The Power of Life Cycle Assessment: A Guide for Companies

Learn why life cycle assessment is crucial for companies to reduce CO2 emissions and position themselves for the future. Discover the multiple benefits of this assessment method and how it can help companies become greener and position themselves for future financing and circular economy markets.

Table of Contents

• What is a lifecycle assessment?
• Why is a life cycle assessment crucial?
• The many advantages of a life cycle assessment
• How a lifecycle assessment can help companies
• How Fiegenbaum Solutions can help

What is a lifecycle assessment?

A lifecycle assessment (LCA) is a method for evaluating the environmental impact of a product, process or service over its entire lifecycle. This life cycle includes the extraction of raw materials, production, transportation, use, disposal and recycling. The main objective of an LCA is to quantify and evaluate the environmental impacts in order to make informed decisions to reduce these impacts.

However, the focus of LCA is not limited to CO2, and companies can extend LCA to other impact categories such as ozone depletion, eutrophication, acidification, human toxicity, ecotoxicity, photochemical ozone creation, land use and resource depletion.

Definition and purpose

Life cycle assessment enables companies to understand and evaluate the environmental impact of their products and processes. By analyzing the entire life cycle, companies can identify environmental impacts and take targeted measures to reduce these impacts. This is particularly advantageous when comparing different products, as the ecologically less harmful variant can be determined. The product design receives valuable design information and can thus close material cycles and consider the entire product life cycle.

Methods and approaches

There are various methods and approaches for carrying out a life cycle assessment, including the ISO 14040 and 14044 standards. These standards define the principles and framework conditions for conducting an LCA and provide guidelines for data collection, evaluation and interpretation. Additionally, PEF and PACT are gaining increasing attention. Learn more about them here: Understanding LCA Methodologies and Standards: A Guide to Sustainable Product Development.

Challenges

A detailed LCA study can be complex and costly as it requires the collection of extensive environmental data at each stage of the life cycle. Setting up and applying the methodology and databases requires considerable time and money.

The need for the availability of reliable data is fundamental. Databases such as Ecoinvent, which are both open use and accredited, allow information to be shared freely and enable life cycle inventory analysis for a variety of sustainability assessments.

The limitations of an LCA should also be understood. The focus on environmental impacts often means that economic and social challenges are not addressed. Furthermore, while the LCA methodology evaluates potential and non-real environmental impacts, it evaluates global or regional rather than local environmental effects. This means that while LCA has recognized that emissions have a global impact, local or smaller impacts on ecosystems or human health are not identified.

Importance for companies

For companies, life cycle assessment is critical to understanding and reducing their environmental impact. By implementing LCA, companies can achieve their sustainability goals, optimize their processes and make their products more environmentally friendly. Innovation becomes more important as questioning the status quo leads to new, profitable ways of doing things.

Why is a life cycle assessment crucial?

Reduction of CO2 emissions

Life cycle assessment enables companies to identify and quantify their CO2 emissions throughout the entire life cycle. By analyzing these emissions, companies can take targeted measures to reduce their carbon footprint and thus actively contribute to climate protection. Insofar as a company focuses only on CO2, something like Doconomy's 2030 calculator is a relevant tool to get an initial feel for the interdependencies of a CO2 assessment. By highlighting the areas with the greatest environmental impact, an LCA enables targeted improvements.

Environmentally friendly management

By implementing a continuous lifecycle assessment process, companies can develop more environmentally friendly products and processes. This not only helps to protect the environment, but can also strengthen the company's image and increase customer satisfaction. In addition, an LCA can identify so-called "hotspots" in a lifecycle that indicate where the company or its suppliers should adapt their processes to reduce their environmental impact. A better understanding of the context in which a product operates allows for a more targeted action plan to address the product's environmental impact, as well as highlighting the critical areas where action needs to be taken. This is important because sometimes a product can perform well in terms of CO2 emissions but use too much water during its life cycle. Thanks to this broader spectrum, LCAs can also protect our oceans, biodiversity and the natural environment.

Future-oriented corporate financing

The consideration of environmental impact and sustainability aspects is becoming increasingly important for companies, especially with regard to future financing. A life cycle assessment can help companies to position themselves as sustainable and future-oriented companies, which in turn facilitates access to financing. Learn more about financed emissions for companies.

The many advantages of a life cycle assessment

• Lower costs: An LCA can provide data on inefficiencies, potentially leading to a reduction in energy or material consumption.
• New business: By communicating the results of an LCA, a product can attract customers that it might not otherwise have attracted.
• Benchmark: A benchmark of product impact serves as a future marker to show progress.
• Internal cohesion: The objectivity provided by an LCA gives different departments a better understanding of company-wide priorities and provides a common goal to achieve.
• Risk management: Finding risks and reducing the occurrence of costly incidents within the supply chain.
• Hotspots: Determine "hotspot" areas with significant environmental impacts along a product's lifecycle.
• Discussion: By taking an open-ended view of supply chains, companies can have open discussions about supply decisions made and their rationale, both internally and with suppliers.
• Future changes: By modeling the product lifecycle, scenario testing can provide information on the impact of future product developments.
• Regulatory preparation: A lifecycle assessment can provide companies with insights into the impact of future regulations and the associated costs.
• Brand reputation: By conducting an LCA, a company demonstrates corporate responsibility and shows that it is committed to a sustainable future.
• Credibility: A LCA is an internationally recognized standard that assures external parties that a product has undergone an independent analysis to verify its sustainability.
• Marketing: The results of an LCA can be combined with other environmentally relevant information to create an environmental product declaration that contains the key results of an LCA in a user-friendly format.

How a lifecycle assessment can help companies

More sustainable business

Implementing a lifecycle assessment helps companies to operate more sustainably and reduce their environmental impact. The introduction of LCAs can significantly improve a company's reputation and competitiveness in the marketplace. As consumers and stakeholders increasingly prioritize sustainability, companies that use lifecycle assessments demonstrate their commitment to transparency, environmental responsibility and a forward-looking approach. By showcasing LCA results and implementing sustainable practices, companies can build a positive brand image and strengthen their reputation as environmentally conscious businesses. This not only attracts environmentally conscious consumers, but also differentiates the company in the marketplace and positions it as a leader in sustainable business practices. Ultimately, integrating LCA into corporate strategies not only serves to mitigate environmental impacts, but also as a strategic method of gaining a competitive advantage and promoting a positive perception in the marketplace.

Positioning for future financing

A life cycle assessment can help companies to position themselves as a sustainable and future-oriented company. This can facilitate access to finance and increase investor and stakeholder confidence. By driving technological innovation, LCA not only contributes to environmental protection, but also positions companies at the innovative forefront of the industry and promotes a culture of continuous environmental improvement. 

Compliance with environmental regulations and standards

By considering environmental impacts and sustainability aspects, companies can ensure compliance with environmental regulations and standards. This helps to mitigate risk and build a responsible corporate image.

As the need to reduce operational impacts on the environment becomes more urgent, more regions, countries and industries are introducing regulations and voluntary programs that require and incentivize companies to measure and report their carbon footprint and other operational impacts. European regulation such as CSRD, with its double materiality, will benefit those companies that can speak this new language of business. Industries such as construction and textiles are also introducing specific regulations or standards that require or encourage LCA for products or processes in the supply chain. One example:

• The Ecodesign Directive in the European Union aims to improve the environmental performance of energy-related products and may require an LCA as part of the product design and assessment process for certain product groups.
• The introduction of a "right to repair" has been proposed in the EU's new Consumer Agenda and Circular Economy Action Plan. This is intended to help consumers overcome obstacles that prevent them from having defective products repaired. Such barriers can include inconvenience, lack of transparency or difficulties in the availability of repair services. The "right to repair" aims to promote repair as a more sustainable consumption choice that contributes to the climate and environmental goals of the European Green Deal.
• Public procurement policies in different countries or regions, such as the City of Hamburg, including the European Union, may require the consideration of LCA or LCA-derived environmental criteria in the procurement of products or services.

Life cycle assessment is therefore a crucial method for companies to understand and reduce their environmental impact and to position themselves for the future. By implementing LCA, companies can not only operate in a more environmentally friendly way, but also secure their financial future and position themselves as a responsible and sustainable business. For a comprehensive overview, visit our guide to life cycle assessment.

How Fiegenbaum Solutions can help

Fiegenbaum Solutions offers specialized consulting services to help companies implement effective life cycle assessments. Our comprehensive support includes:

• Goal definition and scoping: We help define what is to be measured by establishing the purpose and target audience of the LCA, defining the system boundaries, functional unit, mapping procedures and depth of analysis, what is out of scope and which impact categories are to be measured.
• Inventory analysis: Our experts assist in collecting and structuring the data by mapping each process within the scope, modeling the data into input-output flows, defining background data and sources for each process, and collecting the required data points.
• Impact assessment: We translate the data into impacts by modeling the life cycle to define the life cycle inventory impacts and by calculating all environmental impact categories (e.g., the potential impact on climate change and global warming).
• Interpretation of results: We help translate impacts into conclusions and opportunities by understanding the drivers of environmental impact outcomes, determining opportunities and risks, identifying where improvements can be made across the life cycle, and calculating the opportunities for value creation from reducing environmental impacts.

By leveraging my expertise, companies can effectively implement LCAs, reduce their environmental impact, and position themselves as leaders in sustainability. If you would like to learn more or need assistance, feel free to contact me for a consultation.