1. © GSaME, Universität Stuttgart 1 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium The Ecological Allowance of Enterprise Dr. André Reichel Scientific Coordinator GSaME Associate Cluster Director Barbara Seeberg Doctoral Student GSaME

2. © GSaME, Universität Stuttgart 2 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium What size is right? Source: Daly, H.E.; Farley, J. 2003. Ecological Economics: Principles and Applications. Washington DC: Island Press Marginal Utility MU Marginal Disutility MDU Economic growthUneconomic growth ab = bc a b c ed MU Marginal Utility MDU Marginal Disutility MU = 0 MDU =  Material throughput b = sustainable scale (MD = MDU) e = futility limit (MU = 0) d = catastrophy limit (MDU =  )

3. © GSaME, Universität Stuttgart 3 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium Business in the balance 1. Boundary condition2. Boundary condition Economic balanceEcological balance Revenues  CostsImpact  Allowance

4. © GSaME, Universität Stuttgart 4 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium Case of uneconomic firm growth IdeaEvery firm has the right to use ecological space in relation to (1) absolute ecological boundaries and (2) its economic value added Ecological boundary at hand: Global cap on CO 2 emissions, roughly some 750 Gigatons between now and 2050 Economic “allocator” variable: Gross value added (output approach of GDP accounting) Industry in focus: Automotive 2,075 Billion US-Dollar (2008)778 Million tons CO 2 873 Million private cars (2007)891 kg CO 2 per vehicle and year

5. © GSaME, Universität Stuttgart 5 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium Case of uneconomic firm growth Pick a firm from the automotive industry: 891 kg CO 2 per vehicle and year Calculate CO 2 intensity throughout average product’s lifecylce (data from internal Lifecycle Assessment report) 1,833 kg CO 2 in production12,000 km travelled per year170 g CO 2 per km2,040 kg CO 2 per year in use430 kg CO 2 end of life2,228 kg CO 2 per year 

6. © GSaME, Universität Stuttgart 6 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium Strategic framework for ecological allowance Revenue  Costs Impact  AllowanceImpact  Allowance Revenue  Costs Reducing impact  Increase value added at the expense of other firms or industries  Economic competition for “ecological space”  Reducing product sales and product population Increasing allowance  Reducing product sales and product population (dominant strategy)  Reorientation on longer lifecycles and/or product use  Technology (Eco-efficiency and eco-effectiveness)

7. © GSaME, Universität Stuttgart 7 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium Prospective case of economic growth? 2.228 kg CO 2 Impact of old business model Product impact of a Smart: 1,628 kg CO 2 per year Replacement rate of carsharing ~ 1:4 to 1:8 private cars Potential for CO 2 reduction ≥ 80% “Virtual” impact of car2go:407 kg CO 2 per vehicle and year

8. © GSaME, Universität Stuttgart 8 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium Modeling (un-)sustainable businesses Scenario12345 NameBusiness as Usual Business as usual, 50 % more efficient 100 % Carsharing Mix, 50 % more efficient Mix, 50 % more efficient, increased gross value added Change in fleet size in percent ---74.99-29.98-23.98 Self-owned cars49,980,000 -30,000,00034,000,000 Carsharing cars5,000 12,500,0005,000,0004,000,000 Industry gross value added level in percent 100 11.364.698 CO2 emissions in t111,407,82460,418,02358,071,87549,286,25051,514,833 Reduction compared to Scenario 1 in percent --45.8-47.9-55.8-53.8 Product impact in kg CO22,2291,2094,6461,4081,356 Product allowance in kg CO2 1,031 4,1241,4731,356 Overshoot2.161.171.130.961

9. © GSaME, Universität Stuttgart 9 Research Cluster H Sustainability in Manufacturing Seventh International Environmental Management Leadership Symposium “The automotive industry need not worry, but it will have to make cars that consume dramatically less fuel. The great green vision is to transform this strong industrial region into a country with green product lines. We want to prove that economy and ecology can go together without destroying our livelihoods, economic as well as ecologically… Fewer cars are of course better than more. We cannot continue to sell just cars but have to move on to mobility concepts; this includes walking, cycling, driving cars, and using public transportation. We have to build intelligent mobility networks in order to stay mobile without destroying the environment. We have to show here in Baden-Württemberg that prosperity without destruction is possible. That is our responsibility, that is why a Green is going to be Prime Minister. Otherwise the others could do it!” Winfried Kretschmann, PM-elect of Baden-Württemberg