An Indigo Industrial Ecology Paper
Creating systems solutions for sustainable development through industrial ecology

Gambit Ltd.: Integrated Household Service Systems | A Community Scenario
An Insurance Company deals with climate change | Qwanin: A Developing Country

Scenario Building at Indigo 

Development of future scenarios is an important activity in strategic planning for implementation of industrial ecology. This helps balance the current dominance of short-term, incremental change. Seeing the full implications of IE requires imaginative exploration across time. Scenarios enable leaders to build visions that integrate short-term innovations into a long-range plan for transformation of industrial systems. Creation of alternative scenarios enables testing of a design concept against possible shifts in environmental, social, political, and economic conditions.  Indigo Development supports strategic planning teams in developing scenarios in an industrial ecology framework.

On this page you will find several samples of scenarios we created for our industrial ecology sourcebook, Discovering Industrial Ecology. These are purely visionary exercises to suggest what full scale application of this science of sustainability could generate. Some readers have dismissed them as "pure fantasy", yet a decade ago the information access enabled by the World Wide Web was such a pure fantasy.

Gambit Ltd.: Integrated Household Service Systems

October 10, 2008. Gambit Ltd. celebrates its fourth year of successful growth today. In honor of the occasion Sarah Hemmings, CEO, said, "We created a niche and so far we're filling 90% of it." The firm was recently acquired by General House, the major appliance manufacturer who joint ventured in Gambit's startup.

The rapidly growing firm provides new home owners with integrated service systems that fulfill all heating, cooling, ventilating, lighting, and kitchen needs. Gambit owns the hardware, installed by local contractors it licenses as Gambit service centers. The householder pays a monthly lease fee, based upon usage. The fee covers use and service of the system and energy costs.

By creating a whole system to meet all lighting, heating and cooling needs, the company's engineers have cut the Gambit customer's total energy draw by 65%. All components are highly energy efficient. Traditionally wasted heat from any one function is re-used for other heating or cooling purposes, depending upon the season. The system's control center includes occupancy sensors that trigger dimming of lights when a room is empty.

Gambit offers technical services to real estate developers needing support in building with appropriate insulation, use of photovoltaic building components, daylighting and other energy efficient design options. The design of both the home and the Gambit system allow for upgrades as new technologies become available.

The first residential developers to risk working with Gambit's radical approach were a mix of firms committed to sustainable design and affordable housing and others who simply saw a new source of competitive advantage. By cutting their major cost of energy equipment, developers were able to offer houses, apartment buildings, and condos at a highly competitive price.  The rapidly growing market for co-housing structures created one of the earliest customer niches.

First home buyers needed a clear introduction to the savings they could gain by the shift from owning to leasing. Gambit's initial demonstration projects had created a track record to support sales as well as the shake-down of the technologies involved.

General House CEO, Martin Agruerro, initiated the joint venture with Gambit as a calculated risk. If the new company could break into the market, GH would be manufacturing its equipment. If it were successful, Agruerro saw that Gambit might be creating his corporation's future. One recent move by GH indicates this may be happening. The firm has also acquired Home Telecom Systems, the breakthrough venture that has paralleled Gambit's strategy by delivering integrated communications, information, and entertainment services.

An insurance company assesses its investment portfolio

This future scenario is a hypothetical case of  using IE methods by a fictional re-insurance company

In the last years of the 1990s several major insurance companies instituted a major examination of their investment strategies, using insights and tools from industrial ecology. Catastrophic claims from hurricanes, flooding, and other weather events were causing very high payouts from the industry ($39.5 billion for US companies alone between 1989 and 1992). Insurance executives began to explore the possibility that these major losses could be connected to the impact of global warming on climate patterns. They were also concerned about liabilities they were covering in toxic spills and polluted industrial sites.

An industrial ecology consulting group proposed to analyze insurance investment portfolios, reviewing their total environmental impact, not just the issues of climate change. Gulf Re-investment, a Florida based company, contracted for a pilot project. Work began  with an executive briefing and a more intensive workshop for staff investment and risk analysis researchers. The idea of an insurance company, its industrial clients, and its investment portfolio being a living system seemed quite alien initially. Discussion of IE’s analytic tools demonstrated that the idea can benefit even a financial institution. An industrial ecology review of one of GR’s major insurees with heavy Superfund exposure helped bring the concept home.

With a common understanding of IE’s potential, the consultants and corporate researchers worked together to analyze major inputs and outputs of the company’s 15 most energy and materials intensive clients and investments (using standard industry and regulatory data).

 The pilot study of the portfolio’s industrial metabolism  traced:

  • draw upon non-renewable resources;
  • greenhouse gas emissions;
  • other pollution to air, water, and land;
  • generation of solid wastes;
  • patterns of energy use;
  • impacts upon biodiversity, where perceptible.
The team went on to review possible impacts of these findings on the insurance company’s risk exposure. This quick and dirty pilot study indicated some critical points where GR supported major contributors to green house gases and other global environmental effects. Environmentalists had been demanding a strategy of disinvestment in fossil fuel companies. Gulf executives insisted that this would be a quick-fix with fiduciary as well as environmental hazards. They called for a truely systemic approach. They also saw that they would have to build strategies for risk reduction through collaboration with other major players in the insurance industry, as well as with their major insurees and with the companies in which Gulf invested.

GR decided to issue its IE team's initial findings as the Gulf Re-investment Environmental Report Card. This report was used to stir dialogue within the company, with its insurees, and with the firms in GR's portfolio. The communications package included a print report, a video tape, an overview of industrial ecology, and a computer disk with a survey for each company in its portfolio. The latter raised questions about environmental performance objectives, strategies for reducing greenhouse gas and acid rain emissions, and the status of programs for implementing these strategies. CEO to CEO contacts were used for some of the worst cases.

This process continued through the first year of the new century, leading the majority of Gulf's clients and investments to set voluntary goals for reductions in emissions greater than those the U.S. EPA was suggesting.

A new cluster of hurricanes and floods in the Summer and Fall prompted collaboration between Gulf Reinsurance and other major reinsurance companies. They organized a series of informal CEO level retreats with leaders in the energy industry. They bluntly asked how could the insurance industry support the energy industry's achievement of much higher energy efficiency, diversification into renewable sources, and the phasing down of use of fossil fuels.

After two years GR started analyzing the economic and environmental impacts of this strategy of technological and business diversification in the energy industry. Its research team drew upon another industrial ecology tool, dynamic input/output modeling IO models enabled them to compare the impacts of a business as usual scenario and an energy diversification scenario. They also factored in growth in the environmental and renewable energy venture funds Gulf had set up to finance commercialization of demonstrated new technologies. The resulting what-if tool continued to play a major role in the company's portfolio analysis and its ongoing dialogue with major companies in which it invested or whom it insured.

Gulf offered notable leadership to its industry and to major firms in the industry's portfolio. Without ever threatening disinvestment, the company supported a more rapid reduction in greenhouse gases and other emissions than any corporations thought possible at the beginning of the process. An insurance company, acting in terms of its economic self-interest, helped define the common self-interest in sustainability.

The following is the actual history of insurance company involvement in climate change issues in the 90s

The future scenario above of a hypothetical case of  using IE methods by a fictional re-insurance company  was written with the following basis in fact.

Beginning in the early 90s scientists of the environmental action organization, Greenpeace, made a case for the role of global climate change in triggering more frequent hurricanes and floods and record claims on insurance companies. (Leggett, Jeremy. 1993. Climate Change and the Insurance Industry. Greenpeace, London.)

In 1995 insurance executives attended the Berlin Climate conference with great interest. Frank Nutter, President of the Reinsurance Association of America, said, "It is the threat to people from natural events that drives much of the demand for insurance; yet it is the same threat of future natural catastrophes that could jeopardize the industry's financial viability." He pointed out that in the U.S. 21 out of the 25 largest catastrophes (in terms of insurance claims paid) had occurred between 1985 and 1995. 16 of these involved wind and water, mainly in the form of hurricanes. ("Insurance Firms Ask If Global Warming Swells Disaster Rate," Christian Science Monitor, March 29, 1995, Boston, MA.)

Richard Keeling, a former Lloyds of London executive at the Berlin meeting said, "Every major economy in the world where we have significant exposure has had a loss . . . we started getting concerned about this problem, and we got our experts to look at the reasons for these losses. They turned around and said 'well, we can't prove that we have a definite global warming problem, but by the time we can, you chaps are in real trouble.'" ("Insurers Launch Joint Effort to Tackle Environmental Risks, "Environment Watch: Western Europe. 7 April 1995, Vol. 4, No. 7. Cutter Communications, Arlington, MA.)

"Five major European insurance companies have begun an effort to take their customers' environmental performance into account when setting premiums and to improve their own environmental record . .  Senior executives of UNI Storebrand (Norway), Swiss Re, Gerling Global Konzern (Germany), General Accident (UK), and National Provident Institution (UK) pledged to integrate environmental considerations and a 'precautionary principle' into their business goals.

Åge Korsvold, President of UNI Storebrand said, "Our objectives as an insurance company and the society's objectives for a sustainable development are closely linked. From an economic viewpoint, it is more profitable to employ resources in prevention than to pay insurance claims. Environmental risks are also financial risks.

"Munich Reinsurance Company, the world's largest reinsurer, had announced prior to the summit that it was raising its estimates of costs caused by natural disasters because of their increasing frequency, and said that it believed this increase and the risk in global mean temperatures was no coincidence." ("Insurance Companies Launch Environmental Initiative," Business and the Environment, May 1995 p. 9, Cutter Communications, Arlington, MA.)

For more information see the UN Environment Program's web site on insurance and climate change.
UNEP Insurance Industry Initiative or

A Community Scenario

Hometown uses industrial ecology to form its economic development strategy.

In October, 2005 Marie Capistran, returned from an economic development conference with a new idea: industrial ecology as a foundation for her community's economic planning. As Director of the Hometown Economic Development Council she was in a position to act on her new idea. She quickly briefed her Chamber of Commerce President, Hometown's Director of Public Works, a real estate developer, the CEO of the local utility, and her favorite anti-development activists.

She told each of them, "I think we can get past all the conflict we've had around industrial development in Hometown. This concept of industrial ecology tells me we can take care of our environment better than we have before while we grow strong new businesses.

First, we get rid of the idea that we have to produce wastes. Our industry will be much stronger if we face facts: plants are producing products they just haven't figured out how to sell. Then they pay good money to haul them to the dump! "If they start seeing everything they produce as possible by-products, they'll be more competitive. Putting that into effect will give us a whole new type of business to recruit or incubate. We'll need firms that re-process the residual products."

Marie had soon recruited a leadership team to back her up in planning a community strategic planning conference: Making Hometown More Competitive through Industrial Ecology. In January, 2006 industrial and union leaders, city officials, environmentalists, educators, and representatives of the state EPA met for two days. They focused on learning about their community as an industrial ecosystem and brainstorming initiatives.

Conference participants studied Kalundborg's industrial symbiosis and the early attempts to create eco-industrial parks. They mapped the industrial metabolism of Hometown, roughly charting the major energy and materials flows in the industrial, commercial, and residential sectors. (Participants had decided to stop using the word "waste" in Hometown by the end of the first day of the conference.)

Ecologists from the local university helped them develop a visual model of the major natural ecosystems in and around their city. In this model they highlighted areas of damage, vulnerability, and potential for restoration. Hometown Mayor, Andy Rice, said, "We have to know our environment's qualities, characteristics, and constraints if our economic development is going to work with it, not against it."

By the end of the conference, participants had committed to a process of creating a sustainable community strategic plan. They set initial broad objectives: reducing the total waste stream; increasing efficiency of energy use; lowering air and water emissions; and developing jobs. To carry this planning forward and assign specific targets they planned the following activities:

  • Continue the ecological modeling to deepen understanding of Hometown's ecosystems and to guide setting of environmental performance objectives.
  • Survey companies to inventory their major unsold by-products and major inputs (energy as well as materials); and to gather information on current implementation of pollution prevention and energy efficiency programs.
  • Compile and review all existing data on materials going into the landfill.
  • Create kits for family self-audits of their material and energy inputs and outputs.
  • Refine the mapping of Hometown's industrial metabolism, using input from the above steps.
  • Set up a community online information exchange with e-mail, discussion forums, and a data base of unsold by-products.
  • Hold a second conference to review objectives and set specific targets within the broad environmental and economic objectives set in the first meeting.
Hometown's TV and radio stations gave the conference full coverage and committed to reporting regularly on each of the initiatives. The Hometown Times asked Marie to write a weekly column on the project and KHOM scheduled a regular call-in show to keep channels open for citizen input.

Marie Capistran's board was willing to invest seed money and staff time into these projects. She argued that a cleaner, more efficient industrial sector would create new business development opportunities, make Hometown a more attractive site for plant location teams, and strengthen the town's economy.

The local banks and utilities also contributed funds and staff time for number crunching. A state foundation made grants to the university, community college, and K-12 system to support the survey work and analysis. Finally, the city council voted general fund money for project coordination and outside consultants.

The State EPA and Energy Commission helped the schools design energy efficiency and pollution prevention training programs.

The schools at every level played a very important role in the data collection and processing. Student/faculty teams augmented by engineering consultants worked together in the company surveys to determine the major industrial by-products available for recycling or reuse. They used a geographic information system to map the major opportunities and possible customers.

A business school team created a business plan for a resource exchange operating on the principles of investment recovery. High school and elementary school children made sure their families did the household audits and compiled the data they gathered with them.

Within a year Hometown had enough information to hold its second conference. The surveys had uncovered significant opportunities for increasing efficiency of energy and materials use in industrial plants and for turning wastes into useful products. The ecological modeling highlighted natural constraints to guide the setting of specific targets for environmental performance and development.

Following the second conference, the Economic Development Council used the Public Works waste stream and landfill analysis to identify six early business development opportunities in materials and chemical re-processing. Working with the university and community college, HEDC created a business incubator. The utility recruited a food processing plant, a greenhouse, and an aquaculture firm to locate on its land to use excess steam from its power plant. An investment recovery company decided to open an office to manage the exchange of energy and material by-products.

A local real estate developer negotiated a deal with the City to create an eco-industrial park on closed landfill property. The analysis of community waste streams gave her the foundation for a recruitment strategy based on low-cost supply streams.

Engineers at the university helped find technologies for turning several major waste flows into usable by-products. HEDC supported the creation of industrial development bonds by the city. The development of the Hometown Ecopark moved forward as a strong public/private partnership.

By 2008 city leaders from around the world were coming to Hometown to learn how industrial ecology could help make local economic development sustainable. The economy was strong. Eighty new local businesses interacted in the City's industrial ecosystem with 12 plants of major corporations. All operated with environmental performance standards higher than those required by regulations.

Qwanin: A Developing Country Scenario

A hypothetical developing country uses industrial ecology to chart its path to sustainability. Qwanin


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