Life cycle thinking and the next industrial revolution – by Paul Hohnen
[Originally published on Tobias Webb’s The Smarter Business blog]
In a guest post on Tobias Webb’s The Smarter Business blog, Paul Hohnen reflects on the strengths and weaknesses of Life Cycle Assessments (LCA) and makes some recommendations on how the real potential of LCAs might be unlocked.
Any successful transition to sustainable development will depend on a shared understanding of the social and environmental impacts at the organizational and product level.
Which is why Life Cycle Assessments (LCAs) and related reporting and monitoring will be so crucial to our collective efforts to move to a Circular (or Closed Loop) Economy.
For those who aren’t familiar with the concept, LCAs are tools that can be used to assess the environmental (and, some would argue, other) impacts of a product, process or service from design to disposal and re-use.
Judging from a recent international conference held last month in Lille, France, LCAs and Life Cycle thinking are attracting increased interest and application, but are still some distance from achieving mainstream recognition and support.
On the positive side of the ledger, it was common ground among the almost 300 participants from 25 countries that Life Cycle thinking offered user companies and regulators multiple benefits.
These included greater transparency about material and energy use at the product and corporate level, opportunities for cost reduction through innovative changes in design or manufacturing processes, and improved communication with interested stakeholders (including consumers, through clear and trustworthy environmental labelling).
There was also general agreement that a mature and common methodological framework had been provided by the ISO 14040 series standard.
While some concerns were raised about the potential for recent national and EU initiatives in the space to create confusion, French and EU representatives were reassuring on the issue of compatibility.
For example, while the EU Commission is currently piloting a ‘Product Environmental Footprint’(PEF) and an ‘Organisation Environmental Footprint’ (OEF) as part of the follow-up to the Communication on
Building the Single Market for Green Products, it is doing so in consultation with a wide range of stakeholders, including many ISO users.
Although the outcome of the PEF/OEF pilot phase will not be known until 2017, and policy recommendations developed in the period 2017-18, the process seems very likely to ensure complementarity with ISO, even where the proposed EU approach might go further, in pursuit (among other things) of encouraging competition based on life cycle environmental performance and of supporting the Circular Economy.
On the less positive side, my sense was that three factors are still inhibiting the wider and more rapid adoption of LCAs.
The first are the ongoing philosophical and methodological differences within the Life Cycle Assessment community itself.
For example, while some experts argued in favour of a narrow range of simple indicators and metrics (e.g. carbon emissions, water use, etc.), others warned about the risks of ‘greenwashing’, where companies could use overly simple LCAs to tell any story they liked.
Similarly, while some participants insisted that LCAs should confine their focus on a product or company’s environmental footprint, others wondered whether social and economic factors (including job creation potential) shouldn’t also be factored in.
In a world where ESG indicators are becoming more important to both consumers and investors, this seems to be a fair comment.
Differences such as these increased the risk of losing important regulator and business audiences looking for a simple, practical and cost- effective sustainability operating system that helped ‘democratize’ LCA among key users and their stakeholders.
This links to a second limiting factor: the difficulty of effectively communicating the benefits of Life Cycle thinking to the C-suite.
As with sustainability arguments in general, I had the sense that the LCA community – with support from regulators – needed to make more effort in helping make a more compelling business case for the routine adoption of LCAs.
This might include, for example, not only providing greater transparency on the commercial benefits (e.g. increased innovation, productivity, supply chain transparency), but also the adoption of language that business leaders understood.
Here, accounting firms and ICT experts have a role to play in helping develop software and other systems that can better make the LCA/business performance case, and in proposing economically effective incentives to regulators (e.g. tax relief) for any additional costs for firms (and especially SMEs) using LCAs.
Academics, too, might help document and profile the quiet and successful progress that many companies are already making by using LCAs to improve performance.
Finally, I had the impression that not all regulators had fully seized the transformative potential of LCAs and their vital role in the transition to sustainable economies.
While France, Germany and the EU Commission and some others had shown leadership in putting in place policies to catalyze action to advance the practical use of LCAs to drive changes in consumer behaviour, there was not yet the level of high level and sustained political support globally – including among the BRICs – that would be needed to take LCAs to scale.
The proposed UN Sustainable Development Goals (SDGs) to be agreed next year for the period to 2030 would be an appropriate place for both regulators and business to call for the enhanced recognition and use of LCAs along global value chains.
Here, I detected a need also to ensure greater consistency at the policy level, where too often one set of regulations encouraged deeply unsustainable behaviour (e.g. subsidies to fossil fuels), while another set (e.g. on ‘zero waste’ manufacturing) incentivized innovation, and material and energy efficiency.
Like so many sustainability tools (think of reporting), LCAs are not – and, I suspect, will never be – perfect.
It would be a mistake, however, to use this as an excuse for not giving greater recognition to their irreplaceable role in reflecting the complexity of products and their environmental impacts as we move towards the next Industrial Revolution.
Paul Hohnen is Senior International Associate with ACCSR, Associate Fellow of Chatham House, and a member of the Ethical Corporation advisory board. Paul has been a diplomat, director of Greenpeace International and a director of the Global Reporting Initiative.