Key Skills for Corporate Transition - LCA - Fall 2024 PDF

KEY SKILLS FOR CORPORATE TRANSITION Life Cycle Assessment Prof. Yoann GUNTZBURGER, Ph.D. SKEMA PGE M1 S1 - 2024 INTRODUCTION 2 SESSION’S OVERVIEW Importance of Life Cycle approaches to sustainable business decisions; From Life Cycle...

KEY SKILLS FOR CORPORATE TRANSITION Life Cycle Assessment Prof. Yoann GUNTZBURGER, Ph.D. SKEMA PGE M1 S1 - 2024 INTRODUCTION 2 SESSION’S OVERVIEW Importance of Life Cycle approaches to sustainable business decisions; From Life Cycle Thinking to Life Cycle Assessment (LCA); LCA Framework and Main Limitations; 3  IMPORTANCE OF LIFE CYCLE APPROACHES TO SUSTAINABLE BUSINESS DECISIONS THE SUSTAINABILITY IMPERATIVE Sustainability is now a megatrend that is transforming companies because of multiple pressures: ‒ Regulation pressures; ‒ Investor pressures (ESG criteria); ‒ Consumers and stakeholder pressures; ‒ Employees pressures; ‒ Competition pressures; ‒ Costs & risks pressure; ‒ Awareness-raising. 5 SUSTAINABLE VALUE CREATION Main strategies for companies to improve their sustainability performance, gain competitive advantage and enhance their reputation: ‒ Reduce risks and costs of scarce resources; ‒ Develop more sustainable (env/soc) products, processes or the overall business; ‒ Target specific environmental and social needs (social ventures/enterprises). Creation of sustainable value through innovation. Mignon & Bankel (2022). Sustainable business models and innovation to realize them: A review of 87 empirical cases. Business Strategy and the Environment 6 SUSTAINABLE VALUE CREATION Value creation: ‒ The performance of actions (using organizational assets, both tangible and intangible) that increase the worth of goods, services or even a business; ‒ Value = monetary value; Environmental (natural resource use, pollution prevention, reduction of emissions) Sustainable value Social Economic (Standard of living, equal Social- (Profit, cost-savings, opportunities, safety, Economic economic growth) Sustainable value creation: health) (Fairtrade, human rights) Performance of the organisation’s actions that increase the economic, social and environmental value of goods, services or the overall business, while ensuring its sustainable value creation capability 7 7 THE BIG QUESTION REMAINS… How to make sure that we make the most sustainable decision??? 8 5 MAIN PURPOSES OF LCA APPLICATIONS 1. Decision support in product and process development (R&D); 2. Marketing purposes (e.g. Eco-labelling); 3. Development and selection of indicators used in monitoring of environmental performance of products or plants; 4. Selection of suppliers or subcontractors; and 5. Strategic planning. 9 TWO LEVELS OF APPLICATIONS Products (goods and services) level; Corporate Level: Organizational LCA (O-LCA); 10  From Life Cycle Thinking (LCT) to Life Cycle Assessment (LCA) Quantis 11 FROM LCT TO LCA MINDSET Life Cycle Thinking INTEGRATION INTO B. PRACTICE Life Cycle Management POLICY/ DATA/ STRATEGY MODELS SYSTEMS/ TOOLS/ PROCESSES CONCEPTS/ TECHN. PROGS LCA 12 LIFE CYCLE THINKING Definition: “Life Cycle Thinking (LCT) is about going beyond the traditional focus on production site and manufacturing processes to include environmental, social and economic impacts of a product over its entire life cycle.” Life Cycle Initiative – UNEP/SETAC Sustainable development is both the origin and the objective of LCT 13 LIFE CYCLE THINKING Typical product Design lifecycle diagram In each life cycle stage, there is the potential to reduce resource consumption and improve the performance of products; Component processing & production Necessity to consider the life cycle system in its globality to avoid pollution transfer; Each actor, from cradle to grave/cradle, has a responsibility and a role to play LCI – UNEP/SETAC Life cycle thinking is not only a matter of circular economy! 14 LIFE CYCLE THINKING Example: The life cycle of a T-Shirt What are the main life cycle stages? What are the main source of env. impacts for each stage? 15 LIFE CYCLE THINKING 16 LIFE CYCLE THINKING 17 LIFE CYCLE THINKING Shift in mindset: a holistic perspective; It means that we recognise how our choices influence each of the life cycle phases; Potential for innovation: identification of both opportunities and risks of a product or a service, all the way from raw materials to disposal; 18 LIFE CYCLE THINKING 19 Life cycle management LCM 20 LIFE CYCLE MANAGEMENT Set of practices that can be used to target, organize, analyze and manage product/service-related information and activities towards continuous improvement along the product/service life cycle; Systematic integration of product/service sustainability in company strategy and planning, product design and development, purchasing decisions and communication policies and programs; Holistic view and a full understanding of interdependency within one organisation and between businesses; 21 LIFE CYCLE MANAGEMENT 22 LIFE CYCLE MANAGEMENT 23 Life cycle assessment LCA 24 LIFE CYCLE ASSESSMENT Life Cycle Assessment (LCA) : ‒ Quantitative method to assess environmental impacts related to a product's life cycle (product – process – service); ‒ It is decision-making tool for sustainability (environmental) management: choice between multiple options; 25 LIFE CYCLE ASSESSMENT The strengths of LCA: ‒ Scientifically based and data-driven; ‒ Comprehensive: integrates multiple impact categories (climate change, resource depletion, air acidification, eutrophication, air toxicity, biodiversity loss, etc.); ‒ Framed by international standards (ISO 14040 series); ‒ Avoids ”pollution shifting”. 26 LIFE CYCLE ASSESSMENT Pollution shifting (or Pollution transfer): Impact Impact 1 2. Raw Fabrication Distribution Use End of Life Raw Fabrication Distribution Use End of Life materials materials Phase, type of impact or geographic region 27 LCA – HOW DOES IT WORK? MODEL & ASSESSMENT SOFTWARE Product/Service Model env. Databases system & data data Ecoinvent SimaPro Gabi OpenLCA USDA Ecochain Methods LCA Asses env. Impact Results Methods impacts https://ecoinvent.org/the-ecoinvent-association/software-tools/ 28  FULL LCA – A STANDARDIZED PROCESS Society of Environmental 1990s: scientific exchange platform for the development of LCA Toxicology and Chemistry (SETAC) 2002: SETAC and UNEP launch the Life Cycle Initiative 2002 – 2007: developing consensus on life cycle approaches The United Nations 2007 – 2011: spreading awareness and use of life cycle approaches Environment Program (UNEP) throughout the world 2012 – now: developing consensus on impact indicators and guidance for organizational LCA The International Organization for 1980 and 1990s: ISO published over 350 standards / environmental issues Standardization (ISO) ISO 14000: environmental management systems 1990s: ISO 14040 series on LCA, revised in 2006 30 LIFE CYCLE ASSESSMENT ISO 14040 & ISO14044 LCA Methodology: 4 (+1) main steps 1. Goal & Scope LIFE CYCLE ASSESSMENT definition FRAMEWORK Direct applications: Product development 2. 4. and improvement; Need for Inventory Strategic planning; comprehensive Interpretation analysis (LCI) Public policy making; Databases Marketing; Etc. 3. Need for 5. Critical review Impact software and assessment models 31  Life cycle Analysis Step 1: Goal and Scope 32 LCA – STEP 1: GOAL & SCOPE 4 questions to answer to properly define (or analyse) the goal and scope of an LCA WHY? WHO? WHAT? WHERE? 33 LCA – STEP 1: GOAL & SCOPE Set the goal: Why the LCA is considered? Identify the (sustainability related) decisions that require a support from the results of the study: ‒ Assess (environmental and health) impacts; ‒ Improve design decisions; ‒ Make better procurement decisions; ‒ Meet communications needs; ‒ Achieve compliance; ‒ Make better policies; ‒ Identify cost savings; ‒ Enhance brand value for competitive differentiation, etc. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us- consulting-enhancingthevalueoflifecycleassessment-112514.pdf 34 LCA – STEP 1: GOAL & SCOPE Example of a MIT LCA study on hand dryers (Commissioned by Dyson): The overall goal of this study is to compare the life cycle environmental impact of several hand‐drying systems using a consistent basis. Specific goals are to: ‒ 1) Evaluate how hand‐drying systems impact the environment under different manufacturing and use scenarios. ‒ 2) Identify impact drivers and ways to target those factors. ‒ 3) Inform product design decisions. Answering the WHY question helps define the specific objectives of the study. 35 LCA – STEP 1: GOAL & SCOPE Who is the target audience? ‒ Is it for internal use only? ‒ Will it be used by the design or engineering teams? ‒ To engage your suppliers or to inform the CEO? ‒ Do you plan to make the results available to the public? ‒ Etc. 36 LCA – STEP 1: GOAL & SCOPE 37 LCA – STEP 1: GOAL & SCOPE Example of a MIT LCA study on hand dryers: ‒ Who is/are their target audience(s)? “This study was commissioned by Dyson and it is expected that the results will be used to support comparative assertions that are disclosed to the public. The report has two audiences. The first audience is any interested party who wishes to understand the data, assumptions, and methodologies used to calculate life cycle environmental impact for the hand‐drying systems. The second audience is the Dyson engineers who are interested in understanding the drivers of environmental impact for the hand‐drying systems.” 38 LCA – STEP 1: GOAL & SCOPE What is going to be analysed? A LCA requires a fair basis to compare options: ‒ Function: A product’s function is an action describing the product’s purpose or the product’s components’ purpose(s); A simple way to describe a function: verb + complements. 39 LCA – STEP 1: GOAL & SCOPE What is going to be analysed? Examples of functions: 40 LCA – STEP 1: GOAL & SCOPE What is going to be analysed? 2 possible levels of function: ‒ Basic functions & additional functions; ‒ Example: Node chair Basic functions: ‒ Sit; ‒ Write and read; Additional functions: ‒ Move quick and easily in classroom ‒ Store student’s belongings ‒ Fit to student’s ergonomics and comfort needs 41 LCA – STEP 1: GOAL & SCOPE What is going to be analysed? Functional unit: ‒ A product’s functional unit is a quantified performance of a system of products to be used as the reference unit in the LCA study; ‒ The FU should relate to a quantity of service (related to the function) rather than a quantity of physical product. 42 LCA – STEP 1: GOAL & SCOPE What is going to be analysed? Examples of functional units: And in the MIT example? 43 LCA – STEP 1: GOAL & SCOPE What is going to be analysed? Three common mistakes when defining FU: Assuming that the same Being overly restrictive; Incorrect use of technical standards or physical quantity of a legal requirements: product equals the same Example : “Enable function: watching of television Example : “Driving 1000 average with a 30 W power person-kilometers in a diesel Example : “1 kg of consumption for passenger car that fulfils the Euro 6 packaging material” 10,000h” standard and therefore emitting less than 0.08 g NO X per kilometer (Euro 6 standard) during use” 44 LCA – STEP 1: GOAL & SCOPE Where are placed the boundaries? System boundaries: ‒ the boundaries between the studied product system and (1) the surrounding economy (technosphere) and (2) the environment (ecosphere); ‒ determine the unit processes from which environmental impacts should be quantified. 45 LCA – STEP 1: GOAL & SCOPE - Elementary flows: Cradle to gate directly taken (resources) or rejected (emissions in air, water, soil) in the Supplier 1 environment; - Non elementary flows: Supplier 2 Supplier 3 Energy supplier intermediary materials, components, products or co-products or wastes between Production facility actors. Elementary User flows Other flows Elementary EoL actors flows Cradle to Grave Other flows Cradle to Cradle 46 LCA – STEP 1: GOAL & SCOPE Where are placed the boundaries? System boundaries: ‒ Define the LC phases that are considered (Cradle to Gate / Cradle to Grave / Cradle to Cradle); ‒ Define the level of scrutiny of the study: cut-off rules 47 LCA – STEP 1: GOAL & SCOPE Boundaries: cut-off rules ‒ 1. Physical measure with weight (% total mass) ‒ 2. Cost or revenue contribution (% total cost) ‒ 3. Environmental aspects contribution 48 LCA – STEP 1: GOAL & SCOPE Boundary : decisions of exclusion – by physical properties Example with a tea kettle 95 % 49 LCA – STEP 1: GOAL & SCOPE Where are placed the boundaries? System boundaries: ‒ Define the LC phases that are considered (Cradle to Gate / Cradle to Grave / Cradle to Cradle); ‒ Define the level of scrutiny of the study (% w/w, % total cost, % env. contribution); ‒ Define the location of the study. 50 LCA – STEP 1: GOAL & SCOPE Where are placed the boundaries? ‒ Example of a MIT LCA study on hand dryers (Commissioned by Dyson) “The analysis includes all life cycle stages, from cradle to grave, along with transportation between each stage. These stages and their corresponding locations are shown in Figure 2 for the hand dryer, cotton roll towel, and paper towel systems. The United States is the primary region of focus for the use of the products in this study, although scenarios involving several other regions throughout the world have been evaluated in the sensitivity analyses […] all systems, with the exception of paper towels, are assumed to be manufactured in China and used in the United States. […] In the case of the Dyson Airblade hand dryer, all parts are accounted for, with the smaller parts such as screws or fasteners aggregated into a single “part”” 51 LIFE CYCLE ASSESSMENT LCA Methodology: 4 (+1) main steps 1. Goal & Scope LIFE CYCLE ASSESSMENT definition FRAMEWORK Direct applications: Product development 2. 4. and improvement; Need for Inventory Strategic planning; comprehensive Interpretation analysis (LCI) Public policy making; Databases Marketing; Etc. 3. Need for 5. Critical review Impact software and assessment models 52 Life cycle Analysis Step 2: Life Cycle Inventories (LCI) 53 LCA – STEP 2: LIFE CYCLE INVENTORIES Basically, an LCI is: ‒ A list of quantified elementary flows (inputs resources and outputs emissions), as well as secondary flows (intermediate and final products or waste between actors), needed to fulfil the FU; ‒ Based on a process diagram; ‒ Done with respect to the goals and scope definition. 54 LCA – STEP 2: LIFE CYCLE INVENTORIES 55 Bill of activities data Unit process inventory data Airblade aluminium MIT example http://environmental- management.ca/lca/LCA_MIT_Hand- 56 Dryers_2011.pdf Life cycle Analysis Step 3: Impact Assessment (LCIA) 57 LCA – STEP 3: IMPACT ASSESSMENT Objectives of the Impact Assessment (LCIA): ‒ Understanding and evaluating the magnitude and significance of the potential environmental impacts of the studied system; Choice of a database and of a specific impact assessment method; 58 LCA – STEP 3: IMPACT ASSESSMENT How to choose the database and the impact assessment method: ‒ Mostly based on the impact categories (midpoint and endpoint); ‒ Product and/or process, the industry; ‒ Specific environmental regulation, ecolabel or ecoprofile; ‒ Company’s environmental agenda; ‒ Consistency with other studies; ‒ Etc. 59 LCA – STEP 3: IMPACT ASSESSMENT Midpoint impact categories Vs. Endpoint categories of protection Example: IMPACT 2002+ http://environmental- management.ca/lca/LCA_MIT_Hand-Dryers_2011.pdf 60 LCA – STEP 3: IMPACT ASSESSMENT 61 LCA – STEP 3: IMPACT ASSESSMENT Three main steps to reconciliate different flow quantities into specific impact categories: 1. Classification All flows (from LCI) are linked to the or their corresponding impact category/ies; FLOWS Inflows Outflows One flow can operate on different impacts Many flows can act on the same impact category IMPACTS Resources Pollutions 62 LCA – STEP 3: IMPACT ASSESSMENT CO2 Ozone destruction NO3 NO2 Global warming CFC Acidification C2H4 PO4 Eutrophication CH4 Photochemical Oxidation smog SO2 N2O 63 LCA – STEP 3: IMPACT ASSESSMENT Three main steps to reconciliate different flow quantities into specific impact categories: 2. Characterization Expression of flows (from LCI) in equivalent quantity of a reference substance based on the characterization factor; 3. Normalization and Weighting Normalization: use of an exposure of reference (average annual impact) – create a relative impact; Each impact result is given a « weight » (a relative and subjective importance), then the different scores can be added to give a single score, expressed in « points » (Pt). 64 LCA – STEP 3: IMPACT ASSESSMENT 65 LCA – STEP 3: IMPACT ASSESSMENT http://www.solidworks.com/sustaina bility/sustainable-design-guide/lca- detailed-overview.htm 66  Environmental impact Impact assessment method Airblade aluminium IMPACT Airblade impact on Global Warming 2002+ GWP results of different systems to dry “one pair of hand” http://environmental- management.ca/lca/LCA_MI 67 T_Hand-Dryers_2011.pdf LCA – STEP 3: IMPACT ASSESSMENT 68  Life cycle Analysis Step 4: Interpretation & Conclusion 69 LCA – STEP 4: INTERPRETATION & CONCLUSION Objectives of the interpretation and conclusion: ‒ Analyze the results (main contributors of the analyzed impacts); ‒ Proceed to a sensitivity and uncertainty analysis; ‒ Give recommendations. 70 LCA – STEP 4: INTERPRETATION & CONCLUSION Sensitivity analysis: ‒ The extent to which the variation of an input parameter or a choice leads to a variation of the results; Uncertainty analysis: ‒ Relates to baseline (scenario) assumptions (multi-parameters variations) and/or bill of activities data (estimated by software); ‒ Allows to quantify and improve the precision of a study and the robustness of its conclusions; Both must be communicated. 71 LCA – STEP 4: INTERPRETATION & CONCLUSION The impact score estimate option A is 4 (mean result) and option B is 6 (mean result) which may suggest that option A is preferable (less impacting). But considering the uncertainties: the more the distributions overlap, the higher the chances that option A may not be preferable to option B. 72 LCA – STEP 4: INTERPRETATION & CONCLUSION 73 LCA – STEP 4: INTERPRETATION & CONCLUSION Decision tree: Combination of sensitivity analysis and uncertainty information to focus improvement of the LCA data 74 Life Cycle Analysis Main limitations 75 LIMITATIONS: DECISION MAKING Many decisions are made during a LCA : ‒ Functional unit and scope definition; ‒ Type of LCA; ‒ Cut-offs; ‒ Impact categories; ‒ Allocations; ‒ Weighting, etc. 76 LIMITATIONS: DATA AND MODEL QUALITY “All models are wrong, but some are useful” George Box Uncertainties related to: ‒ Parameters: data quality, gaps, unrepresentative, etc.; ‒ Scenario: usually managed through sensitivity and uncertainty analyses; ‒ Model: insufficient knowledge of the mechanisms of the system, steady-state assumption. 77 LIMITATIONS: DATA AND MODEL QUALITY Examples of uncertainty sources for the IT sector Life cycle stage Important uncertainty sources Raw material Complex supply chain acquisition Variations in geographical location World market variations Production Large supplier base which changes continuously Allocation of facility data Use Lifetime, geographical location, traffic scenario model Network design and energy use variation Variations in electricity and power production supply EoL Treatment Future processes principally unknown Variation between suppliers and regions Allocation of facility data European Telecommunications Standards Institute (ETSI) Telecommunication Standardization Sector (ITU-T) 78 LIMITATIONS: LCA ≠ SUSTAINABILITY! LCA cannot tells us if a product/service is sustainable! Why? ‒ Information about best option, not environmental sustainability; ‒ Environmental impacts are just part of the answer; Two methods to try and fill this gap (aligned with ISO 14040): ‒ Environmental Life Cycle Costing (eLCC); ‒ Social Life Cycle Analysis (S-LCA); Life Cycle Sustainability Assessment 79 LIMITATIONS: LCA ≠ SUSTAINABILITY! Rödger et al. (2018) Life cycle costing: An introduction. In Hauschild et al. (Eds) Life Cycle Assessment: Theory and Practice 80 LIMITATIONS: LCA ≠ SUSTAINABILITY! Table 16.1 An overview of Worker-related issues social impacts included in Non-discrimination S-LCA approaches Freedom of association and collective bargainning Child labour, including hazardous child labour Forced and compulsory labour Level and regularity of wages and benefits Physical working conditions Psychological working conditions Training and education of employees Society-related issues Corruption Development support and investments in society Local community acceptance of company's activities Company commitment to sustainability issues Product user-related issues Integration of consumer health and safety concerns in product Moltesen et al. (2018) Social life cycle assessment: An Availability of product information to users introduction. In Hauschild et al. (Eds) Life Cycle Ethical guidelines for advertisements of product Assessment: Theory and Practice 81 MAIN CHALLENGES TO LCA DEVELOPMENT Main barriers for implementation of sustainability management tools (including LCA) by SMEs: 1. Lack of awareness of sustainability issues; 2. Absence of perceived benefits; 3. Lack of knowledge and expertise on sustainability issues; 4. Lack of human and financial resources; 5. Insufficient external drivers and incentives; 6. Changes in workplace routines; 7. Unsuitability of formal management tools to fit the often informal and flexible SME structure; and 8. Complexity of tools. 82 LIFE CYCLE ASSESSMENT QUIZ K2!!! 83