EVALUATE priority, dependencies and impacts

Introduction

Developing an understanding of nature-related dependencies and nature impacts at each location where a business interfaces with nature is the essential pre-requisite for developing a robust understanding of risks and opportunities.

As outlined in the LOCATE phase above, early identification and screening of locations which are most likely to present critical dependencies, substantial impact and material risks and opportunities can help to focus the evaluation of dependencies and impacts in this phase of the LEAP approach. The prioritisation approach suggested in the LOCATE phase is suggestive and not prescriptive. There is no substitute for judgement. Analysts and executives within an organisation know their business model and processes best and it may be that critical dependencies and impacts that do not meet the definition of ‘priority locations’ could still create exposure to material risks. This underscores the importance of consulting widely with both internal and external stakeholders to form a sound judgement of the locations where it would be prudent to undertake a detailed assessment of nature-related dependencies and nature impacts as outlined below.

Dependency and impact analysis stems from an understanding of the environmental assets that provide ecosystem services to society, including business processes that create revenues, cashflows and ultimately, enterprise value. At the interface between natural systems and business processes are ‘impact drivers’ that help a company identify how their activities and those of others are driving nature impacts.

Most organisations and financial investors take for granted that nature will continue to provide ecosystem services to support the business processes that produce products and services, and ultimately, revenues, cashflow and enterprise value. In this phase of the LEAP approach, an organisation makes explicit the environmental assets and ecosystem services on which it depends and from which its business processes at each location generate financial value. Making dependencies more visible in corporate and investment decision-making is a first, critical step to better understanding nature-related risks.

Given that organisations are benefiting from ecosystem services, while simultaneously having impacts on nature through the interface of their business processes with ecosystems, dependencies and impacts are interrelated. The process of extracting freshwater from a watershed, for example, has an impact on the health and resilience of the ecosystems in that watershed. In short, the impacts an organisation has on ecosystems today can create risks to the environmental assets and ecosystem services that it and others depend on now and in the future.

Guiding Questions

Internal and External Tools to Support your analysis

Suggested outputs from the EVALUATE Phase

  1. A list of the relevant environmental assets and ecosystem services at each priority location;
  2. A list of relevant nature-related dependencies and nature impacts, according to the selected scope;
  3. An assessment of the size and scale of nature-related dependencies and nature impacts material to the business, according to the scope of the assessment.