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Your partner in sustainability

Thoughts from the Field

Sustainserv is a global CSR and sustainability consultancy. This blog will serve to communicate some of our ongoing thoughts and perspectives on the work that we do.

Debra Shepard

Debra Shepard has not set their biography yet

As companies begin to view their business practices through the lens of sustainability, some of the first questions to arise include:

  • Where do we focus our limited time and resources to maximize environmental and social benefits?
  • How do we measure the environmental impacts associated with our products?

The variety of approaches to these basic questions is staggering, and can sometimes paralyze your efforts.  For example- should you follow a rating system or seek third-party certification?  Establish an environmental management system? Develop a carbon footprint?

The answer will depend on what your objectives are.  In our experience, focusing on your product line is an excellent place to start your sustainability “data collection,” as it will directly tie your sustainability initiatives to your primary business drivers.   The outcome of such research can lead to innovations in product design and development, operational efficiency and resource conservation, and market positioning through re-branding your product as a smart and “eco-efficient” alternative to your competition.

Starting with your products also means that you are working with what you know best- the processes you use to transform your supplies into a useful and essential good for your customers.  Placing a sustainability spin to your existing processes opens the door for employee involvement.   Corporations who embrace this concept and are willing to engage their staff have demonstrated over and over again that those employees with the most intimate knowledge of daily production processes have a wealth of ideas which lead to cost savings, efficiency improvements, and product transformation.  To see examples of this, check out Dow Chemical’s energy efficiency program, where employee-submitted projects have saved over $500 million and over 400,000 metric tones of CO2 emissions.

So how exactly does one begin to make this transformation?  One strategy which we’ve found to be successful is to conduct a life cycle assessment (LCA) on one of your key products.   LCA, also called “cradle-to-grave” analysis takes a comprehensive view of a given product, to examine environmental impacts from raw materials extraction, through manufacturing, packaging, distribution, use phase, and end-of-life/ disposal:

LCA Stages

The LCA field has its roots in the late 1960s and early 1970s when the oil crisis was front-and-center and the tension between population growth and material and energy use was revealed in groundbreaking works such as “Limits to Growth.”   Companies including Coca-Cola began to commission studies to inform manufacturing choices, such as comparing different beverage containers to see which has the least environmental and energy impacts associated with it. 

Since those days, LCA has evolved into a sophisticated science which uses a multitude of data inputs and analyses to identify environmental impacts, scale them, weigh them, and combine them into an overall environmental profile for a given product.  Oftentimes, assumptions must be taken and judgment calls made, since there may be missing information.  Take the example of a laptop computer- do you know how much silicon is in a given circuit board?  How about aluminum? Copper?  Where are these raw materials sourced and how are they made into the integrated components you use in your manufacturing?  Similarly, LCAs offer different weighting schemes to compare across broad categories of environmental impacts.  What is more important- climate change or water resource degradation?  Human exposure to toxins or natural resource depletion?  These underlying assumptions and the flexibility in how an LCA is scoped have led to numerous criticisms of past LCA studies, which question the scientific rigor and balance used in the assessment. 

Companies which want to participate in this arena in a credible way can overcome these potential pitfalls by employing standardized methods (ISCO14040) while balancing the level of effort to obtain meaningful results that can directly influence internal decisions on product design and manufacturing.  In order to do this, one should apply the “80-20 rule” when developing the scope of the LCA.  The 80-20 rule is a rule-of-thumb in business where we tend to see 80% of a given impact attributed to 20% of the causes.  In terms of an LCA, this could be done by surveying the various phases of the life cycle to estimate the greatest impact, and coupling that with working knowledge of sustainability “hot-spots” so that you can identify the materials or processes which incur the highest environmental damages.  From there, one can dive deeper into those pivotal areas of concern and begin to research alternative approaches.  In order to do this properly, we recommend developing a close partnership between internal production and manufacturing staff and scientific advisors who are well-versed in life cycle impact assessment categories and the emerging areas of global environmental concern.  Such a partnership can produce quick and efficient results which will have immediate benefits for your corporate bottom line and dually “stand up” to external criticism by providing a strong scientifically-based foundation. 

The practice of greenhouse gas (GHG) accounting has rapidly evolved in recent years as more and more companies recognize and pursue the business benefits gained from managing their carbon footprint. Time and again, smart carbon management has been shown to reap cost savings, risk mitigation, and improved competitive advantage.

However, GHG inventories can be complex and yield unexpected results depending on how they are structured, with few topics presenting as many challenges and surprises as scope 3 emissions.

As defined by the Greenhouse Gas Protocol Corporate Standard, “Scope 3” refers to indirect GHG emissions which are a consequence of your business activities but occur from sources not owned or controlled by your company:

ghg scopes

Figure of GHG accounting scopes, with expanded examples of scope 3 (blue arrows) along the corporate value chain.  (GHG Protocol)

As you can see from the figure, scope 3 emissions include emission sources both upstream (purchased goods and services, business travel) and downstream (product transportation and distribution, consumer use) from the company itself.  Scope 3 is often considered a catch-all category for those emissions which may be the furthest from your company’s control, and for this reason, it has been a slippery subject for many companies. 

Addressing scope 3 emissions forces a company to take the leap from measuring data which may be easily available, such as your utility bills and fuel use records, to examining the entire value chain of your operations.  In essence, you need to take a life cycle approach toward your company’s carbon footprint- starting with resource extraction of raw materials and finishing with end-of-life treatment of your sold products. 

In theory this may seem like a straightforward process, but it opens up many questions, most notably, where do you draw the boundaries of your assessment and how accurate are your estimates?  What sources are worth calculating versus those which are high effort / low carbon impact?

Although there are no clear-cut answers to these questions, companies are moving forward with estimating and reporting their scope 3 emissions.  Some of the more notable examples of scope 3 stories include Stonyfield Farm and Dell.

Stonyfield Farm is a company known for its organic yogurt and other dairy products.  When Stonyfield expanded their carbon footprint beyond their production facilities, they came to the startling conclusion that most of their emissions arose not from manufacturing or transporting their products, but from the methane produced by the cows back at their suppliers’ farms! 

Dell, a world-wide name in computing and IT equipment, was harshly criticized a few years ago when the company proclaimed that it had achieved carbon neutrality (net zero GHG emissions), because they failed to include scope 3 emissions such as downstream consumer use of their products (i.e. from the electricity used to run all of the computers, servers, and other equipment they sold).  In my opinion, Dell may have been unfairly targeted as the science of scope 3 accounting was then, and still is, a very new and poorly articulated process, not to mention that scope 3 is considered an “optional” category according to most reporting programs! 

Both of these stories demonstrate that investigating scope 3 emissions must be done in a cautious and structured way, so that stakeholders are correctly informed and to ensure that the company is concentrating on only those scope 3 sources which are most relevant to your business:

  • Large relative to the company’s scope 1 and 2 emissions
  • Contribute to GHG risk exposure
  • Raised as critical issues by stakeholders
  • Can potentially be influenced by company

While accounting for scope 3 emissions can be challenging, we do encourage all companies to at least screen for their highest impact sources.  This will better enable the company to address stakeholder questions, establish plans for further analysis, and find areas for future innovation.  The GHG Protocol is in the final stages of developing its Scope 3: Corporate Value Chain Accounting and Reporting Standard, which will hopefully lend some much needed clarity to the topic.  Interest in scope 3 won’t be waning anytime soon, and in fact, will continue to grow with the sophistication of corporate environmental accounting in general.