Business development services programs can have a positive, neutral, or detrimental impact on the environment. The Guide provides information on ensuring that BDS programs are either positive or neutral, so they can contribute to business growth and environmental conservation and management. It explains how linking BDS and the environment can lead to sustainable environmental and business benefits and how addressing environmental concerns can enhance BDS program goals.
How do BDS programs enhance environmental preservation? The issues and strategies outlined here are relevant for a variety of markets—crafts, eco-tourism, specialty foods, and agriculture—in which natural resources are a key input. The topics and methods are also useful when working with metal crafting, plastics, wood, and other sectors where pollution or resource mismanagement can be a major problem.
Strengthening environmental management can positively affect BDS programs and these programs can, in turn, enhance environmental issues. Many entrepreneurs believe that addressing environmental concerns is a luxury for less developed nations that adds unnecessary costs to already marginal businesses. However, integrating environmental issues into BDS programs can actually help them attain their goals.
§ For businesses that depend on natural resources—reed grasses, forest products, natural dyes, soil—good resource management helps ensure long-term availability and keep costs stable.
§ When businesses pollute the environment, they waste resources that might be used profitably and make the operating environment less conducive to sales. Obviously, a filthy market is going to attract fewer customers than a clean and tidy one.
§ Reducing negative environmental impact contributes to the competitive position and sustainability of a business.
§ Market trends increasingly favor businesses that demonstrate positive environmental management because consumers are more aware of such issues. Organic food markets are now booming in developed countries.
§ Legislation requiring environmental management and impact assessments is on the increase in most countries. Taking such issues into account when developing businesses helps them comply with regulations.
§ Raising the awareness of development agencies about resource management enhances their program designs—businesses must follow environmental regulations to take advantage of environmental marketing opportunities. Programs that address natural resource input sustainability also speak to the continuation of key industries over the long term.
§ Communities that manage natural resources intelligently safeguard them for use by future generations.
§ BDS programs also promote natural resource conservation and good environmental management.
§ Winning people’s support for conservation of forests and other natural resources requires addressing their economic needs.
§ Creating new job opportunities in businesses based on sustainable natural resource extraction provides an incentive to manage those resources.
§ Stimulating small enterprise development in the tourism sector provides an incentive to conserve natural areas and the species that live in them.
§ Promoting markets that require environmental management stimulates responses to the opportunity.
§ When environmental initiatives are designed as a business, they are more likely to become sustainable.
Strategies that promote links between BDS and the environment
The following strategies can be used to achieve both business development and environmental goals.
Natural Resource Management
§ Training in, and dissemination of, traditional knowledge about the harvesting of resources to control raw material costs. Ensuring that the supply of raw materials is not depleted or threatened can help keep costs down. Many crafts businesses experience cost increases because they buy materials rather than gathering them, or they have to go further to collect them.
§ Resource management can enhance product value, such as when natural rather than chemical dyes are used. Business development can resuscitate the knowledge of traditional plant dyes, which then results in higher quality products and lower production costs.
§ Managing natural resources enables local communities to maintain control of their production, create business security, and reduce dependency on outside suppliers.
BDS Guide link: Technology & Product Development
Integrated Pest Management
§ The wide-scale withdrawal of subsidies for chemical inputs under market liberalization schemes provides new opportunities for farmers who can no longer afford them to introduce new production methods based on biological controls. These can improve not only productivity and business performance, but also the health of farmers, the soil, and water by dramatically reducing water supply contamination.
§ Most farmers, brought up on subsidies and government extension schemes that promote the use of chemicals do not know how to manage pests and diseases through biological control methods and so need training and technical assistance.
BDS Guide link: Technology & Product Development and Input Supply
Organic Certification
§ When farmers stop using chemicals, they can apply for organic certification, which allows them to enter domestic and/or international markets that pay premium prices for certified products.
§ Certification requires accredited certifying agencies and qualified inspectors. The more agencies that can be established in developing countries, the more producers will be able to obtain certification since many potential applicants are too small to afford certification by international bodies.
§ Organic production can be processed for domestic sale in urban markets.
BDS Guide link: Infrastructure and Market Access / Creating Alternative Markets
Other Certification Schemes
§ There are several labeling schemes to endorse a product or service that has met a set of specified environmental standards. Examples are the Forest Stewardship Council for wood and Green Globe for tourism. Consumer demand for products and services that do not harm the environment is driving growth in such schemes.
§ Most SEs need training and technical assistance to fulfill the criteria of the labeling organization and secure access to new markets.
§ Some environmental institutions grant use of their logo to manufacturing and trading companies able to demonstrate that they source raw materials and products from environmentally sustainable sources. Like accredited schemes, these approaches yield revenue that enable the service to recover monitoring and administration costs. Nevertheless, unaccredited schemes can be based on inadequate data collection or used as a means to attain positive market positioning without sufficient justification. This is termed “greenwashing” and consumer care is needed.
BDS Guide link: Market Access / Creating Alternative Markets
Product and market development of environmentally sustainable products and services
§ Growing interest by consumers in the environmental impact of the products and services they buy stimulates development of new products and packaging.
§ Consumer interest has caused a major expansion in the development of tourism that benefit local communities by providing opportunities to sell services such as prepared foods, accommodation, transport, and interpretation of local plants, birds, and other wildlife.
§ New market segments created in many product areas stress the use of natural ingredients, non-use of GMOs, shade or bird-friendly cultivation, etc.
§ Product and market development that enhances design and develops products from recycled materials and waste can not only reduce the amount of raw material needed, but also increase its value.
§ Companies can enhance sales by training staff in the origin of the products they sell and their relationship to the environment. In this way costs can be embedded in products whose market value increases with the quality of sales service. Aveda is a market leader in this area.
BDS Guide links: Technology & Product Development and Market Access / New Marketing Business
Policy
§ In developing countries, policy services are often required to support the SE sector in cases where large national or international logging, mining, fisheries, or other businesses having political influence may cause environmental degradation or seek to control access to land, waters, materials, capital, and markets.
§ The development of tourism SEs can be stimulated by policies that favor local provision of services or safeguard income generating attractions through fees that support environmental management or protect vulnerable or threatened species.
§ Raising awareness of negative environmental impacts in the wider community creates pressure on businesses to clean up their operations.
BDS Guide links: Policy / Advocacy
Technology
§ National and international laws related to packaging and labeling, hygiene, safety standards, waste emissions, and product standards require technology services—new machinery or laboratory testing—that enable SEs to comply.
§ Such services can impact not only SE development but also the health of the community by ensuring safe disposal of waste, non-pollution of water, reduction of industrial accidents, and avoidance of toxic emissions.
BDS Guide links: Technology & Product Development
New business start-up
§ In many developing countries, poverty drives people to poach animals, fell trees, fish with cyanide and dynamite, dive to collect coral, and use mercury to mine on a small scale. The establishment of viable businesses provides people with alternative livelihoods that do not destroy the environment.
§ New business initiatives require legal, financial, tax, and business planning services.
§ Financial schemes may be designed to extend favorable terms to businesses that incorporate environmental management into their operations.
BDS Guide links: Market Access and Financial Services
How this relationship can be demonstrated and measured
Programs that incorporate BDS and environmental issues can achieve a triple bottom line of enhanced business performance, social benefits, and positive environmental impacts. The results of programs that incorporate BDS and environment goals can vary and may include:
Increased Market Presence
§ Products using natural ingredients;
§ Products carrying third party accredited certification—Smartwood, Forest Stewardship Council, and many organic seals;
§ Space given to information on packaging about contribution of the product to environmental conservation and the use of natural packaging; and
§ Tourism destinations that benefit conservation and local communities.
Management of Production Systems
§ Internal control systems, production, recycling, and waste disposal practices of processing and manufacturing companies;
§ Natural resource management plans; and
§ Environmental impact mitigation and community benefit programs financed by companies exploiting natural resources.
Policy Changes
§ Tax benefits for environmental management;
§ Assignation of rights to natural resources for local communities; and
§ UN recognition of ecotourism with 2002 declared the International Year of Ecotourism.
Donor Criteria
§ Donor incorporation of environmental criteria or components in requests for proposals in the SME sector; and
§ Requirement to provide evidence of environmental sustainability.
Publications
§ Published reports and case studies of BDS providers who specialize in promoting environmental enterprise, such as the Biodiversity Conservation Network; and
§ Reports of businesses adopting environmental management plans.
Financial Services Providers
§ Growing number of environmental investment funds; and
§ Global Environmental Facility financing of SEs that are creating biodiversity benefits.
Circumstances in which it is appropriate to link BDS and the environment.
There are particular circumstances that create strong opportunities for programs to achieve both business development and environmental goals, such as when:
Market opportunities are strong for environmental products
§ Organic products may allow a premium on top of the market price, but sometimes they do not and this can make the cost of certification difficult to cover;
§ Shade and bird-friendly coffees are usually sold at premium prices; and
§ Nature tourism is the fastest growing segment of that sector (over 10% annually against overall growth of 4% in the sector, according to a study by the World Resources Institute).
Businesses are attempting to reach markets that have high environmental standards
§ There is a high concentration of businesses in an area that damage the environment and threaten future livelihoods
§ Local people are encroaching on protected areas to grow cash crops;
§ Shifting agriculture is destroying forests; or
§ Watersheds are being polluted by use of contaminating materials or improper waste disposal.
§ A resource on which the business depends will run out unless good environmental management is introduced
The following are specific programs or initiatives that support or incorporate BDS and environmental goals.
Technology transfer and market development – Five organizations with a specialist interest in the conservation of biodiversity—Conservation International, Smithsonian Migratory Bird Center, Rainforest Alliance, Summit Foundation, and Consumer’s Choice Council—produced the “Conservation Principles for Coffee Production” in 2001. These Principles discuss ways farmers can produce coffee without using practices that harm the environment—forest clearing, chemical spraying, or watershed draining. They have been shared with six cooperatives in Chiapas, Mexico to help them conserve El Triunfo Biosphere Reserve, which is home to such threatened species as the quetzal. Starbucks Coffee Company purchases all coffee produced according to the Principles, paying well above the depressed international market price so that farmers can implement these practices. Subsidized technical assistance is gradually being withdrawn. The market incentive is what motivates the farmers to change their farming practices in support of conservation. www.starbucks.com
Policy – SE members of the International Federation for Alternative Trade (IFAT) are advocating for a legal and policy framework for international trade that redresses the existing bias against the poor. They are promoting environmentally sustainable production and fair trade through practical example and by speaking out directly to policy makers and opinion makers. As the global platform for fair trade organizations, IFAT's mission is to improve the livelihoods of disadvantaged people in developing countries by linking and promoting organizations that offer just alternatives to unfair trading structures and practices. Membership dues cover its operating costs. “Fair Trade is a vital component to Africa’s national and international development efforts. As Africans, we value our diverse cultures, our creativity, our natural environment, and our traditions.” (Semshak Gompil, Alternative Trade Network of Nigeria) www.ifat.org
Certification – Alianza Verde (Green Alliance) in Petén, Guatemala is a non-profit organization specializing in tourism and providing business services—market development, business training, and certification—to its members. It established the Green Deal certification scheme for tourism businesses that adopt its guidelines—service quality, biodiversity conservation, and economic benefits for local communities. There are a number of community-managed ecotourism businesses in Petén, which is home to the Tikal Mayan ruins and many rare bird, animal, and plant species. Most tour operators visit only Tikal and members of the local tourism industry—operators, hoteliers, transport companies, and other community-based businesses—are interested in having tourists stay longer. Demonstrating compliance with environmental and social business principles is not only responsible, but good business. This is how the attractions will be conserved and new products developed. Alianza Verde completed its first certifications in 2002 and several of its members have invested in a local marketing company, Ecomaya, to sell their products more competitively. www.alianzaverde.org
Training – Aside from covering training costs through vouchers or by charging a fee, an effective way to manage this service is to leverage the commercial interests of end users. It is common for companies to train their suppliers to ensure quality. An example of how this works in favor of the environment is in Guyana, where Macushi Amerindians design, craft, and sell small figurines made of balata latex harvested from the bulletwood tree (Manilkara Bidentata). Amerindian communities suffer from the country’s highest levels of poverty, malaria, and health problems and the income they earn from this activity helps prevent them from clearing forests or migrating in search of employment. This sale of crafts has revived an activity that had declined in many tropical countries. Crafts and other forest product industries provided local populations people with sustainable livelihoods until the invention of synthetic substitutes. During the decline of the crafts industry, traditional knowledge of how to extract balata without damaging trees was lost. As demand increased, many trees were destroyed by people eager to supply the raw material. Artisans who formed their own businesses and marketed in the U.S., sent master carvers out to the villages to train young people in extraction methods and guarantee a long-term supply of the material. www.oneworldproject.com
Lessons Learned
§ BDS providers need skills in both business development and environmental management. The best way to achieve this is through partnerships of specialist organizations.
§ Effective natural resource management requires a business model that generates benefits for the community; managers from outside the area do not have as high a stake in long-term conservation.
§ Environmental business initiatives can incur high costs by initially decreasing yields, high labor costs, preparation of management plans, and obtainment of organic certification. Short-term subsidies may be necessary and financial costs and benefits must be carefully studied.
§ Market and product research are required before investing in new business development. The private sector is increasingly willing to invest in order to discover new ingredients, products, and services that conserve the environment and function well, such as Aveda’s use of a Brazil nut protein in its hair care products.
§ Local communities do not want to damage their environments. They need to become aware of activities that damage the environment, and existing alternatives. They are open to developing new businesses that safeguard it for future generations.
§ Many environmentally sustainable products are best marketed in international markets, which may be small niche markets or very volatile. Communities accessing international markets, especially niche markets, need ongoing access to product development and promotion services.
More information
www.BCNet.org, www.conservation.org, www.bodyshop.com, www.aveda.com, www.starbucks.com organizations and companies practicing or supporting environmental businesses: Biodiversity Conservation Network; Conservation International; Body Shop International; Aveda; and Starbucks
www.isealalliance.org, International Social and Environmental Accreditation and Labeling Alliance (ISEAL)
http://www.villageearth.org/ATLibrary, Consortium for Sustainable Village Based Development
http://www.fao.org/forestry/FOP/FOPW/NWFP/nwfp-e.stm, Food and Agriculture Organization’s (FAO) community forestry department has a wealth of information on forest products.
http://www.ecotourism.org, The International Ecotourism Society (TIES) provides information on research, conservation and business.
http://www.ifoam.org, The International Federation of Organic Agricultural Movements is the most important international body in organic agriculture.
www.tellus.org, Tellus Institute is a research organization specializing in business and the environment whose web site lists resources and publications in this field.