Simplifying Ecodesign to serve business growth

With sustainability and decarbonation dominating the agendas of many Multi-National Companies (MNC), leaders across the board are now building tangible actions plans to walk the talk on the public commitments they have made.

This article aims to show by sharing simple yet actionable ideas for CEOs & their Chief Sustainability Officers (CSO) – how they can work on achieving both short-term and long-term sustainability in parallel with their business objectives, pairing business forecast and sustainability backcast to define their actions plan, by taking the lense of Ecodesign.

This introductory paper extends beyond defining Ecodesign. It also shows the different angles Ecodesign can be addressed. The best practices illustrated below are examples that hopefully spark ideas for you to introduce Ecodesign elements - minor intentional and committed changes in your product, processes and business development, while keeping your company running without a complete disruption of your processes and operation flow. ?

In the end, I hope you will come with the conclusion that sustainability and Ecodesign can be in line with your business acumen , and forms a powerful idea generation framework to future-proof your business.

What is Ecodesign in the first place?

??????According to the European Environment Agency (EEA) , Ecodesign is “The integration of environmental aspects into the product development process, by balancing ecological and economic requirements.” Eco-Design considers environmental aspects at all stages of a product development process, striving for products which make the lowest possible environmental impact throughout the product life cycle.

?????While this definition may seem at a first glance rather business unfriendly (how does one balance economic and ecological requirements?). There is actually a LOT of room to play around Ecodesign and make this not only something good for the environment and communities, but also for your business.

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Going beyond current compliance to make it a true business advantage

??????Businesses often focus on Ecodesign on 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 can and should be a catalyst to sales growth, profitability improvements, better product quality and more. Putting on a conventional business lense, your company most likely already does this to a certain degree: the required certifications such as finance, quality, EHS and regulations already embed this principle to a certain degree, but as a compliance requirement rather than as a truly empowered and business focused approach.

As your market develops more constraints in response to the push from regulators and policy makers to drive industries into the Net-Zero world, ?your company can anticipate and even sublimate those requirements instead of letting them to hamper your businesses. ?

Pre-emptive actions to embed Ecodesign in your business model and your value chain in advance of the inevitable regulatory push towards Net Zero are an opportunity. Early preparations gives you the head start on finding the competitive advantages in an everchanging world. You can be the first to reap the benefits - profit maximisation, differentiation, increased brand visibility or improved talent retention while minimising your environment footprint on the environment and maximizing it on the ecosystem that contributes to your businesses.

All that is being said, so how can you brainstorm Ecodesign with your team? We’ll explore 3 dimension : Products, Systems & Business models.

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A.???Product & Portfolio Ecodesign

This is most common and most mature aspect of Ecodesign in most existing industries and companies, historically for a few reasons:

-???????Reduce production cost: this is (or should be) a common obsession of any professional product owner. This translates into using less material, removing un-necessary features to reduce costs.

-???????Regulatory compliance: with increasingly stringent regulations (ROHS, CE, etc…), some materials which use should be limited or completely avoided due to their potential in harming people or the environment.

For proper Ecodesign beyond those existing requirements, the first step is to identify the product impacts via a life-cycle assessment (LCA) study. LCA will increase your understanding the environmental footprint of the full creation process - from raw material extraction, transformation, delivery to the manufacturing, assembly, delivery and usage of the product up to its end of life.

This is already an industry standard in many markets and existing data can therefore be leveraged as the basis to ask ourselves the right questions. For those who do not have such existing data, many tools exist including even some open-source ones to help you in that first step of the journey.

Once you have the data, you can start to identify options by:

• Comparing the different products of your portfolio between themselves but also with their competitors (publication is not systematic but often mandatory in some geo)
• Look for new technical solutions in the materials (recycled, remanufactured, plastic-free, socially & environmentally responsible sourcing methods etc…) that fit the business requirements of the product
• Look for the relationship between the different cycles of a product’s life and their related carbon scope (Scope 3 Upstream, Scope 1 & 2, Scope 3 Downstream) as this might bring you keys to achieve significant footprint reduction with targeted actions/improvements.
• Do not neglect integrating all suppliers/user/stakeholders to your investigation. Knowledge on what to improve across the full value chain do not sit exclusively within your organization or in the responsible teams.
• Assess cost/benefit & cost/sustainability impact and go for 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, manufacturing process, and, required investments into the model to ensure the most educated decisions on a pure Net Present Value (NPV) basis.
• Do not stick to manufacturing and usage but also end of life, 2nd life, recycling, reparability and reusing. Some geographies and industries even have dedicated support schemes that can tip the balance of your investment decision one way or the other.

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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 on every product creation or evolution plan that you take from the moment you decide to embed Ecodesign in your process.

Develop the right team. At first and in order to make sure your team asks itself the right questions, hiring and developing a core pool of experts to evangelize and train your teams is a good starting point so that you minimize risks of starting off the wrong way. You will also need consistent and repeated internal communication on your purpose and intent paired with aligned KPI structure and governance.

Support the growth. As your teams grow in knowledge and in depth, you will see more and more innovative ideas coming to reduce both the environmental footprint and cost of the product, while increasing the durability and quality of your products . This is where process and governance should take over and make to automate your decision making process towards the most financially and sustainability-wise beneficial decisions.

Start early. While this process might appear as you setting your team into uncharted territory, adding more constraints or a new cost sink, I can only emphasize here that it will be more costly and painful to wait while your competitors are gaining ahead and increasing their chances of taking the upper hand on what will become a mainstream topic. Starting sooner, with proper executive sponsorship and involvement, even in an imperfect way, is far better than neglecting this in the long run.

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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 components, products and systems that can even depend on other systems, either as a sub-system, main-system or simply peer system.

This is a first change in perspective that basically takes us into considering not only how our products or systems behave on their own but also:

1.?????How they behave within the system they are being used in

a.?????What are the most required and “un-efficient” behaviours of your product in its commonly used system (i.e. always powered even when un-used, unrequired heat generation requiring cooling,

b.?????What behaviours cause a deterioration of optimal footprint

c.?????What common system requirements reduce product life-span,

d.?????Etc…

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 perspective also opens you up for new productive discussions with other 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.

This canvas can also allow you to deepen your understanding of end-customer applications & behaviours with a new lense and look at the way the system they use (or your provide them) affects their performance and/or generates non-desired outcomes in terms of efficiency, product life time and other factors, as well as how it support or not their own sustainability and decarbonation agenda.

With the increase of carbon taxes, Sustainability considerations will only accrue further in the future becoming at worse a license to operate for your customers and ultimately a competitive advantage you enable for them. Companies offering solutions that tick this new box in the requirement list will gain increased purchase and price considerations.

C.???Ecodesigning business models and value chains

This lense might be the most innovative and yet also the trickiest since many of its components do not usually directly or solely depend on a single company, which does not help with consideration and action. It however offers a unconventional canvas to rethink an industry and its value chain. This can open doors to creating new strategic partnerships with suppliers and customers for co-innovation or simply for vertical integration ?across a value chain to catch the value detected during the exercise.

The idea is an old concept and quite simple: look for inefficiencies and/or waste in your value chain that are not properly valued, i.e. where does heating, cooling, waste material happen in your manufacturing or value chain process? Can you or your suppliers prescribe a dollar value to it?

Let’s take an example to illustrate: the air compressor industry.

This industry comprises of OEMs who delivery air compressors to their end customers for them to use in their facilities or industrial processes. Doing a quick LCA and carbon analysis, it becomes obvious that 95%+ of the related carbon emissions come from the operating phase across the lifespan of the compressor (which is also part of Scope 3 Downstream), mostly from power usage by the compressor and the huge heat-losses from the air-compression process.

A US start-up company found a clever way to adapt its business model in order to create value & monetize its energy losses by switching to selling directly compressed air (per-use system) and moving to an air-compressor leasing model where the heat generated is embedded in the factory or building process to be put to use rather than simply dispersed or worse cooled down by some air conditioning, with that saved heat being monetized.

Another example is circularity: 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 necessarily producing new products (which helps with Carbon) while reaching new market segments that are either environmental conscious or have a slightly lower purchasing power than those buying new bikes. They are starting the same with footware and ?a “Sport Leasing / Sport as a Service” type of business model, which allows earn more per unit produced, increase customer loyalty and all while reducing their carbon footprint.

There are many existing examples in the market with great potentials when you widen your search. By mobilizing your organization across a well-defined process, you can achieve more and make your business future proof and resilient to disruptions.

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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. Companies still have a few years in front of them to crack the code of their industries and their customers to become first movers and maximize their value creation. 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 and be right where the market expects you. Not limited to this, it may also open doors to better financing and attracting talents with an improved brand equity.

Time is of the essence, not only for the planet and our communities but also businesses. As many companies pursue the agenda and make sustainability as a public commitment, few have yet completely integrated it as part of their business strategy and positioned it as a true competitive advantage.

With the right team with the right focus and also being early on this journey, you will find your business on the right path, towards to overcoming the steep learning curve to discovering new innovation potential.

Learn more by contacting the author.

Sorouch KHERADMAND

skherad@gmail.com