PricewaterhouseCoopers: The Economics of Ecosystems and Biodiversity report for business
PwC ROMANIA - 14 September 2010
No sector or business in the economy will escape unaffected by changes to the availability of environmental resources for business and consumers, according to analysis by PricewaterhouseCoopers as part of a landmark study by the UN Environment Programme (UNEP) examining the economics of biodiversity and ecosystem loss for business.
The UN study The Economics of Ecosystems and Biodiversity (TEEB) indicates that scrutiny of big business and its impacts on the world's natural capital is likely to intensify as better evaluations and assessments come to the fore. Already, TEEB estimates the global economic impact annually of biodiversity loss at between $2-4.5 trillion, and is to be felt in product pricing, availability of products and financing, impact on climate and supply chain disruptions for consumers, business and government.
Despite this, research by PricewaterhouseCoopers completed as part of the study, found that less than one in five companies see biodiversity as an important business issue. Only two out of the world's largest 100 companies manage it as a strategic risk.
'Biodiversity should not been seen as a liability and a cost, but also as a huge still untapped potential for businesses worldwide. The PwC analysis has found out that there is an enormous potential in the emerging markets for biodiversity and ecosystem services. For example, the current market for certified agricultural products (organic food) is estimated at 40 billion $ worldwide, amounting to 2.5% of the global food and beverage market. The PwC study projects that the organic food market will increase five times by 2020, reaching a total value of $ 210 billion and by 2050 could amount to $ 900 billion. Also, the certified forest products are expected to grow from the current market level of $ 5 billion to $ 15 billion in 2020 and to $ 50 billion by 2050', states Alexandru Lupea, Partner, Alexandru Lupea, Partner, Assurance Services, Leader of the Energy, Utilities and Mining Group with PricewaterhouseCoopers Romania.
'In this context, Romania could benefit from this organic food trend and could develop a strong bio-agricultural sector, making use of its large agricultural and forest area, and capitalize on the current low use of fertilizers and pesticides in the Romanian agriculture, which can thus be turned from a competitive disadvantage to an advantage', added Lupea.
The TEEB report has found out that the perception of the decline in biodiversity is greatest on the continents most affected by climate change and large scale deforestation. Over 50 per cent of CEOs in Latin America and 45 per cent in Africa see declines in biodiversity as a challenge to business growth. In contrast, less than 20 per cent of their counterparts in Western Europe share such concerns. The findings indicate that corporate chiefs who fail to make sustainable management of biodiversity part of their business plans may find themselves increasingly out of step with the market place.
Water used in food and drink production, timber for packaging, furniture and paper, productive land for fruit and vegetables, and fibres for clothes, are amongst just some of the biodiversity and ecosystem 'services' whose economic value and protection is examined in the study.
Unpriced, and largely unaccounted for in business life, the flow and use of natural resources is embedded in the global economy every day.
Despite this, research by PricewaterhouseCoopers completed as part of the study, found that of the world's largest 100 companies, only 18 companies made any mention of biodiversity or ecosystems in their annual report, with only two seeing biodiversity loss as a strategic business risk. In high – dependency or impact sectors including food producers and primary industrial sectors, nine identified it as a sustainability issue.
'Current business strategies are biting the hand that feeds stable consumer prices, business prospects and long term investor security and returns. When estimates in the study put economic impact of biodiversity loss at between $2-4.5 trillion annually, you realise that this is not just about environmentalists and scientists, but economically rational conservation that protects the long term prospects for business. That means putting more value on the resources that supply and sustain businesses worldwide, including companies and projects the financial services sector is investing in', stated Alexandru Lupea.
'We're effectively in an environmental recession for which few businesses appear to have a real accounts or a recovery plan for. Identifying and managing the risks that arise from our impact on biodiversity is not about greenwash, or CSR, it's about the economics of supply and demand, and in a shorter time frame than climate change', added Lupea.
The 'TEEB for Business' report, which will form part of a final TEEB synthesis report to be launched at a meeting of the Convention on Biological Diversity in Nagoya, Japan in October 2010, calls on professional associations to develop new accounting and reporting tools for business that take into account the biodiversity and environmental aspects as well.
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PwC is the only professional services firm making a significant technical contribution to the UN's major study on The Economics of Ecosystems and Biodiversity report for business. A number of PwC specialists have performed supporting analysis and are co-authors in the report. The report interprets current evidence and trends, highlight risks and opportunities for business related to biodiversity and ecosystems.
Today's report, entitled 'TEEB for Business' is part of a suite of reports being launched in the UN's International Year of Biodiversity, calling for companies to embrace concepts such as 'No Net Loss'; 'Ecological Neutrality' and ultimately 'Net Positive Impact' on the environment.
The TEEB for Business report is available at www.teebweb.org
The lead authors and editors of the TEEB for Business report include staff from Business for Social Responsibility (BSR), Earthmind, the Global Reporting Initiative (GRI), PricewaterhouseCoopers LLP (PwC), the International Union for Conservation of Nature (IUCN), the United Nations Environment Programme (UNEP), and the World Business Council for Sustainable Development (WBCSD).
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PricewaterhouseCoopers (www.pwc.com/ro) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
'PricewaterhouseCoopers' and 'PwC' refer to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL). Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm's professional judgment or bind another member firm or PwCIL in any way.
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