how to systematically align business success with poverty reduction, business strategies with healthy ecosystems, and biodiversity conservation with human development.
The primary focus of many business contributions to development and poverty reduction are usually on promoting local economic and social development. However, it is critical that the linkages among poverty, the environment, and BES are considered in the design of these initiatives if they are to make genuinely sustainable contributions to the well-being and livelihoods of the poor. Growth in economic activity does not necessarily equate to reduced poverty, a better environment, greater equality, or a higher quality of life for local populations. In communities that depend on economic activities that result in adverse impacts on BES, the poorest and most vulnerable are usually those who suffer most. Conversely, a more integrated consideration of the links between poverty and BES can enhance the opportunities for businesses to generate both commercial and societal value through their activities.
While there is a broad range of win-win opportunities in this domain, the risks and challenges facing business must also be acknowledged. In many cases, even well-intentioned business actions can result in adverse, unintended consequences.
- Conflicting aspects of sustainable development and biodiversity conservation: Some business strategies for achieving poverty reduction can increase pressures on ecosystems, compromising the program’s capacity to produce and maintain benefits over the long run. Investments to enhance the supply of certain commodities (for example, food production) can degrade biodiversity and reduce the supply of other natural resources (e.g., water, fish, or wildlife), and ultimately remove income sources for local populations.
- Unintended consequences such as project-induced in-migration: Large-scale land use projects can dramatically change the social landscape around project sites. Early project documents typically outline the potential benefits that local people in the project area might expect. In many parts of the world, the economic opportunities associated with such large-scale projects can generate significant in-migration of individuals and groups from elsewhere, potentially fundamentally reconfiguring existing local social structures and relationships.
- Blurred roles between business and government: Many corporate investment programs, whether focused on biodiversity, economic development, or both, aim to help local communities expand their use of available resources in order to meet their needs. In addition, and notwithstanding the potential for companies to assist local partners in project development and implementation, businesses are sometimes held responsible for delivering outcomes that lie beyond their competence or expertise.
- Difficulties in measuring success: There are challenges for business in assessing the potential impacts and benefits for local communities of their actions. While there are potential business benefits from supporting local economic and social development, including reduced risk and an increased social license to operate, the benefits for local communities are often difficult to assess.
Business can address the challenge of meeting both sustainable development and biodiversity conservation objectives through various measures, including:
- Understand which ecosystem services are impacted and depended upon by your company and by local communities. Companies and local communities are linked by their dependencies and impacts on environmental assets. Businesses that can clearly see those linkages can make informed decisions when comparing different objectives and operational strategies for local economic development programs.
- Advocate for alignment among government programs. Stronger linkages and better alignment among government policies and programs that address ecosystem management and sustainable development would make it easier for business to align its own efforts.
- Engage with other sectors operating in the region and/or country. Business can engage with government, donor agencies, and other industries in the areas where it operates. Partnerships enable companies to contribute to sustainable development with a reduced risk of being responsible for outcomes outside of their expertise, enhance the creativity of development initiatives, and help scale pilot initiatives, distributing benefits to a wider audience.
- Conduct thorough “upfront” work during social impact assessments (SIA) in order to build more inclusive business models. Meaningful social investment and CSR programs should begin with a thorough socioeconomic baseline. Where possible, engage with community members in their homes, talk to people about how they earn their incomes, whether their children are in school, the type of health problems they have, and how many additional people they support. This type of analysis is not typically part of an SIA. While the SIA does focus on a range of issues that provides an overview of a community, the main focus is on developing mitigation plans in areas where the company might have an impact. There are also new business-focused impact assessment tools that can support better decision making in this context.
Experience shows that there are potential synergies among business, conservation, and poverty reduction: for example, private-sector participation in water supply and sanitation, agribusiness development, forest product markets, and payments for ecosystem services. The challenge for business is to identify areas to align contributions to local economic and social development with the conservation or enhancement of BES in ways that generate both business and societal value.
This article was adapted from a chapter in “The Economics of Ecosystems and Biodiversity” (TEEB) report, entitled “Business, Biodiversity, and Sustainable development.” The TEEB report can be downloaded here.