Thursday, 12 April 2012

Cradle to Cradle


Effective natural resource management will soon become a decisive competitive factor in business. It will separate the companies that understand how to adapt to the new economic agenda from the rest, and adopting the Cradle-to-Cradle approach could facilitate this shift.

by Peter Bjerregaard 

The race for resources is elevating on the global agenda and the ability to use resources – from metal and water to minerals and oil – as efficiently as possible, will become much more important than classical wage competitiveness, which classical economic thinking suggests. 

“The companies and nations that insist on competing on wages will increasingly be confronted with problems, whereas those who understand that the future competition is based on the access to, and reuse of resources, will see completely different opportunities,” says Prof. Katherine Richardson, Director of the Sustainability Science Centre at Copenhagen University. 

Her point is supported by Jeremy Oppenheim, Director at the consulting firm, McKinsey & Company, who recently co-authored a report on the resource economy. 

“There is no doubt that resource efficiency is the new indicator for competitiveness and will weigh heavier than access to cheap labour. Resources are a concern all companies should put in the centre of their strategy – otherwise they only have a slight chance to survive when commodity prices take off,” says Jeremy Oppenheim.


Commodity prices have increased sharply since 2000, erasing all the declines of the 20th century.


An example of the rising demand for commodities is the price volatility for neodymiumoxid. Neodymiumoxid is used for magnets and is also used for building windmills. Between 2001 and 2011 the price for one kilo increased from approx. 40 USD to 1,200 USD. The price shock hit a range of industries from producers of hard disks to manufactures of electric cars. Today the price is 160 USD but demand is expected to almost double within the next three years. 

The McKinsey report shows that between 20 and 30% of the resources needed in 2030 can be gained simply by using current resources more efficiently. Translated into monetary terms, this means potential savings for up to €800 billion globally. And on top of this are the environmental benefits. 

In a response to these challenges, companies are increasingly moving towards a Cradle-to-Cradle approach. Incorporating this approach means perceiving all inputs as valuable and the concept of waste, as we know it, does not exist. 

In 2010, the Danish furniture fabric manufacturer Gabriel, was the first Danish company to receive a C2C (Cradle to Cradle) certification. The company has developed a range of new fabrics without chemical addictives or harmful colours, which ensures the fabrics can be used for other products or re-enter the biological circle after use. 

Although C2C is a relatively new concept in Denmark, the idea is gaining traction. For example, C2C is incorporated into the new national waste plan. 

A few other prominent Danish companies are on the way to certification, and others use the principles to optimise their value chains. “It’s not about being perfect from the beginning, but about getting started,” says CEO Søren Lyngsgaard at EPEA Kopenhagen, the central Cradle to Cradle hub in Denmark. 

“The vision that our products will have a positive effect on the bottom line not merely in economic and social terms, but also for the environment, is enough to make it worth starting,” says Søren Lyngsgaard and points to the rising shortages of oil, phosphorus, copper, biodiversity and many other resources as trend drivers. 

There are several more examples of companies that are trying to create “closed-loop systems” for products where the components can be reused or are biodegradable: 
  • Mushroom-based packaging from Ecovative Design instead of Styrofoam. This is biodegradable and uses 98% less energy to produce. 
  • Nestle’s USA manufacturing facility in Freehold, New Jersey, sells spent coffee grounds to fire log producers. 
  • Steelcase, Herman Millers Chairs are designed to be easily disassembled into smaller parts, which can be recycled. 
  • Coca-Cola has together with Emeco created the 111 Navy Chair that is made from 111 plastic bottles of Coca-Cola.

Photo courtesy of emecowithcoke.com


Main principles of C2C: 

Waste = nourishment
The concept of waste is eliminated. Instead of piling up waste, we turn it into nourishment for nature or for the next generation of products, creating biological and technical cycles where the products are composted or recycled in new production.

Renewable energy
Instead of burning fossil fuels and having a negative impact on our surroundings, we use renewable energy.

Variety
Nature’s ecosystems are a multiplicity of complex cycles developed and designed in harmony with the immediate and very special surroundings. Human design profits from this variety and should take this into account.

More information: 
The Story of Stuff Project
McKinsey & Company
McDonough Braungart Design Chemistry 

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