Eco efficiency

From CEOpedia | Management online

Eco efficiency reflects the company's environmental performance beyond the basic measures of environmental compliance and pollution control. In general, eco efficiency can be defined as creating value with fewer environmental resources, which is associated with lower environmental impacts such as less pollution or depletion of natural resources. It is seen as a form of environmental stewardship with proactive environmental management. Improved environmental performance is achieved through operational efficiency changes, rather than tackling pollution at the "end of the line" by adopting standards (Guenster 2011, pp. 679-704).

In business, eco efficiency can be applied as a corporate concept at the product, company, group or sector level, or considered as sustainable development at the company level. Eco efficiency is often associated with the terms zero emissions, resource productivity, factor X, pollution prevention, cleaner production, source reduction, waste reduction, waste minimization, life cycle management, environmental management systems, and design for environment. A well-known criticism of eco efficiency is that it neglects the social aspects of sustainable development. In summary, there are 4 different definitions (Koskela, Vehmas 2012, pp. 546-566):

  • Eco efficiency means producing more with less.
  • Eco efficiency means creating more value with less environmental impact.
  • Eco efficiency means reducing the environmental intensity of economic output.
  • Eco efficiency is a management strategy through which a company simultaneously improves its economic and environmental performance.

The World Business Council for Sustainable Development (WBCSD) defined in 2006 eco efficiency as followed: "Eco efficiency is achieved by the delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life-cycle to a level at least in line with the Earth’s estimated carrying capacity" (WBCSD 2006).

Moreover, the WBCSD formulated 7 goals through which eco efficiency can be improved (Koskela, Vehmas 2012, pp. 546-566):

  • Reducing material intensity
  • Reducing energy intensity
  • Reducing toxic dispersion
  • Enhancing recyclability
  • Maximizing the sustainable use of renewable resources
  • Extending product durability
  • Increasing service intensity

Eco efficiency analysis

For managers, decision-makers, and customers to assess a product or business' performance within a structured replicable framework, eco efficiency analysis (EEA) has grown in importance. Consideration of the life cycle performance of products or services becomes a more natural and necessary part of daily business operations for larger organizations. Eco efficiency analyses are becoming a common part of the decision-making process at many businesses. As a result, BASF established its initial eco efficiency analysis as a comprehensive methodology in 1996. The analysis weighs a product's cost-effectiveness in proportion to its environmental impact. The environmental assessment is based on the following predetermined set of environmental impact categories (Grosse-Sommer et al 2020):

  • climate change
  • ozone depletion
  • acidification
  • photochemical ozone formation
  • solid wastes
  • emissions to water
  • resource consumption
  • energy consumption
  • land use
  • water use
  • human toxicity and risk

In-house Life Cycle Assessment (LCA) methods were developed for several topics, including resource consumption, human toxicity, emissions to water, and solid waste, to help practitioners make the most of the information at their disposal. The assessments contain aggregated total eco efficiency performance information that incorporates life cycle costs and comprehensive environmental information that illustrates the contributions of several life cycle processes in each impact category. The BASF eco efficiency analysis Toolbox offers specialized sustainability analyses based on established impact assessment procedures, delivering trustworthy and credible data for communication and decision-making (Grosse-Sommer et al 2020).

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Author: Alexandra Schewior