New accounting tool tallies 'ecosystem services'
Scott Black
New accounting tool tallies 'ecosystem services' (05/03/2011)
Jenny Mandel, E&E reporter
Pollinating insects contribute $190 billion per year to the global economy -- about eight times the total operating income of Wal-Mart Stores Inc. in 2010 -- and their contribution, along with other crucial functions provided by natural ecosystems, should be accounted for in business decisionmaking.
So argues a new framework on corporate ecosystem valuation published by the World Business Council for Sustainable Development (WBCSD) that aims to help companies take stock of the resources they use and their contribution to the corporate bottom line.
"Biodiversity loss and ecosystem degradation are continuing to escalate, thereby putting business at risk, but if managed properly, [they] can be transformed into new opportunities," WBCSD President Björn Stigson said in launching the framework last month in Geneva.
Corporate ecosystem valuation, or CEV, "allows business to fully recognize and value ecosystems and the services they deliver," Stigson said.
The term "ecosystem services" covers a broad swath of benefits that accrue from the natural environment including filtering dirty water, providing flood control, dispersing pollutants, providing naturally occurring resources like minerals and the genetic basis for farmed resources like crops, and serving up recreational and spiritual opportunities.
The new framework, which was developed by WBCSD over 18 months along with consulting group Environmental Resources Management, the International Union for Conservation of Nature, PricewaterhouseCoopers and the World Resources Institute (WRI), is designed to help willing participants account for those benefits and assess how they play into business decisionmaking.
The framework builds on a previous tool developed by WRI, WBCSD and the facilitation group Meridian Institute that they say has been used by more than 300 companies since 2008 to tally their exposure to ecosystem-related risks and opportunities.
The new approach was road-tested by more than a dozen companies that have endorsed the roadmap, including mining giant Rio Tinto, forest product group Weyerhaeuser, Italian oil and gas company Eni, South African utility Esko, and manufacturer Hitachi.
"We see that CEV can strengthen business performance by considering social benefits, sustaining revenues, reducing costs, revaluing company assets and determining levels of liability and compensation," the group of early testers said in a joint statement.
WBCSD officials say the framework does not tell businesses how to carry out an ecosystem valuation, nor does it put values on particular services.
Rather, it can help companies decide if they might benefit from carrying out a comprehensive assessment and lays out a process of scoping, planning and evaluation with further advice on how the results can be applied to change companies' "business as usual" processes.
The framework argues that CEV can help companies save money, find new revenue streams from underutilized resources, reduce their tax burdens, assess liabilities and gauge environmental risk, among other benefits.
Another potential upside of undertaking an assessment, the report says, is if companies can use the results of a formal ecosystem valuation to argue a case with regulators, for example that taking certain conservation steps should allow the company to charge users an additional fee.
But it acknowledges that one factor in whether businesses should take the approach is the range of mandates set by various levels of government that require some form of reporting.
In publishing the evaluation tool, the groups behind it said they aimed to develop a system that would cater to the needs of business. That would set it out from among an increasing number of such frameworks that have emerged over recent years, they said, each of which with a slightly different perspective.
This tool was specially designed to meet the requirements of a study, the Economics of Ecosystems and Biodiversity (TEEB) report, released by "G-8 + 5" group of environment ministers at last year's U.N. Convention on Biological Diversity, they said (ClimateWire, Oct. 28, 2010).
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Scott Hoffman Black
Executive Director
The Xerces Society for Invertebrate Conservation
Chair
IUCN Butterfly Specialist Group
The Xerces Society for Invertebrate Conservation
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The Xerces Society for Invertebrate Conservation is an international nonprofit organization that protects wildlife through the conservation of invertebrates and their habitat.
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