Potential for business in environment preservation grows

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Reuters, Jeju, Korea

 

(Reuters) - Conservationists have long placed the responsibility and costs of environmental preservation almost exclusively on the shoulders of governments and NGOs, but the expectation of participation by businesses and consumers is growing, following the unshakable law of supply and demand.

The discussions at a major world meeting of conservationists in Korea in September, an event that until a few years ago had its meeting rooms filled only with members of governments and environmentalists, now have an increasing space for multinational companies interested in participating in a growing market: the products and services that carry the aura of sustainability.

Something unthinkable in previous editions of the World Conservation Congress, held this year in the South Korean island of Jeju, seats and microphones are now open to executives from companies like Shell and Syngenta, so they can share ideas and suggestions on the difficult task of saving endangered species and ecosystems around the planet.

All that at the same time that more and more food, energy and goods are produced for 7 billion people  the planet holds nowadays and for the 9 billion people it will have by 2050, according to UN figures.

"Until now we have relied only on governments to save the world. This will not work. We need to involve the financial market. Today, if a company is doing well in sustainability, the financial market does not care about that," the president of the World Business Council for Sustainable Development, Peter Bakker, told Reuters.

 

Although still a minority of agricultural products receives premium prices for having a sustainable production, some commodities such as cocoa and coffee already have companies interested in paying more for a differentiated product.
Nestlé, the Swiss food giant, for almost 10 years now has been signing long-term contracts with coffee farmers demanding, among other things, certification of environment preservation.

Last year, 60 percent of coffee purchased by the company came from producers who are members of its program on quality and sustainability, including Brazilian suppliers as cooperative Cooxupé, in the heart of Brazilian coffee belt, in Minas Gerais state.
"The company's success today is in the consumers who see advantages through the quality of the coffee that we are offering. And I also see the benefits in side of the producers, because every year we have more of them joining the program," said Jerome Perez, head of sustainability at Nespresso, a division of Nestlé.

The consultant who helped formulate the strategy of Nespresso says he does not believe that the way to recover the cost of sustainability is through higher prices charged to consumers. For Dean Sanders, of The Good Brand Works, there are 10 more percentage points of chances that people who know a sustainable product make recommendations of it to their friends and relatives.

"Because people are satisfied, they will recommend the product to others and this is a much better drive. More subtle but natural, more human, more part of the brand."

On the other hand, he admits that the coffee market is special, and it may be more difficult to apply this model to other chains.

"If I were talking to a company of rubber or resin, I would ask, 'Why not to be the first to introduce sustainability standards in your market and receive the benefits first?'. Because I'm sure that sooner or later everyone will have to have sustainable sources. Why not capitalize quickly?"
   
CALCULATING THE IMPACT
The pressure to incorporate aspects of sustainability to companies' financial statements may come faster than one can imagine.
At least that is what Puma --the German based company that produces athletic shoes and sportswear-- believes, as an example cited often by Peter Bakker, from the World Business Council for Sustainable Development (WBCSD), a forum in which the company, and many others, take part.

The example of Puma is mentioned in a publication by WBCSD, launched during the World Conservation Congress, in South Korea. According to the study, Puma held, since 2009, an effort to translate into monetary terms the impacts of its operations and its supply chain.

The analysis of 2010 showed that costs of water use, carbon emissions, land use, waste and other forms of air pollution amounted to 145 million euros.

According to the publication, the vision of the company is that "business should account for and, ultimately, pay for the cost to nature of doing business. Currently these costs do not hit the financial bottom line, but could easily do so in the future."

"In a few weeks, they will have examined the ecological cost of their pairs of shoes. They will inform the market about the costs of one or another type of footwear," Bakker said in an interview.

"If all companies make the accounting for environmental profits and losses, then we can begin a discussion with financial markets. 'Look, the value of a company is not only financial capital but also social and natural capital'," he added.

 

    
REGULATION AND CONSUMERS
Anxious to make true the biodiversity conservation goals set for 2020, Brazilian national Braulio Ferreira de Souza Dias, executive secretary of the UN Convention on Biological Diversity, is also depositing hopes in changing the model of operation of the companies.
"Businesses react to government regulation and consumers. We need to work on both sides. We need to improve government guidelines, which is required to operate a business, licensing procedures and access to credit and environmental compensation," he said.
When it comes to preserving natural resources, everyone seems to agree that if there are people willing to pay, there will be companies and producers to offer. And a planet to express gratitude.

(This story was originally published in Portuguese to Reuters clients and was translated into English by the author to be shared in EJN. Edited in Portuguese by Roberto Samora and Maria Pia Palermo)