Eco-efficiency: what it is, how to calculate it and its benefits for businesses

Performing an eco-efficiency analysis is crucial to make strategic decisions about profitability and environmental impacts of a product. What are the associated costs? Which one of my products gives higher profits without having a major impact on the environment? Which action is most effective in reducing my costs and consumption?

Let's check what eco-efficiency is, what entails performing an eco-efficiency analysis and what benefits it brings to your business.

What is Eco-Efficiency?

An eco-efficiency analysis analyzes the environmental impact of a product in proportion to its profitability. By linking the environmental and economic results, the eco-efficiency is primarily a management concept.

Eco-efficiency aims to achieve economic and environmental development through efficient use of resources and reducing pollution, while fostering innovation, growth and competitiveness. This tool assesses the environmental impacts of a product's life cycle and can be applied to all aspects of business, from the purchase of materials to distribution. It generally focuses on energy consumption, raw materials and water, in addition to greenhouse gas emissions and wastewater.

This concept can be used as an environmental or economic indicator, however is not considered a sustainability indicator as it doesn't include social aspects.

Thus, an eco-efficiency analysis allows a company to know what products or services deliver greater profitability without harming the environment.

Should your company perform an eco-efficiency analysis?

Any business can perform an eco-efficiency analysis, but for some it's more beneficial. If you are interested in evaluating the economic and environmental performance of a product or service, an eco-efficiency analysis will allow you to determine which line of business delivers the highest profitability. Also, if you want to reduce your operational costs, this analysis will help you identify opportunities for improvement and define eco-efficient actions that will enable you to achieve your goals.

What are the benefits of eco-efficiency?

Utilizing eco-efficiency measures provides a number of benefits for companies. Firstly, it reduces the consumption of energy and raw materials by optimizing and improving their processes. This also reduces environmental impacts, including greenhouse gas emissions, water pollution and waste disposal.

Secondly, eco-efficiency promotes the redesign of products so that customer needs can be met innovatively and with fewer resources. This redesign also encourages cooperation between businesses, as others can get value out of the company's waste.

Eco-efficiency can also serve as a mean to develop and successfully implement sustainable strategies. You will be able to guide the decision taking process, investments, investigation and development of actions that encourages sustainability within your company and allow you to meet your objectives.

Finally, a company that successfully incorporates eco-efficiency into its business will be able to improve its image by marketing and communicating its improvements. It will also enhance market differentiation and improve customer retention.

How is an eco-efficiency analysis performed?

An eco-efficiency analysis allows observing the environmental impacts of a product throughout its life cycle, it follows the methodology of a Life Cycle Analysis (LCA), where the stages of raw material supply, production, use and end-of-life are studied. For this stage, the analysis follows the ISO 14040:2006 and 14044:2006 standards.

Similarly, it is necessary to know financial data, such as the costs of raw materials, production and use of the product. With environmental and economic data, the analysis can be performed, either for a product or one of its stages. The assessment of life cycle costs and overall eco-efficiency is based on ISO 14045:2012.

Then, to carry out an eco-efficiency analysis, you should follow these next steps:

How to choose the best expert for an eco-efficiency analysis?

Carrying out an eco-efficiency analysis is not simple. The regulations for this type of studies have a specific technical complexity, so we recommend that you approach a specialist with experience in this topic.

While it's important to choose a consultant who knows the methodology and industry being analyzed very well, you should also consider the characteristics of the service. Some consultants may limit themselves to only calculating your impacts, or they may expand their service and advise you on making decisions to reduce your impact. They may also offer to help your marketing team to effectively communicate the results, thus making sure that you do not fall into greenwashing.

Overview

In brief, an eco-efficiency analysis enables your business to reduce energy and raw material consumption by optimizing and improving processes. In addition, it serves as a tool to empower your company in the market and boost its reputation. To achieve all these, you must start by defining the objective and scope of the study and find the perfect consultant to support you, only then it can lead to a result that will help your company to improve.