Understanding the Life Cycle Assessment Approach

A robust methodology that has emerged for assessing an organisation's impacts on sustainability through ESG reporting is the Life Cycle Assessment approach (LCA).

The Life Cycle Assessment (LCA) approach measures the impacts on sustainability associated with a product, process, or service throughout its entire life cycle, from raw material extraction through to processing, manufacturing, distribution, use, and end-of-life disposal, and consists of four distinct phases: goal and scope, inventory, assessment, and interpretation.

Companies can leverage LCA to improve the accuracy of their ESG reporting and strategic planning, as this comprehensive methodology looks at the impacts associated with a product, process, or service throughout its entire life cycle.

Life Cycle Stages

The life cycle stages indicate the end-to-end process of the creation of a product from raw material extraction. There are two common approaches to how to measure a product’s life cycle for LCA: cradle-to-gate and cradle-to-grave. Cradle-to-gate includes the environmental impacts of a product from the extraction of raw materials to when the product leaves the manufacturing facility. The cradle-to-grave approach is more comprehensive as it assesses environmental impacts from the extraction of raw materials through to the final end-of-use disposal or recycling. A company must choose which of these system boundaries to use when starting a life cycle assessment. This whitepaper will explore the more comprehensive cradle-to-grave approach.

The product life cycle includes the following stages:

• Raw material extraction
• Processing
• Manufacturing/production
• Transportation/distribution/packaging
• Use/retail
• End of use/waste disposal

Raw Material Extraction:

This stage involves the extraction and processing of raw materials required to manufacture the product, such as drilling for fossil fuels, mining for metals, or harvesting agricultural crops.

Sustainability impacts include: emissions from extraction processes, resource depletion, and biodiversity loss.

Processing:

This stage involves the processing of raw materials into components necessary to create the product.

Sustainability impacts include: energy consumption and waste generation.

Manufacturing:

This stage assesses the impacts of the assembly and manufacturing of the final product.

Sustainability impacts include: energy consumption, water use, and resource depletion.

Distribution:

This stage considers the impacts of transporting materials to manufacturing facilities, as well as the packaging and distributions of the final products to retailers or end-users.

Sustainability impacts include: emissions and fuel consumption from transportation.

Use/Retail:

This stage looks at the impacts of the product's use by the consumer.

Sustainability impacts include: waste generation and energy consumption during product use.

End-of-Life:

This stage assesses the disposal of waste or recycling of the product after its been used.

Sustainability impacts include: emissions from disposal methods, such as landfilling, or the depletion of resources through the recycling process.

Through the consideration and assessment of these stages, the LCA approach provides a comprehensive view of the impact on sustainability of a company’s product or process through its entire life cycle.

Life Cycle Assessment Methodology: Four Phases

The LCA methodology consists of four phases:

1. Goal and Scope Definition
2. Inventory Analysis
3. Impact Assessment
4. Interpretation

1. Goal and Scope Definition

The first step in LCA is to define the goal and scope of the assessment. This phase involves defining the purpose of the assessment, the system boundaries for the life cycle to be assessed, and the functional unit against which the impacts will be measured.

• Goal: Define the purpose, reason for, and intended use of the assessment.
• Scope: Define the system boundaries (e.g. cradle-to-grave, cradle-to-gate).
• Functional Unit: Specify the unit of analysis (e.g. kilograms, tonnes, kilometres).

2. Inventory Analysis

The inventory analysis phase involves compiling an inventory of energy and material inputs and outputs associated with the product or process being assessed, including collecting data on raw material extraction, energy use, emissions, and waste generation. This process relies on gathering accurate and reliable data.

• Data Collection: Gather quantitative data on inputs and outputs.
• Data Validation: Ensure the accuracy of data.

3. Impact Assessment

The impact assessment phase evaluates the potential environmental impacts associated with the data collected in the Inventory Analysis phase. This involves classifying and characterising the data to understand the effects of the inputs and outputs on the different impact categories, such as climate change, ozone depletion, acidification, water use, etc.

• Classifying data: Assign data from the Inventory Analysis phase to relevant impact categories.
• Characterising data: Quantify the contributions to each impact category.

4. Interpretation

The final phase is the interpretation of the results, which involves evaluating the findings to find any potential hotspots, gathering insights to strategic decisions for improvement, and communicating results to stakeholders. It also includes assessing the results to ensure they are robust. The goal defined in the initial phase should be addressed by the findings in the interpretation phase.

• Results Analysis: Examine and interpret the results to find any potential hotspots
• Results Insights: Provide insights and suggestions for actionable change based on the analysis.
• Results Assessment: Assess the robustness of the findings.
• Results Communication: Deliver results to stakeholders to show commitment to sustainable change and transparency and accountability for impacts on sustainability.

By looking at the environmental impacts across the entire life cycle, organisations can get a full understanding of the sustainability impacts of their products and processes. This allows for accurate reporting, identifying areas for improvement, and facilitates actionable insights for positive sustainable change. These results and efforts can be communicated to stakeholders to display transparency and accountability for a company’s impacts across sustainability.

To understand more about LCA and its broader role within ESG reporting, download our whitepaper: 'Applying a Life Cycle Sustainability Assessment Approach to Corporate Sustainability Reporting'.