How sustainable business practices can also be profitable

To sustain the current model of production and consumption, the economy should grow by 3.4% annually. How do we make this happen on a planet that doesn’t grow, with finite resources? “The key is to preserve the value of resources for as long as possible and decouple progress from unlimited resource consumption; the answer thus lies in the circular economy.” This was the starting point of the talk that Elena Badia Elias, Ecodesign and Circular Business project manager at inèdit, gave on November 11th at the II Sustainability Forum of Castellón in her presentation “Ecodesign and new business models,” a day for companies and initiatives committed to sustainability to meet and aimed to demonstrate that it is possible to generate economic benefits while minimizing social and environmental impact.

In her talk, Badia pointed out that some of our most urgent challenges are “extremely complex systemic challenges,” and to understand these complex challenges, “we must first understand the problem well through a systemic view,” that is, considering the impacts at each stage of the product life cycle, from the extraction of materials for production to its final management once it becomes waste.

A change in the business model

Between 75% and 90% of the environmental impacts of a product occur in the phases of material extraction, production, and distribution to points of sale. How can we reduce and capture more value in products to minimize these impacts? A key strategy is a shift in the business model where companies stop providing products and start offering access to them. This is known as servitization, and there are three types:

• – Product-centric servitization: The product is owned by the user, and the company offers maintenance, repair, updates, etc., extending the product’s life while generating extra profit for the company.
• – Use-centric servitization: The product is owned by the manufacturer or brand, and the company offers access to the product through rental or pay-per-use. Companies are interested in ensuring that their product lasts as long as possible, encouraging good material quality and durable design while discouraging planned obsolescence.
• – Performance-centric servitization: The product is owned by the manufacturer or brand, and the company offers results to the consumer through a fixed fee or subscription. The company is interested in making the process as efficient as possible to meet the customer’s needs and generate value economically.

“For this model shift to take place, the involvement of the entire company is necessary: from top management to design, operations, marketing, sales, and finance teams”, according to Badia.

Reducing environmental impact though ecodesign

It is estimated that over 80% of environmental impacts related to products are determined in the design phase, so introducing ecodesign criteria in products is essential. These criteria can focus on the pre-use perspective, such as dematerialization, during use, such as facilitating the repair and updating of products, and after use, for example, ensuring material separability for proper end-of-life management.

Having environmental impact data

Sustainability metrics allow companies to identify critical improvement points based on specific data, serving as a starting point for implementing ecodesign strategies to reduce environmental impact. As inedit’s project manager puts it: “These metrics also help align the goals of companies with those of customers and existing regulations while providing transparency in communication with the end consumer”.