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What the Heck Does Biodiversity Have to Do with Business?

It might not be top of mind, but biodiversity has an important impact on business. Companies are slowly beginning connect the dots between the proliferation of species and their bottom line. The reasons why might surprise you.

Biodiversity (or biological diversity) refers to the full complement of all life forms on Earth, including plants, animals and micro-organisms. There are more than 8.7 million known species on our planet today, with more still to be discovered. All of these species are part of ecosystems that, when functioning properly, provide “services” that individuals, businesses, and communities rely on every day.  Ecosystem services refers to nature’s provision of those things upon which we rely every day, such as fresh water, fisheries, raw materials, recreation, habitats for species, and protection from natural hazards. When uninhibited, nature will continue to provide us with an uninterrupted flow of these precious benefits.

But, here’s the clincher.  Proper functioning of ecosystems depends on their biodiversity. Healthy ecosystems are needed to maintain soil and water quality, help control air composition, and treat and dissipate waste. To keep benefitting from the services nature provides, ecosystems must be maintained – including the careful balance of interconnected species within them.

Extinction, or the death of the last individual of a species, is the first step in the declining health of an ecosystem. The extinction of a single species sets off a chain reaction that can ultimately result in the failure of an entire ecosystem. A study in the journal Nature estimates that 15-37% of all species on earth will be extinct by 2050.  This will launch many ecosystems into crisis.

You may begin to see where I am going with this.  For any business, the value and availability of materials are critical factors in the success or failure of an enterprise. Numerous industries, including pharmaceutical, food and agriculture, construction, and packaging rely on ecosystem services to deliver critical inputs used in their production processes. Changes that may seem small or completely unrelated to the provision of a good or service can have huge impacts.

Let’s take a deeper look at how the extinction of a particular species can have wide ranging implications.  During a family vacation in Acadia last year, I unexpectedly learned a lot about bats.  You may not be a fan of these furry, vampire-like creatures, but they actually play two very critical roles we should all care about.  For one, they eat insects.  A lot of insects.  A single colony of 150 big brown bats can protect local farmers from up to 33 million rootworms each summer!  In addition to being on the insect control patrol, they are also major pollinators. One of every three bites of food eaten worldwide depends on pollinators for a successful harvest. And, bats pollinate some of the most economically valuable plants in the world. (For those who like their margaritas – bats are the sole pollinators for the agave plant. Without them, there would be no tequila!)

Unfortunately, in North America, bats are dying at astounding rates.  The culprit is White Nose Syndrome – a fungal disease that could lead to regional extinctions of bats in the US and Canada in the next 20 years.  Because of their two important roles, when the bat population decreases, insects proliferate and pollination decreases.  Both factors have a dramatic and negative impact on the agriculture we rely on to feed ourselves.

The financial burden on farms is significant. Colony collapse disorder (CCD), which affects bee populations and results in lower pollination rates, caused $15 billion in crop losses each year. When crops fail, farmers tend to use more pesticides and fertilizers, which introduces more dangerous chemicals into our food, air, and water.  Compounding the negative impacts on society, food prices rise due to lack of supply, which adds to the financial burden on individuals and families.

With the increase in human population and demand for goods, we are destroying natural habitats at a rate that nature cannot restore. Take palm oil for example. We use this commodity in the production of food, cosmetics, biofuels, and several other products. The demand for palm oil has increased and, without proper management, has caused dramatic damages to tree and peat forests as well as displacing elephants from their habitats. These impacts must be understood and managed by business to maintain a healthy flow of ecosystem services.

Unfortunately, most of our current business models and systems are not structured to take into consideration the finite nature of the natural world. There has been some progress over the last five years toward changing business perspectives and practices.  We are beginning to see forward thinking companies incorporate a future-oriented, systems thinking approach that goes beyond traditional economics.

Corporations such as Puma have created an Environment Profit and Losses (E P&L) report that enables the business to track the entire supply chain with regard to business effects on environmental services and the consumption of natural resources. Puma focused on greenhouse gas emissions, water usage, land usage, air pollutants, and waste, calculating what they would owe to the planet if they treated each of these things as a service.  The findings were a wake-up call for the company and helped them see where to focus their sustainability initiatives.  The E P&L illustrates the impact that a depleted ecosystem can have on company performance.

Biodiversity is a public good. To protect our ecosystems from future collapse, all sectors of government will need to create policy change. A global effort to put a price on nature will generate a new system of economic decision making to protect the future of ecosystem services. Public, private, and non-profit sectors must all work together to create effective incentives, establish regulatory mechanisms, and grow collective expertise to shift behaviors of individuals and businesses.  At Sustrana, we can help you navigate your business toward a more sustainable future with a proper strategy that bears biodiversity in mind.

This blog post features significant contributions from our current intern, Laura Wright and our former intern, Toutia Daryoush.