Life Cycle Assessment—a tool that evaluates environmental impacts on a product-level life cycle—delivers valuable information to companies that can impact their financial performance as well as strategic stance.
Sometimes called “cradle-to-grave” or “cradle-to-cradle” analysis, LCAs take a holistic approach in evaluating factors in product manufacturing that impact the environment. The analysis provides a methodology to assess often hidden factors starting with raw materials, how the materials that make up the product are transported and what methods are used for consumption and disposal.
LCAs allow companies to integrate environmental consideration into core business operations, revealing opportunities for improvement as well as strategic issues. Overall, information from an LCA can help top management make informed decisions that will impact their company’s top and bottom line and help develop a sound strategy.
Impacting Top-and-Bottom Line
LCAs link environmental impact with financial implications by identifying fuel, energy and environmental risks, but also by identifying ways to cut costs and improve processes within the scope of a product. With the comprehensive performance data from an LCA, managers can better identify where fuel and energy are being spent and thus focus on where improvements can be made. By mitigating environmental issues and achieving more efficient and low-impact operations, companies are also able to achieve top-line growth.
An LCA of for a building product manufacturer revealed that a huge amount of energy use was resulting from a common practice which involves burning off natural gas to destroy toxins before they reached the atmosphere. Using findings from the LCA, the company focused on this as an opportunity to decrease energy use and boost environmental performance, and successfully pursued a grant from their State Department of Energy to purchase a cogeneration unit to capture the wasted energy. As a result, the company was able to lower its long-term costs by adapting to a more energy-efficient process, which also decreased its carbon footprint.
Developing a Sound Strategy
Protecting the environment is no longer restricted to extending a company’s social responsibility. More importantly, it has become a matter of strategy and a source for competitive advantage. The benefit of LCAs can vary according to the specific pains and interests of a company. This information allows top management to make key decisions in defining the strategic direction of its products or company by conforming to emerging client buying preferences, risks and challenges within the regulatory landscape, as well as identifying opportunities for improvement and innovation.
TreeZero Paper Products—an innovative company that creates paper products without the use of trees—underwent a life-cycle greenhouse gas emissions analysis that helped define it product’s environmental advantages over tree-based paper. Its unique process of using bagasse from sugar cane and bamboo from waste scaffolding was validated through the LCA and as a result, TreeZero was able to launch a new product by taking a strategic stance that distinguishes its product from traditional paper products.
Whether it is a product manager needing to differentiate product benefits, or a CEO looking to understand the risks and rewards inherent in their business, environmental analysis has never been more important. LCAs offer directed, meaningful analyses which tell a story about the energy and effect of a product or process, providing critical data to the supply chain, marketing and strategic management.