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Published: August 27, 2013
 / Autumn 2013 / Issue 72


The Business Case for Nature

This is not a call for naivete. Businesses must always ask tough questions about what will yield profitable results. Governments must do their part in enacting smart environmental policies and regulations. And environmentalists must remain vigilant about identifying and confronting companies that undermine environmental standards and regulations. Collaboration does not mean that companies should expect a free pass from environmentalists; watchdog organizations will always play an important role in exposing bad corporate practices. But even those organizations that push companies hardest see the benefits of working with those willing to do things differently.

We will have opportunities over the next several decades to make real progress on these issues, if we start now. In many of the places conservationists want to protect, the underlying threat is human demand for food, energy, space, and water. An expanding global middle class will only intensify this demand. It will push companies to build more roads and other infrastructure, expand agricultural lands, and extract more minerals, oil, and natural gas. Simply ignoring these trends will only put the planet in greater peril. Likewise, just saying no to these companies and their customers is unlikely to be a successful strategy.

Changing the Conversation

What if instead of saying no, environmentalists ask “how?” How might companies change their practices to achieve better environmental and business outcomes? How might governments create incentives for companies to invest in and protect nature rather than degrade it?

The water fund in the Cauca Valley is just one project being framed by these questions. Another can be found along California’s central coast. There, the same frustrating dynamic played out for years: Environmentalists argued for limiting or halting all bottom trawling and creating reserves where fishing would be prohibited, while the fishing industry fought all restrictions as assaults on fishermen’s livelihood. The result was as predictable as it was devastating. The groundfish industry collapsed, and that environmental disaster rippled throughout the local and regional economy.

Some conservationists gradually came to realize that simply talking to (or on occasion yelling at) the fishermen was not going to work. A breakthrough came when we at TNC decided that instead of fighting the industry, we would join it. We bought trawlers and trawl permits from willing sellers in the fishing town of Morro Bay, and the fishermen who wanted to keep fishing agreed to support the protection of 3.8 million acres of fish habitat that would be off-limits to trawlers.

No one had ever tried this approach before, and the fishing community reacted with disbelief. Who could imagine that a bunch of tree huggers would end up owning a large share of West Coast fishing rights? Some TNC supporters and even some staff reacted the same way. But the result has been a successful partnership with local small businesses. Instead of trawlers, most fishermen are using hooks and lines, and the market for live-caught fish is booming.

Major corporations are learning the same lessons. In 2011, Dow Chemical Company CEO Andrew N. Liveris challenged TNC to help apply the concept of nature’s value to his company’s business decisions and operations. His questions were eminently practical: How do Dow’s operations both affect and depend on nature’s services? How would the natural assets that generate such services be accounted for on the company’s balance sheet? How vulnerable are those services, and what might Dow do about those vulnerabilities—either on its own or by joining with other stakeholders to influence natural resource policy?

Today, TNC and Dow are working together to answer these questions. The hypothesis is that once businesses can quantify a broad range of services they depend on from nature, they will see a bottom-line payoff from investing in the natural assets that generate those services. If that hypothesis proves to be right, a straightforward business calculation should motivate new corporate practices that favor nature protection. Those changes could ripple across entire industries. But this is an experiment. The proof will be in what Dow does with what we learn, and how receptive other companies are to the findings.

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