The Role of Eco-Efficiency: Global Challenges and Opportunities in the 21st Century
Executive Summary
Overview
The business climate of the 21st century will be characterized by increasing globalization, revolutions in information technology, rapid process and product innovations and chaotic marketplace demands1. The marketplace will also be profoundly changed by a predicted population increase of four billion by the year 2040.
All this will take place on a planet that is, in the minds of many decision-makers, already reaching ecological limits in critical areas such as ozone layer depletion, loss of biodiversity, water quality and management, and climate change. The challenge, for industry, governments and individuals will be to ensure that continued economic development and social well-being are compatible with ecological support systems. Achieving this objective requires a dramatic improvement in resource productivity.
These changes are resulting in a rethinking of business strategies to focus on how companies deliver higher value products and services to their customers and how they can increase resource productivity. This shift will involve the development of materials, products and industrial processes and services that are more eco-efficient. Eco-efficiency can be broadly defined as the production, delivery, and use of competitively priced goods and services, coupled with the achievement of environmental and social goals1. Inherent in the concept of eco-efficiency is a strong linkage between environmental performance and shareholder value, a broadening of environmental management to focus on products (as opposed to facilities and substances), and the consideration of the full life cycle or complete product system (raw materials, manufacturing, use, and end-of-life) when identifying improvement opportunities.
The concept of eco-efficiency has been recognized by the government of Canada as a key mechanism for industry to contribute to sustainable development. Recently the House of Commons Standing Committee on Industry noted that “eco-efficiency is an important business practice and management tool, whereby innovations in technology, production, processes, product design and business organization and practices can lead to lower unit costs, improved product quality, lower environmental-related liability, less material usage and less adverse impact on the environment.”2
Study objectives and results
This study is an attempt to provide decision-makers with some insights into the drivers and challenges that organizations face as they shift toward more eco-efficient operations, products and services. The specific study objectives are to:
- Define eco-efficiency in the context of sustainable development and other emerging environmental management concepts and tools such as life cycle assessment, design for environment and industrial ecology.
- Identify and explain the primary economic and ecological drivers for eco-efficiency.
- Provide industry examples of best practices in developing and implementing eco-efficiency.
- Examine the role that leading national governments are playing in the promotion of ecoefficiency to their industrial sectors.
Companies included in the study were:
Case Studies
- BASF
- Compaq Computer Corp
- DaimlerChrysler (Stuttgart)
- Shell Canada
- Canfor
- Noranda
- Airbus
Shorter vignettes
- Kuntz Electroplating Inc
- Saturn
- 3M
- Siemens Canada Limited
- Weyerhaeuser
- BP Amoco
- Beaver Meadow Farms
- Alcan
To understand how eco-efficiency was being perceived and implemented in these organizations, senior managers were interviewed and company literature was reviewed. The one exception is the vignette on BPAmoco, which was prepared from publicly available literature on their climate change activities. The full text of these case studies is included in a stand alone report entitled The Role of Eco- Efficiency: Global Challenges and Opportunities in the 21st Century Part 2: Industry Case Studies.
The study results indicate that companies who are anticipating and implementing eco-efficiency are doing so to get out in front of market and regulatory trends, to reduce costs, to gain competitive advantage and to ensure long-term profitability and sustainability. In addition, capital markets are increasingly evaluating environmental and sustainable development aspects of firms.
Table ES-1 summarizes the key drivers motivating the companies studied to adopt more eco-efficient practices.
It is important to note that while eco-efficiency generally does not address the full range of social, economic and environmental considerations encompassed by sustainable development, it is an important and necessary step in moving toward more sustainable patterns of production and consumption. The case studies indicate that the practice of eco-efficiency ranges from simple and somewhat standard industrial practices related to improving resource and energy efficiency to highly innovative product and process redesign initiatives, in which ecological or environmental considerations are used as a catalyst for change. The companies examined in the study fell into three categories of environmental management.
Market-Driven. An organization responds not only to regulatory requirements, but also is reactive to its customers’ environmental expectations by providing leading product/service and operational performance.
Competitive Advantage. An organization is not only in compliance, but understands its environmental market opportunities and proactively uses that knowledge to create markets where it has sole or leadership market positions.
Sustainable. An organization proactively integrates economic growth, environmental, health, and safety, and social well being into its operations for competitive advantage and long-term viability.
1. Presidents Council on Sustainable Development. Eco-Efficiency Task Force Report. 1996.
2 Productivity and Innovation: A competitive and Prosperous Canada. Report of the Standing Committee on Industry. April 2000. Eco-efficiency: Global Challenges and Opportunities. Part 1
