Many industries enjoy a wide range of benefits from the resources and processes supplied by nature. Forests supply timber and wood fiber, purify rivers and streams, and yield genetic resources. River systems provide freshwater, power, and recreation. Coastal wetlands filter waste, mitigate floods, and serve as nurseries for commercial fisheries.
Businesses have started to recognize these benefits - known as ecosystem services (ES) - as an important consideration for one simple reason: they depend on them to be successful. Contingent on the industry, that dependence can vary. Below are some examples of why companies are incorporating ES into their business plans.
An ES approach to environmental management has the potential to increase social license by intertwining economic development with ecological goals, in a way that has not yet been seen in Canada. By raising Canada’s environmental leadership above the status quo, there is also an opportunity to change the conversation surrounding the country’s natural resource sector and gain access to new markets. Alberta’s Premier recently stated that the best way for Alberta to gain market access for the oil and gas industry is to substantially improve its record on greenhouse gas emissions and overall environmental leadership. In a time when the industry is planning for a possible extended period of low oil prices, access to new markets may breathe fresh life into the industry.
Business disruption due to changes in the flow of ES as a result of climate change or land management practices on adjacent lands is now a real threat. Many companies that depend on the continuous flow of ES are identifying these dependencies within the company’s supply chain and quantifying the impacts should the flow of the ES slow or stop altogether. Coca-Cola is an example of a company that is planning ahead. They regularly invest in green infrastructure and conservation efforts to improve water access for downstream users. This investment not only improves the company’s social license, but it also ensures water flow for company use.
Furthermore, overlooking ES in business planning has the potential to open companies up to new risks. By not incorporating ES management directly into business strategies, companies are leaving themselves open to NGO targeting as seen when Forest Ethics ran their ‘Victoria’s Dirty Secret’ catalogue campaign. Victoria Secret eventually stopped using paper made from British Columbia and Alberta forests due to the public backlash triggered by the campaign.
Natural resource sectors have been prioritizing restoration areas and assessing how to efficiently allocate resources for a number of years. Using an ES approach to prioritization is a holistic management approach gaining ground. It allows for program level thinking, where a basket of goods is accounted for, rather than focusing on just one objective at a time. This type of management is being applied more often, as seen in recent pipeline approval processes and regulatory frameworks.
Lastly, some companies have used ES as a new source of revenue. An inventory assessment of ES provided by natural capital owned by a company may reveal opportunities to monetize these benefits and translate them into new sources of revenue. For example, a US-based forestry company, recognized an opportunity to sell recreational access permits and leases for popular recreational areas on their land base used by people to fish, hike, and hunt.
ES approaches are already being addressed in land-use planning in Alberta. If the Alberta government implements a market-based approach to manage competing land uses, an ES approach to management will likely outperform traditional land management in an offset market. The opportunity exists right now to engage government and assist in policy development that will protect and restore the ES that multiple industries depend on.
*This blog was originally posted on the Silvacom Website Dec 14, 2015.