Economic benefits tied to ecodesign

Journal of Cleaner Production

19 (2011) 573-579
Sylvain Plouffea, Paul Lanoie, Corinne
Berneman, Marie-France Vernier
12/21/2011

Outline
1. Introduction
2. Literature review
3. Methodology
4. Results
Variable cost
Fixed cost
Total cost
Key success factors for profitability
France-Quebec comparison
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5. Conclusion

Introduction
Widespread globalization of goods and services is

prompting
companies to adopt innovation and creativity strategies,
or ecodesign
Adopting environmentally responsible strategies still
elicits
skepticism() from industries.
Investigated the various sources of cost reduction and
additional
revenues associated with the production and marketing
of
ecodesigned products.
Compared 30 companies in France and Quebec, Canada

Literature review
process of integrating
environmental aspects into
product design and
development with the
objective of reducing its
negative environmental
impact

Green
design

Ecologic
al
design

Products dissociated from the

political world, it also has a
stronger scientific connotation

Sustaina
ble
design
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Product and services that

integrate environmental,
social and economical
aspect.

Literature review
1. Reduced costs

use of recycled materials

better use of raw materials

2. Increased revenues

stand out from the competition because of longer life

cycle
build customer loyalty
lower energy consumption

3. Non-economic benefits for the organization

enhance the firms image

foster greater creativity or enhance innovation
capability
increase the motivation of the work force

4. All studies point out profitability but based on

Methodology
Purpose of the study was to assess the economic impact of

ecodesigned products for the firm.

cost reduction
increased revenues
other benefits for the organization
Used qualified databases to select 30 companies, 15 in
France and 15 in Quebec

Methodology
A semi-structured questionnaire was designed;
the topics addressed during the interview were:
General characteristics of the firm
History of ecodesign in the firm
Description of an ecodesigned product
Economic impact
Impact on the organization and customers

Methodology
The sample varies as to the levels of experience in ecodesign

(15/30) was involved in ecodesign for five years or less.

(7/30) have 10 years of experience
(8/30) are involved for more then 10 years.

For 15 companies, the product under study was a first

experience in ecodesign.
12 companies in the sample only produce ecodesigned

products and will be referred to as FBE (firms based on

ecodesign) in the remainder of the paper.

Results
Assess whether an ecodesigned product is more
profitable than a traditional product.
analyzed the impact of ecodesign looking at both
costs and revenues
analyzed the key success factors for improved
profitability
compared the results of the French and Quebec
companies

Variable costs
17 of 30 mentioned a reduction in (recurrent)
variable costs of production compared to traditional
method.
13/17, savings were made primarily on raw materials
6/17, savings resulted from a reduction of energy
8 of 30, costs remained unchanged
unit cost of raw material increased, but given a
reduction of the quantity of inputs necessary.
5 cases, variable costs went up
higher price paid for less polluting inputs.
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Fixed costs
26 of 30 companies, ecodesign generated
additional expenditures for certain categories of
fixed costs

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20/26, additional R&D spending

8/26, increased spending on marketing (training
of sales staff)
4/26 more time and energy was spent on finding
appropriate suppliers

The positive impact on profitability for

ecodesigned products is mainly achieved
through an increase in revenues rather than
a decrease in costs.

Impact on revenues
Revenues can be improved by
increase in the volume of units sold
increase in the price of the product
26 firms out of 30, ecodesign contributed to increased
revenues for the company.

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Profitability
Unit profit margin

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Total profit

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Key success factors for profitability

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Ecodesign on multiple stages is profitable

Stages: raw material, processes/energy,
transport/energy, use/energy and end of life

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Features of the ecodesigned products

In short, to be successful, as far as profit goes,

environmental
benefits are not enough.

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Francee-Quebec comparison
Few differences on the following aspects:
economic sector, size; year ecodesign began;

number of FBEs
motivation to introduce ecodesign; presence of
environmental certification; improved functionality of
the product

French firms are more profitable than Quebec

companies

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Explanation for difference in profitability

French firms more often identified opportunities for

reducing costs than their Quebec counterparts.

French companies appear to have a more systemic
approach and therefore manage to make cost
savings at several stages in the product lifecycle.

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Conclusion
Clear short-term benefits for the firm
Revenues and volume of sales are

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predominantly higher for the ecodesigned

product
variable costs are lower
Profitability over the long-term cannot be
assessed, as fixed costs seem to be higher for
ecodesigned products
SMEs have a higher success rate than large
corporations, and also that the B2B sector is more
sensitive to ecodesigned products.
Seeking to expand its market or looking for cost
reductions are associated with higher economic

Conclusion
Product has to provide a tangible benefit for

its user in addition to a reduced

environmental impact.
focus on increased functionality
seek for environmental and economic

improvement on as many life-cycle stages as

possible

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