One of the best-known green business mantras is "first mover advantage." In the past, corporate giants like shipping firm TNT and networking company Cisco have proved this is true with industry-first pledges to green up their operations.
Now it appears that drug giant AstraZeneca is the latest company to follow in that tradition.
Together with the the UK’s Department of Environment Food and Rural Affairs (DEFRA) and Derek Whatling, a researcher at the University of Cranfield and the consultancy Middlemarch Environmental, AstraZeneca is piloting a new model for biodiversity risk management in the supply chain of its pills and other products.
According to Robert Bloomfield, head of the UK’s International Year of Biodiversity initiative (IYB-UK), current models for biodiversity appraisal are lacking in sophistication.
"The sophistication at the moment is not there frankly in terms of quality biodiversity assessment," Bloomfield said. "The fact of the matter is the measurement systems for those are still quite fragile and rudimentary."
Whatling believes his model has solved these problems. It has the flexibility to be mashed up with any product in a supply chain, and can be a stand-alone metric or used alongside ISO14001, the internationally recognized standards designed to help firms minimize how their operations harm the environment.
The genesis of the pilot came from drug maker AstraZeneca, who asked Whatling to assess the global supply chain for a particular corn-based solvent it uses in its pills. His task involved analyzing processes all along the supply chain — from corn moncropping to transportation and storage and manufacturing.
The goal was to pinpoint specific suppliers in the chain with significant risk to biodiversity.
Whatling’s model uses a standard ecological assessment survey to assign a value — positive or negative — to each supplier link in the chain. A positive value indicates that the supplier’s production processes have a positive impact on biodiversity. A negative value means an adverse effect, and zero means it’s neutral.
"You find ‘n’ number of suppliers you consider to be a risk, and let’s say there [are] 10 suppliers in the solvent supply chain. You can assign a significant figure to each of those suppliers and then at the end of it, you have a cumulative total of your biodiversity risk," Bloomfield said.
A positive figure, Whatling says, presents a market opportunity for businesses. The figures can be converted into currency — cost amounts — though the risk management tool isn’t meant to be used that way, necessarily. Whatling describes it as more of a behavioural tool, where "reputation is linked to bottom line." AstraZeneca declined comment on the new model.
Integrating biodiversity into risk management has proven difficult because putting a dollar figure on the value of species is an incredibly unexacting process. Whatling says his model controls for some of the arbitrary effects by ranking risk based in part on the population of species.
But Bloomfield, of IYB, explained that biodiversity impact assessments needed for risk management will always be relative because they are based on "ecosystem services." That phrase, used by scientists, refers to the hard-to-quantify but valuable products or functions that nature provides to people.
The assessments "will relate to the amount of biodiversity in [the ecosystem]. It will relate to the amount of benefits and access of genetic resource which is in the system. It’s likely to relate to the amount of species which are vibrant within an ecosystem,” Bloomfield said.
Biodiversity and the Bottom Line
Even with such challenges, accounting for biodiversity in business seems bound to take off and have a huge impact on corporate practices and profits.
A large pharmaceutical company, like AstraZeneca, which relies on nature for its medicines, could approach the biggest suppliers in its supply chain to improve their own biodiversity impact. Whatling explains that presented this way, a biodiversity risk management scheme "cascades down the product supply chain, and also shares the cost so the high-risk suppliers — initially anyway — would probably have to pay more to address their biodiversity issues."
"But if they want to supply a large company like AstraZeneca, then that’s what they’ll have to do," he said.
But Whatling himself admits that there are barriers. Business, first and foremost, needs to think differently, he said. "Biodiversity is about long term, it’s not short term." Business, on the contrary, is driven by short-term profits.
Whatling likes to think he’s created a model that doesn’t look at biodiversity in "an ecological bunny-rabbit-tree-hugging perspective" but from a more refined, "what’s in it for business" perspective.
And business is waking up to the idea. While the UN has officially named 2010 the international year of biodiversity, it may as well have happened on its own.
Companies, in anticipation of future national and international carbon regulation schemes, are already beginning to get their houses in order on biodiversity. The European Union is considering biodiversity legislation in its biodiversity action plan, although, according to Andreas Baumuller, biodiversity expert with WWF-EU, the EU’s commitment to biodiversity can be measured by the paltry 0.2 percent of the EU budget devoted to the cause.
More serious commitments to biodiversity are beginning to roll in from member states. Very shortly in Spain, Portugal and Greece, companies will be required to have indemnity insurance that takes biodiversity into account.
Environmental insurance experts even see such legislation extending at some point in the future to operators and end users of products. Consider, for instance, corn grown using monocropping techniques that are highly destructive to land.
A food company that buys large quantities of corn syrup made from that corn might be found to be responsible for biodiversity effects on the land. Indeed, just as carbon footprint labels exist today, it isn’t a far stretch to anticipate biodiversity impact labels on goods as well.
See also:
New Study Measures Total Environmental Degradation, Not Just CO2 Pollution
Deforestation Pushing Amazon to Its Ecological Limits
Insurance CEOs Call on Industry to Get Proactive About Climate Change
SEC Decision Requiring Disclosure of Climate Risks Could Have Broad Impact
Record Number of U.S. Companies Face Shareholder Concerns About Climate Risks
