Biodiversity Business Risks

How can I manage the business risks from biodiversity issues?

Businesses face growing pressure from outside investors, customers, trading partners, shareholders, governments, NGOs and the public to identify and report on their social and environmental performance, and biodiversity is one of the key areas of interest. Positive performance on biodiversity can enhance a company's standing among outside stakeholders and create real business value for the company. At the same time, poor performance or negative impacts to biodiversity can seriously undermine corporate value and affect a company's ability to operate and survive in today's markets.

As government regulation and societal expectations change, the risks to business from biodiversity issues will likely increase. There are six key factors that drive the argument for proactively managing biodiversity in business activities:



    Diagram of the case for biodiversity management

Biodiversity management does not require an entirely new set of operating systems. In most cases, existing environmental management tools can be adapted to include consideration of biodiversity issues.

A company's standard Social and Environmental Impact Assessment (S&EA) [PDF] process can be used to identify, predict and assess the likely biodiversity impacts – and potential opportunities for biodiversity conservation – associated with business activities, although a number of important issues should be emphasized when seeking to understand biodiversity impacts. Biodiversity assessment within an S&EA needs to be started as early as possible, as many biodiversity impacts can be addressed – and avoided – by redesigning or re-siting the activity. However, as project development proceeds, the costs of redesign and re-siting rise, making impact avoidance less viable (See the Holcim Vietnam case study [PDF]). In addition, effective consideration of biodiversity impacts may require studies undertaken over a period of months or even years, to ensure full consideration of seasonal issues and migratory species. Given the complexity of biodiversity assessments, it is very important to partner [PDF] with experts where biodiversity issues are thought to be an issue, and to undertake widespread stakeholder consultations in order to identify risks and concerns.

Companies can also adapt their Social and Environmental Management Systems (SEMS) to include biodiversity management issues. A SEMS defines a company's organizational structure, responsibilities, practices and resources for managing and monitoring its activities and performance on social and environmental issues. In some situations, such as where operations may have a significant impact on biodiversity or where the business model is based on the use of natural resources, a standards SEMS may not be sufficient. In these cases, a company may choose to develop a Biodiversity Action Plan (BAP), either as a stand-alone management system or, preferably, integrated into the broader SEMS.




Example: Rio Tinto
At its gold and iron mines in Brazil, Rio Tinto has worked closely with NGOs and other stakeholders to develop Biodiversity Action Plans (BAPs) that consider the whole life cycle of the projects and the site-specific context to ensure that any business decisions maximize the biodiversity value of the area. The BAP includes plans to relocate habitats and species within the site, restoration and use of offset compensation, and recognition of the needs of local communities.


Another important component of biodiversity management is a monitoring program, to evaluate the impacts of business activities and decisions, and determine the effectiveness of mitigation measures. Most biodiversity issues comprise a number of complex inter-relationships and as such, their impacts are difficult to predict and understand ahead of time. An adaptive management approach is an effective response: a management system which continually monitors ecological change and revises management policy, practice and systems accordingly. Adaptive management practices can help companies avoid major surprises that may be discovered too late and could seriously impact the viability of their business. (See the Holcim Vietnam case study [PDF])

Finally, company performance on biodiversity issues can be included as part of standard reporting procedures. Many companies have developed separate environmental or sustainability reports that include information on biodiversity issues. Consumers, shareholders, the financial community, individual and institutional investors, civil society organizations and other stakeholders increasingly expect businesses to report on their biodiversity impacts, policies and management processes. Biodiversity reports can allow for better understanding of a company's biodiversity impacts and performance, help communicate commitments, progress towards implementation and challenges faced by the company, and build trust and credibility with key stakeholders. Within a company, internal reporting can help identify progress and challenges in implementing biodiversity policies and targets, support company decision-making processes by providing necessary information, and provide incentives for employees to deliver on biodiversity goals. For example, Unilever's website details the company's biodiversity strategy, together with numerous examples of its application at the project and product level. Potential biodiversity impacts from product use are also discussed (e.g. eutrophication from use of detergents).