The Triple Bottom Line – Part Three: Environmental Responsibility

We’ve been exploring the concept of the triple bottom line[1] of Economic, Social and Environmental, and how digital fusion (the coming together of the physical and digital and biological worlds) can help drive innovation and business transformation in the fourth industrial revolution. Today we’re looking at the Environmental bottom line.

In the past, if companies have worried at all about their environmental impact, it’s often been considered a chore or compliance requirement. At best, it may have been seen as a way to save money by using energy-efficient light bulbs or by claiming tax relief on environmentally friendly energy use.

That view seems to be changing though, with 55 percent of executives[2] in 2016 believing that sustainability can drive revenue growth, and one in five[3] thinking that sustainability drives competitive advantage. This can be seen in practice when you look at Unilever – the company reports[4] that 50 percent of its yearly growth came from its ‘sustainable living’ brands (like Dove*, Hellman's*, Lipton* and Knorr*), which grew 30 percent faster than its other brands. A subsequent study[5] found that one in five people would buy a brand that made its sustainability credentials clearer on its packaging. This amounts to an untapped market of £817 billion!

So it’s not just about growing a few trees anymore. Undertaking environmental initiatives can help grow customer loyalty, and grow your business.

The Circular Economy

So what can digital fusion do to help you drive innovation in your environmental bottom line? Well, one trend in this area is the emergence of the Circular Economy[6]. This is a model which moves away from the traditional ‘produce, use, dispose’ process, to a cycle in which products are designed and produced to enable reclamation or reuse of some or all of their constituent parts. The potential benefits of this new model are huge: McKinsey estimates[7] that the circular economy has the potential to save $1 trillion in material costs every year by 2025.

But how does it work in practice? Let’s look at Michelin[8] tyres as an example. It has moved from simply selling truck tyres to its customers, to offering an end-to-end tyre management service. It uses sensors embedded in each tyre to monitor its condition in real time. This enables it to optimize tyre pressures for maximum fuel efficiency, which saves the customer money as well as extending the life of the tyre. It also means that Michelin can recall tyres and replace them when their level of wear is still low enough that they can be re-treaded, re-conditioned and re-fitted.

The cost of re-using a tyre in this way is 50 percent less than the cost of creating a completely new tyre, but it still delivers 90 percent of the performance. It also means that rather than going to a landfill after one use, each tyre can be kept on the road for two or even three times longer. On top of that, customers feel they are getting a really tailored, attentive service.

Washing machines are another good example. Manufacturers aim to sell as many higher-end machines as they can, as they drive higher profit margins. Consumers, however, prefer to go for models that have a slightly lower purchase price, even though they may not be as efficient to run and so may end up with a higher lifetime cost.

One way around this is to offer a rental service, like Dutch company Bundles[9], where the customer can get a higher-end machine – complete with its higher performance and lower running costs – while the manufacturer still gets the strong profit margin. At the end of the lease period, or when a sensor in the machine says it’s reaching a certain level of wear, the manufacturer can take back the machine and re-use many of its parts, rather than throwing them away. The customer also gets a newer model as a replacement.

This idea of moving from a lifecycle to use cycle model is therefore economically good for many businesses, as well as doing environmental good. And with the global middle class growing[10] to over 3.2 billion people by the end of the decade, it looks like demand for consumer goods is set to remain high. Many of these can be produced using the circular economy model.

What does your product or service lifecycle look like at the moment, and where are the opportunities to introduce some circular economy models? By applying digital fusion across the three elements of the triple bottom line – economic, social and environmental – you can empower your business to innovate and make the most of the fourth industrial revolution. In my last blog in this series, I’ll outline some of the pitfalls to be aware of as you embark on this journey, and steps to follow as you get moving.

© Intel Corporation. Intel and the Intel logo are trademarks of Intel Corporation or its subsidiaries in the U.S. and/or other countries. *Other names and brands may be claimed as the property of others.


[1] Triple bottom line, The Economist, http://www.economist.com/node/14301663
[2] Sustainability in Europe – Top Trends 2016, Ethical Corporation, http://indiacsr.in/wp-content/uploads/2016/04/Europe-State-of-Corporate-Social-Responsibility-2016.pdf
[3] Sustainability in Europe – Top Trends 2016, Ethical Corporation, http://indiacsr.in/wp-content/uploads/2016/04/Europe-State-of-Corporate-Social-Responsibility-2016.pdf
[4] Unilever Sustainable Living Plan 2015, https://www.unilever.com/Images/uslp-mobilising-collective-action-summary-of-progress-2015_tcm244-424809_en.pdf
[5] Brands missing out on £820bn opportunity by not pushing sustainability, Marketing Week,  https://www.marketingweek.com/2017/01/03/third-consumers-buy-brands-based-sustainability/
[6] Circular Circular economy could bring 70 percent cut in carbon emissions by 2030, The Guardian,  https://www.theguardian.com/sustainable-business/2015/apr/15/circular-economy-jobs-climate-carbon-emissions-eu-taxation
[7] Towards the Circular Economy, McKinsey, https://www.ellenmacarthurfoundation.org/assets/downloads/publications/Towards-the-circular-economy-volume-3.pdf
[8] Circular Economy Case Studies, Possible People, http://www.possiblepeople.com.au/case-studies[9] Internet-enabled pay-per-wash: a model offering multiple benefits, Ellen McArthur Foundation,  https://www.ellenmacarthurfoundation.org/case-studies/internet-enabled-pay-per-wash-a-model-offering-multiple-benefits
[10] The rise of the global middle class, BBC News, http://www.bbc.co.uk/news/business-22956470