Integrating Sustainability Practices at Design Consultancies

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SAMINT - MILI 2015

Master’s Thesis 30 credits June 2020

Integrating Sustainability Practices at Design Consultancies

A Case Study at Prevas AB

Kimaya Bharale Wilhelm Stenberg

Master’s Programme in Industrial Management and Innovation

Masterprogram i industriell ledning och innovation

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Abstract

Integrating Sustainability Practices at Design Consultancies

Kimaya Bharale Wilhelm Stenberg

Working toward a sustainable environment and society has never been as high a priority as it is today. Numerous studies worldwide have concluded that if no actions are taken, it will be too late to ensure the survival of future generations. Sustainability entails fundamental changes in the way

organizations and societies have been working, the way products and services have been produced, and the way environment, economy and society have been interacting with each other. Design consultancies operate at the initial stages of product development and can contribute significantly to design and production of sustainable goods. This thesis aims to understand and identify how design consultancies can be an active part of a system transformation required to achieve sustainability. It is a case study carried out at a design consultancy Prevas AB in Uppsala, Sweden. Sustainability is a complex topic and its integration into business practices is seldom easy. The objective of the study is to assist design consultancies in addressing this challenge of

integrating sustainability. A comprehensive literature review on sustainability, sustainable design practices, role of design consultancies in product

development is presented. A qualitative approach with semi-structured interviews is followed to understand the current situation in the market, the perception of sustainability by various stakeholders, and potential

improvement areas. The thesis underlines the need and importance of making investments for integrating sustainability at design consultancies, along with some recommendations and practical suggestions to implement related practices. With an analytical approach, integrating sustainability at design consultancies is discussed as an innovation, and the business opportunities involved in adopting this innovation are identified. The results show that although design consultancies may not independently drive the sustainability in product development, they can surely play an important part in it and the current timeframe is critical for making related investments.

Keywords: Sustainability, Product Sustainability, Product Development, Design Consultancies, Eco-Design, Gartner Hype Cycle.

Supervisor: Fredrik Paulson Subject reader: Marcus Lindahl Examiner: David Sköld SAMINT – MILI 2015

Printed by: Uppsala Universitet

Faculty of Science and Technology

Visiting address:

Ångströmlaboratoriet Lägerhyddsvägen 1 House 4, Level 0

Postal address:

Box 536 751 21 Uppsala

Telephone:

+46 (0)18 – 471 30 03 Telefax:

+46 (0)18 – 471 30 00 Web page:

http://www.teknik.uu.se/student-en/

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Popular Science Summary

Ever-growing global population, depletion of non-renewable resources, adverse climate change impacts on the planet, have resulted in the topic of sustainability becoming increasingly relevant and important. To define sustainability in a way that everybody can easily understand has been a big challenge. There are multiple scientific sources that define sustainability in different ways. For example, avoidance of the depletion of natural resources in order to maintain an ecological balance, capacity of humans and biosphere to coexist. In general, sustainability is composed of three distinct pillars: social, environmental, and economic which are also known as people, planet and profit. Overall, the goal of sustainability is to focus on meeting the needs of the present without compromising the ability of future generations to meet their needs. The way we interact with our planet today will impact how the planet will look like in the future. To achieve and maintain a good ecological balance, the sustainability challenge needs be tackled from multiple directions.

Since industrialization, businesses and organizations have been playing major role in the way human beings have been interacting with the ecosystem. Over the decades, human activities have severely affected the environment resulting in issues such as increased pollution, ozone layer depletion, global warming and so on. This in turn has created a threat for co-existence of humans and biosphere. Sustainable development has therefore become an important factor for all sorts of businesses all around the world. A system transformation is required in the value chain to change the way products and services have been designed, manufactured, produced and used for years. There is a growing demand for companies to research and implement new innovative processes to develop increasingly sustainable products and services. Product design and development lies at the core of the value chain of product. It has been identified that product lifecycle impacts are a major cause of current social and environmental challenges. Many organizations have developed tools to help companies, designers, and consultants rethink how to design and produce products in a way that improves profits and competitiveness while reducing adverse environmental and social impacts.

The thesis is focused on the role of industrial design consultancies in the development of sustainable products and services. A design consultancy is an engineering company that performs technology focused design activities for its clients. Design consultancies play an important role in the value chain of products and hence can be an active player in the required system transformation. The thesis work is mainly focused on a case company Prevas AB, in Uppsala, Sweden. Prevas provides services and solutions to a wide variety of industries such as automotive, energy, manufacturing, life-science, oil & gas etc. Prevas office in Uppsala is focused on life science industry. The aim of the thesis is to suggest some ways to improve the processes involved during product development at design consultancies, in order to help them reduce the negative environmental and social impacts of the products during development, use and disposal phase. The underlying idea is to help in integrating sustainable development practices in the existing product design processes.

As product development processes are unique to every company, the integration of sustainability needs to be customized. Correspondingly, a qualitative research approach is

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ii followed to conduct the study. Semi-structured interviews are conducted with employees of Prevas working at various levels within the organization, and some customers of Prevas as well. The focus of the interviews is to understand the processes involved in a typical product development process at design consultancies and how they can be improved by integrating sustainability approaches. The results show that there is much scope and demand for integrating sustainability at design consultancies. Also, sustainable product development is seen a way for companies to become and remain competitive today as well as in the future. However, it is observed that integration of sustainability at design consultancies is in the early phases. It requires investments in for example, education and dedicated resources. The importance of integrating sustainability in business practices and benefits of its prioritization has been stressed in the thesis.

The thesis intends to provide some suggestions to help individual design consultancies to plan their sustainability related business strategies. For instance, it suggests having a collaborative approach with customers for combined efforts towards developing sustainable products.

Integrating sustainability in the early phases of product design and development at design consultancies can further boost its positive impacts during manufacturing as well as other life cycle phases. Having a sustainable business that can give economic benefits while being socially and environmentally sane is the ultimate challenge. If design consultancies such as the case company succeeds in tackling this sustainability challenge, it can be a gamechanger and set a new trend for companies and businesses to work.

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Acknowledgement

This case study was conducted in collaboration with Prevas AB during the spring of 2020. We would like to thank Prevas AB for giving this opportunity to conduct our Master Thesis work at Prevas.

First, we would like to thank Fredrik Paulson, our supervisor at Prevas for his continuous guidance and advice throughout this work. His support, timely feedback and suggestions have helped us a lot in conducting this thesis work. We are also grateful to Markus Nässén, for offering us this opportunity at Prevas office in Uppsala and providing all required resources.

We thank both Fredrik and Markus for proactively helping us with contacting interviewees for data collection.

Further, we would like to express our gratitude to Marcus Lindahl, our supervisor at Uppsala University for his continuous support, valuable discussions and push to make the thesis better.

Without his expert knowledge and constructive feedback, this thesis would not have taken the shape it did.

Next, we would like to thank our interviewees, who took time to give valuable inputs to our work. In spite of the unforeseen pandemic situation, the interviewees made themselves available and helped us to adapt to virtual interview formats.

Special thanks to our examiner David Sköld for his guidance throughout the semester and for finalising the thesis.

We would also like to thank Department of Industrial Engineering and Management at Uppsala University. We are grateful to all the teachers we had throughout our courses in the program, who made the overall learning experience interesting and exciting.

Finally, we would like to share that we have collectively worked on all aspects of this thesis work throughout the entire semester. Iterative reading and reviewing each other’s work was the followed way of working.

Kimaya Bharale and Wilhelm Stenberg, Uppsala University, June 2020.

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List of Tables

Table 1. Pros and Cons of Sustainability Tools. ... 24

Table 2. Indicators of Phases in a Hype Cycle (Fenn, Raskino and Burton, 2017). ... 26

Table 3. Examples of Motivators and Hygiene factors (Expert Program Management, 2018). ... 28

Table 4. Details of the Internal Interviewees. ... 32

Table 5. Details of the External Interviewees. ... 33

Table 6. Segmentation of Interviewees. ... 38

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List of Figures

Figure 1. Product Development Process at Prevas (Prevas, 2020). ... 6

Figure 2. Sustainable Development as a path towards Sustainability. ... 8

Figure 3. Triple Bottom Line, Weak Sustainability, Strong Sustainability (Wu, 2013)... 10

Figure 4. UN Sustainable Development Goals 2030. (UN, 2015)... 12

Figure 5. Goal 12 Responsible Consumption and Production (Goal 12: Sustainable Development Knowledge Platform, 2020). ... 13

Figure 6. Design Core of the Product (Luttropp and Lagerstedt, 2006). ... 18

Figure 7. Cradle-to-Grave Product Life Cycle Perspective (ISO 14040:2006, 2020). ... 19

Figure 8. Cradle-to-Cradle Product Life Cycle Perspective (Dyllick and Rost, 2017). ... 21

Figure 9. Gartner Hype Cycle. (Gartner, 2020). ... 25

Figure 10. Priority Matrix. (Gartner, 2020). ... 27

Figure 11. Word Cloud for Sustainability (Wordclouds, 2020). ... 40

Figure 12. Project Management Triangle (Iron Triangle) (Atkinson, 1999). ... 41

Figure 13. Placement of Integrating Sustainability at Design Consultancies on Fast-Track Hype Cycle (Gartner, 2020). ... 49

Figure 14. Placement of Integrating Sustainability at Design Consultancies on Priority Matrix (Gartner, 2020). ... 50

Figure 15. Modified Iron Triangle with Sustainability. ... 55

Figure 16. Framework for Sustainable Products Inspired by Lowell Centre Framework for Sustainable Products (Edwards, 2009). ... 57

Figure 17. Suggested Timeline for Integrating Sustainability Practices at Prevas. ... 59

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List of Abbreviations

AB Aktiebolag

B2B Business to business B2C Business to consumer C2C Cradle to Cradle

CEO Chief Executive Officer CTO Chief Technology Officer DFS Design for Sustainability EOL End Of Life

OECD Economic co-operation and development ISO International Organization for Standardization KPI Key Performance Indicator

NDA Non-Disclosure Agreement

OEM Original Equipment Manufacturer PPP People Planet Profit

PSS Product Service systems R&D Research and Development SDG Sustainable Development Goals

SCP Sustainable Consumption and Production TBL Triple Bottom Line

UN United Nations

WCED World Commission on Environment and Development

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Terminology

• Business to business (B2B)

Business to business is a trade or partnership carried out between one company and another.

• Business to customer (B2C)

Business to consumer refers to the phase of companies selling goods and services directly to customers, without a middleman.

• Buzzword

A word or phrase, that is fashionable at a particular time or in a particular context.

• Customer

An individual or business that purchases another company's goods or services (Investopedia, 2020).

• Designer

A person who creates and/ or manufactures a new product style or design (Merriam and Webster, 2020).

A Designer at Prevas is a regular term used to refer to the consultants that work at the company in research and development as well as in information technology domains.

• Design Consultancy

An engineering company that undertakes product design activities for its clients, by focusing on the technical and functional aspects of the product.

• Environmental Sustainability

Environmental sustainability defines a boundary for us to satisfy our current needs without anyway compromising the quality of environment/ecosystem so that it remains equally capable of supporting the future generations too (Kaswan et al., 2019).

• Greenwashing

Greenwashing is the process of conveying a false impression or providing misleading information about how a company's products are more environmentally sound (Investopedia, 2020).

• KPI

Key performance indicator, a way of measuring a company's progress towards the goals it is trying to achieve (Cambridge English Dictionary, 2020).

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• Product Development

“… the set of activities beginning with the perception of a market opportunity and ending in the production, sale and delivery of a product” (Ulrich and Eppinger, 2008).

• Product Development Process

“The sequence of steps or activities which an enterprise employs to conceive, design, and commercialize a product” (Ulrich and Eppinger, 2008).

• Social Sustainability

Social sustainability is about identifying and managing business impacts, both positive and negative, related to for example safety, well-being, equality on people (i.e. employees, workers in the value chain, customers and local communities). (UN Global Compact, 2020).

• Sustainability

Causing little or no damage to the environment and being able to maintain an ecological balance for a long time (Cambridge English Dictionary, 2020).

• Sustainability Aspects

Aspects which affect the possibility to achieve sustainability. The three sustainability aspects considered are environmental, social and economic.

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Chapter 1

1. Introduction

This chapter presents an introduction to the topic, problematization with purpose, aim and research questions as well as an overview of the case company.

Due to the speed at which our planet’s resources are being exploited, an industrial evolution is crucial to sustain human activities in the years to come (Allwood, Ashby, Gutowski and Worrell, 2011). All businesses have influence on the economy and environment in one way or the other. The decisions that firms make impact both social and environmental factors (Montiel, 2008). According to researchers, the quest for sustainability had already started a decade ago, which is forcing companies to change the way they think about products, technologies, processes and business models (Nidumolu, Prahalad and Rangaswami, 2009). Consequently, in the past decade, there have been lot of contextual changes and theoretical developments related to sustainability and, society and businesses have been one of the key stakeholders of these changes (Ceschin and Gaziulusoy, 2016).

Increasing number of studies are challenging the traditionally accepted roles and responsibilities of businesses in society and proposing new models for generating values (Ceschin and Gaziulusoy, 2016). Consequently, industries worldwide are facing increasing pressures due to economic crises, resource scarcity and pollution and are changing business strategies to incorporate sustainability (De los Rios and Charnley, 2017). This necessitates organizations to take initiatives to reduce and control adverse impacts of their businesses. As a result, organizations’ response to these changes have also evolved over the years. It is seen that there is increasing awareness about impact of organizations and their businesses on the society and environment. Over the years, three once-distinct trends – declining natural resources, increasing transparency of business practices and a rising tide of social and commercial expectations have converged to make sustainability as one of the important issues of contemporary business agendas.

Initial review of related literature showed that design and development of a product plays an important role in achieving sustainability. It has been argued that implementing inherently sustainable strategies requires changes from the very creation of products and services (Nakajima, 2000). The design and characteristics of a product influence the way its entire value chain will be constructed and managed (Bevilacqua, Ciarapica and Giacchetta, 2008). As a result, there is growing demand for companies to research and implement more innovative processes to develop increasingly sustainable products and services. Many authors have been researching about industry requirements in developing sustainable products and services.

However, despite of having loads of literature and ongoing research on sustainable development, many businesses experience difficulties in implementing it in practice. This suggests that maybe sustainability is not yet practiced in all industries or at least not in all segments. Maybe it is just used as a buzzword or as tool for greenwashing and is not always penetrated deep into the system at design level of products and services. The value chain of

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2 products including design consultancies, manufacturers, suppliers, distributors seem to be detached with regards to sustainability (Dewulf, 2019). While sustainability has become a major challenge for all organizations, the goal of pursuing it cannot be achieved merely by single firm’s performance since it will always be affected by other actors in the value chain.

As stated by Senge et al. (2007), a system transformation is required to achieve a truly sustainable development. This transformation cannot be achieved if some of the involved actors are not aware of the role they are required to play especially when it comes to execution (Senge et al., 2007). Therefore, every actor in the value chain of a product or service plays a crucial role.

Myriad organizations have sustainability related goals, visions. It is interesting to understand how individual businesses are working with these goals, how sustainable development is managed at a business level, how do companies implement it in practice, are there any specific methods or processes that are being followed. It is interesting to know how they plan to accomplish the set goals related to sustainability, is sustainability an extra activity outside usual business or are there any efforts to make sustainability an integral part of the business. This study was inspired by such questions.

Earlier research by (Dewulf, 2019), have shown the importance of integrating environmental sustainability early in the design process otherwise it becomes difficult to consider sustainability aspects in later stages. Study by Gould et al. (2017), has also identified the need to target early phases of product development to integrate sustainability. Decisions made in early phases influence the sustainability impacts of not only manufacturing but also other life cycle phases (Gould, Bratt, Lagun and Broman, 2017). The authors believe that being one of the actors in the value chain, design consultancies can play an important role in designing more sustainable products.

1.1. Problematization

Consultancies offer the right kind of expertise, especially the expertise that is often difficult to cultivate in all companies. Many consultancies have built their reputation on particular capabilities that they can deliver regularly at the highest level (Tennity, 2010). According to Tennity (2010), organisations seek outside expertise to acquire knowledge and talent that they cannot maintain in-house. This speeds up the development of products and services with specialised skills and processes. Moreover, he asserts that the impact of consultants is more profound when partnership becomes an integral dimension of a client’s culture and strategic thinking (Tennity, 2010). According to Tuulenmaki (2004), there are two stages when design consultants come to client company. First is the emergence stage when R&D activities are just starting, and new ideas can have the opportunity to control the development process.

Tuulenmaki considers this stage as an asset for product improvement. Second stage is the project program stage when main features of the product design have already been finalized and the project has proceeded to the implementation phase (Anssi Tuulenmaki, 2004).

A competitive advantage exists when a firm has one or more competencies that allow it to create superior value relative to its competitors in some market segment (Hunt and Morgan,

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3 1995). As rightly put by Flint and Golicic (2009), relying only on products to provide such an advantage often only results in short term benefits. Therefore, firms increasingly rely on their supply chain to obtain competencies. Design consultancies’ user-focused perspective, their ability to conceptualise, and available skills at responding to customer needs make them valued partners in the quest for competitive advantage. Tennity mentioned in his work (2010) that companies are increasingly savvy about improved methods and processes for achieving competitive advantage. Among many other competencies, environmental sustainability has received increased attention in the literature (Flint and Golicic, 2009). In addition, research has argued that proactive environmental strategy creates an entry barrier for newcomers and is a source of competitive advantage in international markets (Porter and Kramer, 2006). Therefore, in the present situation, having sustainable business processes may lead to gain a highly valued competitive advantage. It is worth noting that design consultancies such as Prevas play an important role in the early stages of product development and hence integrating sustainability practices at design consultancies will surely be beneficial for all the stakeholders involved.

Additionally, early studies have also found that there is positive relationship between environmental management initiatives and financial performance (Aragon‐Correa and Sharma, 2003).

It is evident that design consultancies can be one of the main actors in the value chain of a product. Through the literature review, it was observed that ample literature discusses the importance of design consultancies in general (Tennity, 2010; Anssi Tuulenmaki, 2004).

However, it was noted that there is a lack of literature focusing solely on role of design consultancies in developing sustainable products and services. A lot of theories and practices related to sustainable manufacturing have been discussed and proposed through extant literature. However, it appears like its relevance is limited to original equipment manufacturers (OEMs) and the literature lacks to highlight the role design consultancies can/ should play in overall development of sustainable products and services (Maxwell and Van der Vorst, 2003).

For example, within Design for Sustainability literature a strong focus can be observed on the phase after the formulation of the design. It has also been argued that, although there are tools for systematic implementation of sustainability in general, the actual results of using them might be hard to adopt to every sub-genre of tasks (Maxwell and Van der Vorst, 2003) for example tasks that a design consultancy might undertake during product development process.

Based on this information and knowledge it was understood that a system transformation is required in the value chain to produce more sustainable products and services.

Correspondingly, studying about implementing sustainability practices in design consultancies would be relevant and useful as they play an important role in the value chain of products. This has motivated the authors to analyze the typical product development process at design consultancies to help understand how design consultancies can integrate sustainability in their processes to develop more sustainable products and services. In this thesis, light is shed on the possibility of design consultancies being a vehicle of sustainability improvement in product design and development. It also attempts to identify what internal as well as external practices consultancies may adopt to achieve it.

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4 The thesis work was undertaken in collaboration with Prevas AB in Uppsala, Sweden. Prevas Uppsala works as a R&D consultancy mainly for Life Science projects. Detailed information about its business is presented in the Section 1.3 of this chapter.

1.2. Aim and Research Questions

1.2.1. Aim

Aim of the thesis is twofold: First, to evaluate the viability of integrating sustainability at design consultancies while understanding the perception of different stakeholders.

Second, to identify improvement areas and suggest ways to improve processes involved in product development that will help design consultancies in reducing negative environmental and social impacts of products by taking appropriate measures before and during their development, while retaining or increasing the profit levels.

1.2.2. Research Question

How can design consultancies in today’s business environment be a vehicle of sustainability improvement in product design and development?

Corresponding sub-question:

What changes can be suggested in product development processes at design consultancies to improve the performance of projects on a sustainability scale (social and environmental aspects)?

1.2.3 Addressing the Research Question

The research questions are answered by examining the case of Prevas AB. Interviewing different stakeholders (both internal as well as external) of Prevas gave the insights of how sustainability is perceived in the context of design consultancies and what is the scope of integrating it to make an impact on product design and development. Analysis of the empirical data helped to identify the improvement areas at Prevas and make suggestions to integrate sustainability in product development processes. Theoretical framework and literature facilitated the generalization of findings to a broader level indicating the benefits of integrating sustainability at design consultancies in a bigger context.

1.3. About Case Company – Prevas AB

1.3.1. Overview

Prevas is a Swedish engineering design consultancy. Its focus is to provide solutions and consultancy services for different customer segment. They offer services in variety of sectors such as engineering industry, energy, defense, life science, telecom, food. Prevas has multiple offices in Sweden, Denmark and Norway with around 600 employees. Prevas has a wide and

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5 comprehensive network of specialists and business associates within different offices and with other companies. They have a wide variety of offers to their customers. They try to transform ideas by using technical innovation by making it more effective, user friendly and competitive.

(Prevas, 2020).

There are mainly two types of consultants involved when Prevas contributes to the development of its clients’ products, R&D consultants and subcontractors. R&D can be described as in the organisation for economic co-operation and development (OECD) manual - “An innovative and systematic work conducted to expand the knowledge base – including human intelligence, culture and community – and to create new uses of existing information”

(OECD, 2015). Prevas matches the R&D consultant profiles with work assignments they get from customers. In addition to R&D consultants, Prevas has subcontractors within its network.

The subcontractors are hired to fill in gaps in projects running at Prevas. For example, they are utilized when more people are needed for a project or there is a lack of expertise. The subcontractors almost always have their own firms or are self-employed and are then given assignment from Prevas. When an R&D project is conducted at Prevas, Prevas appoints a team of R&D consultants and, if necessary and possible, subcontractors to deliver it.

Duration of projects that Prevas work with vary in time depending on the type of product. One of the projects Prevas is working on right now has been in process for nearly 3 years (Paulson personal conversation, 2020).

One example of a product that Prevas has been highly involved in developing is a smart phone connected breathalyzer specifically aimed for supporting people who suffer from alcoholism to recover. A breathalyzer is a product that estimates blood alcohol content.

1.3.2. Prevas - Uppsala

This case study was done in collaboration with Prevas’ office in Uppsala, Sweden. Operation at Prevas Uppsala are focused on life science sector. They act as a supplier and developer of Life Science projects. Sometimes, they acquire other projects as well, but they mainly work within life science sector (Paulson personal conversation, 2020). According to the 2019 annual report (Appendix 3), 19 % of Prevas’ total business comes from the life science industry which represent the second largest industry for Prevas. Uppsala office is therefore a big contributor for the overall company business (Prevas annual report, 2019).

Prevas Uppsala have expertise or a full collection of tools required to create a concept with regards to serial production of products, including applications, equipment, logistics, quality control and project management services. Prevas Uppsala also provides turn-key production of medical instruments and analytical tools. Prevas office in Uppsala has a set of core competences that they are especially centred around. These were quoted by the business site manager of Uppsala office (Nässen personal conversation, 2020):

Core competence at Prevas Uppsala office:

1. Instrument development, development of analytical instruments in the form of prototype until it becomes serial production.

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6 2. General mechanics, prototype development, software development focusing on

embedded development and PC software but not the graphical interface.

3. Quality assurance is also a big deal for the Uppsala office and is something that they work closely with.

The distribution of consultants at Uppsala office is as follows. There are around 35 Engineers in total. 2/3 of them are connected to software development and 1/3 to hardware development.

Their focus depends on what project they are assigned to. It can be either electronics or pure mechanics or combination of both.

1.3.3. Product Development Process

Prevas has a standardized way of working regardless of the type of customers they are working with. The stages usually involved in a typical product development process are visualized in the Figure 1 below. This process mainly works as a tool to develop customer products but are also used for other projects.

Figure 1. Product Development Process at Prevas (Prevas, 2020).

Key tasks performed in each stage and milestone are as follows:

1. Start

• Check handover from the sales process

• Check the initial planning done by project manager.

2. Definition

• Identify product’s key functionality and define requirement specifications and design descriptions.

• Planning of schedule and cost estimates

• Get consensus of all stakeholders on all these documents 3. Design review

• Experts review the architecture and design document

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7 4. Specification

• Lay down comprehensive specifications for the product

• Describe the design and write an overview of the project, provide a realistic timeline and minimize main risks, and develop a clear understanding of the specifications of the project (including the sub-parts of the project).

5. Project Review

• Verify the project against checklist 6. Development

• Confirm that product meets the requirements and is ready for transition.

• The goal of the process is to produce the product according to the specification of the product specifications.

7. Transition

• Validate if the product is ready for delivery or mass production

• Verify that the product meets the specifications of the customer and the stakeholder.

8. End

• Check all the necessary activities are done to close the project

This was a brief overview of Prevas AB including that of their general product development process, along with some specific aspects related to their Uppsala office where this thesis work was undertaken.

This chapter also gave a brief introduction to the topic of the thesis and presented the problematization and research questions of the study.

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Chapter 2

2. Literature Review

This chapter presents concepts and methods related to sustainability and sustainable product development. It gives an overview of what is sustainability and why is it important for businesses. Role of design consultancies in product development has also been highlighted. In addition, brief overview of various tools and practices used for designing sustainable products and services has been presented.

2.1. Sustainability

2.1.1. What is Sustainability?

The word ‘sustainability’ has following two meanings in the dictionary (Lexico, 2020):

1. Ability to be maintained at a certain rate or level

2. Avoidance of the depletion of natural resources in order to maintain an ecological balance.

Santillo (2007) estimated that there are around 300 definitions of sustainability. Geissdoerfer et al. (2017) have cited few of them in their work. Some of which are cited here. Sustainability can be defined as a situation in which human activity is conducted in a way that conserves the functions of the earth's ecosystems (ISO15392, 2008), a transformation of human lifestyle that optimizes the likelihood that living conditions will continuously support security, well-being, and health, particularly by maintaining the supply of non-replaceable goods and services (McMichael, Butler, Folke et al.,2003), or an indefinite perpetuation of all life forms (Ehrenfeld, 2005). Geissdoerfer et al. (2017) framed the term sustainability as a balanced and systemic integration of intra and intergenerational economic, social, and environmental performance. Some researchers define sustainability as normative. They argue that it presents general ethical values such as responsibility for distant neighbours and future generations etc.

(Spangenberg, Fuad-Luke and Blincoe, 2010). Due to variety of aspects involved in it, defining sustainability is not at all easy. In a broader sense, sustainability is about persevering resources and energy in the long term rather than exhausting them to meet short-term goals or needs.

Quite often, the terms sustainability and sustainable development are used interchangeably.

However, some say that there is subtle difference between the two. It is best described by the quote “Sustainable development is the pathway to sustainability” (Introduction to Sustainability Guide - Circular Ecology, 2020). Accordingly, sustainability is seen as the ultimate goal and sustainable development as the way to reach there (Figure 2).

Sustainable Development

Sustainability

Figure 2. Sustainable Development as a path towards Sustainability.

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9 Sustainable development has been adopted as a policy by United Nations (UN), European Union as well as many individual countries. Additionally, many companies, businesses, political parties and non-government organisations are also increasingly focusing on this notion (Heijungs, Huppes and Guinée, 2010).

Most commonly accepted and frequently cited definition related to sustainability was coined by the famous Brundtland Report (Our Common Future) in 1987. It states that “Sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development WCED, 1987). This definition is also referred to as Brundtland definition in recognition of former Norwegian Prime Minister Gro Harlem Brundtland who served as the Chair of the WCED. This definition emphasizes the dynamic balance between human development and environmental protection as well as intra and intergenerational equity.

Inspired from Brundtland report, John Elkington coined the term triple bottom line (TBL) in 1994. According to Elkington, TBL was proposed to emphasize the fact that economic activities have important social and environmental consequences and organizations must assume responsibility for this (Elkington 2006). The TBL also known as the three pillars of sustainability are; social, environmental and economic (Figure 3). These are also popularly described as people, planet and profit (PPP) or 3Ps. In this case, to achieve sustainability means to simultaneously achieve social, environmental and economic sustainability. As also stated by Geissdoerfer et al. (2017), the triple bottom line is referred to as the balanced integration of economic, environmental and social performance. United Nations also expressed 3 pillars as,

“they act as interdependent and mutually reinforcing pillars” (UN General Assembly, 2005).

To further explain this, Jianguo Wu from School of Life Sciences & Global Institute of Sustainability, Arizona State University, state that meeting human needs in any place requires economic (increase in material goods and services) and social development (raising and protecting values such as trust, justice, liberty). Both economic and social development influence as well as get influenced by nature (Wu, 2013).

An important aspect of sustainability is social sustainability. What social sustainability actually means is widely debated, but the focus is on satisfying people’s needs while achieving environmental management goals and economic development. As mentioned in the Brundtland report (1987), when peoples basic needs are met, we can begin to actively address environmental concerns (Vallance, Perkins and Dixon, 2011). For example, Crabtree (2005) study showed that poverty is a barrier to uptake green technologies and engagements. Social sustainability also needs more flexible economic conditions for individuals in order for them to take environmental initiatives. It is unrealistic for people to care for global warming and extinction of animal species while they are either unemployed, hungry, or unsafe (Crabtree, 2005). A takeaway from this is that basic development issues, for example providing necessary goods and services, need to first be successfully addressed before we can focus on what might be considered as “higher-order” needs (Vallance, Perkins and Dixon, 2011).

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2.1.2. Weak and Strong Sustainability

From TBL perspective, it has been challenging to understand the relationship among the three dimensions of sustainability (Wu, 2013). For example, how do these three dimensions interact with and/or depend on each other at local, regional and global level? Most debated topic has been, can and should economic development be allowed to substitute for environmental integrity? In this context, the meaning of sustainability is the subject of intense debate among environmental and resource economists (Ayres, C.J, Gowdy and Van den bergh, 2001).

Substitutability of natural resources with economic activities is the basis of concepts of weak and strong sustainability.

Weak sustainability

Weak sustainability is defined by using concepts like natural capital and human capital (Cabeza Gutés, 1996). Human (manufactured) capital incorporates man made resources such as factories, infrastructure, labour, skills, knowledge. While natural capital incorporates environmental assets such as fossil fuels, minerals, biodiversity, ecosystems. Weak sustainability is an idea which states that human capital can substitute natural capital.

Specifically, weak sustainability permits mutual substitutability between natural and human capital as long as total capital increases or remains same and such system is considered sustainable (Wu, 2013). (Figure 3). This means that natural capital may decline as long as human capital is increased. Essentially, weak sustainability allows trade-offs between natural and human capital. According to this view, region with rapid economic development and urbanization at the expense of its environmental stability will still be considered as sustainable.

Figure 3. Triple Bottom Line, Weak Sustainability, Strong Sustainability (Wu, 2013).

Strong sustainability

According to Daly the pioneering ecological economist, most natural and social scientist are convinced that it is impossible to maintain long term social and economic development without healthy environment (Daly 1997). Proponents of strong sustainability believe that meeting needs of human while ensuring environmental integrity requires another kind of sustainability.

Strong sustainability assumes that human capital and natural capital complement each other but they are not interchangeable (Daly 1995). In general, strong sustainability means economic activities are part of social domain, and both social and economic actions are constrained by

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11 the environment (Wu, 2013). (Figure 3). Therefore, strong sustainability accepts that there is some natural capital or environmental activities that cannot be replaced by humans or human capital.

Daly (1995) further stated that complementarity and not the substitutability is the key to sustainability. According to Wu, strong sustainability is consistent with the concept of TBL.

Since it emphasizes that for achieving balance among three dimensions of sustainability it needs to be understood that different forms of capital are complementary and should be given equal emphasis (Wu, 2013).

TBL and all other interpretations of sustainability emphasize on social justice and human needs along with environmental aspect. However, according to Ceschin and Gaziulusoy (2016), the operational focus of sustainability has always been on the environment. In one of Gaziulusoy’s earlier works, it is stated that human society is dependent on the ecosystem not only to fulfill their primary biological needs, but it also acts as a supplier of resources required to make economic and technological developments (Gaziulusoy, 2010). This according to Gaziulusoy is the reason behind the emphasis of sustainability on the environment. According to Ceschin and Gaziulusoy, current understanding of sustainability suggests that, sustainability is a system property and not a property of individual elements of a system. Therefore, achieving sustainability requires process-based, multi-scale and systematic approach (Ceschin and Gaziulusoy, 2016).

2.1.3. Sustainable Development Goals

The Sustainable Development Goals (SDGs), commonly recognized as the Global Goals, were embraced by all United Nations Member States in 2015 as a collective call for action to eradicate hunger, secure the world and ensure that all people achieve stability and security by 2030 (UN, 2015). In 2015, the UN announced 17 global sustainable development targets to be achieved by 2030 to meet three key objectives: ending severe deprivation, growing inequality and injustices around the planet, and solving the climate problem. Following Figure 4 shows the 17 goals (UN, 2015). The goals raised are universal and in order to accomplish them, all aspects of the world's cultures will function together: states, companies and individuals.

Sustainable development calls for concerted efforts towards building an inclusive, sustainable and resilient future for people and planet.

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12 Figure 4. UN Sustainable Development Goals 2030. (UN, 2015).

2.1.4. Sustainable Consumption and Production (SCP)

Sustainable development has become an important factor for all sorts of businesses all around the world. There is growing demand for companies to research and implement more innovative processes to develop increasingly sustainable products and services. One of the key elements for achieving sustainable development is the transition towards Sustainable Consumption and Production (SCP) (UNEP, 2015), which is also closely to linked to goal number 12 of SDGs which is responsible consumption and production (Figure 5). A commonly used definition of SCP is; “the use of services and related products which respond to basic needs and bring a better quality of life while minimising the use of natural resources and toxic materials as well as the emission of waste and pollutants over the life cycle of the service or product so as not to jeopardise the needs of future generations” (Oslo roundtable defining sustainable consumption, 2020). As can be observed, SCP is closely linked to resource efficiency – the optimal usage of resources, particularly scarce and non-renewable resources (UNEP, 2015). Resource efficiency is only possible if consumers demand sustainable products. “If a demand exists for unnecessarily resource intensive products, then one manufacturer or the other will meet the demand. Resource efficiency is thus inextricably linked to both consumption and production”

(UNEP, 2015). Apart from sustainability purpose, companies can also aim for resource and energy efficiency to reduce costs.

Having understood the concepts related to sustainability and sustainable development in general and referring to the work of Bansal and Desjardine (2014), sustainable development in businesses can be described as planning for achieving short term goals without compromising the ability (of a business) to reach the long-term goals. In this context, sustainability can be related to time to a great extent. It can be described as a survival strategy in the long-term.

Organisations are often in a hurry to acquire short term profits/ rewards and in this race, they tend to lose long term benefits. Bansal and Desjardine make an important point by stating that sustainability means managing resources not only at a point in time but across the time (Bansal and DesJardine, 2014).

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13 Figure 5. Goal 12 Responsible Consumption and Production (Goal 12: Sustainable Development Knowledge Platform, 2020).

2.2. Strategic Importance of Integrating Sustainability

It is clear that companies are recognising the need to act on sustainability. Sustainability is becoming more and more important for all organizations across all industries. It has become important for businesses to look beyond their own challenges more than ever. This will specifically help them to understand and consider the broader influences that are changing the way world works. Some of these changes include increasing demand from the market to demonstrate ethical behaviour, to describe organisation’s purpose; being transparent (EY Global, 2018). Professional communication and good intentions are no longer enough to survive in the market (Haanaes, 2016).

“There’s no alternative to sustainable development”, says widely cited article from Harvard business review by Ram Nidumolu, C.K. Prahalad and M.R. Rangaswami. Nidumolu et al.

(2009) state that sustainability is at the origin of organisational and technological innovations that yield both cost and profit benefits which are the ultimate goals of corporate innovation.

They argue that becoming environment-friendly reduces cost because companies end up reducing inputs they use. Additionally, it also generates extra revenues from better products and services. Therefore, companies that treat sustainability as new frontier of innovations are perceived as smart (Nidumolu et al., 2009). They further state that by setting sustainability as a goal will help early movers to develop competencies that competitors will find hard to match.

They had already predicted (in 2009) that traditional business approaches will collapse, and companies will have to develop innovative solutions. “That will happen only when executives recognize a simple truth: Sustainability = Innovation” (Nidumolu et al., 2009). Another recent article by Chris Librie supports this argument by saying that, when sustainability is fully integrated into the business, it helps create insights about new product innovations (Librie, 2016). Additionally, it is also observed that there has been recent shift in investor behaviour to

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14 also focus on knowing whether organisations have integrated sustainability into their business strategies to improve performance and build resilience (EY Global, 2018).

Nidumolu et al. (2009), further stated that the fight to save the planet has turned into a subtle battle between governments and organisations, between organisations and consumers and sometimes between consumers and governments. It has been described as three-legged race, in which one moves forward with two untied legs, but the third tied leg holds back the forward movement. Policy experts and environmental activists suggest more and increasing stringent regulation as a solution to this battle. Nidumolu et al. (2009) argued that voluntary actions will not be of sufficient help to reach the goal. Some suggest educating customers so that they will demand businesses to be sustainable. However, Nidumolu et al. (2009) claimed that although both legislation and education are necessary, they may not be able to solve the problem quickly or completely (Nidumolu et al., 2009). Nidumolu et al. (2009) also commented about organisations’ rigidities by stating that organisations find it easier to adhere to lowest standards for as long as possible. However, there is strong need to upset this status quo. It is observed that, the initial goal of incorporating sustainability is to create a better image but most organisations end up reducing costs and creating new businesses as well (Nidumolu et al., 2009).

EY (2018) have introduced a new definition of integrating sustainability in businesses. They say that the word sustainability has become a synonym for the capability of organisation to adapt to potential impacts of global megatrends and survive over time. While integration is treated as an opportunity to improve day-to-day operations and at same time look at business transformation for the future, be it new product, new purpose or new business model.

Businesses that look at Sustainability not only as a buzzword but also as a key to future prosperity are rapidly gaining a powerful advantage over their domestic as well as international competitors (Zhexembayeva and Laszlo, 2011).

Organizations around the world are realizing that in order to future proof the business, they need to plan for and address potential impacts of global megatrends and the drivers that can fundamentally change the way they may operate over the coming decades (EY Global, 2018).

Additionally, it is estimated that having a sustainability approach will help businesses to attract top talent and build employee engagement in the coming years. Millennials and generation Z might have different expectations from businesses. In a survey by Business for Social Responsibility (Best and Mitchell, 2018), it is found that 75% of millennials expressed they consider company’s commitments towards social and environmental responsibility while choosing an employer while around 66% of them said they will not accept a job at a company without any strong sustainable program (Best and Mitchell, 2018). Resilient organisations are addressing this new trend by investing in sustainability, integrity and advocacy. It is estimated that millennials and generation Z will make up 75% of the global workforce in 2025 (Best and Mitchell, 2018). Thus, to fulfil employees’ expectations, the demand for sustainability is likely to increase.

Therefore, integrating sustainability approach will not only help organisations in attracting and retaining top talents but will also guide them to prepare themselves to answer to a changing world, to define new business models with social impact, to futureproof the business and it will

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15 act as an innovation engine to innovate new products by including environmental and social aspects.

2.3. Role of Design Consultancies in Product Development

Competition among businesses is global and increasingly complex. As a result, organisations have realised that it is extremely difficult to gain and maintain competitiveness on their own.

To overcome this difficulty, involving consultancy firms via outsourcing has become a useful strategic tool. Outsourcing helps to leverage globally dispersed resources with an advantage in cost, capability and many other aspects compared to doing something in-house (Li, Okoroafo and Gammoh, 2014). Researchers have argued that by outsourcing, organisations can focus their limited resources on their core competencies and potentially be more efficient and effective in the global market (Kannan and Tan, 2002; Lankford and Parsa, 1999). Others state that the main aim of outsourcing is to help businesses or organisations to derive a competitive advantage (Kroes and Ghosh, 2009).

The strategic importance of outsourcing is increasing and is getting recognized among businesses. Outsourcing of new product development is increasing in diverse industries such as electronics, automotive, consumer goods to name a few (Raassens, Wuyts and Geyskens, 2012). An indication of this trend is the large number of design consultancy companies which can be involved as external design experts in the development and production of products.

While in-house designers focus exclusively on designing the products of one client, external design consultants work for a variety of clients thereby having a greater market awareness and knowledge of industry-wide best practices. The traditional commercial context for a design practice is that designers offer a service to clients who usually seek to manufacture and/or commercialize the product designs the practice generates (Utterback, 2010). The role of design consultancies is directly linked to speeding up development and jump-starting innovations and changes by contributing with specialized skills and process experience (Tennity, 2010). Design consultancies usually have an enduring reputation that is directly linked to the capabilities that customers need. Customers also usually identify design consultancies based on strengths that they possess and try to cultivate long relationships. Companies and their leaders are always concerned with developing methods and processes for gaining competitive advantages, which usually guarantees a stable environment for design consultancies to survive in. Moreover, there are incentives for those paying attention to refine their attractiveness to customers and maintain long-lasting and mutually beneficial partnerships (Tennity, 2010).

Meanwhile, the role of designers across different areas as identified by Deborah et al. (2017) is divided into three categories (Deborah et al., 2017):

1. Strategic Role: Designers in this role are involved in development of strategies and policies which form the framework for future products and solutions. This may also involve initiating projects and leading the product design tasks in the intended direction.

2. Coordinating role: Designers in this role focus on balancing different ideas and interests of different stakeholders. They form a bridge between different stakeholders, facilitating conversations and knowledge transfer to ultimately integrate into the product design.

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16 3. Functional role: In this role, designers translate the ideas into actual products. They are involved in all stages from idea generation to implementing final products. The focus is on materialising the product and not on defining or developing higher level policies.

Majority of the time when design consultancies are hired, the designers assume coordinating or functional roles. Strategic roles are usually assumed by the hiring (client) organisations.

It has been shown that for sustainable product development, a strategic change of mindset driven by environmental as well as social awareness is required from product designers (Roux, 2011). Designers have the potential to influence perception and consumption patterns to help industries and societies move away from careless resource depletion (De los Rios and Charnley, 2017). They can affect lifestyles and resource use which will help to drive the transition toward sustainability. The design of a product and/or service can therefore play an important role in the development of sustainable products and services. However, the role of designers and/ or design consultancies in achieving product sustainability is an underrated area in the research field. Not much data is available on this topic. There have hardly been any investigations about the necessary capabilities required to execute both technical as well as strategic changes to design sustainable products (De los Rios and Charnley, 2017).

2.4. Sustainability in Product Development

2.4.1. Product Development

Product development can be defined as “a set of activities beginning with the perception of a market opportunity and ending in the production, sale and delivery of a product” (Ulrich and Eppinger, 2008). The timeline and scope of these activities can be described in the product development process, which has been defined as “the sequence of steps or activities which an enterprise employs to conceive, design, and commercialize a product” (Ulrich and Eppinger, 2008).

2.4.2. Product Sustainability

If a product is sustainable it means that it has the capacity to endure or continue. It means it can be reused or recycled in some way because it has not exhausted any of the resources or energy required to create it. Dyllick and Rost describe product sustainability as ability of products to provide economic benefits to a company while providing environmental and social benefits to the society in general. They further state that product sustainability aims at balancing the contributions of products to the triple-bottom line thereby creating a multiple and shared value for different stakeholders (Dyllick and Rost, 2017). Similar definitions are suggested by other researchers as well. Another definition by Lowell Centre for Sustainable Production states that “Sustainable products minimize environmental and social costs throughout the product lifecycle and aim to maximize environmental and social benefits to communities, while remaining economically viable” (Edwards, 2009).

Product lifecycle impacts are a major cause of current social and environmental challenges (Gould et al., 2017). Many organizations have developed tools to help companies, designers,

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17 and consultancies rethink about how to design and produce products in a way that improves profits and competitiveness while reducing adverse environmental impacts (Walker, Giard and Ehrenfeld, 2013).

2.4.3. Approaches towards Sustainable Development

The demand of products continues to increase around the world and at the same time, the environmental and social factors are becoming more important. Gould et al. (2017) state that it has become a competitive advantage for businesses to consider sustainability within the product development process (Gould et al., 2017). An article by Gould et al. (2017) argued that product development is unique to every business, and therefore sustainable product development needs to be customized. The same study found that product development should be targeted with sustainability integration in the earlier phases. This is because it's the early- phase decision making that influences the sustainable impacts of manufacturing. Early phases are also essential when it comes to the success of the projects in general and impacts the development cost significantly (Gould et al., 2017). The term sustainability requires as well as guides policy makers and industrial decision makers to focus on broader areas. In order to bring sustainability into business it is important to focus on broader areas in different directions.

To respond to the sustainability requirements and remain competitive in the market, organizations can have diverse approaches. Johansson, Sundin and Wiktorsson (2019), presents four different approaches organisations take to improve on a sustainability scale (Johansson, Sundin and Wiktorsson, 2019).

1. Reactive: This consists of focussing on legal compliance. Organizations taking reactive approach towards sustainable development drive try to improve business practices to comply with the regulatory and legal requirements related to for example emissions, material usage. In short, responding to government rules and regulations.

2. Receptive: In this approach, organizations are willing to change and accept the new changes. For example, they implement environmental management at the organisational level to improve / optimise current business processes.

3. Constructive: In this approach, organisations are one step ahead. They take life cycle perspective. This may involve for example, taking end of life (EOL) responsibilities, collaborating with value chain actors such as suppliers, customers, end-users.

4. Proactive: In proactive approach, environmental management is viewed as a means for competitiveness and ambitious goals are defined to minimise or eliminate environmental impact.

Some of the barriers discussed in literature related to integrating sustainability are economic, lack of management support, lack of knowledge, lack of environmental data. While drivers for sustainable product development are pointed out as improved competitiveness, cost reduction, market and customer demands, and regulations and standards.

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2.4.4. Challenges for Integrating Sustainability in Product Development

Traditionally, design (of a product or service) was never considered as a relevant factor in discussions about sustainability and sustainable consumption, nor was it considered to contribute to the solution of such problems (Spangenberg, Fuad-Luke and Blincoe, 2010).

However, much progress has been made and design has become an increasingly important factor for sustainability.

The main challenge in developing sustainable products according to Luttropp and Lagerstedt is to provide solutions to customers and satisfy their needs with lowest environmental impact and/or economic cost (Luttropp and Lagerstedt, 2006). Product developers are frequently demanded to fulfil requirements from all different functions such as marketing, technical, customers, management, etc. It means that product designers need to achieve balance between large number of requirements including cost and time. All these requirements, “design core”

as it is referred to (Figure 6), exist together at the same time. Environmental and sustainability demands are just one part of it. Luttropp and Lagerstedt argue that functional requirements and economic benefits of the product always have higher priority in business. This indicates that sustainability practices/ methods will not be welcomed unless they are integrated with latest practices (Luttropp and Lagerstedt, 2006).

Figure 6. Design Core of the Product (Luttropp and Lagerstedt, 2006).

Early attempts of green design focused on reducing environmental impacts through redesigning individual qualities of individual products. This was usually achieved by following the waste hierarchy of reduce-reuse-recycle. For example, by reducing amount of materials used in a product, reusing parts or whole product while designing new products and replacing virgin

Integrating Sustainability Practices at Design Consultancies

Master’s Thesis 30 credits June 2020