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How Business and Society Thrive by Investing in Nature – An interview with Mark Tercek

In 2008, The Nature Conservancy (TNC) surprised the conservation world when it selected Mark Tercek, an investment banker at Goldman Sachs, as its new president and CEO. For people familiar with Tercek, however, the move made perfect sense: he was a leading figure in Goldman’s efforts to pursue new environmental policies. In 2005, Tercek became head of the firm’s Environmental Strategy Group. In that role, he worked with ecosystem services science pioneers, including Gretchen Daily of Stanford University and President Obama’s chief scientific adviser, John Holdren.

Mark Tercek.

While at the helm of TNC, Mark Tercek has continued his focus on ecosystem services or attributing economic value to nature. In his new book, Nature’s Fortune, Mark discusses the fruit of this work.

Mark Tercek, CEO of The Nature Conservancy, recently sat down with Mongabay.


Mark Szotek: Please explain what prompted you to write your new book, Nature’s Fortune: How Business and Society Thrive by Investing in Nature.

Mark Tercek: I have tremendous respect for the environmental movement and all that it has accomplished over the past half century. We are very fortunate to have a strong base of passionate supporters. But to achieve our mission we need to improve our approach and attract even more people and resources to our cause.

One way to accomplish this goal is to make nature relevant to more people. Undisturbed, nature provides us clean water and air, fertile soil, timber to build homes and support industry, and protection from floods and other natural hazards. Writing a book seemed a good way to reach more people with the message that saving nature is one of the best investments we can make.

I believe this approach can result in some very positive outcomes for the environmental movement. First, it will help us build more support and secure new partnerships for conservation. Second, it will unlock new sources of funding. Third, and perhaps most importantly, it will improve the dialogue between environmentalists and the rest of society. You can conserve the environment and not be at odds with economic progress. Everything is not a trade-off, and there are truly win-wins.

My goal was to write a hopeful and pragmatic account that strives to reduce the disconnect between the environmental movement and the rest of society. As much as possible, we all need to be on the same page.

Mark Szotek: Can you provide an example of success between commercial and environmental interests?

Catskills. Photo courtesy of TNC.

New York City. Photo courtesy of Dschwen.

More than a “Weekend in The Catskills” – Saving New York City Taxpayers Billions: Investing in natural watersheds proved far more cost-effective for New York City than building new water filtration and treatment plants. Chapter Two – “Not a Drop to Drink”, Nature’s Fortune.

Mark Tercek: I open the book by discussing water. Water scarcity and quality are already serious global problems. As we look ahead, climate change, population growth, and the rise of the global middle class will translate into increased demand for the world’s natural resources, especially fresh water.

At The Nature Conservancy, we are encouraged when we help regional water users understand that environmentally conscious investments in protecting their water supplies can also be very economically attractive. In Quito, Ecuador, for example, TNC’s team learned that plans for an expensive new water filtration plant were about to be launched. After evaluating the situation, we contacted the municipal water authority, the local brewery, and the Coca Cola bottler and ultimately proposed a different approach. Instead of building an expensive facility to clean water later, we proposed rather straightforward changes in ranching and farming practices upstream that would keep water clean downstream, thereby saving money and the environment. Residents and business were happy and a very important wildlife habitat called the Condor Bioreserve was preserved. In essence, a primarily economic argument advanced conservation.

This is an exciting new model for protecting nature. Instead of raising philanthropic capital for conservation, local users pay less themselves for projects that secure a clean water source. The idea has spread to more than 20 watersheds across Latin America, protecting millions of acres of habitats and securing potable water for tens of millions of people. We also have funds in development in the U.S., Asia, and Africa.

An Investment Model with Spillover Benefits: TNC water funds investments both provide the citizens of Quito Ecuador with a reliable source of fresh water, while also helping safeguard habitat for local biodiversity, like the Gray Breasted Mountain Toucan, the Jaguar, and the Andean Condor. Chapter Two – “Not a Drop to Drink”, Nature’s Fortune. (Image credits: Toucan courtesy of TNC, Jaguar by Rhett A. Butler, Condor courtesy of TNC)

Notice that this approach results in the outcomes I mentioned earlier. First, water users, including corporations and local businesses, come to truly understand that it makes economic sense to invest in protecting nature. Second, dollars flow in an entirely different way from traditional conservation. In this model, a small amount of philanthropic start-up capital gets the project off the ground. But soon the project begins to pay for itself, as water users contribute to the fund to further economic benefits. And third, we’ve changed the dialog with local companies and communities. Rather than lecturing people to protect local forests and watersheds, we rolled up our sleeves and collaboratively developed a win-win solution to a specific challenge.

Mark Szotek: Another story in your book describes the benefits that occurred when the fishermen of Morro Bay in California reexamined their standard fishing practice of using trawl nets.

Sometimes Less Truly is More: The revitalized fishing industry of Morro Bay (Image courtesy of TNC). Chapter Four – “The New Fishing”, Nature’s Fortune.

Mark Tercek: This is a great example of how focusing on the value of nature can result in powerful new alliances with groups once on the sidelines, or even opposed to conservation. For years, TNC, together with other environmental groups, made little progress advocating for more sustainable fishing practices in Morro Bay. The local fishing industry relied on bottom trawling: dragging massive trawl nets across the seafloor. Although inexpensive and reasonably efficient, this approach destroys the seafloor and local marine habitats, results in excessive by-catch, and eventually leads to severe overfishing. And by flooding the market with fish, the fishing community was practically guaranteeing a low price for their catch.

Our discussions with the fishing community, though, had reached a stalemate. The breakthrough came when Chuck Cook, a TNC staffer, suggested we “put our money where our mouth was.” Instead of fighting the fishing industry, why not join it? With the Morro Bay fishing industry in sharp decline, we purchased fishing boats and permits from many willing sellers. We then sat down with the remaining local fishermen and worked out some strategies to provide profitability for fishermen and sustainable outcomes for nature.

To rebuild ground-fish populations, we mapped out no-trawl zones. We leased back permits and vessels to fishermen willing to use less damaging fishing practices or limit trawling to less sensitive areas. Together, we found that sustainable fishing techniques like traps and live-tanks (selective fishing that brought live fish to market) could generate substantially higher income for Morro Bay’s fishermen than the traditional trawl-based model of catching and selling high volumes of fish for low values. It was a win-win all around. And fishing communities beyond Morro Bay have begun to take notice.

Mark Szotek: In Nature’s Fortune, you offer many other success stories of joint efforts between commercial and environmental interests. To many, however, business interests and environmentalists seem very polarized. What do you feel is the primary reason for the division?

Mark Tercek: Well, I don’t think there is a clear-cut division. At least there doesn’t need to be. In any community there will be some good players and some bad. I find many divisions or disconnects are due to misunderstandings and miscommunications.

The business leaders with whom TNC works seem to understand that continued business success requires smart strategies that manage environmental challenges. They recognize that their businesses depend upon nature, whether that means securing clean water, managing risks to their supply chains, protecting facilities from storms and floods, or a commitment to the communities in which they operate. Likewise, customers, employees, and investors are increasingly choosing companies whose values reflect their own, and this includes a growing sense of environmentalism.

Helping companies with big environmental footprints that are genuinely committed to making better environmental decisions has the potential to result in very significant conservation gains. This is why building bridges between “environmentalism” and “business” has been an important focus for me.

Mark Szotek: As conflicting time horizons and investment cycles are in many ways at the core of the division between environmentalism and business, how do we move business to think beyond a five-year time horizon?

Mark Tercek: In business, there’s a lot of emphasis on quarterly results (an efficient metrics for many business drivers), but that shouldn’t be at the expense of long-term strategies. Many highly respected companies like Amazon, Google, and Apple are clearly focused on quarterly results alongside bold and longer-term investments. And it seems to me that all prudent business leaders can understand the benefits of a long-term point of view. Still, there is a need for regulatory policy to motivate the business community to take actions that might not at first evolve solely through market mechanics.

Mark Szotek: So what advice do you have for the environmental community for building true working relationships with those business leaders, instead of viewing business interests as the enemy?

Mark Tercek: I think that environmentalists have at times struggled to build meaningful connections, not just with the business community but with society as a whole. Environmentalists have sometimes been viewed as either zealots or naysayers (or both) in their approach to solving problems. In turn, we sometimes find ourselves lecturing instead of cooperating, or even listening. In our zeal and passion, we can forget that most people don’t like being told what they should—or should not do.

In my view, the key to building productive relationships with business, government and broader audiences in general is for environmentalists to put themselves in other people’s shoes. Not everyone has the innate love of nature that drives many of us in the environmental community. We should focus on showing people “what’s in it for them”—how nature makes their lives better, protects their health, improves their business’s bottom line, creates jobs, and gets our economy moving.

By stressing the value of nature, we can stop lecturing people and instead connect with them around shared values and concerns.

When I started writing Nature’s Fortune, I thought I would be writing a wake-up call to the business community. But now I think that both sides would benefit from reconsidering the ways they view and talk about nature.

Mark Szotek: In closing, how do we further encourage business, governments, and individuals across the globe to place appropriate values on natural capital and environmental services to reap the true bounty and potential of nature’s fortune?

Mark Tercek: First, we need more scientific data to back up environmental theories. We have compelling ideas, but business managers, engineers, government officials, and others who are responsible for making infrastructure decisions need solid data on the benefits of investing in natural solutions alongside, or in lieu of, traditional (manmade) infrastructure approaches.

Second, I think we should continue to improve the dialogue between environmentalists and the rest of society. This was one of my goals in writing Nature’s Fortune. Environmentalists are very good at preaching to their choir of supporters. And we should continue to do so; we are enormously grateful for and dependent on our choir’s passion, commitment, and generosity. But we should also look beyond the choir and talk about the value of nature in new ways that will make it relevant to more people.

Third, government action is critical. We need smart environmental policies and regulations that bolster voluntary initiatives. Lately, this key player has been missing in action. Our leaders must move past partisan gridlock and recognize the important role of nature in our nation’s prosperity.

A climate of respectful dialog on issues of the environment needs to be encouraged. Since I now see business leaders at the table, scientists and environmental advocates are stepping up. There’s reason for optimism.

Photo courtesy of Indiana University.

“What we have ignored is what citizens can do and the
importance of real involvement of the people involved –
versus just having somebody in Washington make a rule.”

– Elinor Ostrom

An Advocate for The Common Good and The Only Woman
Recipient of the Nobel Prize in Economics to Date, Elinor
Ostrom (August 7, 1933 – June 12, 2012)

Nature’s Fortune, references the work of Elinor Ostrom, who
won the Nobel Prize in economics by challenging the accepted
view that drivers that promoted individual economic activities
were more productive than those that worked toward shared or
common goals.

Author’s Note: In acknowledging the benefits of a shared approach, I offered Mark Tercek a “bonus interview question,” posed by a close friend — Tim Holmberg — who has strong environmental and political interests and who often helps review the various features I’ve authored.

Tim Holmberg: Many in the environmental community have a view of business that is based in large part on observed practices and the strong tendency of business to externalize costs to meet competitive challenges. If both company A and B make essentially the same product and have achieved relatively similar efficiencies in manufacturing, the incentive then becomes finding ways to defer or externalize costs to achieve a competitive advantage. The collected externalized burden on the environment is not only damaging, it is accelerating. How do we get business and manufacturing to stop shifting costs to the rest of society?

Mark Tercek: In the book I touch on this subject in a section on climate change, which discusses how the wide utilization of fossil fuels does not price or factor in the external costs to society through environmental degradation.

In a competitive environment, businesses can be pushed to bad choices in a bid to maintain advantage. This is where I think strong and improved regulatory policy is necessary. Voluntary initiatives by the private sector will never be sufficient. There is a vital role for government in managing the environment and this needs to be voiced by voters. I spend a lot of time on Capitol Hill, and I’m left with the impression that our elected officials don’t feel that environmental matters are a big priority for their voters and constituents. The general public—voters—has a lot more potential influence than they are using. It’s critical that citizens step up and fight for effective environmental policy. Our individual voices do matter.

We need new policies that bring the government, environmentalists and the private sector into a productive partnership. With my book, I hope to show with real-life examples, not just theory and conjecture, that better ways are possible. If we expand financial and economic support for conservation, there can be great outcomes. Dialog, not division, is the way forward. We are all shareholders of the environment.

Nature’s Fortune

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