For maximum insight into environmental performance, organizations often perform Life Cycle Assessments on both a product as well as organizational level. But, comparing these two LCA levels seems harder than it looks. They use different approaches that combined hold crucial information- yet are hard to make sense of. The solution? Activity-Based Footprinting.
Life Cycle Assessments* (LCA) are, by nature, extensive pieces of research. Only trained experts can create reliable assessments that go to the bottom of complex processes and value chains.
At least, that’s the common perception.
*An LCA is a scientific analysis of the impact one object or process has on the world around it. It calculates a product, service, or company’s environmental footprint.
And that’s because a *Life Cycle Assessment follows a bottom-up approach. You conduct a deep analysis of every element of a product – that all together creates the total footprint of said product.
But, what about organizational footprints then? Do they require the same complex approach?
A single LCA is bottom-up, it deeply focuses on just one part of your company – your product.
An organizational footprint is actually top-down. Instead of a single product, all products, services, and processes (your entire value chain) within your company are mapped out first. After that, multiple LCA’s are performed to calculate the total environmental impact of your organization.
You can imagine it can be difficult to place a bottom-up LCA next to a top-down organizational footprint, right? Both have different perspectives and different focus points. Both look at your organization’s sustainability from a different point of view. In-depth single units vs. an interconnected whole. It clashes.
This clash is an issue. Many organizations calculate both their individual product LCA’s and organizational footprint for maximum insight into their environmental performance.
Very logical. Yet problematic – as often the two approaches just don’t harmonize and reconcile for a proper overall analysis due to their nature. This only increases difficulty in understanding the interconnectedness between your individual product processes and your total impact – which is a shame…
How do you effectively unite these different perspectives? How do you smoothly connect these two important pools of information and get the most out of your data?
The answer: people often rely on consultants to do all this heavy work of calculating and connecting for them. Consultants with a scientific background, that have the academic knowledge and time to dive deep into your value chain and connect all the dots.
Understandable.
But doesn’t that make LCA a flawed methodology? One that clashes and could never be scalable to a broad range of businesses? One that always requires consultants?
Ironically, the business world has long solved this clash. And the solution lies in a method called Activity-Based Costing (ABC).
Activity-Based Costing is the bookkeeper’s answer to the very same problem. How can I assign costs to individual processes and products, but make sure it all connects to the ‘top-down’ bigger picture? How can I embed robustness in my accounting?
ABC is a robust accounting method that assigns an organization’s (indirect) costs to its activities and their related outputs: such as products or services – all based on their actual consumption. Providing more accurate ‘true’ product/service costs.
This accuracy allows you to make improved strategic decisions; say goodbye to certain products and accelerate others based on actuality.
It’s a perfect approach in financial bookkeeping – and the norm in costing. Still, it’s not really a practice you’d associate with footprinting. Until now.
Goodbye static reports, hello robust impact assessments.
To create this accounting robustness in environmental footprinting, we (Ecochain) applied Activity-Based Costing to Environmental Footprinting and called it Activity-Based Footprinting (ABF) (very creative name- we know).
Activity-Based Footprinting (ABF) follows the same approach as ABC. ABF first assigns an organization’s material and energy use (instead of costs) to its production processes (activities) and then to its accurate related outputs: your products and services. After doing so, LCA algorithms conduct integrated environmental footprint calculations on your company, process, and product level.
So, why is Activity-Based Footprinting so useful?
LCA’s take time and effort. Especially the work that goes into calculating multiple LCA’s for an organizational footprint can be quite an imposing thought.
Yet, due to its top-bottom approach, Activity-Based Footprinting allows you to create hundreds of Life Cycle Assessments (LCA) of your entire product portfolio- at the same time. It makes LCA’s scalable and applicable to a wider range of company types and sizes (e.g. even to those that have >25.000 products).
And this is great. ABF’s robustness creates more efficiency within companies to focus on understanding where your impact comes from and taking actual sustainable action. Instead of wasting time on outsourcing tasks, writing reports, or recalculating changes.
ABF is even more in-depth than a normal LCA. Its robustness increases the quality of your LCA’s. It makes it a lot easier to dive down into all the LCA details of your products (expert-data) or analyze the consolidated information about the performance of your product lines and processes (your Business Intelligence statistics).
ABF’s consolidated information not only allows for a thorough understanding of where the environmental impact of your products comes from. It places this information in a bigger picture. How are all your business processes interrelated with your overall environmental impact? How can sustainable improvements be implemented throughout multiple processes?
Finally, ABF’s approach allows you to convert scientific LCA data (bottom-up + top-down) to integrated business performance statistics that everyone within your company understands. Whether you want to dive into LCA details of materials or benchmark the environmental performance of your processes.
It makes scientific LCA data comprehensive and understandable – not an unimportant factor.
“The LCA methodology should not be flawed. It should not be limited to trained experts only but approachable and used by everyone who has the power to make a change.”
To sum it up: Activity-Based Footprinting enables your whole sustainability process to become more efficient, robust, and of higher quality. Saving many companies a lot of time, effort & costs (and probably some stress as well).
It takes away the LCA ‘consultant dependency myth’, and makes LCA’s accessible and scalable to businesses with the help and support of environmental specialists.
The LCA methodology should not be flawed. It should not be limited to the understanding of trained experts only. But robust, approachable, and used by everyone who has the power to make a change.
And ABF does exactly that. It makes sustainability more accessible to those with a large responsibility in our global climate strategy.
