What is Corporate Ecosystem Valuation?
Corporate Ecosystem Valuation (CEV) was introduced by the World Business Council for Sustainable Development (WBCSD) in 2011. It serves corporate decision-making by identifying and valuing ecosystem impacts by businesses together with the risks and opportunities businesses face from changing ecosystem services. In a CEV, the benefits and value of the ecosystem services a company depends on, and affects by its actions, are assessed to guide the company's decision-making.
When and why would the tool be useful?
The application of CEV depends on the purpose. For example, if applied to a project or process design, it should be applied at the earliest stage of the decision-making cycle to allow an optimal design. It can also be used to evaluate the impacts of products, projects or an incident, in which case it would be applied at the Evaluate stage of the decision-making process. CEV can also inform risk assessments at any time.
What is its relevance to the Ecosystem Approach and ecosystem services?
CEV has a direct focus on ecosystem services: it is important to apply the ecosystem services framework, for example adopted from the National Ecosystem Assessment. This is to avoid a pre-selection of ecosystem services, because some ecosystem services are assumed to be marginal or because they are difficult to assess. A pre-selection can lead to undervaluation or neglect of important ecosystem services relevant to corporate performance. A CEV can focus on specific ecosystem services, but the selection of most significant ecosystem services should be part of a CEV itself.
The principles of the Ecosystem Approach should always be acknowledged when undertaking a CEV. For example, it is crucial to involve relevant stakeholders at all stages of the CEV. Ecosystem services are not only affected and used by one business, but usually also by other stakeholders. Identifying and involving such stakeholders strengthens the outcomes of a CEV, and may also allow the business to make use of specialised knowledge and expertise which may not be available internally to the business.
It is also important to define the spatial and temporal scale of a CEV clearly and to incorporate cross-boundary issues and discount future costs and benefits to society. This becomes increasingly important as businesses have global impacts in the use and management of their activities.
How do you work with the tool in practical steps?
In general, CEV can be applied to a business as a whole, but also products, services, projects, assets, or an incident. As the name suggests, a CEV includes the (monetary) valuation of ecosystem services relevant to the business.
CEV depends on existing valuation techniques such as the revealed preferences method, the stated preferences method, the benefit transfer approach, or valuations based on expert judgement.
Usually, CEV has two main elements. First, CEV provides corporate decision-makers with better information about the risks and opportunities arising from changing ecosystem services. It evaluates which ecosystem services are most important for the business performance and how such ecosystem services are projected to change in the future. The main question is how changes in ecosystem services provision will or can affect business success and how the enterprise can react.
Second, CEV evaluates how business activities affect ecosystems and ecosystem services. Such an assessment reveals which ecosystem services are affected most (positively or negatively). This can, for example, help to target actions to mitigate negative impacts, to compensate for them, and/or to implement the value of affected ecosystem services into business accounting and reporting.
View a good practice case study
Because CEV is a comparatively new tool, applications and case studies are rare, especially in the UK. However, the WBCSD worked with a range of businesses to 'road test' the tool when developing their CEV guidance document. One of them was Eka Chemicals, a business unit with AkzoNobel and one of the world's leading manufacturers of bleaching and performance chemicals for the pulp and paper industry. They applied CEV to compare the societal costs of atmospheric emissions for three alternative chemicals used in paper production. Benefits transfer was used to assess the value of externalities caused by greenhouse gases, SO2, NOx, VOC, dust and ammonia released in the life cycle from cradle to delivery at paper mill.
The CEV revealed significant differences in the external costs between these products. Eka Chemicals commented that they can use such advanced information to undertake Cost-Benefit Analysis for the evaluated chemicals and to improve product and process development related to these chemicals. The information may also be implemented in their risk assessment to better manage reputational risks and opportunities.