Over recent years, the consultancy firm EY has developed several independent studies for Corticeira Amorim that have assessed the company’s environmental, social and economic impacts. As part of the group’s sustainability strategy, based on the three pillars of ESG (Environment, Social and Governance), these studies have included an important assessment of the ecosystem services associated to the oak cork forest, making it possible to calculate the environmental footprints of various of the company’s products.
João Alves, Managing Director of EY in Portugal, Angola and Mozambique, has accompanied these studies very closely, and highlights their main conclusions, as well as the importance of quantification to make accurate assessments.
Why is it important to assess ecosystem services in order to reinforce public perception and interest in the conservation of ecosystems and biodiversity?
The concept of ecosystem services — defined as nature’s contributions to people’s well-being — has played an important role in raising public awareness of the need to conserve ecosystems and protect biodiversity.
This concept introduces a perspective in which ecosystems and biodiversity are understood as a specific form of capital — natural capital — providing a wide range of material goods and non-material benefits that support quality of life. It highlights the dependence of human societies on the long-term sustainability of this natural capital.
A commonly cited example of an ecosystem service is climate regulation through carbon sequestration by forests. This function is widely recognised as a nature-based contribution to climate change mitigation at an ecosystem and landscape level, and forms part of broader policy discussions related to long-term climate objectives, such as carbon neutrality by 2050.
Ecosystems also provide many other services, including hydrological regulation, mitigation of extreme events such as flooding and fires, pollination by insects that supports agricultural production, and opportunities for recreation and nature-based tourism. Together, these services illustrate the direct and indirect benefits that societies derive from healthy ecosystems.
The evaluation of ecosystem services is therefore important to support a more informed understanding of the role of ecosystem and biodiversity conservation within economic systems, and to inform decision-making processes related to land use and territorial management.
This approach has been increasingly reflected at European Union level, through initiatives encouraging Member States to map and assess ecosystems and the services they provide, as well as to explore ways of integrating these values into national accounting and reporting systems.
In this context, there is growing pressure for companies to align their sustainability strategies with this broader agenda, particularly in relation to biodiversity conservation and responsible land-use practices, as reflected in voluntary initiatives such as Act4Nature.
Why is it important to quantify these services?
Firstly, because we need to understand the complex interaction of biological and ecological processes that result in the provision of a service, thus providing the basis for managers of the territory to intervene in the system, in order to maximise the provision of ecosystem services in a sustainable manner.
Secondly, quantification is the underlying basis for valuation, which is fundamental in order to integrate the value of ecosystem services in accounting systems, for assessment of the environmental impacts of projects, or for the development of economic instruments such as the remuneration programmes for ecosystem services (attributed to owners who opt for forestry and rural management practises that are compatible with the provision of services of ecological and monetary value).
From a corporate perspective, quantifying and valuing the direct and indirect impacts of company’s activities on ecosystems and their associated services, as well as assessing the risk of their dependence on natural capital, is crucial in order to understand the true extent of the footprint of activities and operations associated with their value chain, in terms of the degradation or preservation of ecosystems and biodiversity.
What methodologies did you use and why?
In the study developed by EY on the value of the ecosystem services of the cork oak forest, the assessment of ecosystem services was based on use of methodologies for mapping and quantifying services using geographic information systems, cartography and forest inventories, provided by four case studies. In this assessment, three services were monetised: climate regulation; regulation of extreme events; fire prevention, hydrological regulation and soil protection.
The valuation took into account the avoided cost method, i.e., the social cost that would be borne by society if it had to remedy the environmental damages associated with absence of ecosystem service. For example, the social costs related to greenhouse gas emissions are a result of the damages that are caused to agricultural crops, medical care associated with heat waves and droughts, as well as the damages caused by floods and rising sea levels. Considering the climate regulation service, the consideration of a social cost of carbon (€ / ton of CO2eq emitted), makes it possible to estimate the monetary value associated with this ecosystem service.
What conclusions have you reached?
The study developed by EY, based on the selected case studies, concluded that cork oak forests provide benefits to society worth on average over € 1300 / ha per year. The value of the total quantified services is an underestimate of the total value of the ecosystem services associated to the cork oak forest. This ecosystem plays an essential role in the maintenance of biodiversity and habitats, responsible for invaluable ecological functions, some of which are not yet fully understood by humanity.
There is also a complex set of benefits generated for society, ranging from provision of services, regulation or cultural services. These services are evaluated in the study using qualitative and quantitative information in order to provide a set of useful information on the dimension of the identified contributions.
What can this work offer for the future?
This work demonstrates the value associated with the cork oak forest, which goes far beyond its landscape importance, and includes the fact that it forms part of the cultural identity of Portugal and the Mediterranean and considers the multiple applications of cork in different sectors.
For the various stakeholders in the cork sector and its respective products, the work demonstrates the societal benefits associated with good management of the cork oak tree and can serve as a catalyst for the adoption of management practices that ensure a compatible balance between economic exploitation and conservation the rest of Portugal. This is also a good example of how companies can benefit from knowledge about their impacts and their dependence on natural capital, both in reputational terms and through demonstrating their contribution to achieving public policy objectives, in terms of biodiversity conservation and ecosystem services.
