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Organisations, environmental management and innovation
Organisations, environmental management and innovation

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1.15 Drivers of eco-innovation

Why would an organisation be interested in eco-innovation?

Activity 14 Drivers of eco-innovation

Timing: Allow about 10 minutes

Thinking back to the organisations and innovations you reflected on in the first few activities in this course, what are the drivers for these organisations to engage in eco-innovation?

Provide your answer...

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It's likely that most of the drivers to eco-innovation will be centred on cost reduction and maximising profit. While it is reasonably convincing that the individuals and management team are keen to be as ‘green’ as possible, without a convincing economic and/or management rationale it is unlikely to be adopted. If it can be green and improve the bottom line or improve organisational practices then it is likely to be accepted.

Your answer will probably have two or three main drivers for eco-innovation.

The most obvious and perhaps most compelling answer for most organisations is that the innovation is financially attractive and viable. This could be in the form of cost reductions arising from increased efficiencies of the organisation’s work – such as a reduction in heating costs due to new thermostat-controlling technologies – or a new revenue stream as a result of the innovation – such as a company selling a new type of battery with fewer environmental impacts or offering advice for reducing environmental costs. For business organisations, gaining market share is also a key driver and this may lead to efforts to improve the environmental performance of the product or process they are engaged in, or bringing in innovations developed elsewhere.

In addition to the financial benefits, organisations are often legally required to implement some process- or product-related innovation in order to comply with legal statutes and regulation. Examples might include banning use of toxic materials in manufacturing or specifying waste disposal routes and recycling. Of course, legal requirements can increase costs for any organisation, large or small, business or non-business, such as paying for controlled disposal of electrical equipment under the European Waste Electrical and Electronic Equipment (WEEE) Directive.

An organisation’s culture can also drive innovation. Ethical and moral concerns are a key issue for some organisations wanting to develop more responsible business practices, new business models and business ethics. These are often focused on transparency of organisational practices and taking on responsibilities within the supply chain. This can apply to business organisations as much as non-business organisations. A voluntary charity may want to demonstrate its commitment to ethical issues and only buy services and products from suppliers it considers to be socially and environmentally responsible.

Social drivers may also be significant to an organisation, particularly if there is a risk to revenues and the organisation’s reputation in terms of environmental performance. For very large organisations, some may want to be seen as leaders in their sector. Social drivers might arise from various groups with an interest in the organisation, including shareholders, staff, customers, users and external groups, particularly environmental NGOs.

Described image
Figure 7 Input–output diagram of innovation drivers

These drivers are not exclusive of each other: changes in social values might prompt staff to lobby an organisation’s management to make changes to practices, which may lead to cost savings, which might result in a shift in the organisation’s culture regarding environmental performance. Equally, an organisation may identify a (market) opportunity by engaging in eco-innovations, and initiate a change programme with staff.