“The pathway towards a more sustainable future presents vast opportunities in a range of business segments as global challenges became the key strategic drivers for companies over the next decade” - Vision 2050 Dialogue, World Business Council for Sustainable Development
Using a social ecological systems approach to better enable business to understand the uncertainties of their natural resource risks in order to help build organisational and systems resilience.
Background to the project
Business are now at the point of understanding that sustainability goes beyond the reduction of negative impacts on the receiving environment and includes an understanding and enhancement of the ability of a system in which the business operates, to survive and remain resilient over time. Sustainability and risk are truly interlinked in that a business will never be able to achieve sustainability without understanding how risk affects it.
The fundamental risks for which business is most concerned are those events that would impact the profit margin of the business. There are five main risk categories for which business assesses their risks these include; operational, regulatory, reputational, market and product, and financing. While risks to the natural environment (social and ecological aspects) are in part considered in these five risk categories the overwhelming uncertainty and cumulative impact of a natural resource risk event, such as an extreme weather event or the contamination of a water source, calls for business decision makers to include natural resource risks into their risk profile. Ultimately this will contribute to business understanding, assessing and addressing risks from a social ecological systems perspective as seen in Figure 1.
Figure 1. The interdependent nature of the risk categories to business for which natural resources is the fundamental risk leading to the ultimate impact on the financial bottom line of business
Figure 1 adapted from Amis and Nel, 2011
Amis, M and Nel, D. 2011. Managing water risk: Business response to the risk of climate change in South Africa – a synthesis. Published By WWF South Africa.
In the context of this research we are primarily interested in the implication of natural resource risks to the social ecological system in which business operates. These are risks that commonly affect the biophysical environment upon which a business operates and include climate change, loss of biodiversity and resource degradation, soil degradation, water scarcity and degradation, air pollution, accumulation of persistent toxic substances in nature, and oceanic pollution.
The project aims to address the gaps in the current knowledge of business risk assessment and social ecological systems resilience through developing an approach to support business directly dependent on natural resources that will enable them to strategically respond to identified opportunities for the integration and incorporation of resilience building actions into their business management and operations.
Research objectives
The objectives of the project include:
1) To develop a detailed understanding of the strengths, weaknesses and opportunities of risk assessment and management approaches used by businesses within the context of building the resilience of the social ecological system on which they depend. With a specific focus on global change related risks to natural resources dependent business.
2) To identify and develop mechanisms that will effectively mobilise social ecological systems knowledge within a risk assessment framework, and direct actions towards improved system resilience
Case studies
In 2010 the BR2 project undertook to co-fund two case studies mainly one relating to the Insurance Sector (in collaboration with the University of Cape Town and WWF) and the other to the Food and Beverage Sector (in collaboration with WWF). The objective of these case studies was to test a ‘proof of concept ‘relating to mapping the social ecological system of the business and determining key points of resilience to better enable the business to systematically understand how global change impacts on their natural resources risk profile.
Proof of concept
The ‘proof of concept’ centred on testing the approach outlined in four core objectives:
1) Develop a systemic understanding of the risk landscape within which the business operates;
2) Describe the key social-ecological processes that underpin resilience within the landscape;
3) Understand the role of business in reducing risk and improving resilience; and
4) Develop a potential response for the industry.
Both case studies involved modelling of climate change projections for the geographical area of the social ecological system and specific ecological and social element in relation to the natural resource risk being assessed i.e. flooding, sea surge. Outputs of the models were used to develop different scenarios of change and thereby possible interventions that can be made to mitigate future risk.