Why corporate stewardship makes good business sense

15th August, 2014 by Stuart Poore

By acting as stewards of natural assets, businesses are protecting their own future as well as the planet’s, says Stuart Poore.

 

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The concept of ‘stewardship’ is well known within the corporate sustainability field, thanks to the work of organisations like the Forest Stewardship Council (FSC) and the Marine Stewardship Council (MSC). However, far too few businesses think about their own sustainability strategies in this way – something we at WWF hope to address by encouraging more of them to act as ‘corporate stewards’.

There are three elements to the approach we advocate. First, businesses must recognise that sourcing natural resources presents risk and opportunity, in terms of supply chain resilience and reputation. Businesses must then manage this risk by changing supply chains and working in collaboration with other users of the resource. Finally, they need to advocate for better policy and implementation governing the management of the resource, in order to deliver long-term solutions.

Our corporate stewardship model has evolved in part from our work on water stewardship with companies like SABMiller, one of the world’s largest beer producers. WWF is helping SABMiller address water risk in its hops supply chain through a project involving nine farmers and a conservancy in the George region of South Africa – a priority area for WWF as part of the Cape Floral Region, a biodiversity hotspot.

For water-reliant businesses, water scarcity and quality issues pose real and long-term business risks. In the past, the tendency has been for businesses to focus on managing this risk by ensuring the efficient consumption of the water over which they have direct control. This has limitations. Businesses can be water efficient or even use relatively small amounts of water, but if they are operating in a water-stressed catchment where rules and allocations are non-existent, or where water is apportioned poorly to people and ecosystems, then they will be exposed to risk. The converse is also true: those pursuing efficiency in water-abundant areas may not be making best use of their capital, and could invest in other issues.

We’ve shown the value of a different approach, one where businesses build on the efficiencies made to their supply chains by looking beyond their ‘factory fence’. Only by accepting the shared nature of the water risks faced and the mutual benefit of working with others – businesses, local communities, NGOs and governments – can long-term supply chain resilience be effectively built. The same goes for the management of forests, fisheries and other natural resources.

This emphasis on collaboration in delivering stewardship is rapidly gaining traction within the financial community as a principle for ensuring responsible investment. For example, the Banking Environment Initiative recently kicked off a project, in partnership with the Consumer Goods Forum. It aims to mobilise the banking industry as a whole around the need to help transform ‘soft commodity’ supply chains, helping clients achieve zero net deforestation by 2020.

The importance of collective action raises the case for sector-wide voluntary standards for sourcing responsibly – such as FSC, MSC and, more recently, the Alliance for Water Stewardship. It can also lead businesses to advocate for stronger rules and regulations governing the use of natural resources, rather than appealing for more deregulation. This is an important feature of the stewardship model. Why? Because any business that attempts to source in a sustainable way can find its efforts undermined by competitors who don’t play by the same rules. A levelplaying field ensures that all businesses can access the resource in the long run, irons out idiosyncrasies in the market, and ensures everyone is clear on what is expected of them.

Take the EU Timber Regulations, designed to combat the trade in illegal timber. Faced with the competitive threat posed by businesses sourcing illegally and the reputational damage inflicted on the sector, a critical mass of timber businesses helped shape the case for regulatory reform. They changed themselves, and also acted as agents of change.

The transition to a world of corporate stewards won’t happen overnight. But several of our partner businesses have already taken significant steps. Coca-Cola is working with WWF and other NGOs to improve its practice on the ground and advocate for better management of UK rivers. Another is M&S: through its commitment to responsible seafood sourcing, it’s performing the role of a key advocate for regulatory reform on illegal, unreported and unregulated fishing practices. These companies aren’t just acting philanthropically. They understand that corporate stewardship is good for business as well as for the environment.

Stuart Poore is Director of Corporate Stewardship, WWF-UK.

WWF-UK is a Forum for the Future Partner. www.wwf.org.uk

Photo credit: aaprophoto/iStock/Thinkstock

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