2 Learning objectivesUnderstand characteristics of eco-efficiency and how it has emergedRecognise the business case for eco-efficiency
3 Structure Definition and drivers The business case Implementing Measuring and reportingBeyond eco-efficiency
4 Structure Definition and drivers Definition and drivers The business caseImplementingMeasuring and reportingBeyond eco-efficiency
5 The challenge“The growth of world population and production combined with unsustainable consumption patterns places increasingly severe stress on the life-supporting capacities of our planet.”Agenda 21
6 = ECO-EFFICIENCY The challenge To provide more value with less environmental impactTo de-link growth of welfare from the use of natureTo improve both economic and ecological efficiency= ECO-EFFICIENCY
7 Definition“The delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impact and resource intensity throughout the life cycle, to a level at least in line with the Earth’s estimated carrying capacity.”
8 Evolution Government Agenda Business Agenda TimeBusiness AgendaComplianceCleaner ProductionEco-efficiencyResponsible EntrepreneurshipEHS AuditingICC- CharterEMSStandardsSustainability StrategyGovernment AgendaOurCommon FutureAgenda 21Factor XEnv. FootprintCommand & Control LegislationSustainabilityCo-regulatory AgreementsEconomic InstrumentsAs the horizontal arrows in the signpost diagram show, companies intitiatllyDealt with pollution problems through Compliance Management. Next, theyMoved toward proactively preventing pollution via cleaner production. Eco-effieincyThen began to contribute because, for the first time, it established the link betweenEnvironmental improvements and economic benefits. The next step is throughReponsible entrepreneurship through which the private sector aims to balanceAll three pillars of sustainability (social justice, economic prosperity and ecologicalBalance).
9 Command & Control Legislation Global trendsTimeBusiness AgendaComplianceCleaner ProductionEco-EfficiencySustainabilityRio 1992Jo’burg 2002Corporate SocialResponsibilityGovernment AgendaStockholm 1972Command & Control LegislationCo-regulatory /VoluntaryEconomic InstrumentsPartnershipEHSManagementCorporateStrategySustainableLivelihoods
10 Why businesses are embracing eco-efficiency Because it is a management tool which:focuses on opportunitiesimproves performancemakes businesses more competitiveIt speaks the language of business leaders.
11 Why governments are embracing eco-efficiency welfareIt de-links welfare from use of nature.environmental impactenvironmental impactcost savingsinnovationcompetitiveness
12 Energy production: Germany 250GDP200energy150energy productivity100501960197019801990index base 1960Source - European Environment Agency
13 In developing countries too... WATER m3 consumedper unit of product$ of value added per m3of water consumed10020030040050060019901991199219931994199519960.000.501.001.502.002.501990199119921993199419951996Source – BCSD Colombia
14 Structure Definition and drivers The business case The business case ImplementingMeasuring and reportingBeyond eco-efficiency
15 Business caseFrom RY: change « Networks virtual organisations` to Networks and Partnerships
16 Example: Optimised processes CEMEX Eco-efficiency Program (CEP)Program formally launched in 1994 to leverage experience and innovation in eco-efficiencyEconomic impact of 2000 performance $USMOptimised materials & natural resource use 9.2Use of alternative fuels & wastes 4.1Reduction of emissions & wastes 2.2Optimised energy useOffice paper recyclingTotal $35.1MSince 1994 benefits more than $60MCO2 emissions reduced by about 2.5M tonnes
17 Example: Waste recycling Cevolution: new carbon fibers business for ConocoPhillipsWorking to extend life cycle of crude oil production:Using ‘bottom-of-the-barrel’ sludge in production of new fibersSludge previously considered a waste with handling and disposal costsNew fibers stronger, lighter and more durable
18 Example: New servicesDow Chemical ‘leases’ chlorinated solvents in a closed-loop system instead of selling them:Offers safe delivery and take-back of solventsProvides customer assistance in product use
19 Example: Networks and partnerships Testing world’s first hydrogen economy:The 3 multinationals are teaming with the Icelandic consortium, Vistorka, to form Icelandic New Energy Ltd (INE). The INE group, comprising business, government and academic institutions, is looking to turn Arnason's dream into a reality and facilitate Iceland's transition from a fossil-based economy to a non-fossil-based economyIdea to make the nation a testing ground for hydrogen vehicles and hydrogen refuelling infrastructure and producing hydrogen using electricity from renewable sourcesUltimately aims to make nation energy self-sufficientWhile achieving Kyoto Protocol goalsFrom RY: should perhaps change original wording of Business case to partnerhsips instead of virtual organisations – i never really understood that in practice….
20 Competitive advantage for nations There is a positive correlation between highenvironmental standards and competitiveness
21 Structure Definition and drivers The business case Implementing eco-efficiencyImplementingMeasuring and reportingBeyond eco-efficiency
22 Explore entire areas within value chain for opportunities MarketOpportunitiesKnow the customerSell functional (rather than material) offeringsProvide users with comprehensive solutionsCreate new businesses with add-on servicesImprove customers’ eco-efficiencyCompanies can identify business opportunities in eco-efficiency in four different areas.
23 Reduces material intensity Energy intensity is minimized Principle approachReduces material intensityEnergy intensity is minimizedDispersion of toxic substances is reducedUndertakes recyclingCapitalizes on use of renewablesExtends product durabilityService intensity is increased
24 Getting started in your company Understand the full life cycle of your products.Establish eco-efficiency as a prominent target and evaluation screen in your innovation process.Test your key technologies and markets against changing trends in societal acceptance.Set eco-efficiency measurements and targets for your current operations and products.Develop a communication concept including dialogues, partnerships with stakeholders, and others.Evaluate which business lines would benefit from planned resource-based economic instruments.Explore how you could mitigate negative impacts through product innovation.
25 Structure Definition and drivers The business case Implementing Measuring and reportingMeasuring and reportingBeyond eco-efficiency
26 Steps to measuring and reporting communicateperformance,set new targetscalculate eco-efficiency ratioselect relevantsupplemental indicatorscollect dataunderstand eco-efficiency conceptand core indicators
27 Selecting indicatorsbe relevant and meaningful with respect to environment, health and welfareinform decision making to improve the performance of the organizationrecognize the inherent diversity of businesssupport benchmarking and monitoring over timebe clearly defined, measurable, transparent and verifiablebe understandable and meaningful to identified stakeholdersfocus on areas under direct management controlrecognize upstream and downstream aspects of a company’s activities
28 Eco-efficiency indicators framework AspectsCategoryMultiply broad area of environmental influence or business valuee.g. environmental influence in creation of productGeneral information related to category (the "what")e.g. material consumption, waste outputSpecific measurement of aspect (the "how")e.g. tonnes material consumed, tonnes CO2 emitted
29 Supplemental Indicators Leading Company Indicators Eco-efficiency indicators - frameworkAspectsIndicatorsCategorySupplemental IndicatorsLeading Company IndicatorsCore IndicatorsPHM priority heavy metalsHighly relevant and meaningful on global scale to virtually all businessese.g. energy consumption, GHG emissionsWill look different depending on sector, region, etc.e.g. VOC to air, PHM to surface water
30 Calculating the eco-efficiency ratio On the micro-level (company):Eco-efficiency =product/service value environmental influenceOn a macro-level (government):Resource productivity =more welfare less resource use
31 Reporting eco-efficiency Includes five elements:Organization ProfileEE =product/service valueValue Profileenvironmental influenceEnvironmental ProfileOrganization Profile – to provide a context for the eco-efficiency information, including the number of employees, business segments, primary products and major changes in the structure of the company.Value Profile – indicators from the “value” portion of the WBCSD framework, including financial information, the quantity of products, or functional indicators for specific products.Environmental Profile – including generally applicable environmental influence indicators as well as business specific indicators relating to product/service creation and use.Eco-efficiency Ratios – in addition to providing in the previous two elements the basic “numerator” and “denominator” data for estimating eco-efficiency, companies may also wish to provide calculations of ecoefficiency indicators that they consider most relevant and meaningful for their business.Methodological Information – covering the approach used to select indicators, data collection methodologies, and any limitations on use of the data.It shall also provide:Absolute and relative dataNumbers and graphsTrends and targetsData interpretationEco-efficiency RatiosMethodological Information
32 Structure Definition and drivers The business case Implementing Measuring and reportingBeyond eco-efficiencyBeyond eco-efficiency
33 Action points (1) Government leaders & civil servants Civil society leaders& consumersEducatorsSet macro-economic EE targetsIntegrate policy measures to strengthen EE (e.g. eliminating subsidies, internalising externalities, effecting shifts in tax policy)Work toward international policy and systems for trade, financial transactions, etc. for higher productivity, emissions reductions and improvements for underprivilegedEncourage consumer preference for more eco-efficient products and servicesSupport political measures to create framework conditions which reward EEInclude eco-efficiency and sustainability in educational curricula and build into research and development programs
34 Action points (2) Financial markets & investors Business leaders Recognize and reward eco-efficiency and sustainability as investment criteriaHelp eco-efficient companies to communicate their progressPromote and use assessment tools and sustainability ratings to support markets and widen understanding of eco-efficiency’s benefitsIntegrate eco-efficiency into business strategy, including operational, product innovation and marketing strategiesReport company eco-efficiency and sustainability performance openly to stakeholdersSupport policy measures which reward eco-efficiencyFoster eco-efficiency in supply chain, including SMEs
35 Limitations of eco-efficiency Lacks social sideMeant as a complementary tool within an SD corporate strategyNot a rigid framework or single strategyNot a certifiable standardNot an off-the-shelf solutionA flexible method to improve practices compatible with a variety of corporate strategiesNeeds company-specific interpretation and implementationFrom RY: didn’t add all of limitations according to Issue Brief as they seem a bit repetitive
36 Beyond eco-efficiency 1. Innovate2. Practice eco-efficiency3. Move from stakeholder dialogues to partnerships for progress4. Inform consumer choice5. Improve market framework conditions6. Establish the worth of Earth7. Make the market work for everyone
37 WBCSD work on eco-efficiency Environmental Performance & Shareholder ValueEco-efficiency: the business link to SDSignals of ChangeSustainability through the MarketEco-efficiency Metrics & ReportingEuropean Eco-efficiency InitiativeSustainable Development ReportingThe Business Case for Sustainable DevelopmentWalking the Talk
38 Take-away messagesEco-efficiency emerged as a logical approach for environmental and economical improvementThrough examples and experiences presented here, companies continue to recognize the business case for eco-efficiency and capitalize on the opportunitiesFrom RY: didn’t add all of limitations according to Issue Brief as they seem a bit repetitive