Eco-efficiency | an awareness tool

Eco-efficiency describes the idea of creating more goods and services whilst using fewer resources and generating less waste and pollution.

It was first used formally by the World Business Council for Sustainable Development [WBCSD] in a 1992 publication ‘Changing Course”. 

1992 was also the year of the first Earth Summit that chose to endorse the term as a new business concept and a way for companies to implement Agenda 21 — this was the same summit that created a convention to deal with biodiversity conservation and also managed to generate a climate change issues behemoth.  

The link between environmental performance and business bottom line is not an easy one to make. Businesses exist to make profit after all and company directors risk going to jail if they fail in their responsibility to maximize shareholder value — not easy to do if profits are lean.

Profit happens when the costs of doing business are less than the returns. No surprise that if costs can be shifted and held elsewhere — by the environment for example — it is easier to return a profit. 

Before the Rio extravaganza claims all the credit for eco-efficiency concept we should note that the idea has a longer history.

In the early 1970’s Paul R. Ehrlich and John Holdren developed a formula that describes the impact of human activity on the environment

I = PAT 

Human Impact = Population x Affluence x Technology

As well as writing down warnings about resource depletion in Population Bomb, Paul Ehrlich was way ahead of the climate change issues too, famously using television and media to warn us of the problem of global warming. This was a courageous thing to do give that at a time a few years of cold winters in Europe had global cooling as a greater risk.

But it took another 20 years for eco-efficiency to become a catchy handle and a movement to change the perception of industry and business from a cause of environmental issues to “the solution for sustainability and global development.”  

The flared jeans era simply wasn’t ready for it.

Measurement and business value 

It should be easy enough to measure a business management philosophy for sustainability that combines ecological and economic efficiency. All we need to do is measure the ratio between production and the environmental impacts of that production and lower it — make more from less without making a mess.

At the scale of nations this became ratios between economic metrics such as gross domestic product [GDP] and pollution [sulphur dioxide being topical at the time as the gas that causes acid rain].

Except that nations are not businesses. They just tend to cop the collective consequences, good and bad, of business activity.

Businesses happily monitor efficiency as knowledge of the effectiveness of resource use within the company that can point managers to easy productivity wins. Pollution is not their problem unless it involves a lawsuit.

And pollution is only one item on the list of environmental issues.

In explaining how improved resource productivity [make more from less] can turn onto a competitive advantage, the WBCSD lists the following as critical:

  1. A reduction in the material intensity of goods or services
  2. A reduction in the energy intensity of goods or services
  3. Reduced dispersion of toxic materials
  4. Improved recyclability
  5. Maximum use of renewable resources
  6. Greater durability of products
  7. Increased service intensity of goods and services

Items 1 and 2 are internal to a business and directly accounted. 

The rest are either external and only make the balance sheet if there are rules [3] or would cause fewer items sold in the medium to long term [4, 5, 6 & 7].

pesticides ready for loading into crop spraying aircraft — a business with high potential for environmental risk

Sources of eco-efficiency 

Research has identified various versions of eco-efficiency:

  • Confidence in technological innovation as the main solution to un-sustainability — in other words 'technology will fix it'
  • Reliance on business as the principal actor of transformation. Here the emphasis is on firms designing new products, shifting to new production processes, and investing in R&D, etc. that improve efficiency without environmental impact — consumers need not worry because 'business will fix it'
  • Trust in markets that will make efficiency essential for business survival — the 'market will fix it'
  • “Growthphilia” there is nothing wrong with growth as such — do not worry because 'growth will fix it'

Businesses are not charities to people or the environment. This means that wherever commerce looks for efficiency the bottom line comes first or eventually the business fails.


Pragmatology

The 1992 Rio Earth Summit was a long time ago. Long enough for many a business to have been born and failed or born and sold for a fortune — Facebook, Twitter, Instagram, were not even thought of back then.

The generation born in 1992 have graduated from University and now have smartphone neck.

In other words there has been plenty of time for eco-efficiency to have taken hold. Realistically it hasn’t.

Instead we still see bland statements like this one from Industry Canada “Eco-efficiency is increasingly becoming a key requirement for success in business”.

There are companies who pay attention to their environmental footprint — and a few more who say that they do — but the bottom line rules as powerfully as ever.

Profit still provides the purpose. And whilst business understands efficiency anything “eco” still jars with overtones of tree-hugging and preservation.

Except Paul Ehrlich was right way back in the 1970’s. We need to pay much closer attention to our use of natural capital for it is fragile, easily exploited rather than managed and without it we fail.



› eco-efficiency


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