Corporate Ecosystem Valuation

A Business Perspective

Richard Heathcote

Sustainable Development Manager, Heineken UK

Contents

• CEV?

• Where is business?

• Some examples

• How to take forwards?

2

CEV?

3

What is CEV?

• TEEB uses BES

• DEFRA uses NEA

• RCs use VNN

• WBCSD uses CEV

• NGOs use 5Cs

HELP!

• Ecosystem Services

• Five Capitals model

Ecosystem Services – what is an

Ecosystem?

Yesterday “Ecosystem” delivered 15,100,000 results So that’s millions of different definitions and uses

Ecosystem Services – what is an

Ecosystem?

Ecosystem Services – what is an

Ecosystem?

Ecosystem Services – what is an

Ecosystem?

Ecosystem Services – what is an

Ecosystem?

Ecosystem Services – what is an

Ecosystem?

Ecosystem Services – what is an

Ecosystem?

Ecosystem Services – what is an

Ecosystem?

Ecosystem Services – what is an

Ecosystem?

Ecosystem Services

Millenium Ecosystem Assessment

Five Capitals

Five Capitals

WHERE IS BUSINESS?

Where is Business? A personal view.

• Generally recognises that this thing called Sustainability is important

• Has decided to do something about it - so we all have “Sustainability

Reports” and associated action plans

1. Carbon:

now understood: it’s easy; reducing carbon often means reducing

energy, which reduces £££. This is GOOD.

2. Water:

coming up the agenda quickly: is perhaps an even more clear and

present danger than carbon. Certainly in agri-food related companies.

3. Biodiversity and Ecosystem Services? I spoke to the CEO and he said

“er ... what is that ... bored now, move on. Now, where’s my ROI, EPS, and EBITDA, you know, simple stuff I can understand easily!”

Biodiversity

19 Sourec: WWF Living Plant Index, 2010

So what are Business’ requirements

• Relevant

MAYBE ...

So what are Business’ requirements

• Tangible

YES, BUT WHY? CO2

So what are Business’ requirements

• Material

YES

So what are Business’ requirements

• Risk Understood

ALWAYS

So what are Business’ requirements

• Simplicity

ABSOLUTELY!

SOME EXAMPLES?

Ecosystem Services Project

“What are we seeking to achieve?

The markets component of the Ecosystem Services Project will define

a range of ecosystem services that can be bought and sold through a

new currency/commodity such as a carbon, water quality, salinity or

biodiversity credit.

Once commodities for ecosystem services are defined we will actively

work with catchment communities to find buyers who are willing to

invest in environmental services. The relationship between

ecosystem services, environmental commodities and funding

mechanisms is depicted in the diagram below.”

Q. What happens when the markets begin futures trading and the price falls?

Heineken

• World’s 3rd

largest brewer

• > 70 countries with Heineken breweries

• > 70,000 direct employees and their families

• > 20 Olympic sized swimming pools of beer per day

• > €15,000,000,000 turnover

And we’re 1/3rd

the size of the largest!

We have grouped our

23 programmes into 6

core initiatives

We have built our

programmes around

three strategic

imperatives

Our long-term ambition is

Our journey is summarised by

A new approach Continuously IMPROVE the

environmental impact of our brands

and business

• By 2020, reduce specific direct and

indirect CO2 emissions from fossil fuels

in our breweries to 6.4 kg CO2/hl

• By 2020, reduce specific water

consumption in our breweries to 3.7

hl/hl

• Starting 2010, 100% of all replacement

fridges based on green technology

• By 2020 aim for water neutrality of

breweries in water-stressed areas

• Continually reduce and track the CO2

footprint of our brands throughout the

value chain

• By 2020, develop the concept of CO2

neutral brewery and implement in at

least three sites

EMPOWER our people and the

communities in which we operate

• In 2010, double, to EUR 20 million, the

funding for the Heineken Africa

Foundation, enabling EUR 1 million

investment per year thereafter

• Ensure access to pre-defined, basic

healthcare for 100% of employees and

dependants

• By 2020 achieve 60% local sourcing of

raw materials in Africa

• Aim for a accident and incident-free work

environment

• Implement and audit a new employee

rights policy

• By 2020map the economic impact of our

business on developing markets

Positively IMPACT the role of beer

in society

• By 2015, 100% of markets to have a

partnership with a third party to help play

or part in reducing alcohol related harm

• By 2015, include a culturally appropriate

responsibility message on all brands

• Continue 100% adherence to rules on

Responsible Commercial

Communication

• Continue 100% adherence to rules on

alcohol at work

• Partner with industry to address issues

of drinking and driving, self regulation

and non-commercial alcohol

• Partner with industry to ensure effective

self regulation

Enabling our Journey We have defined 5 Key enablers that will

be fundamental to meeting out long-term

ambition:

• In 2010, introduce incentives for all

senior management on sustainability

targets

• From 2010, every market to have three

year sustainability plan

• By 2015 100% of markets to produce

local sustainability reports (20 in 2010)

• Renewed Supplier Code based on new

approach

• Executive level Governance model

Brewing

a Better Future

To be the

World’s Greenest Brewer

Improve

Continuously improve

the environmental

impact of our brands

and business

Empower

Empower our

people and the

communities

in which we operate

Impact

Positively impact

the role of beer

in society

Green

Brewer

Green

Commerce

Engaging

Employees

Responsible

Consumption

Heineken

Cares

Partnerships

for Progress

Governance, Senior management incentives, Reporting & transparency, Supplier code, Communication & engagement

Treatment of effluent

In an Ecosystem Service context?

Barley, apple, hop production

Pure water for beer Fermentation: the

brewer’s ecosystem

Pure water for beer

Logistics

Thrown away packs

Alcohol awareness Responsible drinking

Use of by-products

By product processing

Of Practical Use?

HOW TO TAKE FOWARDS?

To take forwards

• Simplify the message

• Align at the top: IUCN, WBCSD and in UK across all Government

depts.

• Make it clear how the different interpretations link together

• Build consensus and capacity

• Ensure that in all communications “it” has

– Relevancy

– Materiality

– Tangibility

– Simplicity

– Risks

• And all in business language

TEEB: Key Action Points for BUSINESS

1. Identify the impacts and dependencies of your business on

biodiversity and ecosystem services (BES)

2. Assess the business risks and opportunities associated with these

impacts and dependencies

3. Develop BES information systems, set SMART targets, measure and

value performance, and report your results

4. Take action to avoid, minimize and mitigate BES risks, including in-

kind compensation (‘offsets’) where appropriate

5. Grasp emerging BES business opportunities, such as cost-efficiencies,

new products and new markets

6. Integrate business strategy and actions on BES with wider corporate

social responsibility initiatives

7. Engage with business peers and stakeholders in government, NGOs

and civil society to improve BES guidance and policy

Thank You