Over the years, as countries and regions around the world
began to develop, it slowly became evident that industrialization
and economic growth come hand in hand with environmental degradation. Eco-Efficiency
has been proposed as one of the main tools to promote a transformation from
unsustainable development to one of sustainable development. It is based on the
concept of creating more goods and services while using fewer resources and
creating less waste and pollution. “It is measured as the ratio between the (added)
value of what has been produced (eg. GDP) and the (added) environment impacts
of the product or service (eg. S02 emissions).” The term was coined by the World Business
Council for Sustainable Development (WBCSD) in its 1992 publication
“Changing Course,” and at the 1992 Earth
Summit, eco-efficiency was endorsed as a new business concept and means for
companies to implement Agenda 21 in the private sector. Ergo the term has become
synonymous with a management philosophy geared towards sustainability,
combing ecological
and economic efficiency.
History
Although eco-efficiency is a rather new method, the idea is
not. In the early 1970s Paul R. Ehrlich and John Holdren developed the
lettering formula I = PAT to describe the impact of human activity on the
environment. Furthermore the concept of eco-efficiency was first described by
Schaltegger and Sturm in 1989, but it wasn’t until 1992, when the term was formally
coined and widely publicized by Schmidheiny in ‘’Changing Course’’. Stephan
Schhmidheiny set out “to change the perception of industry as being part of the
problem of environmental degradation to the reality of its becoming part—a key
part—of the solution for sustainability and global development.” The major drivers in the early phase of
eco-efficiency’s development were the “forward-looking managers and thinkers in
3M and Dow.” It was their involvement which catapulted eco-efficiency from a
brilliant idea to a workable concept. The results of the WBCSD’s work creating
the “linkage between environmental performance and the bottom line was
published in 1997 in its report Environmental Performance and Shareholder
Value.”
Methods
According to the WBCSD definition, eco-efficiency is
achieved through the delivery of "competitively priced goods and services
that satisfy human needs and bring quality of life while progressively reducing
environmental impacts of goods and resource intensity throughout the entire
life-cycle to a level at least in line with the Earth's estimated carrying
capacity." It works by implementing 4 main types of ratios.
“The first two are environmental productivity and its
inverse, environmental intensity of production, referring to the realm of
production. The second pair, environmental improvement cost and its inverse,
environmental cost-effectiveness, are defined from an environmental
improvements measures point-of-view.”
The ratios may be applied to any unit comprising economic
activities because such activities always relate to cost and value, “and having
some physical substrate, always influence the environment.” Furthermore, there
are two different levels upon which to orchestrate the ratios: ‘’micro’’ and
‘’macro’’. There are three different methods to determine eco-efficiency at the
micro-level. First, ‘’incremental eco-efficiency’’, which “specifies the
effects of the total value of a product system or sector and its total
concomitant environmental effects.” Second, an analysis method nicknamed
‘’win-win’’, which “gives a comparison between a historical reference situation
and potentially new situations based on the use of new technologies.” It should be noted that the win-win
micro-method is limited because it cannot give a concrete answer on the
question of whether it improves overall environmental performance. And the
third is ‘’difference eco-efficiency’’, which is similar to the win-win variant,
but removes all irrelevant alternatives to heighten potential for optimal
technologies while comparing two alternatives. Now the macro-level is much less
defined and has shown less accurate results. However, “the ultimate aim of
eco-efficiency analysis is to help move micro-level decision making into
macro-level optimality.”The main goal in years to come is to create headline
indicators to carry out macro-level analysis at a country/world scale.
There are two LCA-based calculation systems on eco-efficiency:
the Analysis Method of BASF, and the method of the Eco-costs value ratio of the Delft University
of Technology.
Uses
The reduction in ecological impacts translates into an
increase in resource productivity, which in turn can
create a competitive advantage. According to the
WBCSD, critical aspects of eco-efficiency are:
- A reduction in the material intensity of goods or services;
- A reduction in the energy intensity of goods or services;
- Reduced dispersion of toxic materials;
- Improved recyclability;
- Maximum use of renewable resources;
- Greater durability of products;
- Increased service intensity of goods and services.
Strategies that have been linked to eco-efficiency include
“Factor 4” and “Factor 10”, which call for specific reductions in
resource use, “natural capitalism”, which incorporates eco-efficiency as part
of a broader strategy, and the “cradle-to-cradle”
movement, which claims to go beyond eco-efficiency in abolishing the very idea
of waste. According to Boulanger, all versions of eco-efficiency share four key
characteristics:
- Confidence in technological innovation as the main solution to un-sustainability;
- Reliance on business as the principal actor of transformation. The emphasis is on firms designing new products, shifting to new production processes, and investing in R&D, etc., more than on the retailer or the consumer, let alone the citizen.
- Trust in markets (if they are functioning well);
- “Growthphilia”: there is nothing wrong with growth as such.
The view that improvements in eco-efficiency are sufficient
for achieving sustainability has been challenged by Huesemann and Huesemann who demonstrate, using extensive historical
evidence, that increases in technological efficiency have not reduced overall
resource use and pollution. Moreover, with “cradle-to-cradle”, growth is
conducive to sustainability per se. This broader concept is called
‘’Sustainable Production and Consumption’’ (SPC). “This concept involves
changes in production and consumption patterns that lead to sustainable use of natural
resources;” [7]
business has taken a key role in accelerating the use of this concept because
businesses both consume and produce. Eco-efficiency is routinely a concept used
because it combines performance along two of the three axes of sustainable development, making it easier
for academics and leading thinkers to tease out the associated social issues.
Examples
Furthermore, eco-efficiency is also a very useful tool
because it can adapt and flex to be fit different sizes of companies, while
also maintaining relevance with the larger scale of government and national
policies. For example, larger national players such as the Organisation for
Economic Co-operation and Development (OECD 2002), European Commission (EU 2005), European Environment Agency (EEA) and
the National Round
Table on the Environment and the Economy (NRTEE) have all recognized that
eco-efficiency is a practical approach that businesses should adopt in setting
and achieving their environmental performance objectives. It has be proven to
heighten market values for firms, serve as an effective management tool for
governments, benefit civil society, and increase quality of life. “It does this
by changing industrial processes, creating new products and changing and
influencing markets with new ideas and with new rules.” More people aim to get more value for their
money in the market, while also enjoying a better environment.
Recently, there has also been use of eco-efficiency in more
non-traditional ways, such as a use in banks to integrate environmental
criteria into their credit-approval process; looking at “eco-integrated
economic risks of a customer.” And is
also being implemented as marketing advantages where, “eco-efficient choices
are always preferred,” especially in
service sectors such as tourism.
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