Business input to the COP10 of the Convention on Biological Diversity

October 2010

Effective biodiversity and ecosystem policy and regulation

• The World Business Council for Sustainable Development (WBCSD) is a global CEO-led coalition of some 200 international companies, from 35 countries and 22 sectors, with a shared commitment to sustainable development.

• Collectively, members represent an estimated:

– 15 million employees– 7 USD trillion annual revenues– 5 USD trillion market capitalization

(Source: Observatoire de la Finance, Geneva, December 2009)

What is the WBCSD?

WBCSD members

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Regional Network

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What is our mission?

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Provide business leadership as a catalyst for change toward sustainable development

Support the business license to operate, innovate and grow

Support the business license of member companies to operate, innovate, and grow by proactively:

•Addressing business risks associated with ecosystem degradation.

•Promoting development and uptake of best practice mitigation and market-based approaches.

Ecosystems Focus Area Objective

Ecosystems Core Team

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Co-chairs:

Businesses impact on ecosystems and ecosystem services

Businesses rely and depend on ecosystems and ecosystem services

Ecosystem change creates business risks and

opportunities

Business case for action

1. Measure, manage and mitigate risks and impacts; proactively address risks and explore opportunities

2. Undertake corporate ecosystem valuation to quantify business risks and opportunities

3. Innovate and lead the development of:– Markets for ecosystem services– Eco-efficient goods, services & technologies

4. Encourage suppliers & purchasers to adopt best practices

5. Enter into creative partnerships with municipalities and governments, NGOs, scientific community, etc

6. Support “smart” ecosystem regulation that reverses degradation and “levels the playing field” for all

How can business respond?

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• Development supported by WBCSD-member PricewaterhouseCoopers

• Released at CBD COP 10 in Nagoya, Japan (Oct 2010)

Initial effort on policy by business

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• All businesses depend on and impact biodiversity and ecosystem services (ES)

• Continuing losses of this natural capital present increasing risks for businesses & for society as a whole

• Business has a major role to play in halting this loss

• Current responses from business and existing policy measures have not been sufficient to halt biodiversity loss & ecosystem degradation

Why business input on policy?

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Build on…

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• Good policy ideas exist – these need to be recognized and then implemented and enforced more widely

• Some businesses have innovated on a voluntary basis – some of these innovations can be supported and scaled up with appropriate policy interventions

• Collaboration can significantly improve chances of delivering policies that work

• Clearly-defined goals, supported by targets which are Specific, Measurable, Attainable, Relevant and Time-bound (SMART)– Establish & enforce accountability for delivery– Provide adequate resources for their

implementation

• Establish a level playing field both for companies competing

– in the same markets – to use the same resources

Prerequisites & principles

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• Intergovernmental Platform on Biodiversity & Ecosystem Services

• Green Public Procurement

• Access & Benefit-Sharing

• Subsidies

• Payments for Ecosystem Services (PES), environmental markets & compensation for loss of ecosystem services

• Mitigation hierarchy, biodiversity offsets & “no net loss”

• Taxes & fiscal incentives

• Protected areas & managed areas with conservation targets

• National Green Accounting

• Investments in natural capital

• Environmental regulation, standards & certification

Biodiversity policy options covered:

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Business wants to engage and participate in IPBES and WBCSD applauds its recent

establishment

•Strengthen science-policy interface

•Similar mechanism to IPCC

•Business can benefit from IPBES outputs (e.g. support decision-making)

• IPBES can benefit from business input (e.g. data)

*Intergovernmental Platform on Biodiversity & ES15

IPBES*

•Public purchasers (e.g. 16% of EU’s gross domestic product) take account of environmental factors when buying products, services or works.

•Many efforts also include social requirements, e.g. Fair Trade

Green public procurement & markets

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WBCSD is supportive of GPP with appropriate conditions and safeguards

– Compliance criteria must be clear & consistent– Where possible harmonized across borders– Review & leverage existing standards– Overcome competitive concerns: e.g. support

smaller suppliers; apply to state owned enterprises; base on evidence of improved environmental outcomes not other factors (e.g. excuse to buy local and preclude foreign imports)

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Green public procurement & markets

WBCSD supports objective of fair & equitable sharing of benefits

•Relates to the use of genetic resources & traditional knowledge – a central aim of CBD

•Price to access these resources should be an incentive to protect them

•Need to recognize that commercial value of genetic resources generally results from costly R&D by private sector

Access and Benefit-Sharing (ABS)

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• Brazilian cosmetic, fragrance & personal hygiene products company

• Natura’s “Ekos” line: partnering with 26 local communities to develop 100 cosmetic produced sources from native species

• Communities – provide access to natural ingredients & traditional

knowledge – receive direct payments & benefits, including

investment in local development

Case study Natura: sharing benefits

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•Subsidies come in many forms, e.g. direct transfers, income / prices support, tax credits, exemptions and rebates, low-interest loans & guarantees…

•Up to 75% of subsidies in transport & water sectors can be considered environmentally harmful (ref. TEEB)

• “Green” subsidies, e.g. agricultural subsidies reward effective land stewardship not production

Making subsidies work

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WBCSD is supportive of objective to reduce harmful / perverse subsidies

• Improved subsidy data is needed to provide transparency

•Financial and other transitional support will be required

•New ‘green subsidies’ must be evaluated for net positive impact not based on an isolated environmental metric

Making subsidies work

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•Voluntary transactions where a well-defined ES is “bought” by a buyer. Examples:

– Int’l Payments for ES

– Payments for Reducing Emissions from Deforestation & Degradation + forest management and enhancement of carbon stocks (REDD +)

– Green Development Mechanism

– Tradable environmental rights, e.g. Carbon credits; Wetland banking; Trade in forest obligations in Brazil; Markets for groundwater salinity credits in Australia

Payments, markets & compensation

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WBCSD supports expansion of market mechanisms for conservation

•Regulators can help facilitate private PES by implementing measures to reduce transaction costs

•REDD+ must include measures to enhance carbon stocks

•Financial compensation for loss of ecosystem services should include a valuation element – but this must be clearly defined

Payments, markets & compensation

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• Forest products company, with objectives to:– Achieve economic return on company assets

– Create offsets to compensate for unavoidable loss of wetlands

– Manage ecosystem health & provide ecosystem services

• Company proposed 11 mitigation banking projects in US (to restore, create, enhance or preserve a wetland or wildlife habitat)

• Wetland credit pricing range: $3,000 - $653,000 per credit = new business opportunities

Case study Weyerhaeuser: banking

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WBCSD encourages application of the mitigation hierarchy by all businesses

•Prevent / avoid impacts, then minimize & reduce, then repair / restore

•Any residual effects addressed via “biodiversity offsets” to achieve “no net loss”

– more challenging from a scientific perspective but some businesses are engaging to overcome these challenges

Mitigation hierarchy, offsets…

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• Rio Tinto long-term goal: Net Positive Impact on biodiversity

• Positive actions outweigh inevitable negative effects associated with mining and mineral processing by using:– Mitigation hierarchy (avoid, mitigate, restore)– Offsets and other

conservation actions

Case study Rio Tinto: no net loss

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•Environmental taxes: “any compulsory, unrequited payment to general government levied on tax-bases deemed to be of particular environmental relevance” (ref. OECD, IEA, EC)

•Tax exemptions can function like a PES to reward positive conservation efforts (non-payment)

Taxes and fiscal incentives

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WBCSD believes such taxes can deliver environmental improvements and provide

incentives for innovation

•Credibility and certainty is critical to encourage investment

•Regressive aspect of many environmental taxes needs to be adequately addressed

•Other measures are needed in conjunction (e.g. information campaigns)

Taxes and fiscal incentives

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•13.9% of Earth’s land surface & 6.4% marine areas designated as protected

– CBD Strategic Plan new target: 17% and 10% respectively

•Benefits of privately protected land can be significant & should be recognised

– In S. Africa, area under private protection > government protection

Protected & managed areas

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WBCSD believes that businesses’ capacity to protect areas must be leveraged

•Encourage sustainably financing of protected areas, e.g. sustainable extraction or use

• Improved spatial information on protected areas and environmentally valuable sites is urgently needed

•Local distributional affects of protected areas must be adequately addressed

Protected & managed areas

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• Brazilian pulp & paper company, owns 1,043,000 hectares, of which 393,000 are native reserves dedicated to conservation

• Fibria engaged in national legal framework of Private Natural Heritage Reserves (created 20 years ago)

• Legalization process completed for Fibria’s 2,677 hectares, with 3,690 more hectares pending completion

• Actions include: survey & maintain biodiversity, ecological corridors, protect endemic species

Case study Fibria: Private reserves

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WBCSD is supportive of measures to recognize value of natural capital in national accounts

•Most comprehensive & widely-accepted guide for green accounting is System for integrated Environmental and Economic Accounting (SEEA), by UN (1993, revised 2003)

•Building blocks being established, e.g. through REDD+ forest and carbon baselines; CEV

•Businesses are experts at accounting for stocks & flows – can support

National Green Accounting

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WBCSD supports the many businesses that are already investing in natural capital in preference to more expensive engineering solutions (e.g.

help fund watershed protection to ensure water supply)

• Investments in restoration, activities to preemptively prevent or halt degradation

•Government can provide enabling framework• In some instances public investments in natural capital are warranted

Investments in natural capital

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• Car manufacturer’s factory in Puebla Tlaxcala valley in Mexico, where securing reliable water supply critical to ensure production

• Local specialists analyzed groundwater situation• VW de Mexico earmarked $430,000 funding for

project to replant deforested slopes nearby• Additional 1,300,000 m3/year will be fed into ground

reserves in the source region (more than VW consumes)

• Forest will also sequester CO2 and provide habitat

Case study Volkswagen: replenish

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WBCSD prefers, where possible, measures which realign economic incentives compared to

regulations and standards•Regulation is most widely used instrument for environmental protection, 3 basic types:

1.Regulation of emissions (often includes standards, good practice)

2.Restriction on use (e.g. illegally logged timber) or production standards (e.g. certification)

3.Spatial planning (regulation of land uses)

Regulation, standards & certification

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•Wide range of voluntary & quasi-voluntary standards exist, e.g. ISO 14000 series, GRI

•Regulation must avoid stifling innovation provided by voluntary standards

•Some voluntary measures can be scaled up•Tools exist to expand use of certification through procurement and financing, e.g.

– WBCSD & WRI’s Sustainable Procurement of Wood and Paper-Based Products;

– WBCSD & PwC’s Sustainable Forest Finance Toolkit

Regulation, standards & certification

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• Sustainable Procurement of Wood and Paper-Based Products, with World Resources Institute– Reliable, impartial and technically “easy-to-

understand” information to assist sustainability officers and business procurement managers in purchasing decisions

• Sustainable Forest Finance Toolkit, with PwC– Globally applicable resource to help financial

institutions invest in and finance sustainable forestry operations worldwide – highlights importance of credible certification

Case study WBCSD: tools

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Concluding remarks

• Biodiversity and ecosystem values should be integrated into policy and regulation

• Many businesses are keen to work with policy makers, which can improve policy effectiveness

• Biodiversity targets must be business relevant

• In many cases policy is already adequate but enforcement is poor

• Governments can lead implementation through state-owned enterprises

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