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Risks and Opportunities

There are solid economic reasons for companies to look at incorporating biodiversity into their business decisions. These can be broken down into two broad categories, risks and opportunities. Often these can be seen as flipsides of the same coin, a potential risk can be turned into a profit-enhancing opportunity.


Risks

Under risks, the following issues can be considered:

  • Scarcity of Resources/Long-term Viability Damaged: Every company depends on resources that are either directly or indirectly extracted from nature. If a resource, upon which the company depends, is under severe stress, or in the worst case scenario collapses entirely, the company’s long-term viability may be threatened

  • Governmental Regulation: As governments increasingly recognize the importance of biodiversity and sustainability, the risk of heavy legislation becomes increasingly real. In almost all cases, it is more expensive for a company to respond to legislation after the fact than to try to get ahead of the curve before such rules are enacted

  • Negative Corporate Image/Product Boycotts: Companies seen as environmental “villains” can be subjected to intense campaigns and product boycotts, which can have long-lasting negative consequences, resulting in significant loss of market share

  • Loss of Investment: There are increasing numbers of ethical investment funds being developed, which may be unavailable to companies that are not undertaking sustainable environmental practices

  • Clean-up and Compensation Costs: Natural disasters can entail huge and long-lasting clean-up costs that can severely effect a company’s bottom-line. In addition, disasters of this sort can be a major black mark on the reputation of the business involved

  • Insurance Costs: Related to the above points, insurance companies are well aware of the risks associated with environmental degradation, and will pass on associated costs to their consumers

Opportunities

As the trend towards sustainability continues to move forward, the ability to benefit from this momentum becomes ever greater:

  • Increased Market Share: Businesses seen to be green leaders are increasingly being favoured customers. Good corporate practices can often translate, all other things being equal, into better market share. Cost Control: A well managed and streamlined supply chain will often generate cost savings for a company. Knowledge about the origin and processing of purchased resources and products guarantees cost control and environmental impact at the same time

  • Better Relationship with Other Stakeholders: Businesses must deal with local communities, governments, NGOs or other stakeholders. If their practices are sustainable and seen as benefitting the community and environment, their dealings will be that much easier and less costly. Furthermore, regulators will be more inclined to grant licenses to those who have demonstrated positive stewardship of their resources

  • Enhanced Loyalty of Employees: By enhancing their environment footprint and getting their employees directly involved in the process companies generate increased corporate loyalty and benefit from the ideas generated by their staff

  • Long-term Viability of Business: If resources are harvested or extracted in a sustainable fashion, they will be available for the long term, thus allowing businesses to continue operating. New products can also be found through the sustainable use of existing resources (i.e. forest generated products as opposed to simply harvesting the trees for lumber)

  • Creation of New Products (Bio-Prospecting/Bio-Mimicry): Many new technologies have been inspired by natural processes. This requires intensive study and time. Degradation of biodiversity can remove these natural inventions before they can be discovered, let alone understood. Additionally, new pharmaceutical and agrifood products are just waiting to be discovered, but without viable ecological systems to support them, they too can be lost

There is no “silver bullet” that will make a business sustainable overnight and at zero cost. The process requires some work and effort, and likely – at least initially - the expenditure of resources. This can be seen as the cost of doing business in a changing economy. These upfront expenditures will eventually result in a leaner, more sustainable, and more profitable business model.

Aside from the various tools and mechanisms that can help businesses make the transition to sustainability, the CBD Secretariat has been involved in facilitating the development of the Global Partnership for Business and Biodiversity.

  • United Nations
  • United Nations Environment Programme