First Step to Sustainability: Conducting a Life Cycle Assessment
The global business landscape is constantly changing, and with this comes increased responsibility for businesses to operate sustainably. In recent years, a trend has emerged of conducting a Life Cycle Assessment (LCA) to determine the environmental impact of a product or service. An LCA is an accounting tool that measures the inputs and outputs, and the environmental and social impacts, of the entire life cycle of a product or service, from raw material extraction, to production, to consumption, and disposal. Businesses that conduct LCAs gain valuable insights into their products or services and can identify areas for improvement. In this article, we will explore why every business needs to conduct an LCA, and how it can benefit them.
Meeting Stakeholder Expectations
Sustainability has become a key focus for many stakeholders, including customers, investors, and employees. Businesses that conduct LCAs demonstrate their commitment to sustainability and transparency, which can increase stakeholder trust and loyalty. According to a Nielsen survey, 81% of global respondents believe that businesses should help improve the environment, and 73% would change their consumption habits to reduce their environmental impact. Conducting an LCA can also help businesses anticipate potential changes in regulatory requirements, anticipate changes in consumer preferences, and remain competitive in the long-term.
Reducing Costs and Improving Efficiency
Conducting an LCA can also help businesses identify inefficiencies in their products or services that can be addressed to reduce costs, increase efficiency, and minimize waste. For example, an LCA conducted by McDonald’s found that the greatest environmental impact of their products occurred during the customer use phase (e.g., waste, packaging), leading the company to implement changes to their packaging to reduce waste. Many businesses have also found that optimizing their supply chains by sourcing materials locally, reducing packaging, and improving energy efficiency can lead to significant cost savings.
Increasing Innovation and Identifying New Opportunities
LCAs can also lead to increased innovation and identifying new opportunities for businesses. By identifying areas for improvement in their products or services, businesses can innovate to create more sustainable products or services that meet stakeholder demands. For example, Interface, a global carpet tile manufacturer, used the results of their LCA to create new products made from recycled materials and to redesign their production processes to reduce waste. Businesses can also use the information gathered from an LCA to identify new markets and opportunities for growth in environmentally conscious industries.
Navigating External Challenges
Conducting an LCA can also help businesses navigate external challenges, such as the threat of climate change, and increase their resilience. As the effects of climate change become more severe, businesses face physical risks such as extreme weather events and supply chain disruptions, as well as transitional risks from changing regulations and consumer preferences. By incorporating the insights gained from an LCA into their decision-making processes, businesses can anticipate and address these risks, reducing their vulnerability and increasing their resilience.
Best Practices for Conducting an LCA
Conducting an LCA can be a complex process, but businesses can take steps to ensure that they conduct a thorough and accurate assessment. Firstly, it is important to define the scope of the LCA, including the life cycle stages to be included, the system boundaries, and the functional unit. The functional unit is the benchmark used to compare different products or services and should be clearly defined to ensure comparability. It is also important to carefully choose which environmental impact categories to include in the assessment, as different impact categories may have different levels of relevance to stakeholders.
Another important step is to gather accurate and reliable data, including the energy, water, and material inputs and outputs, the use phase of the product or service, and the potential environmental and social impacts associated with these stages. Businesses can use existing databases and tools to assist in the data collection process, and should also engage with stakeholders such as suppliers and customers to gain a comprehensive understanding of the entire life cycle of the product or service.
Once the data has been collected, it is important to analyze the results and identify areas for improvement. This can include the identification of hotspots (e.g., life cycle stages with the highest environmental impact), the calculation of eco-innovation potential, and the development of improvement strategies. It is important to involve all relevant stakeholders in the decision-making process, including suppliers, customers, and employees, to ensure that the strategies developed are feasible and effective.
Conclusion
In conclusion, conducting an LCA can benefit businesses in many ways, from meeting stakeholder expectations to reducing costs and increasing innovation. By identifying areas for improvement in their products or services, businesses can innovate to create more sustainable products or services that meet stakeholder demands. It is important for businesses to adopt best practices when conducting an LCA, including clearly defining the scope, gathering accurate and reliable data, and involving all relevant stakeholders in the decision-making process. Ultimately, by conducting LCAs, businesses can better understand the environmental and social impacts of their products or services and make informed decisions that contribute to a more sustainable future.