By Julia Rohe-Frydrych and Luis Ebert*
Markets have not been kind to biodiversity. Activities up and down the economic value chain take an enormous toll on the planet’s ecological riches, and many people believe conservation and private-sector commerce are mutually opposed. In recent years, some conservationists and economists have started to argue that biodiversity is essential to long-term business survival.
But instead of trying to fit biodiversity into conventional business logic, we should start recognising that biodiversity protection is itself a viable business proposition. The best therapy for our ailing planet is to empower local businesses that profit from the protection or restoration of nature and integrate local communities into their value chains.
Current biodiversity protection measures are flawed
The contemporary debate on business and biodiversity still takes a narrow view. It focuses on three main issues: 1) how to motivate corporations to become greener and more biodiversity-friendly; 2) how to fund large conservation projects with private money; and 3) how to determine the economic value of biodiversity and protect it through economic incentives.
The first issue feels like a lost cause. It is hard to find authentic greening measures in the haystack of symbolic and heavily publicised displays of greenwashing.
Oil conglomerates patronisingly allocate negligible sums for clean-up programs in regions they depleted; fast fashion companies establish eco-focused foundations while continuing to flood maritime ecosystems with toxic microfibres; and fishing and logging companies receive watered-down biodiversity protection certificates while ravaging ecosystems globally.
Regarding the second issue, private-sector conservation finance would need to launch into phantasmal dimensions to really make a difference. Credit Suisse has projected that funding would need to grow 20 to 30-fold in order to meet projected annual costs of US$300-400 billion for global biodiversity protection.
Given that hardly any biodiversity projects are profitable, private actors have little incentive to take up the cause. Even if they somehow provided the funding, it is unclear whether it would have a sizeable impact since biodiversity conservation projects commonly suffer from poor effectiveness.
Determining the economic value of biodiversity does make sense in theory, given that its value has mostly been ignored or has remained undetected by markets. However, programmes and concepts such as REDD+ or payment for ecosystem services (PES) have failed to have substantial positive biodiversity impacts.
Some have even blamed this approach for “a lost decade for international forest conservation”. Unsurprisingly, none of these pathways have effectively reduced biodiversity degradation to date. We keep diminishing our earth’s diversity of flora and fauna year by year.
Rethinking business and biodiversity
So how to clean up the mess we created? In a world ruled by capitalist modes of production, we must find ways to consummate a marriage between market-based solutions and biodiversity protection.
A critically overlooked but impactful actor group is local biodiversity enterprises with innovative business models and an intrinsic motivation to conserve local wildlife. Biodiversity enterprises are micro, small and medium-sized enterprises (MSMEs) operating at the community level and using market-based mechanisms to sustainably manage, restore and protect biodiversity-rich ecosystems.
These enterprises, by using business rationale and including local communities and marginalised people in their value chain, can resolve the dilemma of having to choose between economic development and ecological protection.
How does this work?
Biodiversity enterprises do not re-invent the wheel of business. Instead, the restoration, management or protection of biodiversity becomes a crucial variable in the products or services they offer. While others make money from exploiting nature, these businesses make money from nature protection or restoration.
The following chart gives many thriving examples of biodiversity entrepreneurship. For example, enterprises in areas with uncontrolled alien flora have specialised in products such as oils (1) made from processing the invasive plant species, thereby increasing biodiversity integrity while generating profits.
Enterprises in highly diverse ecosystems such as primary rainforests have established partnerships with indigenous communities and farmers to sustainably buy, harvest and process medicinal plants, herbs (2) and honey (3, also see https://www.youtube.com/watch?v=1HPoXh_BD8I), ensuring an equilibrium of resource extraction and fair product prices.
Tree nurseries focusing on drought-resistant crop trees (4) generate revenue while simultaneously re-building depleted ecosystems.
Despite notable attempts to design conservation projects more inclusively (e.g. through community forestry management), conventional biodiversity projects still commonly exclude local communities from accessing formerly used resources.
This limits communities from developing economically and often angers locals, who feel ruled by far-away faceless organisations. Should employment opportunities arise in such projects, they usually end with the project phase-out. Biodiversity enterprises reverse this strategy:
They are locally based, known and accepted, and hire locally for the long term. Community members are the employees, customers and sales agents of such enterprises, generating significant spillover effects for adjacent villages and cities.
Breaking away from mainstream of current conservationism
Biodiversity MSMEs are far from mainstream. In addition to the challenges faced generally by MSMEs in low-income economies, namely the lack of financing options and supporting policy frameworks, biodiversity enterprises are burdened by a lack of recognition from major biodiversity actors.
Many do not make it to maturity. These small-scale businesses do not have at their disposal the same resources as large public biodiversity projects, such as sophisticated impact matrices and high precision indicator measurements.
This lack of impact measurement and reporting capacity leads to their exclusion from existing biodiversity financing and support schemes, which are usually designed for large-scale, internationally certified business actors. It is an upside-down system, where local biodiversity MSMEs struggle to find support to scale-up their conservation-driven business models and conventional businesses use funds dedicated to nature conservation only to launch nature-friendly niche products without ending their harmful business-as-usual operations.
To unlock biodiversity enterprises’ full potential, international conservation needs a paradigm shift. The solution is not ill-planned temporary public biodiversity projects, short-sighted attempts to insert biodiversity protection into conventional business operations or putting a price on ecosystems or species to factor them in as assets on corporate balance sheets.
Private sector, public and non-governmental conservation finance has to increase substantially; but local private sector actors also need access to funding, as they know best how to tackle local issues and get buy-in from their communities.
Although there are some promising first steps into this direction from biodiversity enterprise-focused funders like CI Ventures and Mirova, their budget and beneficiary volumes are still marginal. At the national scale, policy makers must create a finance and policy framework to help small-scale biodiversity enterprises grow and scale up their impacts.
Locally based, community-embedded business actors are the central piece in the puzzle of successful biodiversity action. It’s time biodiversity enterprises receive the exposure and support they deserve.
adelphi is Europe’s leading independent think tank and public policy consultancy on climate, environment and development.
Julia Rohe-Frydrych is Senior Manager + Acting Co-Lead Green Entrepreneurship at adelphi. The core areas of her work are sustainability entrepreneurship, green and inclusive business models, and climate and green financing. Julia especially focuses on innovative approaches to support and scale up sustainable businesses in developing and emerging countries and to help them access financing. She is convinced that local, green and inclusive businesses are in the best position to sustainably improve the lives and livelihoods of their communities and to conserve natural resources.
Luis Ebert is an Analyst at the Green Entrepreneurship team at adelphi. Together with his team, Luis promotes and supports green and socially inclusive entrepreneurship. As an Enterprise Support Adviser at SEED, he focuses on analysing, unlocking and showcasing the full potential of inclusive and sustainable business models in emerging and developing markets. For him, the challenges of climate change and ecological degradation necessitate a paradigmatic shift of attention towards the green solutions and socio-economic effects that small and medium-sized enterprises offer.