Business Ecosystems Training (BET) - U.S. Business Impacts & Dependencies Ecosystem Risks & Opportunities Barbara G. McCutchan, Ph.D., Fellow Center for Leadership in Global Sustainability at Virginia Tech

Agenda Ecosystem services - overview Business impacts and dependencies Going beyond the fenceline Business Ecosystems Training (BET) score card Introduction to the BET-US sessions Business Solutions

Ecosystem services – overview Provisioning Goods or products produced by ecosystems Regulating Natural processes regulated by ecosystems Cultural Intangible benefits obtained from ecosystems Supporting Functions that maintain all other services As described in the Millennium Ecosystem Assessment, 2005.

Provisioning services: Goods produced or provided by ecosystems Food Crops Livestock Capture fisheries Aquaculture Wild foods Fiber Timber Cotton, hemp, silk Biomass fuel Freshwater, Genetic resources, ornamental Biochemicals, natural medicines & pharmaceuticals Think about your company’s ecosystem services as we go through this and the next few slides Examples of provisioning services Food Products derived from plants, animals and microbes e.g. Crops: grains, vegetables, fruits, Livestock: Animals raised for domestic or commercial consumption or use (e.g. chicken, pigs, cattle), Capture fisheries: Wild fish captured through trawling and other non-farming methods (e.g. cod, crabs, tuna), Aquaculture: Fish, shellfish, and/or plants that are bred and reared in ponds, enclosures, and other forms of freshwater or saltwater confinement for purposes of harvesting (e.g. shrimp, oysters, salmon) Wild foods: Edible plant and animal species gathered or captured in the wild (e.g. fruits and nuts, fungi, bushmeat). Fiber Materials including wood, jute, cotton, hemp, silk and wool. Products made from trees harvested from natural forest ecosystems, plantations, or non-forested lands (e.g. industrial round wood, wood pulp, paper). Other fibers (e.g. cotton, hemp, silk): Non-wood and nonfuel fibers extracted from the natural environment for a variety of uses. Fuel Biological material derived from living or recently living organisms – both plant and animal – that serves as a source of energy., e.g., wood, biomass, etc.  thinking about growing our fuel Freshwater Inland bodies of water, groundwater, rainwater, and surface waters for household, industrial, and agricultural uses.  huge importance Genetic resources Genes and genetic information used for animal breeding, plant improvement, and biotechnology. Biochemicals, natural medicines, and pharmaceuticals Medicines, biocides, food additives, and other biological materials derived from ecosystems for commercial or domestic use. Ornamental resources: Animal and plant products used as ornaments. Emphasize that biodiversity underpins all of these services

Regulating services: Natural processes regulated by ecosystems Air quality regulation Climate regulation Global (CO2 sequestration) Regional and local Water purification and waste treatment Water flow regulation Natural hazard regulation Erosion regulation Disease regulation Pest regulation Pollination Examples of regulating services: Air quality regulation: Ecosystems both contribute chemicals to and extract chemicals from the atmosphere, influencing many aspects of air quality.  eg trees next to interstates/freeways Climate regulation: The global influence ecosystems have on global climate by emitting greenhouse gases or aerosols to the atmosphere or by absorbing greenhouse gases or aerosols from the atmosphere (CO2 sequestration): Forests capture and store carbon dioxide, Cattle and rice paddies emit methane Regional and local climate regulation: The influence ecosystems have on local or regional temperature, precipitation, and other climatic factors Forests can impact regional rainfall levels Water purification and waste treatment: The role ecosystems play in the filtration and decomposition of organic wastes and pollutants in water; assimilation and detoxification of compounds through soil and subsoil processes: Wetlands remove harmful pollutants from water by trapping metals and organic materials, Soil microbes degrade organic waste, rendering it less harmful. Water flow regulation: The influence ecosystems have on the timing and magnitude of water runoff, flooding, and aquifer recharge, particularly in terms of the water storage potential of the ecosystem or landscape Permeable soil facilitates aquifer recharge River floodplains and wetlands retain water – which can decrease flooding during runoff peaks – reducing the need for engineered flood control infrastructure Natural hazard regulation: The capacity for ecosystems to reduce the damage caused by natural disasters such as hurricanes and to maintain natural fire frequency and intensity: Mangrove forests and coral reefs protect coastlines from storm surges, Biological decomposition processes reduce potential fuel for wildfires. Erosion regulation: The role vegetative cover plays in soil retention Vegetation such as grass and trees prevents soil loss due to wind and rain and prevents siltation of water ways Forests on slopes hold soil in place, thereby preventing landslides Disease regulation: The influence that ecosystems have on the incidence and abundance of human pathogens: Some intact forests reduce the occurrence of standing water –a breeding area for mosquitoes– which can lower the prevalence of malaria. Pest regulation: The influence ecosystems have on the prevalence of crop and livestock pests and diseases Predators from nearby forests – such as bats, toads, and snakes – consume crop pests Pollination: The role ecosystems play in transferring pollen from male to female flower parts: Bees from nearby forests pollinate crops. Emphasize that biodiversity underpins all of these services

Cultural services: Cultural and social benefits obtained from ecosystems Recreation Ecotourism Spiritual and religious values Educational Ethical and “existence” values Examples of cultural services: Recreation: Recreational pleasure people derive from natural or cultivated ecosystems (e.g. hiking, camping, bird watching, going on safari). Ecotourism: travel and tourism specifically relating to the natural environment or wildlife locations. Spiritual and religious value e.g. those derived from sacred lands and rivers, Ethical and existence values: The spiritual, religious, aesthetic, intrinsic, “existence,” or other values people attach to ecosystems, landscapes, or species. This can also include cultural heritage values, for example, many societies place high value on the maintenance of either historically important landscapes.  Existence values: knowledge that something exists (even if not used), creates value. Education values e.g. the use of ecosystems and nature for education

Supporting services: Functions that maintain all other services Nutrient cycling Primary production Photosynthesis Water cycling Examples of supporting services:  underpins all other services Nutrient cycling: The role ecosystems play in the flow and recycling of nutrients approx. 20 of which are essential for life (e.g., nitrogen, sulphur, phosphorus, carbon) through processes such as decomposition and/or absorption: Decomposition of organic matter contributes to soil fertility Primary production: The formation of biological material by plants through photosynthesis and nutrient assimilation: Algae transform sunlight and nutrients into biomass, thereby forming the base of the food chain in aquatic ecosystems Photosynthesis: The production of oxygen necessary for most living organisms. Water cycling: The flow of water through ecosystems in its solid, liquid, or gaseous forms: Transfer of water from soil to plants, plants to air, and air to rain.

Trends in the world’s ecosystem services over past 50 years Degraded Mixed Enhanced Provisioning Capture fisheries Wild foods Biomass fuel Freshwater Genetic resources Biochemicals, natural medicines, and pharmaceuticals Timber and other wood fiber Other fibers (e.g., cotton, hemp, silk) Crops Livestock Aquaculture Regulating Air quality regulation Regional and local climate regulation Erosion regulation Water purification and waste treatment Pest regulation Pollination Natural hazard regulation Water regulation Disease regulation Global climate regulation (carbon sequestration) Cultural Ethical values (spiritual, religious) Aesthetic values Recreation and ecotourism From Module 2, slide 60 Source: Adapted from the Millennium Ecosystem Assessment. 2005. Ecosystems and Human Well-being: Synthesis. Washington, DC: Island Press.

The business case for action Businesses IMPACT on nature Biodiversity loss and ecosystem degradation create business RISKS and OPPORTUNITIES Businesses RELY and DEPEND on nature All businesses depend upon, and in some way impact, the ecosystem services that are provided by the natural ecosystems and biodiversity that make up planet Earth. However, very little is known about the actual value of these services for business, or the specific opportunities that they present in business terms. Such values have not, conventionally, formed a part of business planning and financial analysis. Water, for instance, is a critical input for most, if not all, major industrial processes. The pharmaceutical industry benefits from nature’s genetic resources. Agribusiness and the food sector depend on nature’s pollination, pest control, water, and erosion regulation services. Forest industries – and downstream construction, communications and packaging sectors – rely on continued supplies of timber and wood fiber. All extractive industries inevitably cause some level of ecosystem disturbance, while tourism increasingly builds on nature’s cultural services and aesthetic values. All building owners and plant operators benefit from the natural hazard protections that some ecosystems provide. In fact, it is hard to think of any economic activity that does not benefit from ecosystem services, or in some way impact the natural ecosystems around it.  

Going beyond the fenceline - supply / value chains Value chain: all of the upstream and downstream activities associated with the operations of the company Supply chain: the network of organizations (e.g. manufacturers, wholesalers, distributors and retailers) involved in the production, delivery, and sale of a product to the consumer. Suppliers can be separated into Tiers, each of which has different ecosystem impacts / dependencies Tier 2 supplier Tier 1 supplier Company activities Downstream value chain Facilitator to talk through basic concepts associated with supply / value chains. Facilitator to explain the diagram and definition. The diagram shows how each stage of value chain, upstream and downstream, impacts and depends on ecosystem services, and thus the reporting company can have indirect impacts / dependencies. Value chain: Refers to “all of the upstream and downstream activities associated with the operations of the reporting companies, including the use of sold products by consumers and the end-of-life treatment of sold products after consumer use”. Supply chain: A network of organizations (e.g., manufacturers, wholesalers, distributors and retailers) involved in the production, delivery, and sale of a product to the consumer. Suppliers can be separated into : Tier 1 supplier: A supplier that provides or sells products directly to the reporting company. A tier 1 supplier is a company with which the reporting company has a purchase order for goods or services. Tier 2 supplier: A supplier that provides or sells products directly to the reporting company’s tier 1 supplier. A tier 2 supplier is a company with which the reporting company’s tier 1 supplier has a purchase order for goods and services. As the following example of Puma will show there can be a number of tiers within the supply chain.  Ripple effect through the supply chain. Impacts and dependencies Ecosystem services

Value chain footprints – Puma 2010 GHG emissions by value chain source 2010 Water use by Value Chain Source Instructions: Facilitator to use Puma and Unilever as examples of reporting on upstream/downstream value chain environmental footprints. Background Puma In 2009 PUMA started to develop an Environmental Profit & Loss (E P&L) that measured and assessed the impacts of greenhouse gas emissions, water use, land conversion, air pollution and waste resulting from PUMA’s core operations and supply chain by putting a financial value on them. The environmental impacts were valued at € 145 million for 2010. The analysis revealed that 94% of the environmental impacts occur among PUMA’s external suppliers further up down the supply chain. 57% of all environmental impacts are associated with the production of raw materials such as leather or cotton in the company’s supply chain. PUMA’s focus on using more sustainable materials will help to mitigate the impacts.  PUMA’s operations have very small effect Tier 2 supplier Tier 1 supplier Company activities Downstream value chain …

Value chain footprints – Unilever GHG emissions 26% 3% 2% 68% 1% + + + + Raw materials Manufacture Transport Consumer use Disposal Water footprint approx 50% <0.1% 50% Instructions: Facilitator to use Puma and Unilever as examples of reporting on upstream/downstream value chain environmental footprints. Unilever  Similar work done by Unilever, but this shows the role of the consumer, and via innovation by the company, can change their product to have less impact The Unilever Carbon footprint indicates that most of their GHG emissions and water use occur downstream, i.e. during consumer use of the products. The GHG footprint covers 70% of Unilever’s volumes and Unilever’s water footprint relates to a 2008 baseline study conducted across 7 countries. Water used in the raw material we source Water we add to the product Water used by consumers in water-scarce countries Tier 2 supplier Tier 1 supplier Company activities Downstream value chain

Discussion questions Business Ecosystems Training Score Card My company has been affected by the following challenges: Water scarcity  Yes  No  Don’t know Climate change Habitat change Biodiversity loss Overexploitations of oceans Nutrient overloading Other: ……………………………………………………………………………………………………... My company benefits upon or impacts on the following ecosystem services: Provisioning The goods or products obtained from ecosystems such as food, freshwater, timber, and fiber  Benefits  Impacts Regulating The benefits obtained from an ecosystem’s control of natural processes such as climate, disease, erosion, water flows and pollination, as well as protection from natural hazards. First apply the score card to the case studies presented on Day 1, notably the Dow-TNC case study, bringing John DiMuro of Dow (and Lisa Downes) up for an interview (is he game for this?) . Do this on a Dow Chemical basis. Have him give the boilerplate on Dow to introduce to the audience. Have him talk about learnings at each point. Run this like an interview, including the risk discussion questions. Then ask each table to discuss one company represented at their table (have this seeded in advance). Run through the same thing Then take X (10??) minutes to do discussion at the table The BET Score Card is inspired by the Dilemma Assessment Card that was developed by the WBCSD’s Future Leaders Team in 2007. The Card (as illustrated on the slide) was designed as a discussion tool. There are 6 questions covering the key ecosystem challenges facing business, the main ecosystem services and key drivers for addressing ecosystems alongside questions on the above mentioned dilemmas and how they are being managed inside a company. Instructions: The facilitators will set the BET Score Card as pre-work for the course, participants will be asked to answer the questions from the perspective of the company they work for. Optional: participants can also consider supply / value chain issues The BET Score Card should be emailed separately to the participants after the webinar.

Discussion questions (cont.) Business Ecosystems Training Score Card My company has been affected by the following challenges: Cultural The non material benefits obtained from ecosystems such as recreation, spiritual values and aesthetic enjoyment  Benefits  Impacts  Don’t know Note: we are not asking this specific question regarding supporting services as these services are underlying the above 3 categories (Supporting services: the natural processes such as nutrient cycling and primary production that maintain the other services) My company has taken the lead on addressing ecosystems: To manage risks  Yes  No  How? ………………… To improve operational efficiencies To gain business opportunities Additional actions: ……………………………………………………………………………………………………………… My company has considered the long term consequences of ecosystem degradation in its strategy: ……………………………

What are the tools you can use to manage ecosystem risks and opportunities? 1. Building capacity 2. Sharing best practices 3. Understanding existing tools Here is how the WBCSD can support you in the integration of natural capital in your strategy and action plans 1. Building capacity For example by using the Business Ecosystems Training (BET) material that the WBCSD has developed in collaboration with member companies, Regional Network partners, academic institutions and UN related organizations. This capacity building program aims to equip companies with the skills they need to better measure, manage and mitigate their ecosystem impact and dependence. 2. Sharing best practices You can learn at what companies are doing to respond to the Convention on Biological Diversity’s objectives, reading the case study compendium that the WBCSD develops every 2 years. You can also contribute to these reports, by sending the WBCSD examples of what your company is doing to protect biodiversity, use it sustainably and/or share the benefits arising out of the utilization of genetic resources in a fair and equitable way. 3. Understanding existing tools The WBCSD is currently working on Eco4Biz, a project that aims to help: - Companies needing guidance on which external tools exist and which ones will best suit their specific needs - Tools developers to understand how to increase their reach and impact – by better understanding how their too relates to others and could be adapted or linked to each other The objective of ‘Eco4Biz’ is to provide a structured overview of tools and approaches in order to help companies make better-informed decision about which tool to apply when assessing and managing their ecosystems impacts and dependencies.

What are the tools you can use to manage ecosystem risks and opportunities? (cont.) 4. Assessing impacts and dependencies 5. Valuing impacts and dependencies 6. Engaging with policy makers 4. Assessing impacts and dependencies The Corporate Ecosystem Services Review (ESR) is a structured methodology that helps managers proactively develop strategies to manage business risks and opportunities arising from their company’s dependence and impact on ecosystems. 5. Valuing impacts and dependencies In 2011 the WBCSD released the Guide to Corporate Ecosystem Valuation (CEV), a process to make better-informed business decisions by explicitly valuing both ecosystem degradation and the benefits provided by ecosystem services. What the Guide is - A framework for improving corporate decision-making by valuing ecosystem services - A set of resources to navigate through related jargon and techniques What the Guide is not - A price list of biodiversity & ecosystem services - A calculator to “crunch numbers” - A stand-alone methodology By including ecosystem values, the company’s aim is to improve corporate performance in relation to social and environmental goals and the financial bottom-line. 6. Engaging with policy makers Provide policy makers constructive and practical input form business, in order to positively influence the design and implementation of biodiversity and ecosystem policy and to improve both its efficiency and effectiveness in delivering environmental outcomes

Business Ecosystems Training – Contributors All content is based on WBCSD material and publically available reports. BET curriculum and structure was designed by The structure and content development of BET was governed by an Advisory Committee consisting of WBCSD member companies and Regional Network partners, NGOs, UN and academic institutions. The course has been developed by the WBCSD in collaboration with KPMG and an advisory committee made up of several WBCSD member companies, Regional Network partners, academic and UN institutions and NGOs.

Business Ecosystems Training US – Contributors This US customized version of BET was developed by WBCSD and U.S. BCSD, with support from: The US version of the Business Ecosystems Training course was developed by WBCSD and US BCSD with input provided by the above different organizations

BET in the US: curriculum Introduction webinar on the basics (1.5 hour) Understanding the links between ecosystem services and business Assessing business impacts and dependencies on ecosystems Present the structure of the training participants will attend, highlighting that they will be introduced to 2 methodologies (ESR and CEV) that can help their company better measure, then manage and mitigate their impacts and dependencies (thus address risks). Titles of publications are The Corporate Ecosystem Services Review Guide to Corporate Ecosystem Valuation Managing and mitigating business impacts on ecosystems Valuing ecosystem services - an introduction

What’s next? Please share this with your colleagues Schedule of the next training sessions to come: To be announced Able to schedule a session close to you For any questions, please contact Kieran at sikdar@usbcsd.org or Katie at ksarro@compete.org For more information and a current training schedule see bet-us.org

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