The Business Case for Biodiversity

There are numerous reasons why businesses should take steps to respect biodiversity and make their practices as sustainable as possible. Beyond ethical and environmental considerations, however, there are solid economic reasons for companies to look at incorporating these concerns into their business decisions. These can be broken down into two broad categories, risks and opportunities.

Risks

Under risks, the following issues can be considered:

• 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: It is well known that 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

• Scarcity of Resources/Long-term Viability Damaged: Many companies want to be in business for the long-term. However, if the resource upon which the company depends for its inputs (either directly or indirectly) is under severe stress, or in the worst case scenario collapses entirely, it may threaten its long-term viability

• Governmental Regulation: As governments increasingly recognize the importance of biodiversity and sustainability, and respond to their constituents demanding environmental protection, so 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.

Opportunities

With regard to opportunities, many of these are simply the flip-side of the risk issue. But 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 by consumers and customers the world over. Good corporate practices can often translate, all other things being equal, into better market share

• Better Relationship with Other Stakeholders: Businesses that must deal with local communities, governments, NGOs or other stakeholders (which basically encompasses everyone) will find that if their practices are sustainable and seen as benefitting the community and environment, then their dealings will be that much easier and less costly. Particularly in the case of government, regulators will be more inclined to grant licenses to those who have demonstrated positive stewardship of their resources

• Enhanced Loyalty of Employees: Most employees want to work in a company that they feel is making a positive impact on the world. Numerous corporations have found that by enhancing their environment footprint (and getting their employees directly involved in the process) they generate increased corporate loyalty and benefit from the ideas generated by their staff

• Long-term Viability of Business: If products can be harvested or extracted in a sustainable fashion they will then be available for the long term, thus allowing businesses to also keep functioning for the long-term. 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 which require 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

• Changes in Business Methods: Change can be good, but it can also be scary. The entire world underwent a vast change in the way of doing business (the IT revolution) which was very disruptive, very expensive and cost millions of jobs. It also created a myriad of new industries, a vast expansion of wealth and many more jobs than it destroyed. It is all a matter of perspective

• Cost Control: Finally, it is worth noting that cleaner, more streamlined supply chains often means less waste and lower costs. Going green shouldn’t be a choice between costs and sustainability. If managed properly, the two will go hand-in-hand.

Click here for Previous Page (Relevant Business Decisions)