Peter Young, Chairman of the Aldersgate Group (AG) welcomed attendees to the launch of the AG’s new report on business and biodiversity.

Previous work by the AG has dealt with the importance of wider resource efficiency, “beyond carbon”, and the business case for action on biodiversity progresses this theme.

Developments in the understanding of biodiversity issues have been rapid, with Defra’s publication of the Natural Environment White Paper which includes a commitment to publishing natural capital accounts and establishment of the Ecosystem Markets Task Force by Defra, which he would be a member of, representing the AG.

Peter Unwin, Director General for Environment at Defra noted that in the current economic climate, “some people would say that it’s time possibly to put the environment on the back burner.”

However by publishing the Natural Environment White Paper, the UK Government has made clear its understanding that natural capital underpins economic growth and prosperity, and is “just as important as financial capital or human capital.” Domestically and globally, “those ecosystem services and that natural capital is being run down in an unsustainable way which if left unchecked will have really serious implications for business and economy globally.” The TEEB report estimated that we are losing flows of ecosystem services valued at between $2-4trn a year, just from deforestation alone, while the National Ecosystem Assessment, published by Defra earlier in the year, found “that 30% of the habitats in the UK are in decline.”

Following on from carbon and water, “biodiversity is the next issue that is coming to boardroom attention.” Companies at the forefront are those in food, drink and pharmaceuticals, but “companies in the primary producing areas are more interested in it than in the consuming areas”, because the risks are closer to their business.

“You look at that chain of interest from climate to water to biodiversity, there’s an increasing chain of complexity that we’re going through.” Carbon is relatively straightforward because it is fungible; a tonne of carbon in Beijing has the same impact as a tonne of carbon in Bradford and a global trading system could deal with this. But “biodiversity in Bradford is very different from biodiversity in Beijing and … how do you offset the value of a sky lark against the value of a great crested newt? You’re comparing apples and pears.”

The complexity of biodiversity issues means “we mustn’t let the best be the enemy of the good”, and businesses like Rio Tinto and PUMA are already leading the way on how to tackle the issues. “I hope that in ten years’ time all major company boardrooms will be thinking about water, biodiversity and ecosystem services in general, in the same way that they’re thinking about carbon at the moment.”

Alex Gourlay, Chief Executive of Boots Health & Beauty reported that sustainability “is becoming really much more important to the consumer and once we’re through this period of slowdown and recession it’ll come through even stronger.”

Boots is in an unusual position of being a retailer and a manufacturer, and is consequently “in the fortunate position of having total control over the supply chain”. This provides opportunities to influence products from development to manufacturing to transport.

One issue which chimes with consumers is traceability of natural extracts, so Boots has worked with Kew Gardens to ensure extracts in its Botanics range are fully authenticated and traceable. In a project in Nottingham, waste heat and CO₂ from a CHP plant are being reused to grow algae. “We hope and believe that we can make that one of the sustainable ingredients in our products.”

This work has been profitable for the business, which has seen strong growth for the Botanics range in international markets, while domestically Mr Gourlay believes that building sustainability into products “makes sound business sense, not just from a cost point of view but also importantly from a growth and loyalty point of view.”

Sir John Harman, Director of the Aldersgate Group announced that the new report, Pricing the Priceless, “is a bit out of the ordinary for us, because it represents our initial thoughts, rather than our conclusions.”

We all realise that our economic and social systems depend upon natural systems, but “we haven’t really understood how they draw from that ecological fundamental base.” This report consequently marks the start of a journey rather than a set of polished answers.

The Aldersgate Group seeks to understand “what public policy might look like as concern about our impacts on ecology and biodiversity develops: what will government and public policy reactions be and what will businesses want to do?” From businesses’ perspective this is challenging when “most of our impact on the natural world is a collective one, and yet businesses quite rightly want to understand their individual impact and to manage it.”

“This is work we want to carry through,” and Sir John welcomed input and engagement from other businesses as the work progresses. The issue relates not just to individual company risk, but “I believe that UK competitiveness will to a great extent in the long run depend on how well we address this issue.”