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Presented to: Engaging Stakeholders Members October 2010

The Biodiversity Challenge for Business

THE BIODIVERSITY CHALLENGE INTRODUCTION

-  2010 is the International Year of Biodiversity. -  In October, governments will meet to review

international target to reduce rate of biodiversity loss at global, regional and national levels as a contribution to poverty alleviation and to the benefit of all life on Earth.

-  The target has not been met – mainly because of the lack of traction in mainstreaming biodiversity into business and poor public policy.

This presentation: -  Gave an overview of the state of biodiversity and

ecosystem services; -  Profiled initiatives underway; and, -  Ended with next steps for businesses.

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Context

Presented by Jennifer Biringer biringer@sustainability.com

THE BIODIVERSITY CHALLENGE INTRODUCTION

-  Most cacao is based on one strain, and one that is not very stable – it has been plagued by serious losses due to pests, disease, and susceptibility to drought. Fungal diseases can destroy cacao pods and wipe out 80% of the crop. It causes an estimated $700m in losses each year.

-  Despite our love of chocolate it turns out cacao is one of the least researched crops.

-  Mars – seeing a supply security nightmare – partnered with IBM, the USDA, and universities to produce a free map of the genome.

-  Findings will not benefit Mars’ bottom line initially, but will allay supply worries in the future.

-  It will boost yields and secure livelihoods of 6.5 million farmers in Africa, South America and Asia.

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First, a biodiversity story

THE BIODIVERSITY CHALLENGE INTRODUCTION

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All businesses depend on biodiversity

The world loses between €1.35 trillion and €3.10 trillion-worth of natural capital every year… from deforestation alone

Biodiversity is seen as realm of government , but the rate of loss is so significant that we cannot expect regulations alone to reverse the trend.

THE BIODIVERSITY CHALLENGE INTRODUCTION

Biodiversity, ecosystems and ecosystem services (BES) -  ‘Biodiversity’ is short-hand for ‘biological diversity’: “The variability among

living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems” (UN CBD)

-  ‘Ecosystems’ are one component of biological diversity, as noted also within the Millennium Ecosystem Assessment (MA 2005), which identifies an ecosystem as “a dynamic complex of plant, animal, and microorganism communities and the non-living environment interacting as a functional unit”.

-  ‘Ecosystem services’ are the benefits people receive from ecosystems. These include: •  Natural resources •  Regulating services •  Supporting services •  Non-material or cultural benefits

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Agreeing on common definitions

THE BIODIVERSITY CHALLENGE INTRODUCTION

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Biodiversity is a “meta” issue

THE BIODIVERSITY CHALLENGE INTRODUCTION

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Ecological overshoot

-  Published last year in the journal Nature, this graphic shows where we have already exceeded the safe operating space for 9 global systems.

-  The rate of species loss in recent decades is estimated to be 100-1,000 times faster than the “natural" rate.

Implications for Business

THE BIODIVERSITY CHALLENGE IMPLICATIONS FOR BUSINESS

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Difficulties in addressing issue

-  From The Sustainability Survey 2009 (GlobeScan and SustainAbility)

-  Suggests limited awareness of the business risks posed by biodiversity loss.

-  Some countries are more concerned and have begun to respond. Noticeably Latin America, Africa, and Asia Pacific show business leaders on the front lines.

THE BIODIVERSITY CHALLENGE IMPLICATIONS FOR BUSINESS

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Business risks are increasing

Reputational risk

Reputational risk (moratoria and rationing)

Operational risks (supply security)

THE BIODIVERSITY CHALLENGE IMPLICATIONS FOR BUSINESS

-  This benchmark was done specifically for companies with agricultural supply chains, with a specific focus on Brazil.

-  Ranked against criteria relating to competitive advantage, governance, policy and strategy, management and implementation, and reporting, you see that Foster’s, SABMiller, M&S, and Unilever stand out.

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Investors are taking interest

THE BIODIVERSITY CHALLENGE IMPLICATIONS FOR BUSINESS

-  Early mover advantage still possible in most of these markets

-  Opportunities in developing new technologies; reduce resource intensity, reduce degradation, increase supply chain resilience

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The opportunities are immense

Source: The Economics of Ecosystems & Biodiversity, www.teebweb.org

THE BIODIVERSITY CHALLENGE IMPLICATIONS FOR BUSINESS

-  Efforts to tap into “3.8 million years of R&D” and some 10 million species.

-  Companies as diverse as Boeing, Ford, General Electric, Herman Miller, HP, IBM, Kraft, Nike, and Patagonia are bringing biologists into their design labs to build more sustainable products and systems.

•  Studying the way human lungs work to develop ways to capture CO2

•  Learning from prairies how to grow food more sustainably •  Innovations in sustainable packaging (Patagonia and

others) •  Inspired from plants in dusty environments for self-cleaning

surfaces •  Inspiration for the design of the Japanese bullet train

(Kingfisher)

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Opportunities inspired by nature

THE BIODIVERSITY CHALLENGE IMPLICATIONS FOR BUSINESS

-  We will not see the scale of change needed without underlying public policies, to frame ecosystem use and management, and support business action.

-  Companies are prime engines of innovation. Most important is the definition of property and tenure rights as the basis for effective stewardship as well as incentive structures.

-  Any new regulatory framework needs to level the playing field for all ecosystem users.

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Smart public policies are crucial

Source: The Economics of Ecosystems & Biodiversity, www.teebweb.org

THE BIODIVERSITY CHALLENGE IMPLICATIONS FOR BUSINESS

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What can you do?

Source: The Economics of Ecosystems & Biodiversity, www.teebweb.org

Company Examples

THE BIODIVERSITY CHALLENGE EXAMPLES FROM COMPANIES

-  Rio Tinto framework assesses biodiversity value of land holdings and links to management actions

-  Piloting biodiversity offsets in Madagascar, Australia, North America

-  Reporting relative biodiversity value of mining sites (low, medium, high), land in proximity to biodiversity rich habitats, and number of plants and animal species with conservation significance

-  AEP and Bristol-Myers Squibb adopt a similar approach

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Net positive impact example

THE BIODIVERSITY CHALLENGE EXAMPLES FROM COMPANIES

-  Unilever showed a structured way of building brand value and addressing barriers to sustainable sourcing through its Brand Imprint tool.

-  Has policy commitments to ‘minimize any adverse effects on soil fertility, water and air quality, and biodiversity from agricultural activities’.

-  Sustainable agriculture standards provide guidelines for farmers (adapted by companies in a number of other sectors).

-  The company has produced biodiversity action plans for two sites and a farmer-focused tool to assist farmers in addressing sustainability indicators, including biodiversity.

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Unilever’s sourcing commitments

Further Resources

THE BIODIVERSITY CHALLENGE – FURTHER RESOURCES

-  The Biosphere Economy (Volans, Tellus Mater, Global Initiatives): http://www.biosphereeconomy.com

-  The Economics of Ecosystems and Biodiversity (UNEP): http://www.teebweb.org/ForBusiness

-  Corporate Ecosystems Review (WRI, WBCSD, Meridian Institute): http://www.wri.org/publication/corporate-ecosystem-services-review

-  The Ecosystem Services Benchmark (NVI, UNEP-FI, FFI): http://www.naturalvalueinitiative.org/

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