One of seven goals outlined in The Dow Chemical Company’s 2025 Sustainability Goal, the “Valuing Nature” Goal is a first-ever commitment by a corporation to consider nature in virtually all of its business decisions. It’s a big bet on the idea that there is a lot of unaccounted for value from nature, and a lot of undiscovered nature-based solutions to business problems. In fact, Dow is betting that they will find $1B by 2025, in business value from projects that are good for ecosystems and good for business.
For more information about the Nature Goal, see the Cool Green Science blog from TNC’s lead scientist Jennifer Molnar
You have said Dow’s Nature Goal could change the way companies value nature. Why is this so significant for conservation?
Dow’s 2025 Sustainability Goal around “Valuing Nature” is a game changer for conservation – and for business – because right now nature is essentially valued at zero. There have been few or no ways to formally factor nature into business decisions, which means there were also few incentives for businesses to invest in conservation, beyond philanthropy. The Nature Goal aims to begin delivering systematic and widespread investments in nature because they are good for business – by providing the tools, structure and business environment through which to do so.
What are some of the ways Dow will incorporate the value of nature into its business?
By 2020, all of Dow’s capital, real estate, and R&D projects will need to go through a nature screen as part of the regular approval process. This means thousands of projects every year will be evaluated for how they benefit from or impact nature – fundamentally changing the way Dow does business.
What is the nature screen? What will it involve?
At an early stage, Dow project designers and managers will answer basic questions about how their project design benefits from or impacts air, water, soil, habitat, and the benefits ecosystems provide to communities (e.g., sense of place, aesthetic views, recreation).
They will also answer questions about whether nature can help provide a solution to the problem they are trying to solve with their project. And, they’ll get examples of nature-based solutions like how restoring native forests can do the job of engineered air scrubbers, how constructing wetlands could replace a wastewater treatment pond or how restoring floodplain habitats can enhance water storage.
How will this benefit their company? Their bottom line?
Being aware of and investing in natural capital can help businesses save money, reduce risks, and build value for shareholders, stakeholders, and customers. Screening projects is the first step. The second step is improving project design so that it provides better benefits or lower costs to the business and ecosystems. Dow’s goal is that all of these improved projects will add up to $1B in business value by 2025.
An important point here is that the $1B in business value is the total value of the projects that are good for the business and ecosystems, not specifically the value derived from nature. There is a practical reason for this. The net present value (NPV) of a project is a metric that Dow and other businesses already calculate, and calculating the value of the nature component is not practical as part of regular operations. We anticipate that in some cases this project NPV will be equal to or nearly equal to nature’s value (e.g., the constructed wetland mentioned earlier). In other cases, the NPV may include value from other aspects of a product or process improvement.
With such a comprehensive project, how did you conduct research?
By conducting a number of experiments. Over the last four years, we worked with Dow managers and engineers at different sites and in different ecosystems, addressing a range of business questions. This gave us proof of concept that there was a solid business case for nature and that we had the tools to evaluate that business case.
The big challenge over the last year was figuring out how to make valuing nature practical, routine, and ultimately second “nature” for project managers and engineers company-wide. A key part of this was developing the Ecosystem Service Identification and Inventory (ESII) Tool, which can be used by Dow project managers to evaluate alternative project designs in the second step of the Nature Goal process.
But we’re not done experimenting. We’re testing the Nature Goal at multiple sites as part of our third and final pilot of our collaboration with Dow. We’re going to be testing the tools and training managers and engineers to use them on real projects. This work also aims to uncover the first projects that are good for business and ecoystems that will count toward the goal to deliver $1B of value by 2025.
What can corporations bring to nature conservation that other sectors can’t?
Corporations control and/or impact vast amounts of natural resources – whether directly or indirectly – through their operations, supply chain, and products. They have the potential to direct spending toward wide-spread investments in natural capital that have a solid return and conservation benefits and away from investments that degrade natural capital. Corporations are also centers of innovation, with some of the best and brightest minds focused on new solutions. Lastly, when corporations have the organizational and leadership wherewithal, they can create rapid and transformative change, as we believe is the case with Dow’s Nature Goal.
Were you surprised at how valuable some ecosystem services are? Are we overlooking habitats that could be doing more for people?
Yes, water! We know that water is the lifeblood of – well, everything—including business, society, and nature. But the price businesses currently pay for water vastly underestimates the value of water. This is a problem because it means that businesses don’t have good information to help guide investments in water. In our first pilot, we made a big advance in addressing this problem by developing a way for Dow and other businesses to value water and evaluate investments that sustain rivers, including nature-based solutions.
Since then in our work developing the Nature Goal, we’ve realized that water is the number one issue where managers and engineers want help. And, we’ve realized that there are lots of opportunities for nature to help—from native shrubs and trees enhancing river flows, constructed wetlands or phytoremediation trees cleaning water, restored floodplains mitigating floodwaters, coastal or riparian habitats managing erosion along coastlines and streams, to woodlands or bioswales managing stormwater.
What are some of the limitations of the Nature Goal?
The Nature Goal has some potential limitations in what it measures and what it may achieve. Some of these limitations are the result of having to make the process practical, and others have to do with trying to drive innovation by improving specific project-based decisions.
One potential limitation is that the Nature Goal process will not add up all of Dow’s impacts to and benefits from nature; it is not designed to achieve a metric like net positive impact. Instead, it will focus on changing behavior across the company through improving decisions for thousands of projects a year. This project-based approach is intended to inform actionable decisions and create learning opportunities for project managers, while other sustainability goals at Dow address enterprise-wide impacts, such as greenhouse gas emissions and energy use.
Another potential limitation may be that projects initially identified for the Nature Goal involve small, highly engineered natural areas on sites. However, we expect that the Nature Goal will eventually lead to investments in larger, wilder natural areas. For instance, at the first site we are visiting to test the Nature Goal in Bristol, PA., Dow recently decided to protect 82 acres of rare woodland habitat along the Delaware River by selling it to a local land trust, the Heritage Conservancy, rather than selling it for development. Conserving the woods not only helps protect several endangered and threatened species and provide beauty and recreational opportunities for the community, it also helps clean the air and water and absorb stormwater. If the Nature Goal process builds a business case for conserving natural areas like this, it may become a widespread approach to managing surplus lands across Dow and other businesses.
Through the third pilot, we will test the Nature Goal process and track the implications of these and other limitations – and if needed, revise the process to achieve business and conservation outcomes.
What is the most gratifying part of this project for you?
Letting the idea of nature’s value run wild. I visited one of Dow’s R&D groups and talked to them about our research from the first collaboration pilot on how coastal habitats can help protect against storm waves and sea level rise. Before I knew it, the engineers were ahead of me hatching new ideas about nature-based solutions for coastal resilience and other business challenges.
With the Nature Goal, this sort of innovation isn’t going to be limited to R&D groups; it’s going to be coming from every project manager and engineer. This is what makes me excited and confident that the Nature Goal is going to be transformative and produce lasting value for business and for nature.