The Biosphere EconomyScaling up Market Solutions to Ecosystem Challenges

WEC/Volkswagen Roundtable, May 20-21, 2010

Alejandro LitovskyDirector, Pathways to Scale, Volans

The Amazon pumps 8 trillion litres of water a year into the atmosphere

Seeing differently: Eco-Utilities

Biodiversity’s role in sustaining Nature’s services

Source: The Value Web

An inflection point: Planetary overshoot

‘Vision 2050’World Business Council for Sustainable Development

• CEOs of 29 global companies

• A future where markets adequately price the ecological costs of doing business.

• We are becoming more acutely aware of our dependence on natural systems.

• Companies include Alcoa, Boeing, Syngenta, Sony, E.ON, Proctor&Gamble, Duke Energy, Toyota, Infosys and Volkswagen.

• An Economy aligned with naturalcapital

• Role of market pioneers and their pathways to scale

• A collaborative agenda 2010-2020

The Biosphere Economywww.biosphereeconomy.com

New DashboardsPlanetary Boundaries

Source: Stockholm Resilience Centre

New Dashboards 2Ecological Footprint

Source: Global Footprint Network

The Biosphere Economy: 4 Trends

• 1998 Yangtze floods: $20 billion in losses, 250 million people affected. Chinese government forbids land degradation in upper basin.

1. Business Leadership:From Externalities to Corporate Valuation

• “It is only a question of time until a financial analyst, looking at the valuation of companies begins to consider (knowingly or not) the ecological factors that threaten their business.”

Chris Knight PriceWaterhouseCoopers LLP

• 35 financial institutions with $3.5 trillion in assets back the disclosure request of the Forest Footprint Disclosure Project. 200 companies exposed to forest-risk commodities (e.g. leather, palm oil, beef)

2. Operations and Supply Chains:Ecological Footprint and Shareholders

• “You can’t expect companies to run a series of parallel systems for water, carbon, forests, etc.”

Richard Burrett, Earth Capital Partners

• Shareholders backing disclosure requests.• Funds incorporating ecological footprint metrics.• Carbon markets $11 billion in 2005 > $170 billion in 2010 > $3.1

trillion in 2020.• Other markets: Biodiversity offsets, water services, ‘forest carbon’.

3. Markets and Finance:Markets for Ecosystems Services

• “Investors are switching to this agenda as they are beginning to understand the genuine long-term benefits and liabilities associated with capital allocation decisions.”

Jason Scott, EKO Asset Management Partners

4. Nature-Driven Innovation:Biomimicry

Source: The Biomimicry Institute

Scaling up the Biosphere EconomyWorking with innovators

• Business Leadership: What’s the company’s story about natural capital and leadership in a Biosphere Economy?

• Operations and Supply chains: What does the zero footprint vision look like? convergence of metrics and mgt systems?

• Investment: How to factor in natural capital into new portfolio and long-term risk models?

• Nature-driven innovation: What would radical innovation in business models, design and products look like?

See: www.biosphereeconomy.com

Alejandro Litovsky

Director, Pathways to Scale

alejandro@volans.com

www.volans.com

Thank you

‘Pathways to Scale’ Model