[Editor’s note: This is the last post in a three-part series on sustainability innovation from the Network for Business Sustainability. For more tips, check out the previous two posts, Don’t fear the word 'incremental' and The next level: Designing products to meet your goals.]

In two previous posts, I described how companies can make both incremental and transformative changes that drive a virtuous cycle of innovation, sustainability and profit. These changes are backed by rigorous research: At the Network for Business Sustainability, we’ve dug through the top scientific papers on sustainable business practice so you don’t have to.

This time, let’s explore the third and rewarding stage of innovation: systems building. At this stage, companies see themselves as part of an interconnected ecosystem. Innovation involves reaching out beyond the walls of your own organization. Done right, it can push your company to the pinnacle of sustainable business practice.

Innovations for stage one companies minimize the harm they cause by selling conventional products and service. Innovation at this stage includes reducing product packaging, introducing hybrid fleet vehicles or decreasing the miles sales teams travel. Stage two companies generate revenues by creating products and services that are environmentally or socially responsible. Think of the Tata Nano, a revolutionary car that provided affordable mobility to millions of people in India. (Recent reports, however, suggest Tata is going to have to change its marketing approach.)

Stage 3: Building systems

Systems building is a complex, long-term venture.

Stage three organizations are the most highly evolved forms of sustainable business. They work with partners from previously unrelated areas or industries to build sustainable systems or “circular economies.” In a circular economy, one firm’s waste becomes another company’s raw material. After all, as the late science fiction writer Arthur C. Clarke is quoted as saying, “Wastes are merely raw materials we’re too stupid to use.”

Image of 3d small people by Art3d  via Shutterstock.

The opportunities for symbiosis are all around us. A construction company might use glass waste, saving its partners disposal costs while cutting its own raw-materials cost.

One of the most highly evolved examples of this kind of “industrial ecosystem” is in Kalundborg, Sweden. That city has a network connecting the municipality to a coal-fired power station, an oil refinery, a pharmaceutical plant, a plasterboard manufacturer and local farmers, among other things. It’s a complicated web, but here are two threads: The power station uses wastewater from the oil refinery as cooling water, while fly ash from the power plant goes into the production of gypsum, which is used to make wallboard. (See Figure 3 in this journal article for an illustration of the web of interconnected organizations.)

Powering paper mills with garbage

Another example is a landmark collaboration between a paper mill, a utility and a landfill in Quebec, Canada. In 2002, a St-Jérôme mill owned by Cascades Fine Paper was suffering because of skyrocketing natural gas prices. Between 1999 and 2000, the company’s average energy costs per ton of paper climbed 90 percent. Casting a wide net for innovative solutions, the company spied a nearby landfill, which was burning off roughly half of the biogas (methane and carbon dioxide) produced by decomposing garbage.

Cascades and landfill owner Waste Management approached Gaz Métro, a utility company that expressed interest in building experience with biogas. Cascades and Gaz Métro put up the cash to build a 13-km pipeline to carry biogas from the landfill to the mill, and Cascades retrofitted some of their equipment to accommodate the change from natural gas to methane. Within two years, the two companies had recouped their investment: Cascades through cost savings and Gaz Métro via delivery revenue. Waste Management also benefitted. In addition to reaping revenues from the sale of biogas, the process it uses to accelerate decomposition helped reduce solid waste volume by 15 to 30 percent. Better yet, the project slashed the paper mill’s greenhouse-gas emissions by more than 40 percent. (You can download a more detailed description of the Cascades project here.)

Now doesn’t that make you to want to contact other organizations and figure out how you can work together?

For more tips to help your company cut costs and benefit people and the planet, check out our report, Innovating for Sustainability.