Biodiversity an issue for business

Cranfield School of Management

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Biodiversity an issue for business
By Richard Wilding

Biodiversity may seem to have little relevance to business and the area of supply chain management, my specialism, but biodiversity has quite a simple context and connection with business and our work. Biodiversity is about encouraging variety in the natural world. In considering biodiversity what we are trying to encourage is a variety of plant life, which encourages a variety of insect life, which then in turn encourages a variety of birds and mammals, and so on.

If you take just the simple example of your back garden: if you just covered it over with concrete or pavers you are going to have very little biodiversity; perhaps a few bits of grass coming up between the cracks and some ants walking around! If you then plant a lawn, you are then going to have various insects which can live in the lawn. If, however, you then start planting shrubs and other border plants you will attract a greater variety of insects, which will then mean that you will perhaps get greater variety of bird and mammal life. It will encourage insect pollinators like bees which in turn support our agricultural sector and keep food costs down. Digging a pond and allowing it to be populated with plants and insects and fish further increases the biodiversity. If you then planted larger trees a greater variety of insect and bird life is encouraged. For example research has shown that an oak tree can sustain over 200 different insect species.

So from a business point of view, this is quite critical because our actions have an impact on the amount of “variety” that the world has. Even building a factory or warehouse can be used to facilitate an increase in the variety of our natural environment or it could also significantly deplete the variety present. If you are building a facility on a brown field site with car parks and a large roof structure, water could either be sent into storm drains or utilised to create a wetland landscape that encourages an increase in biodiversity. So as managers there are things we can do to ensure that we can generate more biodiversity through our actions.

And should we care about this in business?

It could be argued that “it is all very well for nature lovers to say we need to nurture the environment, but what about hardnosed business people?” Recently the Stern Report focused on CO2, and this is having a tremendous impact on business; make no mistake that the next “CO2” is biodiversity. There has been a recent report, the TEEB Report, which stands for The Economics of Ecosystems and Biodiversity and assesses the implications of biodiversity for business.

Already consumers are waking up to the fact that you don’t want to have moral and environmental baggage attached to your business, say, child labour being incorporated into your products. In future, it is going to be bad for business if you are associated with the destruction of biodiversity. This might be on a grand scale, for example where certain endangered species are dying, but at the same time we have to recognise that our impact can have a significant fall-out on the whole environment. For example, CO2: it is estimated that it is worth to us $3.7 trillion, the amount of CO2 which is locked up in forests. So is our business and our supply chain responsible for the destruction of forests which may be destroying biodiversity and also releasing more CO2 leading to climate change? And what things can we do to offset this and ensure that we do not continue to inflict a damaging impact on the environment?

What should business be doing?

So what should business be doing? There are key actions outlined by the TEEB report that we should consider:

  • Identify the impacts and dependencies of your business on biodiversity and ecosystem services.
  • Assess the business risks and opportunities associated with these impacts and dependencies.
  • Develop biodiversity information systems, set SMART targets, measure and value performance, and report your results.
  • Take action to avoid, minimize and mitigate biodiversity risks, including in-kind compensation (‘offsets’) where appropriate.

1. Identify how you are impacting on biodiversity

The first thing is that you need to identify how you are impacting on biodiversity – not just at your own sites, which is very important, but also further out throughout the whole of your supply chain.

2. Assess the business risks and opportunities

We also need to assess the risks and opportunities because it is not just about destruction, there is potentially good news too. If we manage our businesses correctly, we can increase biodiversity. For example, some organisations are already capturing water run-off from the roofs so they are able to create wetlands, which can then support and increase the amount of diversity locally, which benefits local people. In fact some businesses are even being able to create off shoot businesses and opportunities in terms of recreational use of those helpful environments; it might be a lake which has water skiing on it and fishing and so on. So you need to take a wide look at the risks and opportunities. You may actually be able to make money by increasing biodiversity.

3. Set targets and measures

We then need to have targets and measures, rather like with CO2 we had to have targets and measures for CO2 that is now occurring in biodiversity.

4. Take action

The bottom line is that we have got to avoid, minimise and also mitigate any risks to biodiversity which are taking place.

Research project for a Supply Chain Biodiversity Risk Assessment Tool

Cranfield School of Management is excited to be working with Middlemarch Environmental, who specialise in creative ecological solutions. Cranfield and Middlemarch are undertaking a research project to develop a Supply Chain Biodiversity Risk Assessment Tool which is going to aid businesses to look at the impact on an organisations supply chain on biodiversity in more detail. This project is supported by the United Kingdom's “Knowledge Transfer Partnership” scheme and is breaking new ground in this area and we would love to support companies by applying the techniques developed to ensure industry can leverage advantage by considering biodiversity. Do feel free to contact us if you would like to join this initiative.

Message for us all

So the message is that biodiversity is important for business, without considering biodiversity our supply chains will become increasing unsustainable. By being proactive in considering biodiversity as we make supply chain decisions competitive advantage can be gained and the environment and society will also benefit.

For all of us personally, let’s take a look at our back gardens and see how we can increase the biodiversity! For businesses, take a look in the “back garden” of your organisation ask how your supply chain can be structured to increase natural “variety” and not deplete it. Review sourcing decisions and work with suppliers and customers to create opportunities to increase biodiversity. Biodiversity is good news for everybody, companies and society, and it will be good news for our environment and our future.

Richard Wilding is Professor of Supply Chain Strategy .

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