Eco-innovation
Eco-innovation makes both economic and environmental sense and it means being economically competitive while respecting natural environment.
It can be implemented to a new product, but also involves consideration of changes needed to be made to organisational processes. The core focus however, is to creating business models which can be both competitive and reduce negative environmental impact.
"Eco-innovation is the introduction of any new or significantly improved product, process, organisational change or marketing solution that reduces the use of natural resources (including materials, energy, water and land) and decreases the release of harmful resources across the whole life-cycle." (Eco-innovation Observatory)
The main components of the framework include: ECONOMY, ENVIRONMENT, SOCIETY and POLITICS.
Economical factors would include saving material and energy costs, developing new products and services, upgrading the business models and foreseeing new markets and business opportunities.
The Environmental factors would allow sustainable management of natural resources, tackling climate change and improving biodiversity and ecosystems.
Social benefits will include enhancing the quality of life and creating new sustainable jobs.
And finally, from the Political point of view the material justice and resource security can be assured.
Circular economy
Circular economy its the economy that learns from nature and wastes nothing. It is a concept beyond recycling.
* Ir replaces the end of life concept with restoration
* Short towards the use of renewable energy
* Eliminates the use of toxic chemicals which include re-use
* Eliminate waste through design of materials, product systems and business models
In many models the circular economy circle involves Recycling, Repair, Remanufacturing and Reuse with Design being the crucial part in the process.
The design can predefine the product to be reusable, recyclable, repairable, remanufactured or even shared.
Benefits
One of the benefits of eco-innovation would be the new and resilient business model. It is all about revisiting the model to reconsider the value proposition to its customers. With the design of processes, products and services companies can also access new markets and generating higher profits as the results. Eco-design also impact the business resources productivity and save money by reducing costs of materials. The new products also generally meet regulatory requirements and the compliance standard are met.
1) Re-think your value proposition
This part would involve asking yourself some fundamental questions:
* Does your customer need to own the product or it can be leased?
* Are there any emerging trends that could impact your value proposition?
* How can you deliver value to customer with a product that is both profitable and less resource intensive?
* What value you currently deliver to customer?
* Could you consider different ways to satisfy the needs of your customers?
2) Waste generation
Waste can cost organisations a significant amount of profits and it does not only mean reducing materials. It requires efforts to process the waste.
One way of reducing waste would be partnering with recycling initiatives and waste exchange efforts. The assessment of what type of waste and emission company produce and what are their sources is required. Or even looking whether the waste can be materials for others or use others waste as a material. Conducting evaluation of materials used will help the business to cut waste and inefficiencies and gain profits. Additionally, ensuring proper handling and storage of products will avoid breakages and loss. You may also check, whether some materials can be re-used in the business processes.Often suppliers also have available "take-back" schemes which could be looked at. And finally, establishing partnerships with circular use of materials and waste exchange will significantly reduce the amount of waste going into landfill. Proper segregation is a must!
3) Material productivity
Many companies are exposed to risks of raw materials shortages, price mortality and high material prices. It is therefore important to thoroughly assess what type of quantity and materials are consumed. As well as energy consumption in different business operations. Businesses want to think about different measures that can reduce use of materials, energy, water and other resources. For the measures to be taken a specialised consultancy or person accountable may be needed. Putting someone in charge of waste efforts can be a rewarding task.
Analysis of case studies (EIO,2012) reviewed that companies could up to €200,000 per year by implementing material efficiency in manufacturing sector. Small companies achieved around 11% savings of annual turnover, while large companies considerable savings.
Companies could look at substituting some of the materials with lighter and less resource-intensive materials.
4) Challenge your supply chain
Supply chain management involves cooperation and coordination with suppliers, third party provides, intermediaries, distributors, dealers and customers. Good government practice should be followed to encourage positive environmental, social and economic impact. This should be done throughout the life-cycle of the product or service.
One of the challenges in today's supply chain models is to deal with price increase of materials and dealing with uncertainly of provision of those materials. More and more customers want to know about the origin and composition of the materials used. Pressure is also growing from enforcement authorities for more transparency in the business.
The companies should establish what is their position in the supply chain and what are the most value added aspects of it. Business try to improve the collaboration with companies and implement sustainable approach.
Often this redesign of supply chains bring profits to the organisations and bring new opportunities.
The process should start with establishing a clear vision for the supply chain and setting objectives for it. The materials flow in the company should also be measured.
A good practice is also to map out the supply chain channels and define responsibilities within different actors.
The efforts need to be lead by someone responsible so training and accountability within the organisation would play a significant role in achieving success, as well as monitoring its performance.
Continuous communication and exchange of information between partners is also important. This would encourage and inform suppliers on green initiatives.
Finally, implementing IT system to manage the processes can be very helpful. It certainly reduces the labour and resources.
Are there any opportunities to procure eco-friendly materials or services?
5) Research and development
Are there any eco-innovative ideas to revolutionise your R&D department? This could generate a great amount of new business opportunities. Durable, repairable, recyclable products could be the next focus for your new products.
This would require the R&D department to gain knowledge on the environmental impact of products they design and materials they use. The relevant skills may not always be available, therefore relevant training, research and sourcing information is desirable. Companies need to determine whether there is enough knowledge and skill to consider environmental factors when products are developed. Perhaps there are opportunities to partner up with research organisation or become a member of institutions concentrating of eco-friendly technologies within the sector.
Integrating environmental and circular economy consideration into R&D and allocating specific budget would be a great start.
6) Product design
Integration of environmental considerations to product design aims to improve the performance of the product through its life cycle. It also affects the potential reuse, recycling or disposal as well as distribution.
Generally, in small companies the product design, market research and R&D activities are closely connected. There could be centralised decision making process. It is important to mention however, the only focusing on environmental impact during the product production may not be enough. Communicating to customer the information how efficient in energy or environmentally friendly production process is may not be the way. Therefore, the designers should also focus on the environmental impact of the product when used by customers to help them reduce the negative effects.
Considerations of what product design options are there to improve the environmental performance of the products, what is the extended product life possible or less materials to be used. Sometimes, information and data need to be available from the use of the product that may require external expertise. This is to ensure that all tools and resources are available to access the results.
7) Promotion and marketing
Eco-brands integrate environmental benefits into products along cost and quality and communicate this to customers. Customers are increasingly interested in the social and environmental considerations when procuring their products. Therefore market research plays an important role here. It can identify new markets or design projects. Therefore understanding customer behaviour when making purchasing decisions would be beneficial. This includes the environmental effects of the product during delivery, use and purchase of the items.
Consumers are continuously encouraged by media and legislative enforcements to take social and environmental considerations into account. Therefore, proactive companies continuously seeking the understanding of customers as well as the impact of their products.
Considerations need to be made to potential opportunities during the market research in the area of positive environmental impact. Understanding who is the end user and consumer of the products, what is their expectations towards the goods and how relationships can be built upon this understanding.
This could lead to new innovations and selling proposition that is difficult to bit by competitors.
Eco-certificates and Eco-labels ensure continuous credibility. Evidence based promotion will improve company reputation. Benchmarking our products against competitors, including price, added value, costs and benefits can bring valuable insights to the product itself. We need to ensure however, that the marketing and promotional claims are valid, tested and credible before spreading the world, therefore these should be managed carefully.
Perhaps you want to determine the extend to which customers take the environmental and social factors important in your business. Identifying this may bring opportunities for product differentiation. But only information which are clear, true and based on evidence will build the trust among customers. This is the reason for establishing and gaining the knowledge in environmental matters.
Get it right!
Implementing an effective eco-innovation strategy is not easy or straightforward. I have put together few summarising points that can guide the process:
* Determine the benefits of eco-innovation, circular economy and sustainability programme
* Determine the value that your products delivers to customers
* Determine potential customers for your products
* Do your market research!
* Determine your competitors and benchmark your product
* Determine the strengths and weaknesses of your business
* Determine knowledge, skills and gaps
* Determine required resources and process
* Consider getting consultation to access expertise
* Train yourself on environmental and social impacts of your products and global efforts
* Integrate eco-innovation and circular economy considerations into your D&S and design activities
* Determine funding is available for your product development
* Determine your target market, customer segments, their expectations
* Evidence environmental product performance before making claims
Bibliography:
European Commission, EIO, 2016 SME guide, Eco-innovate!, A guide for eco-innovation for SMEs and business coaches, Eco-innovation observatory, 2016
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