An international report entitled Ecosystem Challenges and Business Implications, issued in November 2006, says that business and ecosystem services are inextricably linked. Companies not only affect ecosystems but also rely on them. The report identifies risks and opportunities for business based on the findings of the Millenium Ecosystem Assessment, a 4-year scientific study that concluded that the past 50 years of human activity has altered ecosystems faster and more extensively than ever before. The inter-relationship between business and ecosystems poses significant risks to companies including:
- Operational — increased scarcity and cost of raw materials, such as freshwater, disruptions to business operations caused by natural hazards, and higher insurance costs for disasters such as flooding.
- Regulatory — emergence of new government policies such as taxes and moratoria on extractive activities.
- Reputational — damage to corporate reputation from media and non-governmental organization campaigns, shareholder resolutions and changing customer preferences.
- Access to capital — restrictions as the financial community adopts more rigorous investment and lending policies.
At the same time, new business opportunities can arise through development of new technologies, products and services that restore and preserve ecosystems. However, most companies fail to recognize the link between healthy ecosystems and their business interests.
The report is a collaborative effort by four international organizations — Earthwatch Institute, IUCN – The World Conservation Union, The World Business Council for Sustainable Development, and World Resources Institute. Their aim is to make businesses aware of the degradation of ecosystems and to promote ways that business can help reverse the trend.
Click here for more information and to download a copy of the report.