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April 8, 2009


Why Do Businesses Need to Tackle with Biodiversity Conservation?

adachisan.jpg Copyright JFS

Lecturer: Naoki Adachi

In Malaysia where I had been working as a scientist, more and more tropical forests were cleared and now nearly 12 percent of the country's land area is covered with palm oil plantation. About 80 percent of the palm oil goes into food applications including margarine, ice cream, chocolates and cooking oil, and the remaining 20 percent is used in industrial applications including detergent and soaps. The consumption is increasing rapidly to manufacture everyday products. Our livelihoods have a great impact over the biodiversity of many regions including Malaysia and other South-East Asian countries.

Biodiversity at 3 Levels

Biodiversity simply means there are many different living things. Having many species is the most recognizable trait, but it means more than that. During more than four billion years of Earth history, many different species were born because of the genetic diversity. Many living things undergo sexual multiplication and male and female exchange their genes to give birth to their offspring with a new combination of genes that can as a result adapt to more diverse environment. Diversity gives an advantage in adaptation to the environmental change.

A variety of genes enable a species to differentiate into various living things. In other words, the interaction of different genes brings about an ecosystem. A diverse ecosystem allows many different living species to exist. The diversity of these three different levels: gene, living things and ecosystem, blends together and comprises biodiversity. We need to remember that biodiversity conservation must involve the conservation of these three totally different levels.

Ecosystem Services that Support Human Life

The global scale study of the state of biodiversity is the Millennium Ecosystem Assessment (MA) published by the United Nations in 2005. This study provides well-organized information on how beneficial the ecosystem is to our life, human welfare and well-being.

The ecosystem provides us with various resources and materials that are necessary for our livelihood. It also performs many adjusting functions that allow us to live safely as well as to mitigate natural disasters, which are collectively called ecosystem services.

One of the most critical ecosystem services is the supply services. For instance, about 40 percent of the medicine we use is made from natural ingredients. As for food, basically we only eat living things. Therefore, our livelihood literally depends on ecosystem services.

JFS/college 0810-02
Source: Millennium Ecosystem Assessment

Not only our livelihood, businesses and industries also depend on them. In addition to timbers and fibers, the palm oil, tires made of rubber and dyes are all plant origin.

The UN's Millennium Ecosystem Assessment, however, indicates the degradation of biodiversity and ecosystem services that support our livelihood and economy over the past 50 years.

Furthermore, an interim report "The Economics of Ecosystems and Biodiversity - TEEB", somewhat like a biodiversity version of the Stern Review on the Economics of Climate Change, was published in May 2008. Although the interim report only examines the ecosystem services provided by forests, it forecasts an annual economic loss equivalent to 28 billion Euros if this situation continues. In total, six percent of the World's GDP will be lost just like the case with the climate change impacts assessed in the Stern Review. It is becoming clear that biodiversity will have a big impact on economy.

Japanese Companies are Finally on the Move

Now let's summarize the global efforts so far. In 1992 we actually concluded an international treaty on biodiversity, which is similar to the United Nations Framework Convention on Climate Change (UNFCCC). It is called the Convention on Biological Diversity (CBD) and most countries including Japan joined the treaty but not the United States.

At the eighth meeting of the Conference of the Parties to the Convention on Biological Diversity (COP 8) held in Curitiba in Brazil in 2006, the governments concluded that they would need to get businesses involved in biodiversity conservation activities. In other words, the international community agreed that the involvement of businesses were essential to solve the biodiversity problem.

In addition, at the COP 9 held in Bonn in May 2008, the Business & Biodiversity Initiative was launched by the German government. Business participation is growing with 34 leading companies around the world joining the initiative.

The upcoming COP 10 is scheduled to be held in Aichi Prefecture, Japan in October 2010. In Japan, only recently people started to discuss how to get businesses involved. In May 2008, Japan adopted the Basic Act on Biodiversity, which states that corporate efforts toward biodiversity conservation are mandatory. As one of the measures, the Japanese government is now trying to make a guideline showing how businesses can conserve biodiversity.

Japanese companies have been participating in social contribution activities, but most of these efforts were unrelated to their core business. Even if it is not their intention, but especially the non-governmental organizations (NGOs) in western countries could criticize these activities as "greenwash." I believe the conservation through core business will be very important in the future.

Not tackling biodiversity issues could pose risk to businesses. On the contrary, tackling biodiversity could create new business opportunities. In any case, biodiversity conservation is essential to businesses not for their social contribution but for their corporate management.

The Japan Business Initiative for Conservation and Sustainable Use of Biodiversity was launched in April 2008. The initiative comprises 19 companies (21 as of March 2009) including Daiwa Securities Group Inc. and other companies such as construction companies that have a direct impact on biodiversity and others that use plant-derived raw materials.

These efforts by businesses are recently gaining attention not only from the industries that expect major direct impacts such as fish and forest industries but also from financial sector. "Bloom or Bust?," a report published by the United Nations Environment Programme Finance Initiative (UNEP FI) in March 2008 points out that the financial sector is facing various risks on biodiversity.

Now businesses and governments around the world are paying close attention to climate change. This trend is creating a money flow. When the money starts to flow, the world will follow. The financial sector will also play a key role in biodiversity. In that sense, I am very interested in the publication of this report. In the future, the mainstream global financial institutions will invest heavily on biodiversity. Then the movement on biodiversity will gain momentum.

Efforts that Reduce Risks and Create Chances

I mentioned that businesses are facing various risks. Now let's look at some specific examples of mainly western companies and how and what kind of risks they manage.

First is the risk about operation. As raw materials become scarce or it becomes extremely costly, the operation sometimes is forced to stop. Or when the laws and regulations become stricter, the companies may face risk of lawsuit or suspension of business.

Reputation is another risk. If the company is not involved in biodiversity activities, the evaluation by its clients, investors and society goes down. The company may face the risk of not getting enough money to expand its business if the financial market gives a low rating to the company.

A famous example of risk directly related to business operation is the case of Vittel's mineral water: Farmers around the mineral water source in a region of France cleared forest. They started to raise many cattle and used a lot of pesticides. As a result, foreign substances such as nitric acid began to mix in the water source. Naturally the water would not be approved as mineral water by law, and the company would lose a business using the area as a water source. Then the Vittel provided necessary financial compensation to the surrounding farmers to ask them to maintain the proper condition of the area. This is the successful example of a company protecting its brand of natural mineral water.

In South Africa, we can find another example to create a business chance in the efforts on biodiversity. South Africa is located at the edge of African continent and it has many unique fauna and flora. One example is a unique ecosystem called fynbos. At a glance, it looks like an ordinary shrub zone, therefore the area was quickly developed into vineyard to make use of it. Now the area is reduced to two percent of its original size. If nothing is done, the distinctive and precious South African ecosystem as well as the animals that live there would be lost soon.

Since there is one of the country's most poor areas nearby, someone tried to solve that problem, too. He bought the fynbos that was about to be cleared to make vineyard, and instead he collected wild flowers blooming in the bush, made bouquets of flowers and started to export them to Europe. Thus the attempt was able to protect valuable ecosystem, solve poverty issue by creating jobs and contribute to the stabilization of the whole community. It was the world's rare ecosystem called fynbos with beautiful flowers that created the business chance.

What about the efforts made by Japanese companies? Let me introduce some leading examples.

As for procurement, there is an example of a company called Aleph Inc. that operates a chain restaurant, Bikkuri (meaning "Surprise!" in Japanese) Donkey. Restaurants need various raw ingredients, and for instance, they purchase tomatoes from farmers who use native bumblebees for pollination.

Pollination of tomatoes is very labor intensive, but if we release bees, they can help pollination by flying from flower to flower. This is one of the ecosystem services. Originally Japanese native species of bumblebees were used for this purpose, but at some point in the history, European bumblebees were introduced to improve efficiency. Then the European bumblebees escaped from tomato greenhouses and drastically increased its number. Soon the Japanese native bumblebees will be expelled. That is why Aleph buys tomatoes only from farmers who use the Japanese bumblebees to contain the damage caused exotic species.

Sekisui House, Ltd., a Japanese major housing company, also does an interesting effort called "Five Trees Project." Out of five trees they plant in the yard when they build a house, they select three trees for birds and two trees for butterflies. When trying to plant trees for birds and butterflies so that they can gather in the yard and find food to grow, we would need to choose Japanese native or indigenous species. Sekisui House suggests that it will be a small but good step in restoring the community's original ecosystem if there are more and more of such houses in the neighbor.

Japanese companies are slowly starting to work on various efforts on biodiversity conservation.

To Accomplish Stewardship

Biodiversity is not an issue limited to a specific area. It is an issue for all business activities and each one of us. Business activities are especially responsible for it because they give more or less impact on biodiversity.

It does not necessarily mean that the corporate activities are bad. Unlike oil and minerals, living things are originally sustainable resources. For instance, even if we clear forests, they can provide us with the same services in several years if we properly maintain them.

However, the system of living things and ecosystems is very complicated. We may do things from good intentions, but it sometimes brings unexpected side effects. We need to consider these points and try to use them in a sustainable manner.

Lastly, I would like to introduce a word, "stewardship." A steward is translated as "an administrator of property" in Japanese, and it actually means a butler. Therefore, stewardship means a job duty of administrator of property.

I think we or the companies are actually the administrator of property of nature. If we use nature properly, we can enjoy the benefit it provides us and pass it along to the next generation. Without a good stewardship, we may deplete it during our generation. Or we may leave something even worse to the following generation. I believe now is the time when the businesses are challenged to prove that they can fulfill the stewardship for biodiversity.