For many companies, sustainability is far more than just a feel-good gloss, it’s the very essence of the business itself. Agriculture come to mind, of course, as does the bottling industry, fishing industry, and other sectors that depend on reliable, good quality ecosystems. However, when it comes to justifying an investment in natural resource preservation, it is often difficult for a company to put a concrete value on the ecosystems that support its operations. The World Business Council for Sustainable Development aims to help bridge that information gap with its new Guide to Corporate Ecosystem Valuation (pdf).
What’s the Value of Ecosystem Valuation?
In a recent article on the new guide in the Guardian, James Griffiths of the World Business Council uses the example of Mondi, a paper company with tree plantations in South Africa. This essential resource was facing stress from other users and infrastructure issues in the area. With ecosystem valuation, Mondi could gain an understanding of the needs of competing stakeholders, and use that information to help develop a broad-based, collaborative effort to preserve the watershed.
Ecosystem Valuation in Action
Some companies have already taken the lead in ecosystem valuation. PepsiCo provides one example of how a large corporation can engineer a collaborative sustainability plan that goes beyond enhancing internal operations. Last year, the company pledged to “strive for positive water balance” in parts of the world where its operations compete for distressed water resources. Its actions include dramatically reducing water consumption within its operations as well as improving wastewater treatment, but that’ s only part of it. Through the PepsiCo Foundation, the company also invests millions in water management and water quality improvements for local farmers and communities.
Ecosystems and Communities
Pepsico seems intent on setting a gold standard for the bottling industry, but it is certainly not alone. Coca-Cola has been improving its “water footprint” with river restoration projects, for example, which can broadly benefit entire regions and communities. This brings us around to the basic concept behind ecosystem valuation. When Al Gore wrote Earth in the Balance almost 20 years ago, he described a system in which environmental consequences could be defined in terms of their impact on the economy. A few years later, the U.S. Department of Agriculture and several other agencies funded a website through the University of Maryland called ecosystemvaluation.org, which provides budget-wary government program managers with a cost-benefit tool for investing public money in environmental projects.
Ecosystem Valuation and Corporate Social Responsibility
Because ecosystem valuation is a public policy tool as well as a profit-making tool, its potential for creating constructive public-private partnerships is significant. That’s clearly the case when it comes to preserving renewable resources such as water, food, wildlife (as in wild-caught fish), and livestock. Unfortunately the incentives are not as strong in the case of non-renewable resources, specifically fossil fuels. Once a coal mine or oil field is tapped out, it becomes of little if any value to the company, and may even become a significant liability. Conforming to government regulations or enhancing a company’s public image are good enough reasons to perform at least perfunctory remediation work, but they are no substitute for direct financial incentives.
Image: Creek by HeyRocker on flickr.com.