Biodiversity has become the New Value Chain
9/19/97
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Headline: Biodiversity has become the New Value Chain
Source: Earth Times News Service
Date: 9/19/97
Author: Joel Makower
Copyright 1997: Earth Times News Service
Biodiversity isn't a term that comes up often in
business meetings. But in a handful of companies,
biodiversity is being viewed as a business issue.
This is nothing short of a revolution. Until recently, few
companies even understood the term, let alone dared insinuate
it into their daily operations. The subject was left to
scientists or, perhaps, economists, who gave us big-picture
data calculating the value of biodiversity in the form of air
and water filtration, erosion control, plant pollination,
pest control, and all the other things plants and animals do
for us.
Now the term is beginning to resonate inside some companies
as they begin to calculate the value of biodiversity to their
own operations. They are learning that biodiversity is part
of a company's value chain, no less so than R&D, materials
sourcing, distribution, marketing, and all the rest.
Slowly but surely, biodiversity is showing up in corporate
mission statements and on conference agendas, though it's
surprising how few "real-life" examples that exist. Even the
Coalition of Environmentally Responsible Economies, whose
CERES Principles commit companies to "safeguard all habitats
affected by our operations . . . while preserving
biodiversity," could not direct me to activities in which its
signatory companies had actively promoted biodiversity.
But where companies have, the experiences are encouraging.
Here are three examples.
* BANK OF AMERICA'S environmental goals promise "to encourage
activity that respects preservation of natural habitats and
biological diversity." In one instance, B of A had to
foreclose on a southern California property adjacent to an
area targeted for preservation. According to Richard
Morrison, senior VP of environmental affairs, "There was no
mechanism for us to get compensated for preserving it . . .
[and] we couldn't just give it away." So Morrison worked with
the state of California to set up what is now called
"conservation banking."
Conservation banking works something like emissions trading.
By conserving a parcel of land and managing it for its
natural resource values, a company earns credits it can sell
to others who are required to compensate for the adverse
impacts of a development or other activity. A primary
advantage of the conservation bank, as Bank of America found,
is that it allows land owners to receive a higher value for
their land. Says Morrison: "We ended up selling out the
credits on that conservation bank and did quite well for our
shareholders and preserved the area."
"Managing the natural systems so that species do not become
threatened or endangered I think is very strongly in the
interest of business," says Morrison. "Because if you let
them become threatened or endangered then you have a lot of
disruption. It is a lot cheaper and easier for the economy to
deal with that ahead of time rather than deal with the train
wreck."
* WASTE MANAGEMENT INC. (WMX) adopted 14 environmental
principles in 1990, one of which committed it to "a policy of
'no net loss' of wetlands or other biodiversity on the
company's property." That may seem a lofty and costly goal,
but WMX says integrating biodiversity management into its
sites has helped to reduce costs during landfill
construction, maintenance, and closure, and to improve the
company's image.
WMX's Biodiversity Management Guidelines describe how to
integrate biodiversity into landfill projects. One
cost-saving measure is to use native grasslands on its
properties, which conserves native grasses and establishes a
natural habitat in which other species can thrive. It also
saves costs that would otherwise go toward mowing, weeding,
fertilizing, or other landscaping activities.
According to data in WMX's annual report, the company appears
to be meeting its "no net loss" commitment: In 1995, Waste
Management created or restored 7.7 acres of wetlands for each
acre it filled.
* MONSANTO is working with the International Cooperative
Biodiversity Group, a program that funds partnerships between
a developing country's rich biological resources and a
company's capability to commercialize them, on an
ethnobotanical project with medicinal plants in Peru. "As a
life-science company, there is a clear recognition of the
connection between our future product discovery and the need
for conservation," says Dr. David Corley, associate fellow at
Monsanto.
The company recently spun off its chemical operations to
focus on developing such products, which, according to Dr.
Thomas Lovejoy of the Smithsonian Institution, is an
anticipation of the emerging intersection of business with
bioprospecting (exploration for commercially valuable genetic
and biochemical resources) and biotechnology (using living
organisms to make or modify a product, improve plants and
animals, or develop new products). Monsanto plans to do both.
For its Kelco unit, which makes a food product derived from
kelp, the amount it can harvest from nature is directly
dependent on biodiversity. For example, if human activity
brings the sea urchin population out of balance, the urchins
will eat the kelp that is the raw material for Kelco's
products. Monsanto is working with Scripps Institution of
Oceanography to find ways of maintaining a healthy
urchin-kelp balance.
Biodiversity not only is a direct source of products for
Monsanto, it also provides inspiration. "The mechanisms that
come into play could also be services that we might be able
to emulate and could become products or services that we
sell," says Diane Herndon, manager of environmental
communications.
Biodiveristy and business will no doubt continue to find
further synergies. One recent example is Diversa Corp., which
recently signed an agreement to pay royalties to Yellowstone
National Park for revenue generated through bioprospecting.
The creatures Diversa hopes to commercialize are
thermophiles, heat-loving organisms that can be useful in
industries ranging from pharmaceuticals to agricultural
feeds.
If it succeeds, Diversa may prove just how hot biodiveristy
really can be.