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European businesses invest in eco-innovation to hurdle rising materials costs

03/04/2011
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Businesses in Europe are investing in eco-innovation to solve problems on materials scarcity which causes price volatility, showed a Eurobarometer survey of small and medium enterprises in the region.

The survey, presented at the 10th European Forum on Eco-Innovation in Birmingham, Britain, was conducted by The Gallup Organization of Hungary for the European Commission. It covered businesses from the agricultural, construction, manufacturing, water supply and waste management, and food services sectors.

Eco-innovations are products, services or solutions that contribute to environmental protection or more efficient use of resources.

The surveyed companies said that the growth of their businesses have been hampered by rising materials cost due to materials scarcity. To address this, majority of the respondent companies have turned towards eco-innovation, with 56 percent purchasing more efficient technologies, 53 percent developing in-house efficient technologies, and 52 percent practicing recycling.

The survey reports that “roughly three in 10 companies in the European Union” had introduced a new or improved eco-innovative production process in the past two years, while about a quarter had introduced a new or improved eco-innovative organizational method. About another quarter had introduced a new or improved eco-innovative product or service.

Largest investments

Companies from the agricultural and water supply-waste management sectors made the largest eco-innovation investments. These companies, along with those from the manufacturing sector, have adopted eco-innovations related to processes, instead of eco-innovation in technologies, products, organization or marketing. Construction companies preferred to invest in green products or services, while food service companies implemented more organizational types of eco-innovation.

In Sweden, Greece, Austria, Cyprus, Luxembourg, and Poland, over one-fifth of the respondents estimated that 30 percent of their innovation investments went to, or are related to, eco-innovation.

About 42 percent of companies that introduced at least one type of eco-innovation in the last two years reduced their materials use by 15 percent to 19 percent for every unit of output. Roughly a third of companies that introduced eco-innovation estimate that they reduced their materials use by less than 5 percent for every unit of output.

Medium-sized companies, businesses that have an annual turnover of 10 million to 50 million euros ($14.09 million to $70.49 million), or companies that increased their turnover in the past two years are more likely to have introduced eco-innovation.

“What we are seeing is certainly a change in the right direction, but we need to move from evolution to revolution in our attitude to resources. A more efficient use of resources is a must for businesses,” said European commissioner for the environment, Janez Potočnik.

Over 70 percent of the respondents said they need good business partners and good access to information and technology to keep up with their efforts. They called for more subsidies, with six out of 10 companies saying that the lack of incentives is a serious barrier. Two-thirds of the companies claim that “uncertain demand from the market” prevents them from accelerating eco-innovations.

Almost a quarter of managers surveyed said that 50 percent or more of their company’s total costs came from material costs. Three quarters said materials costs increased moderately or dramatically in the past five years.

Within the same period, 75 percent of these European businesses experienced increases in material costs. Almost nine out of 10 companies expect material costs to further increase.

The survey follows on the commission’s flagship initiative for sustainable growth launched last January, which calls on European businesses to be more resource-efficient and reduce their dependency on raw materials to lower carbon emissions while increasing income.

The commission is scheduled to release an Eco-Innovation Action Plan this summer to aid businesses in adopting eco-innovation.

 

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Categories: Eco Energy
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