Ecosystem services are the benefits that people obtain from ecosystems. They enable companies to link social and environmental impacts and to tell their sustainability stories differently.
Taking an ecosystem services approach represents a paradigm shift from tracking single environmental indicators to understanding system dynamics as a whole.
A key challenge is to convince internal senior management to invest in developing an ecosystem services approach and to publicly report on its ecosystem services.
“The big takeaway is that ecosystem services is a concept that is coming of age and is becoming part of the international best practice… . For businesses, an ecosystem services approach provides context to make better business decisions.” —Sissel Waage, BSR
“We had to convince our senior management that there is a business case to report [ecosystem services] data.” —Edie Sonne Hall, Weyerhaeuser Company
“We are hearing a lot about ecosystem services, and we want to understand what that means for our business. It’s about risk management and integrating it into business decisions and operations.” —Sarah Connick, Chevron
Waage kicked off the session by asking the audience how many participants had heard about ecosystem services and for a definition of ecosystem services. Waage explained that ecosystem services is an emerging issue in the corporate sector and that this session explores why and how companies are integrating ecosystem services into their businesses.
To help the audience understand the importance of measuring ecosystems, Waage reminded them of what happened during the Great Depression. Before the Great Depression, there were no tools or metrics to examine large capital flow among banks. The metrics in use at the time were not relevant to identifying and tracking the real issues. Similarly, in the environmental era, current tools examine single impacts and are not well calibrated to understand the overall impacts on ecosystems.
According to Waage, there is a paradigm shift toward understanding and measuring natural capital and ecosystem services. While businesses currently look at single indicators to understand their environmental and social impacts, in the future they will take a multivariable issue-identification and risk-assessment approach.
Waage compared ecosystems to infrastructure in the community (buildings, harbors, schools, and other facilities). This structure enables the functions, which in turn enables the flow of services. Ecosystem services are the benefits that people obtain from ecosystems.
Today, more than 35 large global companies publicly discuss their efforts regarding ecosystem services. Companies are assessing analytical approaches to measuring ecosystem services; they are testing tools and integrating ecosystem services considerations into their business processes.
Weyerhaeuser Company, which grows and harvests trees, is one such company. Sonne Hall explained how Weyerhaeuser implemented an ecosystem service’s approach. When she first looked at the tools to measure ecosystem services, Sonne Hall said that she thought, “These tools are great, but how can we really use them?”
Weyerhaeuser has a goal to maintain or enhance the ecosystem services provided by its timberlands. Sonne Hall asserted that, while they had already reached this goal, Weyerhaeuser was not measuring its ecosystem services and they could not publicly report on it. The company convened a team of people to select a reporting framework, and by brainstorming, identified a list of 60 ecosystem services provided by Weyerhaeuser timberlands. Then they looked at whether they were already collecting any data about these ecosystem services, whether any of the data they were collecting were sensitive or confidential, and whether they could track change on an annual basis. Of the 60 ecosystem services they identified, they chose 18 that they could measure and subsequently published their first data on ecosystem services in their CSR report in June 2013.
One of the key challenges Sonne Hall encountered was to convince her senior management of the business case to publicly report the data. Sonne Hall argued that the company’s long-run license to operate depends on the delivery of these services. Also some of these services present opportunities for new revenues.
Connick added that ecosystem services represents a new way of looking at things at Chevron. She asserted that Chevron has been looking at understanding and managing its impacts and interdependencies for a long time, but that ecosystem services offers a new way of connecting the impacts on communities and the environment. “There is an opportunity to tell the story better,” Connick said. Connick also commented on the importance of building the business case. For Chevron, ecosystem services is about managing risk, managing its license to operate, and supporting operational excellence and Chevron’s desire to be an industry leader.
In the Q&A session, a participant asked how measuring ecosystem services can be applied to valuating a company in order to appeal to investors. Connick answered that there are advanced environmental markets for companies to mitigate their environmental risks, and she then spoke about the challenges of introducing a single metric for ecosystem services within Chevron.