The Science of Valuing Nature Becoming Business as Usual

April 15, 2015

Photo © Jen Molnar/TNC.

In 2011, at the launch of The Nature Conservancy’s six-year collaboration with The Dow Chemical Company, Dow’s Chairman and CEO Andrew Liveris shared what many considered an audacious vision:

Dow incorporates the value of nature into every single one of our decisions, into every single one of our company-wide goals and plans.”

With the announcement of Dow’s Nature Goal, we move a big step closer to showing how a Fortune 50 company can do just that.

With this 10-year sustainability goal, Dow is integrating nature into evaluation of all capital, real estate, and R&D projects by 2020 – a step that could include thousands of decisions each year across the company. In doing so, this Goal seeks to both identify opportunities where Dow can enhance the positive and reduce the negative impacts on nature, while also identifying nature-enhancing projects that create $1B in business value by 2025.

This Goal will lead to fundamental changes to how business decisions are made.

A number of companies have looked at the value of nature at individual sites, or considered individual ecosystem services. Our collaboration has also developed proof-of-concept pilots where nature provided a direct benefit to Dow, while also sustaining local communities and wildlife, including:

* The role of forests in air quality enhancement and compliance
* The potential for marshes to reduce coastal storm risk
* Improved valuation of freshwater resources, and
* Optimization of landscape decisions on agriculture expansion.

Dow is now going beyond a limited, site-specific approach to make the value of nature part of business as usual.

Changing how decisions are made requires shifting behavior. The Nature Goal will provide incentives within the company for this culture change, but we also needed to enable that change by developing methods for assessing nature and the benefits it provides to the company and society that are relevant to regular business operations.

Since no one has done this before, I’ve seen our collaboration with Dow as a big experiment. And science has played a key role in each stage of work.

Case for nature

To learn how nature is relevant to Dow’s decisions, we initially conducted detailed pilot analyses at Dow sites in Texas and Brazil. Doing so required bringing ecosystem science and economics into the corporate context. But this wasn’t a matter of TNC scientists doing a study and handing the results to Dow engineers. We co-created research questions in the context of real business decisions, and worked together to ensure the analysis was advanced in ways that were understood and seen as credible and useful by both the scientists and engineers.

This wasn’t always easy. We were working across organizational cultures, often speaking different languages. But at the same time, both Dow and TNC are science-based organizations; I saw science play a role as we built trust. For example, the fact that TNC scientists understood the freshwater models Dow relied on in Texas helped give us more credibility in the eyes of Dow engineers. Now our results are stronger for the time spent building relationships and working through the challenges. We were able to draw on the strengths of both organizations and learn a lot from each other.

Broader application of valuing nature

Through the pilot projects, the collaboration team demonstrated how nature’s value to business is real.

But this wasn’t enough to operationalize changes. It took two years to do each of the analyses – not something that can be replicated in day-to-day operations.

So we’ve begun development of a rapid assessment tool – the ESII (Ecosystem Service Identification and Inventory) Tool – that will enable corporate staff without ecology training to collect business-useful ecosystem service data at sites. The collaboration team has tested it at sites and conducted ‘voice of the customer’ surveys with staff across Dow to inform its design and ensure usefulness to decisions.

And as we’ve worked together to design the Nature Goal, we took a tiered approach that allows a majority of screening to be done by staff with minimal training. This will allow more staff to bring the consideration of nature into their decisions, raising awareness and understanding of the relevance of nature to their projects. Where more investigation is needed, internal and external experts will play a role.

Next phase of the experiment

As Dow launches and operationalizes the Nature Goal, the company gets closer to achieving Andrew Liveris’ original vision.

As they use the results internally and report on them publicly, it will allow us to learn from Dow’s experience as well as offer an example for other companies.

A few of the things I’m excited to learn as the Nature Goal is implemented:

  • With data collected on Dow’s impacts – what is the scale of positive vs. negative impacts, and how do those change over time through application of the Nature Goal?
  •  Where is there real business value from nature – e.g., types of nature’s benefits and/or decisions – and how can it be maximized?
  • Since not all ‘nature-based’ projects will be the best option based on finances alone, what role do public and ecosystem values play in decisions? How are various values considered in different business contexts?
  • By highlighting and incentivizing investment in the value of nature across the company, what conservation outcomes can be achieved?
  • And ultimately, does the Nature Goal help lead to changes in industry beyond Dow?

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