The practical economics of healthy ecosystems

Companies, particularly those in the food and drink industries, rely on natural resources to operate. However, do they understand the true cost and benefits of healthy ecosystems to their businesses?

Working with BITC, Anthesis explored the risks and opportunities which arise from landscape management, detailed in their Practical Economics: Making the economic case for stewardship whitepaper.

Stakeholders throughout the whole value chain, from farmers to manufacturers and retailers, have scope to gain from environmentally smarter actions, improving the land and water catchments which constitute our landscapes. Companies know that our global water resources, soil health and biodiversity have a connected and causal impact on our food production systems, which ultimately will impact on the resilience and longevity of their operations.

That’s why, in partnership with BiTC, we have come up with a four-point plan for best practice management:

  1. Understand your relationship with landscapes. Know what raw materials and product ingredients have the greatest impacts in your supply chain, and use tools and external expertise to develop good stewardship. For example, the Cool Farm Tool can help you track environmental impacts and improvement over time – for both ends of the supply chain.
  1. Collaboration is key. Companies must work with a range of stakeholders and institutions within their priority landscapes. Landowners and primary producers are valuable sources of information, so businesses must engage and encourage them in sustainable methods to meet long-term performance objectives. This can include using certification (e.g. SOIL, LEAF certification) to provide ways for manufacturers and retailer to ensure good standards are met. Supplier networks (for example, see Tesco Supplier Network) and communications tools facilitate the development of stronger relationships, and help suppliers and producers share best practice and overcome challenges.
  1. Create a plan. Develop a plan and principles/guidelines that use best practice to build resilience. Ensure compliance with rules and legislation by getting to know the local Environmental Agency Catchment coordinator. Transparency tools (e.g. CDP Water Disclosure Platform, CDP supply chain programme etc.) are a way of engaging investors and wider stakeholders in your status, strategies and plans. You may find that certain aspects have higher risks or impacts than others, so you may need to develop specific stewardship plans (for an example, please see our Water Stewardship Strategy Review case study).
  1. Build resilience to future proof the business. Build resilience with a range of initiatives and tools to encourage best practice behaviour. For example, this can include joining internal working groups, or external organisations like the Cool Farm Alliance, a coalition of organisations who promote sustainable agriculture. Calculating the economic value of natural capital is another method which helps businesses understand the true value natural capital brings, providing a robust scope for strategy development and KPI setting. For example, the City of Stockholm found that the total economic value of better water quality in all the waters of Stockholm was £230-260m, while achieving this was estimated to cost £92m. The cost benefit analysis allowed Stockholm to go forward with their water stewardship plans.

At Anthesis, we have proven expertise and experience delivering programs and support to supply chain and enterprise risk management professionals. Our combination of strategic insight, supply chain risk screening and change management provides an end-to-end solution for your entire supply chain.

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