Simplifying Ecodesign to Serve Business Growths
With sustainability and decarbonation dominating the agendas of many Multi-National Companies, leaders across the board are now building tangible actions plans to deliver on the public commitments they took.
This introductory paper intends to show the potential of Ecodesign. It aims at showing the different angles Ecodesign can be used as a tool to improve both your business and your sustainability requirements. The best practices illustrated will hopefully spark ideas for you to introduce Ecodesign in your product, processes and business development, while running your operations.
What is Ecodesign in the first place?
According to the European Environment Agency, Ecodesign is “the integration of environmental aspects into the product development process, by balancing ecological and economic requirements”.
While this definition may seem at a first glance rather business unfriendly, there actually is a LOT of room to play around Ecodesign and make this good both for the environment and your business.
Going beyond current compliance to make it a true business advantage
Businesses often limit Ecodesign to the development of hardware products when a lot can be done beyond the said product design and manufacturing. Ecodesign should embed the whole life-cycle and business model of your product, including and non-exhaustively:
1. How your products reach users
2. How your products are used
3. How your products operate in or with other systems/products
4. How waste/spent product be recovered, recycled, repurpose or re-sold (the second life question)
5. How it is impacting the employees and partners engaged in its value creation
6. How you source and choose raw materials and suppliers
7. How you price or build the business model
Ecodesign should be a catalyst to sales growth, profitability improvements, better product quality and more. Your company most likely already does this to a certain degree but as a compliance requirement rather than as a truly empowered and business focused approach.
As your market develops more regulations and policies to drive industries into the Net-Zero world, your company can anticipate and even sublimate those requirements.
A. Product & Portfolio Ecodesign
This is the most common and mature aspect of Ecodesign in existing industries. It consists of:
- Reducing production cost: using less material, removing un-necessary features to reduce costs.
- Regulatory compliance: with increasingly stringent regulations (ROHS, CE, etc…), asking for the limitation or removal of some materials.
To fully leverage Ecodesign, the first step is to identify the product impacts via a life-cycle assessment (LCA). This is a standard in many markets and existing methods can be leveraged. For those who need, many open-source tools exist.
Once you have the data, you can start identifying options:
- Comparing the different products of your portfolio including with competitors.
- Look for new technical solutions in the materials (recycled, remanufactured, etc…) that fit business requirements.
- Look for the relationship between the different cycles of a product’s life and their related carbon scope (Scope 1/2/3) as this might help you focus your actions.
- Integrate all suppliers / users / stakeholders to your investigation. Knowledge on what to improve does not sit exclusively within your organisation.
- Assess cost / benefit & cost / sustainability impact and choose the best compromise (refer to graph 1)
Very importantly, the following aspects should not be overlooked in this process:
- The impact of future regulations, carbon price, material and energy price, etc… to ensure the most educated decisions on a Net Present Value (NPV) basis.
- Do not stick to manufacturing and usage but also end of life, second life, recycling, reparability and reusing. Some geographies and industries have dedicated support schemes that can tip the balance of your investment.
Consistency and iterations are key. This exercise is most efficient when embedded in the product creation and update process. It delivers most results when consistently applied with an iterative approach.
Develop the right team. At first and in order to make sure your team asks itself the right questions, hire and develop a core pool of experts to train your teams. You will also need consistent internal communication and aligned KPI structure and governance to enforce the new culture.
Support the growth. As your teams grow in knowledge and in depth, innovative ideas will increase and feed a bottom-up approach. This is where processes and governance should take over to automate your decision making process towards the most financially and sustainability-wise beneficial decisions.
Start early. While this process might appear as new constraints or a new cost sink, I can only emphasise here that starting sooner, with proper executive sponsorship and involvement, even in an imperfect way, is far better than neglecting this in the long run.
B. Ecodesigning systems
A system is a collection of elements or components that are organized for a common purpose.
In many cases, whatever we use in life is highly interdependent and interacting with other elements. This is a first change in perspective that takes us into considering in addition:
1. How products behave within the system they are being used in
- What are the most required and “un-efficient” behaviours of your product in its used system (i.e. always powered, unrequired heat generation requiring cooling, etc…)
- What behaviours cause a deterioration of optimal footprint
- What common system requirements reduce product life-span
2. How they influence other products/systems and their behaviours
This perspective will not only show you what new levers you can pull to reduce the footprint and increase the value of your products but also generate a canvas to think of new features or products. Not to mention this also opens new productive discussions with suppliers and customers to co-develop better functioning systems and prescribe your products in the value chain as the most efficient and sustainable, reducing your required sales intensity all while deepening your understanding of end-customers.
C. Ecodesigning business models and value chains
This lense might be the trickiest. It however offers an unconventional canvas to rethink an industry and its value chain. This can open doors to creating new strategic partnerships for co-innovation or simply for vertical integration.
The idea is quite simple: look for inefficiencies and/or waste in your value chain that are undervalued, i.e. where does heating, cooling, waste material happen in value chain process? Can you prescribe a dollar value to it?
Let’s take an example to illustrate: Circularity with Decathlon
The French leader in sport goods began a circular business model where they collect, refurbish and resell bikes and other goods to customers. This helps them do more business without producing new products while reaching new market segments that are environmentally conscious or have a lower purchasing power.
They are starting the same with footware and a “Sport Leasing / Sport as a Service” type of business model, which allows to earn more per unit produced, increase customer loyalty while reducing their carbon footprint.
From Ecodesign to a full integration into value creation
Sustainability is a business opportunity and should simply be seen as such. There is only so much time before this moves to become a must and you find yourself as a mandatory participant.
The challenge may seem big, but the opportunity is much bigger.
Sustainability and Ecodesign do not only help you reduce your costs, but also increase your commercial footprint, find new collaboration areas with your customers, partners and suppliers to innovate. It also helps securing better financing, attracting talents & improving brand equity.
As many companies pursue the agenda and make sustainability as a public commitment, few have yet completely integrated it and positioned it as a true competitive advantage.
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