The Eco Efficiency Analysis

Regarding SD tools, one of BASF's core competencies lies in the field of eco-efficiency analysis. In simple terms, eco-efficiency describes how environmentally friendly and economical a product or process is. BASF, together with an external partner, began to develop the instrument based on the conceptual work of Schalteg-ger and Sturm (1994) as early as 1996. In the meantime, the method has matured and around 230 products and production processes have been analyzed to date. Half of the eco-efficiency analyses conducted to date have been used for internal strategy and research decisions. The other half of the analyses has been carried out in cooperation with external partners such as customers, NGOs, and governmental institutions. Right from the beginning, the eco-efficiency analysis was discussed in public. This has led to many valuable contributions from external parties and has put the method on a high level of acceptance throughout various industries and stakeholders.

8.6.5.1 The Methodology. The eco-efficiency analysis starts with the definition of a specific customer benefit. The analysis then compares economic and ecological advantages and disadvantages across several product or process solutions, which can fulfill the same function for customers (Saling et al., 2002). This means that products are not compared with one another in overall terms, but rather their application performance such as "painting a square meter of furniture front." The eco-efficiency analysis focuses on each phase of a product's lifecycle "from cradle to grave," beginning with the extraction of raw materials from the Earth and ending with recycling or waste treatment after use. The basis is a lifecycle analysis according to standard ISO 14040 and the following.

In this way, the environmental impact of the production, the usage behavior of the consumers, and the various possibilities for reuse and disposal are analyzed. Additionally, a comprehensive economic assessment is performed, including all costs incurred in manufacturing or use of a product. The economic analysis and the overall environmental impact are then combined to evaluate the eco-efficiency. Thus, all relevant decision factors are analyzed with specific customer benefits always being the focus of attention.

Eco-efficient solutions to the problems are those that provide a better customer benefit from a cost and environmental point of view.

8.6.5.2 The Indicators. The representation of a multiplicity of individual results from the actual lifecycle assessment is frequently opaque and difficult to interpret. To improve the interpretation of results, BASF has developed a method that combines the ecological and economic parameters, plotting them as a single point in a coordinate system. The environmental impact is described with reference to six categories, and each of these categories covers a large number of detailed individual criteria. The results of all environmental impact categories are combined by weighting.

Also, the economic data are compiled over the entire lifecycle. The total costs are normalized with respect to the average of all alternatives. This helps in identifying cost drivers and areas offering potential for cost reductions. The data on relative costs and environmental impacts are used to construct a diagram, the so-called eco-efficiency portfolio, which clearly shows the strengths and weaknesses of each product or process.

8.6.5.3 Further Enhancing the Eco-Efficiency Analysis by Including Social Aspects. Based on the principles of the BASF eco-efficiency analysis on the one hand, and a product-related specification of the social sustainability dimension on the other, a social lifecycle assessment procedure has been developed. The new integrated instrument, the so-called SEEbalance compares the costs, environmental impact, and social effects of different product or process alternatives. Socio-eco-efficient solutions combine a good environmental performance with high social benefit and at the same time low costs for the end customer. Social indicators for the evaluation of products and processes are developed. The indicator classification is based on the "business management stakeholder approach" (Schmidt et al., 2004). The results of the social, ecological, and economic assessments are combined in the three-dimensional portfolio, the so-called SEEcubeĀ®. The instrument described here is to be regarded as "work in progress," that is, it needs to be constantly and critically reviewed and adjusted to the ongoing developments in society and discussions in politics, society, and science.

8.6.5.4 Eco-Efficiency and the Global Compact. As part of its active involvement in the Global Compact, BASF started in 2002 a project together with UNIDO (United Nations Industrial Development Organization) and UNEP (United Nations Environmental Program). The goal of this partnership is to investigate and improve the eco-efficiency of small- and medium-sized enterprises (SMEs) in developing countries. The partnership facilitates the transfer of know-how, contributing to sustainable industrial development.

In the first step of the partnership, BASF provided its eco-efficiency expertise (see Section 6.1.3 for detailed discussion of BASF eco-efficiency analysis) to help Moroccan textile dye works operate in a more efficient and environmentally friendly way. Based on the eco-efficiency analysis and the experience of many years with products and processes in the textile sector, BASF developed a software package, which was given to Moroccan companies free of charge. The software tool substantially simplifies the compilation of an eco-efficiency analysis. It uses key technical data to calculate how the manufacturing process can be improved.

Such a software tool can be expanded to other industrial sectors and other countries. Combined with consulting services of the UNEP/UNIDO National Cleaner Production Centers, it enables SMEs in developing countries to perform eco-efficiency analyses.

Applying the results of these analyses, scarce resources can be conserved and the burden on the environment reduced. This enables SMEs to more easily adhere to international standards (Bethke, 2003).

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