Company Implementation

Company Scale Implementation

After assessing the current trends and methods for biodiversity loss management by businesses, Mission 2015 has developed the following series of policy and action recommendations for the private sector:

Refining tax incentives and subsidies so as to promote environmentally sustainable business practices.

A study by Tufts University claims that current U.S. Farm subsidies favor "factory" farms and harm diversified family farmers (Wise, 2005). Multiple assessments agree, especially The Economics of Ecosystem Sustainability (TEEB), that these "perverse environmental subsidies" act to reinforce current market trends. "Factory" farms, who often focus more on high short term profitability, are less likely to adopt long term sustained development because the subsidized cost of certain products, such as grain, promotes large areas of monocultures (Sukhdev, et al., 2010). Smaller organic farms, which operate without pesticides, herbicides, and inorganic fertilizers and tend to have more diverse crop rotations, receive far fewer economic incentives, especially in the U.S., where they receive no farm subsidies (IFOAM). Although not necessarily an objective that can be implemented by businesses, we believe that the effect subsidies play in the private sector, especially in agriculture, is of enough importance that businesses should become part of the collective effort to reform them. Some of these policies can include lobbying for removal of such subsidies and promoting fair trade. Both of these policies aid smaller business groups, such as the organic foods industry, a better chance to compete against larger pre-existing sectors, such as large agribusinesses).

Other issues can be addressed in the transportation and shipping sectors, mainly related to invasive species. The major source of alien species invasions today is increasing global trade (Convention on Biological Diversity, 2009). A 2008 study in the Great Lakes region in the United States suggests that annual losses due to invasive species introduced via shipping are roughly 200 million USD in damages (Convention on Biological Diversity, 2009). We strongly propose that in conjunction with stronger customs policies implemented by governments, businesses should tighten policies against unintentionally transporting alien biological material.

Making investment and expansion decisions based on refined accounting practices that reflect the presence and role of ecosystem services in business.

Currently, businesses use Environmental and Social Impact Assessment (ESIA) to determine how accounting practices can be improved with respect to environmental effects (Integrating Biodiversity into Environmental and Social Impact Assessment Processes, 2003). In order to include biodiversity and ecosystem risk, the Convention on Biological Diversity (CBD) suggests expanding "the scope of analysis to include biodiversity characteristics, evaluating impacts holistically using a wider ecosystem approach" (Convention on Biological Diversity, 2007). At the moment, ESIA is widely used in the oil/gas industry. We propose to expand ESIA or similar assessments to all sectors and revising these with biodiversity and ecosystem analysis, or broader sustainability indices in sectors considered to have more "indirect" effects. Yale's Environmental Performance Index (epi.yale.edu) and the Dow Jones Sustainability Index (www.sustainability-index.com) are good examples of how businesses across all sectors may incorporate biodiversity and ecosystem assessments in current profiles.

Including biodiversity and ecosystem loss in risk assessments while lengthening the term over which investors and companies in all sectors make risk assessments.

According to a report for the Business and Biodiversity Offsets Program, few banks feel the need to have biodiversity specialists because, as stated earlier, the monetary value of biodiversity is usually observed over extended periods, in most cases at least 20 years (PricewaterhouseCoopers LLP, 2010). Given the current practices of the financial industry, ecosystem health has effects that are too long term (i.e. 20 years) to factor in investments. Investments, however, are usually evaluated over, at most, a 10-15 year holding times (Shen, 2005). In order to start evaluating ecosystem and biodiversity risks, we propose that the financial sector will include risk assessments over longer periods of time, at least 20 years, especially when evaluating assets most directly related to resource extraction and cultivation (e.g. mining, oil, agriculture, etc.). As we will explain below, banks commonly incorporate biodiversity risk assessment through the adoption of the Equator Principles.

Introducing micro financing schemes for small and mid-sized farms developing in the emerging "green" market.

Small and mid-sized companies are among the drivers of emerging "green" markets across the world. These companies can range from start-up technology firms to organic and biotrade firms in developing companies. Some venture capital firms, such as New Ventures, have already developed as micro-financers for small environmental and social firms. Still, these small and mid-sized companies suffer from lack of capital, often because the rate of return for these firms are too long-term for existing financing structures (New Ventures).

Reporting regularly on sustainability practices and contributing company data on current biodiversity research.

Currently, certification programs such as the USDA Organic Certification and the Forest Stewardship Council (FSC) already require members to submit public reports on sustainability and ecological impact so as to regulate and determine the ecological impact(USDA); (Forest Stewardship Council). We propose that all sectors publish sustainability reports and submit biodiversity data. The private sector's contribution will help measure the success of sustainability programs and contribute further to the growing global knowledge of biodiversity.

Investing in public interest campaigns that in turn improves company image to consumers.

In a McKinsey & Company global survey, 59 percent of CEOs surveyed said that they viewed biodiversity as more of an opportunity than a risk (McKinsey & Company, 2011). With this type of positive outlook, businesses can be ahead of the consumer concern for biodiversity. In the same McKinsey survey, 37 percent of respondents reported that their concern for biodiversity was directly related to their consumers. Therefore, we propose that businesses proactively promote both biodiversity and their company image through financing public interest advertising campaigns, contributing and funding academic biodiversity research, and researching and developing new sustainable technologies and processes.

Promoting and adapting the Equator Principles in investments and assessments.

The Equator Principles require financial institutions to only give loans when the investment can be reviewed and categorized as sustainable by social and environmental assessment, adheres to applicable social and environmental standards, includes an action plan to revert environmental impacts, includes consultation with and regular disclosure of information to local communities, includes a grievance mechanism by which effects on local communities can be addressed, is reviewed by an expert not associated with the borrower, complies with national laws and guidelines, ensures continued independent monitoring and at least annual reports. These principles are widely considered as the gold standard in biodiversity credit risk management. Based on the International Financial Corporation's (IFC) Performance Standards on social and environmental sustainability and the World Bank Group Environmental, Health, and Safety Guidelines, the Equator Principles serve as a framework for determining, assessing, and managing environmental and social risk for financial transactions(The Equator Principles). Of the sectors making the most progressing in promoting biodiversity-friendly business practices, Equator Principle banks have done the most to reform the financial sector and spread that the influence into other sectors (Convention on Biological Diversity, 2007). We propose that more financial institutions pledge and follow the Equator Principles, and that the proportion of private sector financial institutions which follow to the Equator Principles to double by 2015.