Eco-cost: Taking account of the sustainability challenge
Robert Mostyn and Graham Dalrymple say there is a growing need to choose products and services based not only on cost, but also on their lifetime ecological impact
The impact we are having on the planet is being tackled on several fronts such as reducing greenhouse gas emissions, encouraging recycling and reuse, setting emission targets for pollutants to name a few. In recent years, there has been an increased focus on climate change and the need to reduce the emissions of greenhouse gases measured and reported as the amount of carbon dioxide equivalent emissions (CO2e). However, when it comes to the emissions associated with consuming products and services, there is little data available to the consumer from manufacturers and providers.
One of the greatest challenges is to understand better how we are consuming the earth’s resources and the overall ecological cost to the planet.
Our approach to reducing consumption and environmental impacts has been through the traditional routes of legislation and enforcement, financial incentives such as loans or grants or a reduction in costs.
What if we, as consumers, could understand the ecological cost of the products and services that we consume and could make purchasing choices based on that understanding? What if we put the power to make these decisions in the hands of the consumer rather than with the manufacturer or service provider?
There is a group of consumers who base their purchasing choices around the Lifestyle Of Health And Sustainability (LOHAS) demographic, which forms 8%-10% of the market but its power to help them make informed choices is limited by the lack of information about the environmental impact of the products and services they choose. There is a growing need to be able to choose products and services based not only on cost but also their lifetime ecological impact.
Research and development of a universal ecological accounting method, was the subject of a European Commission research grant running from October 2012 to October 2015, involving nine consortium members with three industrial partners that included The Boots Company plc, Ecover and an organic farmer. A software prototype of this method has now been developed. A dynamically calculated ecological cost (eco-cost) of a manufactured product can be produced from the eco-cost of input component products and sent to a customer automatically, based on the financial invoice issued to the customer from the financial accounting system. The eco-cost is then picked up by the customer and used in a subsequent calculation to create an updated certificate for this stage of the supply chain, ready to be transmitted to the next customer.
The dominant metric in the world is money. It is used to measure human activity at all levels of society, including the cost of global warming. What makes this metric so potent, is the act of accounting for money at every business step as each company adds its value resulting in a price for the final consumer. The basis of this measure is the double entry book keeping standard. Two attributes combine to make this practice so effective; the unit of measure (money) and an accounting method (double entry - where debit entries must equal credit entries for every journal entry).
An equivalent method for ecological accounting is being developed. The unit of measure is the eco-cost and the method for accounting is a mass balance for all inputs and outputs to a manufacturing operation. The inputs and outputs include all materials taken from nature, whether it’s earth extracted for mining or oxygen from the atmosphere to burn fuel (and subsequent emission back to nature). Each business in a value chain receives an eco-cost for goods and services purchased. The eco-cost is entered into their eco-accounts. Each business reflects their business operations in the eco-accounting system so that as ‘work is done’, an eco-cost is calculated for the product being manufactured. An equivalent to calculations is done for service-based businesses. The end result is an eco-cost for the product this company is going to sell to its customers. As customers are invoiced financially, the eco-cost for the purchased product is automatically sent to the customer.
The eco-accounting system is installed into a business’s network and interacts with the financial accounting system via an Application Programming Interface (API). The three fundamental steps, currently signalled in existing business systems, of “buy goods, make goods and sell goods” has an eco-accounting equivalent: “receive eco-cost, calculate eco-cost, send eco-cost”. This means that once the eco-accounting software has been configured, it runs automatically. The only maintenance is keeping eco-cost calculations up to date as business processes change, and the validation of eco-cost calculations from an independent third party each year.
The innovations in this method include:
- An incremental enhancement to the life cycle inventory (LCI) that makes the whole method possible, the LCI becoming the eco-cost
- An ecological equivalent to double entry accounting is introduced that has been developed in software
- Dynamic calculation of eco-cost. As supply chains change, an authentic eco-cost is calculated automatically
- Connected to existing business systems automates the method - 90% of infrastructure is already in place
- Individuals are the final customer where point of sale systems capture an individual’s myEcoCost account details for the eco-cost of purchased items to get sent to
- The provision of personal sustainable budgets that are derived from planetary boundaries. An individual’s cumulative eco-cost can be compared to a sustainable budget for a personal sustainability indicator. This indicator can be updated within minutes of a person’s purchase (for example, buying a train ticket will update the figure on a personal device minutes later).
It is important to note that the eco-cost is a comprehensive measurement of earth’s resources. It is designed to capture all chemical compounds, not just greenhouse gases and water, so that other issues such as the nitrogen cycle and loss of biodiversity can be actively measured as well.
Using this approach, the ecological accounting method would run alongside financial accounting. This would allow consumers to make informed choices about the products and services they buy, based on both the financial cost and ecological cost allowing individuals to reduce their own impact on the planet.
Robert Mostyn B. App.Sc (Comp.Sc.) is founder and chief technology Officer at myEcoCost
Graham Dalrymple PhD FIEMA CEnv is a environmental consultant
For more information, go to: www.myecocost.org/iema
Transforming an Existing Scientific Sub-metric into a Universal Ecological Certificate for Automated Material Flow Exchanges: How to close the loop between earth’s resources, industrial activity, personal consumption and planetary boundaries, Proceedings of the Fourth International Conference on Economic and Business Management (FEBM 2019), Robert S Mostyn
LOHAS. Or: The Consumption of Sustainability, Janina Heim, University of Freiburg, SOE Scientific Paper, April 2011
A consumer-oriented prototype – forming the nucleus of a novel Ecological Accounting Syste.
FP7-ENVIRONMENT - Specific Programme "Cooperation": Environment (including Climate Change), 2012-15
The Planetary Accounting Framework: a novel, quota-based approach to understanding the impacts of any scale of human activity in the context of the Planetary Boundaries, Kate Meyer and Pater Newman, 25 October 2018
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