Framing a Business Case for Sustainability

Many companies fail to make the connection between healthy ecosystems and the attainment of their economic goals (World Business Council for Sustainable Development, 2008). This paper discusses proactive management of environmental resources, an often overlooked business opportunity, using the ecosystem services approach. Det Norske Veritas (DNV) has been working closely with the World Business Council for Sustainable Development (WBCSD) and the World Resource Institute (WRI) in shaping this approach so that environmental management practices can be optimized by better understanding the relationships between business goals and the ecosystem services they impact and depend on.

Understanding ones' ecosystem impacts and dependence, however significant, is only a first step towards achieving sustainable ecosystem use and management. It should be followed by efforts to internalize and account for the full value of ecosystems as well as the costs associated with ecosystem service loss. Only then will strong incentives be present for internalizing these findings and incorporating them into corporate strategy.

Despite the fact that ecosystem services underpin markets everywhere, ecosystem services are rarely traded and are often viewed as externalities. As a consequence, many ecosystems and the services they provide are undervalued. The use and degradation of ecosystems appear to carry either very low or zero costs, and hence there is a need to support sustainable businesses in valuing their ecosystem relationships and assets.

As a result, the apparent business case for progressive action may be weak because of the lack of tools and expertise to quantify the worth of ecosystems in terms of Net Present Value. These unquantified environmental risks and opportunities can be estimated however using a combination of operations knowledge, ecosystems knowledge, and a systematic business approach.

The business cost of failure to manage environmental resources is often hidden in losses due to current inefficiencies, unaccounted future expenditures, and risks and opportunities that arise from ecosystem degradation. The cost of an environmental aspect includes today's lost energy, resources, and opportunities, cumulative losses over time, and losses resulting from related environmental aspects. Therefore, the profitability and sustainability of many industries is inextricably linked to sustainable care of the ecosystem services they impact and depend on.