The issue of the value of the natural environment to the economy has been debated for many years, however recently the topic seems to have undergone something of a revival. In the UK much of this debate stems comments over the last year by the UK Chancellor of the Exchequer George Osbourne that suggest that environmental sustainability and economic growth are not compatible. The truth we simply cannot exist as a species and as a society let alone an economy without the services that the natural environment provides. A classic example of this relationship is shown in the Figure below where the economy is seen as a subset of society and the environment and is dependent upon them. AS James Lovelock reminds us, human society depends on the environment although in contrast the environment would continue without society...
So what does this mean for projects and project management?
Project Managers have long been experts at managing resources and controlling risk. Typically this has meant the management of human resources, equipment and material supplies alongside the assessment of financial, operational and legal risks. What project managers have to get better at is managing natural resources and assessing environmental risks. By this I mean that project managers need to internalise the value of the natural resources that their projects are reliant on, and the potential risk to nature from project operations.
One high profile example could be the BP Deepwater Horizon project. It has since been well publicised that BPs poor risk assessment and preparedness procedures were partly to blame for the disaster and the scale of the impact. The effect on both the natural environment, local economy and the companies corporate image have been devastating. Then there's the financial cost - BP's accounts for 2010 put aside $41bn to pay for the spill, two and a half times more than BP's entire profit in 2009. Had BP evaluated and internalised the costs associated with a catastrophic event such as this, the costs of measures put in place to deal with the distaster in a more effective and timely matter would have seemed trivial and a good investment.
Then there are the opportunities that the natural environment provides for projects. Many projects are actually reliant on the natural environment for their very being. Think forestry, agriculture or mining projects for example. If we fail to manage the natural capital these project rely upon, namely trees, soil and ore, the project will be unsustainable over the long term. Once these primary inputs are depleted, the project can no longer exist. Here project managers need to ensure only what is required is taken, and where possible resources are replenished at at least the rate of use and preferably enhanced or increased. Others projects are reliant on natural resources for their material input. There is a growing scarcity of key mineral and metal resources such as cobalt used in industrial manufacturing projects, and lithium used in batteries and hybrid cars - an issue highlighted in a recent PWC report. Project managers need to carefully manage the use of these resources ensuring that waste is eliminated and where possible alternatives are sourced.
Finally project managers who successfully manage environmental risk, and find a way to harness and protect natural capital, will ensure their projects are more successful and can gain competitive advantage. They may find new methods of production and new technologies that increase efficiency, or differentiate themselves from competitors by integrating natural capital considerations into project management systems and project planning. This may result in the creation of new markets or attract new investment or customers eager to be associated with more sustainable projects.
So what has nature ever done for projects?
Well ,nature provides natural capital and material resources. Nature is the reason for many projects happening in the first place. Working with nature project managers can increase competitive advantage from their projects and reduce risk. With this in mind project managers need to consider the contribution of nature, and eliminate risks to natural capital from project operations. Ultimately if project managers do not fully consider the impact of their operations on the natural environment, nature will fight back increasing risk, cost and damage to reputation...