Dematerialisation: Doing more with less
The world is seeing a decoupling of resource consumption from economic growth
Throughout history, our consumption of resources has been innately linked to economic growth. The industrial era created an unprecedented improvement in quality of life and, as economies expanded, the natural world was stripped to satiate our growing desire for stuff. Between 1970 and 2010, the annual global use of materials grew from 26.7 billion tonnes to 75.6 billion tonnes1.
While this trend is worrisome, over recent years resource consumption has been decoupling from economic growth with the help of advances in technology2.
The rent revolution
Innovations in cloud computing and mobile connected devices are enabling more efficient use of resources, as the modern consumer moves towards an asset-light rental way of life. Music streaming services, such as Spotify, have displaced CDs. Netflix has displaced DVDs. News apps are displacing traditional print, while ride-hailing services such as Uber mean many people no longer own cars. Owning a car, which sits on a driveway for over 90% of its life while incurring road tax, insurance, fuel and upkeep costs, is increasingly inefficient in a world that’s moving decisively towards electric automation in the coming years.
Perhaps the clearest example of dematerialisation can be seen in the iPhone. By owning just one iPhone, you also own a camera, a torch, a map of the whole world, a calendar, a calculator, a clock, a tape measure, a voice recorder, a radio, an MP3 player, a TV, a computer, a GPS, a wallet and an endless number of games. Consequently, these are all goods that we now own less of.
The effects of digitalisation, automisation and system efficiency can be seen across the aggregate usage of several resources in the developed world. US 2019 energy consumption was flat compared to 2007 data, despite a +42% increase in GDP3. Total US water consumption has shrunk by 25% since 1980, while the population is up over 40%, in part thanks to advancements in agriculture and manufacturing.
While eCommerce has become a larger part of our lives, and the packaging accompanying it, the amount of paper and cardboard produced in the US each year is down by 8% from 19904. This is because companies such as Amazon don’t receive value from using cardboard. Instead, they focus on reducing the amount they use to cut costs and increase profit. Besides, cardboard today uses far less paper pulp than it used to.
Ecolab: Portfolio case study
Ecolab is one company reducing consumption across a wide range of industries. Its solutions and insights help customers to produce safe food, maintain clean environments, reduce water and energy use and improve operational efficiency.
In 2018, Ecolab helped its customers save more than 188 billion gallons5 of water – enough drinking water for 650 million people. Its solutions cut customers’ energy consumption by 19 trillion British thermal units and avoided 2.4 billion pounds of greenhouse gas emissions. This is achieved through innovations. For example, its ‘EHT dishwasher’ cleans dishes in a commercial kitchen in 60 seconds, using 50% less energy and water than previous models – saving two swimming pools of water a year.
Seven of Ecolab’s products are also included on the ‘List of disinfectants to protect against coronavirus’ issued by the US Environmental Protection Agency. Today, hygiene is a fragmented and less penetrated market. But, in the wake of Covid-19, it seems inevitable that higher standards will be required across all industry verticals in the future.
Decoupling profits from material consumption
Dematerialisation represents a critical turning point in economic history, where significant
alignment has begun to occur between productivity and sustainability. This is essential if we’re to support a growing global population without destroying the planet.
Source: How the United States uses energy, US EIA, 2018
Unsubsidised renewable energy is now often the cheapest source of energy generation6. While the installation and maintenance costs of renewable energy have previously hindered mass adoption, these costs continue to decrease. As a result, 2019 was the first year in which renewable energy delivered more of Britain’s electricity than that generated by fossil fuels7. This separation of output growth from resource consumption allows us to get more, while taking less from the planet.
While the focus on increasing profits by using less can be seen most evidently in the developed world, emerging economies are expected to quickly follow, benefitting from the innovation and advancements of those that preceded them. The emergence of technology that supports dematerialisation can be found across industries that traditionally extract materials from the earth.
Manufacturing efficiencies are being created using computer aided design, such as producing fuel-efficient engines and creating lighter cars. Employing machine learning in data centres, known for using plenty of energy, allows the facilities to be run far more efficiently. Wide-spread adoption of data-enabled precision agriculture allows farmers to increase crop tonnage while using less land, water and fertiliser.
The technological advancements of recent years have positioned us well as a society to grow within the finite constraints of our world. In the years ahead, continued dematerialisation of the physical world should allow for a better quality of life for us all – and the planet.
Broadridge Financial Solutions: Portfolio case study
Despite the global economy’s digitalisation, many businesses still mainly communicate by post due to its convenience. In the US, 70% of businesses still deliver bills and statements on paper, with only 12% of utilities and 7% of insurance companies actively engaging digitally.
One of the firms offering a solution to this is Broadridge. It helps companies to send their communications digitally at a lower cost and more efficiently than most clients can do in-house. It currently processes US$7trn of equity and bond trades a day and shareholder voting in 90 countries. Broadridge also digitally sends over 90% of broker regulatory communications, reaching 80% of US households.
The company does this through its ‘Communications Cloud’ – a paperless network that can send communications straight to popular consumer channels, such as Google Cloud, Amazon, Dropbox and Evernote. It then sends corporate clients data analytics. Over five billion communications are now processed via the network every year, saving over US$15bn in post costs in the past decade alone.
Read the previous article
Sources and references
- Assessing global resource use, UN environment programme, 2017 [PDF, 3.73MB]
- Andrew McAfee’s ‘More from Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources – and What Happens Next’, October 2019
- How the United States uses energy, US EIA, 2018
- USGS Water Use Data for the Nation, 2018
- US Environmental Protection Agency, 2017
- Ecolab, 2018
- Renewable Power Generation Costs in 2018, IRENA, May 2019
- More power came from renewable energy than fossil fuels in UK in 2019, Sky News, January 2020
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