BIODIVERSITY WEBINAR

How do industrial activity degrade

land and its ecosystems?

06.03.2023
Section 1:
Introduction
What is material sourcing?

Industries rely on sourcing unprocessed materials like wood, fibers, minerals, metals, and others to
manufacture their final products. The sourcing of these materials can result in adverse
environmental impacts, including deforestation, biodiversity loss, resource scarcity, soil
degradation, landscape alteration, among others.

Different raw materials harm the environment in various degrees.

The main impacts of material sourcing include:

● Land use, ultimately reflected in landscape degradation and loss of biodiversity

● Eutrophication, which is associated with aquatic dead zones
● Deforestation, linked to reduced carbon sinks and loss of biodiversity

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Main Environmental Impacts of Material Sourcing

Land degradation from land use

The term Land use is used to designate the “management and modification of natural environments into built
environments such as settlements or semi natural habitats, including arable fields”.

Half of the habitable land in the world is used for agriculture. Nearly 5 billion ha are classified as “agricultural area” by
the FAO.

Land used for agricultural processes degrades land, decreasing the richness of nutrients in the soil, increasing salinity
and harming soil health. The agricultural use of land can also displace species, resulting in biodiversity loss. Overall, land
use contributes to the loss of ecological productivity. Degraded lands are unable to provide key ecosystem services like
temperature and water regulation, as well as supporting biodiversity.

In fact, land used for agriculture has been identified as “the primary driver of biodiversity loss”, threatening at least 24,000
species, 86% of all species at risk of extinction. Experts estimate that human induced land degradation affects 34% of the
agricultural land (1.6 billion ha).

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 Main Environmental Impacts of Material Sourcing

Land degradation

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Main Environmental Impacts of Material Sourcing

Impacts on Water: Eutrophication and Desertification

Agriculture requires vast amounts of freshwater, increasing pressure on water stressed regions.

70% of freshwater withdrawals are used for agriculture. Cotton farming, for instance, has been linked to the
desertification of Aral Sea Basin and Xinjiang.

Moreover, the use of fertilizers pollutes water bodies with nutrients, a process called eutrophication. Nutrient rich
waters increases plant and algae growth, decreasing oxygen availability and increasing water’s PH. Ultimately, these
changes contribute to zones with extreme hypoxia, or dead zones, where fish mortality increases and only a few species
survive.

78% of eutrophication is caused by agriculture.

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 Main Environmental Impacts of Material Sourcing

Dead Zones

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Main Environmental Impacts of Material Sourcing

Deforestation

Deforestation is “the intentional clearing of forested land”.

Deforestation is mainly driven by mining, agriculture and energy infrastructure.

Every year, 6 million hectares of land are deforested, 95% of which in the tropics. The Amazon and Indonesia’s tropical
forests have been some of the most affected by deforestation. According to estimates, 100,000 species become extinct
in tropical forests every year.

Deforestation has cascading effects on ecosystems, affecting their balance and resilience.

Deforestation is considered to have a more severe impact on biodiversity than land degradation. This is because
it has a direct and immediate impact on habitat loss, it is harder to reverse and because it results in larger losses to
biodiversity.

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 Main Environmental Impacts of Material Sourcing

Global Deforestation

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Key figures and stats

● Nearly 5 billion hectares are classified as “agricultural area” by the FAO.

● Human induced land degradation affects 34% of the agricultural land (1.6 billion ha).

● 70% of freshwater withdrawals are used for agriculture. In all, agriculture uses 2.76 trillion m3 of water yearly.

● Nutrient rich water pollution (eutrophication) contributes to dead zones.

● 78% of eutrophication is caused by agriculture.

● Every year, 6 million hectares of land are deforested

● Deforestation is considered to have a more severe impact on biodiversity than land degradation.

● Estimated land use for companies on the platform ranges from 215 Mn ha to around 200 ha

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 Section 2:
What to consider
when rating
How to rate the topic: Value

We evaluate the impact a company has on society or the

environment in two dimensions: Value and Scale.

To assess the value of a company’s impact, think about the absolute

impact the issues raised by the topic have.

With this dimension, you can cast your vote on how harmful or
beneficial you consider the topic and impact described.

This dimension is linked to the topic treated and not with the
company’s specific impact. That is, it should answer the following
question:

How negative do you consider impacts related to material sourcing,

like deforestation, eutrophication and land use to be?

Being linked to the topic rather than the company, the value rating
should hold some consistency across industries.

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 How to rate the topic: Scale

Scale is our second rating dimension and is directly related to the

company’s impact. It consists of three parts: Breadth, Depth and
Persistence

Under Breadth, answer the following question: What is the reach of

the impact?
E.g. Is the amount of land deforested or used vast (many) or
small (few)?

Under Depth, answer the following question: How profound is the

impact? In other words, how significant/drastically has the impact of
the company on the environment been?
E.g. Is the land deforested significantly affecting ecological
productivity?

Under Persistence, answer the following question: How longlasting

is the impact described?
E.g. How long will it take for the land deforested to grow back?
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 How to rate the topic: Core business and CBI

All companies provide key services, positively impacting society.

We measure these impacts thought the company’s Core Business

Topic. In these analyses, we capture:

a. The total reach the company has

b. The number and variety of products or services it provides
c. The impact the company’s products or services have on
society

Other topics mapped arise as costs or benefits from the

company’s operations. In this sense, these topics should be
evaluated and rated with the company’s core business as a
starting point.

Keep the score in perspective.

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Useful questions to guide your ratings

● Is the company using vast amounts of land to source its raw materials? Has it been involved in deforestation
through its supply chain? Has it directly contributed to the formation of dead zones through its agricultural
runoff?

● How much land is the company using for its raw materials? Is this number in the ones, thousands or millions?

● Where is the company sourcing its raw materials from? Has it affected biodiversity hotspots? Has the company
contributed to the degradation of particularly vulnerable ecosystems?

● How profound or drastical has the company’s impact been? In what way and by how much has it modified the
ecosystem?

● How long will it take for the impact caused by the company to be reversed? Is the impact reversible, long lasting
or completely irreversible?

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 Section 3:
An expert rater’s view
Tips and tricks from an expert rater

● Reading through an analysis a couple of times helps to hone in on the salient points necessary for a holistic
rating. The data points also provide a useful summary.

● In some cases, it’s not easy to rate the impact solely from the note, peer group comparisons are a great way of
contextualising the company’s impact.

● Asking for peer opinions on Slack also helps to provide context and is a great way to learn and develop as a rater.

● Remember that the analysis is the basis of the rating, try not to overthink it.

● Where possible, take the time to research the topic on your own, it‘s a great way to gain knowledge and put the
topic in perspective.

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Questions?
 Section 4:
Practical Exercises
Rating Exercises

Suzano's 1.4Mn ha of monoculture eucalyptus forest is fuelling ecosystem degradation & deforestation

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Rating Exercises

Wilmar is linked to deforestation of thousands of hectares in Indonesia through its supply chain

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Thank you!