The Relationship of Business to Biodiversity

What is the relationship of business to biodiversity?

Biodiversity is a fundamental component of long-term business survival. Businesses rely on genes, species, and ecosystem services as critical inputs into their production processes and depend on healthy ecosystems to treat and dissipate waste, maintain soil and water quality and help control the air composition. For example, agribusiness relies on the diversity of wild relatives of major food crops, as a resource to ensure crop resistance to disease and pests.

At the same time, business and industry can have major negative impacts on biodiversity resources (see below). Yet, while the private sector is part of the problem, it is also part of the solution. The resources and influence of the private sector offer important opportunities for innovative and effective contributions to conservation. Two major international initiatives highlight the role the private sector can play.

The Convention on Biological Diversity (CBD), which is the main international agreement on biodiversity highlights the importance of the private sector in meeting the convention's three main objectives through multi-stakeholder partnerships and industry-driven initiatives. The CBD's objectives are: the conservation of biological diversity, the sustainable use of its components, and the fair and equitable sharing of the benefits arising out of the utilization of genetic resources.

The Millennium Ecosystem Assessment (MA) is a public-private initiative designed to meet the assessment needs of the CBD and other international environmental conventions. The World Bank Group, of which IFC is a part, was a major sponsor of this initiative. The MA report highlights ways in which businesses depend on ecosystem services (such as the provision of water and food, control of pests, flood control and others), how those services are changing, and the ramifications for business and industry. The MA found that two-thirds of these services are being degraded, a situation that presents both challenges and opportunities to business.

Business impacts on biodiversity

Direct Impacts:

• Stem primarily from land use and waste generation.
• Usually occur at the same time and place as business activities.
• Can include habitat loss and degradation, erosion, species loss, air and water pollution, soil and water contamination.
• Introduction of non-native species [PDF] can disrupt surrounding ecosystems.
• Can affect local communities by reducing access to natural resources or disrupting ecosystem services, such as erosion control.
• Location is key for determining the potential for direct impacts: pristine or remote locations [PDF] may pose higher risks.
• Can frequently be reduced, and even avoided, through early identification and careful planning [PDF].

Indirect Impacts:

• Result from the actions of others, triggered or caused by business activities.
• Can occur in a different place and at a different time from the actions that trigger them. May represent a company's most significant risk for damage to biodiversity.
• Often the most challenging to predict, identify, manage and control.
• Can be caused by third party suppliers in the sourcing and production of goods and services used by a company. (See the Grupo Granjas Marinas case study [PDF])
• Can result from the use or disposal of a company's products by consumers or other business users.
• Changes in behavior by others, including local people and employees, that are prompted by a company's operations may lead to induced negative impacts to biodiversity, including habitat loss and conversion from unplanned settlements and agricultural expansion, or increased demand for and depletion of natural resources as a result of in-migration.

Cumulative Impacts:

• Arise when the operations of several companies in close proximity begin to collectively affect biodiversity.
• Although individual business decisions or activities may have insignificant direct impacts on biodiversity, when combined, their impact may be significant. (See the Holcim Vietnam case study [PDF])