Corporate responsibility: Returning efficiency gains to the environment
Proactively mitigating rebound effects
When companies reduce their consumption of energy or raw materials, a frequent outcome is that the money or materials saved in this way are employed to manufacture more products or new ones. In such situations there is no overall reduction of environmental or climate impact, for the consumption of energy and resources does not drop. Companies can mitigate such rebound effects proactively by striving for comprehensive energy and material efficiency management, through which they quantify and analyse efficiency gains and evaluate their possible effects. When companies reduce costs by means of resource efficiency, they should invest the savings in additional, ambitious environmental and efficiency measures.
This is one of the recommendations presented today by the partners in the “Comprehensive management of energy and resource efficiency in companies – MERU” research project: B.A.U.M. e.V., Data Center Group, Institute for Ecological Economy Research (IÖW), Leuphana University Lüneburg and Oeko-Institut. The experts underscore that companies can go one step further by adopting a clear strategic position that is guided by sustainability considerations. They should thereby use efficiency gains to improve the sustainability of products and production processes and reduce their energy and material consumption in absolute terms. Intentionally limiting the expansion of production, as a strategy of “corporate sufficiency”, is a further option.
Strategic managerial control of efficiency gains in companies
The researchers stress that there are no simple solutions to counter rebound effects in companies: “We have seen in our interviews and case studies that companies are not yet very systematic in the way they respond to efficiency gains,” notes Franziska Wolff, MERU project manager at the Oeko-Institut. “What is needed overall is a greater awareness in companies that entrepreneurial action must contribute to staying within planetary boundaries.”
The systematic collection and evaluation of all kinds of data relating to energy and material efficiency plays a major role in this endeavour. Which energy and material savings goals can be achieved? Which costs can be cut in this manner and how should the money saved be used? Do the savings have further environmental effects? The research team has produced a guideline for companies showing how they can address such questions in a structured fashion.
“Companies need to be aware that any reductions in consumption that they have not achieved, although they would theoretically be possible, are in fact relevant environmental costs,” says Patrick Schöpflin, corporate management expert at IÖW. “If companies intentionally tolerate such rebound effects, they should craft measures by which they can bring about the non-achieved savings through subsequent adjustments or further efficiency measures. There are no two ways around it: Corporate strategy must be focussed more strongly on reducing absolute consumption.”
“Rebound effects can diminish anticipated reductions in environmental impacts. However, they need not arise automatically and they can be prevented. Suitable management action can even amplify planned environmental improvements. In such cases we speak of ‘reinforcement’ effects,” notes Prof. Stefan Schaltegger of Leuphana University Lüneburg.
The digitalisation sector is one in which high growth rates and rebound effects carry particular weight. In the course of the MERU project, the Data Center Group, one of the project partners, gathered evidence of such rebound effects in data centre use, and of further shortcomings in the overall outcomes of efficiency measures. “But here, once more,” urges Dr. Dieter Thiel of the Data Center Group, “companies can do more to mitigate such effects. Most activities up to now have concentrated on cooling. Yet substantial potential remains in fields scarcely addressed up to now, in IT and in the structural improvement of software.”
Actions by policymakers to counter rebound effects
The scientists underscore that policymakers must simultaneously establish frameworks supportive of companies’ efforts to manage energy and material efficiency comprehensively and tackle critical points. For instance, policies could define goals for the reduction, in absolute terms, of energy and resource consumption.
The internalisation of the external costs of energy and materials is an elementary incentive for companies to pursue such goals. While a CO2 price that gradually increases over time has already been introduced, and such schemes should be further reinforced, there are as yet no similar instruments for taxation of material consumption.
Environmental and energy management systems that have been voluntary up to now could be introduced as mandatory schemes. This would boost awareness of savings potential. If rebound monitoring is made a part of these schemes it would motivate companies further to record measured energy and material consumption values and evaluate this data. Reporting should be mandatory for all types of consumption values.
“The ecological limits to the carrying capacity of our planet are being crossed more and more, resulting in damage to vital ecosystems. This has to do with, among other things, the unabated increase in absolute levels of materials consumption. We therefore urgently need different, low-impact and more conservation-oriented approaches to resource management. This starts early on in product development and must always keep all potential rebound effects in mind,” notes Martin Oldeland, deputy chair of B.A.U.M. e.V.
The MERU project is funded by the German Federal Ministry of Education and Research (BMBF) under its Research for Sustainability (FONA) programme.
MERU project website: https://www.meru-projekt.de
Discussion paper on rebound effects and sustainability/efficiency reporting by IÖW (in German only)