A framework for corporate action on biodiversity and ecosystem services 2 A report by the United Nations Global Compact and the International Union for Conservation of Nature (IUCN), with support from the Colombia Global Compact Local Network About the United Nations Global Compact Launched in 2000, the United Nations Global Compact is a call to companies around the world to align their strategies and operations with ten universal principles in the areas of human rights, labour, environment and anti-corruption, and to take action in support of broader UN goals. Through the development, implementation, and disclosure of responsible corporate policies and practices, business can help ensure that markets advance in ways that benefit economies and societies everywhere. With more than 10,000 signatories in over 135 countries, it is the world’s largest corporate responsibility initiative. www.unglobalcompact.org About IUCN IUCN, International Union for Conservation of Nature, helps the world find pragmatic solutions to our most pressing environment and development challenges. IUCN works on biodiversity, climate change, energy, human livelihoods and greening the world economy by supporting scientific research, managing field projects all over the world, and bringing governments, NGOs, the UN and companies together to develop policy, laws and best practice. IUCN is the world’s oldest and largest global environmental organization, with more than 1,200 government and NGO members and almost 11,000 volunteer experts in some 160 countries. IUCN’s work is supported by over 1,000 staff in 45 offices and hundreds of partners in public, NGO and private sectors around the world. www.iucn.org/business UN Global Compact Team: Gavin Power; Olajobi Makinwa; Moramay Navarro IUCN Team: Gerard Bos; Giulia Carbone; Rachel Asante-Owusu Designer: Hedie Assadi Joulaee Copyright: © 2012 International Union for Conservation of Nature and Natural Resources, UN Global Compact Citation: A Framework for Corporate Action on Biodiversity and Ecosystem Services. UN Global Compact and IUCN. 2012. Disclaimer This publication is intended strictly for learning purposes. The inclusion of company names and/or examples does not constitute an endorsement of the individual companies by the United Nations Global Compact Office. The material in this publication may be quoted and used provided there is proper attribution. The views expressed in this publication do not necessarily reflect those of IUCN or UN Global Compact. ISBN: 978-2-8317-1501-8 3 Contents Executive Summary  5 Introduction: Biodiversity, Ecosystem 6 Services (BES) and Business  Section 1: 8 The business case for action on BES  1.1 Drivers for businesses to address 8 BES: Risks and Opportunities  1.2 Corporate governance and BES action  11 Section 2: Management recommendations for 12 developing a BES strategy  Section 3: Collaboration and collective action 15 on BES  3.1 Inclusiveness and collective action  15 3.2 Involving the supply chain  17 Section 4: Setting goals and tracking performance  18 4.1 Setting goals  18 4.2 Monitoring, evaluating and disclosing 18 company performance  Conclusion  20 Glossary  22 Appendix 1: List of Working Group Members  23 Appendix 2: The BES Management 24 Strategy Checklist  Appendix 3: Suggested tools for BES management 28 4 5 Executive Summary Society relies on biodiversity and the goods and services it provides for human well-being and for the provisioning of raw materials that produce greater material welfare. Over the past 50 years, through increased population growth and climate change humans con- sumed and degraded biodiversity and ecosystems more rapidly than at any other time in human history. All businesses, regardless of their size, location or sector, depend upon and have a direct or indirect impact on biodiversity and ecosystem services (BES) through their operations, supply chains or investment choices. It is thus important for businesses to integrate BES considerations into their practices and to participate in the sustainable and equitable use and conservation of BES. To this end, the UN Global Compact and IUCN have developed this framework for compa- nies to explore the issue of BES as it relates to their activities and corporate sustainability. The overarching objective of this framework is to contribute to the integration of BES into business activities and to firmly position BES conservation among the private sector by engaging the top management of companies in the development, implementation and disclosure of BES policies and practices, in order to reduce risks, manage related impacts and seize opportunities. The framework aims to assist the top leadership of companies in understanding the BES challenge and to prompt the formulation and structuring of BES policies and practices, as part of corporate sustainability strategies that will contribute to achieving long-term profitability, as well as broader sustainability goals - including imple- mentation of UN core environmental principles and related objectives. A working group, formed by companies from different sectors, UN agencies, civil society and Academia, provided insight into what the main aspects of a framework for corporate action on BES should be and suggested relevant strategies to help companies tackle BES issues. Based on this consultative process and other initiatives such as TEEB, the UN Global Compact and IUCN identified common elements and developed 10 main recommenda- tions for the top management of companies to consider and integrate in order to enable the company to take real and meaningful steps in relation to BES. The framework consists of four sections. The first section details how companies can understand and explore their relationship with BES by reviewing the various risks and opportunities driven by business actions that impact BES. Section 2 presents key manage- ment recommendations that can shape a corporate strategy for responsible BES manage- ment. These recommendations represent core elements that should be considered during the development of a BES strategy. Section 3 of the framework highlights the importance of working with stakeholders and business partners to advance common goals and targets in relation to business activities and BES. Finally, Section 4 provides insight into how companies can monitor and evalu- ate their performance on BES issues, and disclose their results. In addition, Appendix 2 provides a BES management checklist to guide companies through the process of assessing impacts on BES, identifying risks and opportunities, and disclosing results; while Appen- dix 3 lists various existing tools and mechanisms that companies can use in implementing the six stages of the BES management strategy that is suggested in this framework. 6 Introduction: Biodiversity, Ecosystem Services and Business Biodiversity and Ecosystem Services With increasing human population and Biodiversity is the life support system of this consumption, competition for natural resources planet. Human livelihood depends on biodiver- and ecosystem services is growing and ex- sity in the form of genetic material, species and pected to become more intense in the future. ecosystems. Ecosystem services are the benefits The impacts of biodiversity loss and ecosystem obtained by people from ecosystems (see Figure 1). degradation have broad and systemic implica- Biodiversity is crucial in the provision of ecosys- tions that are connected to many of the most tem services, since the functioning of an eco- pressing challenges humanity faces today, such system and thus its ability to provide services, is as food security, and water scarcity. These is- strongly influenced by the functional and struc- sues acutely affect the most vulnerable human tural variability in species as well as the quantity populations, even further exacerbating poverty. and distribution of all three components of The loss of habitats, pollution, climate change, biodiversity (i.e. genes, species, ecosystems). Eco- the introduction of invasive species and the systems services can be local such as pollination overexploitation of natural resources all put or the provision of fresh water, others regional biodiversity under pressure. Driving forces (flood and landslide control) and still others behind these pressures include the expansion global in nature (climate regulation). Whilst there of fishing and forestry, urbanization, increased are conflicting views on the rate of species and demand for energy and water, and industrial ecosystem loss there is no doubt that this process development in general1 (see Figure 2). Although poses serious risks for human wellbeing. these activities contribute to economic develop- ment, as current and future demand for eco- 1 Millennium Ecosystem Assessment. 2005. Ecosystems and Human Well- system services increases, so too does the risk Being: Biodiversity Synthesis. Access: http://www.maweb.org/documents/ of jeopardizing the health of critical ecosystem document.354.aspx.pdf Figure 1. Types Of Ecosystem Services Provisioning Regulating Cultural Services Products obtained Benefits obtained Non-material benefits from ecosystems like: from the regulation of from ecosystems such food, fiber, fuel, genetic ecosystem processes as: cultural diversity, resources, medicines, such as climate, water, spiritual and religious freshwater, etc. disease, pest and values, knowledge erosion regulation, systems, cultural pollination, etc. heritage, recreation and tourism, etc. Supporting ecosystem services Necessary for the production of all other services. Supporting services include: Soil formation, photosynthesis, nutrient and water cycling, etc. Source: Adapted from the Millennium Ecosystem Assessment (2005). 7 services on which businesses and human well- Figure 2. Human Impact on Biodiversity and being depend. If current unsustainable trends Ecosystem Services continue, ecosystem services that are available today may become more costly or even cease to Causes be available for future generations2. The Econo- Demographic Resource Use mics of Ecosystems and Biodiversity (TEEB) has Consumption estimated the annual cost of lost biodiversity and ecosystem degradation to be about US$2-4.5 Indirect drivers of BES loss and trillion over a 50-year period3. degradation Forestry Water 2 Millennium Ecosystem Assessment. 2005. Ecosystems and Human Fishing Agriculture Well-Being: Biodiversity Synthesis. Energy Urbanization Access: http://www.maweb.org/documents/document.354.aspx.pdf Mining Transport 3 The Economics of Ecosystems and Biodiversity. Access: http://www.teebweb.org/ Industry Business and BES Pressures The relationship between business and BES is Habitat loss Over-exploitation Human Well-Being Invasive species Climate Change two-fold. On the one hand, businesses rely on the Pollution goods and services provided by BES as input for their products and processes; on the other, they Ecosystems Goods Biodiversity and Services contribute to ecosystem change by generating Species Ecosystems Regulating Supporting impacts through their core operations, supply Genes Cultural Provisioning chains or investment choices. Businesses thus have an important role to play in effectively managing BES, both to ensure that their activi- Ecosystem Processes ties do not generate negative environmental im- pacts, and also to ensure that their impacts, both Sources: Adapted from the Millennium Ecosystem Assessment direct and indirect, do not negatively affect their (2005) and the Living Planet Report (WWF, 2010) own business operations or investments. Whilst businesses from all sectors have already begun to integrate BES practices into their overall business strategies, there is more to be done (see Box 1). Box 1. Objectives of the Convention on Biological Diversity Realizing the vital importance of biological resources to economic and social devel- opment, the United Nations Convention on Biological Diversity (CBD) was opened for signature on 5 June 1992 at the United Nations Conference on Environment and Development (the Rio “Earth Summit”) and entered into force on 29 December 1993. The Convention’s three main objectives are: 1. The conservation of biological diversity, 2. The sustainable use of its components, and 3. The fair and equitable sharing of the benefits arising out of the utilization of genetic resources, including by appropriate access to genetic resources and by appropriate transfer of relevant technologies, taking into account all rights over those resources and to technologies, and by appropriate funding. The CBD has recently adopted a strategic 10-year plan (Aichi Biodiversity Tar- gets) that offers opportunities for better alignment between business strategies, the CBD’s main objectives and new or improved public policies and regulatory frameworks. It has also launched a Global Platform on Business and Biodiversity to promote markets that support nature conservation and sustainable use (http:// www.cbd.int/business/). 8 Section 1. The business case for action on BES Around the globe, companies are increasingly integrating sustainability as part of their business agendas, seeking opportunities and innovations that contribute to corporate and investor success, while at the same time delivering societal value and developing innovative and transformative solutions. Part of this sustain- ability agenda is effective environmental stewardship. The UN Global Compact has defined good environmental stewardship as the comprehensive understanding and effective management of critical environmental risks and opportunities. As companies advance corporate sustainability, it is important to ensure that their strategies are based on an environmental stewardship approach that includes the sustainable and equitable use and conservation of BES to manage related impacts and dependencies. 1.1 Drivers for businesses to address BES: and compensation costs resulting from environ- Risks and Opportunities mental disasters and malpractice judgements can Companies today face growing pressure from severely affect a company’s bottom-line, as well shareholders, investors, customers, trading as its reputation. partners, NGOs, government and the public to In addition to being aware of the risks manage and report on how they do business associated with BES, businesses also should and increasingly, on how they manage the recognize the important opportunities that exist social and environmental effects of the impacts to integrate BES conservation into their overall of their activities on BES. This pressure trans- corporate sustainability strategies, and thus lates into business drivers in the form of risks create significant added value (See Box 2). Com- and opportunities to address these impacts and panies may find the opportunity to tap into con- improve the sustainability of their operations sumer preferences by developing new products with regards to BES (See Table 1). and services, in addition to exploring revenues The failure to manage impacts and dependen- streams that may open with new green markets. cies on BES poses a wide range of risks, which Moving forward with these opportunities may can potentially affect a company’s competitive- allow companies to get ahead of regulatory ness and profitability and increase its liabilities, requirements, better assimilate the costs of be- thus threatening its long-term viability. BES-relat- coming compliant and achieve efficiency before ed risks can be operational, regulatory and le- their competitors. As the landscape of risks and gal, reputational, or market and financial. The emerging opportunities associated with BES loss or degradation of BES can affect a company’s management becomes clearer for business, com- operations by reducing productivity, disrupting panies that integrate biodiversity and ecosys- activities or limiting access to resources, resulting tem conservation into their business strategies in increased operating costs. In terms of regula- will be able to develop this into a competitive tory risks, companies may find it difficult to advantage: as they manage their resources more secure a legal or social license to operate if they efficiently, reduce risks and provide better prod- are not accountable on ecosystem management. ucts and services, they will be able to generate As a result of poor environmental practices, they sustainable business outcomes and demonstrate may also face legal or financial liabilities that corporate leadership in sustainability. can ultimately hurt a company’s reputation, de- creasing brand and shareholder value. Clean-up United Nations Global Compact,, Duke University 2010. Environmental Stewardship Strategy, http://www.unglobalcompact.org/docs/issues_doc/ Environment/Environmental_Stewardship_Strategy.pdf 9 Table 1: Business drivers for action on BES Public and private • Regulatory rules and requirements: legislation and standards governance • Public policy: economic instruments such as taxes, subsidies, cap and trade systems • Corporate strategy and principles: commitments and targets • Boardroom focus: BES performance as a proxy for management quality Non-financial • Securing both a legal and social license to operate economic benefits • Improving reputation, brand value • Delivering corporate social responsibility • Managing non-technical risks • Responding to societal concerns • Providing employee satisfaction • Becoming a preferred business-to-business partner and gaining competitive advantage • Responding to customer demand and consumer preference • Establishing good local relationships by addressing livelihood dependence • Delivering social investment and performance Financial incentives • Generating savings from investing in natural infrastructure • Gaining resource efficiency • Limiting liability and compensation claims • Avoiding project delays • Creating markets and sources of income for goods, services and technology • Increasing share price by demonstrating good HSSE performance • Meeting investor and lender requirements: i.e. IFC performance standards, Equator Principles 10 Box 2. Risks and Opportunities from BES – Examples Opportunity: Increasing Opportunity: Meeting Opportunity: Increasing company shares from product consumer preferences company profits Innovation A 2011 Union for Ethical Biotrade Through its commercial buying Philips has reported that green biodiversity survey showed that policies, Kingfisher has committed products accounted for 39 percent of 80 percent of consumers want to to source responsible timber, and their sales in 2011, with the introduc- be better informed about sourcing this strategy has resulted in a posi- tion of more than 4,000 new green practices by companies. In addition, tive impact on profits through its products. The company has invested a high proportion of consumers commercial buying policies. Sales approximately 479 million EUR in (84 percent) would stop buying of Forest Stewardship Council- green innovation and Eco-design to products if they knew the brand did certified timber have been steadily address sustainability challenges, not respect environmental or ethical increasing for the company since including materials and energy effi- practices. The 2012 survey revealed 2007 (FSC, 2010). In addition, King- ciency. In addition, they have signed that 74 percent pay close attention fisher, together with other retailers, a statement of intent to: contribute to environmental and ethical labels formed the Timber Retail Coalition to the restoration of BES in the when buying food and cosmetic (TRC) to ensure ethical standards Netherlands, reduce the impact of products, while a large majority for timber and wood products sold operations on BES, continue eco- would like to be better informed in the European Union. design to develop green products, about companies’ sourcing practices http://www.fsc-uk.org/?p=191 and work in partnership with IUCN (80 percent in western countries, 87 to explore lightning Technologies to percent in emerging countries). address disturbances to fauna. http://www.ethicalbiotrade.org/dl/ http://www.annualreport2011.philips. BAROMETER_Web_ 2012_EN. pdf com/content_ar2 011/en/sustainabil- ity_statements.aspx#section7 Risk: Jeopardizing a Risk: Securing input for Risk: Meeting investor company’s license to operate business requirements Adverse impacts on BES can dam- Stocks of North Sea cod, a popular Investors are increasingly requir- age a company’s reputation and re- food across northern Europe, have ing that companies meet certain strict its social and environmental li- been greatly reduced by intensive standards to access capital. For cense to operate. Several companies fishing and other conditions. Over- example, project sponsors must have recently requested licenses to fishing led to a major population assess impacts on BES, natural extract gold from an ecologically- collapse in the 1990’s, prompting habitats, invasive species and important area that provides most of a ban on cod fishing and jeopardiz- communities to receive financing the freshwater supply for the city of ing business for many companies. from the IFC or from the 76 private Bucaramanga in Colombia. Extrac- Stocks of other fish, including financial institutions that have tion has faced opposition from local haddock and hake, have also been adopted the Equator Principles. IFC communities and NGOs, who claim seriously depleted. Affected by this Performance Standard 6 on Social they were never consulted on the reduction, Unilever committed to and Environmental Sustainability is projects. As a result of this opposi- only purchase fish from sustainable applicable during the environmental tion, the Colombian Government has sources and partnered with WWF and social impact assessment pro- put on hold the licenses to operate to set up the Marine Stewardship cess for projects that: are located in in this area. Council (MSC). modified, natural and critical habi- http://www.semana.com/nacion/ http://www.unilever.com/Images/ tats, or potentially impact or are santurban- hasta-donde-debe-llegar- es_Unilever_FSI_bro chureII_tcm13- dependent on Ecosystem services. mineria/173144- 3.aspx 13238.pdf http://www1.ifc.org/wps/wcm/con- nect/bff0a28049a79 0d6b835faa- 8c6a8312a/PS6_English_2012.pdf? MOD=AJ PERES 11 1.2 Corporate governance and BES can be integrated into risk and opportunity as- action sessments, core operations and supply manage- Responsible management of BES begins with ment, as well as financial accounting, auditing corporate governance that integrates BES and reporting. It can be helpful for a company considerations into all aspects of management. to articulate the relevance of BES issues to its Specifically, the Board can greatly contribute to operations or products and identify which shaping and managing the company’s sustain- aspects of its impacts and dependencies on BES ability agenda and can integrate relevant BES should be prioritized for action. The follow- issues into a broader strategy of sustainable ing sections provide recommendations, a BES operating guidelines, policies and practices management checklist and a reference to tools to address social and environmental impacts that companies can use to take advantage of (Figure 3). opportunities related to BES, allowing them to As biodiversity and ecosystem services move both contribute to overall global sustainability up the corporate agenda, businesses will need and gain competitive business advantages. to start developing goals and targets for BES that Figure 3. Organizational and Issue Area Framework Global policy statement: Vision & Mission* Board & C-Suite Compliance & Issue and Area Public Policy Trend Tracking Management Identification & Advocacy, Global Consumer prefer- Systems Integration & Local Engage- ences, market-based Meet and seek to Integrate and link BES ment (Convention on approaches, exceed laws and to other relevant areas Biological Diversity, innovative products regulations (Climate change, National Biodiversity and services, etc. Water, Product Design Strategies and Action & Use, Energy, Com- Plans, etc.) munity Development) Value Chain Implementation Direct Ops and Subsidiaries, Suppliers, Consumers Transparency & Disclosure Sustainability reporting (GRI), UNGC’s Communication on Progress BES can be embedded into the overall strategies and activities of the company as suggested in Section 2 of this framework. (* UNGC principles can be considered and integrated within the mission, vision and strategies of a company) 12 Section 2. Management recommendations for developing a BES strategy Companies need to start making the connections between healthy ecosystems, their supply chain, consumer demand and the future value of their businesses. They will face varying BES-related risks and opportunities, depending on their sector and the local environmental and socio-economic context. Businesses seeking to improve their performance in relation to BES manage- ment will inevitably implement different strategies, based on their specific impacts and relative dependency on BES. Nevertheless, there are some common elements that should be present in any BES strategy, regardless of level of impact or dependency, which will enable a company to make real progress toward effec- tive management of BES issues. These common elements were identified through a consultative process and based upon other initiatives such as TEEB for Business, and are summarized in the following ten recommendations for developing a comprehensive BES strategy. 1 Identify and value the company’s depen- dencies, as well as its direct and indirect impacts on biodiversity and ecosystem services. planning for natural resources management that links local and operational site-based initiatives with the wider national or regional Take an additional step and adopt an integrated perspectives of natural resource management. reporting approach that shows impacts and dependency as an integral part of company operational and financial performance at differ- ent levels. 5 Contribute positively to local community development. Respect land rights and land-use rights of local stakeholders, safeguard livelihoods of local natural resource-dependent 2 To effectively manage impacts and depen- dencies on BES, adopt the mitigation hier- archy to avoid, minimize and rehabilitate nega- communities and involve them in decision- making. tive impacts and then offset any unavoidable residual biodiversity losses (See Box 3). Encourage the adoption of this approach throughout the 6 Ensure that the development and imple- mentation of a BES strategy includes engagement with relevant stakeholders, such supply chain. As an initial step in implement- as local communities living near the operation ing this hierarchy, prioritize implementation on site, communities whose livelihoods are derived sites of high biodiversity value. from the use of such resources impacted by operations and local government, in order to 3 Strive to set BES targets focused on achiev- ing a net positive impact or at the mini- mum no net loss of biodiversity. advance common goals and ensure that envi- ronmental as well as social needs are met. 4 Identify ecosystem linkages at the land- scape level, “beyond the fence” of the 7 Monitor, evaluate and report on biodiver- sity impacts using relevant biodiversity and ecosystem service impact indicators, and estab- operational site, and build these linkages into lish a review mechanism to build these results site-specific and supply chain operational plans. into company strategy and overall corporate Landscape-level approaches involve integrated sustainability. 13 8 Contribute to shaping public policies that will create the enabling environment for better integration of BES issues into business ac- To complement these key BES recommenda- tions, the UN Global Compact and IUCN have developed a procedural checklist for integrat- tivities, and in particular create a level playing ing BES strategies into business operations. A field for all companies. working group was established (see Appendix 1) to identify crucial steps along the procedural path- 9 Extend the BES strategy along the supply chain. Integrate requirements to safeguard BES in sourcing schemes and provide support way. Through various consultations, the work- ing group provided suggestions on how the top management of companies could integrate BES to suppliers, especially micro and small and strategies into their operations. These sugges- medium-sized operators. For companies up- tions were categorized into one of six manage- stream in the value chain, make product stew- ment stages following the main steps of the UN ardship commitments and work downstream Global Compact Management model. to promote responsibility among players along The resulting check list (available as Appendix the value chain to encourage a “holistic product 2 of this document) proves that whilst providing approach”. guidance applicable to a variety of companies may be challenging, given that companies 10 Establish partnerships with other orga- nizations (businesses, nongovernmental organizations, academia, etc.) to achieve greater operate in different contexts, there are common elements that can be used to address BES chal- lenges. Figure 4 summarizes some of the key impact beyond the company’s immediate reach steps companies should include within existing or footprint, while supporting BES policy imple- environmental management systems or as part mentation. of a BES action plan (See Appendix 2 for check list). Figure 4. BES Management Model TOP LEVEL COMMITMENT ASSESS DEFINE IMPLEMENT MEASURE COMMUNICATE AND VISION Define a pre- Identify the rela- Define the scope Implement the Measure and Communicate liminary business tionship between and goals for the BES manage- monitor impacts progress and case for BES business and BES, BES Manage- ment strat- and progress of strategies and management and assessing risks, ment Strategy egy and policies BES management engage with mainstream BES opportunities through the actions stakeholders into strategies and impacts. If company and for continuous and operations relevant, include across its value improvement focus on the supply chain chain 14 Box 3 : The Mitigation Hierarchy and Biodiversity Offsets The mitigation hierarchy is widely regarded as a best practice approach to managing biodiversity risk. According to the mitigation hierarchy, efforts should be made to prevent or avoid impacts to biodiver- sity. Following this, efforts should be made to minimize impacts, and then restore adverse effects. After these steps have been implemented, any residual negative effects should be addressed via a ‘biodiver- sity offset’ in order to achieve ‘no net loss’ of biodiversity or ‘net positive impact’ on biodiversity, where offsets take overall impacts significantly higher than a ‘no net loss’ level. Offsets are “measurable conservation outcomes resulting from actions designed to compensate for significant residual adverse biodiversity impacts arising from project development and persisting after appropriate prevention and mitigation measures have been implemented” (BBOP, 2010). The Mitigation Hierarchy Additional Net positive impact conservation actions Residual Offset Offset impact Biodiversity values Biodiversity Biodiversity Biodiversity Biodiversity impact impact impact impact Restoration Restoration Restoration Minimization Minimization Minimization Minimization Avoidance Avoidance Avoidance Avoidance Avoidance Sources: Rio Tinto and Biodjversity –Achieving results on the ground, http://www.riotinto.com/documents/Re- portsPublications/RTBidoversitystrategyfinal.pdf, BBOP (2012) http://bbop.forest-trends.org/ 15 Section 3. Collaboration and collective action on BES Increased awareness of the pressures exerted on companies to act responsibly on economic, social and environmental issues has led companies to seek active involvement and collaboration with relevant stakeholders to promote the sustain- able and equitable use and conservation of natural resources. Stakeholders are those groups or individuals that are affected by business activities and/or have the ability to affect the outcome of those activities. This encompasses a range of ac- tors, including local communities, governments, financial institutions, sharehold- ers, employees and consumers. The appropriate internal or external stakeholders to partner with may vary for a company, depending on the stage of operations. Thus, companies need to iden- tify and assess relevant stakeholders and determine which forms of collaboration may have the greatest impact at different stages. 3.1. Inclusiveness and collective action Table 2: Scale of stakeholder engagement Collaborative action between relevant stakehold- Scale or Stakeholders Engagement ers promotes inclusiveness and partnerships that scope opportunities/benefits can lead to positive impacts for those affected, Internal • Employees • Assess risks and contribute to the sustainable and equitable use operations • Shareholders opportunities of BES, decrease associated risks for the company • Share decision-making and legitimize the company’s corporate sustain- and responsibilities, increasing involvement of ability efforts. stakeholders Involving relevant stakeholders in the devel- • Increase transparency opment and implementation of a biodiversity and thus credibility of the company strategy can have many benefits, including • Build corporate values obtaining both a legal and social license to oper- and capacity of staff ate, increasing productivity, attracting ethical Local • Local • Improve reputation consumers and investors and securing future ac- community/ communities and access license to cess to natural resources. Creating partnerships authorities • Community- operate by improving based social and environmental and involving all relevant actors not only lever- organizations performance ages expertise, capacities and resources but can • Improve capacity to work with communities also lead to: sharing of innovative technologies • Reduce operational risks and practices, support for participatory decision- • Develop inclusive making and conflict resolution, advancement business models that account for BES and the of best management practices, and the building community of coalitions to shape an enabling environment National • National • Identify changes in that increases BES action and benefits for all agencies pending regulations that actors. Thus, it is important for companies to • National can affect the company identify the most strategic types of engagement government • Provide input into bodies processes designed to and the most appropriate partners. There are • National NGOs shape regulations various scales at which to pursue engagement International • Global • Receive global and action, including internal, local or regional, initiatives and recognition of efforts and national and international (see Table 2). working groups image as a responsible brand • Share knowledge of best practices and approaches 16 Within certain industry sectors, companies making use of natural resources and operating have begun collaborating together to develop in areas where they have potential impacts not standards and share best practices in order to in- only on BES but on local communities need to crease overall efficiency and reduce duplication account for the social impacts of their opera- and inconsistencies. Already various industry tions, involve communities in discussions and associations such as International Council on recognize property rights. Integrating such Mining and Metals or the Cement Sustainability considerations can reduce reputational and Initiative are encouraging members to include operational risk (See Box 2). In particular, the BES concerns as part of their core operations. objectives of the UN Convention on Biological Collaboration within sectors can also leverage Diversity objectives and the Nagoya Protocol common concerns and may lead to coalitions highlight the importance of the fair and equi- that go beyond the local to influence national table sharing of the benefits arising out of the policies and regulations that foster greater BES utilization of genetic resources, taking into ac- business action. count free and prior consent of local communi- An inclusive approach to BES action also in- ties, mutually agreed terms for resource use and volves the equitable sharing of benefits arising monetary benefits from the commercialization from the use of biological resources (see Box 4). of products based on genetic resources. This component is particularly important when working with communities and implies a social aspect to business development. Companies Box 4: The CBD Nagoya Protocol on Access and Benefit Sharing One of the objectives of the UN Convention on Biological Diversity (CBD) is the fair and equitable sharing of the benefits arising out of the utilization of genetic resources. This objective developed into an international agreement – the Nagoya Protocol – which aims at sharing the benefits fairly and equitably, including by ap- propriate access to the resources and by appropriate transfer of relevant technologies, on the basis of prior informed consent and mutually agreed terms. Genetic resources, whether from plants, animals or micro-organisms, are used for different purposes that include research and the development of new products in sectors such as agriculture, pharmaceuticals, cosmetics or biotechnology. In some cases, traditional knowledge is associated with the use of these re- sources, which also provides value. Parties to the Convention may apply voluntary guidelines on access and benefit sharing (ABS) developed by the Convention (Bonn Guidelines – guidance on establishing administra- tive, legislative or policy measures on ABS for providers and users) or ratify the Nagoya Protocol, which will enter into force when it has been ratified by 50 countries. 17 3.2 Involving the supply chain tion processes, the sustainable use of resources Companies are increasingly being held account- throughout the supply chain is crucial to ensure able for the impacts generated throughout the a ready supply of production components and supply chain footprint of a product, and face minimize the potential for business disruption a risk of reputational damage if biodiversity- from BES-related impacts. related inputs are procured from unsustainably Close collaboration with suppliers on BES sourced resources. The increasing interest of strategies will be vital for realizing the ben- consumers, retailers and regulators in the car- efits associated with sustainably managing a bon, water and biodiversity footprint of prod- company’s supply chain. This collaboration can ucts can drive action by producer companies to lead to products that are innovative, have fewer work along their supply chain to control and negative impacts on BES and increase sales for measure BES impacts of their entire production companies. In addition, integrating suppliers as process. part of the strategy to address BES challenges Businesses in different sectors may find contributes to a process of due diligence, thus that sustainably managing BES throughout minimizing reputational or operational risks the different stages of their supply chains is from unexpected issues. critical to addressing associated risks and to capture emerging opportunities when doing so. As natural resources are present in all produc- 18 Section 4. Setting goals and tracking performance 4.1. Setting goals Companies should implement monitoring As suggested by the UN Convention on Bio- and evaluation programmes to track progress of logical Diversity, understanding impacts and implementation at different levels of their opera- dependencies and involving relevant stakehold- tions, whether at the product level or throughout ers are essential to informed decision-making the supply chain. This information is crucial to and to designing interventions that effectively support decision-making processes, inform project address the effects of core operations or supply management and report to external and internal chains on BES. stakeholders on the company’s performance. Whether a company has large or small im- Companies can develop SMART indica- pacts or is highly or only marginally dependent tors that are specific, measurable, achievable, on BES, its goals and commitments on BES is- relevant and time-bound. Although indicators sues should be supported by guiding principles, will vary from project to project, SMART indica- developed at the highest levels of management, tors can show the success or failure of actions that direct the company’s voluntary actions. carried out by the company and includes the These principles can help a company set respon- establishment of periodic reviews and valida- sible and plausible goals and targets that reflect tion of the plans of action. best practice and, most importantly, indicate Corporate sustainability reporting is an desired outcomes. effective way for companies to communicate These goals should then be translated by the on their performance. Reporting can also company into specific and relevant policies and legitimize efforts and build credibility with strategies. The three environmental principles stakeholders. There are several tools available of the UN Global Compact may offer guid- for reporting on performance and results, for ance on issues such as innovation, cooperation example the Global Reporting Initiative (GRI), and self-regulation of environmental strate- which has worked with the UNGC on annual in- gies. For example, Principle 7 refers to taking tegrated corporate reports for those companies a precautionary approach to environmental that have joined the UN Global Compact (see challenges, given the fact that the effects of Box 5). In general, and as acknowledged by the BES loss and degradation are highly uncertain. CBD, reporting serves three main purposes: Precaution may help to avoid high future costs 1. As a tool for objective communication with from actions that result in irreversible environ- stakeholders about the company’s perfor- mental damages. Principle 8 promotes greater mance. Stakeholders, such as investors who environmental responsibility, while Principle want to understand whether poor BES per- 9 promotes the development and diffusion of formance can become a business risk or com- environmentally friendly technologies. munities that may be affected by operations, have an interest in understanding whether 4.2. Monitoring, evaluating and companies are actually making progress on disclosing company performance BES issues. Once a company has set goals, decided on 2. As an internal management tool to align which activities to pursue and implemented different parts of the organization with a plan of action to manage BES issues, it is company strategies, policies and responsibili- important to integrate processes to measure its ties on BES. Reporting also helps companies performance against goals or standards. This to continue assessing risks and opportuni- process will allow a company to understand and ties and to integrate these assessments into evaluate how much progress has been achieved management processes. against set targets and what areas or policies 3. As a source of information for markets to need to be reinforced. systematically incorporate BES consider- ations into decision-making. 19 Box 5: Reporting company performance on BES There are various ways that companies can report on their BES-related activities. Companies can become cer- tified through management systems such as ISO 14001, or they can use guidelines for reporting such as the GRI or the UNGC’s Communication on Progress. The GRI promotes a standardized approach to sustainability reporting that is based on environmental, social and economic indicators. In 2006, the guidelines for reporting were revised and now include a number of indicators on biodiversity. The annual Communication on Progress – required for UN Global Compact business participants that have committed to integrate the UN Global Compact ten principles into their business strategies and day-to-day operations – can also serve as a way to disclose advancements in relation to the four main issue areas in- cluded in the communication (human rights, labour, environment and anti-corruption). In particular, compa- nies can communicate progress on the three environmental principles (Principles 7, 8 and 9), which closely relate to the UN CBD’s objectives. Other reporting initiatives with implicit indicators that can help companies to report on and disclose their progress include the Carbon Disclosure Project and the Forest Footprint Disclosure. Source: http://www.unglobalcompact.org/COP/communicating_progress/cop_policy.html, 20 Conclusion All businesses, regardless of size and sector, preferences, which are increasingly favouring depend upon and impact on biodiversity and greener and more responsibly sourced products. ecosystem services. As such, this framework Integrating the proposed recommendations on has sought to provide an overview of how Section 2 and following the BES management companies can approach the management of strategy checklist suggested in this framework BES. By realizing the importance of integrating can help companies to seize such opportunities BES considerations into their overall corporate and ultimately achieve relevant BES conserva- sustainability strategies, understanding how tion outcomes. activities impact BES through core operations This framework was created as a flexible, and supply chains, developing management living document that will be updated to remain strategies and engaging with relevant stake- relevant and effective, and thus the suggested holders who can help advance BES outcomes, model and tools presented here may evolve companies can address potential risks and over time according to new challenges and gain a competitive advantage over their peers needs. The framework also reflects the current- that have not yet recognized the benefits of ly available strategies and tools to address BES good environmental stewardship in relation challenges; these will also be updated as new to BES issues. Hence, companies can create tools and mechanisms are developed. profitable opportunities in line with consumer 21 22 Glossary Biodiversity – the diversity of genes, populations, species, communities and ecosystems that underlies all ecosystem processes. Corporate Sustainability –as defined by the UN Global Compact, corporate sustain- ability is a company’s delivery of long-term value in financial, social, environmental and ethical terms. Ecological Footprint – represents the amount of productive land and sea necessary to supply the resources consumed by a human population and assimilate the associated waste. A footprint analysis compares human demand on nature with its ability to regen- erate resources and provide services. Ecosystems –according to the CBD definition, an ecosystem is a dynamic complex of plant, animal and micro-organism communities and their non-living environment acting as a functional unit. Ecosystems have no fixed boundaries and depending on the purpose of analysis, a single lake or a watershed could be considered an ecosystem. Ecosystem processes –the physical, chemical and biological actions or events that link organisms and their environment such as decomposition, nutrient cycling, production of plant matter, and fluxes of nutrients and energy. Ecosystem services –the benefits that humans derive from ecosystems. These are obtained only if ecosystems include the biodiversity that guarantees the functional eco- system processes that are needed to deliver them. No net loss or Net positive impact –Companies in some sectors (i.e. extractives) may lead operations that can inevitably result in some loss of BES in a given area despite miti- gation and restoration efforts. In this case, the company can aim to achieve no net loss or a net positive impact by taking actions to conserve and restore BES in other areas and striving to maintain overall ecological integrity. Species –a group of organisms that differ from all other groups of organisms and which are capable of breeding and producing fertile offspring. 23 Appendix 1: List of working group Members To support the development of this framework, a working group, comprised of companies from various sectors, UN agencies, civil society and academia, provided insight into what the main aspects of a framework for corporate action on BES should be, and suggested relevant strategies to help companies tackle the BES challenge. We thank the following for their contribution: • Secretariat of the Convention on • Duke University Biological Diversity • Novartis • UN Conference on Trade and Development • Eskom • UNEP—Financial Initiative • Holcim • UNEP – World Conservation Monitoring Centre • Nestle • IUCN –Commission on Environmental, • Carbones Del Cerrejon Economic and Social Policy • Grupo Boticario • Sustainable Agriculture Initiative • Syngenta • International Council on Mining and Metals • World Business Council for Sustainable Development • Movimiento Empresarial Pela Biodiversidade (MEB) 24 Appendix 2: The BES Management Strategy Checklist The UNGC and IUCN formed a working group to assess which actions could be included in a BES management model. Through various consultations, the working group provided suggestions on how the top management of companies could integrate BES strategies into their operations. These suggestions were categorized into one of six management stages following the main steps of the UN Global Compact Management Model, which is used to align corporate sustainability strategies with efforts on four different fronts (environment, human rights, labour and anti-corruption). The following checklist suggests some of the key steps companies can include within existing environmental management systems or as part of a Biodiversity action plan. BES Management Strategy Checklist Stage 1: Establish Top-level commitment and vision 1.1 Define a preliminary business case for BES management specific to corporate needs and/ or strategy: what advantage would improved BES management confer to the company: market leadership, cost savings, employee motivation, improved market share, set standards for emerging regulatory framework etc. 1.2 Identify experience from other companies (either within or outside the sector) with mainstreaming BES. Identify major lessons (both positive and negative) that may be relevant to the specific situation of the company. 1.3 Solicit support from key operational divisions, key senior managers and board members who will be instrumental in implementing BES protocols and secure a mandate for a “network of BES champions” to take this work forward. 1.4 Test preliminary assumptions behind corporate BES business case with BES network and define a provisional working goal, associated objectives and timeframe for the development of an ecosystem services framework. 25 Stage 2: Identify the relationships between business and BES 2.1 Develop a full understanding of BES within the context of the corporate business strategy, operational procedures and associated risks: • How does a company impact BES and where does it have its largest footprint (upstream, downstream operations, supply chain)? • Assess risks and opportunities arising from poor management of BES. • Assess dependencies of the organization on BES along the value chain, focusing on the company’s operations, procurement (suppliers, sub-suppliers) of raw materials and the use by consumers of the company’s products. • Understand and quantify the benefits of specific BES components upon which the company is dependent and assess the status of these BES components. 2.2 Conduct a baseline study on the major operational activities, products or services that are likely to have clear impacts on BES (based on conclusions from 2.1) and document the adequacy of existing corporate practices to either mitigate risks or safeguard critical ecosystem services. 2.3 If relevant, include a focus on the supply chain and progressively implement procurement requirements that encourage and eventually require suppliers to adopt best practices. Stage 3: Define the BES management strategy’s scope and goals 3.1 Establish a concrete corporate goal and associated objectives, along with a defined timeline for corporate-wide roll out, for BES management. 3.2 Establish working benchmarks to “do no harm” and “do some good” with respect to avoiding, minimizing or negating the impact on those BES components most affected by company operations. A BES management pilot strategy should: • Focus on those actions that the company can undertake related to operations for which it is responsible or has a degree of influence. • Be limited to testing in a few geographic localities (depth rather than breadth). • Be based upon measurable targets or (more likely) establish a robust framework by which credible targets can be established and reliably measured. • Ensure that draft BES management protocols and methodologies are consistent with the format and oversight requirements of existing corporate operational procedures. • Include, if appropriate, a strategy for those BES components that are indirectly impacted by the company or by others and on which the company is dependent. • Identify partners with the appropriate skill profile to help develop credible methodological and monitoring frameworks. • Make provision for a 3rd party independent assessment/ audit at the end of the pilot period. 3.3 Establish annual corporate targets and managerial incentives for direct action in implementing the corporate BES management strategy. Ensure responsibility and accountability for internal awareness rising and implementation of the strategy is clearly assigned. Simultaneously, invest in innovation and technological development to improve the environmental performance of the operating units. 26 Stage 4: Implement 4.1 Implement, review and refine a methodological framework for avoidance, control, mitigation and compensation for the risks and negative impacts or for the enhancement of positive impacts in pilot sites. 4.2 Independently assess the robustness, validity and replicability of actions taken at pilot sites. Identify how the outcomes of the pilot phase can be translated into company policies that express the commitment to BES and feasibly align the organization towards these goals. Stage 5: Mainstream measuring and verification 5.1 Formalize and disseminate a measurement and verification protocol (including provision for period independent audit and review) that monitors the effectiveness and efficiency of the BES management actions and, when necessary, corrects any non-compliance and performance failure. 5.2 Continue to review BES footprint according to the chosen scope and systematically implement corporate BES monitoring and verification protocol. 5.3 Evaluate the results both internally, if appropriate, and as part of an independent certification scheme or widely accepted international performance standards. Based on the results, continue to refine and improve the procedures. Stage 6: Communicate progress & engage with stakeholders 6.1 Perform comprehensive and transparent disclosure of company progress towards meeting its BES commitments/corporate targets. 6.2 Communicate and collaborate with stakeholders, including governments, NGOS, investors, and other companies to take collaborative action on those aspects which can only be addressed in partnership. 6.3 Engage industry associations and sectoral platforms with a view to advancing BES best practice management across the sector. 6.4 Establish networks and partnerships with local, national and international NGOs and environmental specialists in the field of BES with the objective of ensuring a multidisciplinary approach and knowledge-sharing. 27 28 Annex 3: Suggested Tools for BES management ARIES – Assessment and Research Infrastruc- The Corporate Ecosystem Services Review ture for Ecosystem Services Project [WRI, Meridian Institute, WBCSD] Tool for assessing, planning and valuing ecosys- Methodology to help managers develop strate- tem services. http://ecoinformatics.uvm.edu/aries gies to manage business risks and opportunities. http://www.wri.org/publication/corporate-ecosys- Integrated biodiversity assessment toolkit – tem-services-review IBAT Provides an overview for businesses on avail- INVEST – Integrated Valuation of Environ- able tools and partnerships that can help them mental Services and Tradeoffs manage BES resources. http://www.ibatforbusi- [Natural Capital Project] ness.org/ Tools to map and value ecosystem services to help in decision-making and management Business and Biodiversity Offsets Programme choices. The tools can help estimate how the – BBOP current location, amount, delivery and value Assessment on whether offsetting is appropriate of relevant services are likely to change in the and provides guidance on how to design offsets. future. http://www.naturalcapitalproject.org/ Shows business how to use the mitigation hier- InVEST.html archy (avoid/minimize/restore/offset) to achieve no net loss or a net gain of biodiversity. Global Action Network for Transparency in http://bbop.forest-trends.org/ the Supply Chain Tool to offer GRI-certified training and one-on- Proteus [UNEP WMCM – Business one support to their Small and Medium Enter- partnership] prise Suppliers in preparing a GRI G3 sustain- Provides information on protected areas, BES- ability report https://www.globalreporting.org/ relevant sites and status of marine and coastal reporting/reporting-support/support-for-supply- systems. http://www.proteuspartners.org/ chain/Pages/default.aspx Guide to Corporate Ecosystem Valuation Global Reporting Initiative GRI – Biodiversity [WBCSD] supplement Framework that helps businesses to integrate Resource to help companies understand report- ecosystem valuation into their accounting ing in relation to biodiversity. https://www. system. http://www.wbcsd.org/work-program/ globalreporting.org/resourcelibrary/Biodiversity- ecosystems/cev.aspx A-GRI-Resource-Document.pdf Global Water Tool [WBCSD] Global Reporting Initiative – G3 Guidelines Maps water use by companies and assesses risks G3 guidelines provide information on how to through their global operations and supply report and on what should be reported in terms chains. http://www.wbcsd.org/work-program/ of disclosure on management and performance sector-projects/water/global-water-tool.aspx indicators. In the environmental category there are 5 performance indicators that ask compa- Business Ecosystems Training [WBCSD] nies to report on various biodiversity-related Free capacity-building programme to increase issues such as size of land owned in protected the knowledge and understanding of the links areas, impacts of activities, strategies for manag- between ecosystems and business. ing impacts on biodiversity, etc. https://www. http://www.wbcsd.org/bet.aspx globalreporting.org/reporting/latest-guidelines/ g3-guidelines/Pages/default.aspx 29 Industry Initiatives Biodiversity indicators for monitoring impacts and conservation actions [The Energy and Biodiversity Initiative] Methodology for developing site-level indicators to monitor BES impacts. www.theebi.org/pdfs/ indicators.pdf / http://www.theebi.org/ The Ecosystem Services Benchmark [The Natural Value Initiative] A tool for investors to assess the management of BES risks and opportunities in companies with an agricultural supply chain. http://www.unepfi. org/fileadmin/documents/ecosys_benchmark.pdf IPIECA – Ecosystem services guidance Various guides for the Oil and Gas sector http://www.ipieca.org/focus-area/biodiversity ICMM – Biodiversity Sustainable development framework, Good practice Guidance on Mining and Biodiversity and ICMM-IUCN dialogues. http://www.icmm. com/biodiversity Better Sugarcane Initiative Standards and certification Schemes to produce sustainable sugar. http://www.bettersugarcane. org Roundtable on Responsible Soy Association Standards for responsible soy production. http:// www.responsiblesoy.org Roundtable on Sustainable Biofuel Third party certification system for biofuel stan- dards. http://cgse.epfi.ch/page65660.html Roundtable on Sustainable Palm Oil Site and supply chain certification scheme and a biodiversity group to address. http://www.rspo.org/ International Union For Conservation of Nature PHOTO CREDITS: World Headquarters Cover © iStockphoto/ fotoVoyager; Rue Mauverney 28 iStockphoto/Momcilo Grujic; iStockphoto/Marje Cannon; 1196 Gland, Switzerland Page 4 © iStockphoto/TommL mail@iucn.org Page 9 © iStockphoto/ARPAD RADOCZY Tel +41 22 999 0000 Page 10 © iStockphoto/Dusan Bartolovic Fax +41 22 999 0002 Page 14 © Curt Carnemark/World Bank www.iucn.org Page 17 © Curt Carnemark/World Bank Page 19 © iStockphoto/Steffen Foerster UN Global Compact Page 20 © iStockphoto/Bob Balestri Tel: + 1 917 367 3648 Page 21 © iStockphoto/microgen Email:globalcompact@un.org Page 27 © iStockphoto/Holger Mette www.unglobalcompact.org Page 30 © iStockphoto/AVTG The Ten Principles of the United Nations Global Compact Human rights Principle 1 Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2 make sure that they are not complicit in human rights abuses. Labour Principle 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4 the elimination of all forms of forced and compulsory labour; Principle 5 the effective abolition of child labour; and Principle 6 the elimination of discrimination in respect of employment and occupation. Environment Principle 7 Businesses should support a precautionary approach to environmental challenges; Principle 8 undertake initiatives to promote greater environmental responsibility; and Principle 9 encourage the development and diffusion of environmentally friendly technologies. Anti-corruption Principle 10 Businesses should work against corruption in all its forms, including extortion and bribery. Published by the Global Compact Office United Nations, June 2012