Environment and sustainability news and comment CCB 114
November 19, 2010
In last month’s edition of CCB, we reported that biodiversity now occupies a similar position in public debate to that enjoyed by climate change at the peak of its popularity in 2007. McKinsey Global Survey results tipped biodiversity as the next big issue to occupy the public spotlight.
And it seems they were right; October’s Convention on Biological Diversity in Nagoya, Japan has served to propel the subject of biodiversity even further up the international agenda, and into the mass media. 2010, the United Nation’s International Year of Biodiversity, has seen unprecedented attention devoted to the topic.
Clearly, for biodiversity, the time is now. But where is business in this picture?
With top companies apparently responsible for $2.15 trillion worth of global environmental damage in 2008 alone, clearly the private sector needs to be at the heart of these conversations. And with the correlation between biodiversity and economic value increasingly highlighted, there are positive signs that such links are beginning to be made.
The Convention in Nagoya saw the release of two reports emphasising the enormous economic importance of biodiversity, not only in terms of service provision on a national scale, but also in terms of continuing business profitability. By highlighting the bottom line financial risks, it seems that biodiversity has finally succeeded in grabbing the attention of the corporate world.
But will this commitment retain momentum once the spotlight provided by events in Nagoya begins to fade? Is biodiversity simply ‘the next big issue’ – another fad which will falter and disappear as other trends become more fashionable? To avoid this, biodiversity needs to become embedded in the way environmental and sustainability issues are understood by all companies, not just those in natural resource-dependent sectors who are particularly vulnerable to ecosystem decline. Only time will tell whether the attention of the past few months has been enough to ensure that the International Year of Biodiversity has a lasting impact on the way businesses pursue long-term, sustainable success.
Clare Battle has an MSc in International Politics. She is currently on an internship at Corporate Citizenship. Contact her on clare.battle@corporate-citizenship.com
Natural resources exhausted at alarming rate
WWF’s 2010 Living Planet report has revealed that humanity’s demands on natural resources are sky-rocketing to 50% more than the earth can sustain. The biennial report, which measures the health of almost 8,000 populations of more than 2,500 species, shows that our demand on natural resources has doubled since 1966 and we are currently using the equivalent of 1.5 planets to support our activities. The Global Index used in the report also shows that while there has been some promising recovery of species’ populations in temperate areas, thanks in part to greater conservation efforts and improvements in pollution and waste control, tracked populations of freshwater tropical species have fallen by nearly 70%. The tropics have also been hit hard, showing a 60% decline in less than 40 years.
A study released by the UN-backed Principles for Responsible Investment (PRI) and the UN Environment Programme Finance Initiative (UNEP FI) calculates that the global environmental damage caused by human activity in 2008 represented a monetary value of $ 6.6 trillion, equivalent to 11% of global GDP. The study, an initial effort to quantify in monetary terms the environmental harm caused by business and the possible future consequences for investor portfolios and company earnings, estimates that in 2008 the World’s top 3,000 public companies were responsible for $2.15 trillion worth of global environmental damage: one third of the total. Utilities, oil and gas producers, and industrial metals and mining were found to be the most environmentally damaging business sectors.
An international assessment showcasing the enormous economic value of forests, freshwater, soils and coral reefs, as well as the social and economic costs of their loss, has put the economic importance of the world’s natural assets firmly on the political radar. The two-year study by The Economics of Ecosystems and Biodiversity (TEEB), which has involved hundreds of experts from around the world, was launched at the Convention on Biological Diversity’s 10th Conference of Parties meeting in Nagoya in October. The TEEB report calls for wider recognition of nature’s contribution to human livelihoods, health, security, and culture by decision-makers at all levels, and in particular promotes the demonstration, and where appropriate, the capture of the economic values of nature’s services. Countries such as India have already announced plans for implementing the economic valuation of their natural capital as well as the value of nature’s services in decision-making.
Bottom Line Financial Risks from Biodiversity Loss
According to a new CEO Briefing by the UN Environment Programme (UNEP), the risks to investments from biodiversity and ecosystems loss is now higher than that from international terrorism and almost on a par with extreme weather events. Demystifying Materiality: Hardwiring Biodiversity and Ecosystem Services into Finance was launched at the UN biological diversity convention meeting in Nagoya, Japan, and argues that overexploitation of natural resources poses a reputational and financial risk for companies. Companies vulnerable to biodiversity and ecosystem decline include those in natural resource-dependent sectors or ones in sectors that operate in ecologically rich and sensitive areas such as, fisheries; forestry; mining and metals. Achim Steiner, UN Under-Secretary General and UNEP Executive Director, said: “The kinds of emerging concerns and rising perception of risks underlines a fundamental sea change in the way some financial institutions—alongside natural resource dependent companies- are now starting to glimpse and to factor in the economic importance of biodiversity and ecosystems.”
US sustainable business spending to double by 2014
The US sustainable business market will double from $28 billion in 2010 to $60 billion in 2014, according to a new report from Verdantix. Based on an analysis of 1,833 firms with US revenues of at least $1 billion, the study defines sustainable business spend across 29 sustainability initiatives, including spending on energy efficiency, carbon management, sustainability strategy, risk management, cleantech innovation, sustainable operations, human capital investments and industrial emission reductions. The report predicts that, over the 2009 to 2014 period, power utilities and automotive firms will increase spending at a compound growth rate of 24%, high-tech engineering at 22% and industrial engineering at 21%. By contrast, compound growth rates for banks and retailers will reach just 14% over the 2009 to 2014 period and media and insurance firms just 15%.
Property industry launches first common approach to measuring sustainability
On 15 October, an alliance of leading property organisations launched the first industry-wide guide on how to measure and report on the sustainability of buildings. The Green Property Alliance report Establishing the Ground Rules for Property provides investors and tenants with industry-agreed metrics that can be used to measure and compare energy use – and its associated greenhouse gas emissions – water use and waste generation in commercial buildings. The paper also makes recommendations on how companies can report both the total and the relative change in the sustainability performance of property portfolios as they grow and contract over time. The Alliance argues that common metrics are vital to enable like for like comparisons of property to be made, whether it be for corporate reporting, identification of cost savings, compliance with government regulation or even for the undertaking of valuations.
EU Ministers have voted in favour of new EU rules to allow Member States to charge an additional levy to cover the cost of air and noise pollution. The proposal will enable Member States to better manage problems of congestion, with a new flexibility to differentiate the charges applied to heavy lorries at different periods of the day. The move comes as part of a much broader drive to create a “fair financial” framework for transport where prices for the different transport modes reflect the real costs to society and the taxpayer. Currently, existing toll rates vary typically between 15 and 25 cent per kilometre depending on the type of lorry and the network. The new Directive would de facto authorise an increase of toll rates, if Member States decide to do so, of around 20- 30% i.e. on average 3-4 cents per Kilometre.
Timberland Commits Five Million Trees in Five Years
As part of their global reforestation efforts, the Timberland Company has pledged to plant “five in five” (five million trees in five years). To engage a broader audience in its reforestation efforts, Timberland has also launched a new “TimberlandEarthkeepersVirtualForest” Facebook application; by creating a virtual forest on Facebook, consumers can help Timberland plant additional trees above and beyond the “five in five” commitment.
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