Eco-efficiency For Products-Establishment of Eco-efficiency Indicators for Sustainable Products

Chie Nakaniwa (nakaniwa@jemai.or.jp)
Japan Environmental Management Association for Industry-JEMAI-1
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Overview of Presentations
1. The need for sustainability indicators-Introduction of Factor X project

2. Emerging eco-efficiency indicators-Evaluation of environmental performance and value-Definition and calculation principles-Case studies

3. Development of eco-efficiency indicators-Environmental product information2
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1. The need for sustainability
indicators
Introduction of Factor X project3
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Decoupling economic growth fromthe environmental burden
Decoupling is a very important theme for business4
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Factor 4• The idea that resource productivity should
be quadrupled so that wealth is doubled,
and resource use is halved. The concept has
been summed up as "doing more with less".
It is argued that this would result in
substantial macro-economic gains.
Green Sustainable Development Strategy for North-eastern NB Draft Strategy

5
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Factor 10• The idea that per capita material flows caused by
OECD countries should be reduced by a factor often. Globally, claim proponents, material turnovershould be reduced by 50 percent, but because
OECD countries are responsible for material flows
five times as high as developing countries, andworld population is inevitably increasing, theOECD has to set long-term targets well beyond
the more conservative Factor Four target.
Green Sustainable Development Strategy for North-eastern NB Draft Strategy

6
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Definition of Eco-efficiency

Product or service value
Environmental influence“Creating more value with less impact”“Economic and environmental efficiency in parallel”
Here, eco-efficiency indicators are defined as a ratio ex. $/T
Source:eco-efficiency creating more value with less impact by WBCSD 7
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The Needs for Eco-efficiency Indicators• to track continuous improvement• to set goals for improvement• to promote efficient inputs and outputs• to report to stakeholders
Corporate;* Executives* Managers* Employees

Stakeholders;* Users* Financiers* The public* Media

Government;* Regulators
8
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Eco-efficiency, Measuring Level
Company

Corporate
Eco-efficiency
Performance
Factory

Factory

Factory

Product
extraction Manufacturing transport
Eco-efficiency
Performance

Factoryuse

disposal
9
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Factor X Project in Japan
Eco-efficiency indicators for
Product Environmental Performance10
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Project Goal and Scope
Create Factor (indicator / index) for products and services:
1. To provide quantified environmental information as asingle or several integrated numbers
2. To provide comparability across a wide range ofindustry sectors, companies, and products
3. To accelerate sustainability development of businesssegments
4. To serve analytical foundation as political tools
5. To link quantified evaluation provided by the factor
with Design for Environment and Eco label, or otherenvironmental management tools, and promote them11
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First Year Target (1/2)
1) Survey for current status in Japan• Identifying types of innovating manufacturing
technology, process• Identifying historical trends of industry sectors
about productivity, improvement2) Identifying the problems, potentials for the future• Identifying structural problems across sectors,
barriers, and technological limitation, and otherissues12
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First Year Target (2/2)
3) Reviewing concepts, existing models
about resource productivity, eco-efficiency, or othermethodology• What is the ratio? What are the denominator andnumerator?
• What could be selected as service/value? What
could be selected as environmental impacts?
• Existing model; Factor 4 and 10, WBCSD ecoefficiency, Ecological footprint, LCA, Dow Jones
Sustainability Index, and others
13
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Project Scheme
Bottom Up Approach (WG 1)

Top Down Approach (WG 2)•Empirical approach•Theoretical approach•Considering sectoral factor improvement•Considering supply chain•NO TARGET
Expecting self-improvement by applying
Factor evaluation methods•Assuming potential target

Industry

Industry

Industry
Industry

Corp.

Corp.

Product

Extraction

Corp.

Industry

Industry

Industry
Product

Historical Trend and Possibilities
Factor(Industry)

Factor(Company)

Factor(Product)

Factor X

ProductTotal Consumption

14

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Two Kinds of Factors Examined
1. Resource Productivity(RP)
RP=S/RC
S=Service(product or service value),
RC=Resource Consumption
Here, energy substitutes for RC
ex. Factor=RP Y2000 /RP Y1970
2. Environmental Efficiency(EE)
EE=S/EL
S=Service(product or service value),
EL=Environmental Load
Here, CO2 substitutes for EL
ex. Factor=EE A type /EE B type15
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Two Kinds of Indicators Examined
Resource productivity
Numerator

Product or service
value

Optional

Economic value, physicalamount, specific function

Denominator Environmental impact Mandatory Energy consumption
Environmental efficiency
Numerator

Product or service
value

Optional

Economic value, physicalamount, specific function

Denominator Environmental impact Mandatory CO2
Product specific indicators (numerator=product performance value)
Product

PC

refrigerator

Washing machineTV

Indicators

HDD, CPU

Freezing speed

Washing capacity

Brightness
16

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Example of Product Eco-efficiency (1)

20

10

15

8

eco-efficiency

CO2, product function

Desktop PC

6

10

4

5

2

0

0
1997

1998

environmental impact

1999
Year

2000

service(function)

2001

eco-efficiency

Denominator-Environmental impact;CO2 during life cycle
17

Numerator-Product function;CPU, HDD capacity *Factor per a productAll rights reserved.

Example of Product Eco-efficiency (2)

8

10

6

8
6

4

4

2

2

0

0
1998

1999

2000

eco-efficiency

CO2, service

Laptop personal computer

2001

Year
environmental impact

service/product function

eco-efficiency

Denominator-Environmental impact;CO2 during life cycle
Numerator-Product function;CPU, HDD capacity

18*Factor perAllarights
product
reserved.

Findings of FY 2001(3)Facts of a Service System
CO2（Environmental
Efficiency）

Energy Consumption(Resource
Productivity)

TV meeting (A)

8.5kg (P/8.5)

200MJ (P/200)

Conventionalstyle meeting (B)

58kg(P/58)

770MJ (P/770)

6.8

3.9

Factor (A/B)

P is outcome of meetings
19
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80
70◇Conventional◇Conventionalstyle
style
◆TV
◆TVmeeting
meeting60

CO2 (kg)

50
40
30
20

TV meeting

10
0
0

100

200

300

400

500

600

700

Travel distance (km)Correlation Between Travel Distance and CO2
20

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CO2 Emission Ratio

1
0.9

85% reduction

0.8
0.7
0.6
0.5

Wireless

0.4
0.3

Equipment

0.2
0.1
0

Conventional Style

TV meeting

CO2 Reduction Effectsof TV Meeting Technology

21
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Findings of FY 2001(4)Facts of a Product
8

10
8

6

6
4

4

2

2

0

0
1994

1999
Year

S, RC

12

RP=S/RC

S, RC

10

7
6
5
4
3
2
1
0

7
6
5
4
3
2
1
0
1994

RP=S/RC(b) Washing Machine Factor6(a)TV Factor １３

1999
Year

Resource Consumption（RC）

Resource Consumption（RC）

Standby power, Screen ruling(S）Power for usage, washing capacity(S）Resource Productivity (RP)Resource Productivity (RP)22

*Factor per a productAll rights reserved.

Findings of FY 2001(5)Facts of a Product
Factor 8

1995

80
70
60
50
40
30
20
10
0

30
25

1999
Year

Resource Consumption（RC）
Energy Efficiency(S）Resource Productivity (RP)

20
15
10
5
0
1991

RP=S/RC

8
7
6
5
4
3
2
1
0

S, RC

8
7
6
5
4
3
2
1
0

(d)Refrigirator Factor6

RP=S/RC

S, RC

(c)PC

1999
Year

Resource Consumption（RC）
Power for usage, cooling/freezing
speeds(S）Resource Productivity (RP)23

*Factor per a productAll rights reserved.

Fundamental Patterns by Product Categories
Environmental Loaddependent pattern

1.5
1.0

1000

Manufacturing stage

0.5

500

2000
1500

19971998199920002001

Year

materialparts◆;denominator(environmental
impact)

1.5

1.6

1.2
1500

1.0

2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0

1000
500
0
1997 1998 1999 2000 2001

Year

0.0
1997 1998 1999 2000 2001

Year

2500
Service, EL (CO2)■;numerator(value)

2000

1.8

0

Service-dependent pattern (1)EE=S/EL

2500

Service, EL(CO2)▲;eco-efficiency

0.5

500

assembly

Decoupling pattern

1.0

1000

0.0

0

1.0

1.5

1.2

EE=S/EL

1500 1.0

1.2

1.5 1.6

1.8 2.0

2.0
1.8
1.5
1.5 1.6

2000
1500
1000

1.2
1.0

1.0
0.5

500
0

EE=S/EL

2000

2500
Service , EL(CO2)

1.5 1.6

1.8 2.0
EE=S/EL

Service EL(CO2)2500

Service-dependent pattern (２)241997 1998 1999 2000 2001

0.0

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YearExtraction

Extraction

Other consumption goods(c)Usage

Disposal

Other consumption goods
(b)

Usage

DisposalAluminum
Manufacturing(A)SteelManufacturing (B)Automobile
Manufacturing(a)Usage

DisposalResource Consumption ofAutomobile =aA+aB+aC

Other
Denominator of Factor X
Materials(C)・ONLY resource productivity of consumable goods should be measured

Extraction

・Consumer goods industries should be measured rather than semimanufactured/material industries.

How should we define
the boundary of environmental impact? 25-Resource Productivity (ex. Metal) All rights reserved.

d=dA+dB+dC
Extraction

Automobile
Manufacturing (C)Al Man.(A)
CO2：
a kg

Extraction

CO2：
c kg

Steel Man.(B)Usage (D)

CO2：
d kg

e=eA+eB+eC
Disposal (E)
CO2：
e kg

CO2：
b kg

Steel Industry
b+dB+eB

Aluminum
Industry
a+dA+eA

Environmental Efficiency (ex:CO2)

Automobile
Industry
c+dC+eC26
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Factor X Project of 2003
METI

Steering Committee

WG1: Sector-specific Indicators
WG2: Exploring existing methods&allocation rules for environmental
burden on supply chain
FY2001,2002

Chairman:Prof. Ryoichi Yamamoto

WG3: ICT(measuring ICT eco-efficiency)

JEMAI

WG4: Factor X Guidebook
27
FY2003All rights
reserved.

Questions and Discussions
1. What are eco-efficiency indicators working for?
Market needs? Ranking?
Promoting incentives of sustainability?
2. What is the future work?
Comparability?
–common rule for benchmarking
Harmonization?
–for business specific indicators•

The amount of environmental productinformation are increasing.
28
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2. Emerging eco-efficiency indicators
Evaluation of environmental performance and value-Definition and calculation principles

29
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Eco-efficiency, Factor X
State of the Art in Japan
1. Eco-efficiency (Factor) indicators for company(factory) performanceeco-efficiency for company=
sales amount/environmental impacts
2. Eco-efficiency (Factor) indicators for productperformanceeco-efficiency for product=
service/environmental impacts
30
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The Application of Eco-Efficiency Concept
Unit：Company

No. ofcompanies
to issueenvironme
ntal report

No. of companies topractice the concept of
eco-efficiency
Product Corporate

Manufacturing

２２０

４

１８

Nonmanufacturing
Total

６５

２

４

２８５

６

２２
31
Source: FY2002 METI study
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Issues to Be Discussed
Methodological issues;• What is a definition of value (numerator)?
• Which is better, single index or multiple indicators?
-Integrating various environmental aspects andproduct performance• How could we weight those parameters?
• Selection of reporting period
Operational issues;• What is a main purpose of using eco-efficiency?
• What is a driving force to start eco-efficiency
32
indicators?

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A Classification of Product Function
Usability

Purchaser’s
judge

Function

Operational procedures(e.g., setting type function
along consumer’s favor)

Core function

Optional function

The general purpose of the function(e.g., washing cloth, cooling food )Other function attachedwith the product, aiming at
increasing user’s convenience(e.g., multiple-function product)

Styling
Price
Intangible service

33
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A Model of Value Indicator
Establishment
Realizing‘expected
result’Purchasing
product

Functioning
product

Realizing‘perceived
result’

Indicator frommanufacturing
viewpoint

Indicator from
Consumer
viewpoint

To establish value
indicator would bepossible by using productspecification

To establish value indicator
would be possible by using
consumer test or other means.
34
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2. Emerging eco-efficiency indicators
Case studies

35
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Example of Matsushita“3 GP(green products) Indicators”• Index for the prevention of global warming=
product function *product life
greenhouse gas emission over the entire life cycle• Resource use index=
product function*product life
(newly supplied resources+discarded resources) over the entire
life cycle• Use of nontoxic materials

36
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Example of Mitsubishi “Factor X”■Basic Factor Computation● Comparison is made with standard product (as a rule, manufactured in 1990).
● Do not take performance improvements into account.
● The negative environmental impact which consists of each element of following
MET was integrated as length of a vector.
(1) Products weight(2) Products energy consumption(3) Quantity of Toxic substances
contained in Products（Note）
M： Effective use of Material,
E：Efficient use of Energy,
T：Reduce use of Toxic substances=37
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Calculation ofmultiple environmental aspects
Product eco-efficiency
1
Negative environmental impact
FactorEco-efficiency of present productEco-efficiency of standard product(M + E + T )222

Environmental impact of ‘old’ = 12 + 12 + 12 =1.73
Environmental impact ‘new’ = 0.422 + 0.242 + 0.822 =0.95
38
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At shopPurpose of using eco-efficiency
indicators
user•

Environmental report

•

Media

material

parts

Brand image

safetyfunction

quality,preference

producerretailerassembly

Negotiation ,businessmeeting, contract

S/EL=basic unit

S/EL=？

S=1

S=multiple

39
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Nokia’s eco-efficiency
Product Eco-efficiency

40
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Home products-Mitsubishi Factor X
Lighting Fixtures
High efficiency, high output and continued lightadjustment capability, as well as high energy conservation
through the use of solar energy stored in the automatic
control system.
Automatic washing machines
Significant decrease of electricity consumption
through the implementation of water atomization
technology and revision of operation control.
Laptop PCs
Considerable reduction in electricity
consumption through the use of high-end CPUs.
41

http://global.mitsubishielectric.com/company/environ/pepfxsp_b.html
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Society Products-Mitsubishi Factor X
Semiconductor/Memory
Reduction in electricity consumption through lower
power voltage of the operating voltage, reduction in use
of materials such as mold resin and soldering material.
Mobile handsets
Further miniaturization through the use of high energy density
batteries. Substantial reduction in the use of resin.
MotorsReduction in power loss. We became the first Japanesemanufacturer to acquire an EPAct certification number(CCO12A) from the US Department of Energy.
42
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Factor Evaluation of Products
Microwave Oven
Factor
1.27

Social contribution
Resource reduction 66.4t,
Energy reduction 15.9GWh

Air Conditioner
Factor
1.44

Washing Machine
Factor2.00

Social contribution
Resource reduction 5,700t,
Water reduction 230 M litters
Lead reduction 3t

Mobile Telephone
Factor
2.97

Transformer
Factor
1.34

Social contribution
Resource reduction 2,400t,
Energy reduction 246GWh
Toluene/Xylene reduction 3.7t

Social contribution
Resource reduction 400t,
Energy reduction 1,874GWh
Lead reduction 0.8t

Social contribution
Resource reduction 68.9t,
Energy reduction 266GWh
Lead reduction 0.33t

Semiconductors
Factor8.07

Social contribution
Resource reduction 61.2t,
Energy reduction 106GWh
Lead reduction 43
0.36t
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Example of Fujitsu(1/2)

Method of environmental
efficiency factor calculation
Environmental efficiency factor=
Service(ratio of new to old products)
Environmental burden(ratio of new to old products)
44
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Example of Fujitsu(2/2)

45
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Calculation of Fujitsu indicators
3.808 =

Optical performance

1 2
2 + 52
2

(

)

(

)

1 2
2
1
.
240
=
1
+
1
.
44
Media processing performance2(

1
1.50 2
Data processing performance 1.500 =
1

(

)

)

1
2
2
2
2
.
469
=
+
+
3
.
808
1
.
240
1
.
500
Value=
346

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Feasibility Study of setting up Factor X (1/3)

Numberof indicators
環境効率指標数/個

14
12
10

Input items

インプット
アウトプット Output items
間接的項目 Indirect items

8
6
4
2
0

導入事例
Existing
indicators

検討事例

Trial
47
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Feasibility Study of setting up Factor X (2/3)

環境効率指標数/個
Numberof indicators

14
12
10
単一の環境負荷項目の使用 Single indicator
複数の環境負荷項目を統合化

Integrated indicator

8
6
4
2
0

導入事例

Existing indicators

検討事例

Trial
48
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Feasibility Study of setting up Factor X (3/3)
1010Number環境効率指標数/個
of indicators

9
9
8

7
物理量

7

経済的価値

6

6

機能

5

Physical items
Economic items
Functional items

4
3

3

2
1
0

0
導入事例

Existing indicators

検討事例

Trial
49
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Strategy of Implementing
Product Eco-efficiency Indicators• To provide information that the company iscommitted to evaluating both “product or service
performances” and “the environmental impact”• To describe the company’s efforts to make its
products, environmental and performance more
efficient• To indicate the degree of product performances by
consulting user priorities for product function• To differentiate its own products from othercompany’s competitive products
50
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Current Trends and Development of
Eco-efficiency Indicators
The first step
*Positive screening*Expressing in ratio*Valuable tools forcorporate management*Internal tools
within companies

The second step
*Information disclosure*Effective tools to show
good performance*External andcommunication tools
to catch attention of
stakeholders

The third step
*Standard-like indicators*Comparativeness*Expanding
market share ofhigh eco-efficiency
products

Information beyond complianceAppropriate selection for environmental impacts and service items
51
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Some Observations• The environmental performance ratio can be used forboth internal and external information.
• A consensus needs to be reached by the businesssectors on core eco-efficiency indicators.
• Reporting eco-efficiency indicators could become as
standard as reporting indicators of financial
performance.
• The distinction between various industries (orproducts) and stakeholders needs to reflect theimportance of proper identification of indicators aspractical business instruments.
52
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3. Development of eco-efficiency indicators-Environmental product information

53
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Disclosure ofEnvironmental Product Information
reduction of toxic materials
packaging reduction

47.3

downsizing

46.8

reduction of related product impact

36.8

energy saving

36.4

consumption of recycled materials

34.1

material consumption

33.2

information disclosure

28.2

resolvability

27.7

longer operating life

26.8

0

20

60

40

60

％

Source: FY2002 Environmental Reporting54
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Several Types of
Product Environmental Information
Full

For better
understandingof B to C,
new wayof declarations
added?

Type I
eco-label

Life
Cycle
Consideration

Complete
LCA
Type III
eco-label

Quantitative
Type II
eco-labelType II
eco-labelPart
SimpleComplex
Degree of Information Simplicity

55
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The Path for Establishing Eco-efficiency Indicators
Environmental
condition

External
requirements

Situation analysis/inventory
Establish indicator system
Data collection/determine indicators
Apply indicators
Review indicator system

IGPA, Sept., 2002

Derive objectives and measurescompany56

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Environmental Product Information
Could Be a Key Tool
for Sustainable Development-to raise awareness, to establish priorities, and to
motivate activities.
Producing
eco-efficient
products
Producer

Decision,communication
tools

Purchaser(business procurement,
user, consumer)
Selecting eco-efficient
products and using inappropriate manner57
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Impacts on the Market• Data on the market impact of environmental
information is difficult to obtain.
• It is difficult to separate the effectiveness ofproviding environmental information from otherfactors which influence product’s market share.
• However, producers continue to apply forenvironmental information, expecting somemarket value.
value

58
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How Could Environmental Product
Information Encourage Producers?
CO2 emission analysis for new model automobile
1.05
1Indicator
0.95
1997Y=10.9
0.85
0.8
0.75

Manufacturing
CO2(t)

Use stage CO2(t)
Y1997

•

Weight(kg)Y2001

The effort in shifting from incremental tosystematic change should be encouraged.
59
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Shift From Particular Interest
to Whole Life Cycle• Concerns are increasingly based on life
cycle analysis rather than specificstage(production, usage, and disposal).
• Rather than single attribute, multi-aspects ofenvironmental information are expected.

60
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Could EPI Stimulate Product Innovation
If There Were Benchmarks?
• Goal is outcomes rather than applied technologies• Improvements/innovations should be recognizedby the market, then rewarded• Benchmarks would raise corporate targets andincrease competition61
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What Kind of Regulatory Requirements
Could Promote These Strategies?
• Government task = prescribe each stage of productdesign• Government task = set clear target from life-cyclebasis• Implementations– Explore the best combination: standard, competition,
cooperative harmonization.
– Disseminate information and experiences.
– Develop institutional scheme; e.g., evaluation system
62
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Current Status of Policy Approaches
to Trigger Product Innovation• EU– IPP (Integrated Product Policy)• Japan– Integration of tools in future policy• The LCA National project• Factor 8 committee~product eco-efficiency indicators• Eco-Leaf Program Environmental product declaration (ISO/CD
14025)• Green procurement
The tools are ready to be used…But, where do these things go?
63
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Possible Approaches Based on Life-cycle
Information to Product Innovation• To enhance product supply chain management– Green public and private procurement– Synergies of existing environmental management
systems/tools– Information flow and cooperation in product chains• To enhance awareness– Capacity building• To create market– Coordination and information in a critical mass
64
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What Could Be Driving Forces To
Enhance Awareness?
• Obtaining credibility endorsement by stakeholders?
• Stimulating supplier by economic incentives,
improved availability to LCA inventory data,
training, critical review process?
– Considering how to deal with data from developing
countries• Stimulating demand by enhancing public
procurement, promotion and training?
65
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How Could We Show Environmental Product
Performance to Users?
Effective Approach to Enhance Acceptability of Environmental Information• Improving declaration format and visibility?
• Offering consumer education(e.g. simple concept about life cycle thinking)?
• Providing other incentives?
• Analyzing consumer behavior/preference?
66
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Concluding Remarks
Success Factors• Establishment of priorities and targets• Dialogue– Among producers– Between producers and consumers• Case studies

67
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