Annik Magerholm Fet Editor

Business
Transitions:
A Path to
Sustainability
The CapSEM Model
Business Transitions: A Path to Sustainability
Annik Magerholm Fet
Editor

Business Transitions: A Path

to Sustainability
The CapSEM Model
Editor
Annik Magerholm Fet
Department of International Business
NTNU
Ålesund, Norway

ISBN 978-3-031-22244-3    ISBN 978-3-031-22245-0 (eBook)

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Foreword by Bjørn K. Haugland

I first met Professor Annik Magerholm Fet some years ago. As Chief Sustainability
Officer for Det Norske Veritas (DNV), I was heading up a project to explore how
global risks could be converted into opportunities. One of our junior employees at
that time insisted on his former supervisor from NTNU being consulted. I was
immediately impressed by the way Annik supported us with deep insights alongside
a systemic view and practical advice. The book you are about to read represents
precisely that approach.
Together with a team of colleagues, many of whom are former PhD students of
Professor Fet, Business Transitions: A Path to Sustainability offers a clear view on
the transition to a safe and sustainable future by providing a holistic approach to the
transition to sustainability alongside a toolbox of practical methods and tools.
Over the last 15 years, I have guided CEOs and executive leadership teams on
how to best position their companies to build competitive capabilities in the transi-
tion to a more sustainable future. Two years ago, I started in my current role as CEO
and co-founder of Skift Business Climate Leaders, a network of 50 companies
accelerating the green transition of Norway. As part of this, I work closely with
governments and academia. There is a growing awareness of the need for action.
And with that, a need to build competence and share best practice is growing across
all sectors of society.
It is indeed time to act.
Secretary-General António Guterres calls the latest IPCC Climate Report (2021)
‘Code Red for Humanity’.
The alarm bells are deafening, and the evidence is irrefutable: greenhouse‑gas
emissions from fossil-fuel burning and deforestation are choking our planet and
putting billions of people at immediate risk. Global heating is affecting every region
on Earth, with many of the changes becoming irreversible.
Sustainability is about much more than climate change. Still, a code red alert on
the need to decarbonize all sectors pinpoints that failing climate change will be a
significant barrier to achieving the other Sustainable Development Goals (SDG).
Business Transitions: A Path to Sustainability has adapted this approach by keeping

v
vi Foreword by Bjørn K. Haugland

a strong focus on environmental sustainability and at the same time highlighting the
holistic overview of SDGs.
Going forward, responding to the challenge posed by sustainability will trans-
form society and business, and greatly affect future solutions and competitiveness.
Sustainability becomes an important driver for business development, increasing
the need for better methods and accessible tools for analysis and development. This
book is a valuable contribution as it presents a toolbox for achieving sustainability.
A net zero society requires more resource-efficient production and use. Producing
more with less means more use of renewable resources, both as raw material and as
an energy source, and more recycling and reuse of materials and products that con-
tribute to closing the loop.
Approaches to sustainability and a green transition invite a new way of thinking,
with an increased emphasis on assessing and designing systems and relationships.
This approach is broad and comprehensive, with a far wider scope than simply
greenhouse gas emissions. All significant energy, material and commodity flows,
and how these affect resource use and emissions, must be assessed. Value chains
and life cycle thinking for the products will play a key role, often related to socio-­
economic systems such as energy, cities, food and land use, water, transport and
industry. Value creation, creating jobs and emission reductions will be linked, so
that green competitiveness can be more specified and strengthened and enhance
social well-being and life quality.
In a green transition, the corporate framework will change, and the changes will
impact opportunities and threats in business development to a high degree. The
market, technology and regulatory frameworks will also change. A sustainable wel-
fare society, as well as business practice, needs new knowledge and solutions to
move towards a sustainable future. This involves developing new tools and novel
management concepts.
The following trends for development will be relevant for all sectors:
• Life cycle perspectives and value chains will have an increasing role and
importance.
• Roadmaps for different sectors in society and across sectors will help to identify
and analyze connections, problems and solutions.
• Uniform and comparable reporting will provide owners and managers of capital
with a common decision basis on sustainability issues such as climate risk.
• Product requirements and product information will be strengthened, giving man-
ufacturers, customers and consumers a better basis for product selection.
• Green procurement, both public and private, must be based on relevant criteria.
• Purchasing requirements should be functionally oriented and based on life cycle
assessments.
• Policy design and policy instruments will change markets and the demand for
technical solutions. The design of economic and regulatory instruments is often
crucial for competitiveness and the pace of implementing new solutions.
• Emerging technologies will have to meet sustainability requirements and must be
integrated with disruptive innovation strategies.
Foreword by Bjørn K. Haugland vii

This book responds to many of the above needs by providing sound methods and a
feasible toolbox for sustainable specification and analysis. The tools presented are
explicit and extensive while discussing aspects and tools for innovation and busi-
ness development on a structural level. In particular, the tools can be applied to
market and technology development and policy instruments. The book presents a
solid foundation for practical development and the implementation of new green
solutions.
The transition to a low-emission society requires generating and sharing new
knowledge. Academia develops new knowledge, and when shared with companies
and businesses, that results in practical results.
The contributors to this book have been deeply involved in the issues and tools
presented and have experience with implementation in companies. Learning by
doing through collaboration between companies, academia and interest groups will
continue to be an important driving force in the further development of work on
sustainability. For example, cooperation on environmental reporting and later sus-
tainability reporting have been important for raising awareness and action in many
companies. Work with corporate social responsibility, life cycle analyses and indus-
trial ecology have also significantly benefited from the interaction between aca-
demia and companies. Systems thinking is expected to benefit from the interaction
between theory and practical application too.
The need for competence building in the area of sustainability has never been
greater: in society, among researchers and students, in the business sector, and for
interest groups and governments. This book inspires further knowledge-based
development and creates opportunities based on ambitions, analysis and facilitation
of implementation. The content is theoretically well-grounded, whilst oriented
towards practical application.
I am confident that this book will become a useful workbook for both leaders and
practitioners in government and business, as well as for students.

CEO Skift, Business Climate Leaders Bjørn K. Haugland

Oslo, Norway
July 1st, 2022
Foreword by Fritz Balkau

For some years now the environmental management vision has turned: preferring
prevention to remediation, the latter having proven to be both costly and inefficient.
Specific instruments and policies were subsequently devised to facilitate such pre-
vention approaches, with both the targets and the tools increasing in sophistication
and applicability. But independent isolated measures inevitably have limited suc-
cess, and efforts turned towards developing universal toolboxes that allow managers
and policymakers alike to better deal with ambitious sustainable development goals.
The CapSEM Model and its underlying toolbox is the latest, and perhaps the most
comprehensive, recent initiative to assist organisations – both public and private – to
more systematically address complex global problems, whilst simultaneously mak-
ing business sense. The present CapSEM Model allows the current generation of
managers and policymakers to move forward to confront our common sustainability
challenges whilst also providing an effective platform for further methodological
evolution.

International Adviser, Sustainable Solutions Fritz Balkau

August 8th, 2022

ix
Preface

Sustainability and Business Challenges

Over the last few decades, excellent concepts and tools have been developed for
business and organizations to address environmental and sustainability challenges.
The contributors to this book have, for a long time, been deeply involved in develop-
ing such tools and have many years of experience implementing them in companies.
It is an area to which I have devoted over 30 years of my academic and research life.
This publication therefore represents and reflects that body of work and the exper-
tise accumulated, shared, and advanced through research, teaching, and supervising
PhD students in this field.
The volume focuses specifically on the environmental dimensions of Sustainable
Development (SD), and presents analytical tools, from a site perspective to a life
cycle perspective. It presents and discusses a significant compilation of concepts
and tools regarding their background, method, and practical application. The tools
are gathered and summarized in a toolbox, giving consideration to the way in which
they have been developed and subsequently implemented by the industry over time.
A significant contribution of this book is the efforts to systematize concepts and
tools in relation to four levels of development: processes, products, organization,
and systems. Together with examples of practical application, this increases insights
into existing possibilities and opportunities for further development to meet busi-
ness requirements in sustainability. The book further discusses how the tools relate
to corporate practice seen from the perspective of sustainability, and finally raises
some critical questions around the extent to which these tools have supported com-
panies in their advances toward more sustainable attitudes, values, and practices.
The combination of technological development and sustainability raises the
challenge for industrial development to think, plan, and produce in accordance with
ecological principles. This is the philosophy behind Industrial Ecology, which is
discussed in a separate chapter of this volume. Systems thinking and a life cycle
approach are essential in the work for SD and, as such, permeate the volume. While
the emphasis is on technological issues in accordance with ecological objectives

xi
xii Preface

rather than discussing political decision-making or societal matters of sustainability,

in Part IV, a systems thinking approach allows reflection on the consequences of the
application of these tools in academic as well as legal and societal settings.
The book is divided into four parts as follows.
Part I, entitled Sustainability challenges and opportunities, sets the context for
the following three parts of the book in 3 chapters focusing on sustainability chal-
lenges, the components of the toolbox in the CapSEM Model, and the role of the
CapSEM Model in terms of the Sustainable Development Goals (SDGs). The criti-
cal discussion of the tools, their implementation, and the flexibility of this model
which is continuously developing is a cross-cutting theme throughout the book.
Part II, entitled The toolbox: Methodologies and theory, builds on the CapSEM
Model presented in Part I and further explains each level in the toolbox. Chapters 4
and 5 deal with Level 1, Chaps. 6 and 7 with Level 2, Chaps. 8 to 10 with Level 3,
and Chaps. 11 and 12 with Level 4. The toolbox in Part II is broken down into its
constituent parts with detailed explanations for each.
Part III, entitled From theory to practice, builds on the theoretical model of the
toolbox set out in Part II. There are a range of innovative and thought-provoking
case studies which exemplify in detail how the constituents of the toolbox are put
into practice. These implementations appear across a range of very different busi-
ness sectors, demonstrating the usefulness, feasibility, and flexibility of the tools.
Many of the sectors included in these case studies are listed under the Circular
Economy Action Plan in Europe and were chosen for inclusion for that reason.
Part IV deals with The road ahead. The concluding part of the book looks at pos-
sible and desirable futures for further development and implementation of the tool-
box. Chapter 21 summarizes the application of the tools and put attention to the
need for transdisciplinary collaboration in the transition to sustainability. The objec-
tive is to identify benefits and challenges for capacity building in sustainability.
Chapter 22 looks at organizations’ approaches to environmental management tools
and the way in which interaction and transdisciplinary collaboration in a wider sys-
tem can contribute to moving toward sustainable societies. Chapter 23 discusses
how the innovative mechanisms in sustainable business models may be expanded
further to encompass all dimensions of sustainability and pervade fully through
organizations.
Chapter 24, or the conclusion, attempts to provide an outlook for business, orga-
nizations, and societies applying the tools while moving toward a sustainable future.
The need for competence building in sustainability is increasing in society, among
researchers and students, in the business sector, and for interest groups and govern-
ments. The purpose of this book should be to inspire knowledge-based develop-
ment, make visible opportunities based on business ambitions, and facilitate
implementation of new solutions. The content is theoretically well grounded, while
also oriented toward thoroughly practical application.
This book can be used as both a beneficial, and useful, workbook for practitio-
ners. Conceivable future developments or applications of the model, not addressed
in this publication, could target learnings for developing countries, transferring the
lessons learnt elsewhere in adopting SDGs to the needs of diverse economic and
Preface xiii

cultural settings. This is aligned with the laudable objective of the U.N. motto
‘Leave no one behind’ and requires a systemic approach across local, national, and
international organizations. The journey, described, considered, and analyzed in this
publication, continues to be a potential catalyst toward a path to be encountered,
embraced, and traveled by multiple actors, across a range of domains, using multi-­
level systems.

NTNUAnnik Magerholm Fet

Ålesund, Norway
Acknowledgments

There are many people I want to thank for their assistance in writing this book.
Firstly, I would like to thank my colleagues and former PhD students for inspir-
ing discussions and contributions to this book. In addition to the few I have men-
tioned below, there are numerous individuals and organizations that have contributed,
and the book would not have been the same without these valuable inputs. I have
gained experience from working together with business leaders implementing the
tools presented in this book, and the CapSEM Model is a result of positive collabo-
ration with practitioners over a long period of time.
The toolbox presented in the CapSEM Model has been tested in many projects
with business partners. One of the most recent was the Erasmus+ project with the
same name which I led as a Professor at NTNU. Thanks to all contributions from
colleagues at TU Delft and University in Lisbon. Many thanks also to our partners
in Uganda, India, and Nepal.
My gratitude is extended to Bjørn Haugland for writing the Foreword, and his
enthusiasm and engagement for a shift toward sustainability in business future prac-
tice. Also to Fritz Balkau for his Foreword and his long-held and continued commit-
ment to expertise in this area of research and teaching.
Special thanks to the Internal Editorial Team:
• Professor Martina Keitsch for many good discussions on the overall structure of
the book, for input on the field of environmental practices and governing princi-
ples, and her excellent scientific contributions to the text, especially Parts I and IV.
• Associate Professor Cecilia Haskins for her contributions toward the book, and
to the final stages of compiling it, especially for her help in the final editing of
Parts II and III.
• Adjunct Associate Professor Sandra Elizabeth Tippett-Spirtou for her work in
coordinating the work on my behalf as the editor and main author, representing
all the co-authors of this book, and keeping a tight timeline for fulfilling the
requirements set by the publisher.
Finally, I would like to thank the publisher for organizing the work between the
many partners involved.

xv
CapSEM Model

Level 4
Systems change
Increasing performance scope

Level 3 SE, MFA, IE

Organizational change
Level 2 EMS, EPE, KPI, GRI,
Product and value LCM, CSR, SBM ility
chain change tainab
sus
LCA, SCM, CFP,
n to
WFP, EPD, DFE nsitio
Level 1 Tra
Production process
change

I/O, CP

Increasing systemic scope EMS – Enviromental management system

I/O – Input-output analysis EPE – Enviromental performance evaluation
CP – Cleaner production KPI – Key performance indicator
LCA – Life cycle assessment GRI – Global Reporting Initiative
SCM – Supply chain management LCM – Life cycle management
CFP – Carbon footprint CSR – Corporate social responsibility
WFP – Water footprint SBM – Sustainable business model
EPD – Environmental product delcaration SE – Systems engineering
DFE – Design for environment MFA – Material flow analysis
IE – Industrial ecology principles

Capacity building in Sustainability and Environmental Management (CapSEM) Model: a systemic

approach towards sustainability. (Modified from (Fet and Knudson 2021)

xvii
Contents

Part I Sustainability: Challenges and Opportunities

1 
Business Challenges in the Transition to Sustainability ����������������������    3
Annik Magerholm Fet and Martina Keitsch
2 The CapSEM Model��������������������������������������������������������������������������������   13
Annik Magerholm Fet and Haley Knudson
3 
Sustainable Development Goals and the CapSEM Model ������������������   29
Annik Magerholm Fet, Haley Knudson, and Martina Keitsch

Part II The Toolbox: Methodologies and Theories

4 
Input-Output Analysis and Cleaner Production����������������������������������   37
Annik Magerholm Fet, Cecilia Haskins, and Magnus Sparrevik
5 Looking Beyond the Factory Gates: Life Cycle
Assessment, Supply Chain Management and Design for
Environment ��������������������������������������������������������������������������������������������   45
Annik Magerholm Fet, Luitzen de Boer, and Martina Keitsch
6 Communicating Product Life Cycle Performance
through Labels and Declarations ����������������������������������������������������������   57
Christofer Skaar
7 Environmental Management Systems����������������������������������������������������   67
Annik Magerholm Fet and Ottar Michelsen
8 Analytical Frameworks, Impact Categories, Indicators
and Performance Evaluation������������������������������������������������������������������   77
Annik Magerholm Fet
9 Reporting Schemes����������������������������������������������������������������������������������   89
Annik Magerholm Fet and Magnus Sparrevik

xix
xx Contents

10 
Business Models for Sustainability�������������������������������������������������������� 101
Haley Knudson
11 Closing the Loop: Industrial Ecology, Circular Economy
and Material Flow Analysis�������������������������������������������������������������������� 113
Annik Magerholm Fet and Paritosh C. Deshpande
12 Systems Engineering�������������������������������������������������������������������������������� 127
Annik Magerholm Fet and Cecilia Haskins

Part III From Theory to Practice: Case Studies

13 
Introduction to the Case Studies������������������������������������������������������������ 139
Annik Magerholm Fet
14 From Waste to Value: A Story About Life Cycle Management
in the Furniture Industry������������������������������������������������������������������������ 145
Ottar Michelsen, Christofer Skaar, and Annik Magerholm Fet
15 The Role of Public Sector Buyers: Influencing Systemic
Change in the Construction Sector�������������������������������������������������������� 155
Shannon Truloff, Luitzen de Boer, Xinlu Qiu, and Annik
Magerholm Fet
16 
CapSEM Applied to the Construction Sector��������������������������������������� 167
Magnus Sparrevik, Luitzen de Boer, Ottar Michelsen, and
Christofer Skaar
17 Application of Material Flow Analysis: Mapping Plastics
Within the Fishing Sector in Norway���������������������������������������������������� 175
Paritosh C. Deshpande and Arron W. Tippett
18 Environmental Management at Fiskerstrand Verft AS:
A 30 Year Journey������������������������������������������������������������������������������������ 185
Rolf Fiskerstrand and Annik Magerholm Fet
19  Transportation Planning Decision Support System�������������������������� 197
A
Dina Margrethe Aspen
20 
First Steps Towards Sustainable Waste Management�������������������������� 207
Øystein Peder Solevåg

Part IV The Road Ahead

21 Transition to Sustainability�������������������������������������������������������������������� 215
Annik Magerholm Fet and Martina Keitsch
Contents xxi

22 Helping Business Contribute to a Sustainability Transition:

Archetypes of Business Models for Sustainability�������������������������������� 223
Haley Knudson and Martina Keitsch
23 
Building Decision Support Systems for Sustainable Transitions�������� 239
Dina Margrethe Aspen and Christina Carrozzo Hellevik
24 The Way Forward������������������������������������������������������������������������������������ 251
Annik Magerholm Fet and Martina Keitsch
Acronyms

ABC Activity-based costing

AC Activated charcoal
ALDFG Abandoned, lost or otherwise discarded fishing gear
BM Business model
BMfS Business model for sustainability
BMI Business model for innovation
BMIfS Business model innovation for sustainability
B2B Business-to-business
B2C Business-to-consumer
BOM Bill of materials
BOP Bottom of pyramid
BREEAM Building research establishment environmental assessment method
BS British standard
CapSEM Capacity building in sustainability and environmental management
CE Circular economy
CFP Carbon footprint of product
CO2 Carbon dioxide
CP Cleaner production
CPA Cleaner production assessment
CSR Corporate social responsibility
DfE Design for environment
DfS Design for sustainability
DfX Design for X principles
DSB Norwegian Directorate for Civil Protection (Direktoratet for Sivilt
Beredskap)
DPSIR Driver-pressure-state-impact-response
EA Environmental auditing
EC European Commission
ECI Environmental condition indicator
ED Eco-design
EI Environmental indicator

xxiii
xxiv Acronyms

EIA Environmental impact assessment

EMAS Eco-management and audit scheme
EMS Environmental management system
EOL End-of-life
EP Environmental performance
EPE Environmental performance evaluation
EPD Environmental product declaration
EPI Environmental performance indicator
ESG Environmental social and governance
FU Functional unit
GHG Greenhouse gases
GRI Global reporting initiative
GSS Green supplier selection
HSE Health, safety and environment
IE Industrial Ecology
IM Industrial Methabolism
I/O Input-output
IOT Internet of things
IS Industrial Symbiosis
ISO International Organization for Standardization
KPI Key performance indicator
LA21 Local agenda 21
LCA Life cycle assessment
LCC Life cycle costing
LCM Life cycle management
LEED Leadership in energy and environmental design
LNG Liquefied natural gas
MBC Material-based cost
MET Material, energy and toxicity
MFA Material flow analysis
MGO Marine gas oil
MIA Material intensity analysis
MIPS Material input per service unit
MPI Management performance indicator
NGO Non-governmental organisation
NOx Nitrogen oxides
NMA Norwegian maritime authority
NRBV Natural resource-based view
OECD Organisation for economic co-operation and development
OPI Operation performance indicator
PM Particulate matters
PCB Polychlorinated biphenyls
PCR Product category rules
PDCA Plan-do-check-act
PEF Product environmental footprint
Acronyms xxv

PSR Pressure state response

PVC Polyvinyl chloride
QAM Quality assurance manual
RI Radical Interdisciplinarity
SCM Supply chain management
SCR Selective catalytic reduction
SD Sustainable development
SDG Sustainable development goal
SE Systems engineering
SETAC Society of Environmental Toxicology and Chemistry
SFA Substance flow analysis
SM Systems methodology
SSCM Sustainable supply chain management
SVC Shared value creation
TBT Tributyltin
TCM Technical cost modelling
UN United Nations
UNCSD United Nations’ Commission of Sustainable Development
UNEP United Nations environmental Programme
USEPA US Environmental Protection Agency
VAA Value-added analysis
VOC Volatile organic compound
VWTP Valley waste treatment plant
WBCSD World business Council for Sustainable Development
WFP Water footprint of product
WRI World resources institute
List of Figures

Fig. 1.1 Interrelationships between ecological, social and economic

objectives for sustainable technology development.
(Fet 1997)..........................................................................................  7
Fig. 2.1 Capacity building in Sustainability and Environmental
Management (CapSEM) Model: a systemic approach towards
sustainability. (Modified from Fet and Knudson 2021)....................16
Fig. 2.2 Three major cleaner production action lines. (Fet 1997)..................18
Fig. 2.3 Classification of environmental performance levels.
(Modified from Fet et al. 2013).........................................................21
Fig. 2.4 Classification of methods and tools for environmental
performance improvements. (Modified from Fet et al. 2013)...........22
Fig. 3.1 The SDG wedding cake. (Rockström and Sukhdev 2016)...............30
Fig. 3.2 CapSEM model together with sustainable development goals.
(Modified from Fet and Knudson 2021)...........................................31
Fig. 4.1 Material flow scheme with inputs & outputs for single/series
of production process(es)..................................................................38
Fig. 4.2 Illustration of the principle for CP strategies (USEPA 1992)...........39
Fig. 5.1 Product development stages integrating aspects
of LCA, DfE and SCM.....................................................................53
Fig. 6.1 Timeline of environmental communication for products..................58
Fig. 6.2 Steps: from deciding to use EPDs to a published declaration..........63
Fig. 7.1 Product-related standards and audit and evaluation standards
underpinning environmental management.
(Illustrated by examples from the ISO 14000-family)......................68

xxvii
xxviii List of Figures

Fig. 7.2 Methodology for Implementation of Environmental

Management Systems with Leadership at the centre........................69
Fig. 7.3 Illustration of pathway from aspects to impacts: emissions
from the use of fossil fuel in transportation to the impact
on climate change caused by CO2 and VOC-emissions.
(Modified from Winther and Fet 2016).............................................71
Fig. 8.1 An indicator information pyramid....................................................79
Fig. 8.2 Pressure-state-response (PSR) framework for indicators.................80
Fig. 8.3 Framework for Reporting on Environmental Issues.
(Modified from EEA 1999)...............................................................80
Fig. 8.4 Example of DPSIR with reference to impact on ecosystem
services. (Santos-Martín et al. 2013)................................................82
Fig. 9.1 Contributors to reporting content and practice (Level 3):
relevant examples of tools and indicators. Levels 1, 2 & 4.
(CapSEM Model)..............................................................................92
Fig. 9.2 Model of reporting according to GHG protocol.
(WRI/WBCSD 2011)........................................................................97
Fig. 10.1 BMfS components............................................................................103
Fig. 10.2 Sustainable business model archetypes. (Bocken et al. 2014).
doi: 10.1016/j.forpol.2018.12.004....................................................108
Fig. 11.1 The change from linear to cyclic material flows
in the industrial ecosystem................................................................114
Fig. 11.2 The emergence of an eco-industrial infrastructure
(Tibbs 1992)......................................................................................115
Fig. 11.3 The butterfly diagram: visualising the circular economy
(ellenmacarthurfoundation.org, 2013)..............................................118
Fig. 11.4 Typical process flow diagram for the MFA system..........................121
Fig. 11.5 Representative illustration of MFA through Sankey diagram
(Schmidt 2008a, b) ...........................................................................123
Fig. 12.1 Systems engineering life cycle process, 6-step framework..............129
Fig. 12.2 Mapping of systems engineering processes to CapSEM
Model methods and tools (Fet 2002)................................................133
Fig. 14.1 Framework for management and communication
of environmental aspects of products. (Skaar 2013).........................148
Fig. 14.2 Relative eco-efficiency for 6 different products using
an aggregated single score for environmental impact.
(Data from Michelsen et al. 2006)....................................................149
Fig. 14.3 Relative impact on different environmental impact categories
for 6 different products. (Data from Michelsen et al. 2006).............150
Fig. 14.4 Relative contribution of value performance and environmental
performance from suppliers, end producer and dismantling
of a chair. (Michelsen et al. 2006).....................................................151
List of Figures xxix

Fig. 14.5 Cumulative environmental impact related to the number

of suppliers. (Michelsen 2007b).......................................................151
Fig. 16.1 Focus areas to reduce environmental impacts
in the construction sector. (Sparrevik et al. (2021)...........................168
Fig. 16.2 Adapting the CAPSEM Model to the construction sector.
(Sparrevik et al. 2021).......................................................................169
Fig. 17.1 MFA of plastic (PP, PE, and Nylon) from six fishing gears
used by the commercial fishing fleet of Norway in 2016
(tons/year). (Adapted from Deshpande et al. 2020)..........................179
Fig. 18.1 Overview of activities resulting from the Cleaner Production
project started in 1993. The numbers in the boxes reflect
the Levels in the CapSEM model
(modified from Fet 2002a, b)............................................................188
Fig. 19.1 Models and tools in the transportation planning decision
support system across CapSEM Levels............................................200
Fig. 19.2 Summary of boundaries and strategies defined in the problem
structuring process. The map is created in the
Norgeskart portal by ©Kartverket....................................................202
Fig. 19.3 Total CO2 and NOx emissions in the study area
under a medium scenario..................................................................202
Fig. 19.4 Congestion on road links with cruise generated bus transport
across strategies 1–4 under a maximum scenario.
(Green link: no congestion, yellow link: medium
congestion level, red link: high congestion level).............................203
Fig. 20.1 Waste hierarchy.................................................................................209
Fig. 22.1 Sustainable value. (Evans et al. 2017)..............................................225
Fig. 22.2 Sustainable value network. (Evans et al. 2017)................................227
Fig. 23.1 Basic components of decision support systems (DSSs).
(Modified from Sprague Jr 1980).....................................................241
Fig. 23.2 Example of DSSs at various CapSEM levels....................................242
Fig. 24.1 Model of actors and their roles in the top-down
and bottom-up approach....................................................................252
List of Tables

Table 2.1 Simple classification of tools for environmental

performance improvements............................................................. 17
Table 6.1 The ISO 14020 family and beyond: environmental
claims for products and services..................................................... 59
Table 8.1 Examples of EPIs expressed by OPIs and MPIs............................. 85
Table 9.1 UN Global Compact ten principles (2021).....................................97
Table 10.1 Important concepts for understanding BMfS.................................. 102
Table 10.2 Sustainable business model archetypes along business
model components.......................................................................... 109
Table 11.1 Principal characteristics of industrial ecology................................116
Table 11.2 Essential terminology in MFA studies............................................ 120
Table 11.3 Type and application of MFA, based on objectives
of interest........................................................................................ 122
Table 13.1 Cases categorized by industry and CapSEM Level......................... 140
Table 15.1 Application of IOPP modes for ZEMCON
in the CapSEM Model.................................................................... 160
Table 16.1 Overview of the potential enabling and constraining
impact of different methods, schemes and regulations
for reducing environmental impact in the construction sector........ 170
Table 17.1 Summary of relevant information obtained from MFA
on each stakeholder across the life cycle of fishing gear
and its potential application............................................................ 178
Table 18.1 Overview of green technologies installed in vessels
delivered by Fiskerstrand Verft....................................................... 193

xxxi
xxxii List of Tables

Table 19.1 The CapSEM toolbox for transportation system

sustainability appraisal.................................................................... 198
Table 20.1 Waste per inhabitant (measured in kg waste per inhabitant
per year (average 2017–2020) (Annual reports published
at www.arim.no and internal data).................................................. 210
Table 20.2 Collected waste (Annual reports published
at www.arim.no plus internal data).................................................210
Table 22.1 BMfS archetypes............................................................................. 230
Table 23.1 The SAMR model for technology in learning.
(Modified from Puentedura 2013).................................................. 246
 Part I
Sustainability: Challenges and
Opportunities
Chapter 1
Business Challenges in the Transition
to Sustainability

Annik Magerholm Fet and Martina Keitsch

Abstract The first chapter of this book presents a brief history of Sustainable
Development (SD) and takes a closer look at business and industry and their atti-
tudes and actions towards sustainability regarding technological development, envi-
ronmental issues and challenges for organizations. The goal of the chapter is to
advocate for the growing need for competence building in sustainability amongst
business leaders as well as societal stakeholders. It prepares the reader to under-
stand how this can be done via the tools and strategies that are discussed in the fol-
lowing chapters of this book.

1.1 Introduction

Advancing the Sustainable Development Goals (SDGs) of the United Nations 2030
Agenda is a globally recognized aim. National governments and societies across the
world are launching SDG-based strategies or aligning their existing policy plans
and objectives with the SDGs. As the United Nations stated in their Preamble:
The 17 Sustainable Development Goals and 169 targets which we are announcing today
demonstrate the scale and ambition of this new universal Agenda. (UN 2015).

In terms of business, the SDGs include, amongst others, an obligation for industry
to adhere to in order to realize SD standards. The World Commission on Environment
and Development also known as the Brundtland Commission (Brundtland 1987)
coined the definition of SD, a predecessor of the SDGs, as:
Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs.

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
M. Keitsch
Department of Design, NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 3

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_1
4 A. M. Fet and M. Keitsch

Besides emphasizing the needs of both present and future generations, SD is also
concerned with meeting the triple bottom line – social, environmental and economic
aspects – also referred to as people, planet and profit. The triple bottom line repre-
sents a dynamic balance that must be maintained between human activities, tech-
nologies, natural environmental capacities, human requirements, living standards,
goals and values (Ehrenfeld 1994). Even if SD is considered a metafix by some
authors (e.g. Lele 2018), the concept provides an agenda and direction for further
global decision-making, research and development.
Both the SDGs and SD require expanding the scope of traditional business man-
agement and reporting, for example, to explicitly include social and environmental
aspects in organizational reporting in addition to its economic performance and its
products and services. Both the SDGs and SD have their roots in the environmental
crisis of the late 1970s.

1.1.1 Historical Background

As factories materialized in increasing numbers (mainly in the United Kingdom) in

the late 1800s, environmental impact on the surrounding land and air also increased.
Smoke was released into the air and pollution belched into streams and lakes lead-
ing to acidification, fish-death and biodiversity degradation. With no laws in place
to stop this, emissions quickly escalated.
In 1952, London’s ‘Great Smog’ killed an estimated 12,000 people and gave rise
to the Clean Air Act (1956) in an attempt to control domestic sources of air pollu-
tion. A subsequent Clean Air Act was passed in 1968. Regulating the minimum
heights of chimneys, air pollution conferred with the motto ‘Dilution is the solution
to pollution’. It required chimney stacks in and near towns to be built up taller to
push pollution away from inhabitants. Neither act considered reducing factory
emissions or their role as significant air polluters (Shorthouse and Nicolle 2019).
Rachel Carson’s book Silent Spring, published in 1961, Paul Ehrlich’s The
Population Bomb from 1968 and particularly, the Club of Rome’s report ‘Limits to
Growth’ (Meadows et al. 1972) served as wakeup calls for a necessarily broader
sustainability quest, expanding from earlier environmentalism perspectives largely
concerned with protecting wild land (Keitsch 2018). Some authors also claim that
the discourse on the environment was driven by the fact that the exhaustion of natu-
ral ecosystems had shown severe consequences not only for nature, but also for
humans and society itself (Odum 1998). Changes in the natural environment placed
the social environment under pressure to change. Environmental concerns were
partly triggered by fears that economic growth might endanger the survival of the
human race and the planet, expressed by authors such as Glick: “…if we continue
our present practices, we will face a steady deterioration of the conditions under
which we live” (Dubos et al. 1960).
1 Business Challenges in the Transition to Sustainability 5

In 1972, the United Nations Conference on the Human Environment Declaration

(the Stockholm Declaration) recognized that: “In our time, man’s capability to
transform his surroundings, if used wisely, can bring to all peoples the benefit of
development and the opportunity to enhance the quality of life. Wrongly or heed-
lessly applied, the same power can do incalculable harm to human beings and
human environment.” Furthermore, Article 3 stated: “To defend and improve the
human environment for present and future generations has become an imperative
goal for mankind.” This conference brought politicians’ attention to the rising prob-
lem of pollution, pesticides, and other issues faced on a global scale. It was one of
the first times a political meeting had such an overwhelming number of citizens
attend. Disastrous events such as the Minamata Disaster in 1950, in which 1785
people died from methylmercury leaking into waterways, and the impact of Agent
Orange on humans in Vietnam, were brought to the table.
Despite various policies and acts formed after the 1970s, their implementation in
different societal sectors halted, and hence lacked rapid progress. In the 1980s, cli-
mate change was introduced to the growing list of global environmental chal-
lenges, later summarized in the Kyoto protocol (United Nations 1998). In addition,
the discovery of the depletion of the ozone layer over Antarctica led to an increase
in research on the impact of greenhouse gas emissions and chemicals on the atmo-
sphere and ozone layer. As a result, ozone depleting chemicals were either regulated
or banned by international laws by the late 1980s (Montreal Protocol 1987).
In the last decade of the twentieth century, increasing concern about the way in
which human activities affect natural systems evolved amongst various stakeholders
across society. Although there was some dispute over the rate of change, most sci-
entists, researchers and decision-makers accepted that the challenges of the new
millennium comprised the loss of biodiversity, thinning of stratospheric ozone, cli-
mate change and the collapse of natural resource stocks. The Brundtland report was
presented at the UN Rio-Summit in 1992. It became a core document for decades to
come (United Nations 2007).
SD topics and policies were further debated at the RIO + 10 summit in
Johannesburg in 2002 (World Summit on Sustainable Development 2002) and the
RIO + 20 summit in Rio de Janeiro in 2012. The summit in Johannesburg gathered
hundreds of Heads of State and government and tens of thousands of government
representatives and non-governmental organizations. The ‘Rio + 20 summit’, offi-
cially called the United Nations Conference on Sustainable Development (UNCSD),
was attended by multinational companies and world leaders, with countries less
well represented (United Nations 2012). The report ‘The Future We Want’ sets out
broad sustainability topics such as Poverty Eradication, Food Security and
Sustainable Agriculture, Energy, Sustainable Transport, Sustainable Cities, Health
and Population, and Promoting Full and Productive Employment, clearly pointing
towards the Sustainable Development Goals (European Environment Agency 2012).
According to some authors (Van Dieren 1995; Kassel et al. 2018; Keitsch 2021),
SD also contributed to a change in mindset of societal actors from focusing on prob-
lems, to an interest in feasible, accessible and flexible solutions for SD. To ensure
consensus on the need for progress, collaboration among stakeholders is essential,
6 A. M. Fet and M. Keitsch

hereunder including governmental agencies, industry, non-governmental organiza-

tions (NGOs), research and academic institutions, individual citizens such as neigh-
bours, voters, employers, investors, consumers and so on.
Moreover, to avoid dramatic incidents, the push towards integration of economic,
social and ecological issues also requires the integration of all other relevant stake-
holders. This became even clearer around the millennium and was brought to atten-
tion and reflected in the United Nations Millennium Development Goals, which
guided sustainable development actions from 2000 to 2015 (United Nations 2000).
Al Gore’s 2006 book and documentary, An Inconvenient Truth, brought attention to
extreme weather problems caused by global warming and simultaneously pin-
pointed the risk of social disturbances, injustice and wars caused by environmental
disasters.
In 2015, 193 countries agreed to adopt the SDGs for the period 2015–2030. They
are meant to encourage the international community to move towards a global sus-
tainable future over the next few decades, and are part of the 2030 Agenda, officially
known as “Transforming our World: the 2030 Agenda for Sustainable Development”,
agreed at the UN Sustainable Development Summit in September 2015 (United
Nations 2015). The SDG framework is comprised of 17 goals and 169 targets that
succeed the eight Millennium Development Goals. The SDGs set a very ambitious
range of goals relevant for regional, national and global issues. Human development
across triple bottom line dimensions (social, economic, and environmental) is cen-
tral to the set of goals. Advancing the SDGs of the UN 2030 Agenda is warranted
globally, and national governments all over the world continue to launch SDG-­
based development strategies, or align their existing policy plans with the proposed
goals. The aim of these SDGs is, amongst others, to end poverty, fight inequality,
protect biodiversity on land and in the oceans and urge efforts related to slowing
down climate change.
In the preceding two decades, sustainability challenges have transformed society
and actors such as industries and businesses. They have influenced the development
of solutions and guided competitiveness toward solving these ecological and social
business challenges. It is crucial to acknowledge the history and development of this
movement, not only for further education, knowledge sharing and inspiration, but
also to understand that all endeavours to move the world towards sustainability are
part of a long line of activism. The global ecology movement has reached every
corner of the world, and while sustainable activities contribute to edging the planet
back from the brink of environmental disaster, ecological challenges grow ever
more daunting (Weyler 2018).
As this brief introduction illustrates, the concept of SD has not only undergone
huge transformations since its first definition by the Brundtland commission in
1987, but has also become much more specific in many areas. SD has been continu-
ally revised, addressing areas of knowledge identified and innovation taking place
as new challenges arise.
The following section takes a closer look at business and industry and their atti-
tudes and actions towards sustainability.
1 Business Challenges in the Transition to Sustainability 7

Fig. 1.1 Interrelationships between ecological, social and economic objectives for sustainable
technology development. (Fet 1997)

1.1.2 Technology Development and Sustainability

The concept of sustainability now differs from former views of environmental value
and the way in which social strategies were designed. Amid several assumptions,
former frontier economists assumed that the earth was limitless in its capacity to
support human society, that the future is created through price systems based on a
free market and that technology is good and the solution to all problems
(Ehrenfeld 1994).
In a narrow economic definition, sustainability comprises the maintenance of
human-made capital (Bartelemus 2002). Social sustainability includes human
rights, moral and social justice and natural capital stock of environmentally avail-
able assets such as soil, the atmosphere, forests, water and wetlands. To avoid com-
partmentalization, in which each societal actor pursues their own idiosyncratic
sustainability strategy, different domains should be encouraged to collaborate and
support each other. For example, technology must be designed to adjust to ecologi-
cal, social and economic objectives. An important challenge for companies world-­
wide is the development of sustainable technologies that fit in with an integrated
system of ecology, economy and social needs in a long-term perspective (Keitsch
2021). Technology development in relation to triple bottom line objectives is illus-
trated in Fig. 1.1. Social objectives include empowerment, participation and cultural
identity, while economic objectives address equity and efficiency to support growth.
Ecological objectives must secure ecosystem integrity and support the earth’s carry-
ing capacity and biodiversity.

1.1.3 Categorising Environmental Issues

There are many ways to categorize the environmental issues behind ecological
objectives. According to OECD, they were grouped into four main categories of
impacts (Gouzee et al., 1995) caused by (1) use of natural resources; (2) flows of
8 A. M. Fet and M. Keitsch

pollutants and emissions; (3) reshaping of environment and changes of ecosystems,

and (4) effects on human welfare caused by the condition of the environment. The
type of impact can be identified based on the exchange of particular substances
between technology and the environment (Fet 1997). The use of raw materials
involves the extraction of substances from the environment, while emissions are the
release of substances into the environment. Both extraction and emissions play a
role across environmental issues. The most prominent environmental issues, or
impact categories, are loss of biodiversity, climate change, depletion of the ozone
layer, acidification of soils and lakes, eutrophication of water bodies, toxification of
soils, water bodies and ecosystems, and accumulation of solid waste in nature.
These categories can be further classified according to their global, regional and
local impacts, as here exemplified by climate change, acidification and air quality.

1.1.4 Challenges for Business

Industrial companies are increasingly concerned about the impacts of their pro-
cesses, products and services, all while searching for balance between profitability
and sustainability. Without a reasonable degree of profitability, a private company
cannot continue to function. This applies to both large and smaller companies.
Small and medium sized companies (SMEs) are less robust financially and will in
many cases take a reactive, rather than a proactive approach to addressing environ-
mental challenges. The question, however, surrounds how environmental improve-
ment measures will benefit the company. Historically, there has been a general
notion that sustainability measures implicate higher costs which cannot be justified
from the perspective of cashflow. In many cases this was probably correct and rela-
tively few companies employed a proactive attitude. However, with growing need
and pressure on a global scale, industrial companies increasingly use environmental
performance as an element in their marketing efforts to meet their customers’
demands and in an attempt to give their products added value.
Long term competitiveness on the market seems to be the most important moti-
vation. Businesses increasingly request information and seek out tools to under-
stand the environmental aspects and related impacts from their processes, products
and services. Rapid green transition influences businesses’ competitiveness based
upon changes in markets, in technologies and in authorities’ frameworks. Changing
markets are driven by increased environmentally conscious demand and willingness
to pay for environmental benefits, from individual consumers, to purchases by pri-
vate businesses and via public sector procurement. A changing technological land-
scape, often driven by adaptations in authorities’ frameworks to place penalties,
taxes and fees on pollution, supports the development and implementation of new
and emerging technologies.
Despite the drivers for change, most industrial companies do not have a compre-
hensive sustainability policy that covers all of their activities. In most cases, they
only react when a business advantage is apparent or when market pressure,
1 Business Challenges in the Transition to Sustainability 9

legislation or international treaties force them to react. Most companies also tend to
have a strategic planning perspective for the short-term, for example 3–5 years.
What happens 20–30 years later has less influence on their decisions now unless
indisputable consequences can be amply demonstrated.
This might also hamper a critical re-thinking of industrial practices from indus-
try until pressure for change is much more compelling. Such pressure will include
economic incentives and social inputs into industrial decision making. Furthermore,
mechanisms will have to be created to foster the goal of balancing industrial activ-
ity, the environment and equity concerns. This can be achieved if companies adopt
system-oriented strategies to satisfy a growing demand for green products.
System-oriented strategies and holistic life cycle perspectives can be designed
from both top-down and bottom-up approaches. A bottom-up approach often starts
with an overview and understanding of the most significant aspects of sustainability
connected to production systems and moreover to products and their material value-­
chains. Such strategies therefore depart from the possibility of increased resource
efficiency, reduction of wastes and emissions at the production site and across the
various parts and stages of the product value chain. Strategies are frequently built on
principles of good housekeeping and implemented through internal control systems
which are also a mechanism for ensuring rules and regulations are met. A top-down
approach, on the other hand, often results from overarching challenges, such as the
company’s contribution to reducing the impact on climate for the sector. Companies
are confronted with a wide range of demands through stricter regulations, standards
and legislations. Business strategies are often developed based on a vision of achiev-
ing goals according to those presumed most important for the company. Procedures,
regarding internal and external performance on different systems levels, will then be
developed in order to implement those strategies.
Regardless of whether the approach is top-down or bottom-up, a set of guiding
principles can be helpful. The purpose of the CapSEM Model presented in Chap. 2
is to provide guidance to companies about the availability of actual tools to analyse
the environmental aspects and impacts of their processes, products and services, and
to further theory on how to build competence and understanding surrounding the
application of these tools in their stepwise transition towards sustainability.

1.2 Conclusion

This chapter started by tracing the history of SD, and concludes with an emphasis
on the growing need for sustainability competence building in the business sector
and for their stakeholders and other societal actors. The tools presented in the fol-
lowing chapters are provided to both inspire further knowledge-based development
and create opportunities based on analyses and raised ambition, and to further sup-
port and facilitate the implementation of more sustainable solutions. The content is
not only well-grounded in theory, but also oriented towards practical application.
10 A. M. Fet and M. Keitsch

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
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The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 2
The CapSEM Model

Annik Magerholm Fet and Haley Knudson

Abstract Organizations may feel pressurized to improve their sustainability per-

formance and increase their orientation towards sustainability, but may not have
either the knowledge as to where, or the capacity, to begin. This chapter therefore
presents a systematized methodology of assessment and management tools for sus-
tainability and environmental management known as the Capacity building in
Sustainability and Environmental Management Model (the CapSEM Model). To
help streamline their application for the business sector and industry, the methods
and tools are positioned in relation to four levels of development: (1) production
processes, (2) products and value chains, (3) organization and management and (4)
larger systems, for example, industrial sectors or social systems.
The discussion and analysis of tools presented in this chapter and explained
throughout this book, address the growing need to engage stakeholders and to con-
sider environmental, social and economic impacts across the entire life cycles of
products in business strategies and organization management. The CapSEM Model
Levels move from incremental business tools and their application in production
processes, to holistic tools for change in organizations and larger systems. The tran-
sition to sustainable societies is considered analogous to growth in both systems and
performance complexity.

Extensively modified from Fet and Knudson (2021).

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
H. Knudson
Department of International Business, NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 13

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_2
14 A. M. Fet and H. Knudson

2.1 Introduction

Responding to requirements for global sustainable development (SD) in society,

information and teaching materials as well as significant environmental assessment
tools for various industry sectors have been continuously developed and improved
over the last 30 years. This chapter presents a systematized methodology for posi-
tioning some of these tools for the business sector and industry in relation to four
levels of development: (1) production processes, (2) products and value chains, (3)
organization and management and (4) larger systems, for example, industrial sec-
tors or social systems. Organizations often do not have an overview of these tools,
and the knowledge and capacity needed to implement them. Small and medium
companies with more limited resources may especially find this challenging (Perez-­
Sanchez et al. 2003).
As internal and external requirements become increasingly stringent to meet
growing sustainability challenges, companies and organizations need a holistic tool-
box to help them navigate the interacting systems of SD, from triple-bottom-line
aspects to geographic scopes and long-term dynamics. The Capacity building in
Sustainability and Environmental Management Model (the CapSEM Model) is
therefore presented as a methodological framework of the four Levels described
above. These Levels move from incremental business tools and their application in
production processes (Level 1) and value chains (Level 2), to more holistic tools for
change in organizations (Level 3) and larger systems (Level 4).
The discussion and analysis of tools for assessing environmental impacts pre-
sented throughout this book, also address the growing need to integrate stakeholder
views and social impacts, in addition to the environmental perspective, into business
strategies and organization management.
The CapSEM Model attempts to integrate the different dimensions of systems,
and the tools and their contribution to systemic change, thus resulting in an improve-
ment in environmental and sustainability performance. The transition to sustainable
societies is considered analogous to growth in both systems- and performance com-
plexity. Before introducing the CapSEM Model, it is helpful to understand the
basics of systems thinking in order to better appreciate the way in which the tools
have been systemized within it. Systems thinking plays an important role in both the
design and content of all chapters in this book.

2.2 Sustainability and Systems Thinking

A system can be described as a set of interrelating parts that perform functions

internally, which overcome their individual limitations. Typical systems are indus-
trial systems, ecosystems, product systems and so forth. Within each of these sys-
tems, there are sub-systems such as bio-regional systems, communities, or business
sectors. The structure of a system defines relatively stable established pathways
as a result of continuous interactions between different sectors. The pathways
(for example, languages, cultural customs, economical routines, political decisions,
2 The CapSEM Model 15

and social codes) design particular circumstances specific to that system. They act
as patterns in relation to functions as actions. Functions modify the existing
structures by constituting new pathways and become established structures in time
serving as templates for new action parameters.
Systems evolve by becoming more complex and more intelligent. The most sus-
tainable systems are those which are the most complex and open. Systems, in turn,
manage resources. Complex open systems are relatively stable because resources
that enter from outside are processed through and assimilated via a function of their
complex design, which can be called adaptability. Complex systems are more co-­
operative than simple ones since they have a wider range and therefore improved
opportunities for reacting to changes and possibilities for such reactions. The sys-
tem then interacts with the other system that provides, for example, new resources,
yet still maintains its distinctiveness: it is a new system evolved from its prior form
but modified by influence from the outside. Systems changes are also visible at a
cultural level, for example, the emergence of industrialization led to massive
changes in almost every culture. Some cultures were simply abandoned because of
the effects of industrialization. Some appeared to maintain their traditional practices
and beliefs within a new context, while others related better to an industrial system
and metamorphized into novel, heterogeneous, yet co-operative, structures
(Keitsch 2012).
Most sustainability tools apply systems methodologies. A systems methodology
can be described as research design based on the transdisciplinary study of the orga-
nization of phenomena, independent of their substance, type, or spatial or temporal
scale of existence. Systems serve here as templates to investigate both the principles
common to complex entities, and the models which can be used to describe them
(Heylighen and Joslyn 1995).
Systems methodologies facilitate the comprehension of purposeful relations
between heterogeneous performances. Using the reduction of wastewater as an
example, a perspective which focuses on a single action would consider the con-
struction of a reprocessing plant for sewage and the recycling of sludge to transform
it into a usable by-product, as inefficient, far less direct and more expensive, than
simply repairing wastewater tunnels. From a systems methodology perspective,
however, the reduction of waste by implementing a recycling system is more effi-
cient, given that it accomplishes many other things, e.g., reprocessing and by-­
product production, in addition to meeting municipalities’ and consumers’ needs
(Keitsch 2012).

2.3 Capacity Building in Sustainability and Environmental

Management Model (CapSEM)

The CapSEM Model can help companies understand their place and the relations
of their actions within different levels of related systems. It is presented in Fig. 2.1.
A systematic use of the tools in the toolbox helps companies investigate the
potential for appropriate actions to change the environmental and sustainability
16 A. M. Fet and H. Knudson

Level 4
Systems change
Increasing performance scope

Level 3 SE, MFA, IE

Organizational change
Level 2 EMS, EPE, KPI, GRI,
Product and value LCM, CSR, SBM ility
chain change tainab
sus
LCA, SCM, CFP,
n to
WFP, EPD, DFE nsitio
Level 1 Tra
Production process
change

I/O, CP

Increasing systemic scope EMS – Enviromental management system

I/O – Input-output analysis EPE – Enviromental performance evaluation
CP – Cleaner production KPI – Key performance indicator
LCA – Life cycle assessment GRI – Global Reporting Initiative
SCM – Supply chain management LCM – Life cycle management
CFP – Carbon footprint CSR – Corporate social responsibility
WFP – Water footprint SBM – Sustainable business model
EPD – Environmental product delcaration SE – Systems engineering
DFE – Design for environment MFA – Material flow analysis
IE – Industrial ecology principles

Fig. 2.1 Capacity building in Sustainability and Environmental Management (CapSEM) Model:
a systemic approach towards sustainability. (Modified from Fet and Knudson 2021)

performance related to production processes (Level 1), products and value chains
(Level 2) and strategic organizational actions (Level 3). The highest Level (Level 4)
represents the larger societal or industrial system and a company’s recognition of its
place and responsibility within it. The waves in the model illustrate different Levels
of performance of the systems under study, and the abbreviations are the acronyms
for the different tools placed at the different Levels in the model. The term change
is used here as meaning the reduction of negative impacts and increase of, or
replacement with, positive impacts—ultimately leading to strong, proactive, and
holistic sustainability as companies move toward the upper right of the model. As
an organization traverses the Levels, knowledge and tools from the previous Levels
are used as input to more extensive methods, meaning that each Level, in turn,
encompasses the Level(s) below it.
Each axis in Fig. 2.1 describes a change in scope. The horizontal axis shows the
scope of systems and begins at the simple production process at Level 1. Furthermore,
it extends to the set of processes within the value chain of a product at Level 2.
Then, to the organizational level (Level 3), to ingrain sustainability consciousness
and commitment into the structural, reporting and organizational routines of the
company through the implementation of management systems that use, for exam-
ple, key performance indicators or certification schemes to help govern the produc-
tion processes and product value chains at the lower levels. The scope of the systems
on Level 4 can be defined as the sector that the organization is a part of, or as wide
as a societal system, since all organizations are part of a larger system.
2 The CapSEM Model 17

The vertical axis delineates the scope of performance, here meaning the potential
for enacting the greatest sustainability impact across environmental and social
dimensions. Level 1 focuses on the environmental impacts of material flows, while
Level 2 widens its focus to the performance of the entire value chain and all of the
processes within it. Furthermore, Level 3 adds aspects to be considered from a stra-
tegic level, such as management systems which may guide organizations through a
shift to a higher level of sustainability performance over time. Since Level 4 sys-
tem’s scope depends on the context of the operation of the organization, a higher
level of performance can be achieved under the holistic recognition of opportunities
that come from improving system performance of each of the other systems at the
subordinate levels. From a systemic perspective, these different levels of systems
could be described as subsystems and system elements of the larger societal system.

2.4 Background to the CapSEM Model

The CapSEM Model has been developed in line with the progression and evolution
of sustainability management over the past 30 years. The reader will therefore note
both similarities and differences between the initial classification and ordering of
tools and methods and should bear in mind the historical and transitory journey
being traced.
A simplified classification of environmental performance improvement tools
from 1997 across micro-, meso- and macro-levels is illustrated in Table 2.1. There
are no stringent boundaries between these levels, and tools placed at one level are
also appropriate at other levels. Their grouping, however, helps to communicate the
main system scope of each tool.

Table 2.1 Simple classification of tools for environmental performance improvements

Levels Appropriate tools/guidelines
Societal Agenda 21 (1992), Kyoto protocol, policy frame
(macro) works.
Industrial Cleaner Production policies in broad sense,
(meso) international protocols.
Corporate Environmental Management (EM), Environmental
(meso) Auditing (EA), Environmental Performance
Evaluation (EPE), Green House Gas Management
(GHGM).
Product Cleaner Production related to products, Life Cycle
(micro/meso) Assessment (LCA), Material, Energy; Toxicity
(MET), Material Input per Service unit (MIPS), Life
Cycle Costing (LCC), Design for Environment (DfE)
Eco-labels, Carbon Footprints and Water Footprints
of Products.
Corporate Cleaner Production processes
production
process
(micro)
18 A. M. Fet and H. Knudson

2.4.1 Cleaner Production

Understanding the levels of processes, products, organizations and systems neces-

sitates attention to Cleaner Production (CP), an approach that was introduced in the
late 1980s in response to the Brundtland Report. In 1989, a working group at the
United Nations Environment Programme (UNEP) defined CP as:
The conceptual and procedural approach to production that demands that all phases of the
life-cycle of a product or of a process should be addressed with the objective of prevention
or the minimization of short and long-term risk to humans and the environment. A total
societal commitment is required for effecting this comprehensive approach to achieving the
goal of sustainable societies (Baas et al. 1990).

This definition clearly focuses on the principles of systems thinking and life cycle
orientation. It also includes pollution prevention, waste minimization, source reduc-
tion, clean technologies and life cycle thinking, areas that refer to forms of preventa-
tive action that reduce the fundamental causes of environmental problems. The
definition is more precise than earlier concepts of environmental protection such as
pollution control, waste management, environmental control and waste disposal,
which were attempts to solve environmental problems by reacting to the effects of
pollutants, so called ‘end-of-pipe solutions.’
The principles of CP can be summarized as precaution, prevention and integra-
tion, ranging from the macro to micro scale. These principles require action in three
major fields: policies, processes and products, illustrated in Fig. 2.2.
The top box in Fig. 2.2 denotes CP as a policy framework. This broad view has
led to the integration of strategies and search for technological opportunities for
improved environmental performance in all areas of the economy. While opportuni-
ties for efficiency improvement may be implemented under existing economic con-
ditions and institutional structures, the considerable potential for CP, in many cases,
involves institutional change, economic change and change in consumer behaviour.
CP was therefore originally presented as a significant challenge to human society at
technical, economic, institutional and societal levels (Jackson 1993).
Prevention requires actions to be taken that influence the potential causes of
adverse effects, thereby averting those effects. Such actions do not address the

Fig. 2.2 Three major cleaner production action lines. (Fet 1997)
2 The CapSEM Model 19

emissions themselves, but the processes that cause the emissions, presented in the
bottom-­left box of Fig. 2.2. Preventative measures are generally process-integrated
measures, which attempt either to close material cycles within the process or to
substitute hazardous materials used in the process with less hazardous materials.
Closed material cycles or replacement of hazardous materials is then further
reflected under the cleaner production of products, shown in the bottom-right box of
Fig. 2.2. Prevention is thus seen to be a dynamic process within a spectrum of pos-
sible measures, rather than a specific type.
The CP model in Fig. 2.2 has laid the foundation for the largest set of resulting
environmental performance frameworks developed since the cleaner production
concept was first introduced in the 1980s. At an organizational level, here indicated
mainly by the CP of processes (on the lefthand side in Fig. 2.2), the CP methodol-
ogy has more or less developed from the guidelines from the United States
Environmental Protection Agency’s ‘Facility Pollution Prevention Guide’ (1992).
The methodology presents a stepwise guide for establishing a company-wide pollu-
tion prevention programme. It outlines procedures for conducting a preliminary
assessment by identifying opportunities for waste reduction or elimination. It then
describes how to use those results to prioritize areas for a detailed assessment, how
to use the detailed assessment to develop pollution prevention options, and finally,
how to implement options that withstand feasibility analyses. This has, to a certain
extent, contributed to the standardization of environmental management sys-
tems (EMS).
The CP of products (right-hand side in Fig. 2.2) addresses not only the produc-
tion of a product, but also the upstream and downstream activities in the life cycle
of the product. To achieve a full understanding of the potential for a cleaner product,
a life cycle analysis of the product is required. Life cycle thinking and analysis pro-
vide another foundational concept of environmental performance management in
the historical development of the CapSEM Model.

2.4.2 Life Cycle Analysis Tools

According to UNEP/SETAC (2005), the main goal of life cycle thinking is to reduce
impacts in the resource extraction phase, production and use phase, and recycling
phase in the form of emissions from/to the environment by simultaneously improv-
ing the social performance at various stages of a product’s life. In this way, compa-
nies can achieve cleaner products and processes, a competitive advantage in the
marketplace, and an improved platform to meet the needs of a changing business
climate. A typical life cycle diagram can be found in the UNEP/SETAC Life Cycle
Initiative (2007).
The life cycle assessment methodologies of Life Cycle Assessment (LCA), Life
Cycle Costing (LCC), Material, Energy and Toxicity (MET) and Material Input per
Service Unit (MIPS) are related to products and their life cycle chains including
materials, production processes, distribution and disposal. Prior to such
20 A. M. Fet and H. Knudson

methodologies being used, companies that wanted to gain some understanding of

key environmental issues linked to their products’ value chains often started with
simplified material flow analyses like MIPS or MET studies. MIPS was developed
in Germany (Liedtke 1994) and set the rules for calculating the material inputs per
service unit, also called the MIPS factor which provides an indication of how much
material is wasted by each service unit. This laid the foundation for the functional
unit thinking inherent in LCA. The MET matrix model was developed in the
Netherlands with the idea of focusing on the materials, energy and toxicity of prod-
ucts (Van den Berg et al. 1995). A simple model helps to identify in which of the life
cycle phases these aspects have the largest impact and thereby to see where and how
to improve the products regarding them. This could be said to be a precursor to the
LCA model. The most comprehensive tool for life cycle analyses is the LCA as
presented by the International Organization for Standardization 14,040-standards
(ISO 2006).

2.4.3 Classifying Improvements
in Environmental Performance

In parallel with the classification of the Cleaner Production processes, several

attempts to classify a set of principles for improvements in environmental perfor-
mance appeared in the literature. One approach classifies strategies as shown in
Fig. 2.3 (Bras 1996; Fet 1997):
1. Environmental engineering (Bras 1996; Fet 1997)
2. Pollution prevention (United States Enviromental Protection Agency 1992)
3. Environmentally conscious design and manufacturing (Ehrenfeld 1994)
4. Industrial ecology (Graedel and Allenby 1995)
5. Sustainable development (Brundtland 1987)
Area 1 in Fig. 2.3 represents perspectives related to environmental engineering
strategies to reduce negative environmental impacts within production and manu-
facturing processes. This area is concerned with a limited systemic scope in both
time and environmental concern (i.e. only during the manufacturing process and life
cycle stage).
Area 2 increases the temporal scope and involves pre-planning for the manufac-
turing phase to prevent pollution and negative impacts during the process. As men-
tioned previously, pollution prevention strategies arose through the initiatives
launched by the US Environmental Protection Agency (1992), with the objective to
reduce the environmental impacts of products by identifying them in the design
phase. This way, impacts throughout the life cycle could be reduced through better
planning at the product design stage. For example, better planning might consider
techniques for assembly and material selection to help avoid negative impacts in the
use and dismantling phases later in the product’s life cycle. So, even though this
2 The CapSEM Model 21

Society 5
Scope of Environmental Concerns

X Manufacturers
One Manufacturer 4
X Products
Single Product Life Cycle

Disposal The challenge: Move from

3 the lower left towards the
Use upper right corner.
2 1
Manufacturing

Planning Manufact. Use Disposal Human Civilization

Life time Span time
System/Product Life time

Fig. 2.3 Classification of environmental performance levels. (Modified from Fet et al. 2013)

space only has a limited system scope on planning and manufacturing, it helps build
an understanding of potential problems that may arise later in the life cycle. It can
be seen as a prelude to the later consideration of the entire life cycle of a product.
Area 3 expands the scope from processes related to manufacturing to the product
as a whole and considers design to reduce negative impacts across its complete life
cycle. The increase in consciousness of environmental concerns is illustrated
through the additional consideration of the use and disposal phases. The wider con-
sciousness is also reflected in the expanding temporal scope related to the gradual
knowledge development of how to address the entire life cycle of products
(Ehrenfeld 1994).
Area 4 broadens the system boundaries and understanding of impacts throughout
the entire industrial system. This includes perspectives related to tracking material
and energy flows according to principles of industrial ecology (IE), e.g., industrial
symbioses and circular material flow models (Ehrenfeld 1994).
Finally, Area 5 represents the holistic consideration of environmental aspects
over an extended timescale and beyond the firm and its network. This means consid-
ering aspects relevant for present and future generations and that address all stake-
holders, and likely societal and political challenges over time.
To advance Fig. 2.3, a model for a systematic approach to environmental perfor-
mance improvements was developed over many years (Fet 1997, 2002). Presented
in Fig. 2.4, it shows adaptations from the first model, most notably the addition of
specific tools and methods for life cycle-based environmental assessment manage-
ment mapped along environmental performance improvement levels.
Figure 2.4 suggests a series of environmental performance and management
tools to be implemented for the purpose of moving to a higher level indicated by
Areas 1–5 presented in Fig. 2.3. Readers should note that models presented in
22 A. M. Fet and H. Knudson

Fig. 2.4 Classification of methods and tools for environmental performance improvements.
(Modified from Fet et al. 2013)

Figs. 2.3 and 2.4 focus mainly on environmental aspects of sustainability: they do
not fully consider economic and other social aspects.
Figure 2.3, together with Fig. 2.4, are the starting points for the CapSEM Model
(presented in Fig. 2.1). Each of the models has advanced the goal to guide compa-
nies and other organizations to systematically implement sustainability practices in
their products and internal strategies while also building partnerships with the larger
societal system.
As seen in Fig. 2.4, Area 1 contains the suggested tools of cleaner production
(CP) and input-output analyses (I/O) to monitor the environmental impacts during
production and manufacturing processes. In the CapSEM Model (Fig. 2.1), Level 1
encompasses production process-related changes for environmental accounting and
(more sustainable) performance (e.g., principles of eco-efficiency (Fet 2003)).
When setting objectives related to emissions, resource use and waste generation,
companies must assess the current use and flows of materials in order to reduce
consumption and waste in their production processes. The I/O method, therefore,
fits in Level 1 as it measures baseline Levels for defining improvement and resource
efficiency (Bringezu and Moriguchi 2002). Cleaner production (CP) is also located
on this level, where source reduction is the objective rather than end-of-pipe solu-
tions (Jackson 1993), thereby moving its placement further along the scales of sys-
tem scope and performance. The focus on resource efficiency is often driven by
2 The CapSEM Model 23

economic and/or policy incentives, as these methods provide for diagnostic com-
parison and benchmarking of companies. Focus only on environmental aspects
means that the Level 1 system does not explicitly consider the wider impacts on
society. Its system boundaries are drawn at the firm level around specific processes.
In Area 2 in Fig. 2.4, the tools for the purpose of environmentally conscious
product development are life cycle assessment (LCA) (Nordic Council of Ministers
1992), life cycle costing (LCC), supply chain management (SCM) (Igarashi et al.
2013), carbon footprint of products (CFP) and water footprint of products (WFP)
(Fet and Panthi 2012), environmental product declaration (EPD) (Fet et al. 2009b),
and design for environment (DFE). By expanding from the boundaries of a single
process, Level 2 in the CapSEM Model focuses on product- and value chain-related
changes. This means a focus on a product or service and all activities and processes
along its value chain. The methods in Level 2 include LCA, which quantifies mate-
rial flows (from Level 1) across the full life cycle of a product. Results from an LCA
are quantified and weighted in terms of environmental impact. The weighted criteria
can then be used to implement changes for more sustainable SCM upstream in the
value chain. In addition, the quantified impacts can be used to perform carbon- or
water-foot printing of a product, or to reach standardisation for acceptable levels of
environmental impact, e.g., EPDs. The principles of DFE, e.g., design for recycling
or dismantling, can transform the value chain, accounting, and planning for reduced
environmental impact through the full life cycle of the product and its materials.
Social-life cycle assessment (S-LCA) could also be placed on Level 2, to track
social impacts through the life cycle of a product (Huertas-Valdivia et al. 2020).
Such methods are younger in their methodological development and can be difficult
to quantify. However, further developing both quantitative and qualitative indicators
to measure social sustainability impact is essential to reach holistic sustainability as
mandated in the SDGs.
Area 3 in Fig. 2.4 presents tools to be used by companies to improve their strate-
gic approach for being more environmentally conscious, e.g., by implementing
environmental management systems (EMS) (Fet and Knudson 2017), environmen-
tal performance evaluation (EPE), key performance indicators (KPI), the Global
Reporting Initiative (GRI) (Fet et al. 2009a), and business models for sustainability
(BMfS) frameworks (Boons and Lüdeke-Freund 2013; Joyce and Paquin 2016). To
further increase the comprehensiveness and scope of aspects considered, Area 3
(Fig. 2.4)/ Level 3 (Fig. 2.1) move toward the implementation of methods for stron-
ger sustainability within an organization’s management systems and strategy. The
transition from Levels 1 and 2 into Level 3 represents an important advancement of
management and monitoring for sustainability, allowing the incorporation of more
social aspects. The organization must now widen its view beyond the firm itself, or
its associated value chains, and track and report on its impacts in relation to the past,
to its competitors, and for its long-term survival.
To make and monitor strategic changes across a company’s operations, tools and
methods for organization-level changes help address more complex sustainability
challenges. Meeting these challenges might include establishing management sys-
tems to monitor goals for reducing negative environmental impacts and engaging
24 A. M. Fet and H. Knudson

further with stakeholders and customers. It also means looking beyond the value
chain for effects of the organization on its employees and global and local environ-
ments in the long-term. Level 3 tools, therefore, include EPE, life cycle manage-
ment (LCM) and EMS for benchmarking, meeting goals and continuous
improvement (e.g., through ISO14001). Corporate social responsibility (CSR)
embraces the triple bottom line of sustainability and is one approach to stakeholder
engagement (Carson et al. 2011; Skaar and Fet 2012). Establishing KPIs is an
essential step in setting these goals, and companies can use a range of indicator
frameworks from national systems to large, standardized reporting and communica-
tion systems such as the GRI. Methods from Levels 1 and 2 can be used to collect
the data required for measuring the KPIs: demonstrating the knowledge develop-
ment path represented by the CapSEM Model. BMfS are also placed on this level as
they can help firms conceptualize their current value flows (environmental, eco-
nomic, and social) and identify areas to innovate for sustainability (Evans et al. 2017).
To achieve sustainable development in the long-term perspective, Areas 4 and
5 in Fig. 2.4 present the policy programmes and international regulations that help
to set goals for a larger societal system. The highest level in the CapSEM Model,
Level 4 also focuses on systems-related changes. This includes the most compre-
hensive assessment of sustainability aspects, both environmental and social, and for
the company to see itself as one actor in a complex network of actors. While Levels
1–3 focus mainly on environmental aspects, Level 4 (and the higher degrees of the
Level 3) command the inclusion of stakeholders and their long-term needs. Here,
systems engineering (SE) is suggested as a helpful methodology to address these
challenges and includes the principles of industrial ecology, e.g., principles of
industrial symbioses and circularity (Sopha et al. 2009). Material flow analysis
(MFA) is also placed on this level because it is an analytical model for measuring
the material flows in larger systems, e.g. industrial systems together with societal
interactions in the bio geosphere (Bringezu and Moriguchi 2002). The acronym
MFA has also been used for material flow accounting most often used at manufac-
turing processes as in Fig. 2.4. In the first version of the CapSEM Model, MFA was
on Level 1 (Fet and Knudson 2021). The model was later modified with MFA at
Level 4 to indicate that MFA is a broader concept, also covering the economic sys-
tem and bulk flows through a system, often presented by macroeconomy indicators.

2.5 A Systematic Approach to Using the CapSEM Model

Systems engineering (SE) is introduced as an overall process at Level 4 to better

consider stakeholder opinions and involvement in a holistic transition process.
SE can be viewed both as a discipline and process (Fet 1997). As a discipline,
SE concerns taking the holistic life cycle perspective and bringing in aspects from
other disciplines as needed in a multidisciplinary context. SE as a process concerns
“bringing a system into being” accompanied by an understanding of challenges to
the system during its life cycle (Blanchard et al. 1990).
2 The CapSEM Model 25

A six-step SE-methodology introduced suggests the following steps (Fet 1997):

1. Identify stakeholders and their needs related to sustainability performance (of a
system, hereunder also an organization or the society as a system).
2. Define requirements for the achievements of stated needs.
3. Specify current performances related to environmental, social and economic
aspects.
4. Analyze and optimize performance according to needs and requirements.
5. Suggest solutions according to stated needs and requirements.
6. Verify the suggested solutions against 1. and 2.
These six steps can be used for each area in Fig. 2.1. The complexity of stakeholder
involvement and therefore sustainability aspects to be addressed along the develop-
ment from the lowest to the higher levels, will increase. Thus, an initial step should
be to describe the system under study by e.g., a production flow-diagram, a product
tree and the supply chain of the product, or the organizational chart of a company.
The steps in the SE-process can be undertaken in several cycles until the most sus-
tainable performance has been achieved. For simplicity, SE is placed at Level 4 in
the CapSEM Model to illustrate that it yields to the lower levels, but also because
the increased scope required for Level 4 represents the most advanced form of
SE. The use of SE is elaborated on in Part II Chap. 12.

2.6 Conclusion

The CapSEM Model comprises a spectrum of tools and methodologies for transi-
tioning towards sustainability. It does not mandate that a company place itself within
one level. Rather, it shows the way the tools and perspectives are linked and build
upon each other. Additionally, it provides an example toolbox of methods that can
be applied for improved sustainability in an organization depending on its level of
ambition or maturity. The CapSEM Model demonstrates how the different dimen-
sions of systems and tools can be integrated to contribute to increased environmen-
tal and sustainability performance. Transitions can be achieved within organizations
using the tools presented first in Fig. 2.4 and advanced since the early 1990s.
Numerous scholars have suggested categorizations of environmental perfor-
mance and sustainability methods (e.g., Robèrt et al. 2002; Singh et al. 2009; Mura
et al. 2018). The CapSEM Model, however, classifies analytical methods and tools
in a practical way that can serve as an entry- or positioning point for companies. Its
development has paralleled the historical growth in concern for the environment and
is a result of engagement with companies of various maturity levels and outlooks
over the period.
As an organization moves between levels, tensions or limitations may be identi-
fied in relation to requirements or assumptions in methods at other levels. This may
be due to the limited scope of certain methods that are unable to capture aspects
across all SD dimensions. In many cases, tough decisions must be made between
26 A. M. Fet and H. Knudson

sustainability trade-offs and requirements that the organization has a clear strategy
to guide their priorities.
Part II of this book describes the tools presented across the CapSEM Model. Part
III will test the tools across different sectors and the different dimensions of sustain-
ability. Part IV will analyse usability, feasibility and flexibility of the tools for dif-
ferent stakeholders to encourage development of the model as systematic progress
towards stakeholder involvement and actions for checking the achievements of ini-
tially formulated needs and requirements. The CapSEM Model needs, for example,
to take stakeholders into consideration when specifying accurate level boundaries.
Nevertheless, it has proven to be helpful for business and organizations that
struggle to find a systematic approach toward implementing sustainability. No mat-
ter what drives this implementation within an organization, sustainability entails
complex problems and challenges (e.g., Lang et al. 2012, Schaltegger et al. 2013,
Brandt et al. 2013) that require transdisciplinary, collaborative, and holistic thinking
across triple-bottom-line principles, long-term systemic reasoning and wide stake-
holder engagement. The CapSEM Model is a conceptualization of methods and
tools to help companies address these challenges, and to identify their implicit
opportunities for sustainable development.

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
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the copyright holder.
Chapter 3
Sustainable Development Goals
and the CapSEM Model

Annik Magerholm Fet, Haley Knudson, and Martina Keitsch

Abstract This chapter discusses the links between Sustainable Development Goals
(SDGs) and the CapSEM Model. It suggests placing these SDGs along the four
Levels of the model to serve as a starting point for organizations’ engagement with
the goals and their objectives. The location of SDGs in the nested system perspec-
tive or ‘wedding cake model’ according to Griggs et al. (Nature 495:305–307, 2013)
and later Rockström and Sukhdev (New way of viewing the sustainable develop-
ment goals and how they are all linked to food. Stockholm Resilience Centre/
Stockholm University, 2016) situates the economic system within the societal sys-
tem, which is situated within the system of the biosphere and helps to conceptualize
the interconnections between SDGs and the dimensions of sustainability. Taking a
similar systems thinking approach, the CapSEM Model situates sustainability and
environmental management methods and tools within the systems of business oper-
ation and production. Extending and merging these two perspectives, the SDGs are
placed along the CapSEM Model to provide a point of engagement for organiza-
tions to align their activities with SDG objectives.

3.1 Sustainable Development Goals

The 2030 Agenda for Sustainable Development is “a plan of action for people, planet
and prosperity” (United Nations 2015). The 17 Sustainable Development Goals
(SDGs) (embedded in Fig. 3.1) are the core of the agenda, established to guide the

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
H. Knudson
Department of International Business, NTNU, Trondheim, Norway
e-mail: [email protected]
M. Keitsch
Department of Design, NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 29

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_3
30 A. M. Fet et al.

Fig. 3.1 The SDG wedding cake. (Rockström and Sukhdev 2016)

global sustainable development agenda until 2030. The goals recognize that “ending
poverty and other deprivations must go hand-in-hand with strategies that improve
health and education, reduce inequality, and spur economic growth – all whilst tack-
ling climate change and working to preserve our oceans and forests” (UN Department
of Economic and Social Affairs 2022).
The SDGs extend beyond the prior global development framework, the
Millennium Development Goals (MDGs), which focused on global poverty reduc-
tion. In recognition of the MDGs’ constraints, the SDGs were developed, involving
stakeholders globally and enhancing the goals with a set of specific targets and
indicators for national governments for measuring and communicating progress
(United Nations 2017).
Critics of the triple-bottom-line approach, such as Griggs et al. (2013), suggested
substituting environmental, social and economic silos with a more unified approach
in a nested system for sustainable development. These factors were combined to
develop the SDGs into a systemic framework necessitating the recognition of the
interconnectedness between the environmental, social and economic dimensions
through the goals and their targets. The objectives and requirements for achieve-
ment of SD on the system level is represented by the 17 goals and their 169 targets.
Although the official SDG target and indicator framework is aimed at national
governments, the success of the agenda hinges on all stakeholders and their engage-
ment and commitment. Crucial to this is the contribution by industry and busi-
nesses. Since 2015, a number of companies use SDGs to direct and communicate
their sustainability strategies as well as share their results. Several organizations
provide guidelines and frameworks for use in companies to set goals and indicators
for their respective strategies and operations. The SDG Compass (2015), a joint
 3 Sustainable Development Goals and the CapSEM Model 31

initiative between the World Business Council for Sustainable Development

(WBCSD), UN Global Compact and the Global Reporting Initiative 2015 is a good
example. They provide databases of business tools and indicators that give open
access to companies. Nevertheless, there are many challenges involved when
attempting to follow the 17 goals together with their respective targets and indicators.

3.2 SDGs and the Three Dimensions of Sustainability

The nested model shown in Fig. 3.1 illustrates an embedded view of the three
dimensions of sustainability. The economic layer, or system, is nested within the
societal layer, which is ultimately nested inside the Earth’s biosphere. This com-
municates the essential fact that all activities must be considered within the Earth
system. This model, often referred to as the wedding-cake model, maps each SDG
along these nested sustainability dimensions, or layers. Relationships and interac-
tions between the layers and therefore between the goals, then become apparent. For
example, environmental impacts are caused by the interactions between man-made
systems (in the societal and economic layers) and nature (the biosphere layer).
SDGs 6 (clean water and sanitation), 13 (climate action), 14 (life below water) and
15 (life on land) are those goals directly linked to changes in the natural system
caused by the flow of material in and out of its many interacting systems.
SDGs 1 (no poverty), 2 (zero hunger), 3 (good health and well-being), 4 (quality
education), 5 (gender quality), 7 (affordable and clean energy, 11 (sustainable cities
and communities) and 16 (peace, justice and strong institutions) are associated with
the societal layer of Fig. 3.2, as their objectives align with the changes necessary for

Level 4
Increasing performance scope

Systems change
Level 3 SE, MFA, IE
Organizational change
Level 2 EMS, EPE, KPI, GRI,
Product and value LCM, CSR, SBM ity
bil
chain change taina
LCA, SCM, CFP, to sus
on
WFP, EPD, DFE nsiti
Level 1 Tra
Production process
change

I/O, CP

Increasing systemic scope

Fig. 3.2 CapSEM model together with sustainable development goals. (Modified from Fet and
Knudson 2021)
32 A. M. Fet et al.

sustainable development across societal systems. Furthermore, SDGs 8 (decent

work and economic growth), 9 (industry, innovation and infrastructure), 10 (reduced
inequalities) and 12 (responsible consumption and production) are placed along the
corporate layer because their objectives require shifts in business strategies to
achieve sustainable solutions. Finally, SDG 17 (partnerships for the goals) is seen as
a requirement for, and outcome of, the entirety of the goals. This model is valuable
in the process of conceptualizing, distributing and systematizing efforts to move
towards achieving individual SDGs.

3.3 SDGs and the CapSEM Model

Rockström and Sukhdev’s (2016) wedding-cake model places SDGs along layers of
the interacting systems of global sustainable development: biosphere, society and
economy. Comprised of a similar systems thinking approach, the CapSEM Model
places tools and methods for measuring environmental and social performance
along the interacting systems of business operations and production: production
processes, the product value chains, the organizational operations and larger sys-
tems activities. Figure 3.2 therefore introduces an analytical model that places
SDGs along the four Levels of the CapSEM Model. This is intended to help organi-
zations distribute and systematize their work toward SDGs by assisting their under-
standing of how their activities affect and contribute to each of the goals. The
advantage of comparing the CapSEM Model with the SDG model in Fig. 3.2 is that
while Fig. 3.1 locates the SDGs hierarchically within the three spheres of sustain-
ability, Fig. 3.2 illustrates (and facilitates) dynamic movement and iteration between
different systems levels of applications in the transition towards sustainability.
Although the goals are each placed on a single level of the model, this is used
primarily to illustrate an entry point to their application. In reality (and inherent to
their conceptualization as a framework), the SDGs overlap and transgress. Their
placement on specific levels in Fig. 3.2 therefore indicates an emphasis on certain
areas, but does not lock them in or prevent their being considered in other areas.
Given their systemic nature, each SDG will expand and interact over several areas.
However, in order to incorporate the SDGs into business strategies, specific goals
and targets must be indicated and prioritized as a starting point.
SDGs 6, 13, 14 and 15 reflect impacts on the biosphere and are placed on that
level in Fig. 3.1. This thinking is also applied in Fig. 3.2. The biosphere SDGs are
placed on Level 1 since material flows in and out of a system, impact different sys-
tems of the biosphere, such as land, sea or air. In the CapSEM Model, these flows
are monitored within Level 1, where energy and material flows are measured by
tracking their movement in and out of the man-made systems under study, referred
to as production processes. Material flows in and out of the systems under study also
occur within Levels 2–4 of the CapSEM Model and are based on the same calcula-
tions and principles as Level 1. Rather than specific production processes (Level 1),
the respective processes are summarized as the systems of the product value chain
(Level 2), the organization’s production site and impacts related to strategic
3 Sustainable Development Goals and the CapSEM Model 33

decisions through stakeholder involvement (Level 3) or the societal well-being or

sustainability at a regional or national Level (Level 4).
Similar impacts are likely to occur on the other Levels in the CapSEM Model,
but this is then as a result of the material flows described under Level 1.
SDGs 12, 8, 9 and 10 reflect impact on the economy and are placed on that level
in Fig. 3.1. However, these SDGs are placed on Levels 2 and 3 of the CapSEM
Model. SDG 12, for example, concerns responsible consumption and production.
This reflects the activities upstream and downstream in the value chain of products
(Level 2). The achievement of this goal is also dependent upon strategic choices
made in the producing organization (Level 3), and on the behavior and needs of
people in society, Level 4 of the CapSEM Model.
The rest of the SDGs are grouped on the societal level in Fig. 3.1. These are not
placed at one specific level of the CapSEM Model, but rather shown as goals that
should be used as contextually appropriate for driving an organization’s transition
to sustainability. The use of these goals should therefore be considered according to
the specific sector being studied or problem analysed. An example of this is SDG 7
as the role which affordable and clean renewable energy will play and important
contribution to changes towards sustainable solutions on all levels.
SDG 17 is placed on the top of the wedding cake in Fig. 3.1, and similarly in the
CapSEM Model as a goal to be focused on during the entirety of the transition
process.

3.4 Conclusion

The models assigning SDGs as shown in Figs. 3.1 and 3.2 are not so very different.
They both structure SDGs according to their role in the transition to sustainability.
However, the additional value provided by their placement in the CapSEM Model is
the toolbox of methods and tools suggested for use by companies and other organ-
isations in this transition. The CapSEM Model helps make sense of the many meth-
ods available for tracking, measuring and improving sustainability performance by
grouping them by level. By grouping the tools by level, it may be easier for compa-
nies to consider using them, and to identify which tools are useful for addressing
environmental, economic and social impacts associated with each of their activities
and processes. This chapter has expanded the systematized approach to the inclu-
sion of the SDGs and their placement along the four levels of the CapSEM Model.
The model presented in Fig. 3.2 is an analytical representation of one approach to
engaging with the SDGs. Each of the goals is placed along one level to serve as an
entry point to understanding the activities and interactions that affect that goal’s
objectives. Their placement on one level does not mean that they are not relevant on
other levels. However, when working with companies, often overwhelmed by their
growing sustainability requirements and limited existing capacity, modest models
that help simplify complex objectives can serve as a baseline for engagement and
improvements in sustainability. The combination of the CapSEM Model and SDGs
therefore takes this approach.
34 A. M. Fet et al.

References

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capacity-building in sustainability and environmental management model (CapSEM-model).
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SDG Compass (2015) Developed by Global Reporting initiative (GRI), the UN Global Compact and
the World Business Council for Sustainable Development (WBCSD). https://sdgcompass.org.
Accessed 20 Jan 2022
Griggs D, Stafford-Smith M, Gaffney O, Rockström J, Öhman MC, Shyamsundar P, Steffen W,
Glaser G, Kanie N, Noble I (2013) Sustainable development goals for people and planet.
Nature 495:305–307. https://doi.org/10.1038/495305a
Rockström J, Sukhdev P (2016) New way of viewing the sustainable development goals and how
they are all linked to food. Stockholm Resilience Centre/Stockholm University. Available via:
https://www.stockholmresilience.org/research/research-­news/2016-­06-­14-­how-­food-­connects-­
all-­the-­sdgs.html. Accessed 26 Aug 2022
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Department of Economic and Social Affairs. Accesed 25 Aug 2022
United Nations (2017) Annex: Global Indicator Framework for the Sustainable Development
Goals and Targets of the 2030 Agenda for Sustainable Development. Work of the Statistical
Commission pertaining to the 2030 Agenda for Sustainable Development

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
 Part II
The Toolbox: Methodologies and Theories
Chapter 4
Input-Output Analysis and Cleaner
Production

Annik Magerholm Fet, Cecilia Haskins, and Magnus Sparrevik

Abstract This chapter gives an overview of the basic principles for analysing
material flows for production processes. This type of analysis is based on a calcula-
tion of materials going in and out of a process. Typical materials to be accounted for
are energy, raw materials and other supporting materials. Likewise, outputs from a
production process are waste of different types, emissions to air, water and soil, as
well as noise, radiation, vibrations, and loss of heat. In an input-output analysis, the
by-products from the process are also accounted for. The chapter also explains the
principles of cleaner production starting with the motivation from corporate leader-
ship to make production processes cleaner: to reduce waste and emissions and use
material in a more efficient way. The concept of Cleaner Production (CP) also
embraces strategic changes for making production and products cleaner and greener.
However, the purpose of the chapter to provide information about basic principles
for collecting information to be used in an environmental account for organisations,
which will help them improve their overall environmental performance.

4.1 Introduction

The cleaner production methodology described in this chapter is based on an under-

standing and accounting of material and energy flows into a production process, the
emissions, discharges and waste streams generated in the process and the by-­
products and final products (or service) that come out of the process. For the

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
C. Haskins
Department for Mechanical and Industrial Engineering, NTNU, Trondheim, Norway
e-mail: [email protected]
M. Sparrevik
Department for Industrial Economics and Technology Management,
NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 37

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_4
38 A. M. Fet et al.

Emissions to air

Energy
Production- Finished
Water
process(es) product(s)
Raw materials

Hazardous Waste Waste Discharges Discharges

waste for for to to soil
landfill recycling water

Fig. 4.1 Material flow scheme with inputs & outputs for single/series of production process(es)

purposes of this book, it is referred to as an input-output (I/O) analysis throughout.

Typical inputs are materials (e.g. processed, recycled, reused or raw materials;
natural resources), energy and services. Outputs are products (e.g., main products,
by-­products, recycled and reused materials), services, wastes (e.g., solid, liquid,
hazardous, non-hazardous, recyclable, reusable), and emissions (e.g., emissions to
air, effluents to water or land, noise, vibration, heat, radiation, light). A visual
representation of these inputs and outputs is presented in a material flow scheme,
see Fig. 4.1.
The operations of an organization may be logically grouped based on inputs to,
and outputs from, their different physical facilities and equipment. Operations also
include the supply to, and delivery from, them. This can be illustrated by a process
flow diagram for the production site, such as the one which Pingmuanglek et al.
(2017) produced for starch production.
I/O Indicators can further help to account and compile the inputs and outputs of
the material streams of the process, form the basis for assessment of subsequent
improvements and are often used to communicate quantitative information. The set
of I/O-indicators are often referred to as the firm-level operational performance
indicators (OPIs) (ISO 2021). A summary of material flows for each of the pro-
cesses in a production, or the aggregated OPI-values, will then form the environ-
mental account of the entire production site. OPIs are important when a company
establishes its environmental aspects, goals and programmes for environmental
improvements. It will show change in the environmental performances over time
and is an essential part of the environmental management system of the company
(see Chap. 7). An environmental account is also of great importance in providing the
underlying information for cleaner production.

4.2 Defining Cleaner Production Strategies

Cleaner production (CP) comprises strategies that aim at reducing environmental

impacts and impacts on health and safety resulting from products throughout their
life cycle, from the extraction of raw materials to their elimination. It encompasses
4 Input-Output Analysis and Cleaner Production 39

concepts to minimise waste production; eco-efficiency; pollution prevention or

green productivity. CP is relevant for companies with large quantities of emissions
and waste, no overview of resource usage, material flows and waste generation, and
high consumption of water, energy and other inputs. According to the action lines
presented in Fig. 2.3 in Part I, Chap. 2, CP-principles can be summarized as precau-
tion, prevention and integration, ranging from the macro to micro scale of policies,
processes, and products. Prevention refers to proactive actions on the corporate
operational level aimed at the causes of pollution. Rather than addressing emissions
after they are released, the actions aim at the heart of the cause of these emissions.
The measures may attempt to either close material cycles inside the industrial pro-
cess or substitute hazardous materials with less hazardous ones. Prevention is a
dynamic process within a spectrum of possible measures rather than a specific type
of measure, focused on industrial processes that include considerations of both
products and the nature of consumer demand (Jackson 1993).

4.3 Performing a Cleaner Production Project

CP implies a change of focus from the usual question of “How can we handle our
waste and emissions?” to a more proactive set of questions, such as “Where do
waste and emissions come from, how can they be avoided, and if unavoidable what
other options are available?” An illustration of cleaner production strategies is given
in Fig. 4.2. Emphasis when employing these strategies should ideally focus on the
left branch of this hierarchy and only consider the right branch when all possible
alternatives have been exhausted.
CP initiatives can be implemented by following the 5-step plan recommended by the
US Environmental Protection Agency (USEPA 1992) as follows Sects. 4.3.1–4.3.5.
This model has later been slightly revised by Baas (1995), and by Zhang et al. (2018),
however the main approach follows a set of similar steps.

Fig. 4.2 Illustration of the

principle for CP strategies
(USEPA 1992)
40 A. M. Fet et al.

4.3.1 Planning and Organisation

CP strategies suggest a variety of measures that contribute to reducing waste and

pollution at source. After gaining management commitment for conducting a CP
assessment (CPA), a specific issue, or set of issues, should be agreed upon as the
target of the assessment project. A qualified team of assessors should be identified
and organised as a task force to address the preparations and inspections needed.

4.3.2 Preparation

As an integral part of implementing CP, companies need to build their environmen-

tal account. An environmental account includes mapping of all material flows and
an assessment of the impact on the environment caused by these flows, together
with an environmental impact assessment of products and services. Essential to the
preparation phase, is the collection and classification of available and relevant data
and other corporate records regarding the assessment target(s). As options for
improvement are identified, the activities will enter a feasibility analysis phase, as
illustrated in Fig. 4.2.

4.3.3 Assessment Step

There are a wide range of methods available for generating ideas for CP improve-
ments. Workshops and brainstorming sessions may be used. Methods for CPA may
in addition include table-top exercises, checklists and inspections on site. All meth-
ods should ensure that participation is encouraged, that ideas are documented and
that all ideas are given appropriate level of consideration.

4.3.4 Feasibility Analysis Step

Based on information gathered through the assessment phase, the different options
are analysed to determine whether implementation of the options can be justified.
Three types of feasibility studies are usually made before selecting an option for
implementation.
• Technical evaluation (Is it technically executable with regards to the set
demands?)
• Economic evaluation (Is it financially justifiable?)
• Environmental evaluation (Will it provide a satisfactory environmental solution?)
4 Input-Output Analysis and Cleaner Production 41

Technical Evaluation
The technical feasibility of proposed options must answer the question, “Will the
suggestion reduce pollution and waste in the given situation?”. Any proposed
adjustments to the production facilities should consider physical obstacles to the
actual construction as well as the potential impact on the specific requirements of
the product. Of special interest are: the market availability of the required equip-
ment; the commercial availability of proposed equipment; and the maturity, i.e., has
the equipment been demonstrated and tested successfully and used in similar condi-
tions? Questions related to availability and suitability are the primary concern of a
technical evaluation for any promising option for pollution and waste reduction.
Economic Evaluation
Standard measures of financial return on any planned investments are used during
the economic evaluation. This includes tools for analysing and comparing economic
consequences of potential investments, such as pay-back on investment, internal
rate of return, and net present value.
The simplest way to determine if a project is a good investment is to add all the
savings and deduct the sum of all the expenses. Savings and expenses may be hid-
den in company accounts under different headings. As an example, the cost of waste
disposal may be directly available in the accounts, however it is unlikely to specify
in detail which materials are wasted and in what quantity. In addition, accounting
for any lost labour, and production downtime, can be challenging. Certain costs may
also be recorded as fixed, even they are variable. A valuable method for assessing
costs and savings is conducted by holding thorough discussions with the responsi-
ble accountant together with staff from different parts of the operations and man-
agement. This might include a walk through the premises, which may reveal that
certain expenses or savings are not included in the accounting, such as so-called
overhead expenses. However, the team should focus on the main areas in order not
to waste too much time on details and small amounts. It is also possible, that com-
panies can reduce their overall risk, through the introduction of cleaner production
measures which can have a positive influence on the economic evaluation.
Environmental Evaluation
Data collected in previous phases is applied to the analysis of internal and natural
environments. The internal or working environment can have environmental effects
on workers. A poor internal environment can manifest in a high absence rate and
lower productivity in production. The natural environment encompasses the sur-
rounding areas of the company, consisting of soil, air and water. Pollution of the
natural environment affects the local community and can also have global conse-
quences. This analysis requires knowledge about how the various production pro-
cesses impact the natural environment. Benchmarks with regards to quantitative
OPIs before and after a production change, a material change, a technology change
or an operational change, become evidence for the objectives achieved.
42 A. M. Fet et al.

4.3.5 Implementation

In this phase, the selected options are delivered according to the recommendations
and plan of action in the final feasibility study. It is also noteworthy that this process
is highly iterative. If the technical feasibility is incomplete, it may be necessary dur-
ing this phase to revisit the earlier assessment phases before proceeding. As the
company gradually identifies new targets for CPA, the overall benefits of CP and
return on investments are realised.
When the company has completed a CPA in one part of the production line, the
organisation has obtained the competence to use this experience in other parts of its
operations. It can be challenging to prioritise improvement options resulting from a
CP. It is obvious that options with high environmental benefit, low technical prob-
lems and high profitability should be considered first. Normal housekeeping mea-
sures will be at the top of the list and can usually be implemented immediately.
Other criteria for prioritizing candidate options include the following:
• Comply with all existing environmental demands from regulatory agencies
• Evaluate demands from neighbours, insurance companies, banks and customers
• Avoid use of toxic substances whenever alternatives exist
• Reduce total consumption of materials and energy
• Continuously consider methods for closing material streams internally
• Investigate ways in which company waste can become a resource for others by
establishing an industrial symbiosis
It is important that environmental concerns are prioritised before short term
financial gains, and that environmental measures are compatible with long term
investments, project plans and product improvements.
Plan of Action
Before moving on from this phase, the team should propose a plan of action that
prioritizes and addresses execution of the most promising options. The plan of
action should include a list of activities needed for the implementation and measure-
ments, design, contact with the equipment providers, and other resource require-
ments. Some of the options may require competence outside the company, in which
case, consultancy support should be considered. The plan of action should also con-
sider if some of the options should be implemented as demonstration projects and
whether it is possible to receive financial support to conduct such pilot projects. The
execution of a demonstration project should also be described in the plan of action.
Additional Uses of the Feasibility Analysis Report
A completed feasibility analysis is useful for the company in many ways. The com-
pany benefits from an overview of the material flow in the surveyed work process;
an overview of waste and emission streams, and which technical, economic and
environmental challenges are connected to candidate measures for improving the
natural and internal environment. A thorough report from the feasibility analysis
phase provide auxiliary benefits beyond the initial purpose. Many governments
demand a technical environmental analysis when issuing permits for emissions, and
a good report can support this. In connection with increased demands on companies
4 Input-Output Analysis and Cleaner Production 43

to provide environmental reporting documentation, a complete report from a CPA

provides a good starting point. The report also provides a strong foundation for
registering environmental improvements after completion of the initial study.

4.4 Conclusion

CP is a broad concept with implications for application at all levels of society. This
chapter has mainly focused on CP processes. CP strategies can be adopted by indi-
vidual companies, by a cluster of industrial enterprises, at regional and state levels
of government and at a global level through treaties and international agencies.
Indications are that compliance with CP principles of waste and emission avoidance
and reduction render positive results for all three pillars of sustainable develop-
ment – social, environmental, and economic. There remains a need for a consoli-
dated strategy that combines the many different instruments for promoting
collaboration in the direction of CP by bringing together all relevant stakeholders.

References

Baas LW (1995) Cleaner production: beyond projects. J Clean Prod 3(1–2):55–59. https://doi.
org/10.1016/0959-­6526(95)00042-­D
ISO (2021) Environmental management – environmental performance evaluation – guideline. ISO
14031:2021
Jackson T (1993) Clean production strategies developing preventive environmental management
in the industrial economy. CRC Press, Boca Raton
Pingmuanglek P et al (2017) Supply chain analysis for cassava starch production: cleaner produc-
tion opportunities and benefits. J Clean Prod 162:1075–1084
USEPA (1992) Facility pollution prevention guide. environmental protection agency’s office of
solid waste in Washington D.C. and the Risk Reduction Engineering Laboratory in Cincinnati
Ohio, USA
Zhang P, Duan N, Dan Z, Shi F, Wang H (2018) An understandable and practicable cleaner
production assessment model. J Clean Prod 187(20):1094–1102. https://doi.org/10.1016/j.
jclepro.2018.03.284

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
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Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 5
Looking Beyond the Factory Gates:
Life Cycle Assessment, Supply Chain
Management and Design for Environment

Annik Magerholm Fet, Luitzen de Boer, and Martina Keitsch

Abstract This chapter gives an overview of the principles of life cycle assessment
(LCA), supply chain management (SCM) and design for the environment (DfE).
They are all placed at Level 2 in the CapSEM Model as tools for enhancing the
product by improving the actual production processes that take place at different
stages and subsystems in the life cycle of a product. One way of analysing and ame-
liorating the environmental performance of a product can be by analysing the envi-
ronmental aspects and impacts initially by performing a life cycle assessment aimed
at finding the most significant environmental impacts in the life cycle of the product.
These hotspots can then be identified under different suppliers in the upstream value
chain. Results from this analysis should then be addressed in the design of a new
product, and further result in changes to the supply chain by supply chain manage-
ment. An optimal solution for improving the environmental impacts at the different
stages of the life cycle of a product, can be achieved at the end by introducing this
into design principles as better specification of the performance at each stage in the
life cycle of the product. This chapter also introduces green public procurement as
a driver for change in the supply chain.

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
L. de Boer
Department for Industrial Economics and Technology Management,
NTNU, Trondheim, Norway
e-mail: [email protected]
M. Keitsch
Department of Design, NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 45

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_5
46 A. M. Fet et al.

5.1 Introduction

Since the introduction of cleaner production (CP) programmes in the early 1990s,
the focus has gradually expanded to include activities outside factory production
sites. Businesses became more aware of their responsibilities during the entire value
chains of their products, both upstream and downstream. The CapSEM Model sug-
gests tools for analysing and evaluating impacts of products and activities in a life
cycle perspective along value chains. This chapter gives a general introduction to
life cycle assessment tools, including the standardized Life Cycle Assessment
(LCA) to consider the product system, Supply Chain Management (SCM) to man-
age the value chains of suppliers and products, and design for environment (DfE) to
integrate environmental concerns in the development of products and services.

5.2 Life Cycle Analyses Tools

A life cycle assessment takes the entire life cycle of a product into consideration,
i.e., the cradle to grave approach (Hauschild 2018; Owens 1996). Life cycle assess-
ment methodologies, LCA, Life Cycle Costing (LCC), and Material Input per
Service unite (MIPS), are related to products and their life cycle chains, materials,
production processes, distribution, and disposal with the most comprehensive tool
being the LCA (Ness et al. 2007). Performing a complete LCA for a product con-
sisting of a high number of components, is very time-consuming. Companies may
not want to perform a complete LCA, but rather want to obtain an overall impres-
sion of key environmental issues linked to the product value chain. Simplified anal-
yses such as Life Cycle Screening (LCS) or Material, Energy and Toxicity (MET)
studies may be used for this. When environmental life cycle analyses are combined
with LCC-analyses, they are appropriate for decision support or strategic planning
related to both product and process improvements.

5.2.1 Environmental Life Cycle Assessment

In order to consider a product’s specific environmental aspects, the most extensive

method available is LCA methodology. LCA methodology was first developed in
Switzerland in the 1960s and further developed by the Society of Environmental
Toxicology and Chemistry (SETAC). It became standardized as an international
standard in 1996 and is included in the ISO 14000-family of environmental man-
agement standards (ISO 2006a, b). During the 1990s, many studies reported omis-
sions and weaknesses within the methodology (Lindfors et al. 1995; van den Berg
et al. 1995). Although the standards have been in use for many years, debate remains
around the accuracy and relevance of the results of an LCA (Ross et al. 2002; Owens
1996). LCA methodology includes the steps goal and scope definition, inventory
analysis, impact assessment and interpretation (ISO 2006a). These steps are still
5 Looking Beyond the Factory Gates: Life Cycle Assessment, Supply Chain... 47

identical, but details under each step have evolved over the years and the entire
process is well documented in the literature (Hauschild 2018). The direct applica-
tions of an LCA is for product development and improvement, strategic planning,
marketing and public policy making.
The results of the inventory analysis comprise a list of all raw material consump-
tion, and emissions identified in every process of the entire life cycle are known as
the inventory table. This information is usually presented in process flow-charts and
used by companies to present an overview of the product system and subsystems (or
modules). This overview of quantitative information is further used to analyse and
assess the impacts of the environmental burdens identified in the inventory analysis.
There is no commonly accepted methodology for consistently and accurately asso-
ciating inventory data with specific environmental impacts. It is also problematic to
find weighting factors which can be adopted globally, due to environmental condi-
tions are under changes as a result of climate changes and pollution in the ocean, for
example. Nevertheless, a process impact assessment includes classification, charac-
terization, and valuation. The main purpose of this classification is to briefly describe
which potential environmental impacts are caused by the inputs and outputs. During
classification, the different parameters from the inventory table are noted under the
relevant impact categories. For example, all emissions contributing to global warm-
ing are noted under the heading ‘Global warming’. The characterization is a quanti-
tative step in which the relative contributions of each input and output to its assigned
impact categories are assessed, and the contributions are aggregated within the
impact categories. In the valuation, the relative importance of different environmen-
tal impacts are weighed against each other. Results from the valuation normally
form the basis for environmental improvement priorities. During this stage, differ-
ent environmental impacts can be weighed and totalled to form an environmental
index. An indication is thus available on how one effect can be compared to another.
For the purpose of improving a product, this information is of importance for its
design. The findings may also form recommendations to decision-makers in the
supply chain.

5.2.2 Life Cycle Screening Tools

Life cycle screening tools were developed to support the development of routines
for performing an LCA. When the intention is to identify key issues for further
investigations, e.g., identify parts of a life cycle that needs further research, Life
Cycle Screening (LCS) is recommended (Heijungs 1996). LCS is a simplification
of an LCA, however it can never claim to be a substitute for a full LCA (Bovea and
Pérez-Belis 2012; Suppipat et al. 2021). The name MET matrix is derived from the
first letter of the LCS categories, i.e., Material cycle, Energy consumption and Toxic
emissions (Brezet and van Hemel 1997). The MET-matrix is a tool for quickly iden-
tifying a product’s main environmental aspects (Stefanov 2017). It is a simple input-­
output model combined with the product’s life cycle. The nature and the volume of
raw materials used in the product are considered, as well as the energy it requires
48 A. M. Fet et al.

and the waste and emissions it generates. This requires reflection on the product’s
entire life cycle, from the extraction of raw materials up to and including processing
the product after it has been disposed. Three categories of environmental aspects are
distinguished in this input-output model as follows:
• Material cycle: raw materials - materials - waste (a line that should be trans-
formed into a cycle)
• Energy consumption: energy consumed during the various stages of the product
• Toxic emissions: hazardous emissions to water, soil, and air
Material Input Per Service unit (MIPS) is another tool developed in 1990s. The
MIPS concept is a life cycle tool for analysing material inputs per service unit. It
measures ecological impact, showing the same system boundaries for all examined
services. Services imply utilization that could be obtained from a product (or infra-
structure) to satisfy human needs and desires. In this concept, the product is con-
ceived as the service delivery machine, or service machines, focusing on the use of
resources and less on waste streams. By calculating material and energy flows and
the number of products produced, the material intensity related to the function of
that product can be calculated, thereby creating a picture of the environmental per-
formance related to that product. The concept is based on the philosophy that better
utilization of materials and resources is needed to achieve a sustainable develop-
ment (Liedtke 1994; Robèrt et al. 2002).
A direct comparison of the MIPS between products that differ in their consis-
tency is significant in cases of functionally equal products. The definition of the
service unit is therefore important. The calculations start with a screening phase
where the product’s material intensity measure is calculated based on inputs alone.
It is not necessary to count waste outputs, which would result in double counting,
because waste is the difference between material inputs and products (or service)
outputs. After the first screening, all known eco-toxicities of the material flows asso-
ciated with goods or services are carefully considered. The counting of material
intensity or resource productivity, the inverse of material input per service unit, 1/
MIPS, is referred to as Material Intensity Analysis (MIA). With MIA it is possible
to compare the ecological impact intensity of functionally equal substituents
(Liedtke et al. 2014). This concept has become an integrated part of LCA as all
material flows should be referenced to the functional unit of the analysed product
together with its supply chain.

5.2.3 Life Cycle Costing (LCC)

Economic issues drive many decisions in industry, and the results from an LCA-­
study can be linked to LCC information (Asiedu and Gu 1998). Traditionally cost
effectiveness implies most performance for least cost. LCC is a comprehensive life
cycle approach especially designed for capturing economically related issues with a
focus on costs and revenues - not environmental issues (Norris 2001). It involves the
collection and sometime estimation of all costs associated with the activities planned
5 Looking Beyond the Factory Gates: Life Cycle Assessment, Supply Chain... 49

and/or accomplished throughout the system life cycle. This includes the costs of
research and development, design, production/construction, operation, maintenance
and support, and system retirement (Blanchard 1990). Another cost examination
instrument is the Value-Added Analysis (VAA), which is related to the MIPS-­
concept (Azapagic and Perdan 2000). VAA supports an evaluation of the market-
ability of an eco-efficient product. A comparison between different production
technologies or substituents based on both MIA and VAA provides an estimate of
where in the life cycle of products and services a low ecological impact can be
reached.

5.3 Supply Chain Management

The life cycle perspective makes SCM highly relevant for addressing improvement
in sustainability. Whilst SCM originally did not initially focus on sustainability, the
inherent, underlying systemic similarities between SCM and LCA suggests that
SCM can serve as an important driver and enabler of improving overall sustainabil-
ity and further encourage the adaptation of approaches such as LCA and LCC (Blass
and Corbett 2018).

5.3.1 What is Supply Chain Management?

SCM as a managerial concept emerged during the late 1980s from the field of logis-
tics management, extending the key principles of logistics to a higher system level
covering a focal firm’s upstream suppliers and downstream customers. Christopher
(2016) defines logistics as:
...the process of strategically managing the procurement, movement and storage of materi-
als, parts and finished inventory (and the related information flows) through the organiza-
tion and its marketing channels in such a way that current and future profitability are
maximized through the cost-effective fulfilment of orders.

SCM can then be thought of as logistics management across multiple, serially con-
nected actors, i.e. the supply chain. Christopher’s (2016) definition of SCM is
used widely:
The management of upstream and downstream relationships with suppliers and customers
to deliver superior customer value at less cost to the supply chain as a whole.

The interorganizational dimension of SCM brings with it specific challenges. Coyle

et al. (2003) identify several mutually related, areas of attention in SCM, including
inventory management, a concern for minimizing the final cost for the final cus-
tomer, accurate and fast information exchange between upstream and downstream
actors, developing relationships and forms of collaborative planning with these
50 A. M. Fet et al.

actors and addressing the perceived division of risks and gains. The increasing focus
on circularity in supply chains further adds to the importance and complexity of
addressing these areas of attention (De Angelis et al. 2018). For example, a shift
towards circular supply chains is likely to change the interaction patterns, material
flows and types of value exchange between various actors, including information
flows, the location and types of inventories held, the need for collaboration and
planning, and novel business models (along with the implications of these models
for sharing risks and rewards).

5.3.2 Why is SCM Important for Sustainability?

When considering the previous section on LCA through the lens of SCM, one could
argue that a life cycle (LC) perspective coincides with, and implies, a supply chain
perspective. After all, assessing costs as well as environmental impacts related to the
development, production, in-service and dismantling of a product will likely corre-
spond to different stages in a supply chain, i.e., producers of components, producers
designing and assembling complete products, wholesalers and distributors of prod-
ucts, final users and service providers. Just as the service level and cost performance
offered to the final customer is the sum of the contributions of all supply chain
actors involved, so is the environmental impact. Since the first decade of the 2000s,
increasing attention has been paid to unravelling SCMs potential as a driver for
sustainability, resulting in the body of literature known as Sustainable Supply Chain
Management (SSCM), defined by Carter and Rogers (2008) as:
… the strategic, transparent integration and achievement of an organization’s social, envi-
ronmental, and economic goals in the systemic coordination of key interorganizational
business processes for improving the long-term economic performance of the individual
company and its supply chains.

In their framework, SSCM builds on four key dimensions:

1. sustainability as an integrated aspect in overall firm strategy
2. risk management, including contingency planning and audits
3. ingraining sustainability in the firm’s culture and values and
4. creating transparency, by stakeholder engagement and other measures.
LCA and related approaches clearly support several of these dimensions, most nota-
bly carrying out risk assessment and creating transparency. As part of their concept
of Shared Value Creation (SVC), Porter and Kramer (2011) identify redefining the
activities in the value chain as a key strategy for linking economic value creation to
social and environmental value creation, pointing to logistics and purchasing as
important areas of attention. Achieving SVC will typically require collaboration
across upstream and downstream supply chain actors (as well as other actors in the
wider ecosystem) and as Porter and Kramer (2011) indicate: ‘…successful
5 Looking Beyond the Factory Gates: Life Cycle Assessment, Supply Chain... 51

collaboration will be data driven, clearly linked to defined outcomes, well con-
nected to the goals of all stakeholders, and tracked with clear metrics.’ By aligning
LCA with supply chain management, a change towards green supplier selection
(GSS) takes place. A strengthened focus on environmental responsibility strategies
motivates a growing tendency to integrate LCA-based information. Igarashi et al.
(2013) indicated how LCA plays an important role in contributing to greener sup-
plier selection. As suggested in their analysis, the use of LCA needs to be aligned
with both a focal organization’s overall strategy as well as the supply chain context.
The use of LCA should be considered in the various stages of the GSS.
In addition, the outcomes of assessing the alignment of the overall strategy with
the supplier selection processes will probably also have consequences for how vari-
ous steps in the green supplier selection process are carried out and how the supply
chain context is mapped. Building further on Igarashi’s work, Jenssen and De Boer
(2019) more specifically identified suitable application strategies for LCA in GSS.

5.4 Design for the Environment

Alongside SCM, Design for Environment (DfE) signifies another important prog-
eny from LCA in the transition towards sustainability. DfE has evolved as practical
approach to design products and services thereby meeting environmental challenges
identified in LCA.

5.4.1 Background

In 1989, the United Nations Environment Programme (UNEP) began work on

approaches for preventing pollution. The resulting strategy, Cleaner Production, is
an essential part of the Sustainable Production and Consumption Policy (Clark
2007). Since the early 1990s, producers and designers from various industries
started to work with cleaner production strategies and to pay attention to the reduc-
tion of negative impacts along the life cycle of a product – from extraction of its raw
materials to its ultimate disposal. Simultaneously, the Design for the Environment
(DfE) approach emerged as a non-regulatory aid for companies to consider sustain-
ability effects when designing and manufacturing commercial products and pro-
cesses (Ehrenfeld and Lenox 1997). In addition to incorporating environmental
concerns into product and service solutions, DfE evolved out of product life cycle
assessment (DeMendonça and Baxter 2001). DfE has had an impact on different
types of production and manufacturing. It has been part of the Xerox industrial
design since 1990, when the company started a 5-year effort to create waste-free
factories including 90% minimum reduction in solid waste to landfills, air
52 A. M. Fet et al.

emissions, hazardous waste, and process wastewater discharges (Azar et al. 1995).
DfE has also influenced companies such as Philips and the ICT branch (Mottonen
et al. 2010).

5.4.2 Methods for DfE

DfE enables designers to consider traditional design issues around cost, quality,
manufacturing process and efficiency as part of a unified decision system (Zheng
et al. 2019; Anderson 1995). Using DfE encourages developers to apply LCA to all
potential environmental implications of a product or a service being designed,
including energy and materials used, manufacture and packaging, transportation,
consumer use, reuse or recycling and disposal. DfE tools enable consideration of
these implications at every step of the design process (Eagan and Pferdehirt 1998;
Bras 1997). The Dutch PROMISE approach (Brezet et al. 1994) is an early DfE
approach, which aims to assist business in setting up systematic environmental
product development. Tools such as the MET matrix and LCA are recommended in
the search for the most important environmental criteria in the product life cycle.
Another useful tool for monitoring DfE impacts is the Ecodesign strategy wheel,
which comprises seven design strategies for environmental product development.
By using a simple grading, poor – average – good, it is possible to map the perfor-
mance of initial, improved and new products, and then compare their environmental
performance against each other. During the 1990s, DfE and the emerging ecodesign
concept consisted mainly of quantitative and empirical methods, and subsequent
improvement strategies concentrated on the material and energy flows within a sys-
tem of producers and consumers, aiming to build knowledge about how these flows
can be fed into design processes to improve products and production rou-
tines (Keitsch 2015). DfE and ecodesign facilitate navigation through the complex-
ity of industrial and natural ecosystems within which societies and businesses
operate (Bras 1997).
Brezet and van Hemel (1997) came up with an Ecodesign Strategy Wheel, which
is often referred to and in common usage. It illustrates the ways in which product
development can be aligned with SCM, DfE and ecodesign. The product develop-
ment process consists of the following stages: strategy, product planning, need iden-
tification, research, analysis, idea generation, concept detailing, customization,
marketing. The stages are unexchangeable, however iterations are often made in
idea generation, concept detailing, and at customization stages. When designing
environmentally sound products, aspects of LCA, DfE and SCM should be inte-
grated at the product planning stage and permeate the whole product development
process (Fig. 5.1).
5 Looking Beyond the Factory Gates: Life Cycle Assessment, Supply Chain... 53

Fig. 5.1 Product development stages integrating aspects of LCA, DfE and SCM

5.5 Conclusion

LCA, SCM and DfE each have their own strengths and limitations. LCA considers
environmental impacts over the life cycle of a product or a service. An LCA requires
comprehensive inventory data where information should be collected throughout
the value chain of the product. The popularity of outsourcing means that parts of the
actual products for which the LCA is undertaken, can be produced in different loca-
tions world-wide and make it difficult to gather specific data. Some of the suppliers
of such parts might be direct suppliers or sub-suppliers for the company producing
the product for which the LCA is performed. Serious impacts can appear much
further away in the supply chain. SCM therefore requires a significant level of stake-
holder involvement when increasing an organization’s awareness around sustain-
ability. The interorganizational dimension of SCM results in both coordination and
monitoring challenges. The combination of LCA and SCM is an appropriate
approach to reduce environmental impacts and costs via different mechanisms to
drive the production of products and services towards sustainability. Similarly, LCA
is an important and helpful tool for gathering information feeding into the
DfE-­process. DfE and SCM both address environmental issues through design and
54 A. M. Fet et al.

innovation to influence companies’ strategic decisions. They thus contribute to the

further development of principles for integrated models for the achievement of sus-
tainable design as a sustainable solution: either as a product, or, as a service. This
has become a growing field of research across different disciplines, and a rich field
for interdisciplinary collaboration.

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56 A. M. Fet et al.

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 6
Communicating Product Life Cycle
Performance through Labels
and Declarations

Christofer Skaar

Abstract This chapter gives an overview of the development of different eco-­

labelling schemes over a timeline of about 50 years. The main focus is, however, the
standards for product declarations developed under the ISO 14000-family.
Hereunder standards for product categories rules (PCRs), environmental product
declarations (EPDs) as well as standards for different eco-footprints as, for exam-
ple, carbon footprints of products (CFP) and water footprints of products (WFPs).
The chapter also gives a brief description on how to develop and implement product
labels for various purposes.

6.1 Introduction

Companies are increasingly held accountable for their performance on sustainabil-

ity. This is an established trend that also extends to the products and services that
companies provide. Expectations to report on environmental performance come
from many stakeholders, such as professional buyers, individual consumers, con-
sumer advocacy groups, environmental organisations, and the government.
Companies can try to meet these expectations through product level reporting,
where product level refers to both products and services. This is especially relevant
when communicating on issues that are not possible to discern from the product
itself. One cannot see the carbon footprint of a product and one cannot tell if the
wood in a product is sourced from sustainably harvested wood or not.
Using labels and declarations to communicate product environmental perfor-
mance has a long history, as shown in Fig. 6.1. Two early examples are the Demeter
label and the Blue Angel, both from Germany. The Demeter label was founded in
1928, allowing customer to choose products from biodynamic agriculture (Demeter
2022). The Blue Angel label was founded in 1978 and is considered as the first

C. Skaar (*)
Department for Industrial Economics and Technology Management, NTNU,
Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 57

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_6
58 C. Skaar

Fig. 6.1 Timeline of environmental communication for products

proper ecolabel (UNOPS 2009), with multiple criteria and a life cycle perspective.
In the decades after the introduction of the Blue Angel, there was global growth in
environmental labels and declarations. The EU has worked on developing and test-
ing a methodology called Product Environmental Footprint (PEF) since 2011. As of
2022, in its transition phase, it is expected to have significant impact if and when it
is introduced into EU law (EC 2022).
With the increase in labels and declarations, there was a need for more coopera-
tion between the organisations. There was also a need for stakeholders to be able to
understand the quality of different programmes – which labels and declarations can
be trusted? In short, there was a need for standardisation. Through the International
Organisation for Standardisation (ISO), the development of a series of ISO stan-
dards was started in the late 90s. These are known as the ISO 14020 series of stan-
dards and they provide principles for communicating environmental performance
through labels and declarations (ISO 14020: 2000, 14025: 2006, 14021: 2016,
14024: 2018a).

6.2 Environmental Labels and Declarations

The ISO 10420 series of standards provides three different approaches for commu-
nicating on the environmental performance of products and services (ISO 2000,
2006, 2016, 2018a). Each approach has its own standard, and they are labelled type
I, II and III by ISO. They must all follow the nine general principles outlined in ISO
14020, where the key message is that environmental claims must be based on sci-
ence, be verifiable, be accurate and relevant, and not be misleading. Note that it is
not uncommon for an organisation to use more than one of these approaches at the
same time, for example to meet requirements in different markets or by different
stakeholder groups. The three approaches (label type and ISO standard) are:
6 Communicating Product Life Cycle Performance through Labels and Declarations 59

• Self-declaration (type II, ISO 14021)

• Verifying content (type III, ISO 14025)
• Certifying performance (type I, ISO 14024)
Table 6.1 provides an overview of key differences between the three approaches.
Main audience indicates if the primary audience is professional or consumers,
termed business-to-business (B2B) versus business-to-consumer (B2C). Public pro-
curement will usually be considered B2B, but smaller procurements may also be
considered as B2C. Programme indicates if there is a requirement for an organisa-
tion (programme operator) responsible for running the ecolabel system.
The ISO standards provide three archetypes for ecolabels: Type I, Type II, Type
III. The archetypes provide a framework for understanding product level communi-
cation. However, we often find labels and declarations that are a mix of these arche-
types. These are referred to as hybrid labels. One hybrid label has become so
common that it has its own ISO standard, this is ISO 14067 for reporting on the

Table 6.1 The ISO 14020 family and beyond: environmental claims for products and services
Hybrid approaches
Footprint Carbon Other
labels (ISO footprint (ISO hybrid
Type I Type II Type III 14026) 14067) approaches1
Standard ISO ISO ISO 14025 ISO 14026 ISO 14067 Check
14024 14021
Main audience B2B Depends Mainly B2B and For Check
and on claim B2B, B2C B2C communication,
B2C possible ISO 14026
Programme Yes No Yes (Yes)2 applies Check
operator
Life cycle Yes (Yes)3 Yes, LCA Yes Check
perspective
Environmental Multiple Self-­ No No (but Check
performance criteria imposed performance rating scales
criteria criteria, criteria may be
often used)4
single
issue
Verification Yes, 3rd No, based Independent Independent Check
type party on verification. verification.
disclosure 3rd party for Programme
B2C, decides for
programme B2B and
decides for B2C
B2B
1
This column provides a checklist for evaluating environmental labels and declarations – if you
encounter an unfamiliar label, you can use this as a guide to evaluate it
2
There is a requirement for programme operator, but a company can be its own programme
operator
3
A life cycle perspective is encouraged, but not required
4
In general, no performance criteria are used. However, it is possible to use rated scales (e.g.
A–E, 1–6, etc.) based on defined performance levels
60 C. Skaar

carbon footprint of products (CFP) (ISO 2018b). The growth of demand for single
issue declarations, such as carbon through CFP and for water through water foot-
print of products (WFP) has led to the development of ISO 14026 for communica-
tion of environmental footprints.

6.2.1 Type I: Environmental Labels

Environmental labels of type I are probably the labels that are best known by people
in general, as they can be found on products such as groceries, clothing, and furni-
ture. Two examples of such labels are the Blue Angel from Germany and the Nordic
Swan, founded in the 70s and 80s. Historically, the main audience of environmental
labels were in the business to consumer market. However, over the last few decades
they have been commonly used for all types of procurement (B2C, B2C, public
procurement).
The purpose of these labels is to certify the environmental performance of the
product against a set of defined criteria. These criteria are developed from a life
cycle perspective and often also include quality requirements. The intention of
labelling is then to make it easier to identify good quality products with a low envi-
ronmental impact.
The basic principles for a type I label are to provide information that is accurate
and verifiable. Furthermore, it must focus on relevant environmental aspects and not
be misleading. The criteria are developed through stakeholder consultation and
based on scientific methodology. There is also a requirement that the label must be
administered by an independent organisation (programme operator): the procedure,
methods and criteria must be transparent.

6.2.2 Type II: Environmental Claims by Manufacturers

Environmental claims of type II are self-declared, for example, made by manufac-

turers and retailers, and can be found, for example, in advertisements, on products,
in technical brochures and on websites. The ISO 14021 standard was developed due
to a growth of claims related to environmental performance and a need to ensure the
reliability of these. These are often used for claims related to one or a few environ-
mental aspects, such as recycled content, recyclability, biodegradability, energy
consumption, and so forth.
For self-declarations, transparency is a key element. The company may evaluate
the environmental performance of a product and communicate this, but they must
also provide information to anyone that wishes to verify the claim. For verified
content, there are no environmental performance criteria that the product must fulfil,
and the customers must themselves evaluate and compare between products.
6 Communicating Product Life Cycle Performance through Labels and Declarations 61

6.2.3 Type III: Environmental Declarations

Environmental Product Declarations (EPD) of type III quantify the environmental

performance per functional unit for a product system. The functional unit is a key
concept and is a quantification of the performance of the product system. For exam-
ple, a chair’s function is to provide seating. This may be quantified with a functional
unit as to provide seating for 15 years. The EPD is based on a life cycle assessment
(LCA), which shall follow requirements specified in Product Category Rules (PCR).
These requirements are based on the LCA methodology and are developed through
stakeholder consultations. There is also a requirement that the EPD system shall be
administered by an independent organisation (programme operator) and that the
procedures, methods and requirements are transparent.
The purpose of an EPD is to provide verified information but note that there are
no environmental performance requirements for the product itself – this must be
evaluated by the user. EPDs are typically used in business-to-business (B2B) com-
munication and public procurement, as the volume of information make them less
suited for business-to-consumer (B2C) communication. Evaluation and comparison
based on EPDs should be based on the functional unit in a life cycle perspective.

6.3 Future Trends: Carbon Footprint of Products (CFP)

and Other Hybrid Labels

This is a continually developing field and not all labels and declarations fit neatly into
type I, II and III categories from ISO standards. Instead, a label may have elements
from more than one type, and we can call these hybrid labels. The carbon footprint is
perhaps the best known of these hybrid labels. It has elements of all three types: it is
a label on the product, may have performance requirements, it is for a single issue,
and it provides quantified information. The EU’s work on developing the Product
Environmental Footprint (PEF) may result in a hybrid approach – potentially com-
bining a quantified declaration with performance-based labelling (EC 2022).
A common trait for all labels is that they are developed to meet a perceived mar-
ket need. Some may have a life cycle perspective and cover all relevant environmen-
tal aspects, but often they are for single environmental issues. For these it should be
noted that there is a danger of problem shifting, reducing the environmental impact
in one area at the expense of increased impact elsewhere.

6.4 Application

The large volume of labels and declarations in use makes it difficult for companies
to choose a label/declaration that best serves their needs and requirements. Finding
the right approach is a balancing act where stakeholder requirements, company
62 C. Skaar

strategy, and resources must be considered. A key challenge is that there is no single
approach that will satisfy all stakeholders. Demands may vary across markets,
industries, and customer types, and continue to develop over time. The choice of
approach should be developed based on the organisation’s environmental strategy
and environmental ambition level.

6.4.1 Choosing an Approach

Organisations have a range of strategic options from which to choose. Roome

(1992) defines a range of ambition levels, from leading edge to non-compliance.
This range can also be linked to environmental ambitions for the product system
(Level 2 in the CapSEM Model):
• Leading edge: the performance of the products is among the best and the organ-
isation contributes to advancing the industry.
• Commercial/ environmental excellence: the performance is among the best; the
environment is used to gain competitive advantage.
• Compliance plus: performance is above minimum requirements but not good
enough to obtain a type I ecolabel.
• Compliance: performance meets minimum legal requirements, but there are no
defined targets to improve beyond this.
• Non-compliance: the organisation knowingly breaks laws and regulations to gain
competitive advantage, e.g. through greenwashing.
Ecolabels of type I can be used in the two highest ambition levels to help ensure that
the product is among the best. Products with these labels are usually among the top
10–20% in the product category (Minkov et al. 2020). A challenge here is that out-­
performing the criteria does not give immediate advantage. Declarations of type III
can be used to ensure that legal requirements are be met. This can be used in all but
the non-compliance ambition level. It can be used as documentation of compliance
and as documentation of being on the leading edge. It is also possible to use a com-
bined approach, for example using type I labelling to show general excellence on a
range of products, with additional type III declarations to show outstanding perfor-
mance on a selected issue (e.g., carbon footprint) or selected products (e.g., a line of
outstanding products). It is also possible to combine environmental and social
aspects when reporting, broadening the scope of the declaration (Skaar and
Fet 2012).
For the highest ambition levels, we need to determine what good environmental
performance constitutes. Type I ecolabels and type III environmental declarations
can provide insight into which environmental aspects are relevant from a life cycle
perspective: labels add performance levels for specific aspects.
6 Communicating Product Life Cycle Performance through Labels and Declarations 63

Fig. 6.2 Steps: from

deciding to use EPDs to a
published declaration

6.5 Creating an EPD

Figure 6.2 provides an overview of the key steps required to develop and publish an
EPD for a product or a service. The first step is to decide that the EPD is the pre-
ferred type of environmental label or declaration, as discussed in the previous chap-
ter. The next step is to either identify or develop a set of Product Category Rules
(PCR) for this type of product. The PCR is typically developed by EPD programme
operators and detail the rules and requirements for the Life Cycle Assessment sup-
porting the EPD. The purpose of the PCR is to ensure that EPDs are harmonised and
comparable. The next step is performing the LCA. A company can choose to either
use in-house expertise or engage a consultant. When the EPD has been developed
and gone through an internal quality assurance check, it is ready for independent
verification. Verification must be carried out by a verifier approved by the EPD pro-
gramme; it is also often a requirement to have third party verification. Having gone
through the verification, the EPD is ready for publication. It is the EPD programme
operator who publishes EPDs, and these are typically published as a document or a
dataset, or both. For companies with a large product portfolio, it is becoming
increasingly common to streamline this process through EPD tools, which reduce
the workload per EPD published (Fet et al. 2009).

6.6 Conclusion

This chapter has provided an overview of environmental labels and declarations.

The main Level in the CapSEM Model for labels and declarations is Level 2, the
product system. However, communicating product performance is not enough on its
own to contribute to sustainable development. The labels and declarations are end
results. To improve the environmental performance of products and services it must
be integrated into a system of continual improvement at multiple levels:
64 C. Skaar

• Level 1. Processes: Labels and declarations can contribute to identifying the

most significant processes in an environmental perspective, both within the
organisation and in the value chain.
• Level 2. Product system: Labels and declarations can contribute to product
design and supply chain management.
• Level 3. Organisation: Labels and declarations can contribute to obtaining and
maintaining a license to operate, and to gain competitive advantage
• Level 4. Larger systems, such as the society: Labels and declarations can contrib-
ute to changes in consumers’ behaviour by informing selections on climate foot-
print of their consumptions.
Elements that may contribute to competitive advantage may be direct (e.g., custom-
ers’ willingness to pay a premium, gaining market access, winning tenders) or indi-
rect (e.g., positive effect on reputation, increased capacity and knowledge base,
better stakeholder communication). However, there are also risks associated with
environmental labels and declarations, for example, that costs are higher than gains,
the chosen label lacks customer trust, or the risk of focusing on the wrong environ-
mental aspects.
Environmental labels and declarations are an effective tool for communicating
environmental performance for products and services, but their potential goes
beyond this, such as a mechanism for communicating corporate responsibility
regarding products (Skaar and Fet 2012). Integrating the use of labels or declara-
tions in an organisation’s environmental management system can ensure continual
environmental improvement, contribute to reduce risks, and help to identify win-­
win opportunities.

References

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ec.europa.eu/environment/eussd/smgp/index.htm. Accessed 27 Jun 2022
Fet AM, Skaar C, Michelsen O (2009) Product category rules (PCR) and environmental product
declarations (EPD) as tools to promote sustainable products. J Clean Technol Environ Policy
11(2):201–207. https://doi.org/10.1007/s10098-­008-­0163-­6
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ciples and procedures 14025:2006
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environmental labelling) 14021:2016
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and procedures 14024:2018
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quantification 14067:2018
Minkov N, Lehmann A, Finkbeiner M (2020) The product environmental footprint communication
at the crossroad: integration into or co-existence with the European Ecolabel? Int J Life Cycle
Assess 25:508–522. https://doi.org/10.1007/s11367-­019-­01715-­6
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Roome N (1992) Developing environmental management strategies. Bus Strategy Environ

1(1):11–24. https://doi.org/10.1002/bse.3280010104
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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 7
Environmental Management Systems

Annik Magerholm Fet and Ottar Michelsen

Abstract This chapter gives an overview of the history of the development of envi-
ronmental management systems (EMS) and the purpose of an EMS. It expands on
the description of the different steps of an EMS under the model Plan-Do-Check-­
Act and clarifies the use of concepts within EMS. Companies are motivated by
external pressure from stakeholders, national and international authorities, custom-
ers demanding greener products etc., as well as the ability to attract new employees
and avoid negative publicity. Standards belonging to the ISO 14000-family for envi-
ronmental management include both product-related standards and audit and evalu-
ation standards.

7.1 Introduction

An environmental management system (EMS) supports organizations in imple-

menting their environmental policy. There are multiple reasons for an organization
to recognize the need for an EMS. External pressure from stakeholders, national and
international authorities, customers demanding greener products etc. motivate some
companies, as well as the ability to attract new employees and avoid negative pub-
licity (Sharma 2000; Epstein and Roy 2001; Mosgard et al. 2022). The implementa-
tion can also be the outcome of using methodologies presented in Chaps. 4–6.
Starting with an intention to improve the processes and the value chains of their
products, these tools will contribute to a better understanding of the environmental
aspects of the organization. Through the implementation of cleaner production (CP)
and design for environment (DfE) principles, the general environmental perfor-

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
O. Michelsen
Department for Industrial Economics and Technology Management,
NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 67

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_7
68 A. M. Fet and O. Michelsen

Product-oriented Management Evaluation and

Support Tools Systems Auditing Tools

Life Cycle Environmental

Assessment Performance
(LCA) Evaluation (EPE)
ISO 14040 - group Environmental ISO 14031
Management
Systems (EMS)
ISO 14001 - group
Environmental
Labelling, Footprints Auditing (EA)
and Declarations (EPD) ISO 19011
ISO 14020 - group

Fig. 7.1 Product-related standards and audit and evaluation standards underpinning environmen-
tal management. (Illustrated by examples from the ISO 14000-family)

mance is improved by reduced material throughputs and lowered energy use

(Eagan and Pferdehirt 1998). This will most often lead to upgrading management
procedures, which further leads to the improvement of environmental policies, rou-
tines and strategies in the company. This, in turn, will contribute to a more compre-
hensive understanding of the benefits of a systematic approach toward the
environmental challenges encountered by most organizations today. This is illus-
trated in Fig. 7.1, which shows a sampling of standards belonging to the ISO
14000-family for environmental management. Note that these include both product-
related, and audit and evaluation, standards. A better insight into the performance of
the processes often also results in improved business performance (Darnall et al.
2008; Mosgard et al. 2022).

7.2 Environmental Management Systems Background

The world’s first standard for environmental management was launched in 1992,
namely the British Standard BS 7750, which was quickly followed by the European
Eco Management and Audit Scheme (EMAS) in 1993, and later the International
Organization of Standardization, the ISO 14001, standard on environmental man-
agement in 1996 (Delmas 2002). The British Standard BS 7750 has been with-
drawn, but the others have been revised and the present version of ISO 14001 is
from 2015 (ISO, 2015). EMAS has been updated with indicators set for different
sectors and recommends ISO 14001. Even though there are differences, an EMS
should include procedures for understanding the environmental aspects, setting
objectives and targets, establishing programmes to achieve those objectives and tar-
gets, and reviewing performance against those objectives and targets.
An EMS is based on the environmental policy of the organization, with the EMS
being the tool to bring this to life (Fet 2006; Fet and Knudson 2017; Johnstone
2020). An environmental policy is a written statement defining the company’s aims
7 Environmental Management Systems 69

Fig. 7.2 Methodology for

Implementation of
Environmental
Management Systems with
Leadership at the centre

and principles on managing the environmental effects and related aspects of the
company. The policy should comply with national and international regulations and
other obligations signed by the company as well as fulfill the ambitions of the com-
pany. A company should decide if they just want to use an EMS to ensure it avoids
breaking any legal constraints, or if the ambition is to demonstrate its control of the
environmental performance as a competitive advantage (Michelsen and Skaar
2021). In the latter case, an environmental policy should set the rules and guidelines
for how a company should operate and shape its organization.
To be effective, an EMS should be integrated with the overall management sys-
tem which includes the organizational structure, responsibilities, practice, proce-
dures, processes and resources for determining and implementing the environmental
policy. When an environmental policy is adopted, the programme should follow the
plan-do-check-act-review cycle through continuous improvements as illustrated in
Fig. 7.2. The context of the organization must be understood, the needs and expecta-
tions of those involved in the organization, including shareholders and the surround-
ing society as well as obligations in relation to compliance. Figure 7.2 makes the
importance of leadership explicit and outlines the roles and responsibilities required
for the management of a strong EMS.

7.2.1 The PLAN Stage in an EMS

The PLAN stage in an EMS is rooted in a description of the activities and processes
of an organisation. It describes how its environmental policy is operationalized. An
important part of this initial planning is to identify stakeholders and their require-
ments, to consider both environmental aspects and associated environmental
impacts, and to understand the laws, regulations and standards with which the
70 A. M. Fet and O. Michelsen

organization must comply. An understanding of the context in which the organisa-

tion operates is also of great importance in addressing management challenges.

7.2.1.1 Stakeholders

Stakeholders are individuals or groups who may gain or experience losses or harm
as a result of company operations. Stakeholders can be employees, customers, sup-
pliers, local communities, governments, nongovernmental organizations, or share-
holders. Stakeholders can be engaged in a variety of ways, such as:
• focus groups meetings
• online discussions
• meetings in local communities (“Townhall” meetings)
• engaging a stakeholder panel, expert panel or external review panel
• involvement in partnerships
It is important to involve stakeholders who are directly affected by the environmen-
tal aspects of the company, both its activities and possible aspects of its products and
services, with the possibilities of minimizing any negative impacts. A similar
approach should be used for the social aspects (Edinger-Schons et al. 2020).

7.2.1.2 Environmental Aspects

Environmental aspects are defined as activities, products or services that might

impact the environment (ISO 2015). When planning the implementation of an EMS,
an overview of any potential environmental aspects that may occur as a consequence
of the company’s activities and products should be created. By drawing maps and
flow diagrams of all relevant activities and material flows, potential environmental
aspects can be identified and listed. Documentation should include descriptions and
flowcharts of existing processes, production data (e.g., raw materials consumption,
production volume, emissions to air, water and soil, energy consumption, secondary
products and waste, noise and vibration), transport, potentially also transport of
employees, and storage of raw materials, products and waste. This should result in
all environmental aspects being fully documented, and, as far as possible, an estima-
tion of the amounts of resource usage, water consumption, and emissions and waste
generated by the various processes involved. Initial surveys of environmental
aspects are often qualitative and provide an opportunity for prioritizing areas need-
ing attention. Material flow schemes and process flow diagrams, (see Chap. 4) can
are useful for rendering a more quantitative overview. An important decision at this
point is in designating appropriate limits for the EMS and identifying environmental
aspects. Is the focus on internal processes only, or should aspects within the value
chain which are upstream and downstream also be included? The answer to this
depends on the type of company involved and the context of its operations, together
with its environmental policy.
7 Environmental Management Systems 71

7.2.1.3 Environmental Impacts

Based on the list of environmental aspects drawn up, the next step is to understand
their severity by analyzing any potential impact on the environment. Impact on the
environment can be local, regional and/or global. In order to understand the conse-
quences, one must know the cause – effect response of the different emissions and
their impact on the environment and eventually on human health. Figure 7.3 illus-
trates the pathway for determining environmental impacts caused by an aspect
which is, the use of fossil fuel in transportation. The burning of fossil fuel causes a
number of emissions into the air, e.g., NOx, SOx, particulate matters (PAM), CO2,
VOC and others. Each of these has a distinct impact on the environment. If we look
closer at the CO2 and VOC, they are categorized as greenhouse gases with an impact
on global warming followed by a potential impact on climate change. The impact
that NOx and Sox have on acidification could be illustrated in a similar manner and
analyses could be completed for each identified aspect.
There are no standardized methods for assessing environmental impacts, so orga-
nizations are encouraged to establish procedures for determining which aspects
have the most significant impact on the environment. It is important to have in mind
that environmental impacts are not limited only to emissions. Impacts caused by
land use, land transformation and resource extraction and potentially depletion
should also be included. Normally, data achieved from input-output (I/O) analyses,
material flow analyses (MFA) and life cycle assessment (LCA) information form
the basis of the registration of environmental aspects and related impacts caused by
the company’s activities, products and services.
For smaller firms with limited resources for a full assessment, a simplified impact
assessment can be conducted where the company identifies a priority list of what is
regarded the most important aspects. For the example of emissions above (Fig. 7.3),
CO2-emissions will have global impact through global warming, while SOx may

Fig. 7.3 Illustration of

pathway from aspects to
impacts: emissions from
the use of fossil fuel in
transportation to the
impact on climate change
caused by CO2 and
VOC-emissions. (Modified
from Winther and Fet
2016)
72 A. M. Fet and O. Michelsen

cause acidification with a regional impact. Similarly, particulate matters may cause
bad air quality, and thereby have local impact. As for other activities land use and
potential impacts on biodiversity could be the most relevant aspect. As part of the
management system, the company should implement procedures for how to evalu-
ate and take action for the most significant aspects for their company. Chapters 8
and 9 on indicators and reporting practices provide a more in-depth analysis of
environmental impact assessments (EIA).

7.2.1.4 Environmental Improvement Programmes

The planning stage should also include consideration of environmental improve-

ment objectives, and furthermore, how to achieve them. This should include objec-
tives related to activities, processes and products, which in the next turn involve
operations as well as value chain control, emergency preparedness, monitoring and
measurements. Proposals for environmental improvements may refer to:
• Product and process changes
• Changes in raw materials and auxiliaries
• Changes in technology and practices
• Alternative measures for waste reduction
• Reuse or recycling
• Energy conservation
• Land restoration and/or biodiversity precautionary actions
• The possibilities for environmental improvements can be considered in different
ways. Based upon the list of identified environmental aspects, a priority-list for
improvements should be made. The next step should then be to select the mea-
sures for improvements. The action plan should specify:
• the schedule for implementation of measures
• assignment of responsibility
• training plan for employees, introduction of new equipment, new operating
instructions, etc.
• documentation of the effectiveness of the chosen measures.
A set of environmental goals and agreed-upon programmes ready for implementa-
tion, signify the shift from the PLAN to the DO-stage.

7.2.2 The DO Stage: Implementation

This part of the management system focuses on implementation of measures for

improving environmental performance. Procedures for implementation, monitor-
ing, control and documentation of the progress should be established. In case of
emergency situations, the organization must plan and implement a process to deter-
mine preventive actions to minimize the risk for accidents that can result in negative
impacts on the environment.
7 Environmental Management Systems 73

The DO stage further requires that the organization shall determine and provide
the resources and competence needed for the implementation of programmes and
procedures, ensuring continual improvement of the environmental performance.
Environmental statements form the basis for determining new objectives and related
action plans or environmental programmes. The organization shall further plan how
to respond to external interested parties as required by its compliance obligations.

7.2.3 The CHECK Stage: Monitoring, Verification

and Auditing

The objective of the CHECK stage is to ensure the project sits within rules and regu-
lations and company policies, and that the plans are appropriate to meet the environ-
mental objectives set.
The monitoring activity should concentrate on following up on the environmen-
tal improvement objectives and programmes, thereby verifying whether the environ-
mental performance is improved according to the plan.
The purpose of an audit is to uncover weaknesses or discrepancies and to exam-
ine whether the systems and procedures are adopted and work as intended. This is
done by obtaining audit evidence and judging it objectively to determine the extent
to which the audit criteria are fulfilled. The audit is completed when all activities set
out in the audit plan have been completed. Follow-up measures should be listed in
the audit report. ISO 19011 (ISO 2018) provides guidance on how to carry out
audits, and the audit programme shall include procedures for the audit and the fol-
low-­up of the audit, and reporting to management.
Another purpose of an audit is to begin a dialogue in relation to any potential
challenges the company might encounter due to an increasing focus on sustainabil-
ity relating to activities, products, and services. Checklists for future scenarios
could therefore support companies wishing to be at the forefront of developments,
and thereby turn such challenges into opportunities.
A final part of the CHECK stage is the management review. The organization
must evaluate environmental performance and provide input to management for
review of the effectiveness of the EMS. The audit report is one of the underlying
documents for the management review.

7.2.4 The ACT Stage: Action for Improvement

The last stage in the PDCA-circle is ACT. This means that the organization should
react to any non-conformity and take action to eliminate the causes of these and
implement corrective actions. An important part of this is also an evaluation of the
company’s environmental policy to determine if it should be revised. This is a task
for top management.
74 A. M. Fet and O. Michelsen

7.3 Conclusion

According to the principles presented in this chapter, an EMS is the tool for bring-
ing the environmental policy of the organization to life. EMS is also a tool that helps
organizations reach and document their compliance regarding laws, regulations and
own targets and ambitions. The target for the EMS is therefore to establish proce-
dures and good practice to achieve the objectives given in the policy. EMS should
support strategic business management: strengthening the relationship between
environmental management and the core business of organizations.
According to the ISO 14001 standard (ISO 2015), an organization must accept
responsibility for the impact caused by its activities, products and services. Due to
the increased sustainability challenges the world is facing, the attention given to an
organization’s performance is also increasing. The discussion is how far reaching
such responsibility should be. As a result of the UN Sustainability Development
Goals (SDG) (United Nations 2015), especially SDG 12 on responsible consump-
tion and production, the responsibility should address the entire value chain of a
product, that involves sustainability aspects both upstream and downstream in the
chain (Michelsen and Skaar 2021). Aspects related to end-of-life treatment of the
products should be included and possibilities to circulate materials into new prod-
ucts, should be identified. This requires that the EMS has procedures for analyzing
the impact outside the factory gate, which means an increased focus on life cycle
thinking (Mosgaard et al. 2022). This should be visible in the environmental policy
as well as in the procedures to be used for the understanding of the most significant
environmental aspects and impacts.
An EMS is designed to mainly address environmental aspects. It can be extended
to a management system to also include social and economic aspects. The structure
could be the same, but the written material should then include procedures for iden-
tifying these aspects, and also criteria for carrying out an audit connected to eco-
nomic and social performance. With an increased focus on holistic and life cycle
thinking, new standards for sustainability management systems are expected to
appear in the future (Nawaz and Koç 2018).

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
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Chapter 8
Analytical Frameworks, Impact
Categories, Indicators and Performance
Evaluation

Annik Magerholm Fet

Abstract This chapter introduces the background for indicators to be used to moni-
tor and communicate the environmental performance of different systems and activ-
ities. They are anchored in the DPSIR-analytical framework which stands for
driving force, pressure, state, impact, and response. This framework is fundamental
to our understanding the background for many of the tools and standards for analyz-
ing, measuring, communicating, and reporting on environmental performance.
DPSIR has been developed as a global model for understanding and analyzing the
status of the Earth due to changes in environmental conditions and how to respond
to these changes. The model can also be adapted for smaller systems, for example,
for city or regional systems (Level 4 in the CapSEM Model), for organizations
(Level 3), for products systems (Level 2) and for productions processes (Level 1).

8.1 Sustainability Indicators

At the United Nations conference on Environment and Development in Rio de

Janeiro in 1992, the society decided to debate the topic ‘Indicators of Sustainable
Development’ as stated in Agenda 21 (UNCED 1992), which was later signed by
most nations. This was further described in the action programme for activities into
the twenty-first century addressing the combined issues of environmental protection
and equitable development for all and laid the foundation for current UN Sustainable
Development Goals (Bell and Morse 2018).
The term indicator comes from the Latin verb indicare, meaning to disclose or
point out, to announce or make publicly known, to estimate or put a price on.
Indicators are normally used to communicate information and to draw attention to
the performance of current policies. Indicators provide information in more quanti-
tative form than words or pictures alone, and they also provide information in a
simpler form than complex statistics or other kinds of social, economic, or scientific

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]

© The Author(s) 2023 77

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_8
78 A. M. Fet

data. In the OECD-definition from 1993, two major purposes are described
(Hammond et al. 1995):
• they reduce the number of measurements and parameters that otherwise would
have given an exact presentation of a situation, but are difficult to obtain, by
providing approximately aggregated measurements
• they simplify the communication process in which measurement results are pro-
vided to the user
Indicators therefore tend to be a proxy for the best accumulated knowledge available.
An indicator should reflect changes over a period keyed to a problem, be reliable
and reproducible, and be calibrated in the same terms as the policy goals or targets
to which they are linked. Indicators must be understandable. They must reflect the
goals one seeks to achieve and give information that is meaningful for interested
parties. Indicators are not an end in themselves, but tools to build support for needed
change and guide the actions of management. Indicators communicate information
about progress toward stated goals.
The United Nations’ Commission for Sustainable Development (UNCSD)
encouraged the development of a core set of Sustainability Indicators, mainly on
economic and social issues (UNCSD 1995). However, there was a lack of estab-
lished comparable international indicators to help decision makers to evaluate envi-
ronmental trends (Hammond et al. 1995; Moldan and Dahl 2007). Environmental
indicators (EI) should be subject to frequent reconsideration as conditions of the
environmental change. The plan was that indicators should facilitate international
compilation. They should guide data collection, even though each nation would
have its own priorities for data collection and analysis, reflecting local needs for
resource management and environmental regulation. However, if each country is
using different indicators or different methodologies, international agencies cannot
work effectively, and opportunity for countries to cooperate to solve global or
continent-­wide environmental issues could be lost.
By using sustainability indicators industry and other organizations have been
guided in how to approach their sustainability performance improvements since the
1990s. There is still a need for placing environmental performance in context so that
firms can understand how to contribute to sustainable development in the long-term
with a reasonable chance for economic benefits, as well as in the short-term.

8.2 Selecting Indicators: Approaches

Indicators can be selected by employing a bottom-up or a top-down approach. The

top-down approach typically starts from international or national rules and regula-
tions, while bottom-up indicators are most commonly based on available data.
Primary data can be processed, summarized and expressed by indicators. The infor-
mation expressed through indicators can be further weighted and aggregated into an
index. Weighting and aggregation should be done with care to ensure verifiability,
8 Analytical Frameworks, Impact Categories, Indicators and Performance Evaluation 79

indexes
level of
interpretation,
analysis and indicators
aggregation
processed information/analyzed data
(essential data)

basic/primary data

Fig. 8.1 An indicator information pyramid

consistency and comparability. Indicators may have many components based upon
measured parameters, but the number of final indexes should be as few as possible.
Hammond et al. (1995) produced an Indicator Information Pyramid interpreted in
Fig. 8.1.

8.2.1 Top-Down Approach

A top-down approach starts with indicators at national and international levels.

National indicators can show citizens and decision makers which trends are on
course and whether current policies work. They can also provide a framework for
collecting and reporting information within nations and for reporting national data
to international bodies. Indicators are used to build support for much needed change
and guide governments, international organizations, the private sector, and other
major groups to act more sustainably. In order to structure sustainability informa-
tion and to make it more accessible to decision makers and the public, various con-
ceptual frameworks have been proposed. A widely used framework for environmental
indicators is based on the following simple questions:
• What is happening to the state of the environment or natural resources?
• Why is it happening?
• How can we improve it?
This approach is often called the Pressure-State-Response (PSR) approach, see
Fig. 8.2. Indicators are used to communicate the interactions between man-made
and natural systems (the environment). The pressure corresponds to the extraction
of resources from the environment or emissions into the environment. Pressure indi-
cators are direct measures of policy effectiveness e.g., related to increase of emis-
sions and waste, and support the decision-making process. The state indicators
correspond to the condition of the environment. Response indicators express the
societal response, which often leads new regulations being developed. For example,
for climate change, pressure indicators express emissions of climate gasses, such as
80 A. M. Fet

Man-made system Environment/Nature

regulations ecosystems
pollution, resource depletion
goods
& people PRESSURE impacts STATE impacts
services

natural feedback

RESPONSE
societal response

Fig. 8.2 Pressure-state-response (PSR) framework for indicators

Fig. 8.3 Framework for

Reporting on
Environmental Issues.
(Modified from EEA 1999)

CO2, the state indicators express atmospheric concentration of greenhouse gases

and the global mean temperature and response indicator may be expressed by
requirements for increased energy intensity or the reduced use of fossil fuels. For
toxic contamination, the generation of hazardous wastes is expressed by pressure
indicators. The state indicators express the impact and the response indicators are
expressed through new regulations.
The PSR-framework was further developed into a framework which distin-
guished driving forces, pressure, states, impact and responses. This became known
as the Driver-Pressure-State-Impact-Response (DPSIR) framework which has been
widely used by international policymakers. DPSIR gives a structure within which to
present the indicators needed to enable feedback to policy makers on environmental
quality and the resulting impact of the political choices made, or to be made in the
future (Kristensen 2003; Reid and Rout 2020; Carr et al. 2007). For each of the
DPSIR-stages, information can be expressed and communicated by indicators (see
Fig. 8.3).
Driving Force Indicators
A ‘driving force’ is a need, and for an industrial sector a driving force could be the
need to be profitable and to produce at low costs, while for a nation a driving force
could be the need to keep unemployment levels low. Other forces could be the need
for specific materials or energy, or the need for land areas to build a facility. A driv-
ing force indicator should be designed appropriately to match the need.
8 Analytical Frameworks, Impact Categories, Indicators and Performance Evaluation 81

Pressure Indicators
As early as 1994, OECD classified human interactions with the environment in four
broad categories: 1. Use of natural resources, 2. Flows of pollutants and emissions,
3. Impact on the ecosystem and reshape of the environment and 4. Effect on human
welfare caused by environmental conditions.
1. Resource index and source indicators.
Indicators in this area directly measure the sustainability of natural resource use,
so they signal the effectiveness of natural resource policies. Roughly, the index
indicates the degree of departure from sustainable resource use, assuming that the
depletion of natural resources is sustainable if their use leads to the creation of other
assets of equal value.
2. Pollution/emission index and sink indicators.
The pollution index is described by six impact categories (OECD 1994): climate
change, depletion of the ozone layer, acidification of soils and lakes, eutrophication
of water bodies, toxification of soils, water bodies and ecosystems, and accumula-
tion of solid waste. For each of these there are supporting indicators. Each impact
category can be weighted based on the gap between the current value of the indica-
tor and the long-term policy perspective of sustainability, the greater the gap, the
larger the weighting factor.
3. Biodiversity index, ecosystem risk and life support indicators.
Biodiversity can in some sense be measured on a species level by counting spe-
cies or listing endangered species. A biodiversity indicator consists, for example, of
a summary of national statistics.
4. Human impact index and exposure indicators.
This concerns human welfare, the environmental conditions that undermine it,
and the social equity. The indicators compare how environmental conditions influ-
ence a nation’s human welfare. This index could provide important environmental
information; it could be combined with other health information to create an overall
health index to be used as an indicator of sustainable development.
State Indicators
As a result of pressures, the state of the environment is affected. State indicators
should be designed to reflect the quality of air, water, soil and ecosystems, tracking
the state of the environment over time. Both physical, chemical, and biological con-
ditions should be measured by state indicators.
Impact Indicators
The changes in the physical, chemical, or biological state of the environment
determine the quality of ecosystems and the welfare of human beings. In other
words, changes in the state may have environmental or economic impacts on the
82 A. M. Fet

Fig. 8.4 Example of DPSIR with reference to impact on ecosystem services. (Santos-Martín
et al. 2013)

functioning of ecosystems, their life-supporting abilities, and ultimately on human

health and on the economic and social performance of society (EEA 2003). Impact
indicators should be designed to reflect and monitor changes over time.
Response Indicators
A response by society or policy makers is the result of an undesired impact and can
affect any part of the chain between driving forces and impacts as indicated by the
arrows in Fig. 8.3. An example of a response to driving forces might be new legisla-
tion in transportation systems. A response to pressure could be adjusted to permit a
change in the content of nitrogen in wastewater discharges to lakes.
Figure 8.4 gives an example of how the DPSIR framework can be used for a
study on drivers that put pressure on biodiversity with an impact on ecosystem ser-
vices and resulting consequences to human wellbeing. The responses are, in this
example, new policies and regulations to avoid damage to ecosystem services.

8.2.2 Bottom-Up Approach and Environmental

Performance Indicators

Whereas a top-down approach works best for issues impacting the global environ-
ment, a bottom-up approach is more commonly adopted for issues with local envi-
ronmental impacts. The four pressure indicators presented in the previous section
could also be a reference for approaches on a company level. At a macro-level,
8 Analytical Frameworks, Impact Categories, Indicators and Performance Evaluation 83

the national governmental institutions like statistical offices, normally gather and
aggregate company based environmental data from the micro level. Environmental
information and statistical data are normally supplied to national and international
institutions by companies. Therefore, it is important, practical, time and cost- effec-
tive to structure company based environmental information systems in such a way
that they are compatible with, and useable for, the macro level. Although this was
addressed in the early 1990s, the need for harmonization remains an issue. According
to ISO 14031 (ISO 2021), environmental performance (EP) is defined as the result
of an organization’s management of its environmental aspects. According to ISO
14001 (ISO 2015), environmental aspects are defined as activities, products or ser-
vices that can make an impact on the environment. The pathway from aspects to
impacts is described in Chap. 7 (Fig. 7.3).

8.3 Environmental Performance Indicators and Evaluation

An environmental performance indicator (EPI) is defined as a specific expression

that provides information about an organization’s environmental performance (ISO
2021). Firms should select EPIs for the purpose of measuring, evaluating, and com-
municating their performance. Measuring one single firm’s contribution to the deg-
radation of global environmental issues is impossible. Likewise, it is challenging for
a company to predict how their reduction of, for example, CO2-emissions contrib-
utes to reduced global warming. From a bottom-up-approach, the corporate’s EPIs
should reflect the most important environmental aspects resulting from internal pro-
cesses connected to the activities, products, and services of the company. A sample
approach to identify appropriate EPIs might be as follows:
1. Identify environmental aspects connected to activities, products and services
(e.g., use of fossil fuels) and then the impacts this may cause (e.g., emissions of
CO2 which may cause global warming, or particles that may cause smog).
2. Analyze the organization’s existing data on material and energy inputs, dis-
charges, wastes, emissions, and other outputs. Assess these data in terms of
quantity and hazards, often termed as the environmental account for the company.
3. Identify the views of stakeholders and other interested parties and use this infor-
mation to help design the EPIs.
An organization that is committed to improving its environmental performance,
should be able to measure its performance level. According to ISO 14031 (ISO
2021), EPIs will help them determine whether they are moving forward with the
intention to improve. Environmental Performance Evaluation (EPE) is the process
that organizations can use to measure, analyze, and assess their environmental per-
formance against a set of criteria. From the perspective of the CapSEM Model, this
takes place within the organization at Level 3 but uses I/O and LCA from Level 1
and 2. EPE helps the organization to understand its significant environmental
84 A. M. Fet

aspects and form a baseline from which objectives and targets for improvements can
be derived. Therefore, EPE is central for monitoring environmental performance
improvements over time, and to compare the performance against another similar
organization for benchmarking.
EPE can be developed for a relatively small application, even in a large organiza-
tion. The process should include (1) establishing measurable goals and targets, (2)
setting time schedules for the improvement tasks, (3) implementing action plans to
achieve the goals, and (4) communicating the environmental performance to inter-
ested parties. As the environmental performance improvements spread within an
organization, the EPE process can expand. Since environmental performance
improvement should apply to all life cycle phases of a product or a service, data
collection should also address relevant information outside the manufacturing site
and based upon data from, for example, a life cycle assessment (LCA) of a product
(ISO 2012).
The areas for EPE can be split into operational performance measured by OPIs
and management performance measured by MPI. The operational area includes
physical facilities and equipment, design and operation, and the material and energy
flows required to generate and provide the products and services. Most EPIs are
related to the operational area; they could also be expressed as operational perfor-
mance indicators (OPI). According to ISO 14031 (ISO 2021), OPIs should provide
information about the impacts resulting from an organization’s operations. Similarly,
a management performance indicator (MPI) is defined as an indicator that provides
information about management (ISO 2021). The management area of an organiza-
tion includes the policies, practices, people and procedures at all levels, and their
decisions and activities, which in turn result in impacts on the environment.
Environmentally related inputs to management include legal requirements, views of
interested parties, information from the operational system, and information about
the condition of the environment.
Examples of OPIs and MPIs are presented in Table 8.1. These can be used as
inspiration for companies for internal performance improvements programmes, and
EPE can then be carried out in relation to the goals set for each indicator for external
reporting. OPIs and MPIs are mainly designed for evaluation internal practices.
Another evaluation criterion is the evaluation of the state of the nature in the sur-
rounding area. This can be carried out using Environmental Condition Indicator.
The condition of the environment covers air, water, soil, flora, and fauna.
Environmental condition indicators (ECI) should be selected regarding these cate-
gories. Evaluating the state of the environment caused by one single organization’s
activities is complex. In most cases, evaluation of the state of the environment will
be undertaken by regional authorities or by help from consultants or scientific orga-
nizations. Good insight into the condition of environmental surroundings can assist
an organization in planning the EPE process and selecting relevant EPIs.
8 Analytical Frameworks, Impact Categories, Indicators and Performance Evaluation 85

Table 8.1 Examples of EPIs expressed by OPIs and MPIs

Example of operation performance Example of management performance indicators
indicators (OPI). (MPI).
Category – materials Conformance – degree of compliance with
regulations
Quantity of materials used per unit of Costs (operational and capital) that are associated with
product a product’s or process’ environmental aspects
Quantity of processed, recycled or Return on investment for environmental improvement
reused materials used projects
Category – energy Category - financial performance
Quantity of energy used per year or per Costs (operational and capital) that are associated with
unit of product a product’s or process’ environmental aspects
Quantity of energy used per service or Return on investment for environmental improvement
customer projects
Category – emissions Category - implementation of policies and
programmes
Quantity of specific emissions per year Number of achieved objectives and targets
Quantity of specific emissions per unit Number of organizational units achieving
of product environmental objectives and targets
Category – wastes Category - community relations
Quantity of waste per year or per unit Number of inquiries or comments about
of product environmentally related matters
Quantity of hazardous, recyclable or Number of press reports on the organization’s
reusable waste produced per year environmental performance

8.4 Other Frameworks for Evaluating

Sustainability Performance

There are many frameworks, guidelines, and standards available for supporting
business and other organizations in their efforts to use indicators in the process of
evaluating their sustainability performance. At the same time, it is important to
remember that indicators are designed to encapsulate complexity into condensed
information, and it has long been known that sustainability indicators can be selec-
tively used to support polarized sides of a given debate (Bell and Morse 2018).
Chapter 9 gives an overview of the most recent and most used framework for driv-
ing performance improvements and for reporting and communicating business
performance.

8.5 Conclusion

This chapter has presented various frameworks for choosing indicators that can
be used for communicating sustainability performance on different systems levels.
At the macro level, the DPSIR-model is a systematic approach for embracing the
86 A. M. Fet

complexity involved when dealing with sustainability in a global society. On the

micro level, the framework for EPE-evaluation is mainly designed for corporate
levels and their activities, products, and services. DPSIR models use indicators for
communicating aspects connected to the operational and management areas in a
company. Even though none of the existing models provide a perfect link between
the indicators selected from a top-down view with those from a bottom-up view, the
DPSIR- and EPE-models offers guidance for companies and other organizations
when selecting an indicator for communication purposes. The use of indicators and
reporting practices is further described in Chap. 9.

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8 Analytical Frameworks, Impact Categories, Indicators and Performance Evaluation 87

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
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The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
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Chapter 9
Reporting Schemes

Annik Magerholm Fet and Magnus Sparrevik

Abstract This chapter gives an overview of different reporting schemes which can
be used by companies to communicate their environmental, as well as their sustain-
ability, performance. Connections between different reporting schemes, underlying
data and the CapSEM Model are explained. The most common sustainability report-
ing schemes are described within the context of their intended use by the reporting
organization. The chapter also addresses the content for writing a sustainability
report together with the use of tools and performance indicators to present quantita-
tive information.

9.1 Introduction

The term sustainability reporting is often used synonymously with corporate sus-
tainability reporting, triple bottom line reporting, and non-financial reporting, and
refers to the reporting of non-financial aspects alongside existing financial reporting
(Paun 2018). These reports may include information about the company’s use of
natural resources and their impact on the environment, relevant social aspects, or
corporate governance. Sustainability reporting should therefore:
• Enable any type of organization to measure, manage and communicate its
performance
• Communicate information that is of interest to stakeholders about a company’s
activities
• Contribute to building trust and manage reputational risk

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
M. Sparrevik
Department for Industrial Economics and Technology Management, NTNU,
Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 89

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_9
90 A. M. Fet and M. Sparrevik

• Work as a benchmarking tool, where performance comparisons can be conducted

internally, externally and over time.
Integrated reporting, defined as “a single document that presents and explains a
company’s financial and nonfinancial—environmental, social, and governance
(ESG)—performance,” is increasingly adopted by companies (Eccles and Saltzman
2011). This is due to increasing requirements for ESG disclosure from governments
and market regulators and the growing recognition of the connection between risk
and ESG factors and a resulting appreciation for sustainability reporting from inves-
tors and stakeholders (Eccles and Saltzman 2011).
Over time, sustainability reporting has gradually evolved. In the beginning,
reporting was confined to non-financial aspects promoting environmental work as a
part of building positive reputation. The reports were often more informative than
accurate and varied significantly between the different actors (Paun 2018;
Stacchezzini et al. 2016). The need for standardisation became evident during this
time and the Global Reporting Initiative (GRI) standard was established in 1997 to
improve the quality of reporting (GRI 2022). Parallel with this voluntary develop-
ment, regulatory requirements to describe the work on the environment, anti-­
corruption, work environment and human rights emerged in national and eventually
supra-national regulations. Even though sustainability reporting became compul-
sory, the impact of sustainability information remained marginal compared to the
financial content. This picture has changed. The need for accurate information about
sustainability performance is growing and is actively used by investors, banks, and
insurance companies to evaluate risks and potential development. In fact, a good
ESG record is becoming a prerequisite for financial investments, as well as regula-
tory requirements and therefore actively governs the future of individual companies
(Fatemi et al. 2018).

9.2 Approaches to Reporting

Sustainable development reporting does not work as a one-size-fits-all approach.

Each company should determine their own situation and needs. This is an evolving
field, and in an effort to provide standardized information on sustainable develop-
ment performance, appropriate frameworks for sustainable development reports
continue to be developed (Sardianou et al. 2021; Lyytimäki and Rosenström 2008).
A framework should help to harmonize reporting practices, and should ideally
address these four elements (Fet et al. 2009):
• Firstly, the underlying concept of sustainable development and its application in
an organizational context. Sustainable development often means different things
to different people (Redclift 2006).
• Secondly, the objective of sustainable development reports. Sustainable develop-
ment reports may be described as showing a balanced and reasonable presenta-
tion of an organization’s economic, environmental and social performance.
9 Reporting Schemes 91

• Thirdly, the characteristics that determine the usefulness of the information in

reports, especially relevance and reliability.
• Fourthly, a framework should define the basic information incorporated in sus-
tainable development reports.
A company’s sustainable development report should allow users to compare its sus-
tainable development performance and position over time to identify trends.
Likewise, these reports should allow users to benchmark different companies to
evaluate their relative performance and position, both regionally and within the
same business segment. The framework elements should measure and report on the
impacts of similar activities and processes in a consistent manner over time, which
presents another dilemma, i.e., a need to trade-off between flexibility and compara-
bility. When a company starts to practice sustainability reporting, they should have
the flexibility to identify those indicators most relevant to their own specific circum-
stances and operations. Reporting guidelines should strive not only to increase the
volume and complexity of the information requested, but favour reliability and rel-
evance. Only a limited number of indicators should be required, allowing users to
compare corporate practice on a general level.
Reporting principles must support transparency, credibility and accountability as
well as ensure that the information and data is relevant, reliabile and clear. External
reporting gives management an additional opportunity for improvement based on
feedback through readers’ reactions, criticisms, and suggestions. Considering stake-
holder views also helps to shape strategy, goals and objectives. The reporting pro-
cess should be an integral part of internal management procedures and a number of
sources are available to assist in this process (Sahin and Çankaya 2020; Gbangbola
and Lawler 2017; Searcy and Buslovich 2014).
As part of an overall management system, reporting should lead to an improved
performance throughout the organization. In the CapSEM Model, reporting is
placed at Level 3. However, reporting involves communicating the company’s per-
formance at all levels. At Level 1, this includes information about the quantities of
materials and energy in and out of each production process, emissions, and wastes,
summarized into an environmental account for the production site, and often com-
municated by means of operational performance indicators (OPIs). At Level 2, the
commentary should address material flows along the entire value chain of the prod-
uct (or service the company provides), most often calculated using life cycle assess-
ment (LCA) and summarized in an environmental product declaration (EPDs), or
other forms of product information, e.g., carbon footprint, (CFP) and water foot-
print (WFP), of products. Reporting management activity at Level 3 should encom-
pass information from Levels 1 and 2 in addition to information about management
and strategic matters (see Chap. 8 for management performance indicators (MPIs)).
A company would also usually include information about its role and involvement
on a societal Level: in the CapSEM Model this is represented by Level 4. For large
corporates with production sites in different regions, for organization and communi-
ties, reporting should always include information about the impacts of related sys-
tems. The communication of performance on all levels should be carried out using
92 A. M. Fet and M. Sparrevik

Fig. 9.1 Contributors to

reporting content and Level 4
practice (Level 3): relevant city /
examples of tools and region
KPI
indicators. Levels 1, 2 & 4.
(CapSEM Model)
Level 3
EU Taxonomy, ESG
reporng, UN
Global Compact,
GHG protocol, GRI,
HSE-reporng,
Level 1 Level 2
I/O, MPI LCA, EPD,
OPI CFP, WFP

performance indicators. Monitoring systems also need to be put into place. These
can either be physical systems or procedures for tracking performance at each level.
The objective of reporting schemes is to assist companies and organisations in their
reporting. Figure 9.1 illustrates some of the reporting schemes most frequently used
by an organisation.
A sustainability report can be compiled in various manners, based on a range of
recommendations for what might be included (Gbangbola and Lawler 2017). The
information to be presented in a report should be collected by using relevant tools,
such as input-output (I/O) analyses on production processes, and value chain analy-
ses tools for products. The information can be further communicated by means of
operational performance indicators (OPIs), or by means of LCA-results summarised
in product declarations and other label systems. The EU Taxonomy suggests a clas-
sification system aimed at establishing a list of environmentally sustainable eco-
nomic activities at company level, but which can be seen as systemic, also connecting
city regional key performance indicators (KPIs).

9.3 Sustainability Reporting Schemes

9.3.1 Environmental Reporting

Content for a sustainability report may overlap with other reporting obligations
within a company. Thousands of companies worldwide hold a certificate on envi-
ronmental management according to ISO 14001 or the European Environmental
management and Audit scheme (EMAS). For ISO 14001-certified companies, draft-
ing an environmental report is voluntary. However, EMAS-registered companies
already have audited environmental statements as part of their verification in accor-
dance with EMAS-regulation. The environmental aspects of a sustainability report
should reflect the company’s overall, real, conditions. This may involve information
about environmental aspects in the form of:
9 Reporting Schemes 93

• resource consumption: raw materials, materials and packaging, energy, water,

land areas
• emissions: pollutants to water, air and soil, noise, dust/smoke, smell
• products: content of toxic substances, proportion of recycled materials, recover-
able share
• waste: hazardous waste, for landfills, for recycling and for incineration
With regard to environmental aspects, the report should include quantified informa-
tion, preferably in the form of performance indicators (Machado et al. 2021). Any
numerical information should show the development over time, with graphic repre-
sentations. Significant changes since the previous environmental report should be
highlighted. If the company has had environmental accidents or unplanned dis-
charges during the period covered by the report, this should be stated. Special emis-
sion permits that apply to the business, as well as any orders received from
supervisory authorities during the reporting period, should be highlighted. If possi-
ble, the company should include information about any environmental impacts
caused by significant environmental aspects together with any acute discharges
caused. Environmental impacts can be grouped according to whether they are local,
regional or global.
Results from environmental audits and environmental reviews, which have been
carried out on the company’s own initiative during the reporting period, should be
described. Progress and results regarding measures from the company’s environ-
mental programme, environmental audits and environmental reviews as described
in previous environmental reports, should also be reported. If the company has been
subject to supervision by government agencies, the results of these inspections and
audits should also appear in the report.
As an environmental management system should consider processes, products
and services, the report should also include information about environmental aspects
of products seen from a life cycle perspective. More specifically, this means incor-
porating information about the impacts of the use phase, maintenance and end-of
life phase. The information can be achieved from LCA, from EPDs or other docu-
mentation simulating the life cycle of the product.
Finally, the company should report on its environmental management programme
for improving health, safety and environment (HSE) whilst both quantifiying, and
providing deadlines, for each individual environmental objective. The description of
these environmental goals should include planned investments in connection with
the measures to be implemented to achieve the goals. Expected cost savings and
earnings opportunities should be reported as a result of reduced raw material con-
sumption, new processes, increased market access, gains by avoiding regulations,
reduced absence costs, etc.. If any of the conditions are significant environmental
aspects, and are not included in the environmental programme, the rationale for
excluding them, and ideally when the company will include them, should be
explained in its plans for environmental improvement.
Information about the work environment should include human resources, work
environment factors (ergonomics, indoor climate, psychosocial conditions, etc.),
94 A. M. Fet and M. Sparrevik

absence, stress disorders, other health damage (solvent damage, etc.). Safety aspects
should include significant risk factors, risk prevention measures, emergency mea-
sures, damage to people, property and the environment.

9.3.2 Measuring Environmental, Social and Governance

(ESG) Factors

Environmental, social and governance (ESG) factors can be used as a framework for
reporting on a firm’s sustainability performance. Environmental criteria consider
how a company performs as a steward of nature. Social criteria examine how it man-
ages relationships with employees, suppliers, customers, and the communities
where it operates. Governance ensures that the company uses accounting methods
with transparency and accuracy, pursues a leadership with integrity and diversity,
and is accountable to shareholders.
ESG reporting can help a company communicate its contribution to sustainabil-
ity through key performance indicators (KPIs) to reach environmental, social and
governance objectives within the firm. KIPs can be structured according to the
ESG-criteria by means of environmental performance indicators (EPIs), operational
performance indicators (OPIs), management performance indicators (MPIs) as
described in Chap. 8. Reporting on ESG factors is also important for external com-
munication to customers and investors. Reporting on ESG factors is also important
for external communication to customers and investors. Many investment banks
have set their own ESG guidelines to mandate the compliance and screen their
investments, and to distinguish those with the best sustainability performance.
Performing well in terms of ESG principles, can therefore attract or maintain out-
side investment. Many financial actors now offer products that employ ESG criteria
in the analysis and presentation of the financial instruments (Escrig-Olmedo
et al. 2019).

9.3.3 Corporate Annual Reporting

There are different national rules for mandatory reporting for business. In their
annual reports, businesses should report on their activities, and especially on their
financial performance. The need for transparency has become stronger, and the
Transparency Act of 2021 (Gullhagen-Revling et al. 2021) aims to provide a com-
mon standard and further tighten the legal obligations for companies to comply with
both the UN Guiding Principles on Business and Human Rights and the OECD’s
Guidelines for Multinational Enterprises as well as the UN’s sustainable develop-
ment goals (SDGs). The Transparency Act is a part of a development in which obli-
gations related to what has historically been considered soft law or obligations that
9 Reporting Schemes 95

should be fulfilled, are now legal obligations for companies. In this context, it is also
interesting to note that the European Commission is steadily working on directives
on sustainable corporate governance, with respect to enhancing the liability of board
members. Assessments must be carried out regularly and be in proportion to the size
of the company, the nature of the company, the context in which the company takes
place and the severity of and the probability of negative consequences for basic
human rights and decent working conditions.

9.3.4 Reporting for Cities

Sustainability reporting can also be adapted to cities. Cities are growing, and it is
estimated that by 2050, cities will contain 70% of the world’s population (Steinert
et al. 2011). Challenges connected to use of resources, food supply, energy supply,
wastes and emissions must be addressed beyond the individual corporate boundar-
ies. While cities plan ways to meet sustainability challenges, indicators to measure
the progress over time are developed accordingly alongside mechanisms to measure
and track the indicators relying on digital (ICT)-solutions and artificial intelligence
(AI-techniques).
As part of the ‘United for Smart Sustainable Cities’ (U4SSC) programme
(Estevez et al. 2021; Sang and Li 2019), a set of 97 key performance indicators
(KPIs) were developed. In addition, cross-country initiatives were put in place to
benchmark cities against these KPIs. Similar KPIs exist for regions with the inten-
tion to measure progress both by municipalities and by businesses operating in the
municipality. The same methodologies presented at each Level of the CapSEM
Model can be used to aggregate quantitative information at the city level, which is
represented by Level 4 in the CapSEM Model. Reporting on city levels is an ongo-
ing process: it is expected this will grow in the future.

9.3.5 Examples of Reporting on Sustainability

A variety of reporting options for sustainability are available, each with a specific
focus on different aspects of sustainable development. These include GRI reporting,
reporting on greenhouse gas (GHG) emissions, the UN Global Compact, and the
EU taxonomy.

9.3.5.1 GRI Reporting

GRI is the first global framework for comprehensive sustainability reporting,

encompassing the triple bottom line of economic, environmental, and social issues.
It has become the generally accepted, broadly adopted framework for preparing,
96 A. M. Fet and M. Sparrevik

communicating, and requesting information about corporate performance.

Furthermore, it provides guidance to reporters on selecting generally applicable and
organisation specific indicators, as well as integrated sustainability indicators
(Dissanayake 2021; Machado et al. 2021; Roca & Searcy 2012). It also includes
forward-looking indicators and targets for future years (Halkos & Nomikos 2021;
Szennay et al. 2019).

9.3.5.2 GHG Protocol

The GHG protocol (WRI/WBCSD 2011) has established the most widely used stan-
dard for reporting on emissions of greenhouse gas emissions related to productivity.
The standard divides emissions into three distinct classes depending on the source
of the emissions. The GHG Protocol scopes emission across the value chain. Scope
1 emissions are direct emissions from owned or controlled sources emitting
GHG. Scope 2 emissions are indirect emissions from the generation of purchased
energy. Scope 3 emissions are all indirect emissions (not included in scope 2) that
occur in the value chain of the reporting company, including both upstream and
downstream emissions. Reporting on scope 1 and 2 are compulsory when using the
protocol whereas scope 3 is voluntary.
All reporting is based on information aggregated at a product level (CapSEM
Level 2) including all supply of services and products necessary for the company
activities, the emissions for internal production process and the impacts foreseen for
the downstream activities of the products or services produced. This life cycle per-
spective may be important for subsequent reporting by the company and for use in
environmental management systems to mitigate impacts correctly in the value
chain. Production companies with large emissions occurring from their own pro-
duction may primarily address actions mitigating their own emissions and energy
consumption based on assessment using the protocol. Consumers or service produc-
ers may, on the other hand, direct more effort towards green procurement to reduce
the emissions on all products and services purchased (Fig. 9.2).

9.3.5.3 UN Global Compact

The United Nations Global Compact (UN 2021) is a strategic initiative that supports
companies that want to demonstrate their compliance regarding awareness about
sustainability. This is the most globally recognized framework for organizations.
The initiative promotes activities that contribute to sustainable development goals
and to align their strategies and operations with ten universal principles related to
human rights, labour, environment, and anti-corruption, presented in Table 9.1.
Companies that have signed the GC are obliged to submit annual reports. All such
reports can be accessed through the UN GC website.
By incorporating the ten principles of the UN Global Compact into strategies,
policies and procedures, and establishing a culture of integrity, companies are not
9 Reporting Schemes 97

CO2 CH4 N2O HFCs PFCs SF6 NF3

Scope 2 Scope 1
INDIRECT DIRECT

Scope 3 Scope 3
INDIRECT INDIRECT

purchased
goods and transportation
services
puchased electricity, steam, and distribution
heating & cooling for own use investments
leased assets
company
facilities
capital
goods franchises
employee processing of
Fuel and commuting sold products
energy related
activities business
company leased assets
travel use of sold
transportation vehicles
products end-of-life
and distribution waste
generated in treatment of
operations sold products

Upstream activities Reporting company Downstream activities

Fig. 9.2 Model of reporting according to GHG protocol. (WRI/WBCSD 2011)

Table 9.1 UN Global Compact ten principles (2021)

Human rights
1. Businesses should support and respect the protection of internationally proclaimed human
rights; and
2. Make sure that they are not complicit in human rights abuses.
Labour
3. Businesses should uphold the freedom of association and the effective recognition of the right
to collective bargaining;
4. The elimination of all forms of forced and compulsory labour;
5. The effective abolition of child labour; and
6. The elimination of discrimination in respect of employment and occupation.
Environment
7. Businesses should support a precautionary approach to environmental challenges;
8. Undertake initiatives to promote greater environmental responsibility; and
9. Encourage the development and diffusion of environmentally friendly technologies.
Anti-corruption
10. Businesses should work against corruption in all its forms, including extortion and bribery.

only upholding their basic responsibilities to people and planet, but also setting the
stage for long-term success. There is no simple reporting template that covers all 10
principles of the Global Compact, however an annual Communication on Progress
(CoP) report should be executed including the following minimum requirements:
• A statement by the Chief Executive expressing continued support for the UN
Global Compact and renewing the participant’s ongoing commitment to the
initiative
98 A. M. Fet and M. Sparrevik

• A description of practical actions the company has taken or plans to take to

implement the Ten Principles in each of the four areas (human rights, labour,
environment, anti-corruption)
• A measurement of outcomes

9.3.5.4 EU Taxonomy

On 18 June 2020, the EU Parliament and the Council adopted the EU Regulation
2020/852 on the establishment of a framework to facilitate sustainable investment.
The EU Taxonomy emerged from the EU Green Deal initiative and is the first stan-
dardised and comprehensive classification system for sustainable economic activi-
ties that are responsible for up to 80 percent of EU greenhouse gas emissions. The
intention is to help investors to make informed decisions by channelling invest-
ments into low-carbon technologies (Dusík & Bond 2022; Schütze & Stede 2020).
The regulation on the establishment of a framework to facilitate sustainable
investment identifies six environmental objectives for the purposes of the taxon-
omy: Climate change mitigation; climate change adaptation; sustainable use and
protection of water and marine resources; transition to a circular economy, waste
prevention and recycling; pollution prevention and control; and protection of healthy
ecosystems (Alessi et al. 2019). It also sets out four conditions that an economic
activity must meet to be recognised as aligned with the taxonomy (Alessi et al.
2019: 4), which are:
• making a substantial contribution to one environmental objective (minimum)
• doing no significant harm to any other environmental objective
• complying with minimum social safeguards
• complying with the technical screening criteria
These are further cascaded into technical screening criteria and described in techni-
cal guidelines for each activity sector and objective (Canfora et al. 2021). The
screening criteria set detailed threshold values at process, product, and company
level for the environmental performance in the definition of ‘substantial contribu-
tion to the objective’ and ‘in doing no significant harm’ respectively.

9.4 Conclusion

Sustainable development reporting is not a one-size-fits-all activity. Each company

should determine their own situation and needs to communicate their corporate situ-
ation. Some reporting is mandated, others, voluntary. Some reporting targets the
global community, others are aimed at selected audiences. Regardless of the situa-
tion, there is a cornucopia of reporting schemes and associated guidelines to support
most needs. Firms must choose carefully to reveal the appropriate information at the
appropriate time. Moreover, transparency in reporting as defined in transparency
9 Reporting Schemes 99

regulations (Transparency Act, 2022) will be important regardless of the reporting

scheme selected, to ensure the general public have access to sustainability perfor-
mance and for the avoidance of any potential adverse impacts of the organisation’s
activity.

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Chapter 10
Business Models for Sustainability

Haley Knudson

Abstract The concept of business models for sustainability (BMfS) has attracted
research attention in the fields of corporate sustainability, entrepreneurship and
management. BMfS are a way of linking sustainable innovation to an organization’s
business model, and as a means for management to operationalize sustainable activ-
ities and strategies across an organization’s value chain. This chapter provides the
history and description of BMfS as both a tool and conceptual logic that divides
activities into three components – value proposition, value creation and delivery,
and value capture. Practitioner tools are introduced, along with a brief conceptual
overview.

10.1 Background

Sustainability at a societal level is dependent on the sustainable development of

organizations. Agenda 2030 and the UN Sustainable Development Goals (SDGs)
have highlighted the importance of industry’s involvement in the necessary shift in
the current economic system (United Nations General Assembly 2015; Sachs et al.
2020; United Nations 2020). Traditional business models are unsuitable for meeting
global sustainable development (SD) challenges (Wells 2013). Business models for
sustainability (BMfS) are a concept that can help bridge the gap between the sustain-
able innovation necessary for SD and the strategies employed by organizations
(Boons et al. 2013).
Research on BMfS has emerged to link sustainable innovation to the business
model of an organization and its stakeholder network. It is a means for management
to ideate and operationalize sustainable activities, mechanisms, and innovations
from a system perspective. For this reason, BMfS are located on Level 3 of the
CapSEM model, as they provide a structure and logic for the creation and capture
of sustainable value. Methods and perspectives from Levels 1 and 2 for reducing

H. Knudson (*)
Department of International Business, NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 101

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_10
102 H. Knudson

negative and increasing positive sustainability impacts can be operationalized

through the organization’s business model as it links these operational activities to
the wider value creating logic. Research on BMfS continues to expand and asserts
the need for the incorporation of stakeholder interests and social and environmental
values into an organization’s strategy (Stubbs and Cocklin 2008; Boons and Lüdeke-­
Freund 2013; Bocken et al. 2014). Organizations can use business model thinking
to reflect on their current operations and to find ways to redesign and innovate to
meet sustainability needs and objectives across all Levels of the CapSEM Model.

10.2 BMfS Concepts

This section presents key concepts used in the study and implementation of BMfS,
summarized in Table 10.1.

10.2.1 Business Models

A business model (BM) represents the way a company creates and captures value
(Chesbrough 2010; Osterwalder and Pigneur 2010; Zott et al. 2011). Traditionally,
this means the activities and resources that combine to allow the organization to

Table 10.1 Important concepts for understanding BMfS

Concept Definition
Business model “A business model describes the rationale of how an organization creates,
(BM) delivers, and captures value” (Osterwalder and Pigneur 2010:14).
Business model “A business model for sustainability helps describing, analyzing, managing,
for sustainability
and communicating (i) a company’s sustainable value proposition to its
(BMfS) customers, and all other stakeholders, (ii) how it creates and delivers this
value, (iii) and how it captures economic value while maintaining or
regenerating natural, social, and economic capital beyond its organizational
boundaries” (Schaltegger et al. 2016: 6).
Business model “The conceptualisation and implementation of new business models. This
innovation (BMI) can comprise the development of entirely new business models, the
diversification into additional business models, the acquisition of new
business models, or the transformation from one business model to another.
The transformation can affect the entire business model or individual or a
combination of its value proposition, value creation and deliver, and value
capture elements, the interrelations between the elements, and the value
network” (Geissdoerfer et al. 2018: 405–406).
Business model “The conceptualisation and implementation of sustainable business models.”
innovation for (Geissdoerfer et al. 2018: 405–406).
sustainability “Sustainable business innovation processes specifically aim at incorporating
(BMIfS) sustainable value and a pro-active management of a broad range of
stakeholders into the business model” (Geissdoerfer et al. 2016: 1220).
10 Business Models for Sustainability 103

meet its objective of delivering value to its customers, while also creating a profit. It
is a reflection of a firm’s strategy (Casadesus-Masanell and Ricart 2010; Seddon
et al. 2004; Shafer et al. 2005; Richardson 2008) and, on an operational level, can
provide the organizational and financial architecture of an organization including its
understanding of its customers and their needs (Teece 2010). The BM and its activi-
ties can be structured around a common framework of three components – value
proposition, value creation and delivery, and value capture (Richardson 2008;
Chesbrough 2010; Osterwalder and Pigneur 2010). Value proposition refers to the
organization’s product or service offering, and the value embedded within it. The
organization’s activities and processes, including its resources, suppliers, partners,
and distribution, represent value creation and delivery. Value capture is the organi-
zation’s cost structure and revenue streams.
In practice, the BM can be a helpful tool for thinking about an organization’s
strategy. It can help outline or conceptualize an organization’s value activities, and
the way in which they interact, impact customers and stakeholders, and help meet
corporate strategy and its goals. As responsibility in the value chain becomes a more
pressing requirement from regulators, customers and stakeholders, organizations
need to change the way in which they do business. They can use their current BMs
as a starting point for brainstorming and thinking systemically about how they can
shift to new or adapted business models that create and capture value across eco-
nomic, environmental, and social dimensions.

10.2.2 Business Models for Sustainability

BMs for sustainability present an opportunity to affect larger societal and environ-
mental change by transforming the value that guides organizations and the current
market. They also provide a vehicle for organizations to increase their long-term
value and competitive advantage (Porter and Kramer 2019). The BMfS definition
presented in Table 10.1 extends the traditional BM components into the sustainabil-
ity domain, as presented in Fig. 10.1. Distinguishing characteristics of a BMfS
include the explicit and proactive consideration of stakeholders, of environmental,

Fig. 10.1 BMfS components

104 H. Knudson

social, and economic capital, and that the organization looks beyond its own bound-
aries and over the long-term perspective (Schaltegger et al. 2016; Geissdoerfer et al.
2018). BMfS are placed on the organizational change level (Level 3) of the CapSEM
Model because they provide a common framework within which the organization
can discuss its current operations, partners, stakeholders, suppliers, and value flows.
By viewing its BM as a system of activities, a company can work on identifying
where and how changes can be made in the process (Zott and Amit 2010).The long-­
term outlook is an implicit requirement of SD, and it is important that organizations
specifically integrate it into their strategies, performance measures and
BMfS. Additionally, stakeholder needs over the long-term must be actively and
intentionally integrated into BM processes and activities, so that the organization’s
activities reflect and meet them.
Embedding the three dimensions of sustainability, long-term thinking, and the
engagement of all stakeholders into a BM requires an organization to understand
how its activities, resources and relationships interact to create value. Conceptually,
the value proposition in a BMfS extends beyond its goal of highest economic return
and removes the purely economic value an organization associates with its product
or service (Boons and Lüdeke-Freund 2013). It reflects the fact that the relationship
between the organization and its customers and stakeholders is based on an exchange
of value (wants and needs), rather than on the product or service itself (Bocken et al.
2014). If the customer wants to purchase a product with a lower environmental
footprint, for example, they may be willing to pay more to have the same need met,
or even sacrifice some functionality for social and environmental benefit.
Drawing attention to its position in a larger system, value creation and delivery
in a BMfS is based on sustainable supply chain processes, such as the supply of
resources, and production and transport activities, that reduce ecologic and social
pressure. Impacts on stakeholders and environments across the life cycle and value
chain must be considered (Boons and Lüdeke-Freund 2013). Improved processes
may allow the seizing of new opportunities, revenue streams and markets, e.g.,
through recycling and closed-loop systems or creating new markets based in sus-
tainable and efficient design or production (Bocken et al. 2014). Organizations can
use the perspectives and tools from Levels 1 and 2 of the CapSEM Model to better
orientate their production processes and value chain activities towards sustainabil-
ity. Examples of innovation for sustainability in value creation and delivery could be
new technology for improved resource efficiency in production, redesign of trans-
port systems or improved labor conditions and worker’s rights. These innovative
activities also require the organization to look beyond its own boundaries and con-
sider the needs of local communities and stakeholders. Such a perspective requires
applying the thinking embedded in Level 4 (systems change) of the CapSEM Model.
Value capture in a BMfS recognizes the value awarded to the organization in
performing in an environmentally and socially beneficial way that meets economic,
environmental and social needs, and produces more than monetary profit (Boons
and Lüdeke-Freund 2013; Bocken et al. 2014). It is structured in a way that helps to
balance the value the organization associates with social, environmental, and
10 Business Models for Sustainability 105

economic costs and benefits. The value capture also “describes how part of the value
generated for a stakeholder can be transformed into value useful for the company”
(Geissdoerfer et al. 2018). Placing value on a reduction in resources or emissions,
or on the benefit of creating community programmes, can then work its way into the
organization’s overall cost-benefit structure. More advanced value capture struc-
tures might incorporate leasing or sharing schemes that reduce traditional consump-
tion patterns and collect payments per use or time-period rather than one-time
purchases.

10.2.3 Business Model Innovation for Sustainability

The process of conceptualizing, adapting, or changing a BM to one that fosters

sustainability is a development that requires a shift in the logic and system of inter-
acting value components of the organization. This process can be referred to as
Business Model Innovation for Sustainability (BMIfS). Conceptual clarity between
the terms business model and business model innovation remains ill-defined (Foss
and Saebi 2017; 2018; Geissdoerfer et al. 2018). However, one can generally distin-
guish between the BM as the system of interacting components, and BMI as
“designed, novel, nontrivial changes to the key elements of a firm’s business model
and/or the architecture linking these elements” (Foss and Saebi 2017). For
sustainability-­based BMI, an organization must undertake more than single innova-
tions that, for example, reduce the environmental impact of a single production
process. Instead, it requires a broader and more complex understanding of innova-
tions, and whether and how they transform and permeate through the business
model, including the logic and processes that create, exchange and capture value for
sustainability.
Another essential aspect of BMIfS is the holistic consideration of all compo-
nents. BMfS components must be considered outside of their individual boxes since
the activities within them are intertwined with activity processes within the others.
Reflecting on these core aspects, the next section presents principles and tools for
operationalizing BMfS and innovating a BM for sustainability.

10.3 Developing a Business Model for Sustainability

This section presents tools and guiding principles for innovating an organization’s
BM for sustainability. Based on their sustainability goals, an organization may
choose to take a defensive, accommodative or proactive approach to innovating its
BM (Schaltegger et al. 2016). These range, respectively, from making small incre-
mental changes to mitigate risk and reduce cost, to improving internal processes
that consider sustainability on some level, to the redesign of the core logic of the
106 H. Knudson

business for sustainable value (Schaltegger et al. 2016). To reach the more mature
levels of BMIfS, important attributes that may help an organization in the process
are (Stubbs and Cocklin 2008):
• Treating sustainability as a strategy in itself
• Using triple-bottom-line reporting for measuring and communicating progress
e.g., SDG targets and indicators or the Global Reporting Initiative (GRI)
• Taking the stakeholder view of the organization
• Embedding sustainability into top management so it makes its way into organi-
zation processes and culture
• Recognizing nature and the environment as key stakeholders
Practitioner tools for BMI for sustainability ideation and development also come in
different forms. Taking an inside-out approach, some tools begin with mapping an
organization’s current BM elements along sustainability dimensions to identify
areas for reducing negative or increasing positive sustainability impact (Joyce and
Paquin 2016). Other approaches take the outside-in perspective and look to types of
BMIfS that have worked for other organizations and have been categorized into
archetypes (Bocken et al. 2014; Joyce and Paquin 2016). The next sections briefly
introduce two alternatives for organizations depending on whether they would like
to start by first mapping their current BM, or by looking to successful sustainability
or BM innovations of outside organizations. The approaches are not exclusive and
should be combined for greater knowledge building, inspiration, and development.

10.3.1 Mapping a Business Model for Sustainability

Applying the BM concept from the operational level can be valuable as a mapping
tool of component parts. Expanding the framework of three BM components, a
business model canvas (BMC) takes an inside-out perspective to identify areas for
innovation across nine “building-blocks” of the BM (Osterwalder and Pigneur
2010). In addition to the value proposition building block, value creation & delivery
are divided into key partners, activities, and resources, and customer segments, cus-
tomer relationships, and delivery channels. Value capture in a BMC is represented
by segments of cost structure and revenue streams. Business model canvases for
sustainability help organizations map their BM elements in a set architecture and in
relation to their social and environmental performance objectives (Foxon et al.
2015; Upward and Jones 2016; Tiemann and Fichter 2016; Joyce and Paquin 2016).
Explicitly viewing activities as components that interact as a system, helps to high-
light their connections and the way each influences the others, potentially exposing
areas for sustainable value creation.
In extending the original BMC for traditional BMs, numerous canvases have
been developed to integrate sustainability dimensions, e.g., (Foxon et al. 2015;
Upward and Jones 2016; Tiemann and Fichter 2016; Joyce and Paquin 2016).
10 Business Models for Sustainability 107

Some studies have shown that mapping tools may have a limited effect on imple-
menting designed innovation strategies (Morris et al. 2005; Demil and Lecocq
2010; Boons and Lüdeke-Freund 2013; Geissdoerfer et al. 2018). However, map-
ping different BM elements and functions across a generalizable framework can be
a helpful starting point for visualization, ideation, and communication purposes
within an organization.
The triple layered business model canvas (TLBMC) (Joyce and Paquin 2016),
extends the original economic focused BMC to include additional layers for envi-
ronmental and social value creation. The TLBMC should be performed in two
steps – first as a baseline outlining the current BM and interactions, and then to
identify areas for sustainable innovation opportunity.
The TLBMC has been selected for presentation in this chapter because the addi-
tional layers force an organization to specifically consider each of their BM compo-
nents in relation to environmental and social aspects and impacts. Other BMCs for
sustainability add important sustainability components, but not in the comprehen-
sive way that the TLBMC embeds them The TLBMC mandates focus on interac-
tions between the building-blocks on each layer (horizontal coherence), but also
between and across the layers (vertical coherence) for systemic consideration of
activities and stakeholders.
In addition to the economic layer, the environmental layer of the TLBMC
requires an organization to take the life cycle perspective when identifying their
environmental impacts. It specifically focuses on addressing the impacts of value
creation & delivery activities such as material selection and supply, production pro-
cesses, distribution, and impacts through use- and end-of-life phases. The environ-
mental layer strongly encourages the use of quantitative indicators for measuring
impact, and many of the Level 1 and 2 CapSEM model tools can therefore be
applied. The social layer takes a stakeholder management approach to help the orga-
nization identify the impacts of relationships and interactions with its stakeholders
including guidelines for local community engagement, organization governance,
and management of employee, customer and societal culture. This helps the organi-
zation understand the flows of value within their value network, and to recognize
opportunities for creating and capturing social value in their BMfS.

10.3.2 Business Model for Sustainability Archetypes

From an outside-in approach, BMfS have been classified into archetypes, or com-
mon models, based on the way(s) in which the models work to create and capture
sustainable value (Bocken et al. 2014, 2016). The archetypes identified by Bocken
and colleagues are categorized according to the type of mechanism or innovation
that helps the organization deliver on sustainability – technical, social or
108 H. Knudson

organizational (Boons and Lüdeke-Freund 2013; Bocken et al. 2014).1 While the
categorization was performed to make sense of the growing literature in the field,
the clear groupings and naming of archetypical models now provides both scholars
and practitioners with common forms and patterns to discuss and reflect upon in the
business model innovation process.
Technical archetypes are characterized by technical innovation in the business
model through, for example, design or manufacturing processes that are more
resource efficient and/or support the principles of the circular economy. Social
grouped archetypes depend on social innovation to offer sustainable value, such as
through a change in the functionality they offer the customer or a change in con-
sumer behavior. Organizational grouped archetypes focus on restructuring the orga-
nization and its value creation, possibly as a reorganization of ownership, social or
hybrid enterprises or base-of-the-pyramid business models that veer away from tra-
ditional company profit maximization structures (Bocken et al. 2014, 2016).
Figure 10.2 presents the eight sustainable business model archetypes, and some
examples, grouped by their innovation type (Bocken et al. 2014). Table 10.2
describes each of the archetypes across the BM elements of value proposition, value
creation and delivery, and value capture (D’Amato et al. 2020).
Archetypes can also be grouped based on their foundational principles, e.g., the
circular economy (Lacy et al. 2014; Lewandowski 2016; Lüdeke-Freund et al.
2019), or by their main value creation area – mainly economic, social-economic,
social, mainly ecological or integrative (Lüdeke-Freund et al. 2018). The categori-
zation of common patterns can provide inspiration to organizations working to
improve the sustainability of their BM. Archetypes point out specific innovations
that can transform the current BM or create an entirely new BM. They can be help-
ful in reconceptualizing current processes and identifying potential opportunities.

Fig. 10.2 Sustainable business model archetypes. (Bocken et al. 2014).

doi: 10.1016/j.forpol.2018.12.004

1
The technological, social, organization groupings were later updated to environmental, social and
economic groupings (Bocken et al. 2016) paralleling triple bottom line dimensions, and a ninth
archetype of ‘inclusive value creation’ added under the organizational/economical grouping. The
original grouping is still most widely used, however, and therefore presented in the chapter.
10 Business Models for Sustainability 109

Table 10.2 Sustainable business model archetypes along business model components
Value creation and
Archetype Value proposition delivery Value capture
Technical Maximize Products/services Adopting more Reducing costs,
material and using less resources,
efficient and safe minimizing
energy generating less production environmental
efficiency waste and emissions processes impact
Create value Turning waste into Using recycled Reducing costs, as
from waste higher value materials, well as waste and
products/services ensuring virgin material use
recyclability of
products/services
Substitute Products/services Adopting Commercializing
with using bio-based innovative new products/
renewables renewable materials production services, reducing
and natural and energy processes based environmental
processes on bio-based impact
materials and
energy
Social Deliver Shifting from a Enabling product/
Commercializing
functionality, consumer to a user service reuse anduser-based solutions,
rather than logic reparation reducing material
ownership use, enabling
consumer access to
expensive products/
services without
owning
Adopt a Providing access to Seeking resource Securing a customer
stewardship more sustainable co-management base by leveraging
role alternatives and transparency stewardship of social
in supply chains and ecological
systems
Encourage Products /services Promoting Encouraging
sufficiency that reduce demand responsible premium pricing,
or consumption consumption and customer loyalty,
frugality (e.g., by increased market
ensuring product/ share, reducing
service longevity) material use
Organizational Repurpose the Prioritizing social Developing hybrid Establishing a new
business for and environmental business, business while
society/the benefits along with cooperatives securing livelihoods
environment economic profit and/or supporting
natural systems
Develop Expanding product/ Developing Sharing and
scale-up service adequate promoting
solutions commercialization infrastructure and sustainability-­
partnering with oriented businesses,
additional e.g., through
operators licensing
Redrawn based on D’Amato et al. (2020). doi: 10.1016/j.forpol.2018.12.004
110 H. Knudson

10.4 Conclusion

This chapter has provided an overview of the conceptual framing of BMfS, along
with some of the practitioner tools that can be used by organizations to begin adapt-
ing, transforming, or creating new BMs that support sustainability objectives. BMfS
are placed on the organizational level (Level 3) of the CapSEM Model because they
can be used by management to visualize and understand the way the organization’s
activities combine and interact to create and capture value. To improve or better
orientate their BM toward sustainability, BM activities must incorporate and com-
bine environmental, social, and economic dimensions over a long-term perspective
with the active consideration of stakeholders. Organizations should therefore apply
and utilize the methods and tools associated with each of the Levels of the CapSEM
Model to establish and measure the impacts of their activities within and beyond
their business model. For example, Level 1 and 2 tools can be used to measure the
material flows and life cycle impacts of production processes and value chains
which can subsequently be incorporated into the value proposition and value cre-
ation and delivery elements of the business model. Changes in the material flows or
resource use can then make their way into the value capture activities of the
BM. Furthermore, management can apply other organizational level tools (Level 3)
to manage, track, report and communicate their progress toward sustainability indi-
cators, and identify areas where they are not meeting selected performance indica-
tors. The organization must make strategic decisions to root sustainability in its
organizational strategy so that sustainability objectives also drive the development
and innovation of its BM. Corporate social responsibility (CSR) could be one such
perspective for helping ground the BM in sustainable practices. Finally, to gain an
overview of the network of actors and interdependent systems and activities that
make up its BM and that must be considered in potential BMI for sustainability
opportunities, the organization must take a holistic systems view (Level 4) to its
operations, business model, and sustainability strategy. The framework of compo-
nents – value proposition, value creation and delivery, and value capture – can then
be used to structure environmental, social, and economic activities within the busi-
ness model and position them for improved sustainability.

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Chapter 11
Closing the Loop: Industrial Ecology,
Circular Economy and Material Flow
Analysis

Annik Magerholm Fet and Paritosh C. Deshpande

Abstract This chapter explores the principles supporting industrial ecology (IE),
circular economy (CE) and material flow analysis (MFA). IE concerns constructing
industrial and societal processes according to ecological principles. One of the main
features within IE is the principle of closing material loops by avoiding pollution.
Insights from IE further aid in building the understanding essential for establishing
the principles of circularity in the resource economy. MFA is viewed as an analyti-
cal method rooted in the field of IE and Systems Engineering (SE).

11.1 Industrial Ecology

According to Graedel (1996), Industrial Ecology (IE) should be defined as follows:

Industrial ecology is the study of the means by which humanity can deliberately and ratio-
nally approach and maintain a desirable carrying capacity, given continued economic, cul-
tural, and technological evolution. The concept requires that an industrial system be viewed
not in isolation from its surrounding systems, but in concert with them. It is a systems view
in which one seeks to optimize the total materials cycle from virgin material, to finished
material, to component, to product, to obsolete product, and to ultimate disposal.

This definition is based on a systems’ view and nature’s carrying capacity. However,
there are several definitions of IE (O’Rourke et al. 1996) which consider other
objectives such as closed material cycles, evolutionary principles, resiliency,
dynamic feedback, cooperation and competition in ecosystems. Industrial Ecology
(IE) is the broad umbrella or the framework for thinking about and organizing pro-
duction and consumption systems in ways that resemble natural ecosystems. This

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
P. C. Deshpande
Department for Industrial Economics and Technology Management,
NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 113

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_11
114 A. M. Fet and P. C. Deshpande

idea considers human societies to be part of and operate within natural ecosystems
(Ehrenfeld 1994). The basic concept is to model industrial systems on natural eco-
systems. IE aims to interpret and adopt an understanding of the natural system and
apply it to the design of the man-made system to achieve a pattern of industrializa-
tion that is more efficient and adjusted to the tolerances and characteristics of the
natural system. The emphasis is on forms of technology that work with natural
systems, not against them. In contrast to industrial production, the natural environ-
ment has evolved into an inherently sustainable, cyclical system over billions of
years. IE aims to incorporate these cyclical patterns into sustainable designs for
industrial production systems. A pattern of change is illustrated by Fig. 11.1 (Jelinski
et al. 1992).
In the early phases of the industrial revolution, the potentially usable resources
were significant, and the existence of life forms was minimally impacted by extrac-
tion or waste. This view of unlimited resources might be described as linear, that is,
as one in which the flow of material from one stage to the next is independent of all
other flows (Jelinski et al. 1992). A contrasting picture emerges with “limited
resources” as an ecosystem view. In such a system, life forms become strongly
interlinked and form the complex networks we know today. According to the grow-
ing resource scarcity, industrial systems will be increasingly put under pressure to
evolve to move from linear to semi-cyclic modes of operation. The central domain
of IE is depicted in Fig. 11.1 with four central nodes: the materials extractor or
grower, the materials processor or manufacturer, the consumer, and the waste

"Unlimited" Ecosystem "unlimited" Linear

resources component waste system

Ecosystem
component
Limited Limited Semi cyclic
resources Ecosystem Ecosystem waste system
component component

Material Material
extractor or manufac-
grower turer Industrial
Limited Limited
eco-
resources waste
system
Waste Consumer
processor

Fig. 11.1 The change from linear to cyclic material flows in the industrial ecosystem
11 Closing the Loop: Industrial Ecology, Circular Economy and Material Flow Analysis 115

Highly developed closed-

products and podcaging

Environmentalism fully
integrated in corporate
Significant changes in

ecosystem developing
Synergetic industrial
mangement tools
Partial recycling

Development of

Full industrial
loop recycling
Compliance

initiatives

ecology
culture
Current idustrial Eco-industrial
infrastructure infrastructure
time

Fig. 11.2 The emergence of an eco-industrial infrastructure (Tibbs 1992)

processor. To the extent that they operate within the nodes in a cyclic manner or
organise to encourage the cyclic flow of materials within the entire industrial eco-
system, they evolve into modes of operation that are more efficient and have a less
disruptive impact on external support systems. Examples range from recycling of
iron scrap by the heavy metals industry to the popularity of garage sales for the
reuse of products in the consumer domain (Jelinski et al. 1992).
Applied IE embraces both business applications and technology opportunities
(Tibbs 1992). It provides a basis for developing strategic options and policy deci-
sions for those in management. Tools for analysis of the interface between industry
and the environment is needed (Fet 2002). On the technical side, IE offers specific
engineering and operational programmes for data gathering, technology deploy-
ment and product design. The technologies of real-time environmental monitoring
are becoming increasingly sophisticated and must be integrated using information
technology as a practical tool for mapping and managing environmental impacts.
According to Tibbs (1992), process and product design should reflect IE thinking
from initial design principles to final decommissioning and disassembly. The emer-
gence of an eco-industrial infrastructure is illustrated by Fig. 11.2, which shows a
set of shifts, both technological and institutional. With the goal of bringing indus-
trial development into balance with natural and social systems, the two main objec-
tives are to achieve closed material cycles and realize a fundamental paradigm shift
in our thinking about industry-environment relations (O’Rourke et al. 1996). The
first is an urgent goal. Unless product and material cycles are closed, the industrial
system will continue to be unsustainable. Regarding the second goal, technology
alone cannot achieve the transformation. It must therefore work within societal sys-
tems. The fundamental point is that implementation of IE, and over time, migration
towards sustainable development will involve significant cultural, societal, and
political changes. Resolving these conflicts requires fundamental change to our sys-
tem of economics. (Tibbs 1992).
116 A. M. Fet and P. C. Deshpande

11.2 Implementing Industrial Ecology Principles in Business

Implementing IE principles into business practice requires simple rules, such as pol-
lution prevention and material cascading. Material cascading means that waste from
one company should be regarded as a resource for another company, which consid-
ers waste minimization, resource and energy efficiency and recycling opportunities.
Pollution prevention includes re-designing products and processes where efforts
like phasing out toxic materials emissions of persistent synthetic materials are
essential. Raw material extraction should be reduced, the material should be selected
and used with respect to the product life cycle, and material flows should be opti-
mized concerning natural material cycles (Jackson 1993). IE is grounded in holistic
life cycle system understanding. Ehrenfeld (1994) presented a list (based on Tibbs
1992) of the seven components of IE which should be considered when implement-
ing IE principles in industry. A modifed version of the list of components is pre-
sented in Table 11.1).
The words which are written in cursive are used to highlight the critical issues
within each of the categories. Adopting these in business practice relies on the
incentives, competence, and willingness to change. In short, it can be said that the
implementation of IE principles is about understanding ecological principles on one
hand and understanding the interactions between business activity and the impacts
on ecological systems on the other.
When implementing IE, process optimization comes first. Integration and coor-
dination between firms are typically a prerequisite and closed-loop systems mean
material reuse and recycling within a firm and material and energy cascading
between firms. The industry parks Kahlundborg in Denmark and Nova Scotia in
Canada are used to demonstrate IE in practice in a special set of relationships known
as Industrial Symbiosis (Doménech and Davies 2011).

Table 11.1 Principal characteristics of industrial ecology

Category
1: Balancing industrial input and output to natural ecosystem capacity, hereunder identifying
ways that industry can safely interface with nature in a holistic life cycle perspective.
2: Dematerialization of industrial output, hereunder striving to decrease materials and energy
intensity in industrial production.
3: Creating loop-closing industrial practices, hereunder improving the efficiency of industrial
processes by re-designing production processes and products for maximum conservation of
resources.
4: Improving metabolic pathways for materials use and industrial processes, hereunder create
industrial ecosystems by fostering cooperation among various industries whereby the waste
of one production process becomes the feedstock for another.
5: Systematizing patterns of energy use, hereunder development of renewable energy supplies
for industrial production, and creating energy system that functions as an integral part of
industrial ecosystems.
6: Aligning policy to conform with long term industrial system evolution, hereunder adoption
of new national and international economic development policies
Modified after Ehrenfeld (1994)
11 Closing the Loop: Industrial Ecology, Circular Economy and Material Flow Analysis 117

However, there are omissions and weaknesses within IE. Policies often do not
support goals, and analyses regarding the problems in changing current industrial
practices, are often lacking. One major problem IE is facing is securing safe, clean,
abundant alternatives to fossil fuels. Energy flow must remain open in any closed
material cycle since energy cannot be recycled. It is of paramount importance,
therefore, to switch to renewable energy sources whenever possible. This is not
merely a technical issue: it requires structural societal changes such as governments
putting forward policies for increasing the use of renewable energy and acceptance
and the support of those policies by stakeholders as well as the public.

11.3 Closing the Loop: Circular Economy

The six principal characteristics of Industrial Ecology are presented in Table 11.1.
The development of IE has also resulted in the emergence of new concepts such as
green engineering, design for sustainability, eco-design, eco-industrial network and
the Circular Economy (CE). CE gained traction in policy, business and academia
and advocates the transformation of industrial systems from a traditional linear
take-make-dispose model toward a circular model in which waste is a resource that
is valorized through recycling and reuse (Geissdoerfer et al. 2017). For the business
sector, three elements of CE provide a suitable means to operationalize sustainable
industrial practices as they:
• increase the efficiency of resource utilization, thereby improving competitive-
ness and profitability (OECD 2021)
• provide an alternative to economic development models (Kirchherr et al. 2017)
• promote environmentally friendly use of resources (MacArthur 2013)
Figure 11.2 shows how elements of IE can be reflected in conceptualizing CE and
its relevance to the business firms through production, use and end-of-life manage-
ment strategies for their products. It illustrates the different elements of a circular
economy, and where in the life cycle these should be addressed.
The theory from IE contributes to CE in different ways. According to Saavedra
et al. (2018), this contribution can be structured along three levels:
1. Conceptual contribution
2. Technical contribution
3. Political and standard contribution
The conceptual contribution is related to category 4 in Table 11.1 where CE aligns
with industrial symbioses (IS), which involves the exchange of by-products and
wastes in planned complexes of co-located manufacturing plants thereby increasing
the intensity of resource use by adding value from the same initial inputs. The tech-
nical contribution concerns the use of IE tools as presented in the CapSEM Model
to support CE. According to Saavedra et al. (2018), the most commonly used
tools are MFA, Design for the Environment (DfE) and Cleaner Production (CP).
118 A. M. Fet and P. C. Deshpande

However, CE can be linked to all Levels presented in the CapSEM Model (see Table
2.1 in Chap. 2, Part I of this book). If a product is designed favouring recycling
combined with economic incentives, the potential to close material loops is high.
The political and standard contribution is manifested in the application of IE
to support the development of policies, laws, and standards to implement CE. To
achieve this systematic transition towards a CE at a macro level, the collaboration
of the business community, policymakers and institutions is fundamental, as
intented by SDG number 17, ‘Partnership’. Some policy instruments can be applied
in this broader context of CE, such as regulatory instruments, research and
educational instruments, technology transfer and informational instruments (e.g.,
eco-labelling).
There are numerous models for the circular economy. The circular economy sys-
tem diagram, known as the butterfly diagram, see Fig. 11.3, is often employed
(MacArthur 2013). Two principle cycles, technical and biological are used to dem-
onstrate the continuous flow of materials in the economy. In the first, the way in
which products are retained in circulation in the economy is by reusing, repairing,
remanufacturing and recycling them. Materials are thus constantly used and never
become waste. In the second, nutrients from biodegradable materials are returned to
the Earth, through composting or anaerobic digestion. This permits the land to
regenerate. The cycle then continues (MacArthur 2013).
Although there have been several attempts to define the scope of CE, critics
claim that it is interpreted differently by different people. Kirchherr et al. (2017)

Fig. 11.3 The butterfly diagram: visualising the circular economy (ellenmacarthurfoundation.
org, 2013)
11 Closing the Loop: Industrial Ecology, Circular Economy and Material Flow Analysis 119

report that more than 100 different definitions of circular economy are found in
scientific literature. The definitions are often linked to the author’s discipline which
can render them confusing for researchers outside the discipline. According to
Murray et al. (2017), the uses of the words circular and linear, in association with
the word economy are potentially confusing as both links exist in entirely different
contexts. While CE has been linked closely to IE and the environmental dimension
of sustainability in this chapter, reflections on the social dimension have been less
visible. So, for the implementation of CE in business, the social value should also
be visible to avoid oversimplification of the concept. Considering these issues,
Murray et al. (2017) have suggested the following definition:
The Circular Economy is an economic model wherein planning, resourcing, procurement,
production and reprocessing are designed and managed, as both process and output, to
maximize ecosystem functioning and human well-being.

11.4 Material Flow Analysis

Material Flow Analysis (MFA) studies the physical flows of natural resources and
materials into, through and out of a given system. It is based on methodically organ-
ised accounts in physical units. It uses the principle of mass balancing to analyze the
relationships between material flows (including energy), human activities (includ-
ing economic and trade developments) and environmental changes (OECD 2008).
The basic principle of MFA simply applies the law of conservation of energy and
mass: matter is neither created nor destroyed. MFA exemplifies what this law
means in practice and how practitioners can demonstrate the law of conservation in
solving real-life problems with varying degrees of complexity related to environ-
mental management. The roots of MFA also lie in the material balance calculations
in chemical engineering problems. Material balance is simply accounting for mate-
rial, and it is often compared to the balancing of financial accounts. Money is depos-
ited and withdrawn. The difference between these transactions at the end of the
fixed time is accumulation in the account, also called the Stock in MFA terminolo-
gies. Because of the law of conservation of matter, the results of an MFA can be
controlled by a simple material balance comparing all inputs, stocks, and outputs of
a process. This distinct characteristic of MFA makes the method attractive as a
decision-support tool in resource management, waste management, and environ-
mental management (Brunner and Rechberger 2016).

11.4.1 MFA Methodology

MFA can be used for assessing various systems or scenarios. The terms material or
substance flow analysis (MFA or SFA) are used interchangeably in the literature
depending on the study unit, material or substance. MFA can be classified either by
material type, analytical scope, chemical ingredient, or research purpose, providing
120 A. M. Fet and P. C. Deshpande

Table 11.2 Essential terminology in MFA studies

Term Definition
Material Material stands for both substances and goods
Substance In chemistry, a substance is defined as a single type of matter consisting of
uniform units.
Goods Goods are substances or mixtures of substances that have economic values
assigned by markets.
Process A process is defined as the transport, transformation, or storage of materials.
Stock Stocks are defined as material reservoirs (mass) within the analyzed system, and
they have the physical unit of kilograms. A stock is part of a process comprising
the mass that is stored within the process.
Flow and Processes are linked by flows (mass per time) or fluxes (mass per time and
flux cross-section) of materials. Flows/fluxes across systems boundaries are called
imports or exports. Flows/fluxes of materials entering a process are named inputs,
while those exiting is called outputs
System A system comprises a set of material flows, stocks, and processes within a defined
boundary
System The system boundary is defined in space and time. It can consist of geographical
boundary borders (region) or virtual limits (e.g., private households, including processes
serving the private household such as transportation, waste collection, and sewer
system)
Substance Substance flow analysis (SFA) monitor flows of specific substances (e.g. Cd, Pb,
flow analysis Zn, Hg, N, P, CO2, CFC) that are known for raising particular concerns as regards
(SFA) the environmental and health risks associated with their production and
consumption (OECD 2008).
Material Material system analysis (MSA) is based on material-specific flow accounts. It
system focuses on selected raw materials or semi-finished goods at various Levels of
analysis detail and application (e.g., cement, paper, iron and steel, copper, plastics, timber,
(MSA) water) and considers life-cycle-wide inputs and outputs. It applies to materials
that raise particular concerns as to the sustainability of their use, the security of
their supply to the economy, and/or the environmental consequences of their
production and consumption. (OECD 2008)
Modi fied from Brunner and Rechberger (2016)

the potential to assess sustainability from various analytical perspectives. Before

exploring the methodological steps, it is essential to understand the terminology
used in describing the MFA study. Table 11.2 provides a brief overview of all the
critical terms for an MFA study.
Figure 11.4 demonstrates the typical system flow diagram for MFA for a system.
P1 and P2 are processes, and S1 is the stock within P1 where the material is accu-
mulated. Here, A0,1, A1,2, A2,1 and A2,0 are the flows from which material and sub-
stance enter the system. As per the definition of a process, the material is either
transformed, transferred or stored in the process represented by boxes.
11 Closing the Loop: Industrial Ecology, Circular Economy and Material Flow Analysis 121

A0,1 P1 A1,2 P2 A2,0

S1

A2,1

Fig. 11.4 Typical process flow diagram for the MFA system

According to the law of conservation of matter, the mass balance equations for
each process can be represented as follows:

∑ Input flows = ∑ Output flows + ∑ Stocks

∆S1
Change in Stock = A0,1 + A2,1 − A1,2
∆t

Mass balance for Process P 2 : A1,2 − A2,1 − A2,0 = 0

If inputs and outputs do not balance when mapping the MFA system, then one or
several flows are either missing or have been wrongly calculated. The mass-balance
principle applies to systems, sub-systems and processes. An accurate material bal-
ance of a system or a process is only achieved if all input and output flows are
known or measured. In practice, stocks are often calculated by the difference
between inputs and outputs. All the necessary information for calculating material
flows should be available from a variety of sources such as company records,
national reports, statistical databases, and published scientific literature. In some
instances, relevant stakeholders and resource users can be targeted to gain insights
into the system to be studied (Deshpande et al. 2020). After calculating all the flows,
the mass balance of the system needs to be checked, and uncertainties of the obtained
information need to be evaluated. MFA studies involving several flows, processes
and stocks tend to become complicated. Dividing processes into sub-processes, re-­
adjusting system boundaries or using analytical software for calculations are the
few techniques to approach the complicated MFA systems. Brunner and Rechberger
(2016) describe calculations protocols, uncertainty analysis, and various software
packages available for conducting MFA in their ‘Practical Handbook of Material
Flow Analysis’.
122 A. M. Fet and P. C. Deshpande

Table 11.3 Type and application of MFA, based on objectives of interest

Specific environmental problems related to certain impacts per unit flow of:

Ia Ib Ic
Substance Materials Products
e.g., Cd, Cl, Pb, Zn, Hg, N, P, e.g., wooden products, energy e.g., diapers, batteries
C, CO2, CFC carriers, excavation, biomass, cars
plastics

Problems of environmental concern related to the throughput of:

IIa IIb IIc
Firms/industry Sector Region
e.g., single plants, medium and e.g., production sectors, chemical e.g., total or main
large companies industry, construction throughput mass flow
balance, total material
requirement

11.4.2 MFA Applications

An MFA delivers a complete and consistent set of information about all flows and
stocks of a particular material within a system. The depletion or accumulation of
material stocks is identified early enough to take countermeasures or promote fur-
ther build-up and future utilization. Moreover, minor changes that are too small to
be measured in short time scales but could slowly lead to long-term damage also
become evident. Historically, MFA is applied through various scales from a global
or national level to a company, product, and process level. In general, MFA provides
a system-analytical view of various interlinked processes and flows to support the
strategic and priority-oriented design of management measures. Table 11.3 presents
the overview of MFA connecting to the application at various levels, i.e., substance
(Ia), materials (Ib), and products (Ic) (Bringezu et al. 1997). These refer to Levels 1
and 2 in the CapSEM Model. The CapSEM model suggests that MFA at Level 1 is
accounted for by each production process’s inputs and outputs (I/O). The account-
ing embraces both substances and other materials, as shown in Table 11.3. Similarly,
for products viewed in a life cycle perspective. This is noted under Ic in the table.
Levels 3 and 4 in the CapSEM model are represented by firms (IIa), sectors (IIb),
and regions (IIc) in Table 11.3. The firm-level MFAs help realize sustainability
goals by uncovering major problems existing in the production phase and across the
product life cycle, supporting priority setting, checking the possibilities for improve-
ment measures, and providing tools for monitoring their effectiveness.
The environmental performance indicators (EPIs) assessed through MFA studies,
complement the sustainability reporting and other tools used to assess the firm’s
environmental performance management through tools such as input-output analy-
ses and life cycle assessment (LCA). The insights gained through applying MFAs
within industries helps in designing corporate strategies for regulatory compliance,
resource conservation, and waste management, waste prevention or circular economy.
11 Closing the Loop: Industrial Ecology, Circular Economy and Material Flow Analysis 123

Fig. 11.5 Representative illustration of MFA through Sankey diagram (Schmidt 2008a, b)

Historically, MFA has been used for a wide range and scale of applications. Binder
(2007) classifies the applications of MFA between industrial and regional scale anal-
ysis. MFA results have successfully been used to optimize material flows and waste
streams in production. MFA is a central methodology used within industrial ecology
and quantifies how the materials that enable modern society are used, reused and lost
(Bringezu S and Moriguchi Y 2002). Sankey diagrams named the ‘visible language
of industrial ecology’, are often employed to present MFA results, see Fig. 11.5. Such
a model exemplifies a mass balance between extracting natural resources and import-
ing goods or resources, with outputs represented as exported goods, and other pro-
cessed outputs. Differences between inputs and outputs become additions to national
reserves. Recycling guarantees the retention of these elements within the national
economy which is consistent with the definition of a circular economy.
Moreover, industrial eco-parks are based on optimizing material flows within
different industry sectors, which can be assessed using MFA (Chertow 2000). On a
regional scale, MFA results could be applied to derive measures for improving
regional, or corporate, management of materials: to optimize resource exploitation,
consumption, and environmental protection within the particular constraints of the
region or company (Binder 2007).

11.5 Conclusion

MFA approaches are now being linked with environmental input-output assess-
ment, life cycle assessment and scenario development. These increasingly compre-
hensive assessments promise to be central tools for future sustainable development
and circular economy studies (Graedal 2019). Industrial Metabolism (IM) and
Industrial Symbioses (IS) are also more often referred to in studies of applied IE
(Oughton et al. 2022). This chapter has assessed the history and status of MFA,
reviewed the development of the methodology, and demonstrated that MFAs have
124 A. M. Fet and P. C. Deshpande

been responsible for creating related industrial ecology specialities and stimulating
connections between industrial ecology and a variety of engineering and social sci-
ence fields. Closing the loop for the preservation of scarce planetary resources
requires the collaborative efforts of participants at all levels of society. An idealized
end-state has been loosely described as a circular economy. The CapSEM Model
offers both a transition pathway and specific methods to achieve this objective.

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Chapter 12
Systems Engineering

Annik Magerholm Fet and Cecilia Haskins

Abstract The value of systems science approaches to address sustainability topics

has been formally recognized since the publication of Limits to Growth (1972) and
the application of system dynamics to investigate the synergies between planetary
activities. Since then, these methods have been applied to address the chaos and
reverse the consequences of the anthropomorphous influences at the root of today’s
wicked problems – climate change, species extinction, unbalanced social equity.
Systems engineering provides theory and practices that are both systemic, system-
atic, sustainable, and based on the foundations of systems science.

12.1 Background

The purpose of this chapter is to describe the use of systems thinking and systems
engineering for the purpose of addressing and working with sustainability chal-
lenges, dealing mainly with society-business interactions. Readers should note that
the methods presented in the CapSEM Model (Part I, Chap. 2) focus mainly on
environmental aspects of sustainability. Systems engineering provides a framework
to fully consider the needs of stakeholders and other social and economic aspects
(Fet and Knudson 2021).

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
C. Haskins
Department for Mechanical and Industrial Engineering, NTNU,
Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 127

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_12
128 A. M. Fet and C. Haskins

12.1.1 Definitions

Systems engineering (SE) is recommended as an approach to incorporate stake-

holder needs and participation in the transition to sustainable and environmental
management. SE is both a discipline and a process. As a discipline, SE concerns
adopting a holistic life cycle perspective and constantly evolving to bring in aspects
from other disciplines when needed. SE as a process is a transdisciplinary and inte-
grative approach to enable the successful realization, use, and retirement of engi-
neered systems – both technological and social, by using systems principles and
concepts, and scientific, technological, and management methods (Sillitto et al.
2019). The transdisciplinary approach organises the analysis and decision-making
around common purpose, shared understanding and ‘learning together’ in the con-
text of real-world problems or themes. It is usable at any CapSEM Level, from
simple to complex, and is especially necessary in unprecedented situations or where
there exists a significant degree of complexity. An integrative approach by itself can
be adequate where the situation is not overly complex or when dealing with a situ-
ation that has been encountered before and a path to the solution can be readily
identified and understood (albeit there will still be many challenges along the way,
technical and otherwise). Systems principles and concepts are the ways in which
systems thinking and the systems sciences provide a foundation for systems engi-
neering practices. Examples of some of the principles, concepts and supporting
tools are mental models, system archetypes, holistic thinking, separation of con-
cerns, abstraction, modularity and encapsulation, causal loop diagrams, systemi-
grams, and systems mapping. The Systems Engineering Body of Knowledge
(SEBOK 2021) describes many of these: it also provides an extensive reading list.

12.1.2 SE Practices

Two concepts are essential to understanding the broad scope of systems engineer-
ing. The first, systematic, means taking a thorough, orderly approach to solving a
problem or set of problems. The second is the systemic perspective. The term means
taking a holistic appreciation of the topic under consideration, whether a man-made
engineered system or an international political effort toward reduction of climate
gases emissions. The literature of systems engineering practice describes a variety
of systematic processes for developing, designing, and deploying large-scale com-
plex systems, such as the standard for systems engineering life cycle development
ISO/IEC/IEEE 15288: 2015. At the same time, successful systems engineering
must be built on a foundation of systemic thinking to conceive and solve complex
problems (Hitchins 2007).
Systems engineering can be used as a management technology to assist and sup-
port policy making, planning, decision making, and associated resource allocation
or action deployment. All systems engineering may be thought of as consisting of
formulation, analysis and interpretation of the various elements in all phases of the
12 Systems Engineering 129

life cycle of a system. Both top-down and bottom-up approaches are needed and
used in SE practices. The top-down approach is primarily concerned with long-term
issues that concern structure and architecture of the overall system and is useful in
planning phase when the system must be viewed as a whole, as at CapSEM Level 4.
The bottom-up approach is concerned with making parts of the system more effi-
cient and effective so they can be incorporated into the overall system and is useful
when determining the tasks to support operational decisions, as in CapSEM Levels
1–3 (Fet and Knudson 2021).

12.2 Description

Systems engineering as a process to support planning, decision-making and system

design has been described in many ways to address the unique needs of a given situ-
ation or domain. Fet (1997) devised a generic process that encompasses the essen-
tial activities of the SE development life cycle process. This 6-step model is provided
in Fig. 12.1 and is the basis for the mapping to relevant CapSEM methods presented
in Fig. 12.1.
Step 1: Identify Needs
In this step, the stakeholders’ needs, their values and concerns are identified. It
includes an iterative loop where the statement of needs answers the question What
is needed? The logic is an answer to the question Why is it needed? and the search
for preconceived (technical) solutions answers the question How may the need be
satisfied? The statement of need should be presented in specific qualitative and
quantitative terms, in enough detail to justify progression to next step.

Fig. 12.1 Systems engineering life cycle process, 6-step framework

130 A. M. Fet and C. Haskins

Step 2: Define Requirements

After identifying stakeholders’ needs, attention turns to defining requirements that
describe how the system is supposed to be designed, function and be operated dur-
ing the life cycle. Both functional, operational and physical performance require-
ments should therefore be defined. While functional requirements reflect the
system’s ability to carry out functions and should be an answer to the what in step
1. Operational requirements are related to the operation of the system all in a life
cycle perspective, and an answer to the why in step 1. The physical requirements
reflect the physical conditions the system will be exposed to, and how the system
interacts with the environment, and thereby an answer to the how in step 1. The defi-
nition of functional, operational and physical performance requirements must be set
to each of the integrated parts of a system, both to the hardware, software, bioware
and the economic parts, which together describe a system (Fet 1997).
Since the toolbox in the CapSEM Model mostly concentrate on the environmen-
tal issues of sustainability, the defined requirements should also take a specific role
in meeting the performance requirements for achieving the change in performance
as was illustrated in Fig. 2.1 in this book. By identifying relevant SDGs that points
to the actual CapSEM-levels as shown in Fig. 3.2, the underlying targets can be
helpful when specifying the necessary performance requirements to meet the stated
needs under step 1.
Step 3: Performance
As soon as the system requirements are defined, they should be translated to perfor-
mance specifications, i.e. definable and measurable performance criteria. The speci-
fication of performance should be formulated by means of performance indicators,
for example, OPIs, MPIs and KPIs, and reflect the needs and requirements formu-
lated in Steps 1 and 2, and also help to answer What, Why and How.
The functional analysis should be performed as an iterative process to ensure that
all elements of system design and development, production, operation, and demoli-
tion and support are covered in the performance specification. The performance
should be specified in a way that measurements verify that needs and requirements
are met. Quantification of the performance indicators selected in step 3 are further
analyzed using impact assessment methods and other various tools suggested in the
CapSEM Model such as life cycle assessment (LCA) and material flow analysis
(MFA) (Valenzuela-Venegas et al. 2016).
Step 4: Analyze and Optimize
System analysis includes an analytical process of evaluating various system design
alternatives. This is called a trade-off which may be defined as “a compromise
between conflicting interest with the need to maintain equilibrium” (Rolstadås
1995). This step includes activities such as searching for a configuration, principles
and technologies to meet specifications conceptually, selection or discrimination
between system alternatives, and optimizing by the trade-off analysis. Trade-offs
between many, often conflicting system requirements, should be carried out, and
this analysis of the system and the specification of its performance goes into an
iterative loop of improvements.
12 Systems Engineering 131

The problem is to select the best approach possible through the iterative process
of system analysis using various analytical methods. The use of weight factors
based upon the priorities of stakeholders is an important part of the analysis
(Freeman 2010). Different optimization techniques should be used.
The trade-off therefore needs to meet a few requirements itself. These may be:
• Define the objective function for the total system performance evaluation
• Define the conditions under which the system performance is to be measured
• Establish the measurement/evaluation criteria for a ‘best’ satisfaction of the
functional, operational and physical needs and requirements.
In the optimization phase it is important to select objective functions taking all alter-
natives into account. The general purpose of an objective function is to express in
quantitative form a total single measure of the system performance. Performing the
analyses, optimisation and evaluation is again an iterative process and should be
performed until a design (or suggestion to the solution of the problem) is accepted.
Step 5: Design, Solve and Improve
Based on the preliminary system design or suggestion of solutions, a detailed design
phase begins derived from the preliminary needs through system requirements and
performance specifications, synthesis and analysis. When the overall system defini-
tion has been established in an accepted conceptual solution, it is necessary to prog-
ress through further definitions leading to the realization of hardware, software,
bioware and economics, all seen in relation to their possible environmental impacts
throughout the system’s life cycle. Decision-makers should make the final decision
on which changes to implement. Where multiple strategies exist, decision-makers
may use multi-criteria appraisals to identify preferred strategies based on the stake-
holders’ subjective preferences with reference back to stated needs and requirements.
Step 6: Verify and Report
The final step of the process concerns monitoring and recording the performance of
the selected course of action. The iteration between steps 4 and 5 should provide the
information and data needed to continuously evaluating the current strategies and
come up with solutions for improvements and changes to the actual CapSEM Levels.

12.3 Application

Progress toward environmental and sustainability performance improvements at

different system levels is encapsulated in human activity systems. The term refers to
social systems where the intentional agents are humans, working toward a common
purpose and where the social system is deliberately constructed and maintained and
can adapt rapidly. A major goal of Systems Engineering is to reduce the risk that
accompanies such systems by establishing shared and valid models of the system,
in order to improve stakeholders’ knowledge and understanding of the system and
its context. To quote Forrester, the inventor of System Dynamics,
132 A. M. Fet and C. Haskins

We do not live in a unidirectional world in which a problem leads to an action that leads to
a solution. Instead, we live in an on-going circular environment. Each action is based on
current conditions, such actions affect future conditions, and changed conditions become
the basis for later action. There is no beginning or end to the process (Forrester 1998).

12.3.1 Systems Approach for Capacity Planning

In his insightful article on how capacity planners can benefit from systems thinking,
Hauck (2005) offers the following five insights:
• Cause and effect relationships are not always linear; they are frequently delayed
in time and unpredictable
• Many successful systems have evolved through incremental adaptations
• Many capacity development processes do not have measurable objectives, but
are guided by implicit intentions and ideas that adjust to emerging situations
• Interconnections among the components of a system are important and can give
rise to valuable synergies
• Feedback is critical for learning and self-awareness, but the form it takes is cul-
turally determined and cannot be applied in a standardized manner.
These insights are relevant to decision-making throughout the entire life cycle of a
system and can be applied from decisions at Level 1 and at each subsequent level of
the CapSEM Model. Systems approaches such as these have become standard prac-
tice for monitoring progress of the current UN sustainable development goals
(Selomane et al. 2019; Haskins 2021). Levels 1 and 2 concern technical analysis.
Levels 3 and 4 mainly concern human decisions between people, technology and an
organization.

12.3.2 Systems Engineering applied to the CapSEM Model

To illustrate the usefulness of SE as a framework for choosing methods for imple-

menting the CapSEM Model approaches to sustainability, Fig. 12.2 maps the basic
SE process in the left column to the activities and outcomes for the recommended
methods including Level 1, represented by cleaner production (CP), Level 2,
represented by life cycle assessment (LCA) and design for the environment (DfE),
Level 3, represented by environmental management systems (EMS) and environ-
mental performance evaluation (EPE).
The application of SE practices to a given CapSEM method also requires atten-
tion to the topic of system boundaries (step 1), which occur between (1) the system
under study and the environment, (2) the system under study and other interrelated
systems, and (3) relevant and irrelevant processes (Selomane et al. 2019). Material,
energy and information crossing the boundaries are defined as inputs to or outputs
12 Systems Engineering 133

Fig. 12.2 Mapping of systems engineering processes to CapSEM Model methods and tools
(Fet 2002)

from the system. As part of an environmental analysis, the environmental loads are
determined by materials extracted from natural resources and emissions into the
environment, all of which cross defined system boundaries. Processes often gener-
ate different products, byproducts and functions, in co-production, recycling or
waste processing. System interactions should be classified according to which of the
interrelated systems belong to the system under study, and which do not. Only after
selecting the most appropriate system boundaries can the decision be taken of how
the scope of a given study of a system should be extended.

12.3.3 Systems Engineering as an Integrating Framework

The eventual application of SE in any CapSEM Level relies on integrated practices

as recommended by Asbjørnsen (1992). A system should be viewed as a combina-
tion of some or all of four different disciplines of roughly equal importance:
• the disciplines of technology that include the physical equipment (Hardware),
• the disciplines of financial science that include the monetary aspects (Economics),
• the disciplines of information science that include computer applications
(Software),
• the disciplines of social science that include human factors and psychology
(Bioware).
134 A. M. Fet and C. Haskins

In this way, technology, management, legal aspects, social and environmental

issues, finance and corporate strategies are all addressed by a total system integra-
tion and inter-disciplinary cooperation. Decisions made during the early phases of
system development have a great impact on the total life cycle costs, as well as the
life cycle environmental performance. Both the life cycle costs and the life cycle
environmental performance should be balanced against the estimated improvement
in performance and related to the overall purpose of the system. In addition, the
processes and methods utilized in the acquisition of systems must be such that sys-
tems can be acquired in a timely and expeditious manner and designed and devel-
oped as effectively and efficiently as possible, considering the limitation of available
resources. The resource requirements and the time requirement to carry out and
complete the work must be specified early in order to ensure a proper allocation of
resources, and to relate the work properly to the total time available, e.g., an upgrade
to a manufacturing facility will desire the shortest possible downtime.

12.4 Systems Engineering as a Collaboration Framework

Sillitto et al. (2019) assert that SE is essentially collaborative in nature, facilitating

collaboration between all contributors to system success, recognizing the need to
respect diverse points of view. They suggest the following critical activities sup-
ported by SE practices (Sillitto et al. 2019).
• Defining and managing the interfaces, both within the system and between the
system and the rest of the world (noting that increasingly, systems engineering is
conducted in a brown-field rather than a greenfield environment, so legacy sys-
tems may be a major or key part of the overall solution);
• Establishing appropriate process and life cycle models that consider complexity,
uncertainty, change and variety, and implementing system management and gov-
ernance processes for both development and through-life use and disposal;
• Supporting transition to operations, considering all aspects including people,
processes, information and technology;
• Periodically re-evaluating status, risks and opportunities, stakeholder feedback,
observed or anticipated unintended consequences, and anticipated system effec-
tiveness and value, and recommending any appropriate corrective, mitigation or
recovery actions to ensure continuing system success.
These can include upgrading, obsolescence management, maintenance and repair
activities, manufacturing changes, changing operational processes, user training,
instituting metrics and incentives, assessing information quality and integrity, and
making other changes to the system as suggested by the CapSEM Level and meth-
ods employed.
12 Systems Engineering 135

12.5 Conclusion

This brief introduction to SE gives an overview of systems engineering practices in

regards to their position(s) on the CapSEM model, explaining the contribution of
these activities and their relevance to all Levels of the model. The reader is encour-
aged to explore the references given here as a departure point for employing these
methods.

References

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Fet AM (1997) Systems engineering methods and environmental life cycle performance within
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for inclusive development. Quorum Books, Westport, pp 451–464
Fet AM, Knudson H (2021) An approach to sustainability management across systemic levels: the
capacity-building in sustainability and environmental management model (CapSEM-model).
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Spain, December 15, 1998
Freeman RE (2010) Strategic management: a stakeholder approach. Cambridge University Press
Haskins C (2021) Systems engineering for sustainable development goals. Sustainability
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Hauck V (2005) Applying systems thinking to capacity development. Capacityorg 26:16
Hitchins DK (2007) Systems engineering: a 21st century systems methodology. Wiley, Chichester
Rolstadås A (1995) Performance management, A business process benchmarking approach,
Chapmen & Hall, UK.
SEBoK Contributors (2021) Principles of systems thinking. In Systems engineering body of knowl-
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Selomane O, Reyers B, Biggs R, Hamann M (2019) Harnessing insights from social-ecological
systems research for monitoring sustainable development. Sustainability 11(4):1190. https://
doi.org/10.3390/su11041190
Sillitto H, Martin J, McKinney D, Griego R, Dori D, Krob D, Godfrey P, Arnold E, Jackson S
(2019) Systems engineering and system definitions. In INCOSE-TP-2020-002-06 | 22 July
2019. https://www.incose.org/docs/default-­source/default-­document-­library/final_-­se-­
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Valenzuela-Venegas G, Salgado JC, Díaz-Alvarado FA (2016) Sustainability indicators for the
assessment of eco-industrial parks: classification and criteria for selection. J Clean Prod
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136 A. M. Fet and C. Haskins

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
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 Part III
From Theory to Practice: Case Studies
Chapter 13
Introduction to the Case Studies

Annik Magerholm Fet

Abstract This chapter provides an introduction and summary of the seven Case
Studies in Part III. The reason behind their inclusion is explained here and their
relevance to the CapSEM Model highlighted. The emphasis is on continuous and
ever evolving research in this area, including a Case Study (Chap. 18) which is
deliberately longitudinal in nature. Transition towards sustainability is at the core of
these studies, demonstrating that while the starting point may be the need for a
remedial solution, the path to resolving such issues differs, is not linear and involves
the application of different CapSEM Model Levels. Such problems are of global,
not only local, interest. The Case Studies therefore provide a variety of roadmaps,
rather than definitive or prescriptive guidance, which should prove of interest to
industry and those examining how the CapSEM Model is put into practice.

The cases presented in Chaps. 14–20 are hand-picked from an inventory of research
conducted by myself and my PhDs and my colleagues and students over many
years, including some ongoing projects. In each instance, an initial problematic
state within the boundaries of a specified organization, environment, or situation
needed a remedial solution. However more often than not, the solution was a start-
ing point for additional activity, in keeping with the concept of continuing improve-
ment and transition toward sustainability. For this reason, each case study is more a
roadmap than a prescription, and the problems addressed are global as much as they
are local. The cases may revolve around a single, sectoral or regional issue using
quantitative evidence from multiple sources, and building, when possible, from the
results of previous research.
The cases share a number of features. For many in the industrial domain prob-
lems arise when customer or regulatory requirements shift toward products that
meet stringent sustainability performance criteria (cf. Chaps. 14 and 18).
Municipalities are driven by similar challenges to provide services that meet strict
requirements imposed by their constituencies for responsible environmental

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]

© The Author(s) 2023 139

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_13
140 A. M. Fet

Table 13.1 Cases categorized by industry and CapSEM Level

CapSEM
Chapter title Industry Level(s)
Chapter 14: From waste to value: a story about life cycle Manufacturing 1, 2, 3
management in the furniture industry by Ottar Michelsen, furniture
Christofer Skaar, Annik Magerholm Fet
Chapter 15: The role of public sector buyers: Influencing Government 3, 4
systemic change in the construction sector by Shannon Truloff, acquisition
Luitzen de Boer, Xinlu Qiu and Annik Magerholm Fet.
Chapter 16: CapSEM applied to the construction sector by Construction 2, 3, 4
Magnus Sparrevik, Luitzen de Boer, Ottar Michelsen and
Christofer Skaar
Chapter 17: Application of material flow analysis: mapping Waste maritime 4
plastics within the fishing sector in Norway by Paritosh C
Deshpande and Arron W. Tippett
Chapter 18: Environmental Management at Fiskerstrand Verft Manufacturing All
AS: a 30 year journey by Rolf Fiskerstrand and Annik shipyard
Magerholm Fet
Chapter 19: A transportation planning decision support system Societal planning 4
by Dina Margrethe Aspen
Chapter 20: First steps towards sustainable waste management Waste All
by Øystein Peder Ssolevåg management

stewardship (cf. Chaps. 15, 19 and 20). Industrial sectors such as construction
(Chap. 16) and fishery (Chap. 17) struggle to coordinate the efforts of many actors
toward desirable sustainable processes. In all cases, tools and methods from the
CapSEM Model provide direction to improve and continuously transition to sus-
tainable objective. Systems engineering and industrial ecology principles are
applied in nearly every case. Table 13.1 categorizes the cases according to the indus-
try and the CapSEM Level of application.
The following provides a quick synopsis of the cases that follow.
Chapter 14: From Waste to Value: A Story About Life Cycle Management in the
Furniture Industry
This case focuses on the use of the CapSEM Model by the Norwegian furniture
industry, beginning with efforts that raised sustainability awareness through a series
of case studies over a period of more than 10 years. It started with a Cleaner
Production (CP) programme for a group of furniture companies in a small commu-
nity. The goal for another case study running in parallel with the CP-project, was to
define a common set of Environmental Performance Indicators (EPIs) for reporting
purposes for both the companies and the municipality to reduce waste and improve
its treatment according to circular principles. While CP is at Level 1, EPIs and
reporting is on level 3 and 4 in the CapSEM Model. In the furniture sector, the
CP-programme led to capacity building by integrating Level 2 methods such as Life
Cycle Assessment (LCA) into their daily work processes. LCA was used for prod-
uct improvements based on hot spots detected through the analyses, and also to
13 Introduction to the Case Studies 141

generate Environmental Performance Declarations (EPDs) for products. The imple-

mentation of these new procedures was integrated into the organisation’s strategic
work through certified Environmental Management System (EMS). In addition to a
demonstration of a gradual shift from Levels 1, 2 and 3, the case also describes the
benefits of building cooperative communities (Level 4) that include sectoral,
regional, and academic participants. The Level 4 activities were originally initiated
by a Norwegian Local Agenda 21 programme.
Chapter 15: The Role of Public Sector Buyers: Influencing Systemic Change
in the Construction Sector
Construction machinery is essential to all construction projects and is also a signifi-
cant contributor to both air pollution and greenhouse gas (GHG) emissions. The
Non-Road Mobile Machinery Market (NRMM), otherwise known as the construc-
tion machinery market, largely operates using diesel fuel nowadays which has sig-
nificant negative environmental impacts. It is critical that governmental leaders
push suppliers to innovate and implement sustainable solutions in the construction
sector. Green Public Procurement (GPP) and Innovation Orientated Public
Procurement (IOPP) have emerged as potentially powerful instruments to drive
green innovation by providing ‘lead markets’ for new technologies. City munici-
palities, regions, nations, and supranational government structures such as the
European Union (EU) are starting to use public purchasing to achieve cleaner con-
struction and Zero Emission Construction Sites (ZEMCONs). Early Market
Dialogues (EMD) prior to the release of procurement documents can be an effective
tool for achieving innovative solutions and for creating positive buyer and supplier
collaboration. This case illustrates how the CapSEM Model and toolbox can operate
from a top-down approach, initiating collaborative approaches amongst multiple
actors, across multiple CapSEM Levels.
Chapter 16: CapSEM Applied to the Construction Sector
The construction sector and built environment have the potential to impact on a
variety of systemic dimensions, ranging from specific processes in the production of
construction materials to pan-national regulations affecting regional areas and cit-
ies. This case study uses the CapSEM Model in order to identify the potential
enabling and constraining impact of different methods, schemes and regulations for
reducing environmental impact in the construction sector. The use of a systemic
perspective highlights that all methodologies are working recursively in actor-­
networks, thereby affecting society and the market differently, depending on the
systemic level.
Chapter 17: Application of Material Flow Analysis: Mapping Plastics Within
the Fishing Sector in Norway
Plastic in our marine environment is now ubiquitous. Abandoned lost or otherwise
discarded fishing gear (ALDFG) is of particular concern due to its ability to con-
tinue to function as a trap for marine organisms. In order for decision makers to act
on this grave issue, we require data on the flow of ALDFG into the marine environ-
ment. One key tool for revealing the flow of material within a specific system is
142 A. M. Fet

Material Flow Analysis (MFA). MFA takes a life cycle approach (cradle to grave) to
assess energy or material flows in a system within space and time boundaries. It can
be applied at multiple levels from the industrial process level to the national level.
This chapter presents a case study of an MFA conducted on fishing gear in Norway.
The MFA methodology was used in this case study to assess the flow of plastic fish-
ing gear from production through to recycling, final disposal or loss to the marine
environment. Data was collected for the MFA through stakeholder interviews, lit-
erature reviews and analysis of government data sets. The MFA revealed that around
4000 tons of plastic fishing gear enters the system in Norway and around 400 tons
enter the marine environment each year. An analysis of the implications of the MFA
for the key actors within the life cycle chain of fishing gear is presented and a short
description of the links between MFA and the circular economy and sustainable
development is provided. Furthermore, the relevance and implications of using
MFA tool for policy making at national and regional level is discussed and elabo-
rated while associated challenges are presented here.
Chapter 18: Environmental Management at Fiskerstrand Verft AS: A
30 Year Journey
Fiskerstrand Verft is a multipurpose shipyard with extensive expertise and activities
in shipbuilding, maintenance, repair and conversion/modification of ships. The yard
is exposed to a range of different environmental challenges related to its business
which trigged the yard to develop and implement health and safety, and environ-
mental management systems. This chapter gives an overview of environmental
management at Fiskerstrand Verft over a 30-year period, written from the perspec-
tive of the first author as CEO. The activities from 1991 to 1994 mainly considered
Level 1 in the CapSEM Model with annual accounting of materials and wastes,
emissions to air and discharges to ocean. The yard participated in various R & D
environmental projects and during the period 1994–1999 these were extended with
activities corresponding to life cycle thinking according to Levels 2 and 3. In 1999,
Fiskerstrand Verft was the first Norwegian shipyard that prepared and published an
environmental report. The yard was certified as an environmental lighthouse com-
pany in 2000, the first in Norway. During the period 2004–2008, the yard further
developed their systems and began to transition to Level 4. The life cycle perspec-
tive for ships and technology has been at the center of the development of green
technologies for ships. This journey continues today, passing the 30 year mark, and
has contributed invaluable knowledge about the CapSEM toolbox and how it can be
applied to shipyard operations.
Chapter 19: A Transportation Planning Decision Support System
In this chapter, the CapSEM toolbox is explored, applied and evaluated in the con-
text of transportation planning and policy making. Transportation system elements
are analyzed across all four CapSEM levels to identify relevant tools to utilize in
decision support systems to address sustainability in the sector. The application of
the toolbox is demonstrated through a transportation planning case study. Benefits
observed from the application include (i) a useful framework to decompose and
13 Introduction to the Case Studies 143

stack models across system and performance levels to handle transportation model-
ing complexity, and (ii) an approach to engage and interact with stakeholders and
decision-makers through problem structuring, modeling, analysis and resolution.
Chapter 20: First Steps Towards Sustainable Waste Management
Waste management started off as a public health issue. Today, the waste business is
an important force in developing sustainable development and circular economy.
New policies and regulations represent an opportunity for circularity, but there is
still a long way to go in achieving a truly circular economy. The Circularity Gap
Report 2020 indicated that the global economy is only 8.6% circular. Industrial
ecology and material flow analysis are important tools, not only for developing local
and regional waste solutions, but also in the development of new global circular
business models. In the Ålesund region, new sorting measures have increased recy-
cling, from 32% in 2017 to 45% in 2019. New measures will be needed to reach
national targets set for 2025. As the current global use of resources is unsustainable,
and as current waste business models are insufficient to achieve circular economy,
the next decade is likely to experience a rapid innovation of new business models
challenging traditional waste management companies. This chapter presents data
collected during a case study conducted in 2020.

13.1 Concluding Remarks

The inclusion of these Case Studies is crucial to being able to demonstrate the
CapSEM Model in action. They have been carefully chosen in order to show that the
trajectory for a transition to sustainability is not necessarily linear, nor will each
company or industry take a similar length of time to achieve their objectives. It also
exemplifies the flexibility of the model and how continuous improvement is very
much part of this circular approach to development within any given sector or busi-
ness. In turn, this can feed back into the development of the CapSEM Model itself
and its future use.

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 14
From Waste to Value: A Story About Life
Cycle Management in the Furniture
Industry

Ottar Michelsen, Christofer Skaar, and Annik Magerholm Fet

Abstract This case focuses on the use of the CapSEM Model by the Norwegian
furniture industry, beginning with efforts that raised sustainability awareness
through a series of case studies over a period of more than 10 years. It started with
a Cleaner Production (CP) programme for a group of furniture companies in a small
community. The goal for another case study running in parallel with the CP-project,
was to define a common set of Environmental Performance Indicators (EPIs) for
reporting purposes for both the companies and the municipality to reduce waste and
improve its treatment according to circular principles. While CP is at Level 1, EPIs
and reporting is on level 3 and 4 in the CapSEM Model. In the furniture sector, the
CP-programme led to capacity building by integrating Level 2 methods such as Life
Cycle Assessment (LCA) into their daily work processes. LCA was used for prod-
uct improvements based on hot spots detected through the analyses, and also to
generate Environmental Performance Declarations (EPDs) for products. The imple-
mentation of these new procedures was integrated into the organisation’s strategic
work through certified Environmental Management System (EMS). In addition to a
demonstration of a gradual shift from Levels 1, 2 and 3, the case also describes the
benefits of building cooperative communities (Level 4) that include sectoral,
regional, and academic participants. The Level 4 activities were originally initiated
by a Norwegian Local Agenda 21 programme.

O. Michelsen (*)
Department for Industrial Economics and Technology Management, NTNU,
Trondheim, Norway
e-mail: [email protected]
C. Skaar
Department for Industrial Economics and Technology Management, NTNU,
Trondheim, Norway
e-mail: [email protected]
A. M. Fet
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]

© The Author(s) 2023 145

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_14
146 O. Michelsen et al.

14.1 Introduction

Small and medium sized enterprises (SMEs) are often neglected in studies on indus-
trial impacts on the environment (von Geibler et al. 2004), despite the considerable
overall environmental impact from SMEs. One challenge facing these companies is
limited resources and knowledge, which is also often not prioritized since they tend
to perceive their own contribution as negligible in the absence of any prior quantifi-
cation (Ammenberg and Hjelm 2003). However, this is about to change with
increasing demands for documentation on both company and product environmen-
tal data and information from society and the global marketplace.
The furniture industry in Norway is an industry dominated by SMEs (Michelsen
2006). Manufacturers are dispersed throughout the country, with a higher concen-
tration in western regions. Several suppliers are located here too, forming an eco-­
system of companies at least partially mutually dependent on each other (Michelsen
2006). Fet and Johansen (2001) presented the development of an environmental
awareness within the Møre and Romsdal region. This case focuses on how starting
from this raised awareness through cleaner production (CP) affected the environ-
mental policy and strategy within the companies and how this resulted in an exten-
sive use and implementation of life cycle assessments (LCA) and development of
environmental product declarations (EPDs). This is presented through a collabora-
tive project performed in 4 phases.

14.2 The Furniture Case Project

Phase 1: The Process Focus

Research activities focused on environmental challenges within the furniture indus-
try have a long history. Initially the focus was on cleaner production (CP) in a group
of furniture companies with the goal of reducing wastes and emissions through the
principles described for CP in Chap. 4 in this book. In parallel, a programme was
running with the purpose of identifying appropriate environmental performance
indicators (EPIs) for environmental reporting of waste streams and waste treatment
within the companies and the municipality where manufacturers were situated (Fet
2000; Fet and Johansen 2001). During these projects, the focus was on companies’
environmental performance and the potential for cleaner production processes, con-
sistent with building capacity from Level 1 in the CapSEM Model. As the munici-
pality with the waste treatment plant collaborated closely with companies to find
appropriate EPIs for reporting and for following up waste streams, it can be said that
Level 4 activities also took place in phase 1. For the purposes of this case, it was
possible to continue the transition to sustainability and move from Level 1 to
Level 2.
14 From Waste to Value: A Story About Life Cycle Management in… 147

Phase 2: The Life Cycle of the Products

The focus gradually expanded and shifted to assessments of extended supply chains
for selected products (Michelsen 2006, 2007a, b; Michelsen et al. 2006). At this
time, several LCAs were performed to get an overview of the environmental impacts
of the materials used in the products and identify areas for improvements. This was
partly carried out with learning in mind; how much detail can be included in envi-
ronmental performance documentation, what are the environmental hot spots, what
are the differences between equivalent products or products with the same func-
tional unit, and, importantly, how can this be communicated.
Since most furniture producers had a large range of product models and variants
of the products, an environmental life cycle inventory database for furniture produc-
tion was created to ease the generation of life cycle assessments of the models (Fet
and Skaar 2006; Fet et al. 2006). To ensure the consistency of the performed LCAs
and the possibility to compare products, a first version of Product Category Rules
(PCR) for furniture was also proposed (Fet et al. 2006). PCR define the criteria for
a specific product category and sets out the requirements that must be met when
preparing an EPD for products under this category (Fet et al. 2009). The database
was used to carry out a large number of LCAs, including those conducted by
Michelsen (2007b) where the importance of the different suppliers was assessed.
For companies, it was also important to document indoor emissions of toxic
substances that could have a negative effect on human health during the use of the
products. This is normally not part of an LCA but was included here to cover other
reporting requirements the furniture producers face (Skaar and Jørgensen 2013).
The end result of this second phase was a standardised PCR as foundation for EPDs.
For companies, it was also important to document indoor emissions of toxic sub-
stances that could have a negative effect on human health during the use of the
products.
Phase 3: Integration in Environmental Management Systems
A third phase focused on a stepwise framework based on systems engineering prin-
ciples (Skaar 2013) to be integrated in the environmental management system of the
company. The framework consists of six steps, from stakeholder identification, to
publishing EPDs and finally auditing the process, see Fig. 14.1. This builds on the
same principles as presented in Chap. 12.
A major barrier to scaling up the number of products that could be assessed was
the resources needed to develop each EPD, (step 4, Fig. 14.1). The third phase
addressed this barrier through the development of the LCA database and EPD soft-
ware tool. This resulted in a significant reduction in the resources needed to develop
an LCA, as a shared database means common background data are only gathered
once. It also made it possible to simplify the EPD generation, using a bill of materi-
als (BoM) approach. This meant that instead of an LCA expert developing the EPD,
the companies could take responsibility for major parts of the process. With a data-
base and tool in existence, the company could enter a limited number of information
to create an EPD: (i) the bill of materials for a product, (ii) specific production data
for the product, and (iii) selecting relevant scenarios (e.g., which market it was sold
148 O. Michelsen et al.

Fig. 14.1 Framework for management and communication of environmental aspects of products.
(Skaar 2013)

to). Based on this, an EPD could be developed based on step D to G in Fig. 14.1, and
the verification of the EPD could be done by a simplified third-party verification of
the database.
The approach developed in phase 3 does not in itself ensure environmental
improvement for the products, but it is a basis for integrating life cycle assessment
as part of the environmental management system as a tool for improvement. For the
life cycle management (LCM) of products, this further supports progression to
Level 3 on the CapSEM Model.
Phase 4 – From Environmental Management to Life Cycle Management
The three first phases followed each other in a logical and chronological order; the
fourth and last phase ran parallel with the previous phase 2 and 3 and gradually
matured. The information gained from environmental analyses of production pro-
cesses and the life cycle of the products enabled companies to make strategic priori-
ties of improvements targets regarding the most significant aspects.
In Michelsen et al. (2006), different products and potential improvement options
were assessed using an eco-efficiency approach, combining information from LCA
and life cycle cost assessments. This was done in order to explore the environmental
and cost profiles of the models, as well as to start assessing potential improvements
for the different models. Figure 14.2 shows the relative eco-efficiency for the mod-
els where single scores are used, while Fig. 14.3 shows the relative environmental
impact divided in different environmental impact categories.
14 From Waste to Value: A Story About Life Cycle Management in… 149

Figures 14.2 and 14.3 show the total (aggregated) scores for the products, but
often it is also necessary for the focal company to know where in the supply chain
the impacts occur in order to actually address them. Clift and Wright (2000) identi-
fied a tendency that the profit is concentrated towards the end of the production
chain, while the environmental impacts are concentrated towards the front part. In
other words, those actors who make the most profit are not the same as those having
the largest challenges to reduce the environmental impact of the final product. This
might be a result of outsourcing challenging processes. However, when the product
as such is addressed, this must consider the supply chain as a unit. This clearly
highlights the need to move from the first level in the CapSEM model to higher
levels; i.e., observed Level 1 improvements can potentially be a product of out-
sourcing, not product level improvements.
Michelsen et al. (2006) found a similar pattern during their assessments, where
the environmental impacts primarily originated from activities at suppliers and/or in
the end-of-life phase. One exception was impacts from phytochemicals, originated
from the varnishing process which the end-producer addressed in-house (Fig. 14.4).
In order to actually improve the environmental impacts up- and downstream, the
focal company must know who the actors are and have the ability to make them
change the processes or inputs (Michelsen 2007b). Communication and a common
understanding of the goal is thus essential. This could be a significant undertaking
job in complex supply chains, but Michelsen (2007b) showed that a limited number
of the suppliers were responsible for most of the environmental impact. In fact, a

1,7
Chair A I
Chair A II
Chair A III
Value performance (1/LCC)

I II Chair A IV
Chair A V
Chair B

IV III

0,3
1,7 1 0,3
Environmental performance (single score)

Fig. 14.2 Relative eco-efficiency for 6 different products using an aggregated single score for
environmental impact. (Data from Michelsen et al. 2006)
150 O. Michelsen et al.

energy consumption

heavy metals materials consumption

photochemicals ozone depletion

waste water consuption

Chair A I
Chair A II
Chair A III
Chair A IV
acidification greenhouse gasses
Chair A V
Chair B

Fig. 14.3 Relative impact on different environmental impact categories for 6 different products.
(Data from Michelsen et al. 2006)

chair designed for institutions for elderly care, found the four most important sup-
pliers where responsible for 82.6% of the upstream environmental impact, see
Fig. 14.5. One of these was even a subsidiary company and the most important, a
producer of polyurethane foam, was a neighbouring company also involved in the
local project on improving environmental performance in the region. The fourth
phase concluded with recognized possibilities for strategic management of the sup-
ply chain in order to improve the performance (Fet and Michelsen 2010) and also
move from the first to the third level in the CapSEM Model.

14.2.1 Drivers

There have been three drivers for the successful development of environmental
awareness and improvements in the furniture industry resulting from this project.
First, there was already a local initiative for environmental performance in the
local community (Fet 2000; Fet and Johansen 2001). The furniture industry is at the
cornerstone of the local industry and had a natural role in the initiative from day one.
Second, the long-time relationships between the furniture producers and their
(local) suppliers have resulted in strong bonds and the shared perception of a
14 From Waste to Value: A Story About Life Cycle Management in… 151

1,00

dismantling
suppliers
0,75
Environmental performance

end producer
0,50

0,25
Global warming
Acidification
Photochemicals
Heavy metals
0,00
0,00 0,25 0,50 0,75 1,00
Value performance

Fig. 14.4 Relative contribution of value performance and environmental performance from sup-
pliers, end producer and dismantling of a chair. (Michelsen et al. 2006)

100

90
Cumulative environmental impact (%)

80

70

60

50

40

30

20

10

0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Suppliers

Fig. 14.5 Cumulative environmental impact related to the number of suppliers. (Michelsen 2007b)
152 O. Michelsen et al.

common destiny. They were devoted to help each other to perform better as a clus-
ter, not only as single companies. This applied to the furniture producers, who even
if they at first glance could be seen as competitors, shared the view that their main
competitors are furniture producers in low-cost countries (Michelsen 2006). This
fact made the development of a common database for environmental data much
easier since the companies involved trusted each other.
The third driver was pressure from outside. The furniture producers are exposed
to an increasing demand for environmental information on the products, in particu-
lar from public purchasers (Michelsen 2007b; Michelsen and de Boer 2009). They
were consequently highly motivated to cooperate with the research activities and
provide available data, e.g., the prospects of an improved image for marketing pur-
poses had motivated the manufacturers (Fet 2002, 2004). The streamlined process
for EPD-generation for products enabled the furniture producers to provide the
requested documentation to public purchasers and then increase marked shares
when EPSs were required.

14.3 Concluding Remarks

As addressed in the introduction for this chapter, SMEs often lack competence and
resources to systematically work with and improve environmental performance at
the process, product and company levels. In this particular case, this need for com-
petence was met through the collaboration through the four phases of research proj-
ects with research institutions. The companies thus increased their possibilities to
initiate and consolidate their own work on environmental performance. It was also
advantageous that the projects continued for more than a decade, as this provided
longitudinal feedback to the researchers. The companies during this period were
able to establish environmental management systems and were able to integrate the
generation of LCAs and EPDs in their everyday activities. As described, the compa-
nies have included this in their environmental management systems, approved by
top management in the companies. They have succeeded in making this a part of the
companies’ strategies.
It remains an open question as to whether this could have been accomplished
without the long-term collaboration with research institutions. Nevertheless, it
stands out as obvious that the collaboration between the companies, both the furni-
ture companies themselves but also their suppliers in the municipality in the region,
have been a prerequisite for establishing a common database and thus lowering the
bar for performing LCAs. By doing this, companies have collectively been able to
expand their environmental focus from process and company-oriented assessments
to a product life cycle focus. The generation of and insight in EPDs has given them
a competitive advantage.
As also described, the furniture companies have been enabled to identify the sup-
pliers that are most significant for the overall performance of the products. It is still
an open question whether they have been able to fully utilize this knowledge in
14 From Waste to Value: A Story About Life Cycle Management in… 153

improvements of products, but the presented case study shows that the number of
suppliers with significant contributions at least for some products is low and conse-
quently manageable.

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
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Chapter 15
The Role of Public Sector Buyers:
Influencing Systemic Change
in the Construction Sector

Shannon Truloff, Luitzen de Boer, Xinlu Qiu, and Annik Magerholm Fet

Abstract Construction machinery is essential to all construction projects and is

also a significant contributor to both air pollution and greenhouse gas (GHG) emis-
sions. The Non-Road Mobile Machinery Market (NRMM), otherwise known as the
construction machinery market, largely operates using diesel fuel nowadays which
has significant negative environmental impacts. It is critical that governmental lead-
ers push suppliers to innovate and implement sustainable solutions in the construc-
tion sector. Green Public Procurement (GPP) and Innovation Orientated Public
Procurement (IOPP) have emerged as potentially powerful instruments to drive
green innovation by providing ‘lead markets’ for new technologies. City munici-
palities, regions, nations, and supranational government structures such as the
European Union (EU) are starting to use public purchasing to achieve cleaner con-
struction and Zero Emission Construction Sites (ZEMCONs). Early Market
Dialogues (EMD) prior to the release of procurement documents can be an effective
tool for achieving innovative solutions and for creating positive buyer and supplier
collaboration. This case illustrates how the CapSEM Model and toolbox can operate
from a top-down approach, initiating collaborative approaches amongst multiple
actors, across multiple CapSEM Levels.

S. Truloff (*)
Department of Architecture and Technology, NTNU, Trondheim, Norway
e-mail: [email protected]
L. de Boer
Department for Industrial Economics and Technology Management,
NTNU, Trondheim, Norway
e-mail: [email protected]
X. Qiu
Business School, NTNU, Trondheim, Norway
e-mail: [email protected]
A. M. Fet
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]

© The Author(s) 2023 155

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_15
156 S. Truloff et al.

15.1 Introduction

A Zero Emission Construction Site (ZEMCON) is one where construction activities

are carried out exclusively with zero-emission construction machinery or equip-
ment, and all transport of goods and people to and from the site use zero emission
vehicles (Bellona 2019). There is great potential for reducing greenhouse gas
(GHG) emissions, air pollution and noise pollution from construction sites by
switching to zero emission alternatives such as electricity, hydrogen, or non-fossil
fuels (World Green Building Council (WGBC) 2019). Non-road mobile machinery
(NRMM) is defined as “any mobile machine, transportable equipment, or vehicle
with or without bodywork or wheels, not intended for the transport of passengers or
goods on roads…” (European Regulation (EU) 2016/1628 – NRMM).

15.2 The Construction Sector: Negative Environmental

Impacts and Challenges

The global construction sector is responsible for nearly 40% of energy and process
related emissions and 23% of the world’s GHG emissions across the construction
supply chain (Huang et.al. 2018). Furthermore, 5.5% of these GHG emissions are
created by the combustion of fossil fuel powering machinery and equipment on
construction sites (Huang et.al. 2018). Continuing business as usual in the construc-
tion sector which relies on carbon-intensive machinery and materials, threatens to
put the world on a fast track towards a global temperature rise of 3 ° C or more (UN
Environment Programme 2019). It is therefore, critical for the construction industry
to accelerate the speed of decarbonisation to achieve the Paris Agreement and the
UN Sustainable Development Goals.
While the European Commission has regulated NRMMs since 1997, GHG emis-
sions have not been included (European Regulation (EU) 2016/1628 – NRMM).
Presently, regulations only address carbon monoxide (CO), total hydrocarbons
(HC), nitrogen oxides (NOx) and particulate matter (PM), ignoring the impact of
CO2 emissions. Regulatory change is needed at the systems level (CapSEM
Level 4).
There are also several barriers to achieving a ZEMCON. This includes (but is
not limited to), high initial investment costs for fossil-free machinery, adequate
electricity infrastructure availability at construction sites, and lack of technical
knowledge on both the supply and demand side of the construction market
(Bellona 2019). With that said, the opportunity for substantial climate gains by
cities when switching to fossil-free and zero emission technologies far out-
weighs the costs.
15 The Role of Public Sector Buyers: Influencing Systemic Change in… 157

15.2.1 Opportunities: Functional Buyer-Supplier Ecosystem

for Green Public Procurement

The European Commission (2008:4) defines GPP activity as: “A process in which
public entities want to procure goods, services, and labor with a reduced environ-
mental footprint throughout the life cycle compared to those goods, services, and
labor with the same primary function as they would otherwise purchase”. Typically,
GPP will include environmental requirements and criteria, and this is what differen-
tiates it from traditional procurement (Cheng et al. 2018; European Commission
2016; Igarashi et al. 2015; Varnäs et al. 2009). When utilising GPP, public actors can
improve their environmental performance in low−/ zero-emission solutions for con-
struction sites, while encouraging their suppliers to also improve (Varnäs et al. 2009).
Municipalities own a significant proportion of infrastructure and building proj-
ects and can leveraging their public sector purchasing power using GPP. An innova-
tive public procurement process will necessitate a higher degree of collaboration
between suppliers and customers than traditional procurement (Edquist and Zabala-­
Iturriagagoitia 2012). Transitioning from traditional construction machinery to
fossil-free or zero-emission solutions requires a collaborative approach amongst
actors across CapSEM Levels. Establishing a functional buyer-supplier Ecosystem
for Zero Emission Construction Sites (EZEMCON) can help the mobilization of the
market towards delivering a ZEMCON. Such an ecosystem includes actors at every
CapSEM Level.
• Level 4: the public buyers and governmental leaders
• Level 3: the construction companies and developers
• Level 2: subcontractors and equipment suppliers
• Level 1: the construction site itself

15.2.2 Framework for Innovation Oriented Public

Procurement (IOPP)

As indicated already, public procurement is “a powerful tool for spending public

money in an efficient, sustainable and strategic manner” (European Commission
2017). It is seen as a strategic policy instrument to (1) enable investment in the real
economy, (2) stimulate demand to increase competitiveness based on innovation
and digitalization, (3) support the transition to a resource-efficient, energy-efficient
and circular economy, and (4) foster sustainable economic development and more
equal, inclusive societies (European Commission 2017).
As Lember et al. (2014) highlight, innovation and public procurement may be
related to each other in different ways. Public procurement can be understood as a
tool to stimulate innovation by targeting a new product or service, or it also refers to
158 S. Truloff et al.

activities that aims to induce innovation possibilities by creating innovation-­

conducive environments to stimulate learning, e.g., pre-commercial procurement
(Lember et al. 2014). In this case, we adopt the definition of Innovation Orientated
Public Procurement (IOPP) by Lember et al. (2014) that includes both above-­
mentioned approaches, which emphasize that the public sector uses its purchasing
power to act as an early adopter of innovative solutions that do not exist in the mar-
ket or are not yet available on a large scale commercial basis.

15.2.3 Innovation-Oriented Public Procurement: Framework

and Dialogue

There are four different policy modes in which innovation-oriented public procure-
ment (IOPP) can be applied; each IOPP mode has distinct goals and means, institu-
tional and policy-capacity requirements and, consequently, distinctive challenges
(Lember et al. 2014).
The most influential mode of IOPP is to use it as a technology procurement
policy. By applying its monopolistic power, public procurement can guide the tech-
nology development and innovation by indirect mild policy intervention or frequent
strong intervention to create and diffuse new technology. The development of new
technological solutions can also have innovation and economic spill-over effects to
other industries. IOPP can also be used as R & D policy when it targets radical inno-
vation with high-level R & D work to meet specific public demand. In EU, this is
mostly implemented with pre-commercial public procurement. Utilising IOPP as a
generic innovation policy has been gaining a lot of attention since 2000s. It focuses
on creating an innovation-friendly public procurement culture to support innova-
tion. Many procurement practices and tools have been developed and adopted, such
as applying performance/environmental specifications, competitive dialogue, and
market dialogue. The last mode of IOPP is to apply it as “no policy” policy. This
mode is often chosen unconsciously because the public authorities are not aware of
the alternatives. It can also be chosen because some governments assume the public
funds should be spent in the safest way, and that innovation is linked with high risk.
Table 16.1 illustrates how different IOPP models can be adopted in the CapSEM
Model to facilitate Ecosystem for Zero Emission Construction Sites (EZEMCONs).
At CapSEM Level 4, IOPP can be used by cross-national networks, national, and
cities by adopting a technology procurement policy to drive technological innova-
tion. IOPP can also operate as a generic innovation policy that uses dialogue to align
expectations and strengthen mutual insights between the public buyers and suppli-
ers, at CapSEM Levels 3 and 4, respectively. At CapSEM level 3, IOPP can be
applied generically to align emission targets (national or city level) and procure-
ment specifications for a specific construction project.
15 The Role of Public Sector Buyers: Influencing Systemic Change in… 159

15.2.4 Early Market Dialogue for Innovation-Oriented

Public Procurement

Early Market Dialogue (EMD) is a tool for achieving innovative procurement as

described above, and it refers to the range of activities through which a procuring entity
or public buyer at CapSEM Level 4 engages with potential suppliers at Level 3, before
procurement documents are released. The national program for Innovative procurement
in Norway (Innovative anskaffelser 2020), identifies that EMD is an important way of
enhancing market’s knowledge and it should be mutually beneficial. Public buyers can
use dialogue prior to procurement to increase predictability for the construction machin-
ery market. This can give market actors the confidence to invest in more sustainable
products and construction methods, to bring solutions to scale. Dialogue process can
stimulate market interest among, and competition between potential suppliers which
will improve the outcomes of a subsequent competitive procurement process (Watt
2018). In Table 15.1, typical dialogue participants engaging in innovation-oriented pub-
lic procurement (IOPP) for a ZEMCON have been identified.

15.3 Implementation at Global, Regional, National,

and City Levels

This section illustrates key projects at the global, regional, national, and city level
respectively which aim to create an Ecosystem for Zero Emission Construction
Sites (EZEMCONs) for cleaner construction practices.

15.3.1 Global Action and Joint Initiatives by Cities: Members

of ICLEI and C40

C40 Cities Climate Leadership Group is a network of mayors of nearly 100 world-­
leading cities collaborating to deliver the urgent action needed to confront the cli-
mate crisis. ICLEI Local Governments for Sustainability is a global network of
more than 2500 local and regional governments committed to sustainable urban
development. These two organizations work very closely for the development of
ZEMCONs and adaptation of NRMM to fossil free. In October 2019, at the C40
Mayors’ Summit in Copenhagen, a common political declaration known as the
‘C40’s Clean Construction Declaration’, was made. There were three targets,
including the reduction of embodied emissions from new builds, from infrastruc-
ture, and procuring using zero emission construction machinery from 2025.
Specifically, the declaration demands zero emission construction machinery by the
signature cities (Budapest, Los Angeles, Mexico City, Oslo, San Francisco) projects
from 2025, and zero emission construction sites city-wide by 2030, where available.
160 S. Truloff et al.

Table 15.1 Application of IOPP modes for ZEMCON in the CapSEM Model
Dominant IOPP
CapSEM IOPP policy approach Typical dialogue Example project actors in
level level (Lember et al. 2014) participants IOPP for ZEMCONs
Level 4 Cross-­ IOPP as technology Large, global NRMM C40 mayors’ commitment
national, policy – Driving the manufacturers, to actions for clean
network development of facilitating third construction; ICLEI and
of large electrical NRMM parties (EU), network EUROCITIES, big buyers
cities of large buyers (cities) initiative (BBI),
Scandinavian green public
procurement Alliance
(SGPPA) on NRMMs
National IOPP as generic Large city, additional Finnish green deal with a
driven by innovation policy, (smaller) cities, commitment on emission
large technology policy national third party, free construction sites
cities or R & D policy– construction firms,
Using dialogue to other regional
align expectations ecosystem members
and strengthen
mutual insights
City level IOPP as generic Individual city, Oslo, Copenhagen,
innovation internal stakeholders, Helsinki, Trondheim,
policy – Aligning local construction Budapest and Amsterdam,
local ecosystem firms, national third among others.
members, both party, regional
internally and ecosystem members,
externally for a e.g. electricity
range of projects or providers
more in general
Level 3 Project IOPP as generic Individual city, Omsorgsbygg, Volvo,
level policy – Aligning primarily procurement Caterpillar, and Hitachi
emission targets and and EM advisors, construction machinery,
procurement local supply network among others.
specifications for a (construction firms,
specific construction subcontractors)
project

This is an example of a top-down approach from governmental leaders at CapSEM

Level 4 which in turn places pressure on lower levels.

15.3.2 Regional Action: Scandinavian Green Public

Procurement Alliance (SGPPA) and Big Buyers
Initiative (BBI)

The Scandinavian Green Public Procurement Alliance project (SGPPA 2020) oper-
ating between 2016 and 2019 is an example of cross border joint procurement part-
nership between the City of Copenhagen, Oslo, and Stockholm, and was funded by
15 The Role of Public Sector Buyers: Influencing Systemic Change in… 161

the Carbon Neutral Cities Alliance. A key outcome of the alliance was the establish-
ment of a Dynamic Purchasing System (DPS) which facilitated the possibility for
the cities of Oslo and Copenhagen to purchase machines in the future that are not
available currently.1 DPS is an innovative procuring procedure that typically spans
several years and operates in this case to signal to the businesses on Level 3 of the
CapSEM Model, the growing demand for emission free machines. The City of Oslo
and Copenhagen continue to collaborate and operate the cross-border DPS of
NRMMs via a web-based platform managed by Mercell.
The Big Buyers Initiative (BBI) is a European Commission programme for
encouraging collaboration between big public buyers (cities at CapSEM Level 4)
and the construction market (at CapSEM Level 3). The initial project was conducted
between 2018 and 2020, with a second phase between 2021 and 2022 based on its
success. One of the three established working groups focuses on ZEMCONs with
city members from Europe, including Amsterdam, Brussels, Budapest, Copenhagen,
Helsinki, Lisbon, Oslo, Trondheim, and Vienna. The multi-city collaboration
brought about innovative partnerships and increased political will to transition to
cleaner construction machinery though using EMD. Such regional projects allow
engaged cities to test procurement procedures such as DPS and environmental
award criteria in a coordinated and targeted manner across public construction proj-
ects, with mutual learnings.

15.3.3 National Action: Finland Targeting Emissions

in the Construction Sector

In Finland, the national government is placing top-down pressure on its cities

through legislation drafted which obligates local governments to draw up climate
plans for low-carbon procurement in a bid to move closer to fossil free construction
sites (HNRY project 2020). The Finnish government has anchored this top-down
initiative to the EU Green Deal agreement for sustainable procurement (2022).

15.3.4 City Action: Oslo Leads Climate Action for Clean

Construction Sites

The city of Oslo took a lead role in setting ambitious demands on potential suppliers
and infrastructure providers well before large electric construction machines were
commercially available (DNV GL 2019). Fossil-free (biofuels) construction sites
have been the minimum requirement for public projects by Oslo municipality since

1
Due to legal and administrative differences between the countries it was not possible for the City
of Stockholm to join the final procurement process.
162 S. Truloff et al.

2017 (DNV GL Rapport 2018). The city has now set requirements that all suppliers
must use emission-free construction machinery by 2025 (Klimakur 2030,
2020/2022). To achieve this, the municipality utilises allocation criteria that rewards
suppliers who can deliver emission-free and biogas-powered solutions. Additionally,
the municipality requires that all vehicles used for the transport of masses and waste
must be fossil-free and that heating and drying of the construction site must be
emission-free. The City of Oslo was the first in the world to launch a zero-emission
construction site, using all electric machinery to complete street renovation works
at Olav Vs Gate (Moore 2020). The application of IOPP and EMD for innovative
GPP and applying significant weight on environmental award criterion for construc-
tion contract has underpinned success.

15.4 Discussion

Historically the CapSEM Model works according to a bottom-up approach (Fet and
Knudson 2021), starting with improvements in production activities and their envi-
ronmental impacts at Level 1, the production processes, and at Level 2, the prod-
ucts, and their value chains. Transition to higher levels then happens with
implementation and improvements in management systems and sustainability mon-
itoring at the organizational Level 3, and at the larger systems Level 4 with a diver-
sity of actors. The CapSEM Model focuses on environmental aspects, and in the
case of ZEMCONs, at the highest level, social aspects are incorporated, such as the
well-being of construction workers and communities.
For the case presented here, rather than applying lower level CapSEM tools to
facilitate moving to higher levels, we are demonstrating a top-down approach using
tools available at higher levels such as policy programmes and regulations to bring
about systemic change.

15.4.1 Top-Down Systemic Change and the CapSEM Toolbox

To achieve a ZEMCON, decision makers, such as construction firms and machinery

producers focus influence on Level 2 and 1 to implement Cleaner Production (CP).
Starting at the highest CapSEM Level 4, government leaders and public buyers can
implement systems-related changes by applying principles of systems engineering
(SE) as a ‘process’ (see Chap. 12). In the construction machinery market, it is
important to facilitate the integration of different actors’ views, environmental per-
spectives, business strategies and organization management for improved environ-
mental performance. SE operates by establishing a functional ecosystem for the
ZEMCON. Within this EZEMCON, frameworks such as IOPP, and practical tools
such as early market dialogue (EMD) and GPP help align expectations and
15 The Role of Public Sector Buyers: Influencing Systemic Change in… 163

strengthen common knowledge across Level 3 and 4 of the CapSEM Model. This in
turn sets the foundation for sustainable development in a long-term perspective.
Policy programmes for cleaner construction sites and regulations help to set
goals for the larger societal system at the city or national level for example.
Environmentally weighted criteria in GPP (created at level 4 and together in dia-
logue with Level 3) can be used to implement changes for more sustainable supply
chain management (SCM) down-stream in the construction value chain (Level 2) as
well as design for environment (DFE). Leaders and public buyers can instruct their
pre-tender customers on Level 3 (such as Volvo or site a developer) to establish,
transparent reporting, organizational routines such as implementing environmental
management systems (EMS) (ISO 2015) and doing environmental performance
evaluations (EPE) (ISO 2021). Adoption at organisational Level (3) of key perfor-
mance indicators (KPIs) or certification schemes will help govern the construction
market production processes and product value chains for NRMMs at the lower
levels. Furthermore, at Level 3 the construction firm can influence its’ subcontrac-
tors and equipment suppliers (Level 2) down the value chain, by requiring that the
supplier produce environmental product declarations (EPDs) for the development of
NRMMs and its component products. Pressure from the upper levels forces cleaner
production (CP) at the construction site itself (Level 1).

15.4.2 Linkages to Lower CapSEM Levels and Tools

A valuable information feedback loop takes place when community leaders at

higher CapSEM Levels learn from, and amend, policy and strategies according to
knowledge gained about environmental performance at lower CapSEM Levels.
Knowledge about individual construction sites’ GHG emissions is gained by using
input/output (I/O) tools and cleaner production (CP) practice which monitor the
environmental impacts during production and manufacturing processes at Level 1.
Information gained by using tools such as Life Cycle Analysis (LCA) at Level 2 for
a NRMM and its component parts helps organisations such as Hitachi Construction
Machinery (at Level 3) and the municipality buyer (at Level 4) make informed deci-
sions. Ultimately the community at Level 4 is held accountable through use of ana-
lytical models for measuring the material flows (MFA) on construction sites.

15.5 Concluding Remarks

When public buyers, cities and nations, follow the top-down CapSEM Model
approach, they adopt the role of change maker in a larger system. Zero-emission
solutions are already available on the European market for smaller NRMMs, how-
ever greater demand is needed to accelerate innovation, especially for larger heavy
machines.
164 S. Truloff et al.

This case illustrates how the CapSEM Model supports a collaborative approach
across actors within multiple CapSEM Levels. At community level (Level 4), strong
political support and dedicated financing for ZEMCON pilots is required. Early
market dialogue (EMD) across Levels 3 and 4 can help knowledge transfer mecha-
nisms and capacity building for ZEMCONS. Leveraging the strategic purchasing
power of public authorities and other top-down demand initiatives such as EU-level
regulation on carbon emissions from construction machinery can accelerate market
innovation and extend uptake of emission-free NRMM solutions. Multi-­actor dia-
logues together with a commitment from both public and private actors to decar-
bonisation is essential.

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Chapter 16
CapSEM Applied to the Construction
Sector

Magnus Sparrevik, Luitzen de Boer, Ottar Michelsen, and Christofer Skaar

Abstract The construction sector and built environment have the potential to
impact on a variety of systemic dimensions, ranging from specific processes in the
production of construction materials to pan-national regulations affecting regional
areas and cities. This case study uses the CapSEM Model in order to identify the
potential enabling and constraining impact of different methods, schemes and regu-
lations for reducing environmental impact in the construction sector. The use of a
systemic perspective highlights that all methodologies are working recursively in
actor-networks, thereby affecting society and the market differently, depending on
the systemic level.

16.1 Introduction

The construction industry and built environment represent significant pressure on

the environment by being the largest consumer of natural resources in the world: it
alone uses over a third of the energy produced annually worldwide (Munaro et al.
2020). In addition, the rate of urbanisation has an increasingly negative impact on
biodiversity around the globe (McDonald et al. 2008). The need to reduce this
impact by moving away from a linear consumption pattern into more circular
solutions, thus reducing the footprint of the built environment is therefore evident
(Arora et al. 2020).
There are several ways the construction sector may reduce the impacts from the
activity involving material considerations, design and resource use, see Fig. 16.1.
To effectively reduce environmental impact during the construction, use and end-
­of life phase of a building, there is a need for environmental assessment tools with
the ability to analyse environmental aspects and impacts during the lifetime of the

M. Sparrevik (*) · L. de Boer · O. Michelsen · C. Skaar

Department of Industrial Economics and Technology Management, NTNU,
Trondheim, Norway
e-mail: [email protected]; [email protected]; [email protected];
[email protected]

© The Author(s) 2023 167

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_16
168 M. Sparrevik et al.

Fig. 16.1 Focus areas to reduce environmental impacts in the construction sector. (Sparrevik
et al. (2021)

building solution, thus capturing that ‘contribution’ across different impact catego-
ries simultaneously. In addition, life cycle-based management schemes, and regula-
tions support environmental performance across the building life cycle better,
consequently affecting the variety of actors in the construction industry. The indi-
vidual effects of these methods, schemes and regulations are widely investigated in
literature (Gallego-Schmid et al. 2020; Górecki et al. 2019; Munaro et al. 2020).
However, it is also important to consider the role and impact of these methods in
different systemic dimensions, a topic often overlooked. Applying the CapSEM
Model to the construction industry and built environment gives a better understand-
ing of impacts horizontally (across topics and involved sectors), and vertically (from
individual projects to international bodies).

16.2 Implementation

According to the CapSEM Model, methodologies for systematic implementation of

sustainable solutions can be organised in a stepwise progression through four levels:
(1) process, (2) product, (3) organisation, and (4) system. The methods may be
separated across two dimensions: (i) in terms of the increasing complexity of
the scope (increasing systemic scope in the original model) and (ii) by the increas-
ing comprehensiveness of performance (increasing performance scope in the origi-
nal model). How one defines the content of each level depends on the point of entry,
i.e., from which perspective one views the systemic levels. Figure 16.2 shows how
the model can be adapted to the construction sector with the most important assess-
ment methods indicated at each level, (Sparrevik et al. 2021). The point of entry
here is the building, seen itself as a product and placed in an organisational context.
16 CapSEM Applied to the Construction Sector 169

Fig. 16.2 Adapting the CAPSEM Model to the construction sector. (Sparrevik et al. 2021)

Each subsequent level is then defined according to this approach. We can disregard
the process level and assume that process improvements and related impact assess-
ment methods are an integral part of the work by suppliers to improve their products.
The initial product level connects to resource performance of the components of
the building and the performance of the building itself. We may therefore divide this
level into two sub-levels: (i) building components and (ii) the building itself.
For building components (i), using materials with a high degree of recycled con-
tent, and produced without polluting materials, ensures environmental benefits.
High technical capacity and long lifetime expectancy are also important to keep the
products and materials in use for as long as possible, thus reducing the environmen-
tal footprint in the life cycle. In this case, it is not only the embodied emissions from
products and materials that count, but also the operational emissions and end-of-life
treatment. For the building (ii), the location of the building affects travel patterns for
residents and users of the building, causing emissions from transporting people,
goods and services to the building. Since the lifetime of a building is long, minimis-
ing the environmental footprint from the building perspective may require further
optimisation between construction (including maintenance and renovation) and
operational emissions.
According to the model in Fig. 16.2, the organisation level relates to standardisa-
tion across construction projects in a geographical or organisational context.
Examples are strategic decisions taken to follow certain standards or certification
arrangements that ensure buildings are constructed according to organisational
objectives. This may create new internal markets based on standardised construc-
tion activities, or result in new solutions, thus affecting the whole supply chain.
However, this level also refers to the strategic decisions made by entrepreneurs in
170 M. Sparrevik et al.

the early design phase of new buildings, new construction projects and to the devel-
opment of new environmentally friendly concepts.
Finally, the system level relates to larger initiatives, either cascading from pan-­
national regulations, such as EU regulations, national regulations, standards or from
various voluntary initiatives at the national or regional level, such as the develop-
ment of the European framework for sustainable systems (EU 2020). Environmental
friendliness in the systemic dimension has a broader impact than at other levels. It
allows for long time predictability, thus creating a new market that may compete
financially with established traditional solutions.
Sparrevik et al. (2021) highlights several findings with management implications
for advancing environmental performance in the construction industry, thus relating
the complexity and scope of the decision to the CAPSEM Model of systemic think-
ing. As summarised in Table 16.1, the methodologies, which are all based on life
cycle thinking and aimed to reduce environmental impact, will have different func-
tions depending on their placement in the CAPSEM Model. In practice, effects are
thus tailored to the appropriate systemic level where they can act as both enablers
and constraints for improvement, depending on the context.

For standardised product (building component) impact assessments, use of envi-

ronmental product declarations (EPD) to provide transparent information on the
environmental impact have gained popularity worldwide and EPDs are now widely
available for most products and materials in the construction sector (Andersen et al.
2019; Burke et al. 2018; Passer et al. 2015). The use of EPDs is transparent and
allows the procurer access to information about the environmental impact of a mate-
rial, a product or service, in order to be able to make well-informed decisions. By
using EPDs, decisions can be made by the builder to choose to select materials and
products with the lowest environmental impacts. Suppliers will thus be encouraged
to use more recycled materials to reduce environmental impact, but also to improve
production processes through cleaner production technologies, lower energy use
and selection of more sustainable transportation services. However, not all life cycle

Table 16.1 Overview of the potential enabling and constraining impact of different methods,
schemes and regulations for reducing environmental impact in the construction sector
Potential enabling Potential constraining
Level Methodology implication implication
2a Material life cycle Better performance at The ability to compare
declarations (EPD) supplier level, product impacts across areas and life
improvements cycle stages
2b Building life cycle Optimal building design and Standardisation due to
assessments (LCA) circular solutions case-to-case based solutions
3 Building certification Higher built environment Unidirectional effect due to
schemes, environmental standard and better voluntariness and user-driven
management organisational performance ambition levels
4 Policies, standards and Broad scale systemic effects Voluntary initiatives for
legislations innovative solutions
Modified from Sparrevik et al. (2021)
16 CapSEM Applied to the Construction Sector 171

stages are treated equally (Durão et al. 2020) and this may bias the results towards
materials and products with low emissions in the production stage without giving
enough focus on impacts created in the use or end of life stages of the products.
Use of life cycle assessments (LCA) for buildings is far more comprehensive
than of each material. On the other hand, using an LCA is more likely to result in an
optimal building design and circular solutions adapted to the wider context. For
example re-use of building materials will according to Arora et al. (2020) and
Eberhardt et al. (2019) reduce environmental life cycle impacts from the building
perspective, but extensive refurbishment to enhance energy performance may be
counterproductive due to the technical lifetime of building materials, especially if
renewable energy is used in the building. The optimum balance here is difficult to
evaluate on the material level, but may more easily be optimized at the building
level. However, since circular solutions on the building level are mainly developed
on a case by case basis, standardised solutions might be more costly and difficult to
reproduce since improvements should ideally be tailored to each individual building.
On an organisational level, building certification schemes and environmental
management systems (EMS) are widely used both to achieve higher built environ-
ment standard as well as better organisational performance. In building certification
schemes (LEED,1 BREEAM2 or similar), the proposed project is scored against
specific predefined targets covering a variety of topics valid for the construction and
use phases of the building. Introduction of EMS will also require the organisation to
identify significant environmental aspects such as energy, material use and water
efficiency and set objectives and targets accordingly. Even though building certifi-
cation and certified EMS affords the possibility of benchmarking environmental
status at the organisational level (Cole and Valdebenito 2013), these systems are still
voluntary and allow for the user to set appropriate ambitions in terms of perfor-
mance. In addition, the various schemes emphasise sustainability aspects differ-
ently, and the content and weighing are neither unified, nor coordinated in their
development (Mattoni et al. 2018).
Finally, at the system level, a wide variety of policy, standards, and regulations
with expected broad scale systemic effects exist. Various EU policies on resource
policy direct the construction sector towards circularity and are enforced by national
regulations, standards and priorities to be effective (Domenech and Bahn-Walkowiak
2019). Requirements related to energy management, nature conservation and tech-
nical design to avoid pollution are examples of requirements often found in regula-
tory frameworks. More innovative activities depending on cooperation between
market and builders, such as the introduction of emission free construction sites, are
difficult to regulate unless demonstrated as successful at a lower building level
(Fufa et al. 2018). On the contrary, detailed non-functional requirements for perfor-
mance may, in fact, be counterproductive for innovation (Sparrevik et al. 2018).

1
LEED (Leadership in Energy and Environmental Design).
2
BREEAM (Building Research Establishment Environmental Assessment Method).
172 M. Sparrevik et al.

16.3 Concluding Remarks

This example of applying the CapSEM model to the construction sector and built
environment shows the benefit of reviewing the methodology using a systemic per-
spective, especially for policy implications. Two findings illustrate this.
The first finding emphasises the importance of addressing environmental perfor-
mance with the correct complexity context to be able to make well balanced and
sustainable decisions (Labonnote et al. 2017). For example, embodied material
related emissions often dominate GHG emissions in a building life cycle (Wiik et al.
2018), thus, suggesting a strong focus on process improvements at the supplier
level. This is inherently robust and positive since it pushes the market to be innova-
tive and develop more environmentally friendly solutions. However, from a broader
perspective and higher systemic perspective, decarbonisation of the energy supply
may be a more effective enabler for reduced environmental impact than material
focus depending on the energy situation in each country and expected life cycle cost
savings (Ibn-Mohammed 2017). A recursive structure will then encompass both
materials and energy but allows for different prioritisations depending on the con-
text of the decision.
The second finding stresses the importance of finding the appropriate scope for
environmental improvements. As Pomponi and Moncaster (2017) point to, circular
building design encompasses not only environmental and technical aspects but also
governmental and behavioural dimensions. These are best developed through organ-
isational tools such as building certification schemes or even by regulatory work at
the system level. However, high score levels in schemes and more stringent regula-
tions are not possible without proper technical solutions at the product level or at a
functioning market with the ability to supply solutions.
With a systemic perspective, it becomes clearer that all methods, schemes and
regulation are working recursively in the actor-networks and therefore affects soci-
ety and the market differently depending on the systemic level. Methods at lower
systemic levels, such as the use of EPDs and LCA of buildings, may stimulate the
market to create environmentally friendly solutions. However, methods in higher
systemic levels, such as building certification, environmental management systems
and regulations, are used by real estate builders, trade organisations and govern-
ments to create incentives for development and innovation.

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Sparrevik M, de Boer L, Michelsen O, Skaar C, Knudson H, Fet AM (2021) Circular economy in

the construction sector: advancing environmental performance through systemic and holistic
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Wiik MK, Fufa SM, Kristjansdottir T, Andresen I (2018) Lessons learnt from embodied GHG
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centre. Energ Buildings 165:25–34. https://doi.org/10.1016/j.enbuild.2018.01.025

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 17
Application of Material Flow Analysis:
Mapping Plastics Within the Fishing
Sector in Norway

Paritosh C. Deshpande and Arron W. Tippett

Abstract Plastic in our marine environment is now ubiquitous. Abandoned lost or

otherwise discarded fishing gear (ALDFG) is of particular concern due to its ability
to continue to function as a trap for marine organisms. In order for decision makers
to act on this grave issue, we require data on the flow of ALDFG into the marine
environment. One key tool for revealing the flow of material within a specific sys-
tem is Material Flow Analysis (MFA). MFA takes a life cycle approach (cradle to
grave) to assess energy or material flows in a system within space and time boundar-
ies. It can be applied at multiple levels from the industrial process level to the
national level. This chapter presents a case study of an MFA conducted on fishing
gear in Norway. The MFA methodology was used in this case study to assess the
flow of plastic fishing gear from production through to recycling, final disposal or
loss to the marine environment. Data was collected for the MFA through stake-
holder interviews, literature reviews and analysis of government data sets. The MFA
revealed that around 4000 tons of plastic fishing gear enters the system in Norway
and around 400 tons enter the marine environment each year. An analysis of the
implications of the MFA for the key actors within the life cycle chain of fishing gear
is presented and a short description of the links between MFA and the circular
economy and sustainable development is provided. Furthermore, the relevance and
implications of using MFA tool for policy making at national and regional level is
discussed and elaborated while associated challenges are presented here.

P. C. Deshpande (*)
Department for Industrial Economics and Technology Management,
NTNU, Trondheim, Norway
e-mail: [email protected]
A. W. Tippett
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]

© The Author(s) 2023 175

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_17
176 P. C. Deshpande and A. W. Tippett

17.1 Introduction

Marine plastic pollution is now seen as a threat to the safe operating space for
humanity, due to its persistence within the marine environment and its ubiquity
(Villarrubia-Gómez et al. 2018), being found in all environments from coastal soil
substrates (Cyvin et al. 2021) to the digestive systems of marine species (Gall and
Thompson 2015). 8300 million metric tonnes of plastic have been produced since
the 1950s, with only 9% being recycled and the majority either lost to the natural
environment or landfilled (Geyer et al. 2017). The first recording of plastic in the
marine environment was made in 1957 with recordings growing substantially since
the 1990s. (Ostle et al. 2019). Jambeck et al. (2015) have estimated that between 4.8
and 12.7 million tonnes of plastic entered the marine environment in 2010 and pre-
dict that between 10.4 and 27.7 million tonnes of plastic will enter the marine envi-
ronment in 2025, if no strategies are implemented to reduce the mismanagement of
plastic waste streams on land. A more recent study by Borrelle et al. (2020) predicts
that annual emissions of plastic waste to aquatic systems (freshwater and marine)
could reach 53 million tonnes by 2030, even when considering current government
commitments made to improve the waste management system.
One significant omission from the studies by Jambeck et al. (2015) and Borrelle
et al. (2020) was plastic entering the marine environment directly from marine
industries, such as abandoned, lost, or otherwise discarded fishing gear (ALDFG).
ALDFG is a major concern for the marine environment due to its design properties.
Fishing gear (FG) is designed to capture or kill and to persist in the natural environ-
ment and it continues to meet these design requirements when lost in our seas and
oceans (Deshpande and Aspen 2018). Therefore, calculating the volume of ALDFGs
entering the marine environment is critical to help policy and decision makers
design practical solutions to solve the issue.
In resource management terminology, information refers to the fundamental
knowledge about stocks, flows, and processes within the resource system as well as
about the human-environment interactions affecting the system (Ostrom 2009).
Highly aggregated information may ignore or average out local data essential to
identifying future problems and developing sustainable solutions. FGs are resources
in the fishing sector, and literature suggests the overall unavailability of data and
monitoring methods to provide sound scientific information on the amount of plas-
tics in ALDFG that enter the ocean and is available after end-of-life (EOL) collec-
tions (Deshpande 2020).
At present, plastics generally follow a linear economy model, where products
have a single lifecycle: virgin material is used to produce products that are then sent
for disposal in landfills or directly into the natural environment for most of these
products. The circular economy (CE) approach presents an alternative model where
materials are given several lifecycles, through the 9Rs framework, for example:
reuse, reparation, recycling and more. The CE model is hailed by the EU and other
international bodies as a solution to the issue of plastic pollution (EC 2018). One of
the key tools for generating evidence for the CE strategies is Material Flow Analysis
17 Application of Material Flow Analysis: Mapping Plastics Within the Fishing Sector… 177

(MFA). (Brunner and Rechberger 2016) define MFA as “a systematic assessment of

the flows and stocks of materials within a system defined in space and time”. MFA
can be used to reveal the stocks and flows of valuable resources within a system to
help industry and businesses, such as plastic recyclers, understand the potential for
developing an economically valuable solution.
To build robust resource management strategies and realize sustainable CE
opportunities that are capable of utilizing untapped resources across regions, it is
essential to know the amount of plastic available for recycling from the fishing sec-
tor (Deshpande and Aspen 2018). The following case study presents the application
of MFA tool to estimate the flows of plastic polymers from fishing process or activ-
ity as presented in Level 1 of the CAPSEM Model.

17.2 Mapping Plastics from Processes Within Fishing Sector

The basic principle of MFA is the conservation of matter and energy in isolated
systems, delimited by boundaries of time and space and following the mass-balance
principle (Brunner and Rechberger 2016). As explained in the CapSEM Model,
MFA is a valuable tool for assessing material and energy flows from the processes
and/or industrial sector. Typically, MFA of a selected substance includes the main
life cycle stages namely, mine, production, manufacturing, use, maintenance and
disposal. The in-depth methodology of MFA is presented in Part II Chap. 5. This
case study presents, and elaborates upon, the successful application of MFA method
in mapping life cycle processes from the fishing sector and thereby measure the
loads of plastic from fishing practices in Norway.
In applying MFA, (Deshpande et al. 2020) studied six major commercial FG
types, namely trawls, purse seines, Danish seines, gillnets, longlines, traps/pots and
their associated ropes, deployed by the Norwegian commercial fishing fleet. The
data was further collected from gear producers, suppliers, fishers (Deshpande et al.
2019), collectors, authorities, and waste management facilities within the region to
model the flows of plastics polymers, polypropylene, polyethylene, and Nylon,
which are used as the building blocks of advanced gears (Brown and Macfadyen
2007). Data was primarily collected using published literature, government statis-
tics, and interviews of stakeholders. Table 17.1 presents the stakeholder involved
and the type of information obtained from each stakeholder category during the
period of 2018–2019.
The study focuses solely on the system of the Norwegian commercial fishing
fleet, through both use and post-use processes. The recreational fishing and foreign
fishing vessels operating in Norway are neglected. FGs are defined using an expan-
sive definition proposed by FAO. According to FAO, FG are defined as “any physi-
cal device or part thereof or combination of items that may be placed on or in the
water or on the seabed with the intended purpose of capturing or controlling for
subsequent capture or harvesting, marine or freshwater organisms whether or not it
is used in association with a vessel” (FAO 2016). Throughout the text, the term
178 P. C. Deshpande and A. W. Tippett

plastics includes polyethylene (PE), polypropylene (PP) and Nylon (PA). Although
the FG unit contains other materials such as metals, lead, polyvinyl chloride (PVC)
and wires, plastics constitute around 60–90% of any gear type. Therefore, plastic
polymers from FG are treated as resources in developing management strategies
throughout this study. A static MFA model was built to present the 2016 stocks and

Table 17.1 Summary of relevant information obtained from MFA on each stakeholder across the
life cycle of fishing gear and its potential application
Information provided
Stakeholder Data obtained for MFA to stakeholders from
category model from stakeholders MFA study Application
Gear producers Annual quantities of FGs Amount of FG sold Development of new FG
sold and material of each type, design suitable for
components of each FG type The market/demand recycling
for each type of FGs, Assessing need for
The typical building repair facilities
tendencies of repair for fishers
and reuse
Need for material
improvement for ease
in recycling
Fishers Typical life span of FGs, The typical life span Developing best practice
(resource repair and disposal patterns, of FG types guide for handling and
users) purchase patterns and typical The FGs types more management of FG types
rate of FG loss in the ocean vulnerable to get lost
upon deployment in the ocean upon
deployment
The typical repair
patterns of various
FG types
Beach Typical amount of FGs Efficiency of Best practice guide for
clean-up plastic collected through clean-up operations effective classification
programme beach clean-up surveys Need for effective and reporting of
and efficient data collected waste items
management plan
Regulatory Typical amount of FGs Efficiency of Suitable regulatory
actors plastic collected through clean-up operations response for management
ocean clean-up surveys Data on potential of plastics from fishing
hotspots for leakage sector
of plastics in the
environment
Information for
effective policy
making
Waste Typical volume of waste The typical handling Best practice guide for
management FGs handled annual by patterns of waste FGs waste managers for
companies WMCs, typical fate of waste The amounts of effective segregation of
FGs (sent to recycle, waste FGs generated waste FGs to improve
incineration or landfilling) every year recycling
(continued)
17 Application of Material Flow Analysis: Mapping Plastics Within the Fishing Sector… 179

Table 17.1 (continued)

Information provided
Stakeholder Data obtained for MFA to stakeholders from
category model from stakeholders MFA study Application
Recyclers Typical challenges in FG The amounts of Considering business
recycling waste FGs generated case of recycling
every year Improvement in
The typical rate of infrastructure for
recycling of FGs recycling within the
Challenges in FG region
recycling
The amounts of
recycled polymers
produced every year

Fig. 17.1 MFA of plastic (PP, PE, and Nylon) from six fishing gears used by the commercial fish-
ing fleet of Norway in 2016 (tons/year). (Adapted from Deshpande et al. 2020)

flows of plastics from FGs because of the maximum data availability obtained
through data collection rounds. Primary modelling and flow calculations were per-
formed in Microsoft Excel, while STAN v2.6.8 was used for further data reconcili-
ation (Vienna University of Technology, Vienna, Austria).
Figure 17.1 presents the typical MFA model depicting the annual flow of plastics
from the fishing sector of Norway (Deshpande et al. 2020). The results summarize
that around 4000 tons of plastics enter the system as new FGs or FG parts every year
in Norway. The fishing activity results in leakage of 400 tons of FGs as ALDFG
upon deployment during the use phase. The beach and ocean clean-up operations
cumulatively remove around 100 tons of ALDFG, resulting in the stockpiling of 300
tons of ALDFG every year from the commercial fishing practices alone. Additionally,
MFA reveals that about 4200 tons of waste FGs are collected at the waste manage-
ment facilities in Norway, out of which only about 50% are segregated and sent for
further recycling, whereas 25% are sent to landfilling and for incineration purposes
within Norway.
180 P. C. Deshpande and A. W. Tippett

17.3 Application of MFA in the Context of the Circular

Economy and Sustainable Development

MFA is routinely applied at multiple levels of governance. At the national level,

economy-wide Material Flow Accounts are reported annually by the EU-27 to
Eurostat. These accounts are in turn used as indicators of progress towards the EU’s
Circular Economy Action Plan, such as circularity rate (CGRi 2021), recycling rate,
etc. MFA is also used as a methodology to calculate progress towards multiple indi-
cators to meet the SDG targets. For example, MFA is used to calculate progress
towards a decoupling of the economy from the material footprint in SDG 8, target
8.4 through material consumption and production rates. At the city level, MFA is a
standard methodology for calculating the flows of material and energy through dif-
ferent sectors within a city. MFA can highlight opportunities for cross-sector col-
laboration, whereby the material output from one sector can be utilised by another
(Kick-starting circular cities and regions in Scotland: Glasgow (Del Sordo 2019).
Furthermore, the ISO 14000 series on Environmental Management now includes
two standards for Material Flow Cost Accounting (a version of MFA which includes
calculation of economic costs of energy and material flows), ISO 14051 and ISO
14052. The ISO standards have now set up a technical committee for the develop-
ment of circular economy ISO standards which may also include reference to the
MFA methodology. Several studies, including regional and industrial sectoral anal-
yses, highlight MFA-based studies’ application to define pathways toward circular-
ity (Franco 2017; Huysman et al. 2017).
The case of fishing gear presented here is a good example of an industry/sector
level MFA and further illustrates how findings from MFA can aid informed decision-­
making at the regional level. Table 17.1 illustrates how MFA is calculated and uti-
lized by different stakeholders across the life cycle of fishing gear and provides
possible applications resulting from the MFA data. This type of MFA is beneficial
for a range of actors in the fishing gear value chain (Table 17.1). Private sector
actors, such as Gear Producers, benefit from information on the market demand for
fishing gear. Regulatory bodies are provided with information on the hotspots for
fishing gear losses to the environment. Environmental non-governmental organiza-
tions (NGOs), such as beach cleaning groups, benefit from data on the effectiveness
of clean-up programmes.
Stakeholder Dependency for Data Collection
MFA requires intensive data collection from key stakeholders. As MFA maps the
system life cycle of a selected product/process and tracks the material of interest
from production to its end of life, it demands quantitative and qualitative informa-
tion from various actors involved directly or indirectly with the system under con-
sideration (Deshpande and Haskins 2021). Therefore, practitioners must invent or
adapt methods to extract information from resource users, regulatory actors, pub-
lished or unpublished literature, datasets, waste management companies, and other
relevant information providers. Table 17.1 illustrates how the information was
17 Application of Material Flow Analysis: Mapping Plastics Within the Fishing Sector… 181

gathered in the case of FG resource management in Norway and which stakeholders

were involved.
Systematic monitoring and availability of data on material and energy streams by
government and private actors would help to make MFA more accessible to compa-
nies. Academia and the private sector can work to develop more accessible software
for companies. Industry-relevant research, such as the research in this case study, is
a valuable source of information for businesses across the value chain. However, it
is essential that research is made accessible to the private sector through open-­
source publishing.

17.3.1 Practical Possibilities and Obstacles for Companies

for Using MFA

Any company can use MFA for mapping energy and material footprint. The infor-
mation that MFA provides companies with, can help them map where they are los-
ing energy and material from in their value chain. This in turn, can be used to
develop a circular economy and sustainable development targets. Data availability
is a barrier for applying MFA at the company level resulting in higher costs initially.
Conducting MFA, therefore, may prove time and resource-consuming, but in
hindsight, it provides a holistic understanding of the various processes and systems
that further aid in developing policies for sustainable resource management.
Table 17.1 summarizes information obtained from MFA results for each stakeholder
group and how these groups can apply the findings from MFA to improve the sys-
tem of FGs in accordance with the CE strategies.

17.4 Concluding Remarks

As discussed in Part II, the MFA tool provides in-depth understanding of the various
processes and causative factors across the system life cycle of the selected resource/
substance. The need for quantitative information demands integration of all the nec-
essary tools and scientific methods (qualitative and quantitative) to obtain data
essential to model the processes within the given system. The relevant information,
if absent, in official documentation or databases, must be obtained through field
visits and subsequent contacts with the stakeholder groups which further improves
the understanding of the resource system. The data collection procedures, imple-
mented to gather essential information from fishers and associated challenges and
benefits are summarized in Deshpande et al. (2019).
182 P. C. Deshpande and A. W. Tippett

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
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adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 18
Environmental Management
at Fiskerstrand Verft AS: A 30 Year
Journey

Rolf Fiskerstrand and Annik Magerholm Fet

Abstract Fiskerstrand Verft is a multipurpose shipyard with extensive expertise and

activities in shipbuilding, maintenance, repair and conversion/modification of ships.
The yard is exposed to a range of different environmental challenges related to its
business which trigged the yard to develop and implement health and safety, and envi-
ronmental management systems. This chapter gives an overview of environmental
management at Fiskerstrand Verft over a 30-year period, written from the perspective
of the first author as CEO. The activities from 1991–94 mainly considered Level 1 in
the CapSEM Model with annual accounting of materials and wastes, emissions to air
and discharges to ocean. The yard participated in various R & D environmental proj-
ects and during the period 1994–99 these were extended with activities corresponding
to life cycle thinking according to Levels 2 and 3. In 1999, Fiskerstrand Verft was the
first Norwegian shipyard that prepared and published an environmental report. The
yard was certified as an environmental lighthouse company in 2000, the first in
Norway. During the period 2004–2008, the yard further developed their systems and
began to transition to Level 4. The life cycle perspective for ships and technology has
been at the center of the development of green technologies for ships. This journey
continues today, passing the 30 year mark, and has contributed invaluable knowledge
about the CapSEM toolbox and how it can be applied to shipyard operations.

18.1 Introduction

Fiskerstrand Verft AS is a shipyard established in 1909, located in the municipality

of Sula, Norway about 25 km from the center of Ålesund. More than 112 years later,
Fiskerstrand Verft is a cornerstone company: a multipurpose shipyard with

R. Fiskerstrand (*)
Fiskerstrand Company Ltd., Fiskarstrand, Norway
e-mail: [email protected]
A. M. Fet
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]

© The Author(s) 2023 185

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_18
186 R. Fiskerstrand and A. M. Fet

extensive expertise in shipbuilding, maintenance, repair and conversion/modifica-

tion of ships. Our business has always been based on quality, expertise and reliability.
Since 1965, Fiskerstrand Verft has delivered more than 84 new ships. Over the
years, Fiskerstrand Verft has also provided innovative and safe solutions for fishing
vessels, and car and passenger ferries in order to achieve the best solutions for our cli-
ents. Fiskerstrand Verft has extensive experience in vessel modifications; its main focus
is on using the latest knowledge, working methods and technology in modern facilities.
Over the years, we have also gained solid expertise in environmental technology
and have, amongst other things, had a particular focus on liquefied natural gas
(LNG) engines for ships, battery technology and on the potential for hydrogen-­
powered ships. In 2019, Fiskerstrand Verft invested in a new and larger floating
dock and increased the docking capacity from 6000 tons to 12,000 tons. The dock
opened the potential for new markets at the same time increasing efficiency: it has
facilities that ensure the collection of wastewater, chemicals and oil which help the
yard to better control waste which in turn helps to protect the environment.
The mother company, Fiskerstrand Holding AS, consists of three 100% owned
companies Fiskerstrand Verft AS (shipyard), Fiskerstrand Eiendom AS (property
company), and Multi Maritime AS (ship design, consultancy company). Our vision
is to ‘create sustainable maritime development’. This vision is underpinned by our
values, of ‘Quality, Reliability, Inclusivity and Innovation’, and our business focus
is primarily on European markets through projects based on green technology and
sustainable solutions. Fiskerstrand Verft runs the entire business in an environmen-
tally friendly way. The shipyard will always follow laws and regulations and strive
to find new solutions in the fight to reduce emissions and waste, as long it is finan-
cially defensible. This, amongst other factors, requires a constructive companion-
ship with our clients, suppliers, and business partners. We wish to prioritize and
open channels of communication with our employees, local society, and national
government regarding environmental issues.

18.2 Environmental Challenges

Fiskerstrand Verft is exposed to a range of different environmental challenges

related to its business. It has a dynamic and thriving variety of activities in general
and as a natural part of various ongoing projects. It generates large volumes of waste
some of which are dangerous. There is significant time pressure while executing
projects: particularly during the construction phase. All of this is accompanied by an
increasing focus on the environmental impact of such projects and on requirements
to resource efficiency in society.
The most significant environmental impacts result from outdoor repairs, mainte-
nance and conversion work while the ships are in the dock or at the quay side. The
environmental impacts discussed in our reports primarily affect local or regional
areas. Fiskerstrand Veft has been producing annual ‘Environmental reports’ since
1999 that show, among other items, energy and water consumption, emissions to air,
land and sea, amount of waste and materials to recovery and recycling.
18 Environmental Management at Fiskerstrand Verft AS: A 30 Year Journey… 187

18.3 Environmental Management at Fiskerstrand Verft

Fiskerstrand Verft intensified their work with managing health, safety and environ-
ment (HSE) in 1992 to improve their performance regarding procedures for work-
ing processes to HSE-issues. The text further gives a flavor for the work throughout
the following years. Many of the results achieved in this time period were docu-
mented in internal reports and the following research reports for the projects con-
ducted in cooperation with Møreforsking Ålesund (www.moreforsk.no/):
Rapport Å 9406, Prosjekt nr. 5707.
Rapport Å 9501, Prosjekt nr. 5713.
Rapport Å 9502, Prosjekt nr. 5706.
Rapport Å 9615, Prosjekt nr. 5734.
Rapport Å 9506, Prosjekt nr. 5707.
Rapport Å 9616, Prosjekt nr. 5734.
In 1992, a new ‘Forskrift om internkontroll’ (Regulation for internal control) was
introduced by the Norwegian government in order to improve companies’ activities
in relation to working environment and safety, protection concerning health and
environmental damage from products and the protection of external environment
against pollution and a better treatment of waste. The shipyard used the rebuilding/
conversion of the car- and passenger ferry M/S ‘Smørbukk’ as the basis for the
project. The work was carried out at the yard in 1992 and documented used materi-
als, work activity for the rebuilding, quantity and type of waste. Material flowcharts
then illustrated the total amount related to the rebuilding.
In 1993, based on this new regulation, Fiskerstrand Verft prioritized the work
with the environmental management system (EMS). Whilst undertaking this work,
we realized that assistance from experienced specialists was required.
In 1994, Fiskerstrand Verft was invited to participate in the project ‘Cleaner pro-
duction in the shipyard industry in the County of Møre og Romsdal’, a collaboration
between 5 shipyards in the region. This project looked at bottom hull treatment,
paint and metallization of steel materials, waste disposal when rebuilding or con-
verting vessels, sand blasting new steel materials, or painted steel materials.
The purpose of this project for Fiskerstrand Verft was to identify the potential for
cost effective environmental improvement based on the introduction of cleaner pro-
duction at the yard, as well as introducing improvements in the choice of materials
and equipment to reduce waste and improve the impact on the environment. The
project also investigated the possibility of reducing the amount of materials, result
of dangerous waste and possible recycling of materials and waste. Fiskerstrand
Verft was responsible for the work related to waste disposal when rebuilding vessels.
In 1994, as part of the project, Fiskerstrand Verft proposed the following
improvements and rectifying actions:
1. Improved handling and labeling of waste, especially hazardous waste.
2. Recycling of thinners.
188 R. Fiskerstrand and A. M. Fet

3. Source sorting of solid waste.

4. Development and implementation of computer programmes for substance
indexes and environmental accounting.
The assumed environmental impact the individual rectifying actions might have on
the amount of material, energy consumption, water consumption, construction
activities, waste and contamination were all evaluated. The consequences related to
economy, results, time and manhour consumption were also evaluated for the differ-
ent proposed rectifying actions. Based on this, we commenced a thorough update of
our environmental management system, environmental strategy, environmental
mapping, goals and programmes.
The activities from1991–1994 mainly considered Level 1 in the CapSEM Model.
All tools (I/O and Cleaner Production) were used to collect quantitative informa-
tion. By developing this further, a database for the environmental aspects for ship-
yards was created. In 1994, a report was produced regarding the systematic
assessment of environmental aspects for ships in the design, engineering, construc-
tion and operational phase seen in a cleaner production perspective. This system
documentation identifies the limits of the total system and subsystems.
As a second step in the portfolio of projects that followed the cleaner production
project in the period 1995–96, were the following projects: (i) “Waste minimization
at shipyards,” (ii) “Bottom hull cleaning water treatment at Liaaen Verft,” (iii) “High
pressure water blasting at Fiskerstrand Verft.” and (iv) “Enclosed systems for sand-
blasting at Ulstein Verft (black steel) and at Søviknes Verft (painted steel).” These
activities correspond to changes towards less polluting practices. One of the activi-
ties corresponding to Level 2 in the CapSEM model, was a project where the life
cycle assessment (LCA) was tested by a simplified analysis. Life cycle screening
(LCS) of the cruise ferry Color Festival was studied to look at how to bring the
information about the environmental impacts of the different subsystems into the
design specification of new ferries by the design for environment (DfE), or design
for x-principles (DfX) in ship design. As part of the EMS-activities corresponding
to Level 3 in the CapSEM Model (see Fig. 18.1), a set of environmental

Fig. 18.1 Overview of activities resulting from the Cleaner Production project started in 1993.
The numbers in the boxes reflect the Levels in the CapSEM model (modified from Fet 2002a, b)
18 Environmental Management at Fiskerstrand Verft AS: A 30 Year Journey… 189

performance indicators (EPIs) was developed and used to monitor and report the
identified environmental impacts over time.
As seen in Fig. 18.1, the results from the projects noted under the numbers 1, 2
and 3 were collected and modified into guidelines and manuals for cleaner produc-
tion at shipyards, and other inputs to policy programmes for greening of the mari-
time industry (Angelfoss et al. 1998, Fet and Sørgård 1998, Hayman et al. 2000, Fet
2001, Fet 2002a, 2002b, Fet and Zhou 2002, Ellingsen, Fet and Aanondsen 2002,
Zhou et al. 2003).
In 1997–98, in connection with the introduction of preventive environmental
measures, internal investment was carried out on environmental management sys-
tems (EMS) with a strong emphasis on the process Plan-Do-Check-Act (PDCA).
This was based on the most significant international environmental management
standards in the ISO 14000 series. A special attention was given to the standards for
Environmental Management System (EMS), Environmental Auditing (EA),
Environmental Performance Evaluation (EPE) and Environmental Performance
Indicators (EPI).
Measuring environmental performance provides a basis for how good or bad a
company is in relation to the most important environmental aspects and evaluated
according to EPIs mirroring the efforts of achieving the best improvement. It also
bench-marked the company’s performance against comparable businesses. EPIs are
used to measure environmental performance for aspects as usage of materials and
energy, emissions to air, discharges to water and soil pollution. Different waste indi-
cators and accident indicators are among the EPIs recommended in the report.
The database from the mapping of waste generated by conversion of M/S
“Smørbukk” at Fiskerstrand Verft was used in this report. It represented a step for-
ward in assisting and improving environmental performance for yards in general.
The report also presented indicators for bottom hull treatment as well as emissions
to air caused by painting and mentalization. Fiskerstrand Verft has prioritized since
the early nineties, reducing the impacts on the surrounding environment.
In 1998–99 the EMS was further developed. Routines for documentation and
reporting were developed and formalized. In 1999, Fiskerstrand Verft was the first
Norwegian shipyard that prepared and published an environmental report (https://
www.fiskerstrand.no/). As a result of several years of work with environmental per-
formance improvements, the company was certified as an environmental lighthouse
company in 2000, the first in Norway. This means that the company’s criteria for
both new building of ships, conversion and repairing of ships at shipyards are ful-
filled. Annual environmental reports have been produced since 1999 up to 2012. For
the period 2013 to 2018 a report showing the development over the period of 6 years
is published, and since 2019 the report has been adjusted to highlight the yards’
responsibility with respect to the 17 sustainable development goals (SDGs).
From 2004–2008, the yard further improved the EMS Manual. The Manual
describes and document the yards system and covers the legal basis, organization
and responsibilities, working environment and environmental protection, fire,
explosion hazards and accidents, product control, reporting, protection inspection
190 R. Fiskerstrand and A. M. Fet

and damage reporting risk assessments, action plans, EMS revision reports and
plans and materials register.
The EMS was also included in the Quality Assurance Manual (QAM). Working
with EMS requires involvement, patience, working step by step and gradually edu-
cation all those involved. The benefits of so doing are clear. It results in a long pro-
cess forward to a “self-propelled system” (Procedures, training, maturing, posture
etc.) provides an improved and tidier working environment. It established an envi-
ronmental protection system (external environment) with 13 new forms and 22 pro-
cedures, sourced and sored (18 types) to yield financial gain due to a differentiated
tax system for waste collection. Not least, the crew on board ship often display a
“hands off” self-waste approach, which is at times a challenge.
The continuing work with the EMS manual and the integration of procedures
according to the environmental policy, has contributed to a set of KPIs and reporting
practices in line with a few of the tools that are listed for Level 3 in the CapSEM-­
model. As a “front-runner” within the shipbuilding and ship repair industry, the
actions also have given an impact on a broader societal system, meaning a move
from Level 3 to Level 4 in the CapSEM-model.

18.3.1 Level 4: Activities

The work with the environmental management provides valuable statistics and
experience data. Fiskerstrand Verft was ordered in 2009 by the County Governor of
Møre og Romsdal to undertake environmental surveys of the shipyard area and at
the seabed near the yard. Multiconsult was engaged to carry out environmental geo-
logical survey of the yard area, field survey, risk and action assessments. The busi-
ness then turned its focus to Level 4 in the CapSEM model, looking into the sector’s
impacts on the society from a broader perspective. The emphasis was on marine
pollution and possibilities for improvements.
During 2007, Fiskerstrand Verft was invited to participate in the project
“Opticap”, a research project to increase knowledge about materials and practical
methods suitable for capping contaminated marine sediments and to reduce spread-
ing pollution. The project was a collaboration between NGI, NIVA, Agder Marine,
Hustadmarmor, Secora, Fiskerstrand Verft and NOAH. Project management was
driven by NGI. Fiskerstrand Verft supported the project financially with over one
million NOK. The contract was between Opticap project group and Fiskerstrand
Verft and Research Council of Norway. The project concentrated on investigating
the development of fine-grained pumpable masses in moderate current-exposed sea-
bed areas, measuring the effect of thin covering in relation to reductions in water
concentration and pollution, measuring biota and recolonization after covering and
documenting the effect of both passive and active covering of materials over time.
In this field test, a thin covering with suspended calc (biocalc) from Hustadmarmor
and suspended calc mixed with activated charcoal (AC) on a heavily polluted area
with among others Tributyltin (TBT) was employed. The test field, an of area
18 Environmental Management at Fiskerstrand Verft AS: A 30 Year Journey… 191

11000m2 divided into two sub-areas, comprised one area of 9000m2 covered with
suspended biocalc alone, and one area of 2000m2 covered with AC mixed with bio-
calc. The covering was carried out in September 2010. A total of 950 tons of biocalc
and 5 tons of AC were used for the covering operation (Opticap 2012a). A final
report “New materials and methods for laying out thin covering on contaminated
seabed” was published in 2012 (Opticap 2012b).
Over the period of 2013–2021, Fiskerstrand Verft has also assisted other ship-
yards in developing their EMS as well as building competence in HSE. In addition,
Fiskerstrand Verft has installed a number of electrical shore connections which pro-
vide an electrical power supply connection between the quay and/or the floating
dock to the ships to ensure electrical supply onboard, thus preventing ships from
using diesel engines with generators to obtain electricity onboard. The total shore
connection capacity is 4000 kVA based on 400 V and 690 V, 50 Hz. From this
capacity, 400 V and 690 V, 60 Hz can also be delivered, as required. Fiskerstrand
Verft has been working with the Tafjord Energy Arena since 2015 on energy man-
agement (2015–2016) for industry and plant and energy savings (2016–2019) for
buildings. Four main gauges on electrical intake, 2 sub gauges and 28 gauges for
electrical consumptions were installed in 2020. The purpose is to monitor the elec-
trical consumption to optimize and reduce peaks and thus, reduce both energy con-
sumption and costs. The electrical grid rent is defined by the specific hour in a
month with the highest power peak. It is therefore important to control power during
any given period. The installed equipment is a good analytical tool to optimize con-
trol and thus reduce power peaks and costs.

18.4 Ship Building, Conversions and Repairs

The activities described in this section describe the use of the toolbox described for
Level 2 in the CapSEM Model. During the period (2010–2021) the yard has focused
on the development of green technologies, both to ensure a good practice in the
organization, but also green technologies for ships. The life cycle perspective for
ships and technology has been central, hereunder focusing on the suppliers for
equipment to development of greener technologies. From this point on, the yard has
been concentrating on product improvements according to Level 2 in the CapSEM
Model. This work took a life cycle approach where both upstream and downstream
activities were considered (use of materials, technologies in the building process
and impacts from the operating vessels). One example from 2002 is the car- and
passenger ferry “Nordfjord”, which was the third ship in world history built under
the environmental classification notation “Clean Design”, which has strict require-
ments concerning safety and waste handling and promotes minimizing emissions to
sea and air.
In March 2013, the LNG-bunkering vessel “Seagas” was delivered, the world’s
first dedicated LNG (liquified natural gas) bunkering vessel that can deliver LNG
from ship to ship. It was based on a conversion of the car and passenger ferry
192 R. Fiskerstrand and A. M. Fet

“Fjalir” to serve the Ropax ship “Viking Grace” for the line from Stockholm –
Helsinki. Since 2010, six ships based on LNG-engines were delivered. This included
one based on LNG hybrid battery and one based on biodiesel hybrid battery.
Fiskerstrand Verft also delivered the conversion of a ferry from LNG to hybrid with
battery, two ferries from diesel to battery and one from LNG to battery. Table 18.1
presents an overview of green technologies installed in vessels delivered by
Fiskerstrand Verft.

18.5 Development of Green Ship Technology

In December 2016, Fiskerstrand Holding AS was granted support by the Pilot–E

system to develop a conversion of a car- and passenger ferry from diesel engines to
a hydrogen fuel cells hybrid battery system. Pilot-E is a financing scheme for
Norwegian industry, established by the Research Council of Norway, Innovation
Norway and ENOVA.1 The project was named HYBRIDship (Cf https://www.sin-
tef.no/prosjekter/2017/hybridskip/). The overall idea of the project is to realize zero
emission propulsion systems for longer crossing/operation time and larger vessels
in hybrid configurations based on battery and hydrogen technology. Based on this
knowledge base a pilot project for a hybrid ferry (hydrogen/battery powered) was
outlined and specified. Further, an existing car- and passenger ferry should be rebuilt
and tested by end of 2020 as the first car- and passenger ferry in commercial opera-
tion in the world. Both DNV and Norwegian Maritime Authority were partners in
the project for the purposes of approving/validating the process. The objective was
a win-win situation for both the regulating authorities and the yard in order to ensure
pioneering functions.
Unfortunately, the project was terminated due to lack of financing for the ferry
conversion. Battery will become the main source for ferry fjord crossings of up to
45–50 minutes. Hybrid with hydrogen and battery are more appropriate for fjord
crossings for longer distances. Hybrid with batteries and biodiesel/biogas could also
be used. Hydrogen fuel cells hybrid battery are relevant for the aqua industry, short sea
shipping–cargo, local cruise lines–fjord cruises, local fishing vessels, high speed cata-
marans and supply and service vessels for offshore industry and offshore windmills.
Fiskerstrand Verft has installed an advanced system for managing wastewater
from the high-pressure bottom hull cleaning of ships in the dock. The flush-down-­
water contains paint residue like TBT, PCB, seaweed, seashells etc. The water can-
not be pumped directly into the sea. Six compilation wells for wastewater have
therefore been installed: - two in each end and two in the middle of the dock.
Collection pipes are installed in the bottom of the dock leading up to four pumps
which pump this through a pipe on the seabed to 3 large settling tanks on the quay.

1
Enova SF is a Norwegian government enterprise responsible for promoting environmentally
friendly energy production and consumption.
18 Environmental Management at Fiskerstrand Verft AS: A 30 Year Journey… 193

Table 18.1 Overview of green technologies installed in vessels delivered by Fiskerstrand Verft
Vessel type Name Power system Description Category Year
Ferry Selbjørnsfjord LNG A pioneering project, New 2010
installing a gas electric system building
in a car ferry, replacing
traditional diesel driven
system significantly reducing
NOx and CO2 emission.
Ferry Boknafjord LNG + diesel At the time, the world largest New 2011
LNG driven car ferries building
crossing Norwegian fjords.
Modern LNG engines,
combined with diesel and
SCR cleaning, gives a
significant NOx – CO2 and
methane reduction.
Feed ship/ With harvest LNG Gas mechanical directly New 2014
aquaculture driven propulsion system, building
optimized for low resistance
at sea and low emission.
Feed ship/ With marine LNG Gas mechanical directly New 2014
aquaculture driven propulsion system, building
optimized for low resistance
at sea and low emission.
Ferry Hasvik LNG Gas electric propulsion New 2015
system, hull optimized for low building
resistance at sea and low
energy consumption
Ferry Bergsfjord LNG Gas electric propulsion New 2015
system, hull optimized for low building
resistance at sea and low
energy consumption
Ferry Fannefjord LNG/ battery Car ferry, upgraded with Retrofit/ 2015
hybrid batteries to handle load Conversion
transients for reduced use of
LNG engines.
Ferry Hornstind Biodiesel/ Car ferry with batteries New 2017
battery hybrid installed to handle load building
transients by reduced use of
diesel engines. Diesel engines
can run 100% on biodiesel,
including exhaust cleaning
systems, Hornstind achieves
significant reductions in CO2
and NOx emissions.
(continued)
194 R. Fiskerstrand and A. M. Fet

Table 18.1 (continued)

Vessel type Name Power system Description Category Year
Ferry Årdal From diesel to Diesel electric ferry upgraded Retrofit/ 2019
battery to 100% battery electric Conversion
propulsion system. Ferry is
adapted to charging systems
from shore for fast charging
and shore power for reduced
use of diesel generators at
rural locations.
Ferry Lærdal From diesel to Diesel mechanical ferry Retrofit/ 2019
battery upgraded to 100% battery Conversion
electric propulsion system.
Ferry is adapted to charging
systems from shore for fast
charging and shore power for
reduced use of diesel
generators at rural locations.
Ferry Karlsøyfjord From LNG to Gas electric ferry converted to Retrofit/ 2022
battery 100% battery electric Conversion
propulsion system. Ferry is
adapted to charging systems
from shore for fast charging
and shore power for reduced
use of diesel generators at
rural locations.

Finally, the water on the upper part of the settling tank is then pumped to a purifier
plant securing clean water. The dregs from the settling tank are taken out regularly
and treated as contaminated substance. The upgrading of the dock represents an
improvement on Level 1 in the CapSEM model by reducing discharges to the sea
from one of the operation processes at a maintenance shipyard.

18.6 Conclusion

This case study describes a transition toward sustainability that has taken place over
a period of 30 years, beginning with the application of Level 1 of the CapSEM
model, moving to Level 3 with implementation of EMS, KPIs and reporting. The
understanding of the impact from shipyards on the environment matured over time,
accompanied by a better comprehension of environmental impacts from each phase
of the life cycle of the ship. When Level 3 in the CapSEM model was reached, a
distinct and measurable shift in performance was demonstrated based upon results
from environmental accounting obtained over a long period of time. This change is
reflected and documented throughout the annual reports. The activities described
for Level 4 illustrates further that Fiskerstrand Verft had gained valuable knowledge
and experiences applicable to the entire the shipyard industry, e.g., as the pilot
18 Environmental Management at Fiskerstrand Verft AS: A 30 Year Journey… 195

company developing the set of criteria for shipyards to become Environmental

Lighthouse certified. The heavy involvement in the conversion to greener technolo-
gies also demonstrates how important the understanding of the life cycle perfor-
mance of products is, both in the design of the technology and the impact it has over
the life-time operation and maintenance of the vessel. A further attention to circular
economy principles in the shipping industry, will gain more attention in the future.
This requires close collaboration with the shipowner and the shipyard. This 30-years
journey has also provided knowledge about the CapSEM toolbox and how the vari-
ous methods can be used for different shipyard operations, as demonstrated by the
example with the upgrade of the floating dock. The environmental accounting for
this follows the input-output calculation method and the principles for cleaner pro-
duction at Level 1.
In closing, this case is an example of how early environmental strategies, com-
bined with practical work and visionary leadership, can lead to the greening of the
shipyard industry.

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Chapter 19
A Transportation Planning Decision
Support System

Dina Margrethe Aspen

Abstract In this chapter, the CapSEM toolbox is explored, applied, and evaluated
in the context of transportation planning and policy-making. Transportation system
elements are analyzed across all four CapSEM levels to identify relevant tools to
utilize in decision support systems to address sustainability in the sector. The tool-
box is applied to a strategic transportation planning case study. The application
demonstrates how the framework may be used to structure and stack models across
system and performance levels to handle transportation modeling and
stakeholder complexity.

19.1 Introduction

The transportation sector provides critical mobility services to society, ensuring the
movement of goods and people. However, the sector also significantly impacts
the global and local environment. The sector accounts for 24% of global direct CO2
emissions from fuel combustion (IEA 2020) and has increased its annual green-
house gas emissions faster than any other societal sector since 2010 (IPCC 2022).
Transportation also contributes significantly to NOx emissions that may have
adverse health effects. In Europe, the sector accounted for 55% of all NOx emissions
in 2017 (EEA 2019). Appraising sustainability performance and improvement path-
ways requires tools that handle the scale and complexity of transportation systems.
This entails addressing sustainability across multiple systems and domains in pro-
viding holistic appraisals to support planners and policy-makers. The Capacity
Building in Environmental and Sustainability Management (CapSEM) toolbox
offers structure and methods for addressing sustainability across variable system
and performance levels. In this chapter, the CapSEM toolbox is explored, applied,

D. M. Aspen (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]

© The Author(s) 2023 197

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_19
198 D. M. Aspen

and evaluated in the context of transportation planning decision support systems

(DSS). A case study is provided to determine its value and contribution to analyzing
and solving complex sustainability challenges in the sector.

19.2 Exploring the Toolbox in the Transportation Sector

The CapSEM toolbox organizes approaches to appraise sustainability across pro-

cess, product, organizational and system levels (Fet and Knudsen 2021). Each level
has its distinct system and performance scope: Ascending across the four levels of
the framework implies moving from low to high system complexity and narrow to
broad scope of sustainability performance (Fet and Knudsen 2021). In transporta-
tion planning, multiple levels often need to be addressed simultaneously as techni-
cal, operational, and system-wide conditions need to be viewed in concert to
understand the implications of transportation policies.
Table 19.1 lists elements to address improving the performance of transportation
systems and associated tools for assessing them. Process change (Level 1) concerns
production processes in the studied system (Fet and Knudsen 2021). Critical pro-
cesses in transportation systems concern energy conversion to produce transport
work. The inputs and outputs from these processes significantly impact the environ-
ment, particularly through resource depletion and air emissions. In order to assess
the consequences of alternative energy carriers, conversion and abatement technolo-
gies, input-output based models are necessary.
At the product and value chain level (Level 2), the scope increases beyond opera-
tional impacts to include upstream and downstream impacts. At this level, addi-
tional input factors beyond energy carriers to produce transportation services such
as materials, chemicals, and other consumables are also important. Life cycle
assessment methods may be used to evaluate alternative transport options to avoid
temporal or spatial problem-shifting of environmental and other sustainability
impacts.
At the organizational level (Level 3), managerial and operational concerns are
addressed, extending from processes and product systems to also encompass human
behavior. Therefore, aspects related to economic and human factors must also be

Table 19.1 The CapSEM toolbox for transportation system sustainability appraisal
CapSEM
level Unit of study Tool
Process Energy conversion, e.g., engine combustion Input – Output analysis
Product Fuels, materials and chemicals Life cycle assessment
Operational Route choice, speed and technology KPIs, OPIs, preference
deployment modeling
System Regulation and policies at regional level SE, system analysis
19 A Transportation Planning Decision Support System 199

considered at this level (Fet and Knudsen 2021). This may be translated to the oper-
ational features of the transportation system. The decisions and actions of multiple
actors combine to produce the total system behavior and, ultimately, performance.
Actors’ preferences and behavioral logics strongly influence their operation of
transport technologies, such as choice of transportation modes, routes, and speed
(Díez-Gutiérrez and Babri 2020). To assess improvement measures at this level,
preference modeling, key performance indicators (KPIs), and operational perfor-
mance indicators (OPIs) may be deployed along with models on lower levels to
understand the effects operational measures.
Lastly, at the system level (Level 4), holistic transportation planning, policies
and regulation are of key interest. This is critical as optimizing subsets of the trans-
portation system may provide effects that counteract overall system performance
improvement. Tools for systems modeling, design, and assessment are required to
provide a holistic perspective in planning and policy making.
In addition to providing a useful system breakdown structure of units of study
and associated tools, there is also a cumulative aspect of the value of the CapSEM
Model when applied to develop decision support systems in transportation plan-
ning. Information and knowledge retrieved at any level is relevant to inform higher
levels. For instance, a life cycle assessment (Level 2) of alternative fuels also
requires considering their combustion process characteristics (Level 1). A transpor-
tation system assessment (Level 4) requires a model that captures the system
dynamics in a defined area where information from all previous levels (Levels 1–3)
is included.

19.3 Application to a Transportation Planning Case Study

To illustrate the application of CapSEM, a case study from the Geirangerfjord World
Heritage Site area is used, where authorities and transportation system actors need
to balance the economic, social and environmental impacts related to tourism in the
area. In 2018, the Norwegian parliament adopted a zero-emission regulation for
ship traffic in the Norwegian fjords designated as world heritage sites by 2026
(Stortinget 2022). The resolution posed a complex problem to stakeholders in the
Geirangerfjord area as it entailed technological, economic and logistical challenges.
This required multiple actors to jointly assess alternative strategic responses to
meeting the zero-emission requirements. As the transportation system includes land
and sea traffic related to regular and tourist-based activities, the assessment rapidly
increased in complexity. In order to provide a system-level assessment, tools from
all levels in the CapSEM toolbox were utilized to build a holistic decision support
system. Figure 19.1 shows the DSS resulting from this application, which is further
elaborated in subsequent sections.
200 D. M. Aspen

Fig. 19.1 Models and tools in the transportation planning decision support system across
CapSEM Levels

19.3.1 Using CapSEM Tools to Develop DSS

for Transportation Planning

The system-level responses to the regulation require structuring and modeling deci-
sions and scenarios involving multiple actors. To establish a joint problem state-
ment, the SPADE methodology was used. SPADE is a soft systems engineering
approach valuable in handling complex problems in multi-actor environments
(Aspen, Haskins, and Fet 2018; Haskins 2008). The methodology was applied to
identify stakeholders (S), problems (P), and alternative strategies (A) to synthesize
a decision analytical structure (D) for further modeling and evaluation (E). The
stakeholder analysis helped classify key actors to include in the subsequent problem
formulation. These included cruise companies, port authorities, transport compa-
nies, tourist operators and politicians. The problem formulation helped structure
strategic responses to the regulation and identify uncertainties, scenarios, and key
performance indicators to use in the subsequent modeling and analysis.
Next, a transportation system simulation model was established. As both road
and sea traffic would be affected by the zero-emission resolution and respond inter-
actively to alternative strategic actions taken, two separate models were developed
and connected to assess the overall dynamic system response. The land traffic model
19 A Transportation Planning Decision Support System 201

handled all transport on road links in the area and included a module to specify
cruise characteristics. The sea traffic model handled cruise ship activity and local
ferry transport. The combined model made it possible to estimate sustainability per-
formance metrics such as air emissions and traffic congestion. More elaborate infor-
mation about transport models and parameters may be found in Díez-Gutiérrez and
Babri (2020, 2022), Johansen (2021) and Johansen, et al. (2021).
In order to estimate air emissions in a holistic simulation model, several compo-
nents were developed using tools across levels 1–3 in the CapSEM toolbox. Firstly,
models were developed to predict operational responses (level 3) to various pertur-
bations in the transportation system. This entailed addressing traveler preferences
and impacts on e.g. route choice (Díez-Gutiérrez and Babri 2022). On this level,
models to derive energy consumption for various operational patterns in road and
sea traffic were also established (Aspen, Johansen and Babri 2020). Life cycle
inventory data was used to establish emission factors (Level 2) from alternative
fuels in sea traffic (Winnes and Fridell, 2010). Lastly, process models (Level 1) to
derive emissions for various operational profiles, fuels, and abatement technologies
were created (Aspen et al., 2020, Johansen 2021, Johansen et al. 2021).
The four-level approach enabled holistic and comprehensive analyses and evalu-
ation of strategic policy responses for key transportation actors. The comprehensive
study included assessment criteria across all sustainability dimensions, but for sim-
plicity, a truncated illustration of the decision support system and associated tools
deployed is shown in Fig. 19.1.

19.3.2 Insights Gained from Model Deployment

The application of systems engineering (Level 4) provided several problem struc-

turing elements, such as definition of system boundaries, key stakeholders, a speci-
fied set of strategies, scenarios, and performance evaluation criteria. Figure 19.2
shows the study area with the strategic transport responses to the new regulation
from the multi-stakeholder group consulted. Through their engagement, five main
strategies were defined to explore transportation patterns for visitors to Geiranger
based on alternative cruise traffic routing. For all strategies, cruise ship emissions
were calculated based on a configuration of marine gas oil with exhaust gas clean-
ing technology installed (SCR). Strategy 1 (S1) was to work toward business as
usual (BAU) which represents the current situation where cruise ships call to port in
Geiranger. This would require delayed enforcement or reversal of the parliament
regulation. Strategy 2 (S2) was to work towards a dispensation for zero-emission
sailing in a “blue corridor” within the world heritage area. Strategy 3 (S3) was to
develop a new cruise port outside the world heritage area in the Stranda village.
Strategy 4 (S4) was to take no action and make cruise ships call to nearby ports
outside the world heritage area, while strategy 5 (S5) was to route cruise ships
outside the entire area, visiting other sites than the ports within the study area.
Within all scenarios, various combinations of land traffic (bus) and zero-emission
202 D. M. Aspen

Fig. 19.2 Summary of boundaries and strategies defined in the problem structuring process. The
map is created in the Norgeskart portal by ©Kartverket

CO2-emissions NOx-emissions

250 1,200

200 1,000

800
Tonn CO2

150
Kg NOx

600
100
400
50
200
0 0
S1 S2 S3 S4 S5 S1 S2 S3 S4 S5
BAU Blue New Nearby No BAU Blue New Nearby No
corridor harbor harbors cruise corridor harbor harbors cruise

Cruise (MGO + SCR) Cruise generated land traffic Cruise (MGO + SCR) Cruise generated land traffic
Regular land traffic Regular land traffic

Fig. 19.3 Total CO2 and NOx emissions in the study area under a medium scenario

vessels to bring visitors to various sites in the Geiranger village were also com-
puted. To account for uncertainties, scenarios for high, medium and low visitor
volumes were also used when assessing strategies.
By deploying models at all CapSEM Levels, it was possible to assess the total
transportation system performance across all strategies and scenarios. Figure 19.3
shows selected results from the broader sustainability impact assessment, display-
ing the CO2 and NOx emissions for a medium scenario where a bus roundtrip is
19 A Transportation Planning Decision Support System 203

assumed for visitors traveling between alternative ports and the Geiranger village.
The figure illustrates that potential cruise-generated bus traffic would only contrib-
ute to a small portion of the total transport-related air emissions in the study area.
This insight was critical as several stakeholders were concerned about problem
shifting through the transferal of emissions from sea to land traffic. The analysis
showed that emissions from road traffic were negligible compared to emissions
from cruise ships and that cruise port location was of a greater importance.
Another critical parameter of concern was the potential for traffic congestion on
road links in the study area due to cruise traffic rerouting. As cruise-generated bus
traffic would increase significantly following strategies 1–4, an estimation of
reduced speed compared to the respective speed limit was performed for each road
segment under a maximum traffic scenario. The results in Fig. 19.4 show that the
Blue Corridor strategy generated the highest level of congestion on road links in the

Fig. 19.4 Congestion on road links with cruise generated bus transport across strategies 1–4 under
a maximum scenario. (Green link: no congestion, yellow link: medium congestion level,
red link: high congestion level)
204 D. M. Aspen

study area. For this strategy, it was evident that local transport between cruise port
and the village had to be accommodated partially or wholly by sea transport compli-
ant with the regulatory zero-emission requirement.

19.3.3 Concluding Remarks

In this chapter, the CapSEM toolbox has been explored and applied for developing
a decision support system in the transport sector. The explicit formulation and com-
bination of models within the four-level CapSEM structure proved useful in address-
ing transportation system sustainability issues in the case study.
From a modeling and analysis perspective, the CapSEM Levels helped organize
a model breakdown structure in the DSS. The sustainability performance of the total
transportation system depends on elements at all CapSEM levels: Physical input-­
output processes in energy conversion, techno-economic processes in product sys-
tems, the operational behavior of transport system actors and material, and strategic
policy and planning processes at the system level. At the same time, models were
designed to let information propagate through the layers facilitating increasingly
complex inferences about the sustainability performance of transportation mea-
sures. This was convenient as it helped manage and exploit multiple domains and
logics necessary to support transportation planning. It also made it easier to com-
partmentalize critical factors and assumptions in the model structure and keep track
of key parameters and their sensitivities.
From the viewpoint of stakeholder engagement and interaction, the approach
also facilitated a clear and transparent dialogue between analysts and various
decision-­makers on the data, assumptions, and reasoning at each system level. This
is important to ensure stakeholder comprehension, judgment, and utilization of
information and knowledge in transportation planning processes.
This case provides a simple illustration of how the CapSEM Model may be
applied in the transport sector. While the chapter only focused on assessing air emis-
sions from various responses to environmental regulation, several other sustainabil-
ity aspects could and should be explored utilizing the CapSEM Model and associated
tools. This includes other environmental impacts, such as land use and ecological
impacts, as well as social and economic aspects influenced by various transportation
system planning strategies.

References

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tion decisions for marine emission reduction technologies. Syst Eng 21(4):388–397. https://
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Chapter 20
First Steps Towards Sustainable Waste
Management

Øystein Peder Solevåg

Abstract Waste management started off as a public health issue. Today, the waste
business is an important force in developing sustainable development and circular
economy. New policies and regulations represent an opportunity for circularity, but
there is still a long way to go in achieving a truly circular economy. The Circularity
Gap Report 2020 indicated that the global economy is only 8,6 % circular. Industrial
ecology and material flow analysis are important tools, not only for developing local
and regional waste solutions, but also in the development of new global circular
business models. In the Ålesund region, new sorting measures have increased recy-
cling, from 32 % in 2017 to 45 % in 2019. New measures will be needed to reach
national targets set for 2025. As the current global use of resources is unsustainable,
and as current waste business models are insufficient to achieve circular economy,
the next decade is likely to experience a rapid innovation of new business models
challenging traditional waste management companies. This chapter presents data
collected during a case study conducted in 2020.

20.1 Introduction: The Historical Development

of Waste Management

Historically, waste management was introduced as a public health measure in larger

cities. Removal of waste, which was mainly of organic origin, was necessary to
reduce the risk of vector induced disease, e.g., through vermin or drinking water.
Removed waste was either diluted in city waterways or reused as fertilizer in food
production, inside and outside nearby cities (Torstenson 1997).
As industrial production developed, new materials, chemicals and other by-­
products where introduced, and with increased knowledge on the detrimental effects
of pollution on human health and the environment, the need for more complex waste
management solutions became apparent. During the twentieth century, waste

Ø. P. Solevåg (*)
ARIM Company Ltd., Ålesund, Norway
e-mail: [email protected]

© The Author(s) 2023 207

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_20
208 Ø. P. Solevåg

management was developed as an economic service, the Waste Business was estab-
lished. This newly established business organised collection and transportation of
waste, surplus chemicals og other by-products, as well as establishing landfills and
waste incineration plants. For a few materials, such as metals, recycling systems
were established (Bodamer 2018). This development is mainly seen in Northern
Europe. Globally, several countries have not moved forward in at the same pace.
Several developing countries have only to a limited extent developed systematic
waste collection and treatment. Marine littering is a major consequence of lack of
such systems worldwide.

20.2 Waste Management and Circular Economy

In the twenty-first century, two global trends are setting a new standard for waste
management. First, the global effects of waste and waste management are recog-
nized as crucial for sustainability. The interlinkage between global resources and
sustainability goals gives birth to the concept of circular economy (BH4S 2022).
Circular economy can be described as a system “where the value of products, mate-
rials and resources is maintained in the economy for as long as possible, and the
generation of waste minimized” (Merli 2018:705).
In the years between 1990 and 2010, cleaner production methods were applied to
achieve process optimalisation in the waste management business. Towards 2010,
life cycle assessment was applied as a planning and decision tool for the develop-
ment of new recycling solutions (Michaud 2010). As the waste management sector
was consolidating, environmental management systems were applied. Extended
producer responsibility has also been implemented as a tool to organise and finance
waste management (Kunz et al. 2018), as has eco-design (Demirel and
Danisman 2019).
There are several methodologies and indicators used to describe the circularity of
the economy. The Circularity Gap Reporting Initiative (CGRi) is an initiative of
Circle Economy, an impact organisation dedicated to accelerating the transition to
the circular economy (CGRi 2020). Using material flow analysis, this Initiative has
published global and national reports on circularity. It describes several dimensions
of the global material flow. Firstly, it describes the total amount of materials applied,
based on material type (minerals, ores, fossil fuels and biomass). Then the material
flow through the global economy (take, process, produce, provide, end of use) is
described. The share of the global material flow between global business sectors
(housing, communication, mobility, healthcare, services, consumables, and nutri-
tion) is also described. Of the 100.6 Gt materials that enters the global economy
annually, 31.0 Gt is added to stock, while only 8.6 Gt is recycled. (CGRi 2020).
In a world where the global economy is expanding, recycling of additional
resources will not be sufficient to gain sustainability (Grosse 2010), and it is impor-
tant to stress that circular economy is more than recycling of materials. Circular
economy is expected to not merely recycle materials, but also to reduce waste og
20 First Steps Towards Sustainable Waste Management 209

improve resource productivity; thus, reducing environmental impacts from produc-

tion and consumption. The International Resource Panel use the term decoupling as
the necessary result of the circular economy: “The decoupling of natural resource
use and environmental impacts from economic activity and human well-being is an
essential element in the transition to a sustainable future” (IRP 2019:28).

20.3 Waste Policies and Regulations

Since the 1990s, the waste hierarchy as presented in Fig. 20.1 has provided a tool
for developing waste policies and regulations. In Europe, the hierarchy has been
implemented as a main part of the international waste legislation. Based on this
waste hierarchy, several targets have been developed. An important target is that by
2035, 65% of all municipal waste should be re-used or recycled. Waste hierarchy
provides a direction for the development of the circular economy. However, it is
necessary to also include other elements from the CapSEM toolbox, such as design,
labelling, supply chain management and monitoring. The ‘Circular Economy
Package’, is an example of this (Stahel 2017).

20.4 Municipal Waste Management in the Ålesund Region

ÅRIM is a waste management company owned by seven municipalities in Norway.

The company was established in 2010, and the main purpose of the company is to
manage household waste from approximately 105,000 inhabitants. The collection
system for household waste was originally based on a two-bin-system, with the col-
lection of paper and plastic every month and collection of residual waste every
week. Glass and metal packaging was not collected on a household level but had to

Fig. 20.1 Waste hierarchy

210 Ø. P. Solevåg

be transported to local recycling stations. ÅRIM carried out an analysis of waste

production and composition from local households. The analysis was based on
national waste regulations, and results from LCA and carbon footprint of products
(CFP), for household waste in general (Raadal et al. 2009) and for food waste in
particular (Modahl et al. 2016). ÅRIM on average (2017–2020) received 384 kg
household waste per inhabitant per year, as shown in Table 20.1. In 2017, 32 % of
the household waste managed by ÅRIM was re-used or recycled.
In 2018, the collection system for approximately 55 % of the households in the
region was changed to a four-bin-system, with the collection of food waste and
residual waste every second week. Paper and plastic are collected once a month, as
before. In addition, glass and metal packaging is collected every second month.
Food waste is used to produce biogas and fertilizer, paper, plastic, glass, and metal
packaging are recycled while residual waste is incinerated, producing electricity
and heat. The results of the change in collection system are shown in Table 20.2.
The change to the collection system has improved the sustainability of waste
management from households in ÅRIM, as more waste is recycled and less is incin-
erated. In 2019, 45 % of the household waste managed by ÅRIM was re-used or
recycled. From 2023, all households will have a four-bin collection system.
However, further work is needed to identify any necessary circular strategies. This
is a challenge for most Norwegian municipalities (Norwegian Environment Agency
2021). In its role as a waste management company ÅRIM is unlikely to achieve
these goals on its own. A partnership between industry, waste management compa-
nies and regulatory authorities is necessary.

Table 20.1 Waste per inhabitant (measured in kg waste per inhabitant per year (average
2017–2020) (Annual reports published at www.arim.no and internal data)
Collected at household level (incl. glass and metal 230 kg
packaging)
Brought to recycling stations (bulky and hazardous waste) 154 kg
Total waste production 384 kg

Table 20.2 Collected waste (Annual reports published at www.arim.no plus internal data)
Collected kg per Collected kg per Change kg per
Categories inhabitant 2017 inhabitant 2019 inhabitant
Food waste 0 35 + 36
Paper waste 39 34 -5
Plastic packaging 5 7 +2
Glass and metal 10 14 +4
packaging
Residual waste 182 133 - 49
Total collected 237 227 - 10
20 First Steps Towards Sustainable Waste Management 211

20.5 Applying the CapSEM Model to Local

Waste Management

The CapSEM Model is useful in many ways. For ÅRIM it can be used as a top-­
down framework for the waste collecting system ÅRIM is using, which is based
upon international and national regulations. These regulations are based on the prin-
ciples of sustainability and circular economy (change on the system level is defined
as Level 4 in the CapSEM Model). The regulations are implemented through envi-
ronmental management systems and reporting systems in ÅRIM (change on the
organizational level is defined as Level 3), established for providing all interested
parties (such as authorities, owners, customers, and neighbours) with necessary
information. In order to achieve recycling targets, ÅRIM must inform consumers in
the regions about how to recycle, and also about how to buy products that are more
durable, can be repaired or recycled (change on the product level is defined as Level
2). Finally, ÅRIM also needs to implement measures on our own waste management
facilities to comply with existing and new environmental legislation, preventing
emissions to water, air and soil (change on the production level is defined as Level 1).

20.6 Concluding Remarks

The types of changes in global systems needed to reach UN Sustainability

Development Goals requires a fundamental shift in the purpose of business and
almost every aspect of how it is conducted. There is a need for innovation of more
sustainable business models (Bocken et al. 2014). Sustainable business model inno-
vation might be described as an important link between Level 3 and Level 4 in the
CapSEM model. Business model innovation is necessary to achieve system change,
but it also represents a threat to organisations which are unable to adapt. As the cur-
rent use of resources is unsustainable, and as the current waste business models are
insufficient for achieving a circular economy, the next decade is likely to experience
a rapid innovation of new business models challenging the traditional waste man-
agement companies.

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tusen år. Oslo: ProArk. Available via : https://www.nb.no/items/URN:NBN:no-­nb_digi-
bok_2017091207132. Accessed 29 Jun 2022 [Norwegian]

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
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the copyright holder.
 Part IV
The Road Ahead
Chapter 21
Transition to Sustainability

Annik Magerholm Fet and Martina Keitsch

Abstract Companies are increasingly faced with the challenge of how to imple-
ment sustainability strategies in their business performances. This chapter discusses
transition processes, presents mechanisms, and clarifies how tools and methodolo-
gies from Part II of this book can help companies in the transition process towards
more sustainable practices. It further elaborates on how the CapSEM Model con-
tributes to bottom-up approaches to sustainability transition processes as well as the
importance of stakeholder collaboration and involvement.

21.1 Introduction

The different parts of this book have illustrated how the tools in the CapSEM Model
can be used systematically to build knowledge and competence in sustainability
towards more systemic and inclusive interactions. It is important to perceive the
development of the model as a transitionary process where sustainability strategies
become increasingly holistic and comprehensive, while the tools on each level build
upon each other. Each wave movement between the levels, (Cf Fig. 2.1 in Chap. 2),
symbolizes a growth of the number of sustainability impacts managed and stake-
holders incorporated. The CapSEM Model provides thereby a common onset for
several actors regarding their interplay and collaboration.

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
M. Keitsch
Department of Design, NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 215

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_21
216 A. M. Fet and M. Keitsch

21.2 The CapSEM Model as a Means for Transition

A transition to sustainability is defined as a “radical transformation towards a sus-

tainable society, as a response to a number of persistent problems confronting con-
temporary modern societies” (Grin et al. 2010). Transitional change refers here not
only to an understanding of how the tools presented in this book can help companies
to move from a lower level to a higher level of maturity, but also how they can
stimulate their efforts to develop own pathways that will enable a shift towards sus-
tainability. Capacity building to achieve transition to sustainability thereby requires
generating, structuring, storing, retrieving, communicating, and acting upon infor-
mation and knowledge. Transitions are achieved through decisions to trigger small
or large-scale change from one state to another.
The CapSEM Model represents the toolbox for transition to sustainability. Level
1 and 2 are analytical methods for quantification of environmental aspects and
impacts, and tools for improvement as, for example, Cleaner Production on Level 1
or Supply Chain Management on Level 2, while Level 3 tools focus on how to
achieve strategic changes through dialogues with stakeholders. Level 4 addresses
larger systems as for example cities and their role to meet the needs of communities,
providing leading visions and strategies in achieving sustainability in collaboration
with stakeholders.

21.3 A Toolbox for Transition to Sustainability

Looking back to Part I of this book, Chap. 2 gives an overview of earlier models that
have led up to the CapSEM Model as presented in Fig. 2.1. While Fig. 2.3 is an
attempt to classify the set of principles for environmental performance improve-
ment as appeared in the literature at that time, Fig. 2.4 shows adaptations from the
first model, most notably the addition of specific tools and methods for life cycle-
based environmental assessment management mapped along environmental perfor-
mance improvement levels.
The CapSEM Model is designed to help companies understand their role and the
relations of their actions within different levels of related systems. A systematic use
of the tools helps companies investigate the potential for appropriate actions to
change the environmental and sustainability performance related to each level (Fet
et al. 2013, Fet & Knudson 2021).
The term change on each level in the CapSEM Model is used to mean the reduc-
tion of negative impacts and increase of, or replacement with, positive impacts—
ultimately leading to strong, proactive, and holistic sustainability as companies
move toward the upper right of the model. As an organisation traverses the levels,
knowledge and tools from the previous levels are used as input to more extensive
methods, meaning that each level encompasses the level(s) below it. These small
stepwise changes have been important parts of the transition towards sustainability.
21 Transition to Sustainability 217

Over years these have led to incremental changes in business performances. An

important question is however if these steps are sufficient to meet the global chal-
lenges the world is facing.
The UN General Assembly held an international meeting entitled “Stockholm+50:
a healthy planet for the prosperity of all – our responsibility, our opportunity” in
Stockholm, Sweden, from 2–3 June 2022 (United Nations, 2022). This was a con-
ference reflecting back to the first UN conference on the human environment held
in Stockholm in 1972 (United Nations 1973). The goal of Stockholm+50 contrib-
utes to accelerate the implementation action for meeting the 17 Sustainable
Development Goals (SDGs) that define the future development agenda for
2015–2030. The aims of the SDGs advance the discussion on a better world, with
emphasis on values for human rights, justice, health, and well-being. Ecological,
social and economic developments are considered interrelated (Keitsch 2018). The
following sections discuss how the CapSEM Model responds to the SDGS, as well
as mechanisms and roadmap, and stakeholder collaboration to approach transitions
to sustainability.

21.4 The CapSEM Model Meets the SDGs

The CapSEM Model with the SDGs integrated as presented in Chap. 3, Fig. 3.3, is
a way of structuring the SDGs according to how they can be a pathway in the transi-
tion to sustainability at each of the 4 Levels. The additional value provided by the
SDGs placement in the CapSEM Model is the toolbox to be used by companies and
other organisations in this transition. The CapSEM Model helps make sense of the
many methods available for tracking, measuring and improving sustainability per-
formance by grouping them by level.
In business practice, cherry-picking of selected SDGs that neatly meet ongoing
operations is common, as is ignoring interactions between them, or failing to reflect
upon the system as a whole. A clear company strategy is needed in order to priori-
tize areas for sustainability improvement, related SDGs and targets. For that reason,
the placement of the SDGs in the CapSEM Model represents suggestions for paving
the way for business in identifying how their operations initially relate to each goal
rather than absolute positions.
If companies better understand, and engage with the goals, their ability to priori-
tize and make strong measurable contributions to their targets increases. This
includes minimizing resource use and avoiding pollution and the unnecessary
expense and disposal of resources, especially into natural systems. Input-output
(I/O)-analyses can be used to quantify material flows within a production process or
a company’s production site. Then, the quantified information can help inform deci-
sions about the best solutions for designing new or adapting processes to reduce
negative environmental impact, and meeting SDG targets, for example, for SDG
number 6, Clean water and sanitation, the increase in efficiency of water use (target
6.4) and the protection and restoration of water-related ecosystems (target 6.6). The
218 A. M. Fet and M. Keitsch

selected goals and targets for improving sustainability can be used to guide compa-
nies in selecting indicators and making strategic decisions on how to reach them
using the tools and methods at this level.
Similar reflections can be carried out for SDG 13 Climate action, SDG 14, Life
below water, and SDG 15, Life on land. It is worth mentioning that these SDGs,
placed at Level 1 are highly relevant for all levels, but the impacts on these elements
of the nature are caused by flows of material (natural resources) out of nature and
likewise into nature as a result of system interactions between natural systems and
technology, most often grouped as man-made systems.
Moving from Level 1 to Level 2 means that in addition to production processes,
all other impacts related to a product and its value chain are considered, such as
transportation of materials and components in the upstream life cycle of the prod-
uct. In addition, downstream issues of distribution, maintenance and repair during
the use phase and end of life treatment should be monitored for the entire life cycle
of the product. Development shows an increased requirement for documentation of,
for example, the carbon footprint of products. This means that the company should
take responsibility for achieving quantified information from the suppliers of mate-
rials, components, and services across the life cycle. Based on quantified informa-
tion, solutions for reducing GHG-emissions could be achieved through changes to
renewable energy sources. SDGs 7 (clean energy) and 12 (responsible consumption
and production) are therefore grouped on Level 2 to capture both upstream and
downstream value chain sustainability improvements. SDG 12 places a focus on the
entire value chain, and here SDG 7 requires that products are designed and manu-
factured for cleaner energy systems. Because Level 1 can be seen as an input, or
subsystem, to Level 2, the goals and targets at Level 1 must necessarily also be
accounted for.
SDG 8 (decent work & economic growth), SDG 9 (industry, innovation & infra-
structure), and SDG 10 (reduced inequalities) are part of the economy as illustrated
in Fig. 3.1 in Chap. 3 and are therefore placed on Level 3 in the SDG-CapSEM
Model. Pressure from public procurement and customer demands for products that
support more sustainable living or help clean-up past damage, encourage companies
to report and communicate their progress toward improved sustainability. They
must, therefore, develop their organizational strategies and practices (Level 3) in
accordance with known guidelines and frameworks including SDGs. This requires
information from the companies across all levels being dependable. For example,
that all Level 1 processes are controlled and managed in a sustainable way, that
systems for quantification of for example the carbon-footprints are in place at Level
2, and that the companies can present a certified environmental management system
at Level 3, for example according to ISO 14001, that supports the company in their
annual assessment of improvements. The tools presented for Level 3, as well as for
Levels 1 and 2, should help the company to communicate the performance and give
the stakeholders the information they need for an eventual approval of the sustain-
ability performance or ranking of the company. SDG 10 is placed on Level 3 and
relates to the social aspects of, for example, equal employment and income and
stakeholder inclusion to be mandated within the company’s sustainability
21 Transition to Sustainability 219

management systems and strategic organizational goals. SDGs 8 and 9 have also
been grouped on the organizational level. This is because they pertain to the eco-
nomic viability of a company and may further support its knowledge and innovation
development related to products that support a sustainable society.
Level 4 relates to tools, strategies and policies that drive systemic societal change
and mandate the company view itself as one actor within a network of actors. SDGs
1 (no poverty), 2 (zero hunger), 3 (good health and well-being), 4 (quality educa-
tion) and 5 (gender equality), are placed at this level as they represent the basic
criteria for thriving livelihoods. Without meeting these livelihood goals, sustain-
ability will not be reached or maintained over time. They also require that compa-
nies consider all stakeholders in their actions. SDGs 7 (affordable and cheap
energy), 16 (peace, justice and strong institutions) and 17 (partnerships for goals)
are also on Level 4 as they help companies recognize their place in the regional,
national and global system. In a smart and sustainable city system, for example,
there are increasing requirement to document the carbon footprint of subsystems,
from furniture used in public spaces and private homes, to infrastructure that is
designed for easier repair and supports smart renewable energy systems. The need
for take-back systems and sharing economy systems will also appear more fre-
quently, and industrial ecology (IE) is one of the tools for symbioses within a circu-
lar economy. Similarly, systems engineering is an important tool for seeing systems
and their interactions from a holistic perspective. Level 4 embraces also the under-
lying features of Levels 1, 2 and 3.

21.5 Mechanisms and Roadmaps

Since the first world UN conference on sustainability took place in 1972, a plethora
of models, guidelines, goals and scenarios have been produced. Some are referred
to in this book to reflect on their effect on the transition to sustainability. Mechanisms
and roadmaps such as the Taxonomy (Schütze, F & Stede, J, 2020), the Norwegian
Transparency Act relating to enterprises’ transparency and work on fundamental
human rights and decent working conditions (Transparency Act, 2022) and the
European Green Deal, the EU’s guidelines for a sustainable economy (European
commission, 2019), are important to facilitate sustainable transitions. In addition,
there is an increased focus on ESG-reporting since the financial sector has become
more active in requiring business to hold and report this type of information. The
EU Taxonomy, the Transparency Act and ESG-reporting scheme are presented in
Chap. 7.
The European Green Deal contains several opportunities for moving towards
sustainable business performances such as innovation-based competitiveness. This
concerns the potential for low-emission technologies, and sustainable products and
services. Business leaders tend to take the European Green Deal on board as a
growth strategy. However, systemic transformation delivers the highest growth in
medium to long-term run, and short-term benefits are questionable. Further, authors
220 A. M. Fet and M. Keitsch

such as Pianta et al. (2020) criticize among others the EU’s weak policy tools for
initiating change in business:
Business has no clear set of incentives for investing in sustainable production, and Member
States have no official political constraints that may push governments to implement a
Green Deal agenda. (Ibid, 635)

According to Stockolm+50 a common political and business focus on qualitative

growth can become an important driver to initiate transition to sustainability. Future
industry might not be able to expand by manufacturing more products but by inno-
vation and development of products and service of higher quality. Creative efforts
of businesses and governments both contribute to qualitative growth.
The main goals of the European Green Deal are:
EU to become climate neutral by 2050
1. Protect humans, animals, and plants by cutting pollution
2. Help companies become world leaders in clean products and technologies
3. Ensure a just and inclusive transition.
The way in which the Green Deal can be understood as an opportunity for business
management as a combination of sustainability motivation and regulation is dis-
cussed in the Green Deal Roadmap (European Commission 2019). Its main ambi-
tions are energy security, climate neutrality, resource efficiency and circularity,
smart mobility and toxic-free environment are among the areas which are focused
on. In addition, the use of regulation and standardisation, investment and innova-
tion, national reforms, dialogue with social partners and international cooperation
will be strengthened (European Commission 2019).

21.6 Stakeholder Collaboration

Sustainable Development Goals define a future development agenda to encourage

the international community to move toward a global sustainable future in the next
few decades. Against this backdrop, the implementation of the SDGs raises ques-
tions regarding human–nature relationships in terms of sustainable resource use
within the limits of ecosystems, but also in terms of just distribution, fair societies,
and equal opportunities. Realising the SDGs in both broad arenas, resource con-
sumption and nature conservation, and inclusion and justice, societal stakeholder
collaboration is crucial. This means involving, among others, societal actors such as
academics, business and political decision-makers on all levels in the planning and
development of SDG strategies. The learning outcome of stakeholder collaboration
should not be underestimated (Kerkhof et al. 2005).
The CapSEM Model facilitates stakeholder collaboration through the tools that
support the design and uptake of sustainable approaches for local, regional, and
global sustainable development. Although tools are more selective on Level 1 and
based mainly on organisations making improvements which benefit themselves,
21 Transition to Sustainability 221

rather than the greater good, stakeholder involvement is required for companies to
make sustainability improvements at all other levels.
Level 2 improvements rely, for example, on existing knowledge and common
knowledge generation from various actors on the materials of a product, associated
costs, maintenance practices, transportation and marketing, to name but a few, since
stakeholder collaboration takes place in many parts of the products’ and company’s
value chains.
Level 3 requires communication with stakeholders to best define reporting, mea-
suring and management plans for improved sustainability. For example, in estab-
lishing strategy benchmarks, a company will need to select environmental and
social performance indicators in collaboration with stakeholders to measure their
progress. In this case, the collaboration comprises employees, consumers, local
community members, marketing firms and company management.
At Level 4, stakeholders are extensively involved as part of an overall systems
change on the macro level, with their input providing necessary information for all
tools at this level.
The following chapters illustrate how different stakeholders benefit from the
model and pinpoints strategies for further development. Chap. 22 has a focus on
business model innovation for sustainability (BMIfS) as a means for enhancing the
transition on the strategic organisation level, while Chap. 23 looks at decision sup-
port systems for Level 4 of the CapSEM Model, i.e., system change, which is a
complex undertaking due to the high number of stakeholders involved.

21.7 Conclusion

This chapter discussed approaches and mechanisms that stimulate processes for
transitions to sustainability in business and other organisations and connects them
with the CapSEM Model. Tools for analysing the environmental aspects and impacts
are placed on Levels 1 and 2 in the model. Decisions about the systems to be studied
and the elements of sustainability to be covered by the analyses, are taken at an
organisational level, Level 3, and at a societal level, Level 4. This can be viewed as
a bottom-up approach in the process of a transition to sustainability. Competence
among business leaders and politicians and their ability to take a holistic systems
perspective are therefore of paramount importance in achieving such transitions.

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Fet AM, Knudson H (2021) An approach to sustainability management across systemic levels: the
capacity-building in sustainability and environmental management model (CapSEM-model),
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Keitsch M (2018) Structuring ethical interpretations of the sustainable development goals—con-
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menneskerettigheter og anstendige arbeidsforhold (åpenhetsloven / Transparency Act),
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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
credit to the original author(s) and the source, provide a link to the Creative Commons license and
indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 22
Helping Business Contribute
to a Sustainability Transition: Archetypes
of Business Models for Sustainability

Haley Knudson and Martina Keitsch

Abstract This chapter discusses business models for sustainability (BMfS). The
objective for BMfS is to increase positive or decrease negative impacts of business
performance on the environment and society, simultaneously providing long-term
well-being of the organization and its stakeholders. The chapter looks at BMfS from
a systems perspective and analyses how sustainable values are integrated into orga-
nizations’ performances. Furthermore, benefits and challenges of BMfS related to
capacity building, stakeholder inclusion and the scope of innovations inherent in the
models are discussed. Conclusively, the chapter appraises the potential of BMfS to
contribute to macro level transition to sustainability.

22.1 Introduction

Business models for sustainability (BMfS) continue to gain attention, both in academic
research and in practice as a means to achieve sustainability innovation and restructuring
in organizations. Business model innovation for sustainability (BMIfS) is the process of
increasing positive or decreasing negative impacts on the environment and society that
also allows the long-term well-being of the organization and its stakeholders
(Geissdoerfer et al. 2018). The complex process requires that an organization situate
itself within its network of actors to see how sustainability-­focused innovations will
permeate its business model (BM) activities and effects on wider society.
BMfS archetypes are introduced in Part II Chap. 9. These are common patterns
of BMfS that have been categorized according to their type of sustainability innova-
tion (Bocken et al. 2014). Based on the archetypes’ guidance, organizations can
identify types of innovative and strategic activities that can help infuse an existing

H. Knudson (*) ·
Department of International Business, NTNU, Trondheim, Norway
e-mail: [email protected]
M. Keitsch
Department of Design, NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 223

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_22
224 H. Knudson and M. Keitsch

BM with sustainability or create a completely new model with sustainability as the

core logic. The archetypes provide inspiration to organizations by demonstrating
how BMfS differ from traditional BMs and innovations that have worked for others.
However, the focus on one innovation mechanism or type within each archetype
may encourage a limited view to sustainability innovation in BMs, which in turn
may influence the sustainability perception and performance in the organization.
Taking only the archetypes perspective may also hinder the full integration of sus-
tainability into an organization’s value proposition, value creation and delivery, and
value capture activities – preventing the creation of a business model that helps
mediate environmental and social needs. On the other hand, more holistic archetype
implementation, i.e., models which provide ways to infuse stakeholder needs and
environmental objectives through the whole business model, can enhance organiza-
tions’ sustainability performances significantly on a systems level.
The transition to sustainability and meeting the objectives set by the UN
Sustainable Development Goals (SDGs) (United Nations General Assembly 2015)
requires a holistic and transdisciplinary approach that is rooted strategically in an
organization and therefore demands broader thinking than the identification and
implementation of a single potential archetype. Organizations must consider their
full value chain performance, including their network of stakeholders, to build and
positively impact social and environmental sustainability in the long-term. Such
requires the redefinition of value within the organization to include both financial
and non-financial (social and environmental) value forms, and their exchange and
capture within the business model (Evans et al. 2017). More holistic archetypes may
therefore be identified in the future, that influence and direct the organization’s sus-
tainability awareness and performance towards the wider system of which it is part.
The next sections of this chapter discuss BMfS archetypes in relation to the fol-
lowing topics:
(a) The process of BMIfS and the integration of sustainable value into systemic
organization performance,
(b) benefits and challenges for capacity building in organizations’ sustainability
and environmental management portfolios,
(c) the inclusion of stakeholders in existing and future BMfS design and realiza-
tion, and
(d) the scopes of innovation embedded in the archetypes and their impact on chang-
ing societal systems.
Conclusively, their potential to contribute to developing changes and innovations at the
organizational level that contribute to system-level sustainability transition is appraised.

22.2 Business Models for Sustainability

Innovation, knowledge building and strategic change for sustainability are dependent on
a shift in the rationales and values that drive an organization (Laasch 2018, 2019). This
requires, among others, a turn from creating value for customers and shareholders, to
22 Helping Business Contribute to a Sustainability Transition: Archetypes of Business… 225

creating, or at least not destroying, value for all stakeholders, including the environment
and society as key players (Boons and Lüdeke-Freund 2013; Bocken et al. 2014).
Stakeholders are here understood as individuals and groups, who have an interest in the
situation and its development or could potentially be affected by it.
Traditional BMs have been based on a shareholder primacy perspective, selling
goods and services to customers with the lowest cost to the organization to ensure
the highest financial return and value added for its shareholders. A BMfS, on the
other hand, creates value beyond the organization and its shareholders to actively
integrate the needs of stakeholders into what it delivers to the customer (value prop-
osition) along with its upstream and downstream activities and resources (value
creation and delivery). Additionally, a BMfS bases itself in the exchange of social,
environmental and economic value with its stakeholders and value chain actors
(value capture), rather than in only financial flows of costs and benefits.
The term ‘value’ and its variants comprise multifocal interpretations and have
has been extensively discussed in management sciences. A general definition of
‘value added’ is: “the difference between the value of a firm’s output and the cost of
the firm’s inputs” and it is seen as “the key measure of corporate success” (Kay
1995) (p. 19). Value creation depends on the relative amount of value that is subjec-
tively realized by an individual, an organization, or a society connected to the will-
ingness to exchange a monetary amount for the value received. Moreover, a more
recent ‘value-creation’ variant focuses, supplementary to the monetary value, on the
resource-creation potential of firms considering, knowledge, innovation, social net-
works, and sustainable growth (Lepak et al. 2007).
BMfS are rooted in sustainable value that “incorporates economic, environmen-
tal and social benefits conceptualized as value forms” (Evans et al. 2017 p. 601).
These value forms should then be considered within and across the BM components
of value proposition, value creation and delivery, and value capture. Figure 22.1
provides examples of economic, environmental, and social value forms that contrib-
ute to sustainable value creation.

Fig. 22.1 Sustainable

value. (Evans et al. 2017)
Environmental
value forms
Renewable resource, low
emissions, low waste,
biodiversity, pollution prevention
(air, water, land)

Sustainable
Social Value Economic
value forms value forms
Equality and diversity, Profit, return on
well-being, community investments, financial
development, secure resilience, long-term
livelihood, labour viabliity, business
standards, health and stability
safety
226 H. Knudson and M. Keitsch

22.2.1 Business Model Innovation for Sustainability

Innovation is a process of creating new value. Because sustainability objectives

require departure from the traditional logic of purely profit-making BMs, the devel-
opment, adaptation and advancement of BMfS should be approached as an innova-
tive process. Disruptive innovation is specifically interesting to develop BMfS since
it transforms businesses on a systems level by, for example, making BMfS appli-
cable for a broader range of companies, and obsoleteing more traditional competi-
tors. Traditional business model innovation (BMI) literature, focuses on the process
of the successful commercialization of new technologies or ideas through an orga-
nization’s BM (Chesbrough 2007). BMIfS extends this by adding or adapting
aspects, technologies and mechanisms that reduce negative and increase positive
sustainability impacts in the organization’s BM, and that support the long-term via-
bility of the organization and its network of stakeholders (Boons and Lüdeke-Freund
2013; Geissdoerfer et al. 2018; Sinkovics et al. 2021).
Research on sustainability-oriented innovation has addressed several individual
elements, for example, how to make supply chains more sustainable or how to use
corporate responsibility activities to create value for employees and their families.
Each of these technological or social innovations contribute to making the BM one
that supports sustainability, but BMfS also require that the BM itself is reconceptu-
alized to create and capture sustainable value within its wide stakeholder network
(Stubbs and Cocklin 2008; Evans et al. 2017). BMIfS therefore requires changing
how is business is done so that strategic aims for sustainability infiltrate the BM and
its activities (Schaltegger et al. 2012a). Based on their sustainability strategy, an
organization may choose to take a defensive, accommodative or proactive approach
to innovating its BM (Schaltegger et al. 2016). These range, respectively, from mak-
ing small incremental changes to mitigate risk and reduce cost, to improving inter-
nal processes that consider sustainability on some level, to the redesign of the core
logic of the business for sustainable value (Schaltegger et al. 2016). It is the proac-
tive approach that helps organizations initiate and guide a wider sustainability tran-
sition, while accommodative and defensive approaches are typically in response to
top-down sustainability mandates or policies on the corporate, governmental, or
societal levels. A BM with sustainability at its core requires that the business model
itself is reconceptualized to create and capture sustainable value within its wide
stakeholder network (Stubbs and Cocklin 2008; Evans et al. 2017).
A holistic approach that considers sustainability across the BM, and that is rep-
resentative of the system of interactions between BM components and stakeholders
is therefore needed (Boons and Lüdeke-Freund 2013; Abdelkafi and Täuscher 2016;
Proka et al. 2018). This requires recognition of the interdependencies between an
organization, its business model, its partners and surroundings, and expands the
scope from small incremental modifications, to innovative change with environ-
mental and social needs at the center (Wells 2013). BMs are the mediating layer
between operational activities and organizational strategy (Osterwalder 2004;
Rauter et al. 2017), and BMI processes therefore serve as a link between the internal
22 Helping Business Contribute to a Sustainability Transition: Archetypes of Business… 227

Society Value forms

Value forms
Focal firm
Value forms

Value forms Supplier

Natural
environment
Value forms

Customer

Fig. 22.2 Sustainable value network. (Evans et al. 2017)

and external business environment, strategic aims, and their operationalization in

the BM structures and activities. When markets, regulations or stakeholder expecta-
tions change, the organization can then assess the system of activities that make up
its value network (Zott and Amit 2010) to identify how to innovate within the BMfS
in line with its strategic aims and performance objectives. Figure 22.2 provides a
representation of an organization’s value network in which the relationships between
the focal organization and its stakeholders are shown as value forms (exhibited in
Fig. 22.1). For example, relationships with societal stakeholders may bring.
The shift in ideology of the current market, from profit as the only value, to the
incorporation of environmental and social value, requires, in itself, a different way
of thinking that transforms the way organizations and society place value on con-
sumption and short-term thinking. By innovating and re-designing their BMfS,
organizations can contribute to environmental and social sustainability and facilitate
attitude change of their consumers and stakeholders to shift demand toward sustain-
ability. On a macro level, disruptive innovation in BMfS design is a key factor to
promote, for example, a circular economy through transformation of the linear mar-
ket (Diepenmaat et al. 2020).
BMI for sustainability requires the simultaneous consideration of the business
model and its value network, the three dimensions of sustainable value, active
engagement with stakeholders and the long-term perspective, all while organiza-
tions have to manage day-to-day operations and viability (Stubbs and Cocklin
2008). Although complex, by situating its BM within the value network, an organi-
zation can use it as a mediator between institutional and societal influences and
sustainability innovation within its boundaries (Lüdeke-Freund et al. 2018; Lüdeke-
Freund 2020). This enables the organization to react to external influences, such as
new initiatives or regulations, and to support and incorporate stakeholder needs. The
BMfS is then a framework through which organizational boundaries must expand to
expose interactions with social and environmental actors in the business and institu-
tional contexts (Boons and Lüdeke-Freund 2013; Brehmer et al. 2018).
228 H. Knudson and M. Keitsch

22.2.2 Barriers to BMI for Sustainability

Business model research, and by extension BMfS research, has been conducted
from multiple perspectives spanning from classification and architectures to opera-
tional and strategic mechanisms, taking both static and innovative process develop-
ment approaches (Morris et al. 2005; Demil and Lecocq 2010; Foss and Saebi 2017;
Ritter and Lettl 2018; Geissdoerfer et al. 2018) into account. To apply the concept
of BMfS on strategic and organizational levels, it is important to move from seeing
it only as an outline or architecture of the status quo, to acknowledge it as a system
of interacting activities with may initiate change and contribute to innovation.
A challenging aspect of pursuing the research or implementation of a BMfS is
linking the concept to practical execution by identifying feasible and appropriate
opportunities and providing accessible tools. Barriers to BMI often arise because of
a disconnect between the current functioning of the organization and the implemen-
tation and follow-up of new changes (Chesbrough 2010). Further, when adding sus-
tainability considerations into the BMI process, the hurdles may be amplified. The
multidimensional aspects of sustainable development can be difficult to balance and
decision making between continuing opposing activities that support the financial
viability of an organization yet do not support its sustainability objectives is diffi-
cult. While increasing the performance of its environmental management and sus-
tainability portfolio can lead to the competitive advantage of a company (Kramer
and Porter 2011; Schaltegger et al. 2012b), financial and human resource invest-
ments and restructuring may be required up front. When evolving the BMfS, i.e., the
structures and mechanisms that allow an organization to create and capture sustain-
able value, the expanse of sustainability aspects and consideration of their interac-
tions must be evaluated and monitored even more closely.
Even when an organization attempts to innovate its BMfS, successful implemen-
tation may not take place. Due to challenges related to, for example, balancing ten-
sions between environmental, economic, and social objectives, redefining
organizational logics and established norms, redistributing resources to build sus-
tainability capacity, and establishing systems for engaging with stakeholders, a
design-implementation gap has been identified (Evans et al. 2017; Geissdoerfer
et al. 2018). Tools to assist organizations in the ideation and implementation pro-
cesses of BMI for sustainability are therefore fundamental to their progress.

22.2.2.1 BMfS Archetypes as a Tool for BMI

Many tools have been developed to aid in the BMIfS process. One tool is BMfS
archetypes, initially outlined by Bocken and colleagues in 2014 to help unify and
interpret the exploding and fragmented literature on BMfS (Bocken et al. 2014).
The archetypes are presented conceptually, and with reference to examples from
business practice in the following sections.
22 Helping Business Contribute to a Sustainability Transition: Archetypes of Business… 229

The archetypes provide common models, patterns, or forms of BMfS that have
been employed by other organizations. Their categorization helps to classify current
knowledge on the subject and develop reference points for future research and
application (Lüdeke-Freund et al. 2018). Such classification is important because
the “ordering of objects into classes provides meaning to reality” and therefore
helps to clarify the research area (Lambert 2015, p. 50).
Archetypes are also used as a tools for practitioners to begin thinking about how
they may innovate their BMfS (Lüdeke-Freund et al. 2016; Jonker and Faber 2021).
The simplicity of the archetypes allows organizations to focus on specific innova-
tion mechanisms that they know other companies have already tested and applied,
and therefore can serve as a low barrier entry point to the beginning of their innova-
tion journey. When faced with pressure from customers, financing or regulatory
bodies, organizations often want to look externally to what has worked for others as
timely inspiration to their BMI process. They may therefore look to the recurring
patterns of BMfS that have been successfully employed in other organizations. In
the initial categorization of BMfS archetypes (Bocken et al. 2014), the models are
grouped by their main innovation area – technological, social or organizational
(Boons and Lüdeke-Freund 2013), and are discussed in terms of the way they seek
to propose, create and capture ecological and social value. This grouping was later
shifted to headings of environmental, social and economical categories (Bocken
et al. 2016; Ritala et al. 2018). A ninth archetype was also added. The adapted
grouping is intended to help clarify the sustainability dimension in which the new
kind of sustainability innovation is occurring. Table 22.1 presents the nine arche-
types along with examples and references for further reading.1
In terms of environmental innovation, the more technical archetypes of “maxi-
mize material and energy efficiency,” “create value from waste,” and “substitute
with renewables and natural processes” suggest changes to the production pro-
cesses, design or material selection within an organization’s BM to reduce environ-
mental impact in upstream value chain processes. In relation to the Levels of the
CapSEM Model, the environmental archetypes can be considered to be representa-
tive of sustainable innovations on Levels 1 (production process-related) and 2
(product-related). Most display a closed systems perspective that sees the organiza-
tion as a unit that interacts with the environment through e.g., ‘pull and push’ of
markets. These archetypes, if not combined with wider BM changes, will lead to
incremental changes and innovations, and less mature BMI for sustainability. Some
advanced examples of the “create value from waste” archetype may contribute to

1
It should be noted that these are not the only archetypes for BMfS. Another categorization of
BMfS groups 45 sustainable business model patterns across 11 pattern groups based on their main
value creation area (mainly economic, social-economic, social, mainly ecological, integrative)
(Lüdeke-Freund et al. 2018). This taxonomy follows a more empirical and transparent methodol-
ogy and was developed in response to the ‘ad hoc’ nature of the archetypes presented in (Bocken
et al. 2014). Focusing on how and what kind of sustainable value is created may be a better way to
group types of BMfS, however the taxonomy (Lüdeke-Freund et al. 2018) has not become nearly
as mainstream as the archetypes (Bocken et al. 2014).
230 H. Knudson and M. Keitsch

Table 22.1 BMfS archetypes

Grouping Archetype Examples
Environmental Maximize material and Low carbon manufacturing/solutions
(Technological energy efficiency
innovation) Lean manufacturing
De-materialization; Digitalization
Increased functionality; Lifespan extension

Create value from waste Closed loop/Cradle to Cradle

Industrial symbioses
Remanufacture; Take back management
Substitute with renewables Renewable energy sources and innovations
and natural processes Zero emissions initiatives
Slow manufacturing
Social (Social Deliver functionality rather Product-oriented (maintenance, extended
innovation) than ownership warranty)
Use-oriented (Renting, leasing, sharing)
Result-oriented (Pay per use)
Adopt a stewardship role Biodiversity protection
Consumer care – promoting consumer
health and well-being
Ethical trade (Fair Trade)
Radical transparency
Encourage sufficiency Consumer education/communication
Demand management
Product longevity
Premium branding/limited availability
Economical Repurpose for society/ Not for profit
(Organizational environment Hybrid businesses, social enterprises (for
innovation) profit)
Alternative ownership: cooperatives,
collectives
Benefit corporations (B-corps)
Social and biodiversity regeneration
initiatives
Inclusive value creation Collaborative approaches (sourcing,
production, lobbying)
Peer-to-peer sharing
Inclusive innovation; Base of the pyramid
solutions
Develop scale-up solutions Open innovation
Incubators and entrepreneur support
Impact investing
Crowd funding; Peer-to-peer lending

Modified from Bocken et al. (2016, 2019), Ritala et al. (2018)

22 Helping Business Contribute to a Sustainability Transition: Archetypes of Business… 231

the larger transition to a circular economy. However, since many of the existing
examples suggest closed loops within a specific company or industry sector, rather
than the economy at large, they are generally grouped in this analysis on the earlier
Levels of the CapSEM Model.
Moving beyond environmental performance, socially innovative archetypes can
be aligned with perspectives from Levels 3 and 4 of the CapSEM Model. These
archetypes specifically include the consideration of stakeholder needs and larger
initiatives that support sustainable development objectives and are therefore related
to the higher Levels of the CapSEM Model that move beyond environmental perfor-
mance to adapt BM structures in line with strategic sustainability approaches.
Socially innovative archetypes focus on innovations that shift existing production
and consumption patterns such as “delivering functionality rather than ownership”,
“establishing product sharing systems”, and “adopting a stewardship role”, for
example by requiring suppliers to meet standards for ethics or biodiversity protec-
tion. On both the consumer and producer side, socially innovative archetypes
include “encouraging sufficiency,” among others, through designing products with
longevity in the use phase to decrease the tendency to buy new products frequently.
These archetypes progressively follow up the technological innovation archetypes
that adhere to an ‘accommodative’ approach to organizational sustainability
(Schaltegger et al. 2012b), that is, to reduce environmental impacts, and resist
developing novel standards for decision-making in business. Other examples
include circular economy based models that support changing production and con-
sumption patterns, e.g., sharing platforms, product as a service, resource recovery
and circular supplies (Moreno et al. 2016), and product-service system (PSS) mod-
els. These differ from the technical “create value from waste” BMs as they do more
than change material, energy, and waste streams in production processes, and enable
and depend on changes in upstream and downstream networks, and in producer and
consumer conceptualizations of need and responsibility.
The economical archetypes demonstrate patterns of organizational innovation
and can be situated on Levels 3 and 4 of the CapSEM Model. While it may seem
counter-intuitive that the economic archetypes are at the higher Levels, this is due to
their reconceptualization of the typical for-profit business model, that is, they make
changes to the current economy in support of market and societal transition. They
attempt to integrate societal norms and ethical thinking and decision-making into
sustainable business strategies and solutions. Focusing on “repurposing the business
for society/the environment,” “inclusive value creation,” and “developing scale-up
solutions” supports the kind of disruptive business models needed for sustainable
transition away from incumbent models (Christensen et al. 2006; Kivimaa et al.
2021). Logically, this surpasses the technological innovation archetypes by acknowl-
edging that it is not possible to derive values for society from natural systems
(Keitsch 2020a). Pragmatically, this means there is a need to relate to larger initia-
tives that support sustainable development objectives and to include societal stake-
holders’ needs, values, and norms in order to generate sustainable network impact.
Although the nine archetypes are separated and referred to individually, they
must be combined to move to more holistic BMIfS that penetrates through the full
232 H. Knudson and M. Keitsch

business model (Bocken et al. 2014). For example, in the case of a product sharing
platform BMfS (i.e., deliver functionality rather than ownership), material and
energy efficiency measures of the technical archetypes must also be part of the BM
to prevent unnecessary production of exorbitant products, or risk little reduction of
environmental impact. Such parallels the logic of the CapSEM Model, as the tools
and methods on the higher levels require application of the tools and perspectives of
the lower levels.

22.3 Discussion

The categorization of archetypes above illustrates the possibilities for implementa-

tion of BMIfS processes into the business models of real-world organizations. Using
archetypes as a representation of the potential for sustainable innovation within
BMs can provide organizations examples of experience and techniques from prac-
tice and help reduce the risk associated with restructuring a BM (Bocken et al.
2014). The reduced risk can help encourage organizations to attempt their own
incorporation of sustainable value, through the selection and combination of differ-
ent archetype principles appropriate for the particular business. The archetypal
innovation strategies and mechanisms can then be considered in relation to an orga-
nization’s specific value chain processes and existing business model. They can also
be combined in configurations that best support the organization’s sustainability
strategy and stakeholder needs. When applied in practice, BMfS archetypes can be
used by organizations among others as a quick fix to meet sustainability demands,
without considering all aspects of sustainability and the societal and environmental
impacts on a holistic scale. Some authors claim that, trapping ideas from established
models may yet limit the impact of BMI outside of the organization (Morris et al.
2005; Chesbrough 2010; Demil and Lecocq 2010; Boons and Lüdeke-Freund
2013), which will be further discussed in the following.
Improving sustainability performance and innovating BMs for sustainability
helps organizations support and incorporate macro-level sustainability objectives
into their activities. To design, implement, or transit to a BMfS, organizations must
implement activities that make their business model one that promotes sustainable
innovation and that contributes to sustainable development in the larger system of
which it is part (Diepenmaat et al. 2020), not only in the organizational unit. While
archetypes may help direct the identification of sustainable innovation opportuni-
ties, they may also lead to ignorance of the entire set of activities and interactions
that make up the organization’s BM. It is therefore required that the organization
also views its BM as a system of activities (Zott and Amit 2010; Evans et al. 2017),
with interdependencies between activities, to create a comprehensive picture of how
it operates within its multilevel context. Incremental choices that impact one activ-
ity and the achievement of its purpose may positively or negatively affect other
activities, therefore impacting or changing the accomplishment of the overall objec-
tive of the value proposition for the customer and stakeholders.
22 Helping Business Contribute to a Sustainability Transition: Archetypes of Business… 233

From a systems perspective, socially innovative archetypes are the most advanced
systems. They represent BMfS that are ‘autopoetic,’ i.e. that perceive business as an
‘ecosystem’, embedded in a network of other entities, or ‘subsystems’. Their ratio-
nale is that business evolves and thrives not just together with other businesses but
also through interdependencies and in interaction with various subsystems
(Valentinov 2014). Moving towards CapSEM Model Level 4, the socially innova-
tive archetypes expand the structure of business interactions, and design new types
of exchanges among organizations and societal stakeholders. Moving to an autopo-
etic systems literacy allows sectors and industries to realize the interconnected
structure of organizations, technologies, consumers and products (Kohtamäki et al.
2006; Keitsch 2012).
In terms of sustainability performance, businesses oriented toward organiza-
tional innovation may commonly develop incentives and a vision to strive for sus-
tainability goals, develop individual initiatives while using political mechanisms to
ensure that their activities will reach these goals, and coordinate the internal with
the external pace of innovation (Anggraeni et al. 2007). The economical archetypes,
then, can support the complete reformation of traditional make-and-sell BMs
through organizational level innovation. For example, to ‘repurpose the organiza-
tion for the society and/or environment,’ as, e.g., not for profit organizations or
social enterprises, or to ‘develop scale-up solutions’ to sustainability that reduce
competition and increase collaboration among organizations in support of open
innovation initiatives, industrial cluster formation or crowd-sourced models.
Economical archetypes focused on organizational innovation allow actors to revise
their value orientations and innovate their business models as results of novel activi-
ties, roles and structures. The societal context of businesses is even more empha-
sized in organizational innovation archetypes and the mutal influence of business
and societal stakeholders is explained in close context to socio-cultural innovation
via new partnerships, business-citizen initiatives such as Open innovation platforms
and transdisciplinary collaboration (Keitsch 2020b). These archetypes put stake-
holder collaboration in the forefront in co-developing sustainability knowledge
and -implementation strategies. The aim is to achieve ‘sustainable well-being’ of all
societal stakeholders by aligning business strategies and solutions to ethical princi-
ples defined by social systems, institutions, and environments. The ‘common good’
of sustainable well-being is heuristic, it assumes that even if assumptions, expecta-
tions, attitudes, values, and interests that influence decisions vary greatly in societ-
ies, consent is possible.
The repurpose for society and the environment, and the development of scale up
solutions in the table above illustrate the aim of sustainable well-being as one onset
for the organizational innovation archetypes. In terms of disruptive innovation,
these archetypes can complement policy and social groups efforts to support the
transformation necessary to achieve sustainable societies. For example, the scale up
solutions might bring major benefits for society by including larger populations, and
new groups in the development process. As Iizuka and colleagues (2021: 16) point
out: ‘Disruptive inclusive innovation (DII) “ …. can be initiated by the private sec-
tor without much government involvement. Entrepreneurs respond to the unmet
234 H. Knudson and M. Keitsch

demands of citizens by devising an innovative business model, linking the under-

served population with new services using emerging technologies to generate
broader impacts”.

22.4 Conclusion

Implementing and examining the full portfolio of sustainability needs and require-
ments that result from the activities within the business model can help an organiza-
tion change or adapt its BMfS to create more disruptive and inclusive social and
environmental impact. While archetypes are useful for ideation and experimenta-
tion, it is essential that they are inserted into the understanding of the business
model as a whole. This entails considering innovation archetypes within the net-
work of activities and actors that make up the current BM, identifying the expected
impacts on stakeholders, and determining the contribution to the organization’s sus-
tainability performance (i.e. ‘autopoetically’). This is supported by the definition of
BMIfS provided by Bocken et al. (2014) in their archetype work: “Innovations that
create significant positive and/or significantly reduced negative impacts for the
environment and/or society, through changes in the way the organisation and its
value-network create, deliver value and capture value (i.e. create economic value) or
change their value propositions” (p. 44). However, consideration and integration
into the wider value network of stakeholders is often hindered due to, for example,
the challenges of the ‘design-implementation gap’ between ideation and implemen-
tation of BMfS (Geissdoerfer et al. 2018), the fundamental shift of core business
logics from profit-making to sustainability creating (Laasch 2018) or a limited
understanding of the dynamics of the process of BMIfS (Lüdeke-Freund 2020).
The question remains, if moving towards BMfS with the help of the archetypes
will apply to every organization in a shifting market. Especially small and medium
sized organizations that are not able to integrate insights from subsequent research
and experience and may end up using tools that do not benefit their context, reduc-
ing their chances of success. For this reason, structural support in the form of, for
example, transdisciplinary stakeholder collaboration, is essential to mitigate fail-
ures and achieve systemic macro level sustainability, a view that will be further
elaborated in the next chapter.

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
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the copyright holder.
Chapter 23
Building Decision Support Systems
for Sustainable Transitions

Dina Margrethe Aspen and Christina Carrozzo Hellevik

Abstract Developing decision support systems for sustainable transitions at the

societal level is a complex undertaking due to the high number of stakeholders
involved, the urgency of problems that needs to be addressed, and the uncertainty of
information linked to decisions. A mismatch between the technological tools offered
for decision support and the real needs of practitioners and society at large has been
observed. In order to address these challenges, several approaches are explored
under the theoretical framework of post-normal science, including co-creative
developmental design, soft systems thinking and models for technology integration.

23.1 Introduction

Capacity building for environmental and sustainability management (CapSEM) to

achieve sustainable transitions requires generating, structuring, storing, retrieving,
communicating, and acting upon information and knowledge. Transitions are
achieved through decisions, individual or in series, as instances or processes, made
based on relevant information and knowledge, to trigger small or large-scale change
from one state to another. Decision support systems (DSSs) help facilitate these
transitions by offering actionable information to decision-makers and other stake-
holders. DSSs may be defined as interactive computer-based systems that aid
decision-­makers utilize data and models to solve problems (Sprague Jr, 1980). Since
the 1960s, these systems have evolved in scope and complexity to help address tasks
at multiple organizational levels across several sectors. As the toolbox for sustain-
ability transitions has grown, so has associated DSSs. While there exist several DSSs
to address challenges at the process, product and organisational level, few DSSs
currently are currently in use to support broader system change.

D. M. Aspen (*) · C. C. Hellevik

Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]; [email protected]

© The Author(s) 2023 239

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_23
240 D. M. Aspen and C. C. Hellevik

In this chapter, the basic structures and features of DSSs are introduced and
explored in the context of the CapSEM framework. The chapter discusses problem
complexity as a barrier to developing DSSs for system change and explores path-
ways for creating DSSs for sustainable transitions at systems level. The case of
Planning-Support Systems, i.e. DSSs for urban development and planning, is dis-
cussed drawing on experience from development projects in Norway.

23.2 Decision Support Systems for Sustainable Transitions

23.2.1 Structure and Components of Decision Support Systems

Arnott and Pervan (2005) define Decision Support Systems (DSSs) as “… the area
of the information systems discipline that is focused on supporting and improving
managerial decision-making”. The concept emerged during the 1950s and 1960s
when organizations started automating business operations such as order process-
ing, billing, and inventory control using computers (Arnott and Pervan, 2005). Early
DSS developers aimed to provide an environment where the decision-maker and the
information system worked interactively to solve problems. Humans would deal
with the complex and unstructured parts of the problem, while the information sys-
tem would assist by automating the structured elements of the decision context
(Arnott and Pervan 2005). Since their advent in the 1950s, DSSs have become pro-
lific in several fields, such as business, agriculture, and clinical decision-making.
While several types of DSSs and problem domain applications exist, they all
have in common some basic components. Figure 23.1 shows a generic structure of
a DSS (based on Sprague Jr 1980). DSS users initiate computational procedures in
the DSS through their queries and commands via the interface. Users may be
decision-­makers, i.e., the individual or group that faces the problem or decision and
needs to act and hold responsibility for the consequences. Users may also involve
intermediaries or other actors that have access to the system via their stake-
holder role.
The interface offers functionalities tailored to the DSS with parameters the
users may specify for the query or command. The interface displays query outputs,
which may be unprocessed data or information derived from the model base. In
some decision support systems, users may also enter commands (decisions) based
on this information to record or activate a change in another system controlled by
the DSS.
23 Building Decision Support Systems for Sustainable Transitions 241

Fig. 23.1 Basic components of decision support systems (DSSs). (Modified from Sprague
Jr 1980)

23.2.2 Decision Support Systems for Supporting Transitions

to Sustainability

While DSSs have been prolific in nearly all industries and domains, systems dedi-
cated to supporting sustainability have become more popular during the last few
decades. Following the four Levels of the CapSEM Model, as shown in Fig. 23.2,
DSSs that support decision-makers at each level currently exist.
For Level 1, multiple process optimization systems exist, such as e.g., marine
fuel optimization to reduce fuel costs and emissions or maintenance optimization
models to determine efficient intervals for machinery maintenance. These may be
expert systems that are either integrated with wider enterprise management soft-
ware or stand-alone applications.
For Level 2, a range of decision support systems also exists, such as e.g., life
cycle assessment software to help decision-makers identify environmental hotspots
and improvement potential across a product life cycle. SimaPro, GaBi, and
OpenLCA are examples of tools that permit life cycle inventory modeling, environ-
mental impact assessment, and sensitivity analyses. These tools may also contain
features such as environmental product declaration generators or enterprise report-
ing functions to link product information to the wider organizational reporting.
242 D. M. Aspen and C. C. Hellevik

Fig. 23.2 Example of DSSs at various CapSEM levels

For Level 3, there are also numerous corporate sustainability systems for man-
agement, reporting, and communication. These range from simple dashboards that
keep track of company performance across selected sustainability performance
indicators to more advanced systems for managing sustainability performance, such
as SoFi.
The types of problems exemplified above, all have a relatively simple, objective
answer, which, assuming that the user makes the rational choice according to the
priorities of the company, can truly optimize operations. However, moving from the
organisational to the systems or societal level (level 4) in the CapSEM framework
entails a great increase in complexity from a decision analytical viewpoint
(Fig. 23.2). System change requires planning and policy-making at higher organiza-
tional levels, involving decision-makers from industry, government, and the wider
public sphere.
An example of an attempt to build DSSs for Level 4 may be found in the plan-
ning support tools. These DSSs aim to support planning across multiple organiza-
tional entities and may be designed for addressing decisions concerning land-use
and transportation, tourism, and public health-services, to name a few examples.
Decisions related to system level transitions typically involve a wide range of
stakeholders with potentially conflicting values, a strong urgency to address the
problem at hand, and high levels of uncertainty in the scientific information neces-
sary to fully appraise alternative courses of action. These elements are synthesized
as Post-Normal Science (henceforth PNS) by Funtowicz and Ravetz (1993). In PNS
theory, we are reminded that any information and choice of presentation is value-­
laden, that worthwhile knowledge exists in the community, and that uncertainty
should be accepted in decision-making (Ravetz 1999) rather than rejected or hidden.
23 Building Decision Support Systems for Sustainable Transitions 243

23.3 Discussion

23.3.1 Developing Decision Support Systems for Systems

Change: Challenges

In searching for an explanation as to why few DSSs for societal transition are in use,
it is necessary to understand the activities of problem-solving and decision-making.
Herbert A. Simon (1960), considered a pioneer in DSS science, distinguished three
phases of decision-making processes. In the first phase, intelligence activity is per-
formed to search the environment for conditions calling for a decision. In operations
research, this refers to problem structuring activities, which entails identifying
stakeholders and their problems, goals, and values. This also involves creating an
understanding of the external environment and constraints to potential solutions
(Belton and Stewart 2002). Simon’s second decision-making phase involves design
activity, where possible courses of action are developed and analyzed. This relates
to the model building phase in operations research, where alternatives and values
are specified in models (Belton and Stewart 2002). Lastly, the choice activity takes
place, where a particular course of action among those identified is selected. In
operations research, this involves the application of models to discern preferable
courses of action. Simon underlined that these steps are sequential and iterative, and
that all phases occur within each phase (Simon 1960). Since Simon, authors such as
Witte (1972) have challenged the established idea of sequential phases, favouring a
model where actions are made in parallel.
While dividing the decision-making process into distinctive phases may support
the design of a DSS to drive sustainable transitions, the complexity in both problem
structuring (intelligence) and model building (design) activities greatly increases
between Level 3 and Level 4, i.e. from the organizational to the systems level. This
is partly due to the number of stakeholders potentially involved as well as the vari-
ety of system types to address, which may diminish the hopes of achieving agree-
ment on defining a problem and how it may be solved. According to Pidd (2003),
decision situations where there is stakeholder agreement on both these dimensions
may be considered puzzles – the challenge is merely to select a best course of action.
Next, there are problems – decision situations where a unified understanding of the
problem and solution is achievable, but requires effort to formulate and select prom-
ising solutions. Lastly, there are messes, where there is no consensus on the problem
itself, nor the solutions to potentially solve them. This links back to the PNS theory
where a high number of stakeholders with conflicting values interact to reach deci-
sions. Moving from lower to higher Levels in the CapSEM Model implies greater
problem complexity as there are more degrees of freedom and more stakeholders
whose (potentially conflicting) perspectives need to be addressed to define the pur-
pose and scope of the DSS.
244 D. M. Aspen and C. C. Hellevik

Rittel and Webber (1973) famously coined problems of planning and policy-­
making as “wicked problems”. In their seminal article “Dilemmas in a general the-
ory of planning”, the abstract succinctly states their viewpoint:
The search for scientific bases for confronting problems of social policy is bound to fail,
because of the nature of these problems. They are “wicked” problems, whereas science has
developed to deal with “tame” problems. Policy problems cannot be definitively described.
Moreover, in a pluralistic society there is nothing like the undisputable public good; there
is no objective definition of equity; policies that respond to social problems cannot be
meaningfully correct or false; and it makes no sense to talk about “optimal solutions” to
social problems unless severe qualifications are imposed first. Even worse, there are no
“solutions” in the sense of definitive and objective answers.

23.4 Pathways to Developing Decision Support Systems

for Systems Change

Against this backdrop, it is worth asking whether it is possible to develop useful

DSSs for system change or if the logic underpinning DSSs makes its shortcomings
too big. While the shortcomings are seemingly clear, some remediation may exist.
The following sections aim to explore potential pathways to address this question in
the research and practice of DSSs through rethinking the who, how and what of DSS
development.

23.4.1 Who: Exploring Co-creative Developmental Design

Several scholars have explored the existing implementation gap of decision support
systems at the planning and policy-making level. A key finding from this research is
that many systems seem to be developed for users, rather than with them (Te
Brömmelstroet 2010). Another problem is that they are technology-driven as
opposed to user-driven and thereby end up representing state-of-the-art without
consideration to state-of-the-practice (Te Brömmelstroet 2010; Geertman and
Stillwell 2020). This mismatch between research and practice is also observed for
DSSs in general (Arnott and Pervan 2008). These challenges call for new methods
to engage users and problem-owners in the research and development of DSSs. One
way that PNS theory advocates effective problem-solving in these circumstances is
by ensuring the quality control of the scientific information and policy recommen-
dations through the extended peer community. Scientific data and models may hide
important details of how changes may be felt “on the ground”, and valuable insights
held in the local community may be lost (Funtowicz and Ravetz 1993). In addition,
these types of decisions can have serious consequences on a wide range of stake-
holders, beyond the decision makers. DSSs should support decisions on issues that
are relevant to practitioners and therefore include their knowledge as well as that of
the local community.
23 Building Decision Support Systems for Sustainable Transitions 245

Engaging users in the research and development of DSSs may be done in several
ways. At the most basic level is the traditional involvement where input from users
is added to an existing arrangement. In these types of development projects, a team
of researchers/developers facilitate user engagement, e.g., through pre-designed
input and feedback activities. Next, there is collaborative research where users and
researchers/developers initiate, perform and control projects together. Lastly, there
is user-controlled research where users both initiate and control the research and
development.
While these forms of engagement are relatively well known from public health
research, it is still unclear how they translate to decision science and other disci-
plines involved in creating DSSs. While basic user feedback is relatively common-
place in a DSS development, involving users more profoundly throughout the entire
development process calls for new ways of designing development projects and
engagement methods. What are the potential roles of users beyond offering infor-
mation about their needs and requirements and feedback to subsequent mockups
and prototypes? How do these potential new roles change the interaction between
researchers/developers and users in DSS development? How to generate ownership
and participation in the design phase without creating fatigue among the user group?
While some of these stronger user engagement approaches may pose new chal-
lenges to developmental design, they may also open up for increased literacy among
users in the DSS technology itself and the problem context in which it exists in
addition to securing improved relevance once it has been developed.

23.4.2 How: Exploring Soft System Thinking

and Methodologies

While known rules and procedures from operations research and “hard sciences”
have apparent shortcomings in the face of wicked problems in planning and policy-­
making at the systems level, soft systems methodologies may offer valuable
approaches to address them. Checkland’s soft systems methodology (Checkland
1999) has, in fact, been deployed in operations research exercises to expand on
conventional problem structuring efforts (see e.g. Belton and Stewart 2002).
Checkland argues that while solving problems in hard systems is possible through
offering models of the world, soft systems problem solving requires developing
models relevant to arguing about the world. Essentially, soft systems models can at
most represent a particular view of the world (Checkland 1985). These models,
achieved through soft systems methods, may occasionally condense to formulate
clear objectives necessary in hard systems thinking. This linkage between soft and
hard systems thinking offers a pathway to explore (and potentially expand) models
and elements of the messy, wicked soft systems that may be translated to and man-
aged in the structured environment of a DSS.
246 D. M. Aspen and C. C. Hellevik

In PNS, the usual domination of “hard facts” over “soft values” is inverted. Due
to the high level of uncertainty, and the high decision stakes, some policies with
life-changing consequences for high numbers of people will be decided on very
uncertain information. Value commitments and trust will determine the acceptance
of these policies rather than scientific certainty. Therefore, as pointed out by
Funtowicz and Ravetz (1993), the traditional scientific inputs become “soft” in the
context of “hard” decisions.

23.4.3 What: Exploring the Potential Transformative

Role of DSSs

Up until this point, there has been little debate about the DSS’s role in supporting
sustainable transformation at the system level. A critical question is what such a
DSS can do, beyond offering new sustainability-related information or knowledge
to decision-makers at various system levels. To explore this potential, the SAMR
model may be helpful (Puentedura 2013). Robert R. Puentedura developed the
model as part of his work in the Maine Learning Technologies initiative (Puentedura
2006). The model was initially developed, and is still primarily deployed, for educa-
tors to rethink the role of technology in learning. The model provides a ladder where
the role of technology in learning moves from enhancement to transformation. What
is intriguing with the model in DSSs is the ability to consider the potential impact
on both cognitive and social processes brought about by its use. Table 23.1 shows
the basic achievements at each step of the ladder.
While DSSs offer computational capacities far beyond the abilities of the human
mind, a system that merely performs calculations to alleviate the cognitive burden
to decision-makers will only substitute this part of the decision-making process. As
an example, a process optimization software that helps tune operational parameters
in a physical system (e.g., a ship, building, or production plant) to reduce energy
consumption may be said to act in a pure substitutive manner. The role of the
decision-­maker is to act upon this information without necessarily rethinking the
entire design and functioning of the (physical) system of study. The same may be
said about a planning support tool that offers more precise and/or comprehensive
information about a transportation system. As long as the information is merely

Table 23.1 The SAMR model for technology in learning. (Modified from Puentedura 2013)
Substitution Technology acts as a direct substitute, with no functional Enhancement
change
Augmentation Technology acts as a direct substitute, with functional
improvement
Modification Technology allows for significant task redesign Transformation
Redefinition Technology allows for the creation of new tasks, previously
inconceivable
23 Building Decision Support Systems for Sustainable Transitions 247

absorbed in existing planning and policy-making processes, the DSS will only sub-
stitute existing information and technologies utilized in these processes.
A DSS that augments decision-making also provides functional improvement to
the decision process. For planning and policy making, this could be exemplified by
a DSS that offers the ability to combine information in new ways and present them
in a visual-intuitive form to create a better understanding of the (system) problems
at hand and its potential solutions. An interactive digital twin-based planning sup-
port tool using e.g. augmented reality technology for land-use and transportation
planning an example of such a tool. The functional change in this type of DSS is
brought about by permitting new ways to interact with and interpret data.
To achieve task modification in planning and policy decision-making, the DSS
must also enable significant redesign of these decision-making processes. Although
this could be done in numerous ways, an example could be an open solution where
citizens may enter data and access and interact with the system to offer their feed-
back, questions, and comments to ongoing processes. A good example of a planning
support tool utilized in this manner is the CityPlanner map service piloted in Ulstein
municipality in Møre & Romsdal county in Norway. During the public consultation
process of the area zoning plan in the municipality in 2018, the 3D mapping tool
CityPlanner was deployed to permit citizens to comment on plans for new trekking
paths in the local mountains (Ulstein Municipality 2020). The planners also used
social media to promote citizen engagement through the tool.
Lastly, a DSS that redefines public planning and policy-making helps create new
processes previously inconceivable. It could potentially offer new ways for decision-­
makers and other stakeholders to generate, exchange and negotiate information.
Considering contemporary planning and policy-making processes, there is great
improvement potential with respect to the transparency and engagement achieved in
these processes across the wide range of stakeholders involved. The same could be
said for exploring how the DSSs are deployed throughout the problem-solving pro-
cesses they are designed to support. While DSSs often are designed to predefined
(recurring) problems, few tools are designed for more open-ended problem explora-
tion and structuring as part of early planning and policy-making activities.

23.5 Conclusion

Designing and implementing decision support systems for sustainable transforma-

tion at the system level is a complex task which requires enabling approaches and
tools. In this chapter, three such approaches have been proposed within the frame-
work of Post-Normal Science. First, the who of the system needs to be carefully
curated. This pertains not only to system users once it is designed, but also who is
involved during the design and development of the DSS and what roles they are
assigned. Co-creative and participatory forms of research and engagement are criti-
cal for establishing systems that tackle the task complexity for system stakeholders,
ensures meaningful problem-solving functionality and impactful use. Next, the how
248 D. M. Aspen and C. C. Hellevik

of system development with system stakeholders needs to be addressed. Soft sys-

tems engineering methodologies have been used in multiple domains to engage
stakeholders in system development. The domain offers language, procedures and
tools to translate between a messy problem context and the structured environment
of DSSs. Lastly, the what of system development needs to be further explored in the
context of transformative change. This concerns the role of the DSS in the decision-­
making processes they are used and the form and functionality it contains to achieve
its role. The SAMR model offers a useful taxonomy to address this question as it
distinguishes levels of learning and task performance enabled by ICT tools in prob-
lem solving processes. The model was initially developed for instructors to curate
and design tasks for learners using ICT tools. In the context of planning support, a
DSS is an ICT tool used to aid decision makers in addressing sustainable transfor-
mation in a pedagogical manner. The remaining challenge is to understand how to
move from enhancement to transformation, which implications this has for the
wider decision-making processes the DSS is utilized within, and how this dynami-
cally influences further DSS development and application.

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing,
adaptation, distribution and reproduction in any medium or format, as long as you give appropriate
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indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
Chapter 24
The Way Forward

Annik Magerholm Fet and Martina Keitsch

Abstract This chapter points to the way ahead by introducing five recommenda-
tions to meet the requirements set forward by the Stockholm+50 agenda. The
requirements identify co-working as vital to addressing the planetary crisis of cli-
mate change, biodiversity loss and pollution, better collaboration and cooperation
across all sectors, reinventing to a circular economy meaning decouple economic
development from its destructive footprint, accessibility of data, and raising a com-
mon awareness for our planet. In response to this potential need, they present five
transition options that might facilitate realising the requirements above and recog-
nise a need for: (1) system change, (2) radical interdisciplinarity and trans-­
disciplinarity, (3) net positive leadership, (4) digitalization for sustainability, and (5)
fair and inclusive transitions. Business leaders, their stakeholders and other groups
should consider meeting these needs through their work in partnership with
other actors.

24.1 Introduction

Chapter 21 focused on how the CapSEM Model tools for continuous improvement
can contribute to a transition to sustainability. Chapter 21 also looked at drivers for
transition achieved through the use of the CapSEM toolbox and additional drivers
sourced from new policy frameworks and international roadmaps, SDG-roadmaps
and the European Green Deal. Chapters 22 and 23 presented two means for
enhancing this transition: firstly, business models innovation for sustainability,
and secondly multi-criteria decision supporting tools. This final chapter explores

A. M. Fet (*)
Department of International Business, NTNU, Ålesund, Norway
e-mail: [email protected]
M. Keitsch
Department of Design, NTNU, Trondheim, Norway
e-mail: [email protected]

© The Author(s) 2023 251

A. M. Fet (ed.), Business Transitions: A Path to Sustainability,
https://doi.org/10.1007/978-3-031-22245-0_24
252 A. M. Fet and M. Keitsch

possibilities inherent in forward-looking approaches, discussed new, innovative

recommendation and which possible options to accelerate transitions to true
sustainability.

24.2 Bottom-Up Versus Top-Down Transitions

and Transition Instruments

When following the CapSEM Model, the stepwise transitions related to processes,
products or organisational changes, can be viewed as a bottom-up approach with
incremental, and measurable, achievements in sustainability. Transition towards
sustainability from a top-down approach might look quite different. Global chal-
lenges such as climate change, scarcity of resources, pollution of oceans and land,
sea-level rise, changes in the global economy, all call for radical changes and neces-
sitate longer-term transition solutions. Global leaders are continuously searching
for new perspectives and models for collaboration for sustainability. To develop
such models, business and society cannot work in isolation from each other: they
must act together in order to pave the way ahead.
At the top of the agenda for forward looking leaders, is how to carry out effective
system changes. To this end, both bottom-up and top-down approaches are needed.
The driving forces can, to some extent, be different. Figure 24.1 illustrates both top-­
down and bottom-up approaches. On one hand, a bottom-up approach might start as
a result of consumer demand, for example, by putting pressure on business to docu-
ment the environmental impacts or climate footprints of the products or services
which they provide. When using the CapSEM Model approach, this frequently
leads to incremental, and continuous, changes. On the other hand, civil society at
large, exposed to pollution and increased waste streams, climate changes and loss of
biodiversity, represents a driver for changes on national and international levels.
This, in turn, puts pressure on governmental bodies’ top-down instruments to con-
sider more radical system changes. Top-down visions, strategies and frameworks
must be connected to bottom-up delivery of solutions if viable solutions for systems
change are to be properly implemented.

Top-down Bottom-up

Civil Society
Government

System Continuous
Business

changes incremental
changes
Consumers

Fig. 24.1 Model of actors and their roles in the top-down and bottom-up approach
24 The Way Forward 253

Policy makers face a considerable challenge in developing feasible combinations

of instruments and incentives for facilitating transitions to sustainability. This
requires, amongst a range of actions, integrating and implementing international
and national regulations in both local, and regional, industrial organisations. To aid
this endeavour, the following administrative, informative and economic instruments
are already currently available.
The administrative instruments are regulatory and take the form of laws, licenses,
binding regulations, and guidelines, towards the establishment and funding of a
robust system of enforcement.
At a transnational level, the European Green Deal, and the Taxonomy and
Transparency Act comprise holistic transition strategies for a new sustainable socio-­
economic model.
The informative instruments aim to raise awareness of the benefits of sustain-
ability through the creation of centres of expertise. Leaflets and websites that dis-
seminate news and best practice for information and knowledge generating examples
of this, are educational programmes that train sustainability experts.
Economic instruments aim to motivate projects towards using economic instru-
ments such as tax incentives, soft loan programmes, and funding for research. Other
economic instruments may apply at consumer level such as refund and sharing sys-
tems, or taxes imposed on fossil fuel products, or other harmful and hazardous
chemicals.

24.3 From Stockholm 1972 to Stockholm +50

The United Nations Conference on the Human Environment which took place in
Stockholm 1972 was organized as an answer to an emerging need for a top-down
view on the global situation regarding the state of the environment. As reported
from the Stockholm+50 Conference that took place in 2022 (United Nations 2022),
the 1972-conference succeeded in bringing the challenges facing the global envi-
ronment. The importance of the 1972 conference was emphasised as follows in the
report from Stockholm 2022:
Before 1972, most people saw environmental issues as local -- pollution of rivers, lakes, and
streams, air pollution over their cities, and oil spills affecting their coastline. The Stockholm
Conference and the creation of the United Nations Environment Programme (UNEP) – one
of the conference’s most important and lasting legacies – was instrumental in raising aware-
ness that many environmental issues are global and require intergovernmental cooperation
to address them. (United Nations 2022)

The Stockholm Declaration (UNEP 1972) proclaimed 26 principles. Principle 25

states that ‘States shall ensure that international organizations play a co-ordinated
efficient and dynamic role for the protection and improvement of the environment’
The UNEP declaration (1972) also proclaimed:
254 A. M. Fet and M. Keitsch

The protection and improvement of the human environment is a major issue which affects
the well-being of peoples and economic development throughout the world; it is the urgent
desire of the peoples of the whole world and the duly of all Governments.

Following 1972, numerous protocols, conventions and multilateral environmental

agreements have been developed. The 1992 UN Conference on Environment and
Development, also known as the Earth Summit, commemorated the twentieth anni-
versary of the Stockholm Conference. The Earth Summit adopted the Rio
Declaration, which was a direct output of the Stockholm Declaration. Similarly, the
programme of action adopted in Rio, Agenda 21, updated the Stockholm Action
Plan to address sustainable development issues on the eve of the twenty-first century
(United Nations 1973, 2022).
Twenty years after the Earth Summit, and 40 years after Stockholm, govern-
ments gathered again in Rio de Janeiro for the UN Conference on Sustainable
Development (Rio + 20). This conference set in motion the process for negotiating
the 2030 Agenda for Sustainable Development and its 17 Sustainable Development
Goals (SDGs), which were adopted in 2015.
Recommendations by the UN for accelerating the actions for a Healthy Planet
and Prosperity for All are summarised in five requirements (United Nations 2022):
(a) Co-working between countries and other stakeholders to address the triple plan-
etary crisis of climate change, biodiversity loss and pollution.
(b) Better collaboration and cooperation across environmental efforts within the
UN, the private sector, and other stakeholders. There is a strength in coming
together and calling for change.
(c) Reinventing an economy for the twenty-first century, e.g. by a green or a circu-
lar economy; meaning decouple economic development from its destructive
footprint.
(d) Science, technology, and data need to be both accessible and used effectively.
In addition to strengthening the role of science across the board of enterprises.
(e) Raising public awareness about the global nature of environmental problems.
To meet the requirements above, the need for implementation in practice is para-
mount, which, in turn, necessitates collaboration with business.

24.4 Long-Term Transition to Sustainability

A common roadmap which could contribute towards meeting these five recommen-
dations set out by the UN, would make it far easier for actors and stakeholders to
initiate long term transitions. However, given the complexity of these recommenda-
tions, a single straightforward roadmap is problematic to design. Moreover, in addi-
tion to deliberate modelling and development of mechanisms, emerging transition
trends and the way in which business and society deal with them, will continue to
influence sustainability paths in the future. Societal stakeholders will have to utilize
24 The Way Forward 255

changes that appear in the global (business) community: that could potentially
impact the quest for developments in advancing sustainability. In response to this
potential need, the authors of this chapter have identified five transition options that
might facilitate realising the requirements above:
1. System change
2. Radical interdisciplinarity and transdisciplinarity
3. Net positive leadership
4. Digitalization for sustainability
5. Fair and inclusive transitions

24.4.1 System Change

System change meets a need for coworking between countries and societal stake-
holders to address the triple planetary crisis of climate change, biodiversity loss and
pollution, as indicated in point (a), Sect. 24.3. A dynamic understanding of systems
and the interaction of systems reveals to us that a great deal more than incremental
changes are needed if we are to depart from the status quo. McPhearson et al. (2021)
suggest five principles for initiating systems level transformation by rethinking
growth, efficiency, the state, the common, and justice.
Implementing these principles globally furthers the organization of interactions
by societal stakeholders so that sustainability can be taken up on a long-term basis.
A systemic understanding of transitions to sustainability commences with indi-
vidual actors and comprehends that change occurs on all levels. For businesses fol-
lowing a top-down approach of the CapSEM Model, it concerns perceiving their
place and role as change makers in a much larger system, e.g. in a larger production
chain system, or as local stakeholders in the community, and realising their roles as
potential game-changers when it comes to consumer behaviour across the whole of
society. SDG 12 (Responsible consumption and production) with its subgoals and
targets pave the way as to how business can integrate systemic sustainability prem-
ises in their strategies and deliverables. Systemic sustainability embraces “the pos-
sibility that human and other forms of life will flourish on the Earth forever”
(Ehrenfeld and Hoffman 2013).

24.4.2 Radical Interdisciplinarity and Transdisciplinarity

Improving cooperation across environmental efforts ((Sect. 24.3, point (b)) calls for
collaboration between disciplines: interdisciplinarity and trans-­disciplinarity is a
must to meet the need for science, technology, and data to be both more accessible
and used effectively. Radical interdisciplinarity (RI) is merging discrete disciplines
in order to generate new knowledge. It thereby combines methodologies of
256 A. M. Fet and M. Keitsch

traditional scholarship with narrative, creative approaches. This fusion of discrete

branches of knowledge can encourage genuinely new insights on, for example, sus-
tainability and gender issues etc. (Keitsch 2022). The systems-­orientation of RI
offers many opportunities, and disciplines might eventually move to transdiscipli-
narity, which encourages cross-communication and design, rather than the persis-
tence of disciplinary identities (Jantsch 1972). Transdisciplinarity is defined as a
critical and self-reflexive research approach that relates societal with scientific problems; it
produces new knowledge by integrating different scientific and extra-scientific insights; its
aim is to contribute to both societal and scientific progress’. (Jahn et al. 2012)

Alongside a greater need for empirical data comes a necessity for broader and nor-
matively oriented problem framing of top-down transitions to sustainability together
with the demand for scientific results which can be used, and useful, for society.
How, and to what extent, academic as well as non-academic actors manage to
develop methodologies and engage in open and responsive discourses are key fac-
tors for success, both for sustainability scientists and for societal transition pro-
cesses alike. Some authors claim that long term transitions require interest in the
normative direction of innovation (Grin et al. 2010). The potential of innovation
rests not solely in economic benefit or political power, but in overall desirable soci-
etal changes and citizens well-being, induced by this innovative activity.
Successful movement across levels in the CapSEM Model calls for an under-
standing and competence rooted in science, technology, strategic management, and
governance, which encompass a mix of transdisciplinary competence. Transitions
induced by methods in the CapSEM Model may be minimal or ‘small-range’ on
some levels, in regards to the mutual knowledge generation and its wider transfor-
mational effect (Stokols 2006; Lang et al. 2012). However, the stepwise CapSEM
Model provides a framework for enhancing activities and contributes towards moti-
vating stakeholders to engage in companies’ sustainability strategies (Fet and
Knudson 2021).
Thereby, the CapSEM Model displays great potential for generation, implemen-
tation, and reflection of new transdisciplinary knowledge on sustainability between
various actors and diverse international contexts.

24.4.3 Net Positive Leadership

Net positive leadership contributes to meet the need for reinventing the economy for
the twenty-first century, e.g. via green or circular economies and decoupling eco-
nomic development from its destructive footprint (Sect. 24.3, point (c)). Green com-
petitiveness illustrates how net positivity can be approached in a network of
companies. According to Polman and Winston, addressing sustainability challenges
via qualitative growth and social responsibility, comprises a huge economic oppor-
tunity for companies (Harvard Business Review, September–October 2021). Core
technologies such as renewable energy, batteries, smarter artificial intelligence (AI),
big data, are getting cheaper and can be implemented at large scale. Companies that
24 The Way Forward 257

have embraced action on environmental, social, and governance also increasingly

demonstrate that sustainability makes for profitable business. Polman and Winston
signify sustainability focused companies as ‘Net Positive’: (Such a company…)
“improves well-being for everyone it impacts and at all scales – every product,
every operation, every region and country, and for every stakeholder, including
employees, suppliers, communities, customers, and even future generations and the
planet itself.” (Polman and Winston 2021, p. 7). The foundation for Polman and
Winston’s novel business architecture is a, somewhat radical, appeal to a strongly
profit oriented economic community. Polman and Winston suggest companies
should withdraw their seclusion: they have a global responsibility.
Responsibility is a core divider between a typical business and a net positive one. After all,
the current model of shareholder capitalism generates tremendous financial value for busi-
ness by pointedly not taking ownership and treating issues such as pollution or inequity as
‘someone else’s problem’. So, taking responsibility is the first step. (Polman and
Winston 2021)

Strategically, responsibility can be met by rethinking what a business is, how inter-
national change can be driven and how other stakeholders can be included in the
decision-making processes.
We’ve earned the distrust of society …With everyone at the table, we can shift entire sys-
tems toward well-being for all. The potential for positive impact is exponentially larger than
going it alone. Historically, governments and multilateral institutions have taken the initia-
tive, but in an increasingly challenging national and international political environment,
leading companies are expected to step up and help make political action less risky for peers
and governments. This is the ultimate work of a net positive company. (Ibid., 168)

Balch (2013) discusses possible drawbacks of net positivity that are worth to
address. First it seems to be a real challenge that companies will only mitigate their
most relevant impacts; Coca-Cola changes its environmental policy only on water,
Kingfisher and Ikea are limiting their ambitions to forests, etc. (Balch 2013).
Moreover, there are industries that might have a hard time to exercise global respon-
sibility such as weapon producers. Further, it will be difficult to measure net positiv-
ity success. What are the criteria for its impact on society?
These few points already indicate that questions and challenges related to com-
panies’ responsibility have to be discussed by society at large, not solely by compa-
nies. Yet, the positive effect of net positivity is its radical approach, it urges the
entire business culture, while corporate social responsibility (CSR) strategies often
do not reach to the core of a business organization and permeate all levels.

24.4.4 Digitalization for Sustainability

Digitalization for sustainability addresses the need for better collaboration and
cooperation on environmental efforts within the UN, the private sector, and other
stakeholders (Sect. 24.3, point (d)). Data driven change towards sustainability is
gaining momentum in the digitalization context. Utilizing data technologies to
258 A. M. Fet and M. Keitsch

make more efficient use of resources is the main goal of Industry 4.0. Computerization
is increasingly impacting manufacturing. Business is quickly adopting mechanisms
such as Internet of Things (IoT), cloud computing and analytics, and AI and machine
learning for production processes and operations. IoT-related technologies promot-
ing circular economy (CE) seem particularly promising (Rejeb et al. 2022). The
successful implementation of IoT requires big data and novel analyses to detect
patterns and trends that can ensure that the implementation of CE concepts is tech-
nologically and economically feasible. The crucial role of big data in enabling the
transition to e.g. CE is pointed out by several authors (Rejeb et al. 2022). However,
they also point to risks such as privacy protection and data security when making
products ‘smart’. Technology and ICT enablers such as IoT, Augmented Reality,
Digital Twins are fruitful for sustainability but they require the development of
capabilities to identify, use, and assimilate internal and external information.

24.4.5 Fair and Inclusive Transitions to Sustainability

Fair and inclusive transitions to sustainability address, among others, public aware-
ness about the global nature of environmental problems and contributes to acknowl-
edge environmental challenges (see point (e) in Sect. 24.3). The twenty-first century
is facing various social challenges on a global scale. That represents persistent prob-
lems such as unstable financial and economic systems, ageing populations, poverty
and work migration flows. Grin et al. (2010) suggest that these challenges involve
various interdepended actors, domains, and scales, and are not directly controllable.
Schäpke et al. (2016) understand sustainability transitions as facilitating change in
societal systems, yet the outcome is uncertain. Transition management is regarded
as necessary to direct change by applying empowerment, social learning, and social
capital development. Transition management helps governments to accelerate
change towards sustainability. This takes place on global and national but specifi-
cally on local levels. Communities are increasingly encouraging social innovation
to manage resources for the public good. Transition management on the local level
for example in form of transition towns, for example through engaging their com-
munities in home-grown, citizen-led education, action, and multi-stakeholder plan-
ning to increase local self-reliance and resilience (Weerakoon et al. 2021). The
transition towns illustrate an example how the two strands of top-down and bottom-
­up approaches of sustainability can be connected to create potential for dialogue
and dynamic interactions between the respective actors (Alexander and
Rutherford 2014).
Fairness and inclusiveness are also in the core of the SDGs. The SDG-CapSEM
connection is discussed in Chapter 21, and can be useful guidance for companies
when addressing these themes.
24 The Way Forward 259

24.5 Conclusion

The CapSEM Model can be regarded as the backbone for many existing roadmaps
and standards for strategic and systemic innovation and implementation, as well as
a foundation for business decisions for actions at the different systems levels. It also
facilitates future sustainability development as ways in which to integrate knowl-
edge across the breadth of sustainability management tools and compile them into
coherent customized frameworks for different users. Small stepwise changes have
been important parts of the transition towards sustainability. This publication has
sought to demonstrate that over many years, these have led to incremental, critical,
changes in business performance. The hope is that they will continue to be a key and
important way of meeting the global challenges the world is currently facing and
will continue to face for the foreseeable future. The CapSEM Model has been devel-
oped as a guiding model to help business to work systematically with the tools to
achieve a stepwise transition to sustainability. It has mainly focused on the environ-
mental aspects and the related toolbox. However, both social and economic aspects
connected to the transition to sustainability could be addressed by a similar sys-
temic mindset model. New tools and roadmaps to be added to the toolbox are
steadily under development and can be implemented, mainly based on natural sci-
ence principles.
Overall, the model can contribute towards the implementation of global frame-
works for sustainable development, including UN Sustainable Development Goals,
and to combat e.g., climate change, biodiversity loss and pollution. The model acts
here as a catalyst for business transition experiments for sustainability, while future
development should focus more explicitly on mutual learning between companies
themselves and between companies and society. For example, combining the
CapSEM Model with frugal, disruptive, and inclusive innovation strategies (Ries
2011; Bound and Thornton 2012) that can generate immediate learning and lead to
practical insights, without excessive resource and time expenses, which is relevant
for all SMEs, and especially sought after in developing countries. The CapSEM
model could here facilitate adoption of the SDGs for business in different cultural
and economic settings, which is in line with the motto of the Sustainable Development
Goals: ‘Leave no one behind’.
There is no doubt that the CapSEM Model contains the potential for expansion
in a variety of directions. It is flexible and dynamic enough to contribute towards
global transitions for sustainable development, amply demonstrated throughout this
publication and harking back to where this journey began. Future developments can
be achieved and underpinned by fostering multi-actor collaborative partnerships,
expanding education, providing training materials and spreading knowledge about
sustainability around the globe.
260 A. M. Fet and M. Keitsch

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