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Environmental Value Creation


Introduced in 2012, the new ISO 14045 standard on eco-efficiency looks promising for packaging and manufacturing companies that are aiming to increase value for their stakeholders and at the same time contribute to sustainable development.

In business, values created are equal to profit; that is, income minus costs. For customers, it may be the willingness to pay for the product minus costs that represents the value. For society, and the ecosystems of the Earth, the value of a product is often associated with a negative impact on the environment. So far there has been limited practical guidance available about how to achieve increased product value and at the same time reduce the environmental impact.

Eco-Efficiency of a Product System

There are a lot of challenges when defining and describing the environmental performance of a single product system. The challenges may, for example, include how to establish the transparent boundaries of the system, to get access to data from life cycle inventories, and to understand what kind of internationally accepted performance indicators can be used. Guidance is, however, now available in the recently published standard ISO 14045 ‘Environmental management – Ecoefficiency assessment of products systems – Principles, requirements and guidelines’ (1). In the standard, eco-efficiency assessment is defined as “a quantitative management tool, which enables the study of life cycle environmental impacts of a product system along with its product system value for a stakeholder.”

The new standard will certainly be of practical use for producers of primary pharmaceutical packaging materials. It is well known that a few grammes here and there, or a total redesign of a packaging product, may increase its eco-efficiency. ISO 14045 will make it easier to describe, compare and communicate the environmental performance and value of a product system.

This article takes a look at some examples where the new standard may be used to add information about the eco-efficiency of packaging products.

Lighter Caps for Pharmaceuticals

The screw cap and seal commonly form the inner membrane that has to be removed to get to a medicine that is held in a container. The manufacture of millions of caps every year makes material efficiency an important consideration, and a more resource efficient version of the cap was therefore recently developed. A new cap would cut down on the amount of plastic raw material required by 30 per cent, and at the same time, manufacturing companies would reduce waste. The use of less material reduces energy consumption during manufacturing since less plastic raw material needs to be heated and then cooled down again. The manufacturing flow would also be optimised; in the old design, each cap had to be moved among three different machines, which is a timeconsuming process. A new cap would be manufactured in a single combined automated cell, leading to a short cycle time. Since the caps would be used in pharmaceutical packaging, the new product would undergo extensive validation of function and performance before being approved. A few grammes here and there can obviously contribute to better environmental performance, so the process should strive to achieve this target wherever possible (2).

Reduced Impact at Half the Cost

For many years, omega-3 fatty acid capsules have been sold in a round aluminum tin. This is considered less than optimal in terms of shelf exposure and environmental performance and a new package would certainly benefit the product, staking out design requirements that included better visibility, adequate label space, reduced environmental impact and lower manufacturing cost.

To be effective, any new bottle and cap design should be injection-moulded in lightweight, white, recyclable polypropylene. The shape itself improves visibility on the shelf while also making space for larger labels with a premium-brand feel. The components would be delivered as a unit to the customer, and once they are filled with omega-3 capsules, the lid is fused in an ultrasonic process to create a tight seal. The package is easy for the consumer to open and close. Compared to the aluminum can, this type of packaging reduces the carbon dioxide emissions by 45 per cent and the production cost by half (2).

Pathways Towards Increased Eco-Efficiency

An eco-efficiency assessment considers the entire life cycle, starting from raw material extraction and acquisition, through energy and material manufacturing, to use and end-of-life treatment and final disposal. With such a systematic overview and perspective, the shifting of a potential impact between life cycle stages, or individual processes, can be assessed with a view to an overall eco-efficiency (1).

The schematic in Figure 1 illustrates how eco-efficiency (EE) can be calculated as the quotient between product system value (P) and environmental impact (E); EE=P/E. The left hand upper corner of the figure could be considered as the ultimate goal for the product developer. The green dot represents low environmental impact combined with a high product system value.

As product development normally is a step-wise process, there may be several paths leading to increased eco-efficiency. As shown in the figure, there may be situations where the reduction of environmental impact as a first step may lead to a product of less value (pathway A). On the opposite side, improved performance may lead to increased environmental impact (pathway C). In both situations, there is always the possibility that shifts in technology will change the path and prevent drops in eco-efficiency. Some customers/consumers may accept the initial lower value (higher price) in pathway A for the sake of the environment. There are many examples where a discount on ‘green products’ has been effective. However, it is very likely that that majority of customers would, at the same time, want higher value and improved environmental performance. Of course, in an ideal situation (pathway B), continual product improvement will result in increased eco-efficiency.

In the context of ISO 14045, improvement in eco-efficiency should only be reported when the product system value is increased together with a decrease in environmental impact. Luckily, the standard provides guidance on how to select ‘product system value indicators’ and ‘environmental impact indicators’ to calculate the eco-efficiency.

Practical Guidance from ISO 14045

If we take a look at the above examples in the light of the ISO 14045 requirements concerning ‘environmental assessment’ and ‘product system value assessment’, several observations can be made.

According to ISO 14045, an environmental assessment should be based on life cycle assessments according to ISO 14040 and 14044. The described cases do not include a formal life cycle inventory (LCI) or a life cycle impact assessment (LCIA). However, in many respects, the company involved worked in a structured and systematic way, and the effects can, for example, be described in terms of global warming and resource depletion. So the step to a more complete life cycle assessment does not look too far away. It is likely that the company would need particular expertise to tackle the technical aspects of an environmental assessment.

When it comes to the product system value assessment, we are getting closer to uncharted territory. This concept forms an essential part of the ISO 14045 standard, and as a product system may encompass different value aspects, there are many ways to assess the value. According to ISO 14045, the assessment may include functional, monetary and other aspects, where the functional value reflects a tangible and measurable benefit to the user and other stakeholders. Monetary value could be expressed in terms of costs, price, willingness to pay, added value, profit and other issues. Other values may include intangibles such as aesthetic, brand, cultural and historical factors. In the case of the screw cap, the aim would be to create cost reduction without jeopardising the functional requirements. In the case of the tin can, monetary value is included as the cost for the product was reduced. The redesign also creates brand value as the new design improves visibility. In addition to these values, the new product adds functional value by being easier to open and close.

The examples in this article are the results of projects that can be established with an aim of creating value for the manufacturing company and the customer, and to reduce the environmental impact. The cases demonstrate a systematic approach that can reduce the environmental impact of primary pharmaceutical packaging materials and at the same time reduce costs. This is a good start, but the new ISO 14045 standard will add further value by offering guidance on the methodological framework, the practical use of eco-efficiency assessments, the interpretation of the results, benchmarking with other products, and how to communicate the results.

Finally, challenges for companies aiming to increase the eco-efficiency of products include knowledge about several elements. The first is how to identify the environmental impact of a product system through environmental assessments based on a LCI or LCIA methods, and to set a target for reduced environmental impact. Secondly, they must know how to understand the existing product system value and understand the interaction between value creation and stakeholders’ expectations of the company’s sustainability performance. This is certainly a task that must be approached by several departments of the company; for example, R&D, marketing, environment, production, communication and finance. Finally, they must be aware of how to communicate the increased eco-efficiency to a multitude of stakeholders with various expectations in a transparent way.

Acknowledgement

The cases in this article were based on products that were developed by the medical arm of the Swedenbased company Nolato AB.

References

  1. ISO 14045; 2012 Environmental management – eco-efficiency assessment of products systems – principles, requirements and guidelines (ISO 14045:2012), International Organization of Standardization
  2. Brorson T, A few grams can make a difference, Advantage Environment, 2011, www.advantage-environment.com

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Torbjörn Brorson is a Professor in Environmental Management and Auditing at the International Institute of Industrial Environmental Economics (IIIEE) at Lund University in Sweden. For more than 30 years he has managed environmental and sustainability issues in industry and academia. Torbjörn’s career includes positions as environmental director in the pharmaceutical industry, has produced several books and scientific articles, and has participated in many expert committees and boards.
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Torbjörn Brorson
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