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Why Carbon Accounting and Product-Level LCAs Go Hand in Hand

In today's world, sustainability isn't just a buzzword—it's a business imperative. As consumers and business customers alike become increasingly environmentally conscious and regulatory standards tighten, businesses must take a proactive approach to address their environmental impact. They can’t just talk the talk, they need to walk the walk.

Carbon accounting has long been a staple in measuring and reducing a company's environmental impact. But here’s the thing: the top-down view carbon accounting provides has its limits.  This is where product-level Life Cycle Assessments (LCAs) come into play. Here's why your business needs both if it wants to thrive in the green economy: 

Identify actionable insights and hotspots

Carbon accounting lays the foundation by quantifying greenhouse gas emissions and identifying key sources within your operations. This is the first piece of the puzzle. Product-Level LCAs broaden the scope to provide more granularity into what’s causing the impact, pinpointing environmental hotspots within the product life cycle. Sustained goes one step further by assessing not only carbon but a total of 16 environmental impact categories (think biodiversity, land use, water scarcity etc.), enabling targeted reduction efforts and informed decision-making.

Meeting Customer Demands

Customers aren't satisfied with vague sustainability claims anymore. They want transparency and accountability when it comes to the sustainability of the products they purchase. They seek credible and detailed insights into the environmental impact of the products they already buy from your company and expect that any new products designed for them adhere to the environmental requirements set in the design briefs provided.

While company-wide emissions measured through carbon accounting provide an overarching view of how sustainable a company is, product-Level LCAs, or product carbon footprints (PCFs) offer a granular assessment of a specific product's sustainability performance. By incorporating Product-Level LCAs into your sustainability strategy, your company can effectively address both aspects of customer demands. This comprehensive approach not only fosters trust and loyalty with customers but also positions your company as a leader in meeting evolving sustainability expectations.

Staying Ahead of Regulations

With environmental regulations tightening, companies face increasing demands for transparent reporting. Initiatives like the Corporate Sustainability Reporting Directive (CSRD) underscore the importance of comprehensive company-level reporting.

However, simply reporting company-level emissions is no longer sufficient. There's a growing emphasis on the need to back sustainability claims with credible data, as seen by the introduction of the EU’s Green claims directive. This will require a shift towards more granular assessments, providing robust evidence and data to support any such claim, which only product-Level LCAs can provide.

By embracing product-Level LCAs alongside company-level reporting, businesses can proactively meet regulatory requirements, safeguarding against accusations of greenwashing and reinforcing their commitment to transparency and accountability in environmental reporting.

Driving Continuous Improvement

Sustainability is a journey, and both carbon accounting and product-Level LCAs play vital roles in driving progress. While carbon accounting helps reduce emissions in the supply chain, LCAs identify opportunities for optimisation throughout the product lifecycle, ensuring sustainability efforts evolve in tandem with business operations. Furthermore, LCAs offer insights into opportunities for eco-design and product innovation, empowering businesses to develop more sustainable products that meet consumer demand while reducing environmental impact.

Gaining Competitive Advantage

Robust sustainability practices supported by both carbon accounting and product-level LCAs can differentiate businesses in the market, appealing to environmentally conscious business customers or consumers and gaining a competitive edge. Sustainability-focused marketing and labelling initiatives, supported by robust LCA data, can enhance brand reputation and customer loyalty, driving competitive advantage and market share growth.

Enhanced Risk Management

Understanding and mitigating environmental risks is crucial for business resilience. While carbon accounting provides insights into emissions, product-level LCAs enhance risk management practices by providing insights into environmental risks associated with product manufacturing, distribution, and disposal. The incorporation of the concept of 'double materiality' within the Corporate Sustainability Reporting Directive (CSRD) further emphasises the importance of considering not only the financial risks that sustainability may cause to the company (financial materiality) but also the company’s own impacts on people and the environment (impact materiality), best measured using product-level LCAs. 

On top of that, if the assessment goes beyond carbon, valuable insights are gained into additional potential risks such as biodiversity impact and resource scarcity essential to a comprehensive risk assessment. This proactive approach to risk management enables companies to anticipate and mitigate environmental risks effectively, ensuring long-term sustainability and resilience in a rapidly changing business landscape.

In conclusion, to truly drive sustainability and meet the demands of customers and regulators alike, businesses need to complement carbon accounting with product-level LCAs. By partnering with Sustained, companies can navigate this journey effectively and drive positive environmental impact—one product at a time.

Frequently Asked Questions

How does a company start implementing product-level LCAs if they've only done broad carbon accounting before?

Adding product-level LCAs involves a detailed assessment of each product's lifecycle to understand its environmental impact fully. This requires gathering data on raw materials, production, distribution, use, and disposal. Companies can start by using defaults if they do not have access to first-party data. Companies often start by either focusing on a single product line to refine their approach before scaling up, or starting with the data they have for their whole product range and iteratively improving its quality.

What are the challenges businesses face when trying to integrate product-level LCAs with their existing carbon accounting practices?

Integrating product-level LCAs with carbon accounting presents challenges such as aligning the scope and scale of assessments, data collection and management complexities, and ensuring methodological consistency. Companies may face challenges in obtaining accurate lifecycle data across the value chain, which is where defaults are helpful so companies can iterate and improve over time. 

How can product-level LCAs be applied to complex food products that involve multiple ingredients from diverse sources?

Product-level LCAs in the food industry must account for the environmental impact of each ingredient, which can be challenging given their varied sources and production methods. This process involves tracking the origin, agricultural practices, processing, and transportation of each component. To manage this complexity, companies can start with secondary datasets from leading databases. Once they identify the biggest contributors, they can work with their suppliers to obtain primary data that would model that ingredient’s impact more accurately. Collaborative efforts with suppliers to gain transparency and detailed lifecycle data are crucial. Connecting Sustained Impact workspaces can be helpful to share data across value chains.