Industrial Social Ecology in Danish Industry

Industrial Social Ecology in Danish Industry


Inger Bojsen
Dept. of Organization & Management, The Aarhus School of Business
Haslegaardsvej 10, DK-8210 Aarhus V, Denmark
Telephone: +45 8948 6688, Fax: +45 8615 7629,
E-Mail: inger.bojsen@org.hha.dk


Abstract

Environmental management of today is very much based on an intra-organisational perspective.
Very good environmental management systems have been developed, as EMAS and ISO 14001 in
the name of sustainability. The question is: “Are these intra-organisational management systems
capable of making companies sustainable?” My answer to this is no. A company cannot by itself
reach a sustainable production. The only way to reach sustainability is through co-operation with
other companies. Differently put, there is a good reason for considering an inter-organisational
perspective on environmental management. An obvious example is industrial ecology.

Industrial ecology is rooted in a systems perspective that views the industrial system as a part of
the natural system instead of two coexisting systems. As with natural symbioses materials cy-
cles can be established in the industrial system. The main preoccupation of industrial ecology as
a research field is how companies through participation in industrial eco-systems become capable
of minimising environmental impact by means of waste minimisation initiatives and at the same
time save money.

The philosophy of industrial social ecology is rooted in the concept of industrial ecology. Industrial
social ecology is an extension of industrial ecology in that it does not only consider the minimisa-
tion of materials waste but it comprises all physical resources such as labour, facilities, ma-
chines, transport and materials used by companies, too.

After an extensive discussion of the concept of industrial ecology and industrial social ecology,
the paper will describe the results of a field study about Danish companies’ experiences with envi-
ronmental management and inter-organisational co-operation. Based on these results follows a
discussion of whether Danish industry is adequately prepared for participating in inter-
organisational co-operation in the field of environment or if there are barriers that hinder the devel-
opment of industrial ecology in general and industrial social ecology in particular.


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The concept of industrial ecology

The environmental management systems (EMS’s) used in industry today is mainly focusing on
the intra-organisational level. I argue that in order to achieve sustainable development it is neces-
sary to extend EMS's from the intra-organisational to the inter-organisational level. Therefore, a
new approach to environmental management is needed. Industrial ecology is an environmental
management perspective based on inter-organisational co-operation.

The philosophy of industrial ecology was first introduced in the late 1980’s by researchers arguing
for the necessity of increasing the recycling and substitution of materials. This meant approaching
the industrial system from an integrated view – as an industrial eco-system (Frosch & Gallopou-
los, 1989). This concept of industrial eco-systems is based on an analogy with natural eco-
systems that are interacting and interdependent systems of organisms of varying degree of com-
plexity which live of each other – either consuming each other or each others’ waste. This means
that an industrial ecosystem can be characterised as a system where industry reuses products
and recycles waste materials during manufacturing, thereby maximising the use of resources and
minimising the waste.

The rationale of industrial ecology is that industry should imitate nature by transferring the idea of
symbiotic relationships to the industrial system in order to achieve more efficient manufacturing
processes with a minimum of waste (Tibbs, 1992; Lowe, 1993; Szekely, 1996). Industrial ecology
means thinking of waste not only as an output which can be prevented, but also as something that
can be designed as part of the industrial process product stream (Frosch, 1992). Implementation
of industrial ecology means optimising the total materials cycle from virgin material, through fin-
ished material, component, product, waste product, to ultimate disposal. Factors to be optimised
include [physical] resources, energy, and capital (Graedel et al., 1993; Graedel & Allenby, 1995).

Graedel et al. (1993) define industrial ecology as an industrial design approach capable of main-
taining a desirable carrying capacity while at the same time allowing for a continued economic,
cultural, and technological evolution. Or, put differently, an increase in throughput, i.e. ‘to do more
with less’. Another interesting feature of industrial ecology is that reducing waste can conserve
resources, reduce pollution, and save money at the same time (Duchin, 1992). In other words: A
win-win situation.

It might be an important factor in the attend of reaching a sustainable development that industrial
ecology is an environmental management perspective based on inter-organisational co-operation
and that industrial ecology has an economic as well as environmental gain and therefore has great
potentials for being accepted by industry. But despite the potentials there are still some shortcom-
ings of the concept of industrial ecology as it looks at the moment.

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Industrial ecology in a social perspective

The systemic framework of industrial ecology is inspired by biology, and, like the comparable ma-
ture biological systems (Allenby & Cooper, 1994), it has one major disadvantage – the systemic
framework tends to be inflexible. The ultimate environmental objective for industry must be sus-
tainability in its broadest sense, however is not possible in an inflexible framework, because the
world itself is dynamic.

Another major disadvantage of the framework is that at this stage of its development, the objective
of industrial ecology seems to be limited to the minimisation of waste, and only as a secondary
objective (and primarily as a result of the former) to minimise the consumption of natural re-
sources. But sustainability cannot be achieved by waste minimisation alone. Both resources and
production must be utilised to the full (and important to point out is that resources are not to be
seen as just raw materials and waste, but also human capacity, excess machine-, and transport
capacity). Furthermore, today, industrial ecology tends to have a focus on the product itself. Very
little attention is given to all the other aspects of production and distribution (i.e. design, produc-
tion processes, transport, etc).

In my view, a broader approach is needed to realise the full potentials of industrial ecology. The
focus on the product and waste minimisation only is far too narrow for sustainability to be reached.
The concept of industrial ecology has only focus on the environmental and economic dimensions.
As shown in the figure below, to reach sustainability it is necessary to enlarge the scope to cover
the social dimension as well (Ulhøi, 1995; Welford, 1997).

Figure 1: Elements of the sustainable Organisation





















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Source: (Welford, 1997)
In order to minimise the impact of industry and consumption on nature, it is necessary to extend
the framework of industrial ecology to include the social dimensions of the concept of sustainabil-
ity. It is also necessary to move away from the systems perspective of industrial ecology to a dy-
namic network perspective. This perspective is labelled industrial social ecology. Table 2 below
outlines the differences between industrial ecology and industrial social ecology.

Table 1: Industrial ecology compared to industrial social ecology


Industrial Ecology
Industrial social ecology
Perspective
Systems perspective
Network perspective

A system of individual entities
A network of integrated entities
Main focus
Environment as external to the
Environment in an integrated way
company

Not necessarily a learning per-
A learning perspective
spective
Purpose
Waste minimization
Resource optimization
Dimension
Economic
Social and economic

Static, inflexible
Dynamic

Industrial social ecology as a management tool calls for a network perspective. Important here is
that the network perspective includes not only the network between the participating companies in
the industrial ecosystem but also networks within the single organisation and networks between
the companies and the surroundings.

A network perspective offers some interesting potentials. Instead of viewing markets as exchange
of products, they can be seen as networks of interdependent relationships (Håkansson & Sne-
hota, 1995). Such relationships may be long-term or short-term, depending on the activity. There
is a continuity of change in business relationships, which implies that business networks are
characterised by ongoing evolution rather than equilibrium (Håkansson & Snehota, 1995:269). An-
other appealing thing about the network perspective is that it integrates social relations and social
cognition (Bovasso, 1996), whereas the systems perspective only takes the physical links into
consideration. The social perspective is important because social factors contribute to the suc-
cess and diffusion of the industrial social ecology perspective. Furthermore, for other reasons,
many companies are already part of networks, which can also be extended to embrace the indus-
trial ecology concept.

Environmental management and co-operation in Danish industry

25 years ago an exchange of waste materials between two companies in the Danish city Kalund-
borg was established. This link was the beginning of what became known as the Kalundborg

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Symbiosis – an example of industrial Ecology. Despite the great success with industrial ecology
in Kalundborg, the concept has not attracted any major attention among Danish researchers until
recently and among practitioners there seems to be very little attention to the concept of Industrial
ecology.

This is somewhat surprising considering the economic as well as environmental potentials in the
concept. There are today, however, several exchanges of waste products among companies, links
that might be considered as being in a pre-stage of industrial ecology. These are basically con-
centrated on waste that is easy to reuse or waste consisting of very expensive materials which
makes it profitable to reuse. But this is only the beginning of industrial social ecology. Probably
most of the materials exchange between companies today were based on sound economic sense
such as reusing the waste or as a result of regulatory incentives, which both can be seen as reac-
tive approaches. Industrial social ecology on the other hand is based on proactivity in the sense of
actively searching for new symbiotic relationships.

In the US several industrial ecology projects have started during the 1990’s. These projects are
called Ecological Industrial Parks (EIP’s) and the principle is to establish or re-model industrial
areas after the concept of industrial ecology. The philosophy is that the collective benefit is greater
than the sum of the individual benefits (Lowe et al., 1997: 142). In Denmark, however, there is still
a surprising lack of attention on the concept of industrial ecology, despite the fact that one of the
most well-known industrial ecology project is located here.

This raises an interesting research question:

1. Why is Industrial social ecology not more widely diffused in Danish Industry?

To answer the question, I made an empirical pre-study, interviewing 11 people from six companies
in a Danish town. All of the 11 people interviewed are involved in environmental management on
middle management or management level. The interview process was planned after Kvales ‘seven
stages in interviewing’ (Kvale, 1997) and analysed according to Kvale and Lantz (Lantz, 1993).

The main objection of this pre-study was to establish basic information about these Danish com-
panies with regard to environmental management and co-operation, the two key dimensions of
industrial social ecology.

The reasons why the six companies in the pre-study are dealing with environmental issues are
different for the companies. For company B the main reason is pressure from regulations and in-
creasing demands from customers. For company A and E it is due to corporate demands. In
company D it is because the management already back in 1972, during the first energy crisis,

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realised the need for resource reductions (at that time it was water and energy). This has since
developed to a focus on environmental issues; i.e. in particular resource savings, in general. Com-
pany F was from the establishment focussing on environmental issues due to the production. In
company C the focus on environmental issues is due to the top manager’s perception of environ-
mental issues. The differences in the environmental approaches in the six companies also appear
in the difference in their environmental management as shown in table 1 below.





Table 2: Environmental management in the participating companies

Company
A
B
C
D
E
F
Interview
1 + 2
3
4 + 5
6 + 7
8 + 9
10 + 11
Formalised EMS
ü

ü
ü
ü
ü
ISO 14001
ü

ü
(ü)


EMAS


ü



part of mission statement
(ü)

ü
ü
(ü)
ü

In all of the participating companies in the study, except for one, there is or will be a formalised
environmental management system in place. Three out of the six companies have decided to be
certified according to ISO 14001. The fact that EMS’s are formalised in a majority of the participat-
ing companies implicates that management in general has a relatively strong focus on the envi-
ronment:

“Earlier there was a person in the inventory who was responsible for
removal of cardboard boxes [packaging], now it has become something
management is interested in.” (1)1

This can also be seen from their replies when asked about how they weigh environmental issues
in relation to other issues such as quality and price. As one of the interviewed said:

“[The different issues] are ranked alongside each other in the strategic
foundation of the company.” (4)

This may provide a very rosy picture, but how does the management really consider environmental
issues; what was the main purpose of implementing a formalised EMS in the companies in the
first place? The persons interviewed give three main reasons for this, where the most frequently
mentioned reason is saving of resources, or in other words, economic reasons. Another reason

1 All the citations are translated from Danish, and they are shown in a condensed way, see
(Kvale, 1997, p. 192)

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given by some of the interviewed is that a formalised EMS systematises the process. A third rea-
son mentioned is that a formalised EMS can help management changing the employees’ routines
and old habits, in other words, an instrument for changing the culture in the organisation.

“There is no doubt that the most important reason for working with EMS
is that we want to reduce the external waste load… We want to use the
EMS at an instrument for being able to comply with constantly increas-
ing/ sharper regulations.” (9)

The fact that the most important reason for implementing a formalised EMS can be assigned to
money savings implicates that management generally act according to a traditional neo-classical
profit maximisation. This means that management will not voluntarily make investments in envi-
ronmental protection, unless there is a good economic incentive for it.

If one look at the attitudes towards environmental issues, there are some interesting differences in
the findings. Attitudes towards environmental issues range from: “It concerns all of us” (5) to “it is
nothing special” (1). But the basic attitudes among all of the persons interviewed are that business
is basically about producing at a competitive price and being able to sell the products:

“Earning money is… the condition for being able to do anything” (3)

This implies some contradiction in their answers, however, as some of the persons interviewed
said; environmental concern has as high priority as other important issues, but this seems only to
be true as long as there is an economic incentive.

To get a closer understanding on management’s rank of environmental issues compared to other
issues, I asked the interviewees about the main driving force for environmental initiatives:

“If you had asked this question 7 or 8 years ago the answer would cer-
tainly have been regulations from governmental authorities, but today it
is because we see some advantages by doing it… It is a question of
making investments that reduces the use of resources.” (9)

“It is the demands to ourselves; that we constantly are one step in front,
so that nothing will come as a surprise [regulations].” (4)

“We started already back in 1972, during the energy crisis. At that time
we decided to save water and energy.” (6)

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This shows that the main driving force behind environmental investments is usually related to eco-
nomic considerations:

“It has changed from a situation with no concern at all, towards an
awareness, about a problem that we had to deal with, and it was consid-
ered as something special we were doing [environmental initiatives].
Now we are in a phase where we look at it as good household, which is
quite undramatic.” (1)

“…We examined the machine to check whether we could save some
energy, which we could but only with a return on investment period be-
tween 15 to 20 years. In such a case we drop the investment.” (8)

These quotes indicate that there are some barriers to industrial ecology that can be called cogni-
tive barriers. The present environmental paradigm is based on an anthropocentric view, with an
overall focus on the economic system. This means that environmental problems are seen and
treated as economic externalities (Ehrenfeld, 1995). For industrial social ecology to be successful,
it is necessary to internalise environmental problems and it is necessary to view human society as
part of the ecological system, with focus on ecology and the social dimension rather than only
economics as shown in figure 1 above. But this is not how reality is today. The following quote
indicates a clear focus on the economic dimension of business:

“Prices can destroy all arrangements, I am not bound to purchase from
a supplier, if I do not want to pay the price (s)he charges. No higher
forces can force me to by at that price. This is why this kind of ar-
rangements [purchase commitments] can be destroyed at any time by
prices.” (3)

If managers do not move the focus away from the overall focus on the economic dimension and
starts to consider the environmental and social dimensions, too, it is impossible for business to
experience a sustainable development.

Despite this evidence of a clearly economic focus in the companies environmental initiatives have
been taken in all of the six companies in the pre-study. Table 3 below shows a categorisation of
the six companies based on the environmental behaviour in the companies. The companies can
be separated in three categories: A passive environmental behaviour; an active environmental be-
haviour; and a proactive environmental behaviour.

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Table 3: Environmental behaviour
Environmental Behaviour
Reactive
Active
Proactive
Company
B E A D F C

Another cognitive barrier to consider might be that of co-operation with other companies, including
companies that might even be the competitors. Fundamental for industrial social ecology is that
companies should move away from purely waste product exchange to exchange of all kind of ex-
cess capacity, such as for example machine and transport capacity in respect for the economic,
environmental, and social dimension. None of the companies involved in the research has any ex-
periences in collaborative projects other than a few development projects. All exchanges of waste
materials are based on ordinary purchase arrangements.

Research has shown that companies usually find new partners through their existing networks
(Gulati & Gargiulo, 1997). This implies that it might not always be the most suitable partner a
company gets, and companies with no prior experience with partnerships might have difficulties in
finding partners.

“We are constantly trying to find alternative use, this means that we are
alert and receptive towards new ideas and as time goes on we get to
know more and more companies which are interested in waste.” (4)

“We would like to [have an co-operation in the environmental area] but it
has to be with companies that are similar to us…” (6)

These quotes show that there are problems in finding the right partners for the companies. One of
the interviewees suggests the following:

“I would like a centralised Danish information place [database], where
one could inform about waste products which are available to other
companies. Where one could inform about needs.” (4)

This shows another barrier to the diffusion of industrial social ecology, which is related to inter-
organisational co-operation. Some of the persons interviewed mention that lack of information
about other companies and their needs makes it difficult to establish partnerships. For industrial
social ecology to be successful it is essential that the necessary information is available. There
are two types of informational barriers 1) external informational barriers concerning the information

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flow between companies, and 2) internal informational barriers concerning the information flow be-
tween employees in and across functioning in the company.

The formal EMS systematises information about use of resources and waste inside the company,
and may thus be a valuable tool for eliminating internal informational barriers:

“There is no doubt that in companies where there has been no [envi-
ronmental focus], it would be a good idea with some sort of formalised
EMS, so that they can get things properly structured.” (10)

But implementing an EMS might not be enough to ensure the internal information flow. The struc-
ture of the organisation itself can be a major barrier to the diffusion of industrial social ecology. If
the structure of an organisation does not adapt to the demands in the environment, the organisa-
tion will be ineffective and eventually cease to exist (Miller & Friesen, 1984). Therefore, to respond
to demands from the environment about cleaner production, there has to be an adjustment of the
structure.

In some of the companies some structural changes have been implemented, in that they have es-
tablished an environmental department/function separate from the production. Only in one of the
companies visited a cross-functional advisory board has been established:

“The organisational structures have been changed in that we now have
an environmental department separated from the production… I think
that it has been very good for a period, but I think that it is time for the
environmental department to be integrated in the production again, be-
cause it is nothing special after all.” (1)

“No [the implementation of EMS] has not required any organisational
changes.” (9)

These quotes show that only minor changes have been made in the respective organisations. This
mirrors a superficial attitude towards environmental issues. Neglecting that a change of structure
is inevitable to reach a sustainable development creates a mayor barrier against a successful dif-
fusion of industrial social ecology. Only in one of the participating companies has management
realised the need for further structural changes:

“The position as environmental manager did not exist earlier. And we
have our environmental committee, which involves all levels.” (4)

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