Every business, regardless of sector-in fact every industry, process and human activity-can be characterized by the energy and materials that flow though that system. (Actually, energy flows; materials cycle. But we’ll get back to that in a bit.)
Every business takes in only two things — energy and materials — and puts out only two things — product and non-product.
For nearly 20 years, I’ve use this simple schema as the starting point for disclosing sustainability-linked business risk and opportunity, and for understanding how business processes work, how they add value, and how well they do that.
|These four flows (and their sub-flows) can be used to characterize any enterprise at any scale – company, facility or process; region, city, community or household. Individually and in combination they provide the basis for selecting – and calculating – small sets of powerful, insightful performance metrics, including key productivity ratios like return on resource intensity, return on carbon, and the always sobering Throughput Pie.|
Last year, I realized something new about this schema, based on a concept I learned years ago from Howard T. Odum: that every flow has an actual or imputed backflow. Energy flows in and money flows out. Materials flow in and money flows out. Product flows out and money flows in. NonProduct flows out and…wait a minute!…money flows out!
This makes starkly visible the inescapable logic of zero waste. Not only does it make no sense to invest resources, capital and production capacity to produce stuff that adds no value to either customers or shareholders. It makes even less sense to spend more money to get rid of the stuff you’ve made that you can’t sell. And it even more strongly welds together the sustainability imperative and the business imperative.
This year, as we’ve used the metabolic “atom” in the value leakage analyses that I described last month, we’ve added some additional flows to the basic model in an attempt to more fully represent the options available at each element in a value stream:
• the always degraded energy flows that leave a system, and that can potentially be cascaded to benefit lower intensity uses.
• the alternate disposition of material flows to reclamation (internal or external recycling) as well as their output as product or nonproduct.
These flows graphically summarize the options available to businesses that mind their metabolism.
Why is this important to you? Because it provides a simple template that enables your team and your stakeholders to build a common view of the physical reality of your business that will help you understand where you add value, where you leak value, and where you can capture new value. It’s the basis for what I named “reality-based accounting” many years ago-and for the new ecological profit and loss statements generated last year by Puma (and pledged by 24 more companies at RIo+20!).
This [r]evolution has been a long time coming, and may take a long time to become the new standard of practice. But don’t wait; put these perspectives into practice at your company. You may be very pleasantly surprised at the scale of the massive value that I predict you’ll uncover.
(If you’d like to learn more about how to use this approach to disclose and add value for your company, call me and let’s explore how to put “natural logic” to work for you!)
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