World Resources Institute

What do these stories have in common? Companies facing unexpected risks or novel opportunities arising from their dependence and impact on ecosystems

Cultural Nonmaterial benefits obtained from ecosystems Regulating Benefits obtained from control of natural processes by ecosystems Provisioning Goods or products obtained from ecosystems Three categories of ecosystem services

Trends in the worlds ecosystem services over past 50 years DegradedMixedEnhanced Provisioning Capture fisheries Wild foods Biomass fuel Freshwater Genetic resources Biochemicals, natural medicines, and pharmaceuticals Timber and other wood fiber Timber and other wood fiber Other fibers (e.g., cotton, hemp, silk) 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 Water regulation Disease regulation Disease regulation Global climate regulation (carbon sequestration) Cultural Ethical values (spiritual, religious) Aesthetic values Recreation and ecotourism Recreation and ecotourism Source: Adapted from the Millennium Ecosystem Assessment Ecosystems and Human Well-being: Synthesis. Washington, DC: Island Press.

The Corporate Ecosystem Services Review Structured methodology that helps managers proactively develop strategies to manage business risks and opportunities arising from their companys dependence and impact on ecosystems

Business benefits Strengthen existing approaches to environmental managementStrengthen existing approaches to environmental management Identify business risks and opportunitiesIdentify business risks and opportunities Anticipate new markets and government policiesAnticipate new markets and government policies Improve stakeholder relationshipsImprove stakeholder relationships Demonstrate leadership in corporate sustainabilityDemonstrate leadership in corporate sustainability

Business decisions and processes the ESR can support Corporate, business unit, or market strategy development Planning processes for corporate infrastructure projects Identification of new markets, products, or services Identification of new revenue streams from corporate landholdings Policy-maker engagement strategies Environmental impact assessments Environmental reporting

Outline and prioritize strategies for managing the risks and opportunities 5. Develop strategies Steps in a corporate ecosystem services review Key activity Identify and evaluate business risks and opportunities that might arise due to the trends in priority ecosystem services 4. Identify business risks and opportunities Evaluate conditions and trends in priority ecosystem services, as well as drivers of these trends 3. Analyze trends in priority services Systematically evaluate degree of companys dependence and impact on ecosystem services Determine highest priority services those most relevant to business performance 2. Identify priority ecosystem services Choose boundary within which to conduct ESR Business unit Product Market Landholdings Customer Supplier 1. Select the scope Step

Step 1. Considerations when selecting the scope 1. Which stage of the value chain? Customers Company Suppliers Which customer(s)? In which geographic market(s)? What aspect of the company? Business unit Product line Facility Project Landholdings Which supplier(s)? In which geographic market(s)? 2. Who and where specifically? 3. Is it strategic, timely, and supported?

Step 2. Identifying priority ecosystem services

Step 3. Ecosystem service trends and drivers framework 1. Condition and trends in the ecosystem service Supply and demand Quantity and quality Present and future 2. Direct drivers Changes in land use and land cover Overconsumption Climate change Pollution Invasive, non-native species Other 4. Activities of others Who How Where To what degree 5. Indirect drivers Governmental Demographic Economic Technological Cultural and religious 3. Company activities How Where To what degree

Step 4. Types of risks and opportunities arising from trends in ecosystem services TypeRiskOpportunityOperational Increased scarcity or cost of inputsIncreased scarcity or cost of inputs Reduced output or productivityReduced output or productivity Disruption to business operationsDisruption to business operations Increased efficiencyIncreased efficiency Low-impact industrial processesLow-impact industrial processes Regulatory and legal Extraction moratoriaExtraction moratoria Lower quotasLower quotas FinesFines User feesUser fees Permit or license suspensionPermit or license suspension Permit denialPermit denial LawsuitsLawsuits Formal license to expand operationsFormal license to expand operations New products to meet new regulationsNew products to meet new regulations Opportunity to shape government policyOpportunity to shape government policy Reputational Damage to brand or imageDamage to brand or image Challenge to social license to operateChallenge to social license to operate Improved or differentiated brandImproved or differentiated brand Market and product Changes in customer preferences (public sector, private sector)Changes in customer preferences (public sector, private sector) New products or servicesNew products or services Markets for certified productsMarkets for certified products Markets for ecosystem servicesMarkets for ecosystem services New revenue streams from company- owned or managed ecosystemsNew revenue streams from company- owned or managed ecosystems Financing Higher cost of capitalHigher cost of capital More rigorous lending requirementsMore rigorous lending requirements Increased investment by progressive lenders and socially responsible investment fundsIncreased investment by progressive lenders and socially responsible investment funds NOT EXHAUSTIVE

Step 5. Categories of strategies Internal changes Sector or stakeholder engagement Policy-maker engagement Operations Product strategy Market strategy Procurement strategy Land management Etc. Industry peer collaboration Cross-sector collaboration NGO collaboration Transactions with stakeholders Etc. Tax incentives Subsidy reforms Protected areas ZoningEtc.

What the ESR is not It is not dependent upon economic valuation of ecosystem servicesIt is not dependent upon economic valuation of ecosystem services It does not identify or address every environmental issueIt does not identify or address every environmental issue It is not strictly quantitativeIt is not strictly quantitative It does not require a long, multiyear analysisIt does not require a long, multiyear analysis

Supporting tools available in Guidelines and on website Methodology cheat sheetMethodology cheat sheet Ecosystem service list, definitions, and examplesEcosystem service list, definitions, and examples Spreadsheet questionnaire and tool or assessing dependence and impactSpreadsheet questionnaire and tool or assessing dependence and impact Frameworks for analyzing trends and identifying risks and opportunitiesFrameworks for analyzing trends and identifying risks and opportunities Case examplesCase examples Other resourcesOther resources