Life Cycle Assessment - A Guide for Sustainability and Strategy Execu:ves David Schatsky

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Life Cycle Assessment - A Guide for Sustainability and Strategy Execu:ves David Schatsky
ISSP Conference 2011

         Life Cycle Assessment
A Guide for Sustainability and Strategy Execu:ves
                 David Schatsky
               September 22, 2011
Life Cycle Assessment - A Guide for Sustainability and Strategy Execu:ves David Schatsky
About Green Research
      • Research, advisory and consul:ng firm
      • Focus on corporate sustainability, clean tech,
        alterna:ve energy
      • Offer market intelligence, strategic advice,
        best prac:ces
      • Tools: execu:ve research; consumer research;
        case studies; market forecasts
      • Based in New York City
2   © 2011 Green Research
Life Cycle Assessment - A Guide for Sustainability and Strategy Execu:ves David Schatsky
The Product Life Cycle
                                                              Extrac:on of
                   Incinera:on                               Raw Materials
                   and Disposal
                                                    Recovery

                                  Reuse and                                              Design and
                                  Recycling             Recycling                        Produc:on
                                                        materials/components

                                                Reuse

                                           Use and                               Packaging and
                                          Maintenance                             Distribu:on

                                   Source: Chart at hWp://www.admin.cam.ac.uk/
3   © 2011 Green Research
Life Cycle Assessment Methodology

                    1. Defini:on of Goal
                         and Scope

                                           4. Interpreta:on
                   2. Inventory Analysis
                                               of Results

                  3. Impact Assessment

                             Source: ISO
4   © 2011 Green Research
Interest in LCA Is Surging
                                                  1000
                                                                                                                      902
                                                  900
                                                  800
                        Publica7ons Referencing
                        "Life Cycle Assessment"

                                                                                                                696
                                                  700                                                                       636
                                                  600
                                                  500                                                     473
                                                                                                399 412
                                                  400
                                                                                          295
                                                  300
                                                  200                           178 205
                                                            137 145
                                                  100
                                                    0
                                                            2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Apr‐15

                                                     Source: sciencedirect.com (4/11)
5   © 2011 Green Research
Downloads of LCA Research Studies
                       Skyrocke:ng

                        (in thousands)
                             200                                                                                 190
                             180
                             160
                            Digital Downloads

                             140
                                                                                                     116
                             120
                             100
                              80
                                                                                57
                              60
                              40       22
                              20
                               0
                                                       2007                  2008                   2009         2010

                                                Source: Springer 2010 publisher's report for "The Interna:onal
6   © 2011 Green Research
                                                Journal of Life Cycle Assessment "
Significant Adop:on of LCA among
               Manufacturers and Major Retailers
                            Formulated Goods                     Durable Goods             Retailers
              Consumer Coca‐Cola, Henkel,                        Dell, ElectroLux, Ford,   Alliance Boots,
              Products Pepsico, Unilever                         HewleW‐Packard, Levi      Marks & Spencer,
                                                                 Strauss, Motorola,        Walmart, Tesco
                                                                 Nokia , Philips,
                                                                 Timberland, Toyota

              Industrial AkzoNobel, BASF,                        Alcatel‐Lucent,
              Products LANXESS                                   Armstrong World
                                                                 Industries, Herman
                                                                 Miller

                               Source: Green Research, the companies
7   © 2011 Green Research
Companies Are Promo:ng their Use of
                       LCA

8   © 2011 Green Research
9   © 2011 Green Research
Academic Work in LCA Largely Mirrors
              Demand from Industry
                                                               Manufacturing                                  70%
                                       Agriculture, Forestry, Fishing, Hun7ng                                65%
                              Waste Management and Remedia7on Services                                      61%
                                                                       U7li7es                            52%
                                                                  Construc7on                             52%
                                            Transporta7on and Warehousing                                48%
                               Mining, Quarrying, and Oil and Gas Extrac7on                             44%
                                                   Public Sector/Government                          30%
                                                         Educa7onal Services                        26%
                                          Accommoda7on and Food Services                            26%
                                         Prof., Scien7fic & Technical Services                      22%
                                                                   Informa7on                      22%
                                              Real Estate, Rental and Leasing                     17%
                                                                   Retail Trade                  13%
                                                       Finance and Insurance                     13%
                           Other Services (except Public Sector/Government)                     9%
                                            Health Care and Social Assistance                   9%
                                             Arts, Entertainment, Recrea7on                     9%
       Ques:on: For which
       industries has your ins:tu:on                                                       0%          50%          100%
       conducted or peer‐reviewed
       LCAs? (Select all that apply)

                                     Source: Green Research Academic LCA Survey (4/11), n=23
10 © 2011 Green Research
LCA Can Deliver Mul:ple Business
                            Benefits
      •     Lower costs
      •     Increased revenues
      •     Ability to respond to customer inquiries
      •     Market access
      •     Brand enhancement
      •     Quan:ta:ve basis for corporate sustainability

11 © 2011 Green Research
Adopters of LCA Cite Expecta:ons of
                  Numerous Benefits
                             Will enable us to make be_er                                                       61%
                                        products
                                  Enables us to respond to                                                      61%
                                     customer inquiries
                            Puts sustainability on scien7fic                                                    57%
                                        foo7ng
                                       Enhances our brand                                                44%
                           Will help make us more efficient                                              35%
                                          Will lower our costs                                     26%
                                Will increase our revenues                                 13%
                                 Helps us with compliance                                  13%
        Ques:on: WhichI see
                         bestli_le or no business benefit                             4%
        reflects your thinking on
        the business benefits of
        LCA?                                                                   0%         20%          40%   60%     80% 100%

                                  Source: Green Research Sustainability Execu:ve Survey (4/11), n=23
12 © 2011 Green Research
At Leading Companies, Sustainability
             Departments Open Funding LCA

                                                                      Mul7ple
                                                                       34%
                                                                                                Sustainability
                                                                                                 department
                                                                                                    46%

                                              Research and
       Ques:on: What                          development
       department budget                                   Product
                                                   8%
       funds LCA at your                                development                               Supply chain
       company?                                              8%                                       4%
                           Source: Green Research Sustainability Execu:ve Survey (4/11), n=24
13 © 2011 Green Research
Goals and Complexity Drive Cost
               Inaccessible
                      Data

                      Complex                                                 High
         Complexity

                        Supply                                              Cost Zone
                         Chain                                            $50K ‐ $100K+

                                                   Moderate
                                                   Cost Zone
                                                  $25K ‐ $50K
                        Simple    Low
                        Supply Cost Zone
                         Chain $10K ‐ $20K

                                 Screening                           Internal Benchmarking   Compe::ve Claims
                                                                           Goal
                                 Source: Green Research analysis (5/11)
14 © 2011 Green Research
Scan and Marke:ng‐Oriented LCAs
                     Most Popular Today
                           Scan/screening level LCA                                                       61%

                    Full product LCA (peer reviewed)                                                  52%

                               Detailed internal LCA                                                44%

                                           Industry‐wide                                   26%

                              Other (please specify)                                 17%
      Ques:on: What type(s) of LCA
      has your company done over                                     0%                             50%         100%
      the last 12 months? (Please
      select all that apply.)                                           Percent of Companies that Performed LCAs

                               Source: Green Research Sustainability Execu:ve Survey (4/11), n=23
15 © 2011 Green Research
LCA Costs Decline With Organiza:onal
              Maturity
    Cost/Effort

                 Year 1            Year 2               Year 3   Year 4   Year 5

                   Source: Green Research analysis (5/11)
Costs Are More Modest than Open
                          Assumed
                                                    $100,001 to
                                                     $500,000
                                                        9%                                             Up to $10,000
                                                                                        Nothing             9%
                                                                                          9%

                                                       $50,001 to
                                                        $100,000
                                                          27%
                                                                                                $10,001 to
    Ques:on: How much has                                                                        $30,000
    your company spent on                                                                          28%
                                                                       $30,001 to
    LCA tools, services and
                                                                        $50,000
    training over the last 12
                                                                          18%
    months (excluding
    internal staff)?

                           Source: Green Research Sustainability Execu:ve Survey (4/11), n=22
17 © 2011 Green Research
Strong Growth in Use of LCA to
                               Con:nue

                           Conduct at least one in the next year                                                  82%

                                                    Train staff to do LCA                               23%

                                                     Hire staff to do LCA                              14%

                           Conduct at least one in 12‐24 months                                       14%

                                                  Acquire LCA sogware                            9%
      Ques:on: What are your
      company’s future plans
      for using life cycle                                                               0%                 50%   100%
      assessment?

                                 Source: Green Research Sustainability Execu:ve Survey (4/11), n=23
18 © 2011 Green Research
Drivers and Inhibitors of LCA Adop:on

                                                                    Takes :me to embed in a
                                                                           company
                                                                     Percep:on of high costs
                                                                  Standards, best prac:ces s:ll
                                                                           emerging

                            Beyond low‐hanging fruit
                           Transparency expecta:ons
                                  Eco Labeling
                                  Regula:ons
                                 Low‐cost tools
                              Open‐source efforts
                                  BeWer data
                                Source: Green Research analysis
19 © 2011 Green Research
Greater Awareness, BeWer Tools and
            BeWer Data Will Increase Adop:on
                Managers are not aware of the benefits                                                      63%
                           Conduc7ng an LCA takes too long                                             58%
               Shortage of exper7se in the marketplace                                                 58%
                             Lack regula7ons that require it                                         50%
                       Conduc7ng an LCA is too expensive                                             50%
                                   Tools are too hard to use                                   38%
                                    Tools are too expensive                                   33%
                                     No major barriers    4%
      Ques:on: What do you think are
      the major barriers to adop:on of
                                                Other         17%
      LCA in industry and the public
      sector? (Select all that apply.)                 0%    20% 40%                                 60%     80%   100%

                                    Source: Green Research Academic LCA Survey (4/11), n=24
20 © 2011 Green Research
To Tap LCA for Innova:on, Develop an
                  In‐house Capability
        Outsource When                              In House When

        Use will be intermiWent                     Your firm has strong engineering/design
                                                    skills
        Focus is on marke:ng claims                 You have a proven ability to adopt and
                                                    ins:tu:onalize innova:ons

        Your company is unready to make a mul:‐ Want to embed life cycle thinking into
        year commitment of resources            your product development process

        But: your internal staff will need to help   Will be conduc:ng more than 4–5 LCAs
        consultants gather data regardless          per year

21 © 2011 Green Research
Be Strategic about Which Products to
                          Study
          Company            Strategy                             Capability
          Dell               First LCAs were of top products in   Outsourced studies,
                             each of three categories             managed by internal
                                                                  LCA expert
          Unilever          LCA or similar for every product      In house
          AkzoNobel         Any investment over €5 million; and   In house
                            products with unique environmental
                            proper:es
          Global            New ventures; products with complex In house
          Manufacturer with environmental message
          $11B in revenues
          Johnson & Johnson Reserve full‐blown LCAs for when    Outsource full‐blown
                            demanded by important customers or LCAs; do screening
                            regulatory considera:ons; use light with in‐house tools.
                            screening methods other :mes
22 © 2011 Green Research
Advice
      • To tap LCA for innova:on, develop an in‐house
        capability
      • Be strategic about what products to study
      • Make sure your LCA has impact by :ming it to
        budget cycles and involving key stakeholders
      • Start building or boos:ng internal LCA
        exper:se

23 © 2011 Green Research
Case Studies
      •     Toyota Motor Sales
      •     Nike
      •     Stonyfield Farm
      •     AkzoNobel
      •     Armstrong World Industries
      •     HewleW‐Packard
      •     GlaxoSmithKline
      •     Yakima Products

24 © 2011 Green Research
Contact:
David Schatsky                Full report and findings
+1 (646) 783‐8337             available online at
dschatsky@greenresearch.com   greenresearch.com
greenresearch.com
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