Aligning Environmental and Business incentives: the case of BASF's Eco-Efficiency Analysis

The aim of the eco-efficiency analysis is to compare similar products or processes. This involves carrying out an overall study of alternative solutions to include a total cost determination and the calculation of ecological impact over the entire lifecycle.
Many shoppers know the feeling: "I want to buy a decent product that's good quality, worth the money, and manufactured in an environmentally and socially compatible way." Finding a product with that kind of sustainability isn't always easy. Though a number of measurement methods and corresponding certification systems exist, most of them are focused exclusively on ecological aspects, i.e. impact on climate, soil and water. Certificates issued on that basis reflect only a small part of what sustainability is all about: balancing environment and economics.
Eco-efficiency analysis looks at environmental impact in proportion to a product's cost-effectiveness. It helps BASF, BASF’s customers, and customers’ customers to decide which products are the best choice both ecologically and economically. Eco-efficiency analysis can also be used to identify ways to make improvements in terms of environmental impact and cost

What is eco-efficiency?

The purpose of Eco-Efficiency Analysis is to harmonize economy and ecology. BASF SE in Ludwigshafen, Germany, is the first chemical company to develop this method for use in its business activities. BASF started to develop this inhouse tool in 1996. To date, more than 400 different products and manufacturing processes have been analyzed using the new method. Eco-Efficiency Analysis is applied in order to use as few materials and energy as possible in producing our products and to keep emissions as low as possible. At the same time, our products can help our customers conserve resources and save energy. Eco-efficiency analyses are offered to BASF business units and to external customers as well.

Ecological Footprint

Economic analysis

Economic and ecological data are plotted on an x/y graph. The costs are shown on the horizontal axis and the environmental impact is shown on the vertical axis. The graph reveals the eco-efficiency of a product or process compared to other products or processes. And it allows us to look into the future, since Eco-Efficiency Analysis is utilized in making strategic decisions and it also helps detect and exploit potential ecological and economic improvements.

[Source]