By Elana Knopp, Senior Content Writer, Edison Energy
Dr. Seyed Ebrahimi, Principal Consultant, Sustainability Strategy, at Alfa Energy (an Edison Energy Company), lays out the nuts and bolts of a Life Cycle Analysis (LCA) within the framework of corporate sustainability, the challenges around supplier participation, and making it work for the bottom line.
Life Cycle Analysis (LCA) has been around for more than half a century, beginning in the 1960s, when heightened environmental consciousness led to increased scrutiny around issues like resource and energy efficiency, pollution, and solid waste. Coca Cola became one of the first major corporations to analyze its environmental footprint, laying the foundation for the methodology used by many companies today.
This ultimately laid the groundwork for governmental support of LCAs through agencies like the U.S. Environmental Protection Agency (EPA) and the European Commission, which both released publications in the 1980s supporting the methodology.
Today, LCAs are often leveraged to help identify “hot spots” within a company’s supply chain by analyzing the environmental impact of each stage of the life cycle of a product or service, with the goal of documenting and improving its overall environmental profile.
With Scope 3, or value chain, emissions typically representing the vast majority of an organization’s total greenhouse gas (GHG) emissions, LCAs are increasingly being sought out by companies to help meet their sustainability targets.
Companies have uncovered a host of benefits as a result of LCAs, like product development, which often means moving away from a particular material or manufacturing process to a more sustainable material or less energy-intensive process.
“There are so many companies in different sectors committing to net-zero targets, but we’re seeing a huge struggle for companies to really think about how to account for their supply chain emissions,” said Seyed Ebrahimi, Principal Consultant, Sustainability Strategy at Alfa Energy (an Edison Energy Company). “Supply chains are global in nature nowadays – you may have raw material procured in China, then perhaps manufactured in the U.S. These complex supply chains will require knowledge and some level of supply chain configuration and mapping.”
The complexity of supply chains and accounting for all the energy and materials used – from raw material acquisition and manufacturing, to processing, use stage, and end of life treatments – can present some challenges for a company in meeting its sustainability commitments. These include the availability of data to help quantify material inputs and outputs at all stages of a defined scope. And when data is available, there’s always the question of how reliable that data actually is. Accurately quantifying environmental impacts is another sticking point.
Then there is the issue of defining LCA boundaries and scope. Companies must ask themselves how far they are willing to go and where they draw the line, what attributes they want to compare against one another, and how far down the chain they want to identify and quantify these material flows.
With some companies having hundreds or thousands of suppliers, working through the process of identifying emissions data – then making the necessary changes and investments – can be onerous and time-consuming.
“In cases when you have a company with 800 suppliers, for example, it’s very difficult to tell them where to actually go to get activity-based data, which focuses on gathering specific data across a company’s entire value chain,” Ebrahimi said. “A spend-based approach, which collects financial data, will help you categorize based on sector or a particular good, like cement. So, if you’re a manufacturer of cement, timber, or steel, you assign those particular suppliers based on that good or a particular sector. We use spend-based methods and then we find the highest emitters from a spend methodology. Then we can take a more activity-based approach.”
Once information is gleaned from suppliers, LCAs can ultimately lead to innovative product development, like additive manufacturing, or 3D printing.
“For companies seeking to make more sustainable products, LCAs can help them make informed decisions from a supply chain management and procurement perspective,” Ebrahimi said.
For companies considering an LCA, Ebrahimi points to centering the business case by conducting a Life Cycle Cost Analysis, or LCCA, in conjunction with an LCA.
An LCCA evaluates the total cost of investment, return on investment, and payback period over the life of a product or service.
“Lifecycle assessments should be conducted in parallel to lifecycle costing,” Ebrahimi said. “For any sort of interventions across the hot spots that we identify, we must look at the economic bottom line. Whether we like it or not, we live in a commercial world and we have to abide by the economics. If something doesn’t make economic sense, it will be very difficult to get everyone to agree to that change.”
Take auto giant BMW, who pioneered the use of lightweight materials for some of its auto components to bring down emissions, utilizing carbon fiber reinforced polymers. The material weighs significantly less than a corresponding part made of aluminum or steel, resulting in less fuel or electricity used and a lower carbon footprint.
“BMW took that cost upon themselves to develop a new technology, and then they set that as an IP, so that’s the flip side,” Ebrahimi said. “You might be spending in R&D through LCA-recommended alternative materials, and if you can then turn that into a use case, you can then sell that to your competitors. From a sales and marketing perspective, if you can do an LCA, then you should. We’re living in a different world and any sort of initiative that shows you’re going green will see companies reaping the benefits.”
Smart sustainability solutions begin with a dialogue. Reach out to our team and let’s start the conversation.
Alfa Energy, together with its parent company Edison Energy, recently hosted a webinar – Taking your supply chain to net zero: A game changer for global manufacturers. Our expert panel shared their perspectives, learnings, and best practices on how to develop an impactful supply chain decarbonization strategy, which included a case study from Honda. In case you missed it, click here to view the webinar livestream.