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Sustainable and responsible business

Study on the competitiveness of European Companies and Resource Efficiency

Resource efficiency is one of the main challenges that the European Union is currently facing. Globalization, the growing world population and the rise of emerging economies result in increased competition over natural resources on a global scale, higher prices and an unsus­tainable pressure on the environment. In the face of these challenges, European companies are already acting to increase the efficiency of their resource use.

In the face of these challenges, European companies are already in the process of adopting several measures to increase the efficiency of their resource use.

"An industrial policy of a globalisation era" and "Resource efficient Europe" are two of the 7 flagship initiatives within the Europe 2020 strategy for smart, sustainable and inclusive growth aiming to deliver high levels of employment, productivity and social cohesion.

The European Commission has issued a study on “The Competitiveness of European Companies and Resource Efficiency” to analyze businesses performance in resource efficiency, the drivers and barriers they encounter in this area and opportunities for greater resource efficiency and competitiveness. 

What are the drivers that trigger companies to invest in resource efficiency?

The main drivers for action are:

  • Cost reduction
  • Productivity improvement
  • Regulation
  • Corporate image

Current investments in resource efficiency

Many companies are already acting to increase their resource efficiency. Industry directs measures at resources that are of strategic importance to them. There are two levels of action:

  • “Short term” investments - Companies adopt incremental (phased) changes in production, e.g., “end of pipe” technology, staff training, improving resource monitoring, increasing material recycling rates, using intelligent information technology across the production cycle etc.
  • "Long term" investments - Companies adopt structural changes in the way they operate, e.g. adoption of higher level technology, incorporation of major structural changes, investments in research and development or the use of substitute/ alternative materials. These measures typically produce more and longer terms environmental benefits.

All these measures require a prior investment that not all firms can afford even if it could lead to a win-win situation in the long-term. The time horizon for investment, financial situation of the firm, and pay back time are all important factors for a company's investment appraisal.

Barriers to further investments in resource efficiency

  • Financial barriers – e.g. difficult access to finance, particularly for SMEs; large capital investments; long pay back times for investment.
  • Lack of information and knowledge – on good resource efficiency practices e.g. how to use waste as a resource.
  • Lack of incentives for investment or misalignment of incentives for the different actors in the value chain.
  • Technological limits – technological breakthroughs are necessary for progress.
  • Lack of clear and consistent policy signals.
  • Different regulatory regimes for waste/recycling within the EU make it difficult for waste to circulate freely within the internal market as they have to comply with different technical specifications.

Possible opportunities to further improve resource efficiency

  • Increase financing options and incentives for resource efficiency projects through the use of market based instruments and public-private partnerships e.g. with the banking sector, construction sector etc.
  • Promote a circular economy through increased recycling, Ecodesign and following a cradle to cradle approach. This may include:

Promotion of industrial symbiosis, in which industries use by-products and other waste materials from other industrial processes.
Cross-sectoral initiatives to identify opportunities for more efficient business interaction across the value  chain.
- Strengthening the single market for waste and recycling to maximize the re-use of materials.
- The development of new business models.

  • Support EU industries to increaseR&D and innovation for alternative materials, new product designs and products with more sustainable characteristics.
  • Introduce economy-wide resource efficiency indicators – indicators, benchmarks and performance levels are important tools for company’s self assessment of their productivity and for policy making.
  • Increase consumers’ awareness to stimulatemarket pull for sustainable products.
  • Disseminate good practices through industry platforms and networks and facilitate closer linkages between all actors including technology suppliers.

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