Life Cycle Assessment
Every company leaves an environmental footprint by producing and delivering its products and services. The more pollution it creates, the larger its environmental footprint.
Imagine an extremely simple value chain for a pencil. From a pencil manufacturer’s perspective, there are only a limited number of component parts and materials: wood, graphite lead, glue, paint, metal ferrule, vinyl eraser, etc.
The raw materials come into the factory from one side and finished pencils go out the other side. As they leave the factory, the finished pencils are packaged, loaded on transportation vehicles, such as trucks, and shipped to distributors and customers around the world.
In the past, asking the pencil manufacturer to trace its environmental footprint was straightforward. The executive would cite environmental impacts that arose from factory operations—exhaust from the equipment on the factory floor, waste water emissions, volatile organic emissions from the paint shop, and scrap wood, metal, and graphite.
A more up-to-date and enlightened view of the environmental footprint of the pencil would extend the analysis beyond the strict boundaries of the factory floor. The extended analysis would certainly include the manufacturing process for the pencil, but the analysis would also include all of the upstream suppliers of the pencil’s raw materials—the wood, graphite, paint, glue, eraser, etc. It would also extend the analysis downstream to all customer usage and ultimate disposal. In this broader view, what happens outside the boundaries of the factory are just as important from an environmental perspective as what happens behind the factory gate.
To gain a full understanding of the pencil’s real environmental footprint, we must ask questions about the operations of all of its suppliers. Where does the wood come from, and is it harvested in a sustainable manner? Where does the paint come from, and does it include toxic materials, and does it produce harmful air emissions? What about the metal used to make the ferrule and the vinyl used to make the eraser? We must also ask questions about the transportation and distribution network, and what happens to the pencil when it is no longer used. The total footprint now reflects the pencil’s complete life cycle: from raw materials to manufacture to use and, finally, to disposal.
Life cycle assessment (LCA) is a “cradle-to-grave” approach for assessing the environmental performance of products and companies. It is an important tool for understanding the broad and cumulative impact of products that we purchase. All stages of a product’s life are evaluated since they are interdependent—no one stage is more or less important than the other stages. LCA is also an important tool for highlighting the environmental pressure points and for finding ways to minimize the harm. By pinpointing these pressure points, a good LCA can help focus a company’s resources on reducing its environmental footprint.
A good LCA provides many benefits. The LCA can help decision makers select the product or process that results in the least harm to the environment. This information can be used in conjunction with other factors, like cost and performance data, to select a product or process. For example, suppose Walmart is choosing between two rival products: Option 1 is a line of traditional cotton textile products, while Option 2 used only organic cotton. By performing an LCA of the cotton textile supply chain, Walmart learned that conventional cotton crops consumed more than 25% of all chemical insecticides and more than 10% of chemical pesticides in agriculture.3 Furthermore, many of these chemicals were suspected carcinogens and after application on the cotton crop, these chemicals were dispersed into the soil, water, and air. Walmart’s use of an LCA has “saved time and money, and reduced the environmental impacts associated with this business segment.” 4
Besides choosing less harmful materials in a company’s production process, another benefit of a good LCA is that it can identify ways to improve resource productivity—for example, energy usage, water consumption, and the amount of waste generated. Some well-publicized examples of this approach among major corporations include:
- Dow Chemical’s program Waste Reduction Always Pays (WRAP), which was designed to stimulate a cultural shift in thinking of Dow employees concerning the value of reducing waste releases and emissions.
- 3M’s program Pollution Prevention Pays (3P), which is based on the concept that pollution prevention is more environmentally effective, technically sound and economical than conventional pollution control strategies.
- Frito-Lay’s “near net zero” factory in Arizona that took a production facility “off the grid,” running primarily on renewable energy sources and recycled water, while producing nearly zero landfill waste.
- Subaru’s zero landfill plant in Indiana which became the first automotive assembly facility in North America that recycles or reuses all waste and sends minimal amounts to the landfill.
In many ways, eco-efficiency represents “low-hanging fruit” for a company. Companies are improving their environmental performance and typically reducing their costs at the same time. Retro-fitting plants, installing energy saving devices, installing centralized controls for heating, lighting, and cooling systems can have a high return on investment and pay back periods of months.
Cradle to Cradle Design
Despite the progress that companies have made to improve their environmental performance using tools like life cycle analysis and eco-efficiency, the system is far from perfect. Our society faces too many resource constraints and places too many burdens on our environment.
The architect William McDonough and others have argued that we need to look at environmental issues in a totally new way. Rather than using a “cradle-to-grave” model, McDonough proposes that companies should redesign their products and services to completely close the loop. He succinctly calls this cradle-to-cradle design, often designated as C2C. In 2002, he published a book with Michael Braungart entitled, Cradle to Cradle: Remaking the Way We Make Things, in which he provides guidelines for how companies can achieve this goal. At the end of a product’s life, rather than disposing of the product in a landfill, the product should be designed so that it can be broken down into biological nutrients that can be safely disposed of, or that’s technological components can be re-used in other parts of our industrial system.
To be more precise, in the C2C model, products should be composed of two primary materials: technical nutrients and biological nutrients. Technical nutrients are inorganic or synthetic materials—such as plastics and metals—that can be used and re-used many times without any loss in quality. They are limited to non-toxic, non-harmful materials that have no adverse effect on the environment. Biological nutrients are organic materials that can decompose into the natural environment like leaves in the forest. The natural decomposition provides food for bacteria and small life forms without affecting the natural environment. Thus, in the C2C model, waste = food.
Many experts have questioned the practicality of the C2C model. Despite the difficulties in implementation, the C2C model provides a starting point for many new product innovations. Two companies that have applied the C2C principles are Herman Miller with the Mirra chair and Ford Motor Company when they renovated the 1,200 acre River Rouge assembly plant.
3Walmart’s Sustainability Strategy, Stanford Graduate School of Business, Case OIT-71, p.18
4Op. cit., p.21
- Cradle to Cradle Design at Herman Miller (Case No. 9-607-003)
Assignment 1: Herman Miller Case
Read and prepare the Herman Miller case according to the questions below. Submit your assignment in question/answer format.
- Do you think Herman Miller should use PVC or TPU in the Mirra Chair arm pad? Why is the PVC vs. TPU decision so difficult for the company to resolve?
- What are the elements of C2C? How does C2C differ from traditional business approaches to environmental issues?
- What process and organizational changes did Herman Miller make to implement C2C? What resources were required?