In its 2008 corporate responsibility report, the Walt Disney Company made a pioneering commitment that the company will have a “net positive impact on ecosystems.” As part of this strategy, Disney will develop habitat and restoration solutions based on ecosystem impacts identified during the design-review process of new projects. In a similar fashion, some government agencies have begun to place more emphasis on ecosystems as a whole, as opposed to single environmental issues such as greenhouse gas emissions: The U.S. Environmental Protection Agency, for example, has oriented its research agenda around ecosystem services, and the European Environment Agency began investing heavily in ecosystem services research and tools to aid its decision-making for management of environmental issues.
These signals point to a game-changing paradigm shift in environmental thinking: Increasingly, stakeholders expect corporations to move from managing environmental performance based on a discrete, single-issue approach to an approach that integrates how various activities may affect landscape-level ecological dynamics. The rationale is that isolated improvements in parameters such as greenhouse gas emissions or wastewater discharge are problematic if overall ecosystem health is still declining.
For investors in particular, the issue may become one of risk management and ensuring that companies are engaged in full due diligence that highlights emerging issues related to ecosystem services. For example, have companies reliant on water from underground aquifers examined natural recharge rates? What is the likelihood that these aquifers will continue to have the water required on a five-, 10-, and even 20-year timeframe? If that likelihood is low, does this put the companies (and therefore investors) at risk of having a significant stranded asset?
In the past few years, several web-based and software tools have been developed to help companies identify, measure, assess, and potentially even derive economic value from both their impacts and their dependencies on ecosystem services.
However, as the number and complexity of tools has increased—in terms of target audiences, intended uses and scope, level of detail, and cost of application—it has become difficult for companies to determine which tool to select and even to test in pilot applications.
To help companies understand how ecosystem services can be incorporated into decision-making, BSR’s Environmental Services, Tools, & Markets Working Group has published a new report offering a snapshot of current ecosystem services tools and possible applications in corporate decision-making processes. This follows our 2008 report, which provided a comparison of both multi-ecosystem-service-assessment tools and biodiversity-focused tools linked to ecosystem services.
Choosing the Right Tools
BSR has found that these tools play predominantly complementary roles in three phases of corporate decision-making, and thus can be placed in three categories:
- Phase one: “Gateway” tools can be used for assessing corporate relevance of ecosystem services.
- Phase two: “Mapping” tools can be used for spatially explicit mapping of ecosystem services flows in a particular landscape or watershed(s).
- Phase three: “Granular” tools are helpful for fine-grain site assessment and valuation of ecosystem services.
While every business is unique, most large companies engage in decision-making around corporate governance, strategy, and operations—and each of these broad categories is likely to require distinct tools with different attributes. For instance, “gateway” tools focused on high-level concepts and processes can be used for corporate governance and strategy, and “granular” tools focused on specific geographies and data can be used for decisions around operations.
Within this context, a company will need a suite of tools to identify issues that are not currently captured within existing decision-making processes such as environmental and social impact assessments. In selecting tools—in addition to evaluating the tools’ ease of use and credibility—it’s also important to consider whether their outputs easily interface with existing corporate decision-making processes.
Most Promising Tool Applications
Given the uncertainty surrounding the application of these tools, BSR working group members feel ecosystem services tools would be most useful when applied to new project developments. The earliest stages of the project life cycle—when companies identify, evaluate, and select new product or service offerings—offer the greatest scope for use of these tools because new projects involve key choices regarding major aspects of project viability, location, design, execution, and preparation for eventual asset retirement.
However, this operational focus does not discount the value companies can gain by using tools for strategic business and governance activities. Therefore, our working group members see a longer-term need for tools that can inform and support decision-making within these corporate activities.
The potential interface points between corporate decision-making and the attributes of the tools highlighted in the report are intended to help tool developers design and evaluate their tools, while also helping companies select and assess the usefulness of individual tools for specific corporate applications. Ideally, the ideas will be tested in the coming years within an increasing number of corporate settings as the concepts, tools, and business case for application become more clear.