The pursuit of eco-efficiency is not confined to the operational aspect of an organisation, but it concerns the wider system in which the organisation operates. It looks at 1. suppliers, components and resources that the organisation uses, 2. the products it produces for customers and 3. partner organisations.
The model is best represented by WBCSD and it does not only have to apply to manufacturing organisation, but can be extended to other sectors.
Re-engineer processes
Here, we are looking at the suppliers of the components, resources, processes that the business utilises. Procurement policies should be put in place to ensure eco-efficiency is at the heart of the processes.
Re-think markets
Here, we are reaching out to the customers. The focus is to create products with functionality that is required by the market and satisfies the customers eco-efficiency goals.
Re-valorise by-products
Here, we are reaching out to other organisations where productive partnerships can be formed. Our by-product (waste) could be an useful input to other organisations.
Eco-efficiency encourages businesses to search for environmental improvements. It has opportunities as its focus and allowing companies to be more profitable while making a positive environmental impact. It is concerned with creating more value with less impact.
There are many successful stories so far from organisations where eco-efficiency allowed reducing hazardous materials from production processes while saving money and bringing profits.
Eco-efficiency should stimulate innovation in the search for bettie new ways of doing things. And it can be a great challenge for any department within the organisation; from purchasing, engineering, sales to finance and quality. More and more businesses include sustainability goals within their policies and set eco-efficiency targets.
Eco-efficiency innovations can emerge at any stage of business process, therefore it is important that all employees understand what eco-efficiency is and how they can contribute. It will never work as an add-on to a business and it must be an integral part of its strategy.
Such practices require transparency, taking accountability, creativity, innovation and ability to work with other organisations to achieve set objectives.
The concept has moved from being seen as a risk evaluation exercise to an opportunity creative process.
What to teach our employees?
Eco-Efficiency is a relatively new topic and the learning need to be adjusted to the audience. The content and delivery of the information should be adjusted and addressed carefully. We have to ensure that it capture an interest and engage the participants. Generally, however the training would involve:
Fundamentals and definitions within the eco-efficiency subject.
Here we can explore the eco-efficiency as a management model that creates more value with less environmental impact. The strategy combines economic and financial performance and enables better production processes while creating more environmentally friendly products. It focuses on reducing waste, pollution, use within the entire value chain. It can be achieved by delivering a product or service at a competitive price that satisfy the needs but also brings quality to human life.
Regulatory environments push businesses into more efficient practices.
2. The business case
Eco-Efficiency makes good business sense. It improves its environmental performance and help companies to get more share in a current market or explore new ones. It reduces costs, allows to gain competitive advantage and ensure long-term resilience and profitability. Companies want to be more efficient in their practices, eliminate risks and explore more opportunities. In order for business to fully take advantage of it, it needs its employees to understand the concept of eco-efficiency. It looks for creative ways of doing things better not only within the organisation but along the entire supply chain.
It is a fact that countries with stronger environmental regulatory regimes are more competitive, as it allows them to improve their economic stand, both qualitative and quantitative.
3. Measurement and evaluation
Setting Eco-Efficiency targets and measuring its progress is very important. Companies may choose to measure their performance in many ways. For example by tracking the performance and progress, identifying and implementing opportunities or improvement or even identifying where costs savings can be generated. Managers can integrate principles of eco-efficiency in their day-to-day decision making as well as metrics. It is certainly one of the way, they can communicate progress within their area of responsibility. Communicating and promoting the efficiencies in terms of sustainability can also bring investors and new consumers.
By using a simple equation:
product value / environmental influence
the managers can calculate eco-efficiency in several ways. For example a manufacturing manager may look at the count of products manufactured to the energy consumed during production process. This than can be translated by a financial department into savings. This values can be measured in different ways, per product, segment, department or site. However, these figures need to be benchmarked against other organisations as this is the only way to ensure true progression and performance.
To make its easier for organisations WBCSD developed a standard eco-efficiency indicators which could be used by organisations:
product / environmental influence on product creation
- volume - energy consumption
- monetary - materials consumption
- function - natural resource consumption
- unintended events
- non-product output
product / environmental influence on product use
- volume - product characteristics
- monetary - packaging waste
- function - energy consumption
- emissions during use
- emissions during disposal
The goal of monitoring is to improve organisational performance and have metric in place which are meaningful for the managers. A small core of common indicators would improve learning over time.
3. Reporting
The goal of reporting trends is to allow assessment of changes in performance over time or compare to a reference point. Information can be presented as figures, eco-efficiency ratios referenced to a particular year or compared relative to an expected result. It is crucial that data presented and published is comparable, so that the trends accurately represent the performance.
There is number of elements included in the official reporting:
1) Background of the organisation - provide profile of the eco-efficiency information, it may include the number of employees, business market, segmentation, products and any main changes the architecture of the organisation.
2) Values - include financial information, volumes of products, functional indicators for specific products.
3) Environmental background - applicable environmental indicators and the indicators specific to the organisation that relate to product design, sale or use.
4) Eco-efficiency ratios - calculations of eco-efficiency indicators which are considered most relevant and meaningful to the organisation
5) Methodology - this covers the thought process used to select the indicators, information on how data is collected or any limitations to the data collected.
Internally the eco-efficiency indicators and efforts should be part of the overall management system.
4. Eco-efficiency and legislation
Governments are aiming to establish regulations, guides and economic instruments to encourage long-term efforts of businesses in the direction of eco-efficiency and sustainability. Governments can use various incentives to promote efforts towards achieving eco-efficiency goals and innovation.
They are rewarding the leading companies and can penalise any free riders.
Governments identify innovation as one of the main drivers of improving eco-efficiency. This is because it is stimulated by competition, incentives and development of "best practice" for others to follow and learn.
Most of the big businesses have adopted eco-efficiency and sustainability models, not time has come for medium-sized and small companies. This calls for a greater leadership in businesses and governments and further determining clear metrics for performance management and continual improvements.
5. Small and medium sizes businesses
Most big and multinational organisations have the finances, resources, staff to research and reap benefits of eco-efficiency. Small businesses believe, they do not have money or time for anything but survival. But in practice small businesses can also benefit from eco-efficiency.
Where cost savings do not make the case, small companies investment in eco-efficiency would depend on the government and legislative initiatives.
For many small companies accredited certification such as ISO is not achievable due to the costs of the accreditations. However, in many cases the issue seem more managerial, than technical. Lack of good management cannot be replaced even by any best technical idea or system.
It is widely visible that some larger companies work with smaller businesses to help with the eco-efficiency processes. This is at times done by contractual requirements of certified environmental management system, education and training or projects which encourage eco-innovations.
6. What next?
It is clear, that eco-efficiency builds value for customers and stakeholders. The goal now is to see the concept not as a compliance focused and crisis management osculation, but as a proactive foundation for markets and public reputation. New accounting techniques, understanding customers needs, creating core technologies for sustainable developments can help small and medium sizes businesses to achieve it. Markets can also be a significant force in enhancing sustainability. Businesses need to go beyond the minimum legal compliance and start working with governments and other organisations to meet market needs.
Bibliography
World Business Council for Sustainable Development, Eco-Efficiency learning module, Available at: http://wbcsdservers.org/wbcsdpublications/cd_files/datas/capacity_building/education/pdf/EfficiencyLearningModule.pdf accessed 28/07/2021
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