What does resource efficiency mean?

What does resource efficiency mean? It’s a cornerstone of sustainable development, but what does it involve, and what should governance professionals know about it?

If you’re looking to enhance your ESG certification, a topic like this is an important baseline.

At the corporate level, resource efficiency means using available resources in the most effective and sustainable way. 

Generally, this means using material resources to maintain the company’s operations, health and profit while minimising environmental impact. 

It’s a broad term; sometimes, it can drill down to minute levels of a company’s supply chain, and other times, it zooms out to analyse a company’s role in global efforts to be more resource-efficient.

The bottom line is that resource efficiency is using less to do more. 

It focuses on minimising waste, reducing resource consumption with the three Rs (reduce, reuse and recycle), and finding more sustainable ways to produce goods and services (such as switching to solar energy over oil, coal or gas.

It’s the modern company’s key to longevity. 

1. It ensures you don’t waste funds that could have been put to use elsewhere, pleasing shareholders. 
2. It ensures you won’t attract negative attention from investors, consumers and employees for being overly wasteful. 
3. It ensures your company plays its part in environmental sustainability, protecting natural habitats, biodiversity, and reducing emissions. 
4. It can boost your profitability, especially if your company adapts to become more resource-efficient in a short time.

How do a company’s board and other corporate leaders fit into all this? Here are a few main points to remember:

• You need the expertise. As the body driving corporate strategy, at least some of your directors should have the appropriate knowledge about making resource efficiency work in practice. 

• You should embed efficiency into company strategy. Resource efficiency is not a side project but part of the core strategy. In other words, your goal is to make a profit while creating efficient supply chains. 

• Foster innovation. The board is one of the primary sources of good or bad culture in a company, so a mindset of being open to innovation and new ideas will go a long way to inspire others within the organisation. 

• Engage with stakeholders. Communication is always important, but for a topic as big as resource efficiency, it’s crucial to ensure everyone knows how you are adapting your company’s structure.
• Invest in good reporting. You won’t be able to demonstrate efficiency without the correct data laid out in formats stakeholders understand. That’s why good reporting is essential.

Companies can generally demonstrate efficiency with proven innovative product designs, cross-sector collaboration and adherence to regulatory frameworks.

It can be, but the right outlook can significantly lessen the impact. 

There could be costs for things like education around efficiency, new tech, and outsourcing expert advice, not to mention other hurdles such as convincing uncertain stakeholders. 

However, it’s important to remember that pursuing resource efficiency is a long game; you just need to ensure that your investment in this change strategy makes financial sense over time.

Resource efficiency means using what you have to its maximum potential, and if you do it right, it forms a core part of corporate strategy. 

You won’t achieve a perfect version overnight, but you can begin to take steps in the right direction by analysing your company’s current setup and where it needs to be in the future.