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Eco efficiency – Concepts, Aspects, Advantages and Disadvantages | Fundamentals of Entrepreneurship

Eco efficiency

Eco-efficiency refers to the management philosophy which minimizes the ecological damage and maximizes the efficiency of the firm’s production process. It is coined by the World Business Council on Sustainable Development. It works on the principles of use of high efficiency production methods and technology, the use of less energy and natural resources for the same amount of production. It also emphasizes for the implementation of more advanced waste management. Using less energy, material, and water, recycling more, and eliminating hazardous products or by-products are the ways to accomplish this.

Eco-efficiency is considered as one of the main tools for promoting the transformation from unsustainable development to sustainable development. It is focused with the concept of creation of more goods and services using fewer resources and creating less waste and promotion.Generally, eco-efficiency is measured as the ratio between the added value of what was produced and the added environmental impacts of that product or service. It addresses the environmental concerns along with it emphasizes on preservation of natural resources, maintenance of industrial efficiency, and development of economy in the nation. It also plays the role of advocacy in the balance development between economic and ecology.

Aspects of Eco-efficiency

Some of the main aspects of eco-efficiency are as follows:

i. Reduction of energy
ii. Reduction of waste and pollution levels
iii. Extension of function and therefore product/service life
iv. Incorporation of life cycle principles
v. Consideration of the usefulness and recyclability of products/services at the end of their useful life
vi. Increased service intensity

History of Eco-efficiency

Eco-efficiency is a relatively new concept, but the idea isn’t. Early in the 1970s, Paul R. Ehrlich and John Holdren formulated the lettering formula I = PAT to indicate human impacts on the environment. Additionally, eco-efficiency was first introduced by McIntyre and Thornton in 1978, and it was Stephan Schmidheiny who officially coined and popularized the term in Changing Course in 1992. Schmidtheiny’s aim was “to change the perception of industry as a contributor to environmental degradation to the reality that industry is an integral part of the solution to sustainability and global development.” The drivers of eco-efficiency back in the early stages were “forward-thinking managers and thinkers in 3M and Dow.” It was their energetic involvement that turned eco-efficiency from a brilliant concept to a workable plan. WBCSD published the results of its work linking environmental performance with shareholder value in the 1997 report Environmental Performance and Shareholder Value.

Importance of Eco-efficiency

The way to achieve eco-efficiency is by increasing product or service values, reducing environmental impact, and optimizing the usages of resources. Some of the importance of eco-efficiency are:

1. It enhances brand image by showcasing environmental efforts and communicating them.
2. It reduces costs by maximizing energy and material efficiency.
3. This eliminates the need to use toxic substances, reducing liability risks.
4. By developing innovative products and expanding market share, it increases revenue.
5. It reduces toxic emissions and increases waste recovery and reuse by improving environmental performance.
6. It aligns the company’s values more closely with the personal values of employees in order to increase productivity and employee morale.

Use of Eco-efficiency

The main aim of eco-efficiency is to minimize ecological damage and maximize the efficiency of the firm’s production processes. Some of the uses of eco-efficiency are:

i. It is used for the reduction in the material intensity of goods or services.
ii. It is used to decrease dispersion of toxic materials.
iii. It is used to reduce the energy intensity of goods or services.
iv. It is used for using the renewable resources in maximum way.
v. It is used for greater durability of products.
vi. It is used for recyclability for improving.
vii. It is used for increasing service intensity of goods and services.

Benefits of Eco-Efficiency

Some of the benefits of eco-efficiency are as follows:

i. It utilizes resources efficiently to save money.
ii. It supports for the development of a sustainable business environment.
iii. It improves your customer’s experience.
iv. It develops new innovations in the field.
v. It improves employer’s appeal.

Example of Eco-Efficiency

  • Southwest Properties

An old brewery was converted into offices, a showroom, and a manufacturing facility by Southwest Properties and Office Interiors Group (Canada). During the conversion, energy-efficient lights were installed, wood and paper products were recycled, metals were recycled, energy-efficient office equipment was purchased, the existing materials were reused and future uses of the building were considered.

  • BASF

BASF is as one of the largest chemical company worldwide. The company introduced eco-efficiency analysis in the 1990s. The company has always recognized its responsibility to the environment and society. At the beginning of the 1990s, BASF committed itself to the idea of Sustainable Development and Responsible Care. In addition, BASF is a member of the Global Compact Initiative of the United Nations and the World Business Council for Sustainable Development. BASF used an eco-efficiency analysis method to consider ecological and economic aspects together while developing their products. As a result, products or processes could be optimized and the most eco-efficient variants could be identified in each case.

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