What is eco-innovation and what role does it play in creating a more sustainable future?

Eco-innovation refers to any new innovation or technology that significantly contributes to sustainable development. This could include innovations that reduce the impact of production on the environment, that enhance nature’s resilience or that use natural resources in a more efficient way. Eco-innovation recognises the positive contribution that industry can have on both sustainable development and a competitive economy. The approach towards achieving sustainable production has changed in recent years with a shift in focus from end product solutions to an increased emphasis on product lifestyles and environmental strategies.

Eco-innovation is integral to the creation of a more sustainable society. It’s more than simply designing green products and green packaging. Eco-innovation goes further than this as it entails improvements in business operations and processes to improve efficiency and to reduce costs and waste significantly.

Why is eco-innovation important for industry?

According to the 7th Environment Action Programme (EAP) the long-term vision for European environment policy is that;

“In 2050, we live well, within the planet’s ecological limits. Our prosperity and healthy environment stem from an innovative, circular economy where nothing is wasted and where natural resources are managed sustainably, and biodiversity is protected, valued and restored in ways that enhance our society’s resilience. Our low-carbon growth has long been decoupled from resource use, setting the pace for a safe and sustainable global society.”

Eco-innovation is hugely important if we are to achieve this ambitious goal. The benefits of eco-innovation are significant for the creation of a more sustainable and environmentally friendly society. However, this approach also offers opportunities and benefits to industry too such as:

  • Access to new and emerging markets– as the demand for eco-innovative solutions grows, businesses have an opportunity to reach new market segments, supply chains and untapped demand where solutions in the market do not exist. Eco-innovation also facilitates collaboration with other partners throughout the value chain, providing access to other networks and knowledge.
  • Staying ahead of standards and regulation– as sustainability is prioritised, relevant regulations and standards in this area are becoming increasingly stringent. Eco-innovative companies are positioned to benefit from competitive advantages as they tend to be ahead of relevant regulations and standards. By continually innovating, such businesses are able to react to requirements more quickly as they develop and change.
  • Attracting investment– with eco-innovation being a priority, financial opportunities are increasing. Banks and long-term investors are continually investing in companies that provide higher resilience and viability for the future. One indicator of this viability is through sustainability initiatives. Additionally, funding from local governments and agencies is increasing for opportunities linked to innovation and sustainability.
  • Increased productivity and technical capacity– the organisational changes triggered by eco-innovation increase the technical capacity of the business and drive productivity. As a result of increased collaboration, employee engagement improves and key competencies are shared and developed.
  • Increased profitability along the value chain– to reap the advantages of eco-innovation, every stage along the value chain should be considered to identify opportunities for improvement. Throughout the value chain there are a number of ways in which profitability can be increased including material or production efficiency, reduced waste to landfill, optimisation of distribution channels and reduced lead-times.

Europe’s green industries are already booming; the environment industry sector grew by more than 50% between 2000 and 2011, one of the only economic sectors to have done well since the 2008 financial crisis. More than 3 million people already work for eco-industries in the EU, and European businesses supply a third of the global market for green technologies — a market worth €1 trillion today and expected to double in five years. Eco-innovation therefore has great potential as a driver of jobs and growth.

The Eco-Innovation Action Plan

How can eco-innovation be assessed in practice?

The EU Eco-innovation Action Plan (EcoAP) was established by the European Commission to focus on any bottlenecks, challenges and opportunities to facilitate achieving environmental targets through innovation. Boosting eco-innovation and overcoming these obstacles is therefore a priority for the European Commission.Eco-innovation can be understood and analysed according to targets, mechanisms and impacts, all of which help to provide a holistic view of eco-innovation and its importance in creating a more sustainable future.

This is the basic focus of eco-innovation and includes:

1. Target

This is the basic focus of eco-innovation and includes:

  • Products (goods and services)
  • Processes (production methods or procedures)
  • Marketing methods (promotion, pricing and other strategies)
  • Organisations (structure of management and distribution of responsibilities)
  • Institutions (institutional arrangements, social norms and cultural values)

2. Mechanism

This refers to the method by which the change in eco-innovation occurs. There are four key mechanisms including:

  • Modification- (small adjustments to products and processes)
  • Re-design- (significant changes to existing products, processes and organisational structures)
  • Alternatives- (introduction of goods and services that can be used as substitutes for other products)
  • Creation- (design and introduction of new products, processes, procedures, institutions and organisations)

3. Impact

This refers to the impact that eco-innovation has whether that be on the environment, across its lifecycle or a different focus area altogether. The impact is determined by both the target and mechanism of the eco-innovation and how it relates to its socio-technical surroundings.

Does the future look more sustainable?

Although the opportunities that eco-innovation offers are clear, greater effort is needed to close the gap with regards to implementation. To be truly effective, eco-innovation needs to be adopted on a larger scale and with greater consistency across different countries and different sectors.

We have been able to identify solutions to recover precious metals from high-tech devices doomed to scrap. We have found ways to treat waste waters and reuse them in agriculture. We have been able to extend the life of products or design solutions to reduce the use of raw material. Last but not least, as consumers we have started to modify our behaviour and started purchasing services rather than products. However, much more must be done and by more people. What we need to do now is to upscale and mainstream some of these solutions. We need to encourage internationalization efforts and offer SMEs, the real engines of eco-innovation, a highway to find new markets and contribute to global sustainability

Karl Falkenberg, Director General for Environment, European Commission

Whilst there is still a long way to go with this new approach to innovation, huge steps have been made in this area. Many businesses are already seeing the benefits of eco-innovation within their industries. This trend will continue to grow as the advantages of eco-innovation for both the environment and for industry become more and more apparent.

For more information about making your business more sustainable, discover OECD’s sustainable manufacturing toolkit here.

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