A business can become more efficient every year and still move further from its environmental goals. That sounds contradictory until you separate two different measures. Intensity is a rate: energy per unit produced, emissions per dollar of revenue, waste per job. Impact is a total: all the energy used, all the emissions released, all the waste sent to landfill. A factory can cut energy per unit by a fifth while producing so many more units that its total energy use rises. The improvement is real. The total is still worse.
Many sustainability and productivity programs are run on ratios, because ratios are easy to compare and they reward genuine improvement. The danger is treating a ratio as if it were the goal. If the goal is to reduce total emissions, emissions per unit is a useful diagnostic, not the outcome. And if the business is growing, improvement per unit may simply slow the rate at which the total rises.
This article explains the difference between rates and totals, how to account honestly for what an initiative achieves, how to ask whether improvement is enough rather than only whether it is happening, how to trace the mechanisms that turn growth into impact, and how to avoid reductions that simply move the problem somewhere else.
Rates and totals tell different stories
Three measures together explain any total outcome:
- Scale: how much activity there is, such as units produced, kilometres driven, square metres built or customers served.
- Intensity: how much resource or impact each unit of activity involves.
- Structure: how the activity is configured, such as which inputs are used, where they come from, the product mix and the energy source.
The total is the product of all three. Improving intensity while scale grows faster can still increase the total. A 2017 study by Shi, Chen and Shen of the Chinese construction industry between 1995 and 2009 illustrates the pattern at a large scale: improvements in energy intensity substantially offset emissions growth, but growth in total demand for construction more than outweighed them. The figures belong to that industry and period. The principle applies to any growing business.
A simple calculation shows the effect. If a business cuts energy per unit by 20% while its output grows by 35%, its total energy use is 1.35 × 0.80 = 1.08 times the starting level, an increase of 8%. To keep total energy flat with 35% growth, energy per unit would need to fall by about 26%, because 1 ÷ 1.35 is about 0.74.
Report what an initiative actually achieved
When a business is growing, an improvement can mean several different things. Be clear which one applies:
- An absolute reduction: the total is lower than before.
- An intensity reduction only: each unit is better, but the total may not be lower.
- Avoided growth: the total is lower than it would have been, but still higher than before.
- A transfer: the impact has moved to a supplier, a customer or another location.
- A delay: the impact will occur later rather than not at all.
For example, if a business’s emissions would have grown from 100 to 150 units without action, and an initiative holds them to 120, it has avoided 30 units of growth. But its emissions are still 20 units higher than where it started. That may be a worthwhile achievement. It is not a reduction, and describing it as one is misleading.
This matters commercially as well as internally. In Australia, the ACCC has made environmental and sustainability claims a focus and publishes guidance for businesses. A claim such as “we have cut our energy use by 20%” when total use has risen could mislead customers. Make claims that match what was actually achieved and that you can support with evidence.
Better than before is not the same as enough
Most environmental targets are relative: better than last year, better than another site, better than the industry average. These targets are useful. They show direction and reward progress. But they do not answer a harder question: is the resulting level of impact acceptable at all?
A 2017 study by Wolff, Gondran and Brodhag applied an absolute sustainability approach to the food range of a large retailer. Instead of comparing the retailer with peers, it compared selected environmental pressures from its products with an environmental budget allocated to the company. Several pressures exceeded the allocated budget. The method is demanding and depends on assumptions, but the shift in question is useful for any business: from “how much have we improved?” to “is this level within a limit we are prepared to defend?”
Three cautions apply to environmental budgets:
- Allocation is a choice. Dividing a wider limit among businesses requires a rule, such as by revenue, output or population, and different rules give different budgets. Make the rule visible rather than hiding it.
- Test sensitivity. A result that exceeds a budget under every reasonable assumption deserves different treatment from one that sits near the line.
- One number can hide several problems. A business can perform well on energy while creating significant pressure through water use, land use or waste.
Even without a formal budget, a small business can set an absolute ceiling for a material impact, such as total energy, fuel or waste, alongside its intensity targets, and check whether its growth plans fit within it.
Impact is usually concentrated
Averages hide concentration. In the retailer study, a small number of product categories contributed disproportionately to parts of the burden. The same pattern is common in small businesses: one process, one material, one customer type or one site often accounts for most of the impact.
Spreading improvement evenly across the business is rarely the best use of limited effort. Find where most of the impact sits, and ask whether that use is justified by the value it creates. The from footprint to drivers article describes how to break a footprint into the activities that cause it.
Manage the mechanism, not the headline
When impact rises alongside growth, it is tempting to conclude that growth is the problem. Sometimes that is the right conclusion, but often the real cause sits further down a chain:
Growth → more activity → the process or technology used → resource intensity → energy or material source → emissions or waste
Each link is a separate decision. A manufacturer expecting 30% more demand might run existing equipment harder, add a new line, change its product mix, redesign the product, change its energy source, outsource production or alter its supply network. These options can produce very different environmental outcomes with the same revenue.
A 2017 cross-country study by Lin and colleagues found that factors such as energy intensity and emissions intensity were stronger drivers of emissions than some of the visible structural trends, such as urbanisation, that are often blamed. The lesson for a business is to look past the headline variable to the mechanism that converts growth into impact, then change the mechanism where possible.
Four practical points follow:
- Do not manage the proxy because it is easy to see. Slowing growth may sacrifice value while leaving an inefficient process untouched.
- Do not use one average for every site or product. The same growth can have very different effects in different places.
- Stress-test success. If growth exceeds the plan, which environmental limit is reached first?
- Check assumed improvements. A plan that relies on future efficiency gains with no named project, owner, budget or evidence contains a hidden gap.
Reducing or relocating?
Totals can also fall inside a business’s boundary while rising outside it. Outsourcing an energy-intensive process, importing a component instead of making it or shifting work to customers can improve internal figures without reducing the overall impact. A 2017 study by Liao and colleagues of emissions in Beijing found that a shift towards services had not, by itself, delivered the expected low-carbon outcome, partly because of links between sectors and demand from outside the city. The lesson is to distinguish reducing impact from relocating it.
Looking through four lenses helps:
| Lens | Question |
|---|---|
| Source | Where is energy used or emissions released? |
| Supply chain | Which purchased inputs carry significant impact? |
| Demand | Which products, customers or markets create the activity? |
| Shared processes | Which common processes, materials or equipment sit underneath many products? |
Sometimes the most effective lever is not where impact is most visible. It may be a product specification, a shared material, a delivery pattern or a customer requirement. The avoiding burden shifting in low-carbon decisions article looks at how improvements in one place can create problems in another.
Put totals and rates side by side
A simple reporting change makes much of this visible: show the total and the intensity for each material impact together, along with the activity level. When intensity improves but the total worsens, ask for an explanation in terms of scale and structure.
A useful leading indicator is the efficiency-growth gap: compare the rate at which intensity is improving with the rate at which activity is growing. If growth consistently outpaces efficiency, totals will keep rising unless something structural changes.
Classify your initiatives
Look at the initiatives the business is funding and classify each by how it affects the outcome:
- reducing intensity;
- reducing or avoiding demand;
- substituting a material or input;
- reuse and circularity;
- changing the energy source;
- changing behaviour;
- improving measurement.
If almost every initiative is in the first group, the business may be improving what is easiest to measure rather than what most strongly determines the total.
A worked example
This is an illustration. A commercial laundry serving hotels and hospitals wins a large new hospital contract. Over three years, the weight of linen it processes grows by 35%. Over the same period, it installs heat recovery and more efficient dryers, cutting gas use per kilogram of linen by 20%. Its marketing team proposes to advertise a “20% reduction in energy use”.
The owner checks the totals. Total gas use is 1.35 × 0.80 = 1.08 times the starting level: an 8% increase. The accurate claim is a 20% improvement in energy efficiency per kilogram, while total gas use has risen with the growth in work. The advertisement is reworded.
The owner then looks for concentration and finds that drying heavy items, mainly towels and blankets for two large customers, accounts for about 60% of gas use. Tracing the mechanism:
- Growth driver: the hospital contract and its volume of heavy linen.
- Process: how much water remains in items before drying.
- Technology: gas-fired tumble dryers.
- Energy source: natural gas.
The options are different at each link: higher-speed extraction to remove more water before drying, discussing lighter linen specifications with the two customers, pricing heavy items to reflect drying energy, and testing whether electric heat-pump dryers make sense given the site’s power supply and tariffs.
The owner also sets an absolute ceiling: total gas use should not exceed the starting level. If volume reaches 1.5 times the starting level, gas use per kilogram must fall to about two-thirds of its original level, a reduction of about 33%, to stay within the ceiling. The current 20% improvement shows how far there is to go, and which levers will be needed beyond equipment efficiency.
How this applies to a small Australian business
Small businesses that are growing often see efficiency improve while total use rises. Practical steps:
- Report totals and rates together for your main impacts, along with activity levels.
- Describe achievements accurately: absolute reduction, intensity reduction, avoided growth, transfer or delay.
- Check environmental claims against the ACCC’s guidance before making them.
- Find where impact is concentrated and focus effort there.
- Trace the mechanism from growth to impact, and act on the links you can change.
- Set an absolute ceiling for one or two material impacts alongside intensity targets.
- Ask whether reductions are real or have moved to suppliers or customers.
- Calculate the efficiency needed to keep totals flat under your growth plan.
The sustainability as an operating choice article covers how to build these decisions into how the business runs.
Signals worth watching
- Intensity improving while totals rise.
- Growth forecasts missing from environmental plans.
- Large changes in product or customer mix.
- Outsourcing that lowers internal figures but not overall impact.
- Plans that rely on future efficiency gains with no named project.
- Claims of “reductions” that are really avoided growth.
- Targets based only on past performance or peers.
Common mistakes
- Treating a ratio as the goal.
- Calling avoided growth a reduction.
- Spreading effort evenly when impact is concentrated.
- Blaming growth without examining the mechanism.
- Counting relocated impact as reduced impact.
- Funding only efficiency projects.
- Making environmental claims that cannot be supported.
Frequently asked questions
Should we stop reporting intensity? No. Intensity shows whether processes are genuinely improving. Report it alongside the total so both stories are visible.
What if growth is the right thing for the business? It often is. The aim is not to avoid growth but to understand what it will do to totals and to choose forms of growth and ways of operating that keep impact within limits you can defend.
How do we set an absolute ceiling without a scientific budget? Start with a simple, defensible commitment, such as not increasing total energy, fuel or landfill waste above a baseline year, and review it as better information becomes available.
What counts as a transfer rather than a reduction? If the activity still happens, just somewhere else, such as at a supplier or a customer’s premises, the impact has moved. Count it as a transfer unless you can show the overall impact fell.
Where can we get guidance on environmental claims? The ACCC publishes guidance for businesses on making environmental and sustainability claims. Check the current version before making public claims.
Questions to ask
- Are our headline measures totals or ratios?
- Which growth assumptions could overwhelm our efficiency gains?
- How much would intensity need to improve to keep our totals flat?
- Where is our impact concentrated?
- Are we reducing impact or moving it elsewhere?
- Which of our initiatives act on demand and structure, not just efficiency?
Bringing it together
Efficiency is a rate and impact is a total. Track both, together with the level of activity, and be precise about whether an initiative reduced the total, reduced intensity, avoided growth or moved the impact elsewhere. Ask not only whether you are improving but whether the result is enough, find where impact is concentrated, trace the mechanism that turns growth into impact and act on the links you can change. Efficiency remains essential. It just cannot do the whole job for a business whose scale and structure are changing.
Source: KEVOS notes, drawing on published research in the Journal of Cleaner Production (2017) by Shi, Chen and Shen on construction emissions, Wolff, Gondran and Brodhag on absolute sustainability assessment, Lin and colleagues on drivers of emissions and Liao and colleagues on sectoral linkages. Examples and figures in this article are illustrations. This article is general information, not legal advice.
