How companies are using life cycle assessments to meet their ESG goals
April 11, 2023
What is a Life cycle assessment (LCA)?
First proposed by the International Organization for Standardization (ISO) in 1976, a life cycle assessment, or LCA, is used to evaluate how the life cycle of a company’s products impacts environmental issues, from the initial extraction of the raw materials used to develop the product, to the ultimate use and subsequent disposal of the product. LCAs are used in many industries, notably mining, manufacturing and energy production.
What is a LCA used for?
The LCA process can be used to:
· Improve existing products and processes to make them more efficient and/or sustainable
· Identify new processes with minimal negative impacts on the environment
· Develop operational strategy around business model planning and execution
· Set key performance indicators to help companies meet carbon reduction goals and other environmentally focused objectives
· Compare a company’s manufacturing process with another company’s manufacturing processes for similar products. The LCA can also be used for comparing materials (e.g., paper vs aluminum).
· Help suppliers meet the demands of their commercial partners who track and set environmental metrics throughout their supply chains
How can my company perform an LCA?
The International Organization for Standardization (ISO) outlines four phases for a compliant life cycle assessment:
1. Goal and scope definition
2. Inventory analysis
3. Impact assessment
Figure 1: Phases of Life Cycle Assessment (LCA), Wikimedia Commons, 2008
Step 1: Goal and scope definition
The first step in conducting an LCA study is to outline the goal and scope of your work. This is a subjective measure determined by the company to determine what is included in the assessment and what is left out. In this step you should consider why you are pursuing the LCA and what key objectives you expect to meet.
Step 2: Inventory analysis
Life cycle inventory analysis (LCI) features data collection and calculation to quantify inputs and outputs of materials and energy associated with a product. This step describes the material and energy flows of the product and its interaction with environment.
An input is something you take out of the environment (i.e. raw materials) to put into the product’s life cycle — an output represents what your product’s life cycle puts out into the environment, including the emission of pollutants. Inputs and outputs, together, complete the LCI of a product
Step 3: Impact Assessment
The impact assessment uses results from the LCI to draw conclusions that enable you to make business decisions. This step includes setting the importance of each metric, categorizing them into environmental themes (i.e. global warming or water pollution), and choosing how to share the results with your intended audience.
Step 4: Interpretation
The last step of the LCA is interpretation of the product life cycle, including identification of the key issues, evaluation of completeness, sensitivity, and consistency, and the development of conclusions and recommendations. Key issues can be identified in processes, materials, activities, or an entire life cycle stage. Conclusions and recommendations must then be prepared to be concisely understood by the audience.
Can LCAs evaluate a product’s economic and social impact?
Though LCAs are usually meant to measure environmental impact, many companies are leveraging the process to evaluate their products’ economic impact and the influence on human health.
· Economic impact: The economic impact of a product is evaluated in terms of monetary cost and time savings, both of which can be calculated based on multiple factors.
· Health impact: The health impacts of a product are also considered during LCA. This includes looking at how it affects air quality, worker safety, and security against harmful substances (such as pesticides).
· Social impact: Social impacts include issues like family planning or childcare for mothers who would otherwise have to take time off from work because their child has an illness. It also enables companies to determine whether their products are helping people lead better lives by improving social conditions in areas where they’re produced or sold (for instance by improving infrastructure).
Why should companies use LCAs?
LCAs can be a valuable assessment tool for companies who are planning their ESG initiatives. In March 2022, the SEC proposed mandatory climate disclosure requirements for all U.S. listed public companies. Companies looking to get ahead of the coming mandatory regulations should be looking at LCAs as a tool to prepare for disclosures ahead of time.
In addition to the upcoming recommendations, companies whose products either positively or negatively impact the environment may leverage an LCA to display the effectiveness of their products, or in the latter case, highlight their commitments to improving their processes.
The LCA process allows companies to evaluate their products, services, processes, and facilities using a systematic approach to meet their sustainability goals. It’s also a tool that can help companies assess the environmental impacts of their projects in an objective manner so they can better understand how they can mitigate these impacts or enhance sustainability performance to meet stakeholder expectations in the long term.
As such, the LCA process provides an objective way of assessing the environmental impact of products through materials sourcing, manufacturing processes and end-of-life disposal options.
1. ISO 14044:2006 Environmental management — Life cycle assessment — Requirements and guidelines, ISO.org, 2006
2. Life Cycle Assessment Best Practices of ISO 14040 Series, Committee on Trade and Investment, 2004
3. How Life Cycle Assessments can enhance ‘green’ mining techniques, Ruiz Leotaud, 2021
4. Life Cycle Assessment, Muralikrishna, Manickam, 2017
5. Life Cycle Assessment (LCA) explained, Pre-Sustainability.com
6. Phases of Life Cycle Analysis, Wikimedia Commons, 2008
Source: Medium - ESGiQ