Who can help me develop an effective biodiversity strategy?
External players: influencing suppliers and business partners
In cases where suppliers or other third-party relationships are the source of a company's biggest biodiversity risks, incorporating biodiversity performance requirements into supplier and partner contract terms may be necessary to promote effective biodiversity management throughout the business cycle. Effective tools for improving biodiversity management throughout the supply chain include mentoring, capacity building and financial incentives. In situations where companies act as sources of finance or goods to third parties (i.e. trade finance in certain agribusiness commodities), it may be appropriate to insert specific environmental or biodiversity clauses into financing or contract documents.
Example: Green and Black's
Green and Black's, a rapidly growing organic chocolate producer, uses a price premium to provide incentives for the use of organic cocoa growing practices, offering higher incomes to farmers and enhancing biodiversity conservation.
In 2002,when IFC appraised Amaggi, a major soy producer in Brazil, it also took into account the role that the company played in providing pre-finance to about 900 third party farmers in the Brazilian states of Mato Grosso, Amazonia and Rondonia. Soy production in this part of Brazil is a sensitive issue because of the encroachment of the agricultural frontier into the Amazon and Cerrado ecosystems, both important biodiversity areas that provide critical ecosystem services. As part of the appraisal, IFC required Amaggi to demonstrate compliance with Brazilian and IFC requirements for its own farming operations and also required the company to develop an environmental and social management system (ESMS) that would allow it to track the environmental and social performance of third party farmers who were receiving pre-finance support from Amaggi. In situations where candidate farms could not demonstrate compliance with these standards (including IFC policy on natural habitats and indigenous peoples), pre-financing was declined. The company provides capacity building via farmer field courses and extension services and monitors performance of third party farmers annually. Compliance with the ESMS performance standards also influences subsequent financing. Amaggi now uses these standards to differentiate its services from other sources of pre-finance, demonstrate its environmental commitment and attract further financing from other sources (e.g. Rabobank).
Even if a biodiversity issue seems distant and very far down the supply chain, it can profoundly affect corporate activity and reputation in unexpected ways, as Vodafonediscovered in its sourcing of tantalum, a rare metallic element that is used in the production of portable electronic equipment. Tantalum is extracted from coltan, a gravel ore that is mined in several countries, including the Democratic Republic of Congo (DRC), which traditionally accounts for about 4 percent of international supply. A massive increase in the price for tantalum in 2000, led to a rush to mine in many places, including Khauzi Biega National Park (KBNP), a UNESCO World Heritage Site National Park in the DRC. The mines were in rebel-held areas of the country, and allegations of humanitarian atrocities quickly surfaced. The mining camps and population increase in the park also had a massive impact on local biodiversity through poaching, including of critically endangered species such as Grauer's gorilla, siltation of rivers, deforestation to build mines and mining camps and provide fuelwood, and increased flood risk and reduced water quality as a result of land-clearing.
When journalists reporting on the war and mining in the DRC made the connection between coltan, tantalum and mobile phones in early 2001, mobile telecommunication companies suddenly faced difficult questions. Vodafone decided to proactively confront the challenge, studying the facts and eventually considering two options: banning trade in coltan from the DRC, or regulating coltan mining and export. Although boycotting central African tantalum seemed the easiest and safest option, the company was concerned about the difficulty of verifying the origin of its coltan purchases and the economic impacts that sanctions would have on a very poor region. So, Vodafone decided to support the establishment of a regulated Congolese coltan industry, which would require tantalum processors to establish long-term, transparently negotiated business deals with Congolese coltan suppliers, paying a fair market price for an ethically sourced product. Fauna & Flora International, is now working with the Congolese government and other local groups to promote regulation of coltan mining in DRC as a "quadruple bottom line" initiative to answer environmental, social, economic and political concerns.