IE Fast Facts
What Is Industrial Ecology (IE)? Industrial ecology is a new and innovative strategy for a sustainable industry. Achieving a sustainable industry means meeting a firms financial bottom line without compromising the state of its surrounding physical environment. Industrial ecology focuses on the interaction of industrial systems and the ecological systems. In the industrial setting, the process involves designing industrial systems to minimize waste and maximize cycling of materials and energy. As far as possible, production systems, instead of the conventional linear fashion, are closed. This is to prevent the loss of energy or useful materials. Industrial ecology seeks to optimize the total materials cycle from virgin materials to finished material product, and to ultimate disposal.
Making IE Your Business Strategy A company can use industrial ecology as a corporate tool in discovering opportunities to advance its competitive advantage. This can be done by analyzing a firms value chain or the activities within and outside the firm, entailed to produce its goods and services.
1. Revenue Generation
Companies are sometimes unaware that their by-products have market value and can be sold rather than disposed of. Most manufacturing sectors have had little incentive to investigate by-product exchanges, or to invest in technologies that will facilitate such exchanges.
2. Cost savings
The sharing of materials, energy, and water can yield significant costs often with little or no capital investment. Cost savings can also be realized through the shared capital and operating costs of utilities which supply gas, water and other inputs to companies. By combining purchases of shared inputs, firms may also be able to negotiate better prices. Likewise, improved public image can increase market share and equity value. But even when environmental legislation is lax and public awareness is low, companies can still make a profit simply because they reduce the material input costs per unit of output.
3. Reduced liabilities
Both financial and legal liabilities can be minimized through industrial ecology. Environmental activities can reduce payments related to higher risk premiums and improve a firms credibility. Waste reduction may reduce liabilities related to environmental accidents or improper disposal. A firm implementing responsible environmental practices can also avoid penalties and closure orders from the government.
4. Cost savings through regulatory flexibility
In the United States, eco-industrial networking of industrial firms may eventually lead to combined permitting systems (e.g. Environmental Compliance Certificate or ECC), faster approvals and even pre-approvals of new industrial developments. This flexibility can lower the risk and costs of new industrial expansions and give facilities within eco-industrial networks a competitive edge.
5. Improved opportunities for new investment
Potential investors gain advantage if a strategic plan for an eco-industrial network is laid out. This plan consists of baseline information on material and energy flows among existing firms. Using this information, candidate industrial facilities can determine how much current suppliers are redundant, or how to reduce reliance on a single supply of a feed stock.
6. Enhanced public image
A company consciously employing environmental management in its systems gains an edge over its competitors. Practicing corporate environmentalism empowers a firm to recognize that this conviction can be compatible with good business.
7. Emergence of a firm as a market leader
A company may induce stringent environmental regulations and become a market leader. In many cases, regulations depend on technological improvements introduced by the private sector.
© 2000 Prime Project M2:IE