Ecosystem Management

One of the world’s most significant environmental challenges is to halt the loss of biodiversity, which is presently disappearing at a rate not seen since major planetary catastrophes tens of hundreds of millions of years ago. Biological diversity, or biodiversity, refers to the variability among all living organisms and the ecological systems of which they are a part. Biodiversity is important because healthy ecosystems with healthy species populations are critical to the livelihoods and survival of many communities around the world. While many countries rely on development for economic growth and for products, services, and jobs, a major cause of the loss of biodiversity is the destruction of natural habitats by agriculture, forestry, oil and gas, mining, transport, and construction developments. 

The oil, gas, mining and utilities sectors, in particular, have high direct impacts on biodiversity. These companies therefore need to be able to demonstrate to host governments and local communities surrounding their sites of operation that they are taking steps to protect local biodiversity. Failure to do so can result in damage to corporate reputations and may compromise these companies’ license to operate in certain countries or communities. Conversely, best-practice management of impacts on biodiversity can offer benefits such as increasing the likelihood and speed of obtaining consents and licenses or achieving 'favoured partner' status.

Given the potentially significant impacts of these companies on biodiversity, Insight believes that they should play their part, alongside governments and other actors, in reducing their impacts on biodiversity, adopting sustainable use strategies and supporting conservation efforts in line with the framework of The Convention on Biological Diversity.

Insight launched its ecosystem management programme in March 2003. Our focus has been on those companies with large direct biodiversity impacts. Our objective is to encourage those companies to manage and report their biodiversity risks and impacts according to a set of agreed best practice standards. We therefore:

• Developed, in consultation with companies and non-governmental organisations (NGOs), a set of best-practice principles and standards for biodiversity management.
  
• Benchmarked companies’ performance and reporting against those standards.
  
• Published research on how companies might manage their biodiversity impacts through establishing offsets.

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Defining best-practice principles

In July 2003, Insight brought together 41 senior managers from oil, gas, mining and utility companies, industry associations, government, NGOs, the International Finance Corporation and investment houses in London to discuss the links between biodiversity and business. In the meeting, we discussed the principles and standards according to which extractive and utilities companies should operate, how companies’ performance with respect to biodiversity should be measured, and how operations in 'sensitive sites' should be managed.

We summarised our findings in a consultation document entitled "Biodiversity: Towards Best Practice for Extractive and Utility Companies", released in conjunction with Insight's presentation to the World Parks Congress in Durban on 13 September 2003. We also published a separate briefing, that set out our preliminary conclusions on what constitutes best-practice management of biodiversity by extractive and utility companies.

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Benchmarking companies’ reporting and performance

This preparatory work, as well as consultation with companies and experts, enabled us to develop a framework for benchmarking companies’ governance structures, policy and strategy, their management and implementation of those policies and strategies, and the quality of their assurance and reporting. Using this framework, we evaluated the performance of 22 companies in the oil, gas, mining and utility sectors.  We published the findings in our report "Protecting Shareholder and Natural Value 2004" in May 2004.

Overall, the results showed that most companies’ processes to ensure that their policy commitments were implemented were in their infancy and varied considerably both between and within sectors. Some companies had some processes in place to manage biodiversity-related risks and opportunities, and many more were aware of the issues and mobilising resources to address it. Over half of the companies had some form of business-wide policy or strategy in place, but these generally lacked the detail required to provide a robust framework to drive improvement in performance across the business and to assure the effective management of biodiversity risks and impacts.

Following the publication of the report, we contacted each of the companies to suggest a range of specific steps we felt each could take, depending on its risk exposure, to be confident that it was operating according to best practice.

In 2005, we – in conjunction with Fauna and Flora International (FFI), the Dutch Social Investors’ Forum (VBDO) and the Netherlands Ministry of Housing, Spatial Planning and the Environment (VROM) – repeated the benchmark, extending the analysis to assess the performance of an additional 14 companies. The results of the study were published in our report “Protecting Shareholder and Natural Value 2005”, released in March 2006. The results showed that a number of companies had made great strides in developing processes to manage biodiversity-related risks and opportunities and in their communication of the issue and that others were starting to tackle the issue in a systematic manner. Five companies (Cairn Energy, Xstrata, Venture, Soco and Tullow) had more than doubled their performance from the previous benchmark.

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Research

Several governments regulate biodiversity management through instruments such as wetland and conservation banking in the USA, tradable forest conservation obligations in Brazil and habitat compensation requirements in Australia, Canada and the EU.

In 2004, Insight published groundbreaking research on the opportunity for companies to contribute to biodiversity conservation through the creation of ‘biodiversity offsets’ – areas that compensate for the residual, unavoidable harm to biodiversity caused by development projects, so as to ensure no net loss of biodiversity. Our report "Biodiversity offsets: views, experience and the business case", prepared jointly with IUCN, explores the potential and limitations of biodiversity offsets as a tool for conservation, including the business case for companies, developers and investors.

This work led to the creation of the Business and Biodiversity Offsets Program (BBOP) by Forest Trends, a US-based, international, public/private, non-profit coalition. BBOP is presently coordinating a series of pilot projects with companies around the world to explore how offsets need to be designed and implemented to achieve the desired biodiversity goals and what makes them successful from the perspective of the developers, communities and government authorities. Insight is a member of the BBOP Advisory Committee.

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Publications

Reports

"Protecting Shareholder and Natural Value 2005" Full Report

"Protecting Shareholder and Natural Value 2005" Executive Summary

"Protecting Shareholder and Natural Value 2004" Full Report

"Biodiversity Offsets" Full Report

"Biodiversity Offsets" Executive Summary

"Biodiversity: towards best practice for extractive and utility companies" Consultation Document

"Biodiversity: towards best practice for extractive and utility companies" Report of seminar

"Biodiversity: towards best practice for extractive and utility companies" Insight's conclusion

Briefings

"Further proof that engagement works: the results of the second biodiversity benchmark"

"Insight hosts meeting on 'Business and the 2010 Biodiversity Challenge" Page 9

"The onset of offset" Page 4

"Can market mechanisms help to protect biodiversity" Page 14

"Protecting shareholder and natural value: the results of Insight's biodiversity benchmark" Page 8-9

"Seminar report: Tread Lightly: towards best practice for extractive and utility companies and biodiversity" Page 8-9

"Biodiversity: implications for extractive and utiilty companies" Page 6-7

"Shrimp farming, biodiversity and human rights: quite a cocktail" Page 9