What is an LCA? Who benefits from it? How does it work?
In this guide, you’ll get an in-depth, non-technical overview of what a Life Cycle Assessment really is, the different approaches to it, how it works in practice and who can benefit from it.
This is, in a nutshell, the question that a Life Cycle Assessment tries to answer.
You have probably asked yourself that question many times (sometimes without even knowing it) – for example in the supermarket:
How environmentally friendly were the products you have just bought? Should I have bought the tomatoes from The Netherlands or from Spain?
But answering this question isn’t easy – because there are countless factors involved:
This will get confusing really quickly because we don’t know all the factors we have to consider for our life cycle analysis.
This is why the Life Cycle Assessment provides a framework for measuring the impact of, for example, a product.
And it doesn’t stop there:
The goal of an LCA is to not only create data but also to facilitate decisions. That’s why it is always designed with a specific goal in mind, for example, to make a product more sustainable.
In this guide, we will go through the concept of a Life Cycle Assessment step-by-step.
We will take a look at the reason behind an LCA and why we should conduct it in the first place.
We will also discuss who an LCA is relevant for and who can benefit from it – before we dive into the actual process of an LCA.
A Life Cycle Assessment (LCA) is an analysis of the impact one object has on the world around it.
Before we dive into how a Life Cycle Assessment works, let’s break down who needs it in the first place.
Sustainability – Relevant for everybody?
If you think about who might be interested in knowing more about the impact of your company, you could probably name everybody.
For example, HR managers might argue that potential candidates find it interesting to know more about the environmental footprint of their future employer.
But LCA is a very specific analysis. It provides the groundwork for any sustainability or CSR strategy within a company because you can only make decisions on things you’ve actually measured before.
The following 4 departments in your company can take action based on an LCA right away. According to our data, these are the users we see the most often.
There are two reasons why a Life Cycle Assessment can be interesting for product management.
Reason 1: Comply With Regulations
Often, companies need to simply comply with regulations to continue doing business.
In some countries, there are standardized tenders for public projects. These tenders require companies to disclose the environmental data of their products – and you would have to conduct a Life Cycle Assessment for that.
A company that provides asphalt for a public road building project might, for example, needs to provide the environmental footprint of that product to take part in that tender. To comply with these regulations, or optimizing existing products so they comply in the future, can be important for the product department.
Reason 2: New Product Developments
New products should be as low in emissions as possible. This can be for many reasons – corporate policy, regulations, customer demand – but often times, it simply means being more efficient with company resources.
One use case for an LCA might be that R&D compares two different materials and how these different materials influence the environmental impact of the end product.
In many industries, the supply chain accounts for more than 80 % of the environmental impact.
That means that sourcing from different suppliers can have a massive impact on your product footprint.
For Supply Chain Managers, choosing the right supplier is often a hard decision, where far more factors than just price play a role. A Life Cycle Assessment can give anyone working in Supply Chain Management or Procurement actionable insights into which company they should source from.
Today, more than 81 % of consumers feel that companies should help improve the environment.
For marketing and sales, this means understanding how sustainable your products are – and how to communicate this to your customers.
A Life Cycle Assessment is the most vital step on that journey. Based on the generated insights, you can see where you already have an edge on your competitors – and where your company can use opportunities to become more sustainable.
Chief Sustainability Officers are still a relatively new position, but more and more companies understand that sustainability isn’t a topic that can be solved with simple greenwashing.
To make strategic decisions on how a company can have a more positive impact on the environment, buy-in from the highest level is important. This is why every LCA should transport actionable insights for the top management level.
Because an LCA looks at products from a broader point of view, it usually creates insights that another analysis might lose out on – an enormous chance for the entire company.
For marketing and sales, this means understanding how sustainable your products are – and how to communicate this to your customers.
A Life Cycle Assessment is the very first step on that journey. Based on the generated insights, you can see where you already have an edge on your competitors – and where your company can use opportunities to become more sustainable.
Product Management / Research & Development:
1. Comply with regulations, 2. Develop new sustainable products
Supply Chain Management & Procurement
Find better suppliers
Marketing & Sales
Act on customer demand for sustainability
Executive Level & Strategic Management
Incorporate sustainability in the entire business
Sidenote: Sustainability often sounds like an abstract construct. In reality, being more sustainable can simply mean to use less energy, recycle materials or streamline processes – all actions that can save large amounts of money, immediately increase the bottom line and make a company less dependent.
Before we dive into the process of an LCA, let us define what the product lifecycle actually is.
With our Environmental Management Platform, you can create LCAs for your entire product portfolio.
If we want to assess the lifecycle of a product, we have to first define what that lifecycle actually consists of.
We will talk about different concepts of the product lifecycle in just a moment, but generally speaking, the product lifecycle consists of five phases:
This is also referred to as cradle to grave, cradle being the inception of the product with the sourcing of the raw materials, grave being the disposal of the product. Transportation is mentioned as step 3, but can, in reality, occur in between all steps.
However, there are also other concepts of the product lifecycle.
Cradle-to-gate only assesses a product until it leaves the factory gates, before it is transported to the consumer.
This means cutting out the use and disposal phase. Cradle-to-gate analysis can significantly reduce the complexity of an LCA and thus create insights faster, especially about internal processes. Cradle-to-gate assessments are often used for environmental product declarations (EPD).
Environmental Product Declarations are standardized certifications of a life cycle assessment, used mostly to verify impact data from business to business.
Cradle-to-cradle is a concept often referred to within the Circular Economy. It is a variation of cradle-to-grave, exchanging the waste stage with a recycling process that makes it reusable for another product, essentially “closing the loop”. This is why it is also referred to as closed loop recycling.
Gate-to-gate is sometimes used in product lifecycles with many value-adding processes in the middle.
To reduce complexity in the assessment, only one value-added process in the production chain is assessed. These assessments can later be linked together to complete a larger level life cycle assessment.
There are two other concepts that are used for special requirements.
Well-to-wheel is used for the Life Cycle Assessment of transport fuels and vehicles. Because there are a lot of steps in between – the “Well-to-tank” and “Tank-to-wheels” only two of them, this approach is more precise in calculating and assigning greenhouse gas emissions and energy usage for the different stages.
The EIOLCA aggregates industry data with the goal to create impact data for specific sectors within the economy.
These averages are sometimes being used when no exact data is available – they do not provide an exact picture of the impact but help to fill blanks.
However, an EIOLCA is not precise enough to make decisions on a product level.
Other models include cradle-to-gate, cradle-to-cradle, gate-to-gate, well-to-wheel, and Economic input-output life cycle assessment.
Now that we have understood the differences between LCA variants, we can dive deeper into the actual phases of an LCA.
The phases of a Life Cycle Assessment are defined in the ISO standards 14040 and 14044.
But as you can see in the graphic, the different steps depend on each other.
Also, the interpretation of the LCA does not always depend on the actual assessment being completely finished.
Especially when a Life Cycle Assessment becomes more complex, continuously interpreting the results helps optimize the analysis as it goes further down the process.
In the first phase of our Life Cycle Assessment, we define what exactly we want to analyze – and how deep we want to go with our analysis.
Defining our goal and scope serves three very important functions:
Will it be a product? If so, how much of the product will we be assessing (functional unit)?
This defines our product life cycle, as well as the implications we will be analyzing. Also, we have to decide which Impact Categories we want to focus our assessment on.
We might, for example, want to generate an Environmental Product Declaration for one of our products. If that is the goal, we have to build our assessment around the methods required by the political bodies, for example the ministry of construction.
The value chain can go very deep.
However, a certain depth might not be interesting for our analysis. We might, for example, decide, that we will not analyze the details of pre-forms of our raw materials in-depth. Also, the social implications of the unit we are assessing might not be completely relevant.
This is an extremely important step because an analysis can – in theory – never be fully finished. If we analyze a certain raw material, will we also examine the implications it has on the family of the worker who harvested it?
To show how an LCA can look like in practice, we will use the example of the KeyKeg – an actual product manufactured by one of our clients in The Netherlands, Lightweight Containers.
Their KeyKeg is a one-way, disposable keg, made to transport and deliver beverages. It is a complex product made of many different materials.
The goal and scope of the analysis for the KeyKeg could be summed up like this:
Defining the goal & scopes of an LCA means defining what we want to analyze, how we want to analyze it and how far we want to go with our analysis.
The Life Cycle Inventory Analysis (LCI) looks at the environmental inputs and outputs of a product or service. It is essentially the data collection phase of our LCA.
Look at it as buckets:
In phase 1, we defined the buckets we want to put our data in, in phase 2 we fill the buckets.
The goal is to quantify the environmental inputs and outputs – this means we measure everything that flows in and out of the system we defined in phase 1.
– Raw materials or resources
– Different types of energy
– Water
– Emissions to air, land or water by substance
Now, this analysis can be extremely complex – because production processes and the supply chain can be extremely complex constructs.
This is why the Life Cycle Inventory phase of the Life Cycle Assessment can take not only a large amount of time but also often be the most work within an LCA.
Life Cycle Assessments today are conducted by professionals who are extensively trained in the norms and standards that define how an LCA should look like. We will look deeper into these standards later in this guide. However, with software solutions like our Environmental Intelligence platform, everybody can perform an LCA.
A lot of the data for the LCA is already available – for example in your electricity or water bills. But that’s of course not all the data we need.
This is why, at this stage, the data gets collected through data collection sheets. These sheets gather quantitative data on a company level, process level and product level. If qualitative data is needed, questionnaires might be used. The data sheets get filled out by the stakeholders in the company who have access to the data.
Sometimes, industry averages have to be used.
One method for that would be the Economic input-output life cycle assessment we described earlier, which can give us data to fill some blanks. Other times, the averages could be aggregated data gathered by branch organizations, financial institutes, NGOs or market research organizations.
Collecting the input and output data within a list or table would quickly lead to confusion.
Moreover, it would also lead to important context going missing.
That is why the Life Cycle Inventory is typically illustrated with a flow model.
The flow model clearly shows the system and unit we are analyzing, the inputs and outputs.
The data within the model needs to be collected for all activities within the scope of our Life Cycle Assessment.
The LCI is the data collection phase of a Life Cycle Assessment. We collect the data and model it into input-output flows.
Now that we have collected the data, it’s time to assign it in the next phase – the Life Cycle Impact Assessment (LCIA).
Until now, we have defined what we want to measure and collect in phase 1. Then we collected and structured the data in phase 2.
In phase 3, we are evaluating how significant the impacts are. This is based on our Life Cycle Inventory flows from phase 2.
There are 3 key tasks in this step.
In phase 1 of our LCA, we defined our Impact Categories based on our goals. Impact Categories are what you want to measure your impact in. For example, you might want to measure the impact of your products on climate change in CO2-equivalent.
Now, we have to define these impact categories more precisely.
There is an abundance of impact categories to choose from. Depending on the goal and scope of your analysis, different categories might apply.
The following impact categories are the most commonly used ones.
Some impact categories are measured in equivalents, often seen as a lowercase e, for example CO2-e for CO2-equivalent.
This is because several emissions contribute to the same impact category.
For example, climate change or global warming potential (GWP) is measured in CO2-equivalents. This doesn’t mean that only CO2 is contributing to global warming, because, for example, also methane and nitrous oxide play a role there.
But to be able to consolidate all gases into one indicator, all other gases are transposed into CO2 equivalents.
1kg CO2 = 1kg CO2-equivalent
1kg Methane (CH4) = 25kg CO2-equivalent
1kg Nitrous oxide (N2O) = 298kg CO2-equivalent
By assigning an equivalent, we can compare all these inputs to each other – much like if you want to compare different currencies to each other.
However, the calculation of the equivalents doesn’t happen until step 3 in our impact assessment. First, we have to choose from the impact categories that are relevant to our overall assessment.
In this step of our Life Cycle Impact Assessment, we are sorting our Life Cycle Inventory and assigning it to our defined impact categories.
In the last step of our impact assessment, we are finally calculating all our equivalents. We are summing them up in overall impact category totals.
Category Totals can look like this:
As previously mentioned, we can always interpret our results during the assessment.
This means that the interpretation doesn’t necessarily have to happen at the very end.
But with all the data in place, we can make the most reliable conclusions and recommendations.
This has to be done cautiously – just because three is lower than four, doesn’t mean that it is automatically the better alternative. Our results have to be put in context to analyze the overall picture.
What we want to interpret is also defined in the ISO norms defining the Life Cycle Assessment.
According to ISO 14044:2006, this is what the interpretation of a Life Cycle Assessment should include:
So, what does that mean exactly?
It means that we have to make sure we collected accurate data and took care of measuring and analyzing it correctly. Only then we can make recommendations – otherwise, we would literally be “jumping to conclusions”!
This is the juicy part of our assessment.
We started the entire task by defining our goals upfront.
Now, after we have gained a lot of insights into our product or service, we can draw conclusions from it, such as:
Remember our friends from Lightweight Containers?
After going through the LCA with their core product, the KeyKeg, they realized savings worth 100.000 € on each productions site.
They also lowered their Environmental Cost Indicator value ahead of legislation – this gave them a competitive advantage. Also, they reached their goal – after all, they started with the mission of making their product more sustainable.
They also took a closer look at their waste streams and were able to recycle more than 80 % of product waste. And on top, they could reduce their emissions for electricity consumption to zero!]
Now we should have a pretty deep understanding of what an LCA does, why we conduct it – and how.
In the next chapter, let’s take a quick look at the legal and technical standards that define how a Life Cycle Assessment should be conducted.
ISO and other standards are absolutely necessary.
However, zooming in on them can be technical and time-consuming. To make our guide complete, we will just quickly explain what the individual ISO norms define.
The ISO 14000 Environmental Management Standards are a family of standards.
They define how companies and organizations manage their environmental responsibilities.
The following standards belong, as the numbers indicate, to this family. LCA software and any Environmental Management Software should comply with these standards, as does our own Environmental Intelligence Platform.
ISO 14001 defines the criteria Environmental Management Systems have to comply with. It ensures that environmental impacts are being measured and improved.
ISO 14021 defines how specific environmental claims have to be and how they have to be formulated and documented.
ISO 14040:2006 defined the principles and framework of a Life Cycle Assessment. Many parts of this article are based on ISO 14040:2006.
ISO 14044 replaced earlier versions of ISO 14041 to ISO 14043.
ISO 14067 defines how the carbon footprint of products is quantified during a Life Cycle Assessment.
ISO 50001 defines Energy Management Systems.
EN 15804 defines the setup of Environmental Product Declarations in the construction industry.
PAS 2050 and the GHG Protocol are standards to define and measure emissions.
This standard defines how the Life Cycle can be accounted for and reported on.
The Global Reporting Initiative provides a framework to assess the environmental impact of companies and their supply chain.
The European Energy Efficiency Directive is “a set of binding measures to help the EU reach its 20% energy efficiency target by 2020. Under the Directive, all EU countries are required to use energy more efficiently at all stages of the energy chain, from production to final consumption.”
Now we have established how environmental management in general and Life Cycle Assessments, in particular, get standardized.
However, there are some points of critique on the concept of LCA that are worth mentioning.
PEF and OEF are currently under development. With PEF and OEF, the European Commission aims to harmonize methodology for the calculation of the environmental footprint of products and organisations. The system has been under development for several years now, and will in the end provide a standardized impact assessment method, a database with background LCA-data and calculation rules for different industrial sectors (PEFCRs).
PEF and OEF will build on many of the standards and norms mentioned above.
The following concerns are sometimes brought up when talking about Life Cycle Assessments.
LCAs are looking for improvements in existing products. On a bigger scale, these improvements are often only small – one company might for example choose a more sustainable raw material for one product, when in reality the supply chain of a completely different product makes the biggest impact.
This is why we created Ecochain. Our Activity-based footprinting approach creates a footprint for the entire company, but can also create Life Cycle Assessments on a product level. This enables companies to find hotspots in their environmental impact – and to reduce them more efficiently. Also, it is much more dynamic than a traditional LCA – when one aspect in the chain changes, all the data gets dynamically updated.
Averages and sample instead of actual data
Often times, LCAs rely on industry averages due to a lack of actual data. This gets criticized as being inaccurate.
An LCA does not incorporate Social implications. However, social aspects are often interconnected with the environmental aspects of sustainability. This is not accounted for in an LCA. However, social LCA is currently under development.
Traditional LCA Software is built to measure one footprint at a time. While this is a great business model for external consultants, the use for businesses is limited.
A traditional LCA is conducted with an external team of LCA consultants. They generate some useful insights and present a report at the end of the analysis.
But if the business wants then starts implementing the recommendations, the analysis essentially becomes useless.
Activity-based footprinting is a new approach to Life Cycle Assessments. Instead of calculating a single LCA at a time, this approach enables companies to calculate the entire footprint of their company – down to product level.
This means that instead of one product per LCA study, Activity-based footprinting can generate hundreds of LCAs at a time.
Ecochain helps companies to turn their environmental data into business opportunities. Our Environmental Intelligence Platform enables businesses to measure and understand their environmental footprint, so they can reduce their emissions, increase efficiency and lead strategically.
Want to learn more about Ecochain? Schedule your demo today.
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