By Janet Ranganatha (WRI) and Marina Grossi

Brazil’s economy has been booming. Over the past decade, it has risen from the ninth to the sixth largest economy in the world. While this growth has brought many socioeconomic benefits, it has also come with a downside: significant environmental impacts. Brazil has one of the highest rates of deforestation  in the world and pollution threatens the country's drinking water supply. Despite a recent drop in national greenhouse gas emissions, agricultural emissions and energy demand continue to grow.

This double-edged sword raises an important question: Brazil, with so many hotspots of biodiversity and the largest tropical forest in the world, will it have to choose between economic growth and environmental conservation? A group of large companies believe not and are beginning to demonstrate that the business sector in Brazil can be both: sustainable and profitable.

A new kind of partnership

Over the last year, eight multinationals have been working within the scope of Business Partnership for Ecosystem Services (PESE) to explore how their businesses impact and depend on the environment. Participants span sectors as diverse as retail (Walmart), mining (Anglo American, Vale and Votorantim), cosmetics (Natura), agribusiness (Grupo André Maggi) and food and beverage (Danone and PepsiCo).

PESE addresses the relationship between corporate performance and ecosystem services. The term refers to the range of benefits provided by nature, such as the provision of clean water and the pollination of crops. These services can underpin a company’s performance, but are often overlooked.

PESE companies are assessing their impacts and dependencies on ecosystem services with a tool called Corporate Review of Ecosystem Services(CSR). The lessons they are learning are beginning to shape their business practices – and could be a powerful example to inspire other companies in Brazil.

PESE's partner companies were joined by the World Resources Institute (WRI), the Brazilian Business Council for Sustainable Development (CEBDS), the Center for Sustainability Studies of the Getúlio Vargas Foundation (GVces) and the United States Agency for International Development (USAID).

Supply chain gains for business and nature

Take agriculture, for example. It is a major driver of deforestation in Brazil. The resulting loss of forest ecosystem services, such as climate and water regulation, in turn threatens the supply of agricultural products in the country. Companies therefore face operational and reputational risks as a result of these environmental changes.

PESE companies are beginning to identify and mitigate these environmental risks. For example:

André Maggi Group, a leading soy player in Brazil, is using ESR to help secure a sustainable supply of wood biomass fuel to power its operations in the Amazon. The company’s sustainability and operations teams have come together to develop a more cost-effective and resilient biomass procurement strategy for the region.

Walmart is addressing the environmental challenges associated with its meat supply. Because cattle ranches account for more than 70 percent of the deforested Amazon region, Walmart has set a goal of having a zero-deforestation meat supply chain by 2015. To help achieve this goal, Walmart’s CSR will examine livestock practices that reduce deforestation.

Danone, a multinational dairy company, is focusing on assessing the strategic risks and opportunities of its core infant product line. In collaboration with a local NGO, Ipê, it has identified ways to help dairy farmers in its supply chain improve biodiversity and soil quality on their pastures to improve milk quality and lower the company’s operating costs.

Changing the mindset from minimizing impacts to maximizing benefits

Mitigating environmental risks is not just good for companies – it is good for Brazil.

For example, palm oil production is often associated with the deforestation of tropical forests and their replacement by oil palm monoculture, with significant environmental impacts, especially in Malaysia and Indonesia. In seeking greater sustainability in the cosmetics supply chain in Brazil, Natura’s Bioagriculture Research Program studied organic palm oil production in diversified agroforestry systems, consisting of several native and commercially viable plants grown in the same production unit. Natura is identifying ways to create positive environmental and social impacts from agroforestry palm oil in the Brazilian Amazon. These include improving food security for farmers, conserving natural resources and producing more sustainable raw materials for its cosmetics.

Mining companies Anglo American and Votorantim have integrated ecosystem services into the environmental impact assessment (EIA) process for designing new mines. Understanding how mining impacts and relies on ecosystem services enables decision-makers to move beyond mitigating negative environmental impacts to capitalizing on the benefits of improved ecosystem management. Opportunities include reducing greenhouse gas emissions and mining operating costs while generating income and development in the region.

Of course, Brazil still has a long way to go to decouple economic growth from environmental degradation. The actions of a few companies will not be enough to truly break the link. But PESE and other similar initiatives demonstrate that environmental conservation is good for business. If enough companies begin to see the connection between sustainability and strong growth, it could create a real shift in Brazil’s business sector – and its ecosystems.

Source: GreenBiz