The Ecology of the New Economy

Sustainable Transformation of Global Information, Communications and Electronics Industries

Jacob Park, Nigel Roome

• Publisher: Taylor & Francis
• Year: 2017
• eBook ISBN: 9781351282024
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

A "revolution" is taking place in the development of global information and communications technologies. In slightly more than a decade, the World Wide Web has gone from the idea of an obscure English scientist to a consumer-oriented technology system with an expected one billion users by 2005. The technologies that enable this to happen are advancing rapidly, which is leading to both an unprecedented number of start-up companies and a host of innovative new alliances between companies.

The growth has been so rapid and unexpected that little research and analysis has yet been done on what impact this transformation has had or will have on the ability of companies to meet the global sustainability challenge.

As environmental strategy has traditionally been portrayed in terms of risk cutting and resource efficiency, there is a danger that critical business issues such as information technology, R&D and e-commerce development are examined in isolation from the wider sustainable business perspective.

An important objective of the book is to explore, document and raise awareness of sustainability concerns arising from the emerging global information economy. The information economy is defined in the broadest sense possible, including software, hardware, telecommunication – traditional and wireless – and advanced communication technologies.

Some of the key issues and questions that are examined include: Case studies on how and to what degree sustainability concerns are being integrated into the business model of electronic, telecommunication and dot.com firms.

The relationship between the diffusion of information and communication technologies and the energy and resource intensity of companies.

The role of information and communication technologies in the shaping of policies for sustainability, its impacts on sustainable or unsustainable lifestyles and its implications for the interaction between companies and other actors.

Corporations and the global digital divide.

The Ecology of the New Economy will be of interest to academics, governments, businesses, and non-governmental groups who are trying to understand the linkages and relationship between the two of our greatest global challenges: the information revolution and environmental sustainability.

Part 1
Sustainability Challenges and Implications of a Global Information Economy

1
Sustainable Business Strategies in the Internet Economy

Klaus Fichter

Borderstep: Institution for Innovation and Sustainability, Germany

1.1 From atoms to bits?

1993 is regarded as the year when the Internet economy was born with the breakthrough of the World Wide Web (WWW). Since then, the Internet has developed into a service-integrated global net with a diversity of multimedia uses. The initial euphoria over the new economy has in the meantime given way to more realistic valuations after the failure of many Internet start-ups and the still low proportion of e-commerce in overall trade turnover. E-business will not be the be-all and end-all in the future, but e-commerce and Internet use will certainly gain in importance.

According to forecasts by the European Commission there will be 500 million Internet users worldwide by 2003 and a rapid increase in e-commerce turnover, especially in the area of business-to-business (B2B). However, when looking at the objectives of sustainable development, the expected effects of the Internet revolution are uncertain. This chapter looks into the environmental effects resulting from e-commerce and Internet use and where the strategic starting points lie for companies who want to use the potential of the Internet revolution for progress towards sustainable development.

What does the future hold in store for the Internet economy? Will Homo connecticus lovingly point to the computer touch-screen, be beamed via the World Wide Web around the globe in a matter of seconds and get all jobs done effortlessly, cheaply, in real time and using a minimum of energy resources and without any negative effects? Is this the new economy—clean, pollutant-free and resource-efficient? If you believe the adverts, yes! However, the real world of the digital economy will probably look very different. The proclaimed paradigm shift from atoms to bits (Negroponte 1995: 11ff.) is only half the story.

1.2 Environmental effects of e-commerce and Internet use

The substitution of physical products by electronic alternatives appears at first glance to be a good opportunity for working towards dematerialisation and eco-efficiency. The ‘paperless’ newspaper on the Internet, for example, could be seen as a contribution to safeguarding natural resources. However, initial estimates show that energy consumption during the entire production process of a screen-readable newspaper is approximately ten times that of a printed newspaper (Plätzer and Göttsching 1998). Digitalisation and virtualisation do not automatically lead to dematerialisation.

For the environmental effects of e-commerce and Internet use, three levels can be distinguished: direct environmental effects of the information technology infrastructure (energy and material use of networks, servers, receiver systems, PCs, etc.); secondary effects caused by the transformation of business processes and markets; and tertiary effects due to subsequent and rebound effects (see Fig. 1.1). This distinction is suitable for classifying environmental effects of information and communications technologies in general. ¹

The core insights of available studies² to date may be summarised as follows:

• ∎ There is no general answer to the question of whether the use of new media will lead to increased or decreased environmental impacts.
• ∎ New and classic media each have their specific environmental advantages: so, for instance, with regard to selective searching for information, electronic media are usually more efficient and more environmentally friendly (time-saving search functions; energy use and environmental exploitation are crucially dependent on use). With regard to entertainment and unspecific background input, conventional media are often more environmentally advantageous.
• ∎ Electronic media are often not so much a substitute for but a rather a supplement to printed or other media, thus tending to increase environmental impacts. There is a risk of summation effects and incomplete substitution.
• ∎ Digitisation of products and media (music, news, e-mails, etc.) does not automatically lead to dematerialisation but often rather entails subsequent effects. So, for instance, digitised music files downloaded from the Web (e.g. via Napster) are often stored on CDs; received e-mails are printed out on paper, etc. These are rematerialisation effects.
• ∎ Side-effects of digitised media, such as packaging of CDs, or printed user manuals, considerably influence the eco-balance.
• ∎ The environmental friendliness of Internet use and electronic media depends heavily on electricity production, and the contribution made by the technol-ogies used for power generation. For printed media, the paper recycling aspect strongly influences environmental effects.

Figure 1.1 Environmental effects of e-business and Internet use

• ∎ The network infrastructure (server, router, etc.), as distinct from terminals, has considerable relevance for energy consumption and environmental effects.
• ∎ Potentials for increasing resource productivity are presumed mainly to lie in the B2B area. US studies (e.g. Romm et al. 1999; Cohen 2000) indicate considerable potential in the areas of reducing stocks of flawed products, energy consumption and floor space used for retail and office businesses.
• ∎ Any assessment of the environmental effects of e-commerce on traffic and the environment is linked to multiple assumptions and requires complex modelling. The results of the analyses of environmental effects are thus extremely dependent on the underlying assumptions.
• ∎ Online orders tend to accelerate the delivery of goods and to change the structure of shipped freight towards smaller units; this results in an increase in courier, express and parcel deliveries.
• ∎ On the other hand, Swedish studies show that e-commerce does not necessarily entail more traffic (Jönson and Johnsson 2000). Under certain conditions,online shopping has the potential to reduce the volume of traffic. The realisation of that potential depends crucially on the population density of the home delivery service area, the share of e-commerce users, the delivery distances travelled, and the type of transportation used in the respective region.
• ∎ Only a very few existing studies take rebound effects into account (Romm et al. 1999; Laitner and Koomey 2000). Most empirical studies reflect only the effects at a certain point in time.

Examples of the results of existing studies on environmental effects of Internet use and e-commerce are listed in Table 1.1.

Table 1.1 Examples of environmental effects of e-business

Subject of the study	Positive environmental effects	Negative environmental effects
Eco-balance: reading an article in an online newspaper as compared to a conventional newspaper (Plätzer and Göttsching 1998)		An online newspaper uses ten times the energy of a conventional newspaper (with respect to consumption of fossil primary energy) and produces about twice as much waste.
Swedish study: comparing online shopping and traditional shopping for food and goods for daily needs (Jönson and Johnsson 2000)	Dependent on circumstances: the energy consumption for transport of goods is 5%–7% lower with online shopping if the delivery route amounts to a distance of 50–90 km and about 25 families are supplied.
Eco-balance for desktop personal computers: comparing ‘traditional’ life-cycle and life-cycle with use of e-commerce (Caudill et al. 2000)	If possibilities of e-commerce are used to their full extent in production (B2B, reduction of stocks, etc.), sales (B2C) and in take-back, energy use and environmental impact can be reduced by about 10%.	If possibilities of e-commerce are used in the sales area only (B2C), the energy use surpasses that of traditional distribution channels by about 10%.This is above all due to accelerated shipment by air cargo.
Comparing printed and online catalogues of a mailorder firm (energetic balance of the complete life-cycle) (Greusing and Zangl 2000)		The primary energy consumption of an online catalogue is about 24 times that of a printed catalogue. The main ‘energy consumer’ is the personal computer needed to read the online catalogue.

B2B = business-to-business; B2C = business-to-consumer

To sum up, the overall pattern of environmental effects of Internet use on transport, material and energy use, as well as on environment-related knowledge, is composed of a variety of positive, neutral and negative effects.

1.3 Business strategies: why take environmental aspects into account?

The key question with regard to business strategies is: why should enterprises take aspects of the natural environment into account? Pivotal goals of strategic management are to secure competitiveness and to gain competitive advantage. Besides ethical requirements, there are strong strategic arguments for taking environmental issues into account, since they might directly or indirectly influence shareholder value and competitiveness (Porter and van der Linde 1995b; WBCSD 2001). That is, environmental aspects are worth consideration if: uri

• ∎ Costs can be lowered or avoided.
• ∎ A firm can differentiate itself from competitors and thus increase its sales.
• ∎ New business areas and markets can be opened up.
• ∎ Risks (liability, brand image) can be reduced.
• ∎ Markets can be secured through compliance with regulations and resulting acceptance on the part of stakeholders (‘licence to operate’).

The influence of environmental issues on the competitiveness of an enterprise in the Internet economy depends on the environmental impacts of digital products and online services, the environmental demands by different stakeholders and their influence on profits and shareholder value (Dyllick 1999). The environmental ‘exposedness’ of an enterprise may greatly vary from sector to sector and from product to product.

Hence sustainable business strategies in the Internet economy will have to deal, apart from other competition-related aspects, with the questions of how far environmental impacts of e-business and e-commerce activities will affect the cost, sales and competition situation of an enterprise, and whether purposive consideration of environmental aspects in e-commerce strategies might allow the firm to win competitive advantages.

The following approaches to sustainable business strategies in the Internet economy are thus to be understood as search paths for finding eco-efficient business solutions. Eco-efficiency is a management philosophy that encourages business to search for environmental improvements that yield parallel economic benefits. It focuses on business opportunities and allows companies to become more environmentally responsible and more profitable (WBCSD 2000: 8).³ The search for win–win solutions should not be seen in terms of isolated partial strategies but as an integral part of development, implementation and checking of business strategies.

Figure 1.2 Sustainable e-business strategies

1.4 Approaches for sustainable business strategies

Whereas the environmental impact of information and communications appliances and technologies has been a topic of discussion in environmental policy (e.g. the EU Directive on Waste from Electrical and Electronic Equipment [WEEE]) for a number of years, the issue of how Internet use and information and communications technologies can actively contribute to sustainable development has not been sufficiently examined. However, the use of information technology in the area of transport is an exception.

To date, positive en...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• CONTENTS
• Foreword
• Introduction. Atom to bits: e-sustainability in the global economy
• PART 1: Sustainability challenges and implications of a global information economy
• PART 2: E-business strategies for a sustainable world
• PART 3: Old-economy concerns in a new-economy world
• Bibliography
• List of abbreviations
• Author biographies
• Index