The Business Case for Understanding Ecosystem Services
Key Takeaways
Ecosystem services contribute $125-145 trillion annually to the global economy—more than global GDP—yet remain invisible in most business planning.
Every industry depends on nature: from tech companies needing water for data centers to financial firms exposed to climate risks in their portfolios.
Over $50 trillion in global GDP is moderately or highly dependent on nature, with companies already facing shutdowns and disruptions from ecosystem degradation.
Companies that understand their ecosystem dependencies gain competitive advantage through better risk management, lower costs, and easier access to capital.
Every business operates within a web of natural systems that provide essential services—from the water that powers manufacturing processes to the forests that regulate local microclimates around corporate facilities. These ecosystem services form the foundation of economic activity, yet most companies remain unaware of how deeply their operations depend on nature's work.
What Are Ecosystem Services?
Ecosystem services are the benefits that humans derive from functioning natural systems. They fall into four main categories: provisioning services like fresh water and raw materials; regulating services such as climate control and water purification; supporting services including nutrient cycling and soil formation; and cultural services like recreation and spiritual value.
These services operate at a massive scale. Research shows that ecosystem services contribute between $125-145 trillion annually to the global economy—more than global GDP. Yet because they're provided freely by nature, they remain largely invisible in traditional business planning and financial accounting.
Consider a simple example: a forest near a manufacturing facility doesn't just provide timber. It regulates local temperature and humidity, reduces flood risk by absorbing rainfall, purifies air and water, stores carbon that would otherwise contribute to climate change, and provides recreational opportunities for employees and communities. The economic value of these combined services often exceeds the value of the trees themselves.
“The misconception that only ‘green’ industries depend on ecosystem services has left many companies blind to their environmental dependencies.”
Why Every Industry Depends on Nature's Services
The misconception that only "green" industries depend on ecosystem services has left many companies blind to their environmental dependencies. In reality, every sector relies on natural systems in fundamental ways.
Financial services firms may seem removed from nature, but their loan portfolios and investments are deeply exposed to ecosystem service risks. When droughts affect agricultural borrowers, when floods damage real estate investments, or when supply chain disruptions ripple through manufacturing clients, financial institutions feel the impact. Insurance companies are already repricing policies based on changing environmental risks.
Technology companies depend on rare earth minerals extracted from ecosystems worldwide, require vast amounts of clean water for data center cooling, and rely on stable climate conditions for their global supply chains. When ecosystem degradation disrupts mining operations or water scarcity forces facility closures, tech companies face significant operational challenges.
Retail and consumer goods companies operate complex supply chains that trace back to natural resources. Whether it's cotton grown in water-stressed regions, palm oil sourced from tropical forests, or seafood harvested from marine ecosystems, retailers depend on the health of natural systems thousands of miles from their stores.
Even service industries that seem completely disconnected from nature rely on ecosystem services. Management consulting firms depend on transportation networks that function because natural systems regulate weather patterns, such as storm and flood mitigation. Their clients face ecosystem-related risks that create demand for advisory services. Their office locations benefit from urban green spaces that provide air purification and temperature regulation, keeping operating costs lower than they would be without these services.
The Risks of Ignoring Ecosystem Dependencies
Companies that fail to understand their ecosystem service dependencies face mounting risks. Physical risks emerge when natural systems can no longer provide essential services—think water shortages affecting manufacturing, or extreme weather disrupting supply chains. Transition risks arise as regulations evolve to protect critical ecosystems, potentially restricting business operations or increasing compliance costs.
More than $50 trillion in global GDP is moderately or highly dependent on nature, according the World Economic Forum and other more recent studies. As ecosystem degradation accelerates, companies without clear visibility into their natural dependencies will find themselves increasingly vulnerable to operational disruptions, regulatory changes, and stakeholder pressure.
The business impacts are already visible. Companies have faced production shutdowns due to water scarcity, supply chain disruptions from extreme weather events, and regulatory penalties for operating in ecologically sensitive areas. Consumer brands have experienced boycotts over environmental practices. Investors are increasingly scrutinizing companies' environmental risks and dependencies.
“Forward-thinking companies are recognizing that understanding ecosystem services isn’t just about risk management—it’s about competitive advantage.”
The Strategic Advantage of Ecosystem Fluency
Forward-thinking companies are recognizing that understanding ecosystem services isn't just about risk management—it's about competitive advantage. Companies that map their dependencies on natural systems can identify vulnerabilities before they become crises, optimize their resource use, and develop more resilient operational strategies.
This understanding also reveals opportunities. Companies might discover that investing in ecosystem restoration near their facilities provides better flood protection than traditional infrastructure. They might find that supporting sustainable practices in their supply chains reduces long-term input costs while ensuring resource availability.
Building ecosystem service fluency enables better decision-making across the organization. Procurement teams can evaluate suppliers based on environmental risks. Facility managers can optimize resource use and reduce operational costs. Strategic planners can identify geographic regions with stable ecosystem services for future expansion.
Regulatory and Investor Momentum
The business case for ecosystem service understanding is strengthening as regulatory requirements evolve. The EU's Corporate Sustainability Reporting Directive now requires companies to assess and disclose their impacts and dependencies on biodiversity and ecosystems. More than 500 companies representing $17 trillion in market capitalization have committed to reporting their nature-related risks and dependencies.
Investors are demanding greater transparency about environmental risks. Credit rating agencies are beginning to incorporate ecosystem service dependencies into their risk assessments. Companies that can demonstrate clear understanding and management of their ecosystem relationships will be better positioned to access capital and maintain stakeholder confidence.
Getting Started
Understanding your company's relationship with ecosystem services begins with systematic assessment. Where do your operations depend on clean water, stable climate, or healthy soils - especially those locations that you hadn’t previously considered to be at risk? How might changes in ecosystem health affect your supply chains? What are your company's impacts on the natural systems that support your business?
The frameworks for conducting this analysis are available, but the process can seem complex for companies new to ecosystem thinking. The key is starting with a structured approach that identifies your most significant dependencies and impacts, then developing strategies to manage the associated risks and opportunities.
For companies ready to build ecosystem service fluency, we've developed a comprehensive guide that breaks down the assessment process into manageable steps. Nature Risk Made Simple: Your Step-by-Step Guide to Confident Disclosures provides practical frameworks for understanding your business's relationship with natural systems and developing appropriate management strategies.
Whether you're responding to regulatory requirements, investor expectations, or simply seeking to understand a critical aspect of business risk, building ecosystem service fluency is no longer optional. The companies that recognize this reality and take proactive steps will be better positioned for sustainable success in an increasingly nature-constrained world.
Ready to get started? Download our free guide or contact Dunya Analytics to learn how we can help your company understand and manage its ecosystem service dependencies.
