According to PwC, 80 percent of customers were willing to pay a premium for sustainable products. Besides the rising consumers' concerns about how a product was produced, other factors drive companies to pay greater attention to sustainability assessments across the entire product life cycle. Some of these factors include climate change, emerging circular economies and related regulations. Companies in the EU and around the world are increasingly experiencing pressure to collect and report data about their product’s impacts on the environment, and, in particular, the carbon footprint. LCAs are far more than just calculating data about CO2. This article gives an overview of what is the life cycle assessment, its stages, assessment of different product stages, data collection processes, technologies and impact.
What is a LCA?
A Life Cycle Assessment (LCA) or Life Cycle Analysis is a systematic methodology of the potential environmental impacts of products or services during their entire life cycle. It means that if we conduct the Life Cycle Assessment for a manufactured product, we have to start an assessment from the raw material extraction stage through to the usage of the final product, its recycling or final materials’ disposal, and have to take into account all materials and the amount of energy involved in the process of each value chain actor. Despite it not being obligatory, companies use LCAs for various purposes, including regulatory compliance, supply chain management and product marketing.
What is a Product Life Cycle?
The product life cycle consists of 5 main steps:
- Raw Material Extraction
- Manufacturing & Processing
- Transportation & Distribution
- Usage & Retail
- Waste Disposal/Recycling
What are three LCA approaches?
Three main LCA approaches include cradle-to-gate, cradle-to-grave and cradle-to-cradle. Cradle-to-gate measures the impacts from the raw material extraction to the manufacturer’s gate, cradle-to-grave measures the impacts from the raw material extraction to the end of the product’s life, while cradle-to-cradle measures it up to recycling or reuse and the beginning of a new product cycle.
Stages of the Life Cycle Assessment
LCA is a collection of information on a product’s environmental impacts from cradle-to-grave — raw material extraction, processing, product manufacturing and packaging, distribution, waste and how products are disposed of at the end of their lives.
According to the European platform on LCA, there are four stages of LCAs:
- Goal and scope: in this stage, companies have to define the goal, the scope, methodology and the studied impact categories and the Life Cycle Impact Assessment (LCIA) models used, and the identification of data quality requirements.
- Life Cycle Inventory (LCI) stage includes data collection, e.g. information about the amount of energy, raw material and other physical inputs, products and co-products and waste, emissions to air/water/soil, and other environmental aspects. Data could be collected from primary and secondary sources and databases.
- Life Cycle Impact Assessment (LCIA) phase includes the analysis of the LCI results and associated environmental impact categories and indicators.
- Life Cycle Interpretation phase includes combining results from LCI and LCIA and interpreting them in accordance with the stated goal and scope.
The LCA results highly depend on the accuracy of the data collected at each stage of the product life cycle, and with the complexity of the product this dependency only increases. For example, a lithium-ion battery for the EV consists of lithium, 0.64 g of graphite required for 1 kWh of typical Li-ion battery storage, electrolytes such as LiPF6, LiBF4, or LiClO4 and other components. To conduct an LCA for the battery and get reliable results, you have to know the exact amount of the raw materials, physical outputs related to the production and transportation of these materials.
How can you start conducting an LCA
The results of the LCAs could be used widely, e.g., for regulation compliance or positioning your product on the market. Fully traceable supply chains and transparent manufacturing processes build more consumer’s trust and confidence. Besides that, as the company conducts the LCAs on a regular basis, it could help to understand the areas where most of the part of its carbon footprint is generated and take actions to minimize it and improve the overall product sustainability. So, how can you start considering the challenges with data accuracy mentioned earlier?
1. Define your strategy and prioritize LCA
The initial step is prioritizing the LCAs internally and making sure you have dedicated team members and resources to conduct the analysis.
2.Think about hypotheses and set the goal
Conducting LCAs could be helpful in many cases: it can help to measure the environmental footprint of a product and as a result improve product development, marketing, and strategic planning. For example, your organization might have a goal to position a product as green and sustainable. You can conduct a LCA and support your positioning with concrete examples and numbers. Another example - you want to decrease the carbon footprint of your product and identify the most carbon-intensive stage of the life cycle and what causes such impact. The result would depend on initial hypotheses. Think about the possible outcomes ahead and try to prove your hypothesis during the LCA.
3.Choose the tools to help you with data collection and analysis
LCAs include a lot of processes, some of which could be time-consuming. To make the analysis faster and more efficient, research the best ways to collect and analyze data for each of the stages. Think about the structure and try to use or build your own templates.
For some of them, the manual way will be still more efficient, for others you can find tools and software and automate the process. For example, usage of the digital product passport across your supply chain over time can help you collect data faster and easier.
4. Start data collection and engage with your suppliers
Research from the World Business Council for Sustainable Development and PwC found that on average a company’s Scope 3 emissions are 11.4 times higher than its operational emissions. For most companies, most of those emissions are associated with supply chain and the use of products. This is why engaging suppliers is crucially important. Research your supply chain policies and make sure you are aligned on collecting the most critical data. Start collecting information from your suppliers on a regular basis and constantly improve the process by introduction of templates, technologies and automation tools.
5. Monitor for technology and create your processes step by step
It’s important to note that LCAs take time and to see the valuable results for making smart decisions and improving the overall sustainability and circularity of your product. The result depends on the quality of data. However, your organization can improve processes step by step. Over time, repeated data collection and analysis will become more efficient and provide more insight into the sustainability of your product.