1xDoes reducing our impact on the planet mean reducing our production of essential materials? Far from it!
The evidence is clear: using our precious resources more efficiently is the route to more prosperity – sustainable prosperity – not less. There’s a long way to go. But we have all the tools to make it happen, and we’re already making progress. And that means win, win for people and planet.
We’re consuming resources faster than the earth can replenish them
July 29, 2021 was “Earth Overshoot Day“. Halfway through the year, we’d already consumed as many natural resources as the Earth could generate in an entire year.
This is the very definition of unsustainable.
And we’ve been doing it year after year. Fewer resources mean increased demand. And increased demand leads to pressure on supply chains, pressure on resources, poor working conditions, migration, conflict – and environmental degradation.
Of course, massive levels of production have also brought life-changing gains. Since 1990, more than 1.2 billion people have been lifted out of extreme poverty, and child mortality has dropped by more than half.[1] That’s an incredible achievement. But what happens as living standards continue to increase around the world? People in the developed world already consume up to eight times as many resources as agricultural communities.[2] We can’t sustain the status quo as it is. Does that mean we should stop developing? Absolutely not. But we absolutely do need to develop smarter.
How big is the problem?
If we’re going to achieve the 1.5°C Paris Agreement global warming target, we need to slash emissions. And fast. Renewable energy is the obvious one, but here I’m going to focus on another of the biggest problems – our ever-rising production of materials and products.
According to the United Nations Environment Programme (UNEP), emissions from materials production more than doubled between 1995 and 2015—going from 5 gigatons (Gt) of CO2-equivalent to 11.5 Gt. Their share of global emissions also increased from 15% to 23%. Iron and steel account for 32%, with cement, lime, and plaster at 25%, as well as plastics and rubber (13%).
Construction and manufactured goods are each responsible for about 40% of greenhouse gas emissions.[3]
Using less and getting more
The good news is we can reverse this trend—provided we work together. From developing effective policies to rethinking how we design, source, make, and market products to changing how we consume them. The ultimate goal is to achieve a cyclical economy where products last longer and waste is minimized or repurposed.
It’s called eco-efficiency.
The goal is to decouple resource consumption from prosperity—to create more opportunities for people and fewer drawbacks for the planet. According to The World Business Council for Sustainable Development (WBCSD), the most critical features of eco-efficient businesses are[4]:
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You’ll notice a lot of these measures actually make sound business sense, too. There’s a tendency – in much mass media and also our collective perception to focus on the idea of sacrificing for the greater good – but there are plenty of industries that have realized that reducing your environmental footprint can also have a positive impact on your bottom line. Here’s how:
1. Measure our resource consumption
Resource consumption is hard to calculate in the complex global supply chain. But getting a handle on how many resources we’re using is essential to assess the trade-offs, set achievable targets, and measure our progress against them. We’ve got to figure out how much energy and resources are used, from source to finished products—including what happens to materials when we’re done with them.
2. Change production methods to use fewer resources and reduce emissions
There are opportunities for using fewer resources in virtually every industry. On the supply side, there’s making production processes more efficient, shifting to low-carbon fuels and feedstocks and technology like CO2 capture and storage.
On the demand side, it’s about using materials more efficiently by designing lighter, longer-lasting products with as much reuse and recycling as possible. Reuse is the most preferable, as the UK’s Centre for Process Innovation (CPI) says:
“Recycling consumes a lot of energy, in some cases almost as much as the generation of completely new raw materials. To make processes more resource-efficient, a better approach is to design the possibility to reuse, remanufacture and recondition final products. Recycling should only be an option when the alternative is throwing the product away.”[5]
3. Create the right incentives
It’s not up to industry alone. Governments have a role to play in establishing best practices, incentivizing businesses, and educating consumers. Measures like green public procurement (GPP), virgin material taxes, recycled content mandates, and removal of virgin material subsidies could all have huge impacts.
Greener construction
Buildings are responsible for around 40% of global energy consumption—roughly one-third of global greenhouse gas emissions.[6] If we are going to increase our eco-efficiency, we should start here. Fortunately, there are numerous opportunities to make buildings more efficient, from practical measures to innovative digital-led solutions. Research from the UNEP highlights the following achievable goals[7]:
- Make them lighter: Using fewer materials and cutting down on carbon-heavy materials like steel, cement, and glass can lower associated emissions across the G7 nations by between 8% and 10% by 2050.
- Use more wood: Using more sustainably sourced timber instead of reinforced concrete and masonry could reduce emissions up to 8% in G7 and even more in China and India.
- Reduce floor space: Reducing demand for floor space by up to 20% through incentivizing things like downsizing and shared living could lower emissions for residential buildings by up to 73% by 2050.
- Improve recycling: In 2016, recycling building materials helped countries in the G7 save between 15% and 20% emissions in the primary production of materials for residential buildings. This could be increased to up to 18% in the most optimistic scenarios.
- Make heating more efficient: This is huge. In Europe alone, 75% of buildings are energy-inefficient—and small changes would have significant impacts. For example, World Economic Forum (WEF) analysis shows that a 20% shift in heating towards heat pump applications running on clean electricity would reduce CO2 emissions by 9%. Coupled with smart solutions, it could save €3 billion in human health benefits from decreased air pollution between now and 2030[8].
There are two main ways to reduce a building’s heating energy consumption: reduce how much it loses through traditional measures like double glazing and roof insulation; and reduce how much it uses in the first place. The conventional methods work, but they’re expensive and take a long time to recoup your investment. The more innovative, more efficient and cheaper way, as the WEF states, “is to equip buildings with the digital tools that allow them to automatically adjust heating, lighting, and other systems to the number of people present at any given time, using real-time data analysis.”
So-called “autonomous buildings” are ultra-efficient, fully electric, perhaps using solar panels to supply power, and can be managed remotely.[9] They repay initial investment much faster, in under five years, versus “passive” energy-efficiency solutions. And they’re much cheaper—with the same budget, digital technologies can renovate ten times the space of traditional technologies[10].
What do greener buildings achieve?
Combined, all of these efficiency strategies could reduce the emissions from the material cycle of residential housing in G7 countries and China by 80% to 100% in 2050, compared to a scenario without material efficiency.[11] Greener buildings would also create greener jobs, according to the WEF, “The EU, for one, estimates that by 2030 an additional 160,000 green jobs could be created in the EU construction sector through a €90 billion-a-year Renovation Wave.”[12]
There are also several opportunities for promoting eco-efficiency at the policy level – from building codes to increasing the lifetime of buildings, including more efficient end-of-life strategies that reduce waste and enable reuse and recycling. In particular, building information management (BIM) software and prefabrication is a major driver of efficiency in the construction sector. Some countries, like the UK and Denmark, have already made this approach mandatory for larger buildings.
Greener car production
We haven’t got the time to cover every sector here, but I couldn’t ignore the automotive industry—which is responsible for at least 9% of global emissions.[13] It’s full of avenues for applying eco-efficiency principles.
Transitioning to fuel cell and battery-powered cars is an important step—provided we can supply enough clean electricity. Meanwhile, recycling materials for production can offset half of the greenhouse gas (GHG) emissions associated with the production of materials used in cars, according to UNEP.[14] And using lighter materials, such as shifting from steel to aluminum, can lead to substantial fuel savings. (This could actually increase emissions during production but save many more during operation—another reason why it’s vital to measure the whole system, rather than focus on one area.)
A move to smaller cars would be a big help, as well as changing how we use them. Policies like high-occupancy vehicle lanes, preferential parking, restricted zones, and building codes would encourage car and ride sharing. As the UNEP notes, “If 25% of the trips in the G7 were conducted as shared rides, emissions would be reduced by 13 to 20%.“[15]
By applying all the primary material efficiency improvements, we could hope to reduce emissions in vehicle manufacturing and disposal by 57 to 70% in the G7, 29 to 62% in China, and 39 to 53% in India.[16]
A beacon for eco-efficient business
The global industrial sector is already in a phase of enormous transformation, driven in large part by unprecedented advances in technology. This so-called “Fourth Industrial Revolution” (4IR) is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. The scale of these changes and the potential of new, tech-driven models could be a huge step forward on the road to eco-efficiency.
The Global Lighthouse Network is a World Economic Forum initiative in collaboration with McKinsey & Co. It seeks to leverage 4IR-driven transformation to create eco-efficiency innovations that add value while reducing emissions. According to McKinsey, 4IR drives eco-efficiency innovation in three key ways:
- It involves digital technology that enables data-informed actions across production and the end-to-end value chain.
- It demonstrates measurable improvements across performance indicators, including cost, agility, convenience, and quality.
- It delivers sustainability gains by reducing consumption, resource waste, and emissions.
The Global Lighthouse Network shares knowledge between multiple producers across the process and consumer-packaged goods industries. With over 450 use cases to date, they’re seeing significant improvements in productivity, sustainability, operating cost, customization, and speed to market – while reducing waste – all essential pillars of eco-efficiency. Almost two-thirds of participants have reported sustainability impacts as part of their 4IR transformation. For example, one oil and gas company deployed AI-powered process controls to reduce energy usage by more than 10%.[17]
Says McKinsey:
“We challenge the notion that environmental responsibility is inherently at odds with productivity and, by extension, profitability. Instead, 4IR transformations based on digital and analytics tools can augment not only green technology but also current production methods by bolstering efficiency. By embracing 4IR-driven transformation, a viable kind of eco-efficiency is possible, where sustainability and competitive excellence are not only compatible, but interwoven.”
Responsible production is possible – and profitable
Eco-efficiency isn’t just a buzzword used by people who have no idea how industry works. In fact, industry leaders are embracing eco-efficiency to help them produce better goods faster, cheaper and with far less impact on the planet. It’s comforting to realize that many of our environmental problems can be solved with the tools we have right now.
Eco efficiency isn’t about buying or consuming less, it is about buying more – more time to combat climate change and secure a sustainable future for all.
[1] https://www.worldvision.org/sponsorship-news-stories/global-poverty-facts
[2] https://friendsoftheearth.uk/sites/default/files/downloads/overconsumption.pdf
[3] Resource Efficiency and Climate Change: Material Efficiency Strategies for a Low-Carbon Future, UNEP
[4] https://marketbusinessnews.com/financial-glossary/eco-efficiency/
[5] https://www.uk-cpi.com/blog/the-answer-to-climate-change-resource-effiency
[6] https://www.weforum.org/agenda/2021/02/why-the-buildings-of-the-future-are-key-to-an-efficient-energy-ecosystem
[7] Resource Efficiency and Climate Change: Material Efficiency Strategies for a Low-Carbon Future, UNEP
[8] https://www.weforum.org/agenda/2021/02/why-the-buildings-of-the-future-are-key-to-an-efficient-energy-ecosystem
[9] https://www.weforum.org/agenda/2021/02/why-the-buildings-of-the-future-are-key-to-an-efficient-energy-ecosystem
[10] https://www.se.com/ww/en/work/campaign/roi-report/
[11] Resource efficiency and climate change: Material efficiency strategies for a low-carbon future, UNEP
[12] https://www.weforum.org/agenda/2021/02/why-the-buildings-of-the-future-are-key-to-an-efficient-energy-ecosystem
[13] https://www.greenpeace.org/international/press-release/24131/car-industrys-2018-carbon-footprint-exceeds-eu-greenhouse-gas-emissions-greenpeace
[14] Resource Efficiency and Climate Change: Material Efficiency Strategies for a Low-Carbon Future, UNEP
[15] Resource Efficiency and Climate Change: Material Efficiency Strategies for a Low-Carbon Future, UNEP
[16] Resource Efficiency and Climate Change: Material Efficiency Strategies for a Low-Carbon Future, UNEP
[17] https://www.mckinsey.com/business-functions/operations/our-insights/lighthouses-unlock-sustainability-through-4ir-technologies
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