Business Perspective on Ecosystem Services
Corporate Ecosystem Valuation
Didier Nootens – Global Product Manager Environmental Studies at SGS
• SGS
• WBCSD
• Definitions
• Drivers for CEV
• CEV guide
• Method overview
• Business case
• Resources
• Discussion
Contents
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ASIA PACIFIC
133 Offices
230 Laboratories
SGS is the world’s leading inspection, verification, testing and
certification company.
Over 1000 offices and laboratories operating in 140 countries
70,000 employees (3,500 in Environmental Services)
Active member of WBCSD
EUROPE
410 Offices
120 Laboratories
NORTH AMERICA
84 Offices
100 Laboratories
AFRICA & MIDDLE EAST
128 Offices
75 Laboratories SOUTH AMERICA
90 Offices
65 Laboratories
SGS GROUP
WORLD-WIDE
SGS SERVES ALL INDUSTRIES AND DELIVERS TRUST
Environmental services including :
Field measurement, sampling, analysis, interpretation, modelling, data
management
Environmental (&Social) Impact Assessments
Life Cycle Assessments (Carbon, Energy, Water footprint)
Environmental Site Assessments (Contaminated land, hydrogeology, asbestos
survey, Indoor Air Quality, Industrial Hygiene, etc.)
Risk Assessment (Hazop, QRA, Occupational H&S…)
Air & Odour measurements and dispersion modelling
Biodiversity studies
Noise & vibrations
…
WBCSD members
5 5
Regional Network
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BCSD El Salvador
BCSD Argentina
PBE (Philippines)
United States BCSD
EpE (France)
BCSD Thailand
BCSR Malaysia
BCSD Zimbabwe
BCSD Mexico
BCSD Honduras
Vernadsky Foundation
(Russia)
BCSD Croatia
uniRSE (Nicaragua)
BCSD Taiwan
BCA (Australia)
BCSD Brazil
BCSD Colombia
respACT BCSD Austria BCSD
United Kingdom
BCSD Mongolia
New Zealand
BCSD
APEQUE (Algeria)
FE BCSD Spain
FFA (Spain)
Korea BCSD
AEEC (Egypt)
BCSD Portugal
Peru 2021
BCSD Ecuador
Excel Partnership (Canada)
NHO (Norway)
FEMA BCSD Mozambique
TERI BCSD India
BCSD Kazakhstan
Nippon Keidanren
(Japan)
CII (India)
CentraRSE Guatemala
AED (Costa Rica)
BCSD Bolivia
BCSD Paraguay
BEC (Hong Kong)
BCSD Hungary
Danish BCSD
DERES (Uruguay)
BCSD Pakistan
Curaçao BCSD
Business Europe
RBF (Poland)
BCSD UAE
China BCSD
NBI (South Africa)
BCSD Turkey
econsense (Germany)
Acción RSE (Chile)
SEV-BCSD Greece
SumaRSE (Panama)
CGLI (Canada/USA)
BCSD Vietnam
Indonesia BCSD
Centre for CSR Dev. (Ukraine)
BCSD Sri Lanka
Maala Israel
Czech BCSD
Ecosystems, ecosystem services & biodiversity
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provides
wood
stores
carbon
cleans water
controls
erosion
Biodiversity
Definitions: ecosystem services & biodiversity
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Ecosystem Functional unit composed of living (e.g. plants, animals, micro-organisms) and non-living environments
e.g. forest, mountain, marine, inland water (rivers, wetlands)
Ecosystem services
Benefits society and business obtain from ecosystems / “goods and services of nature”
e.g. freshwater, food, fiber, climate regulation, pest and flood control
Biodiversity
Variability among living organisms
– within species – between species – between ecosystems
Provisioning Goods or products produced by ecosystems
Regulating Natural processes regulated by ecosystems
Cultural Non-material benefits obtained from ecosystems
Types of ecosystem services
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Supporting Functions that maintain all other services
Business impacts on ecosystems and ecosystem services
Business depends on ecosystems and ecosystem services
Ecosystem change creates
business risks and opportunities
Impact & dependence
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€ 1.35 trillion / year: minimum estimate of natural capital loss, just from deforestation
Approx total GDP of UK or France in 2010
US$ 190 billion / year: contribution of insect pollination to agriculture output
Approx. 8 times Walmart’s 2010 total operating income
Source: The Economics of Ecosystems and Biodiversity TEEB for Business 2010
Value of ecosystems
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Drivers for Corporate Ecosystem Valuation
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Business
What the Guide is A framework for improving corporate decision-making by
valuing ecosystem services A set of resources to navigate through related jargon and
techniques
What the Guide is not X A price list of biodiversity & ecosystem services X A calculator to “crunch numbers” X A stand-alone methodology
Guide to Corporate Ecosystem Valuation
(CEV)
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1. Measure, manage and mitigate risks and impacts
2. Improve decision-making by undertaking corporate ecosystem valuation to quantify business risks and opportunities
3. Innovate and help develop new markets for ecosystem services and eco-efficient goods, services & technologies
4. Encourage suppliers & purchasers to adopt best practices
5. Enter into local partnerships to address on-the-ground issues
6. Promote “smart” ecosystem regulation that leverages market forces and business solutions that halt degradation and “levels the playing field” for all
How can business respond to their
ecosystem-related issues?
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• Save costs – e.g. cheaper & more effective waste management options
(DuPont)
• Reduce taxes – e.g. gain deductions in Federal taxes (Alleghny Power)
• Get new revenue streams – e.g. implement a fee-to-access program for recreational users
of unused lands (Potlatch Corp)
• Assess liability & compensation risks – e.g. calculate oil spill natural resource damages to be used in
courts of law (ExxonMobil)
and more…
How CEV helps improve decision-
making and…
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Screening Methodology
Guide structure: 2 parts
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GO /
NO GO
decision
to
continue
Before using CEV, ask yourself: Are your impacts & dependencies on
ecosystem services significant or material?
Do you need CEV to make a decision?
Is there a mandatory requirement?
Part 1: Do you need to conduct a CEV at all?
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If there is a business case to
continue – GO to Part 2
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Part 1: The business case for CEV – Potentially
relevant to all businesses
Hierarchy of valuation approaches
19 Source: P. ten Brink as cited in TEEB – an interim report (2008)
Monetary
Quantitative
Qualitative
Monetary values not always available
or required
Valuation techniques to use
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Note: many values highly context specific:
Requiring specific valuation techniques - or adjustments to Benefit Transfers.
Part 2: Stages to undertake a CEV exercise
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5) 5)
Embedding
embed the CEV approach within company processes & procedures
Post valuation
4) 4)
Application
use & communicate valuation results to influence internal & external decision-making
Valuation
3)
Valuation
3)
Valuation
actual valuation: may be qualitative, quantitative and/or monetary
2)
Planning
2)
Planning
develop suitable plan to undertake valuation effectively
Preparation
1)
Scoping
1)
Scoping
define scope for valuation exercise, using checklist of questions
1. Define the business “aspect”
2. Establish the environmental baseline
3. Determine the physico-chemical changes
4. Determine the environmental changes
5. Assess the relative significance of ecosystem services affected
6. Monetize selected changes to ecosystem services
7. Identify internal and external benefits and costs
8. Compare benefits and/or costs
9. Apply sensitivity analysis
Valuation (Stage 3)
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Road Testers
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Example : Veolia Environment road test
Aim of case:
Trade-off analysis comparing four land management options (three energy crop scenarios using pumped groundwater).
Compare recreation & non-use values of biodiversity & landscape changes. Plus energy & farm crop yields, carbon etc.
Approach to valuing biodiversity:
Benefit transfer (BT) unable to differentiate subtle scenario changes
So, used ‘Quasi’ contingent valuation WTP survey:
Explained scenarios ‘with and without’ using photos and photomontages describing biodiversity & landscape changes (i.e. ‘bundled’ & high level).
Interviewed 124 site visitors & 83 general public (West and East Berlin)
Did use BT to evaluate ‘maintain option’ (but NOT feasible option).
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Veolia road test – WTP results
Visitor WTP for mixed crops = €4.80/adult/yr for 1,000 unique visitors/yr
Non-use WTP for mixed crops = €3.80 and €0.06/adult/yr (west & east respectively) for approx 1.5 million adults in both locations.
BT assumed €10/adult visitor/yr & €2.50/adult Berliner/yr
(based on adjusted values from other WTP studies in Berlin & Germany)
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Qualitative assessment of relative values
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Resources available on wbcsd.org/web/cev.htm
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Reports & guide Additional
resource notes
•Concepts
•Selection &
application of
techniques
PPT packs
FAQ
Road tester summaries
WBCSD is “operationalizing” TEEB at the company level WBCSD was editor of chapters 2 and
4 in TEEB for Business (D3) WBCSD will be involved in TEEB for Business Coalition
– 1st meeting 27 Feb in London, hosted by ICAEW
The Economics of Ecosystems and
Biodiversity (TEEB) links
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• CEV can help business manage risk and consider new business opportunities
• Valuing these impacts and dependencies helps business make better decisions
• Ecosystem valuation will increasingly be considered by governments, finance sector and business-to-business customers
• CEV process is complementary to other business tools (e.g. ESIAs, LCAs) • Don’t use ecosystem valuation if you don’t need to – it can be resource
intensive. And use methodology that best suits needs & decision you want to make.
• CEV is ideal approach to ensure companies can align with and deliver “green growth”: – Evaluate and justify green investments – Identify energy and natural resource efficient solutions – Prepare for new regulations, markets and fiscal policies – Evaluate distributional impacts
Reflections / questions for discussion
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“We see the value of
ecosystem valuation.”