Corporate Perspectives on Resource-Efficient Growth and Development

Resource-EfficiencyUNEP

Eco or Resource-Efficiency catches at a glance the balance business strives toward sound ecology and profitable operations – Bjorn Stigson, Former WBCSD President

“Most CEO’s don’t understand Sustainability”, said John Elkington in a recent interview to Economic Times. Well, that sums up this post and the Corporate Perspectives on Sustainability and Resource-Efficient growth within the Indian context!

Actually, with whatever the CEO’s do understand of Sustainability, CSR or Corporate Social Responsibility is a big part of their perspective on the Resource-Efficient growth and development. We need to get this straight – CSR is not Sustainability and it definitely is not Resource-Efficiency!

When companies say that they have embedded sustainability into their core business models (within a few months to a couple of years), they really don’t get it! As Elkington says, “those companies don’t really understand the nature and scale of climate change, water, natural resources and poverty issues”.

Current Corporate Perspectives

The current perspective on Resource-Efficient Growth is more to do with, first, Sustainability Communications – by bringing out GRI reports. Apparently, sustainability legends like Patagonia, Interface Global or Seventh Generation don’t report on GRI parameters. They report on their own real issues. Simply creating a GRI report doesn’t in any way suggest that a company is seriously looking at resource-efficiency or sustainability.

Two, since less than 10% of companies in India are working on sustainability initiatives in a structured manner, the perspective is that there is not enough associated ROI that those initiatives will bring.

Three, even companies that are serious on Resource-Efficiency and Sustainable Business Practices, they skirt a fine line of Green-washing as the current perspective is to be “like to be seen” as a green company.

What is Resource-Efficiency?

True Resource-Efficient strategy assumes at the start of the process that no waste will occur. In other words, it is a proactive strategy that uses fewer or smarter resources to begin with and require less clean-up at the final disposal.

It is a clear “Do more with less” strategy. The idea is to generate more value without increasing the amount of products. Various Design for Environment techniques like Dematerialization, Biomimicry and Cradle to Cradle process make use of Resource-Efficiency.

Read Designer’s Toolkit: From Planned Obsolescence to Design for Environment- III: Dematerialization

So, how do companies reach a stage where Resource efficiency is increased and pollution is reduced over product life cycles and along supply chains? Resource-Efficiency essentially covers three areas – Reducing the Consumption of Natural Resources, Reducing the Impact on Nature and Increasing the Product Service or Value. In effect, it is:

  • Reduced material intensity
  • Reduced energy intensity
  • Reduced waste (especially toxic)
  • Increased recyclability
  • Increased use of renewables
  • Increased product durability (something which is missing in today’s products)
  • Increased service value

Resource-efficiency is also closely tied with sustainable production methods and consumption patterns. You can’t address one issue of resource-efficiency and ignore the other issue of consumption…because eventually, resource depletion will catch up – a point that was a year down the line would then come after, say 10 years. But it will come.

Download UNEP’s 10 Year Framework for Sustainable Production and Consumption (10FYP)

Desired Corporate Perspectives

I think a healthy Sustainable and Resource-Efficient business model will only emerge if the corporates have these nine perspectives in mind, in other words Corporates view Resource-Efficient Growth as essential because:

  1. They want to be seen as a responsible corporate citizen
  2. They want to view themselves as an innovator and leader in their category
  3. They want to see it as a way to reduce costs and associated risks, improve efficiency, and increase the bottom and the top line
  4. They want to view it as total asset utilization and the resulting increased productivity (be willing to change the organizational structure)
  5. They want to be proactive and want to frame the policies in aid with the government
  6. They want to internalize the negative externalities caused by their operation
  7. They understand the shift in the consumer and market behaviour
  8. They understand the scope of their extended enterprise and not just their “agenda within the factory”
  9. They understand the benefits of cross-disciplinary approach in making their products

United Nations Environment Program (UNEP) has a dedicated Resource-Efficiency program whose basic premise is that by reducing the environmental impact of goods and services at every stage, from raw material extraction and transportation to manufacturing, distribution, use and disposal, we can achieve more wellbeing with less material consumption. This enhances our potential to meet human needs while respecting the ecological carrying capacity of the Earth.

Corporates need to understand that improving Resource-efficiency of operations may be the only way forward for the developing world companies to gain competitive advantage.

But we need to keep one important thing in mind. Stephan Schmidheiny, in the book, ‘Walking the Talk” states, “if resources are highly subsidized and waste and pollution go largely unpunished, then eco-efficiency (or resource-efficiency) may not improve the bottom line…thus world will only be a better place if markets were to reward eco-efficiency…”

Delhi Sustainable Development Summit 2013 will feature a discussion panel on Corporate Perspectives on Resource-Efficient Growth and Development. I would like to see some of these perspectives resonate with the leaders there.

(Image credit: UNEP’s website)

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