When natural capital runs low…

New report sets out business risks of ecosystem decline Few businesses could survive without adequate supplies of water, food, fuel or timber, yet - oil prices excepted - the prospect of such essential inputs going scarce hardly figures in day-to-day boardroom discussions. But according to a new report from the UN-led Millennium Ecosystem Assessment, that neglect could prove catastrophically costly to enterprises across the globe. It argues that two-thirds of the natural services which business takes for granted - including the relatively cheap, or even free, provision of water, food and fossil fuels, control of pests and pathogens, renewal of fertile soil and flood control - are being degraded at unsustainable rates by human activity. “Ecosystem services that are freely available today will cease to be available or become costly in the near future. The higher costs that primary users may face will be passed downstream to secondary and tertiary industries and will transform the operating environment of all businesses.” Whether or not a business directly uses natural resources, these trends could affect supply chains, access to markets, competitive dynamics, and corporate reputation. Loss of ecosystem services, the report adds, will have a major knock-on effect on business operating conditions, “influencing customer preferences, stockholder expectations, regulatory regimes, governmental policies, employee wellbeing, and the availability of finance and insurance”. And global environmental degradation is proceeding so fast that there may be little warning of such a disastrous loss, leaving no time for businesses to adapt. The report, entitled Ecosystems and Human Well-being: Opportunities and Challenges for Business and Industry, is the fourth produced by the Millennium Ecosystem Assessment, a high-level, international initiative employing 1,360 experts worldwide, with partners including UN agencies and the World Bank. Despite its gloomy assessment of ecosystems’ health, the report concludes that there is still time to slow the decline, and that business is well placed to take a lead by implementing existing best practice and developing new technologies. “New business opportunities will emerge as demand grows for more efficient ways to use ecosystem services, mitigate impacts or track and trade ecosystem services,” it states. New technologies are already available in the food, forest products, energy and waste management sectors, it notes, identifying ‘low or zero till’ methods of agriculture, super-efficient irrigation technologies, agro-forestry, waste conversion, aquaculture and ecotourism as major future growth areas for business markets. The findings were welcomed by leading US companies who already take sustainability issues seriously, including Unilever and DuPont. Its chief sustainability officer, Linda Fisher, said the report “provides important guidance, not only for how we look at our current business, but how we seek new business opportunities associated with our mission of sustainable growth”. - Polly Ghazi

20 September 2005

Polly Ghazi