Product Life Cycle Accounting and Reporting Standard


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Product Life Cycle Accounting and Reporting Standard

  1. 1. Product Life CycleAccounting andReporting Standard
  2. 2. GHG Protocol TeamPankaj Bhatia, World Resources InstituteCynthia Cummis, World Resources InstituteAndrea Brown, World Business Council for Sustainable DevelopmentLaura Draucker, World Resources InstituteDavid Rich, World Resources InstituteHolly Lahd, World Resources InstituteSteering CommitteeGerald Rebitzer, Amcor Ltd.Nigel Topping, Frances Way, Carbon Disclosure Project (CDP)Graham Sinden, The Carbon TrustH. Scott Matthews, Carnegie Mellon UniversityLuc Larmuseau, DNV Climate Change ServicesDavid A. Russell, Rob Rouse, The Dow Chemical CompanyJiang Kejun, Energy Research Institute, China’s National Development and Reform CommissionAndrew Hutson, Environmental Defense FundSimon Aumônier, Environmental Resources ManagementUgo Pretato, Kirana Chomkhamsri, European Commission Joint Research CentreSteven Meyers, General ElectricSergio Galeano, Georgia Pacific, ISO TC207 U.S. Technical Advisory GroupGregory A. Norris, Harvard University, New Earth, University of ArkansasKlaus Radunsky, ISO 14067 Working Group ConvenerAtsushi Inaba, Kogakuin UniversityAlison Watson, New Zealand Ministry of Agriculture and ForestrySusan Cosper, Nick Shufro, PricewaterhouseCoopers LLPRasmus Priess, THEMA1 GmbH, Product Carbon Footprint World ForumWanda Callahan, ShellJames A. Fava, UNEP SETAC Life Cycle Initiative, Five Winds InternationalMatthias Finkbeiner, UNEP SETAC Life Cycle Initiative, Technische Universität BerlinHenry King, UnileverSusan Wickwire, John Sottong, United States Environmental Protection AgencyMaureen Nowak, United Kingdom Department of Environment, Food, and Rural AffairsJames Stanway, Miranda Ballentine, Walmart Stores Inc.
  3. 3. Table of Contents CHAPTeRS guidance 1. Introduction 02 guidance 2. Defining Business Goals 08requirements guidance 3. Summary of Steps and Requirements 12requirements guidance 4. Principles of Product Life Cycle GHG Accounting and Reporting 18requirements guidance 5. Fundamentals of Product Life Cycle GHG Accounting 20requirements guidance 6. establishing the Scope of a Product Inventory 26requirements guidance 7. Boundary Setting 32requirements guidance 8. Collecting Data and Assessing Data Quality 46requirements guidance 9. Allocation 60requirements guidance 10. Assessing Uncertainty 78requirements guidance 11. Calculating Inventory Results 84requirements guidance 12. Assurance 92requirements guidance 13. Reporting 100requirements guidance 14. Setting Reduction Targets and Tracking Inventory Changes 108 APPenDICeS A. Guidance on Product Comparison 115 B. Land-Use Change Impacts 117 C. Data Management Plan 126 Abbreviations 132 Glossary 133 References 139 Recognitions 140 [01]
  4. 4. 01 Introduction
  5. 5. g u i d a n c eE missions of the anthropogenic greenhouse gases (GHG) that drive climate change and its impacts around the world are growing. According to climate scientists, global carbon dioxide emissions must be cut by as much as 85 percent below2000 levels by 2050 to limit global mean temperature increase to 2 degrees Celsiusabove pre-industrial levels.1 Temperature rise above this level will produce increasinglyunpredictable and dangerous impacts for people and ecosystems. As a result, the needto accelerate efforts to reduce anthropogenic GHG emissions is increasingly urgent.Existing government policies will not sufficiently solve the problem. Leadership andinnovation from business is vital to making progress.Corporate action in this arena also makes good business an understanding. It allows companies to take intosense. By addressing GHG emissions, companies can account their emissions-related risks and opportunitiesidentify opportunities to bolster their bottom line, and focus company efforts on their greatest GHGreduce risk, and discover competitive advantages. As impacts. Until recently, companies have focused theirimpacts from climate change become more frequent and attention on emissions from their own operations. Butprominent, governments are expected to set new policies increasingly companies understand the need to alsoand provide additional market-based incentives to drive account for GHG emissions along their value chains andsignificant reductions in emissions. These new policy and product portfolios to comprehensively manage GHG-market drivers will direct economic growth on a low- related risks and opportunities.carbon trajectory. Businesses need to start planning for Through the development of the GHG Protocol Productthis transition now as they make decisions that will lock in Standard, the GHG Protocol has responded to thetheir investments for years to come. demand for an internationally accepted method toAn effective corporate climate change strategy requires enable GHG management of companies’ goods anda detailed understanding of a company’s GHG impact. services. Following the release of this standard, theA corporate GHG inventory is the tool to provide such GHG Protocol and its partners will proactively work [03]
  6. 6. g u i d a n c ewith industry groups and governments to promote its The GHG Protocol has produced the following separate,widespread use – along with the entire suite of GHG but complementary standards, protocols, and guidelines:Protocol standards and tools – to enable more effective • GHG Protocol Corporate Accounting and ReportingGHG management worldwide. Standard (2004): A standardized methodology for companies to quantify and report their corporate GHG emissions. Also referred to as the Corporate Standard.1.1 The Greenhouse Gas Protocol • GHG Protocol Corporate Value Chain (Scope 3)The Greenhouse Gas (GHG) Protocol is a multistakeholder Accounting and Reporting Standard (2011):partnership of businesses, non-governmental A standardized methodology for companies to quantifyorganizations (NGOs), governments, and others convened and report their corporate value chain (scope 3) GHGby the World Resources Institute (WRI) and the World emissions, to be used in conjunction with the CorporateBusiness Council for Sustainable Development (WBCSD). Standard. Also referred to as the Scope 3 Standard.Launched in 1998, the mission of the GHG Protocol is • GHG Protocol for Project Accounting (2005):to develop internationally accepted greenhouse gas A guide for quantifying reductions from GHG-mitigation(GHG) accounting and reporting standards and tools, projects. Also referred to as the Project Protocol.and to promote their adoption in order to achieve a low • GHG Protocol for the U.S. Public Sector (2010):emissions economy worldwide. A step-by-step approach to measuring and reportingThe GHG Protocol follows a broad, inclusive, consensus- emissions from public sector organizations,based multi-stakeholder process to develop these complementary to the Corporate Standard.standards with balanced participation from businesses, • GHG Protocol Guidelines for Quantifying GHGgovernment agencies, non-governmental organizations, Reductions from Grid-Connected electricity Projectsand academic institutions from around the world. The (2007): A guide for quantifying reductions in emissionsstandards include detailed guidance to assist users with that either generate or reduce the consumption ofimplementation and are freely available on the GHG electricity transmitted over power grids, to be used inProtocol website ( conjunction with the Project Protocol.[04] Product Life Cycle Accounting and Reporting Standard
  7. 7. CHAPTeR 01 Introduction• GHG Protocol Land Use, Land-Use Change, and address avoided emissions or actions taken to mitigate Forestry Guidance for GHG Project Accounting released emissions. This standard is also not designed to (2006): A guide to quantify and report reductions from be used for quantifying GHG reductions from offsets or land use, land-use change, and forestry, to be used in claims of carbon neutrality. g u i d a n c e conjunction with the Project Protocol. Ultimately, this is more than a technical accounting• Measuring to Manage: A Guide to Designing GHG standard. It is intended to be tailored to business realities Accounting and Reporting Programs (2007): A and to serve multiple business objectives. Companies may guide for program developers on designing and find most value in implementing the standard using a implementing effective GHG programs based on phased approach, with a focus on improving the quality of accepted standards and methodologies. the GHG inventory over time.1.2 Purpose of the GHG Protocol 1.3 How this standard was developed Product Life Cycle Accounting and In 2008, WRI and WBCSD launched the three-year process Reporting Standard to develop the Product Standard. A 25 member SteeringThe GHG Protocol Product Life Cycle Accounting and Committee of experts provided strategic directionReporting Standard (referred to as the Product Standard) throughout the process. The first draft of the Productprovides requirements and guidance for companies and Standard was developed in 2009 by Technical Workingother organizations to quantify and publicly report an Groups consisting of 112 members representing diverseinventory of GHG emissions and removals2 associated industries, government agencies, academia, and non-with a specific product. The primary goal of this standard profit organizations from around the world. In 2010,is to provide a general framework for companies to make 38 companies from a variety of industry sectors “roadinformed choices to reduce greenhouse gas emissions tested” the first draft and provided feedback on itsfrom the products (goods or services) they design, practicality and usability, which informed a second draft.manufacture, sell, purchase, or use. In the context of this Members of a Stakeholder Advisory Group (consisting ofstandard, public reporting refers to product GHG-related more than 1,600 participants) provided feedback on bothinformation reported publicly in accordance with the drafts of the standard.requirements specified in the standard.As awareness about climate change increases andconcerns grow, investors are demanding more 1.4 Who should use this standardtransparency, and consumers are seeking greater clarity This standard is designed for companies andand environmental accountability. Companies are organizations3 of all sizes in all economic sectorsincreasingly receiving requests from stakeholders to and in all countries. Companies seeking a bettermeasure and disclose their corporate GHG inventories, understanding of the GHG inventory of products theyand these requests often include a company’s products design, manufacture, sell, purchase, or use can benefitand supply chain emissions. Companies must be able to from the use of this standard. Interested users of theunderstand and manage their product-related GHG risks standard within companies could include staff fromif they are to ensure long-term success in a competitive product design, procurement, research and development,business environment and be prepared for any future marketing, energy, environment, logistics, and corporateproduct-related programs and policies. sustainability departments. Policy makers and GHG programs may also be interested in incorporating theThis standard focuses on emissions and removals standard into their policy or program design.generated during a product’s life cycle and does not [05]
  8. 8. g u i d a n c e1.5 Use of the Product Standard The GHG Protocol Common data is used for product comparison to develop scope 3 Scope 3 and ProductThe Product Standard is intended to support inventories and productperformance tracking of a product’s GHG inventory Standards both take inventories, includingand emissions reductions over time. Additional a value chain or life data collected fromprescriptiveness on the accounting methodology, such cycle approach to suppliers and otheras allocation choices and data sources, are needed GHG accounting. companies in the valuefor product labeling, performance claims, consumer chain. Since there canand business decision making based on comparison be overlap in dataof two or more products, and other types of product collection, companies may find added business value andcomparison based on GHG impacts. See section 5.3.2 efficiencies in developing scope 3 and product inventoriesand Appendix A for more guidance on additional in parallel.specifications needed for comparison. While each standard can be implemented independently,Claims regarding the overall environmental superiority or both standards are mutually supportive. Integrated useequivalence of one product versus a competing product, might include:referred to in ISO 14044 as comparative assertions, are • Applying the Corporate Standard and Scope 3not supported by the Product Standard. Standard (to determine the company’s total scope 1, scope 2, and scope 3 emissions) , using the results to identify products with the most significant emissions,1.6 Relationship to the Corporate then using the Product Standard to identify mitigation and Scope 3 Standards opportunities in the selected products’ life cyclesThe GHG Protocol Scope 3 Standard and GHG Protocol • Using product-level GHG data based on the ProductProduct Standard both take a value chain or life cycle Standard as a source of data to calculate scope 3approach to GHG accounting and were developed emissions associated with selected product typessimultaneously. The Scope 3 Standard builds on the • Applying the Corporate Standard, Scope 3 StandardGHG Protocol Corporate Standard and accounts for and the Product Standard and using the results tovalue chain emissions at the corporate level, while the inform GHG-reduction strategies at both the productProduct Standard accounts for life cycle emissions at the and corporate levelsindividual product level. Together, the three standardsprovide a comprehensive approach to value chain GHG The sum of the life cycle emissions of each of a company’smeasurement and management. products, combined with additional scope 3 categories4 (e.g., employee commuting, business travel, andThe reporting company’s business goals should drive the investments), should approximate the company’s totaluse of a particular GHG Protocol accounting standard. corporate GHG emissions (i.e., scope 1 + scope 2 + scopeThe Scope 3 Standard enables a company to identify 3). In practice, companies are not expected or requiredthe greatest GHG reduction opportunities across the to calculate life cycle inventories for individual productsentire corporate value chain, while the Product Standard when calculating scope 3 emissions.enables a company to target individual products with thegreatest potential for reductions. The Scope 3 Standard Figure 1.1 illustrates the relationship between thehelps a company identify GHG reduction opportunities, Corporate Standard, Product Standard, and Scope 3track performance, and engage suppliers at a corporate Standard. In this simplified example, a companylevel, while the Product Standard helps a company meet manufactures one product (Product A). The examplethe same objectives at a product level. shows how scopes of emissions at the corporate level correspond to life cycle stages at the product level.[06] Product Life Cycle Accounting and Reporting Standard
  9. 9. CHAPTeR 01 IntroductionFigure [1.1] The relationship between the Corporate, Scope 3, and Product Standards for a company manufacturing product A g u i d a n c e upstream scope 1 and 2 downstream scope 3 emissions emissions scope 3 emissions material acquisition distributionproduct A & pre-processing production & storage use end-of-life scope 1 and 2 emissions required by the Corporate Standard scope 3 emissions required by the Scope 3 Standard product life cycle emissions required by the Product Standard1.7 Limitations of product GHG inventories endnotesThe Product Standard accounts for the GHG emissions 1 IPCC, Summary for Policymakers (Table SPM.5: Characteristicsand removals that occur during a product’s life cycle. A of post-TAR stabilization scenarios), in Climate Change 2007:product assessment limited to only GHGs has the benefit Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climateof simplifying the analysis and producing results that can Change, ed. B. Metz, O.R. Davidson, P.R. Bosch, R. Dave, clearly communicated to stakeholders. The limitation Meyer (Cambridge, United Kingdom and New York, NY, USA:of a GHG-only inventory is that potential trade-offs or co- Cambridge University Press, 2007).benefits between environmental impacts can be missed. 2 In this standard, both emissions to the atmosphere and removalsTherefore, the results of a GHG-only inventory should from the atmosphere are accounted for in order to calculatenot be used to communicate the overall environmental the total GHG inventory of a product. Removals of CO2 generallyperformance of a product. Non-GHG environmental occur during photosynthesis.impacts that occur during the life cycle of a product should 3 The term company is used throughout the standard to representalso be considered when making decisions to reduce GHG a company or organization that may use the standard.emissions based on the inventory results. Examples of 4 A scope 3 category is one of 15 types of scope 3 emissionspotentially significant non-GHG impacts for some products organized by activities that occur upstream and downstreaminclude ecosystem degradation, resource depletion, ozone from a company’s ownership or control.depletion, and negative human health impacts.Moreover, while this standard focuses solely on GHGemissions and removals, the accounting requirementsand guidance provided can be used to collect data forother environmental impacts. Companies wishing toinclude non-GHG impacts along with their GHG inventorycan do so using the same steps and methodologiesprovided in this standard. [07]
  10. 10. 02 Defining Business Goals
  11. 11. g u i d a n c eC ompanies should first identify their business goals before conducting product GHG inventories. Doing so can bring clarity and assist in selecting the appropriate methodology and data to develop the inventory.This standard has been designed as a comprehensive Understanding the location and amount of GHGs in aaccounting and reporting framework to enable a product’s life cycle is valuable information when assessingcompany to gather information to serve all the business a company’s risk exposure from that product. Investors aregoals defined below and outlined in table 2.1. becoming more wary of companies that are not evaluating and managing these and other GHG related risks. A company can better model potential future costs of2.1 Climate change management regulations by using a product inventory to evaluate aProduct GHG inventories, performed according to a product’s life cycle GHG risks.  For example, completing aconsistent framework, provide a quantitative tool to help product inventory can increase understanding of whereunderstand GHG risks along a product’s life cycle. Product there are energy intensive operations in the life cycle.  Ainventories also can be used to understand emissions company can then use this understanding to informreductions and cost savings opportunities, as GHG emissions strategies for reducing dependency on fossil fuels, suchgenerally relate to energy use and can be a proxy for as switching to a less energy intensive product materialinefficiencies in a product system. The use of product GHG or increasing the use of intermodal transportation forinventories can help product manufacturers avoid the pitfall product distribution. Stakeholders (e.g., investors) mayof focusing too heavily on the most proximate or obvious also like to see this risk assessment publicly reported andemission sources associated with a product’s production there is growing demand for mandatory disclosure ofwhile missing major emission reduction and cost-saving GHG risk in some countries.opportunities elsewhere in the life cycle.Performing a product inventory can also be a proactiveapproach to assessing future risks related to life cycle 2.2 Performance trackingGHG emissions. GHG regulations are already in place Product inventories provide detailed information onin a number of countries and may be enacted in many the relative size and scale of emission sources within lifemore in the future. Energy is becoming a scarcer cycle stages and across the entire product system. Thisresource, creating price volatility and reduced reliability. information may be used to identify the largest emission [09]
  12. 12. g u i d a n c eTable [2.1] Business goals served by a product GHG inventory Business goal Description Climate change • Identify new market opportunities and regulatory incentives management • Identify climate-related physical and regulatory risks in a product’s life cycle • Assess risks from fluctuations in energy costs and material availability Performance • Focus efforts on efficiency improvements and cost-saving opportunities through tracking GHG reductions throughout a product’s life cycle • Set product-related GHG reduction targets and develop strategies to achieve goals • Measure and report GHG performance over time • Track efficiency improvements throughout a product life cycle over time Supplier and • Partner with suppliers to achieve GHG reductions customer • Assess supplier performance for GHG aspects of green procurement efforts stewardship • Reduce GHG emissions and energy use, costs, and risks in the supply chain and avoid future costs related to energy and emissions • Launch a customer education campaign to encourage actions that reduce GHG emissions Product • Achieve competitive advantage by pursuing GHG reduction opportunities and differentiation cost savings to create a low-emitting product • Redesign a product to better respond to customer preferences • Strengthen brand image regarding GHG performance • Enhance employee retention and recruitment resulting from pride in product stewardship • Strengthen corporate reputation and accountability through public disclosuresources – or “hot spots” – in the life cycle and focus efforts 10 percent lower life cycle emissions from its moston the most cost effective emissions reduction activities. popular shoe might use a product GHG inventory to determine the most cost effective means of achievingProduct GHG inventories, performed according the target, selecting from options such as optimizingto a consistent framework, provide a quantitative the distribution network, using less GHG-intensiveperformance metric to set targets for improvement, materials, or improving energy efficiency at productiontrack progress. and communicate successes to internal facilities. External uses of the performance resultsand external stakeholders. External stakeholders, might include communications to regulators, investors,including customers, investors, shareholders and others customers, and local communities, using tools such asare increasingly interested in measured and reported an annual corporate sustainability report.progress in emissions reductions by companies.Therefore, identifying reduction opportunities, settinggoals and reporting on progress to stakeholders 2.3 Supplier and customer stewardshipmay help differentiate a company in an increasingly From raw material vendors to final consumers, productenvironmentally conscious marketplace. inventories provide an opportunity for companiesInternally, product GHG inventories may be used to to engage with stakeholders throughout a product’ssupport less GHG-intensive product design choices life cycle toward the common goal of reducing GHGand production processes. For example, a shoe emissions. This engagement may also lead to supplymanufacturer seeking to meet a company target of chain efficiencies and consequent cost savings, build[10] Product Life Cycle Accounting and Reporting Standard
  13. 13. CHAPTeR 02 Defining Business Goalsstronger supply chain relationships, and uncover 2.4 Product differentiationvaluable information that can be shared to help build Product differentiation is a broad term, encompassingpositive relationships with product users. For example, all the specific end uses of product GHG inventoriesa product GHG inventory of a home appliance may show that may help a company distinguish its products in the g u i d a n c ethat much of the emissions occur in the use stage. This marketplace and create competitive advantage. Forinformation can provide a platform for the manufacturer example, a company may realize product differentiationto communicate and collaborate with their customers simply by conducting and publicizing a product GHG(e.g., the users of the appliance) to achieve lower product inventory that demonstrates to stakeholders thatlife cycle emissions. If customers then reduced emissions the brand is concerned with environmental reducing electricity use, they would also reap benefits With consumers increasingly concerned about thein the form of electricity cost savings. Another example is environmental impacts of their product choices, producta product inventory of a beverage which shows significant GHG inventories enable companies to communicateemissions from packaging. These results may lead to a with customers about their efforts to assess and reducepartnership with packaging suppliers to reduce packaging their product-related impacts. Products may also bematerials or replace them with less GHG-intensive differentiated by advertising that their use can lowercontent. Reporting on these types of efforts and the consumers’ own GHG emissions (and related energyprogress of a company’s engagement with its suppliers expenses). Company efforts to address product emissionscan be useful information for stakeholders both external can also be an effective message to communicate toand internal to the reporting company. employees in order to enhance pride in the company’s 1 2 product stewardship and can have positive impacts on 3 employee retention and recruitment. Swire Beverages As one of the Coca-Cola anchor bottlers, Swire Beverages if all retailers installed refrigerators, it would undertakes the manufacture, sale, and distribution of the new refrigerators, save 5 -16 percent Coca-Cola products. The company conducted life cycle of the life cycle GHG it would save GHG studies for nine of the Coca-Cola branded products emissions of drinking produced in mainland China. 4 5 - 16% 5 products depending 6 of the life cycle on their size. The results showed that packaging and refrigeration by retailers were the processes that contributed the most GHG emissions Swire Beverages significant GHG emissions and risks, especially for small- of drinking and Coca-Cola also and medium-sized products. Swire Beverages either products identified packaging leases or sells refrigerators at a discount to retailers. reduction as a key Following completion of the inventory and evaluation climate mitigation of reduction opportunities, the company installed strategy and rolled out a new packaging design for a energy-efficient refrigerator equipment and aggressively bottled water product in China. The new plastic bottle pursued hydrofluorocarbon (HFC) recovery and HFC-free design reduces packaging material weight by 34 percent technologies. The new equipment uses 357 40 percent - and is estimated 8 reduce GHG emissions by 11 percent to 9 less electricity while reducing the usage of HFC-134a, a over the product life cycle. The new design also helps refrigerant with high global warming potential. Swire Swire Beverages to save on the procurement cost of also calculated that if all retailers installed the new packaging materials. [11]
  14. 14. g u i d a n c e03 Summary of Steps and Requirements[12] Product Life Cycle Accounting and Reporting Standard
  15. 15. g u i d a n c eT his chapter provides a summary of the steps involved in product accounting and reporting, as well as a list of the requirements that must be followed for a product inventory to be in conformance with this standard.3.1 Standard terminologyThis standard uses precise language to indicate which “may” is used to indicate an option that is permissibleprovisions of the standard are requirements, which or allowable. Within the guidance sections, the termare recommendations, and which are permissible or “required” is used to refer to “shall” statements givenallowable options that companies may choose to follow. elsewhere in the standard. Also within the guidanceThe term “shall” is used in this standard to indicate what sections, “needs,” “can,” or “cannot” are sometimes usedis required for a GHG inventory to conform with the to provide guidance on implementing a requirement orProduct Standard. The term “should” is used to indicate to indicate when an action is or is not possible.a recommendation, but not a requirement. The termFigure [3.1] Overview of steps in product accounting and reportingDefine Review Review Define the Set the Collect databusiness principles funda- scope boundary and assessgoals mentals data qualityChapter 2 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8Perform Assess Calculate Perform Report Setallocation uncertainty inventory assurance inventory reduction(if needed) results results targetsChapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 [13]
  16. 16. r e q u i r e m e n t s3.2 Overview of steps in product 3.3 Summary of Product Standard accounting and reporting requirementsFigure 3.1 provides an overview of the steps taken to Table 3.1 provides a summary of all the requirementsperform a product GHG inventory that is in conformance in the Product Standard. Definitions and guidance arewith this standard. Each of these steps is described in provided in the following chapters.detail in the following chapters.Table [3.1] Summary of requirements Chapter Requirements 4. Accounting and • GHG accounting and reporting of a product inventory shall follow the principles Reporting Principles of relevance, accuracy, completeness, consistency, and transparency 5. Fundamentals of • A GHG product inventory shall follow the life cycle and attributional approaches Product Life Cycle Accounting 6. Establishing • Companies shall account for carbon dioxide (CO2), methane (CH4), nitrous oxide the Scope of a (N2O), sulfur hexafluoride (SF6), perfluorocarbons (PFCs), and hydrofluorocarbons Product Inventory (HFCs) emissions to, and removals from, the atmosphere • Additional GHGs included in the inventory shall be listed in the inventory report • Companies shall define the product, unit of analysis, and reference flow • For all final products, companies shall define the unit of analysis as a functional unit • For intermediate products where the eventual function is unknown, companies shall define the unit of analysis as the reference flow 7. Boundary Setting • The boundary of the product GHG inventory shall include all attributable processes • Companies shall report the life cycle stage definitions and descriptions • Companies shall disclose and justify any exclusions of attributable processes in the inventory report • Companies shall report attributable processes in the form of a process map • Companies shall report any non-attributable processes included in the boundary • The boundary for final products shall include the complete life cycle, from cradle-to-grave • The boundary of a cradle-to-gate partial life cycle inventory shall not include product use or end-of-life processes in the inventory results • Companies shall disclose and justify when a cradle-to-gate boundary is defined in the inventory report • Companies shall report the time period of the inventory • Companies shall report the method used to calculate land-use change impacts, when applicable 8. Collecting Data • Companies shall collect data for all processes included in the inventory boundary and Assessing • Companies shall collect primary data for all processes under their ownership or control Data Quality • During the data collection process, companies shall assess the data quality of activity data, emission factors, and/or direct emissions data by using the data quality indicators • For significant processes, companies shall report a descriptive statement on the data sources, the data quality, and any efforts taken to improve data quality[14] Product Life Cycle Accounting and Reporting Standard
  17. 17. CHAPTeR 03 Summary of Steps and Requirements r e q u i r e m e n t sTable [3.1] Summary of requirements (continued) Chapter Requirements9. Allocation • Companies shall allocate emissions and removals to accurately reflect the contributions of the studied product and co-product(s) to the total emissions and removals of the common process • Companies shall avoid allocation wherever possible by using process subdivision, redefining the functional unit, or using system expansion • If allocation is unavoidable, companies shall allocate emissions and removals based on the underlying physical relationships between the studied product and co-product(s) • When physical relationships alone cannot be established or used as the basis for allocation, companies shall select either economic allocation or another allocation method that reflects other relationships between the studied product and co-product(s) • Companies shall apply the same allocation methods to similar inputs and outputs within the product’s life cycle • For allocation due to recycling, companies shall use either the closed loop approximation method or the recycled content method as defined by this standard • When using the closed loop approximation method, companies shall report displaced emissions and removals separately from the end-of-life stage • Companies shall disclose and justify the methods used to avoid allocation or perform allocation • When using the closed loop approximation method, companies shall report displaced emissions and removals separately from the studied product’s end-of- life stage inventory10. Assessing • Companies shall report a qualitative statement on inventory uncertainty and Uncertainty methodological choices. Methodological choices include: • Use and end-of-life profile • Allocation methods, including allocation due to recycling • Source of global warming potential (GWP) values used • Calculation models11. Calculating • Companies shall apply a 100-year GWP factor to GHG emissions and removals data Inventory Results to calculate the inventory results in units of CO2 equivalent (CO2e) • Companies shall report the source and date of the GWP factors used • Companies shall quantify and report the following: • Total inventory results in CO2e per unit of analysis, which includes all emissions and removals included in the boundary from biogenic sources, non-biogenic sources, and land-use change impacts • Percentage of total inventory results by life cycle stage • Biogenic and non-biogenic emissions and removals separately when applicable • Land-use change impacts separately when applicable • Cradle-to-gate and gate-to-gate inventory results separately or a clear statement that confidentiality is a limitation to providing this information • Companies shall not include the following when quantifying inventory results: weighting factors for delayed emissions; offsets; and avoided emissions • Companies shall report the amount of carbon contained in the product or its components that is not released to the atmosphere during waste treatment, if applicable • For cradle-to-gate inventories, companies shall report the amount of carbon contained in the intermediate product [15]
  18. 18. r e q u i r e m e n t sTable [3.1] Summary of requirements (continued) Chapter Requirements 12. Assurance • The product GHG inventory shall be assured by a first or third party • Companies shall choose assurance providers that are independent of, and have no conflicts of interest with, the product GHG inventory process • Companies shall report the assurance statement in the inventory report The statement shall include: • The level of assurance achieved (limited or reasonable) including assurance opinion or the critical review findings • Whether the assurance was performed by a first or third party • A summary of the assurance process • The relevant competencies of the assurance providers • How any potential conflicts of interest were avoided for first party assurance 13. Reporting Companies shall publicly report the following information to be in conformance with the GHG Protocol Product Standard: General Information and Scope • Contact information • Studied product name and description • The unit of analysis and reference flow • Type of inventory: cradle-to-grave or cradle-to-gate • Additional GHGs included in the inventory • Any product rules or sector-specific guidance used • Inventory date and version • For subsequent inventories, a link to previous inventory reports and description of any methodological changes • A disclaimer stating the limitations of various potential uses of the report including product comparison Boundary Setting • Life cycle-stage definitions and descriptions • A process map including attributable processes in the inventory • Non-attributable processes included in the inventory • Excluded attributable processes and justification for their exclusion • Justification of a cradle-to-gate boundary, when applicable • The time period • The method used to calculate land-use change impacts, when applicable Allocation • Disclosure and justification of the methods used to avoid or perform allocation due to co-products or recycling • When using the closed loop approximation method, any displaced emissions and removals separately from the end-of-life stage Data Collection and Quality • For significant processes, a descriptive statement on the data sources, data quality, and any efforts taken to improve data quality Uncertainty • A qualitative statement on inventory uncertainty and methodological choices. Methodological choices include: • Use and end-of-life profile • Allocation methods, including allocation due to recycling • Source of global warming potential (GWP) factors used • Calculation models[16] Product Life Cycle Accounting and Reporting Standard
  19. 19. CHAPTeR 03 Summary of Steps and Requirements r e q u i r e m e n t sTable [3.1] Summary of requirements (continued) Chapter Requirements13. Reporting Inventory Results (continued) • The source and date of the GWP factors used • Total inventory results in units of CO2e per unit of analysis, which includes all emissions and removals included in the boundary from biogenic sources, non-biogenic sources, and land-use change impacts • Percentage of total inventory results by life cycle stage • Biogenic and non-biogenic emissions and removals separately, when applicable • Land use impacts separately, when applicable • Cradle-to-gate and gate-to-gate inventory results separately (or a clear statement that confidentiality is a limitation to providing this information) • The amount of carbon contained in the product or its components that is not released to the atmosphere during waste treatment, when applicable • For cradle-to-gate inventories, the amount of carbon contained in the intermediate product Assurance • The assurance statement including: • Whether the assurance was performed by a first or third party • Level of assurance achieved (limited or reasonable) and assurance opinion or the critical review findings • A summary of the assurance process • The relevant competencies of the assurance providers • How any potential conflicts of interests were avoided for first party assurance Setting Reduction Targets and Tracking Inventory Changes • Companies that report a reduction target and/or track performance over time shall include the following: • The base inventory and current inventory results in the updated inventory report • The reduction target, if established • Changes made to the inventory, if the base inventory was recalculated • The threshold used to determine when recalculation is needed • Appropriate context identifying and describing any significant changes that trigger base inventory recalculation • The change in inventory results as a percentage change over time between two inventories on the unit of analysis basis • An explanation of the steps taken to reduce emissions based on the inventory results 14. Setting Reduction Note: Setting a reduction target and tracking inventory changes over time is not Targets and required to claim conformance with the Product Standard. However, if companies Tracking Inventory choose to set a reduction target, the following requirements apply. Changes Over Time To set reduction targets and track inventory changes over time, companies shall: • Develop and report a base inventory that conforms with the requirements of this standard • Recalculate the base inventory when significant changes in the inventory methodology occur and report those changes • Complete and disclose an updated inventory report including the updated results, the base inventory results, and the context for significant changes • Use a consistent unit of analysis to enable comparison and track performance over time [17]
  20. 20. 04 Principles of Product Life Cycle GHG Accounting and Reporting
  21. 21. g e q d a rn ec m e n t s r u i u i e4.1 IntroductionT he five accounting principles are intended to underpin all aspects of GHG accounting and reporting for products. Their faithful application should help to ensure that the product inventory constitutes a true and fair representation of its GHG emissions andremovals. Their primary function is to guide users in the implementation of this standard, inparticular when making accounting choices not specified by the standard.4.2 Requirements GHG accounting and reporting of a product Consistency inventory shall follow the principles Choose methodologies, data, and assumptions that allow of relevance, accuracy, completeness, for meaningful comparisons of a GHG inventory over time. consistency, and transparency. Transparency Address and document all relevant issues in aRelevance factual and coherent manner, based on a clear auditEnsure that the product GHG inventory accounting trail. Disclose any relevant assumptions and makemethodologies and report serves the decision-making appropriate references to the methodologies and dataneeds of the intended user. Present information in the sources used in the inventory report. Clearly explain anyreport in a way that is readily understandable by the estimates and avoid bias so that the report faithfullyintended users. represents what it purports to represent.Completeness AccuracyEnsure that the inventory report covers all product life Ensure that reported GHG emissions and removals are notcycle GHG emissions and removals within the specified systematically greater than or less than actual emissionsboundaries; disclose and justify any significant GHG and removals and that uncertainties are reduced as faremissions and removals that have been excluded. as practicable. Achieve sufficient accuracy to enable intended users to make decisions with reasonable assurance as to the reliability of the reported information. [19]
  22. 22. 05 Fundamentals of Product Life Cycle GHG Accounting
  23. 23. g e q d a rn ec m e n t s r u i u i e5.1 IntroductionP roduct life cycle GHG accounting is a subset of life cycle assessment (LCA), which seeks to quantify and address the environmental aspects and potential environmental impacts throughout a product’s life cycle from raw material extraction through toend-of-life waste treatment.1 LCA became internationally standardized by the InternationalOrganization for Standardization (ISO) with the publication of the 14040 series of life cycleassessment standards. In 2008, the British Standards Institution (BSI), in partnership withthe UK Department of Environment Food and Rural Affairs (DEFRA) and the Carbon Trust,published a Publicly Available Specification (PAS) for the assessment of life cycle greenhousegas emissions of goods and services, known as PAS 2050.2The Product Standard builds on the framework and 5.2 Requirementsrequirements established in the ISO LCA standards(14040:2006, Life Cycle Assessment: Principles and A GHG product inventory shall follow theFramework and 14044:2006, Life Cycle Assessment: life cycle and attributional approaches.Requirements and Guidelines) and PAS 2050, with theintent of providing additional specifications and guidanceto facilitate the consistent quantification and public Product GHG inventories,4 also commonly known asreporting of product life cycle GHG inventories. Other product carbon footprints, are a subset of LCA becausestandards and publications such as the ILCD Handbook3 they focus only on the climate change impact categorywere also used as reference during the development (the limitations of which are discussed in chapter 1).of this standard. The following sections clarify the However, the accounting methodologies and requirementsrelationship between the ISO LCA framework and the presented in this standard follow the life cycle approach asProduct Standard while identifying two fundamentals on established by ISO LCA standards 14040 and 14044.which the Product Standard is based: the life cycle andattributional approaches to GHG accounting. [21]
  24. 24. r e q u i r e m e n t sThe requirements and guidance in this standard follow Box [5.1] The consequential approachthe attributional approach to life cycle accounting.The attributional approach is defined as a method in In addition to the attributional approach, anotherwhich GHG emissions and removals are attributed to method of life cycle accounting is the consequentialthe unit of analysis of the studied product by linking approach. The consequential approach is defined as antogether attributable processes along its life cycle.5 approach in which processes are included in the life cycleThe attributional approach makes use of primary data boundary to the extent that they are expected to changeprovided by a supplier/customer or average (secondary) as a consequence of a change in demand for the unit ofdata for a given process. Explanation of the terms unit analysis.6 The consequential approach makes use of dataof analysis, attributable processes, and primary data are that is not constrained and can respond to changes ingiven in chapter 6, chapter 7, and chapter 8, respectively. demand (e.g., marginal technology information), where change in demand can occur as a result of changes in production volumes, production technologies, public policies, and consumer behaviors. Although not followed in this standard, the consequential approach can provide valuable insight in certain applications such as evaluating reduction projects or making public policy decisions.[22] Product Life Cycle Accounting and Reporting Standard
  25. 25. CHAPTeR 05 Fundamentals of Product Life Cycle GHG Accounting5.3 Guidance5.3.1 Phases and steps of a GHG inventory step in identifying what data are needed by determiningThe ISO LCA standards define four phases of a LCA attributable processes, but data collection limitationsstudy: the goal and scope definition, inventory analysis, (as defined in chapter 8) may result in excluding some g u i d a n c eimpact assessment, and interpretation. To report the processes from the inventory results and justifyingresults of an LCA study, ISO also defines critical review those exclusions in the inventory report. Applying theand reporting as additional steps. Figure 5.1 shows the principles of this standard and clearly setting businessgeneral relationship between the ISO LCA phases of an goals will help companies ensure that the decisions takenLCA study defined by ISO and the steps to complete a while conducting the inventory and interpreting the finalGHG inventory in conformance with this standard. results are relevant to those goals.The life cycle approach is by nature an iterative 5.3.2 Use of product rules and sector guidancetechnique, where each phase or step is dependent on As mentioned in chapter 1, product comparisons,the results or methodologies used in another (previous beyond tracking product performance over time,or subsequent) phase or step. For example, defining need additional specifications to ensure consistentthe unit of analysis (as defined in chapter 6) is a step application of this standard for a product or productthat directly impacts the subsequent steps of boundary category. These specifications are provided within asetting, data collection, and allocation. However, a product rule. A product rule is a document created bycompany may find that to avoid allocation (as defined a group of stakeholders with an interest in a particularin chapter 9) they need to redefine the unit of analysis. product or product category and the goal of buildingLikewise, setting the boundary (chapter 7) is the first consensus on the additional specifications needed toFigure [5.1] Comparison between the phases of an ISO LCA study and the steps of a Product Standard GHG inventory Phases in an Steps in a product standard GHG inventory The life cycle ISO LCA study approach is by business goals (chapter 2) nature an iterative principles (chapter 4) goal and scope definition fundamentals of product life cycle accounting (chapter 5) technique, where defining the scope (chapter 6) each phase or step is dependent boundary setting (chapter 7) inventory analysis (LCI) data collection and quality assessment (chapter 8) on the results or allocation (chapter 9) methodologies used in another (previous or subsequent) impact assessment calculating inventory results (chapter 11) phase or step. uncertainty (chapter 10) interpretation performance tracking (chapter 14) reporting (chapter 13)reporting & critical review assurance (chapter 12) (when applicable to the reporting (chapter 13) goal and scope) [23]
  26. 26. g u i d a n c eenable comparisons or declarations about the product. Sector guidance is typically created by a group ofAn example is a product category rule (PCR) as defined stakeholders and sector representatives convened toby ISO 14025:2006. Appendix A includes details on what build consensus on guidance for performing a productspecifications are needed in a product rule to enable GHG inventory within their sector, but without the goal ofdifferent types of comparisons and gives some guidance enabling product comparison.on creating product rules. While using product rules and sector guidance is not required for conformance with this standard, each providesTable [5.1] Sector guidance and product rule specifications Inventory step Sector guidance and product rule specificationsChapter 6: • Choosing a studied product (in sector guidance)Establishing • Choosing a unit of analysis (functional unit)the Scope • Identifying whether a cradle-to-gate inventory is appropriate • Identifying any additional GHGs that are applicable to the product or sectorChapter 7: • Life cycle stage definitions and descriptionsBoundary Setting • Specific attributable processes • Relevant non-attributable processes • Justified excluded attributable processes (including insignificance threshold) • Use and end-of-life profiles • Time period • Method used to calculate land-use change impactsChapter 8: • Type of primary data to collect for processes under the reporting company’s controlCollecting Data and • Processes not under the reporting company’s ownership/control where primaryAssessing Data Quality data should be collected • Secondary data sources and default data valuesChapter 9: • Allocation method and appropriate allocation factorAllocation • Recycling allocation methodChapter 10: • Default uncertainty valuesAssessing Uncertainty • Likely sources of uncertaintyChapter 11: • The GWP values to useCalculating • Default emission factorsInventory ResultsChapter 12: • The type of assurance to performAssuranceChapter 13: • Optional reporting elements that would be beneficial to stakeholdersReporting • Additional requirements due to communication type (e.g., label)Chapter 14: • The base inventory to setSetting Reduction • Definition of changes that would warrant base inventory recalculationTargets and TrackingInventory Changes[24] Product Life Cycle Accounting and Reporting Standard
  27. 27. CHAPTeR 05 Fundamentals of Product Life Cycle GHG Accountingadditional specifications that can be useful to companies endnotesas they prepare their inventories. Table 5.1 provides some 1 International Organization for Standardization, ISO 14044:2006,examples of additional specifications for key inventory Life Cycle Assessment: Requirements and Guidelines. Geneva.steps. For definitions and explanations of terms included in 2 British Standards Institution et al. PAS 2050:2008: Specification g u i d a n c e for the assessment of life cycle greenhouse gas emissions ofthe table please see the respective chapters. goods and services.Companies using sector guidance and product rules 3 European Commission - Joint Research Centre - Institute forstill need to abide by the requirements of the Product Environment and Sustainability, International Reference LifeStandard. For example, companies may use a product Cycle Data System (ILCD) Handbook - General guide for Life Cyclerule to help choose an allocation method as long as the Assessment - Detailed guidance. First edition, March 2010.method is in conformance with chapter 9 and performed Luxembourg: Publications Office of the European Union, 2010. 4 In the Product Standard, a completed GHG assessment is calledusing the attributional approach (e.g., primary supplier or a GHG inventory to be consistent with corporate-level GHGaverage data). Companies may not use sector guidance accounting. The GHG inventory includes both the collection ofor product rules to exclude attributable processes data and the calculation of the global warming impact. This iswithout justification. Any sector guidance or product rules different from the ISO LCA terminology which defines inventoryused during the inventory process are disclosed in the as only the collection of data.inventory report following the reporting requirements 5 Adapted from UNEP and SETAC, Global Guidance Principles for Life(chapter 13). Cycle Assessment Databases. 2011. 6 Adapted from UNEP and SETAC, Global Guidance Principles for LifeProduct rules and sector guidance should be developed Cycle Assessment Databases. 2011.through an inclusive multi-stakeholder process to ensurebroad acceptance and facilitate increased consistency andcredibility. Guidance and tools in conformance with theProduct Standard can be found at ( [25]
  28. 28. 06 establishing the Scope of a Product Inventory
  29. 29. g e q d a rn ec m e n t s r u i u i e6.1 IntroductionA well-defined scope1, aligned with the five accounting principles and the company’s business goals, can help ensure the final inventory meets the company’s and stakeholder’s needs. In addition to identifying which GHGs to account for,establishing the inventory scope involves choosing a product, defining the unit of analysis, andidentifying the reference flow. Specific requirements and guidance are detailed in this chapter.6.2 Requirements Companies shall account for carbon Removals from the atmosphere typically occur when CO2 dioxide (CO2 ), methane (CH4 ), nitrous is absorbed by biogenic sources (i.e. plants) and converted oxide (n2O), sulfur hexafluoride to energy during photosynthesis. However, removals (SF6 ), perfluorocarbons (PFCs), and may also occur when a product absorbs atmospheric CO2 hydrofluorocarbons (HFCs) emissions during use, or when CO2 from the atmosphere is used to, and removals from, the atmosphere. during a processing step. Companies shall also account Additional GHGs included in the inventory for all removals of CO2 from the atmosphere if they are shall be listed in the inventory report. removed during the product’s life cycle.Companies shall account for these six gases in their Companies shall define the studied product, product GHG inventory if they are emitted during unit of analysis, and reference flow.the product’s life cycle. Companies should accountfor any other GHGs whose 100-year GWP values have The studied product is the product on which the GHG lifebeen identified by the IPCC if they are emitted during cycle inventory is performed.the product’s life cycle.2 Any additional GHGs that areaccounted for shall be listed in the inventory report toimprove transparency. [27]
  30. 30. r e q u i r e m e n t sThe unit of analysis is defined as the performance For intermediate products where thecharacteristics and services delivered by the product eventual function is unknown, companiesbeing studied. The reference flow is the amount of shall define the unit of analysis as the product on which the results of the study are based. reference flow. Intermediate products are goods that are used as inputs For all final products, companies shall define in the production of other goods and services. For the unit of analysis as a functional unit. example, a plastic resin that is eventually transformed into plastic car parts is an intermediate product.Final products are goods and services that are ultimately In general, an intermediate product is a good thatconsumed by the end user rather than used in the eventually becomes a material input into the life cycle ofproduction of another good or service. Since the function a final product. Therefore, the service an intermediateof a final product is known, companies shall define product fulfills is often dependent on the final product’sthe unit of analysis as a functional unit. The functional function. When that function is unknown to the companyunit, like unit of analysis, is defined as the performance performing a GHG inventory on an intermediate product,characteristics and services delivered by the product it is not always possible to define the unit of analysis asbeing studied. A defined functional unit typically includes the functional unit. In this case, companies shall definethe function (service) a product fulfills, the duration the unit of analysis for an intermediate product as theor service life (amount of time needed to fulfill the reference flow or amount of product being studied.function), and the expected quality level.[28] Product Life Cycle Accounting and Reporting Standard
  31. 31. CHAPTeR 06 establishing the scope of a product inventory6.3 Guidance6.3.1 Choosing the studied product If it is still unclear through screening exercises and furtherA review or screening exercise of all the products a evaluation which product to choose, companies shouldcompany produces, distributes, buys, or sells3 is the opt for a product with the largest anticipated strategic g u i d a n c efirst step to identifying an individual product to study. impact and GHG reduction potential in the life cycle.Companies should pick a product that is GHG intensive 6.3.2 Defining the unit of analysisas well as strategically important and aligned with their Defining the unit of analysis is a critical step in completingbusiness goals. a GHG inventory because it directly influences theThe results of a corporate GHG inventory following the subsequent steps and results of the inventory. For example:Corporate and Scope 3 Standards can be used to easily • The duration/service life is the basis for the product’sidentify products or product categories that are GHG use profile during boundary setting (chapter 7)intensive. If this inventory is not available, companies • The reference flow is the basis for all data collectionmay use environmentally extended input-output (EEIO) since it defines the magnitude of material or energytables to estimate the GHG intensity of products based inputs and outputs (chapter 8)on economic transactions. (See chapter 8 for more • A well-defined unit of analysis can avoid allocationinformation on EEIO tables.) If neither is available, by including the studied product and co-productscompanies may use physical or economic factors to rank together (chapter 9)products by mass, volume, or spend. This option is least • The unit of analysis is the basis on which the inventorypreferred because physical or economic factors alone may results are reported, and therefore a transparent unitnot correlate with GHG intensity. of analysis is important to ensure inventory results areCompanies may decide to further evaluate a group interpreted and used correctly (chapters 11 and 13)of products in more detail. This further evaluation The following sections provide guidance on defining amay include looking deeper into where reductions product’s function, functional unit, and reference flow,could occur along the product’s life cycle, evaluating as well as defining the unit of analysis for intermediatethe company’s potential influence on suppliers and products and services. customers, researchingCompanies should pick supplier relationships Identifying the functiona product that is GHG and potential for The function is the service a product provides. Whenintensive as well as engagement, and the function is known (i.e., for final products and somestrategically important ranking products intermediate products), the unit of analysis is theand aligned with their based on the ability functional unit. Some questions a company may ask to for marketplace help identify a product’s function include:business goals. differential. Companies • Why is the product created? may consult with their • What purpose does the product serve?product design and/or research and development teams • What defining characteristics or expected level ofto choose a product for which potential reductions quality does the product have?could be met through innovation such as design,material, or manufacturing advancements. Or they may For example, if the studied product is a light bulb, thechoose a new or emerging product still in prototype product is created for the purpose of providing light.or conceptual stage where GHG reductions could be The amount of service (e.g., light) that the light bulbachieved during the product design and implementation provides depends on characteristics such as the amountstages of development. of luminance and spectrum. In many cases, a product can have several functions; in this step, companies should identify all functions before selecting one to serve as the basis of the functional unit. [29]
  32. 32. g u i d a n c eSelecting the function(s) amount of product; or define the functional unit firstIf multiple functions are identified, companies should and then determine the amount of product needed tobase the functional unit on the function(s) that best fulfill it. When defining the functional unit first, it is oftenreflects what the studied product was designed to do. helpful to base the parameters on product rules, sectorFor example, paint fulfills the function of providing wall guidance, or industry average use-profiles. On the othercolor and surface protection. If the goal of the company hand, the reference flow may be defined first to specifyis to design paint with longer-lasting color that doesn’t an amount of product included in the study. This couldhave to be reapplied as frequently, that is the function be an individual product, bulk packaging of a product, oron which the functional unit should be based. More than government- or industry-regulated product specificationsone function can be represented in a functional unit if (e.g., government-recommended serving sizes for foodapplicable to the goal of the company. products). It is helpful to consider which criterion would be most meaningful to the user of the report. ForDefining the functional unit and reference flow example, a functional unit that requires half a productA well-defined functional unit consists of three general may be hard for a consumer to understand.parameters: the magnitude of the function or service; theduration or service life of that function or service; and the To report efficiency improvements of a product over time,expected level of quality. Although not all parameters companies should define the functional unit so that, asmay be relevant for all products (or some parameters may improvements are made, the reference flow needed tobe mutually exclusive), considering them helps to ensure fulfill the same functional unit decreases. Consider, fora robust functional unit definition and makes subsequent example, a laptop computer for which the functionalinventory steps easier, such as defining the use profile unit is average daily use over a 3-year lifetime and theduring boundary setting. reference flow includes two batteries that each have a 1.5-year useful life. Extending the battery life will reduce theThere are two approaches to defining the functional reference flow in subsequent inventories. (See chapter 14unit and reference flow: define the reference flow first for more information on performance tracking over time.)and then determine the functional unit based on the ecolab Ecolab, the global leader in cleaning, sanitizing, food The reference flow was defined as the total pounds of safety, and infection prevention products and services, product required to fulfill the function, namely: performed a GHG inventory on the life cycle of their • 500 racks per day of dishes washed at a typical location APEXTM automatic warewashing system. Ecolab selected with 360 operating days per year the function as the delivery of clean and sanitized dishes • 1800 parts per million (ppm) average detergent through an automatic dish machine, which included concentration within the dish machine (steady-state the necessary individual functions that the APEXTM assumption) warewashing system provides (APEXTM Power, APEXTM • 0.15 grams of rinse additive per rack of dishes Rinse Additive, and APEXTM Presoak). They chose the • 4000 ppm presoak concentration, dispensed twice per day magnitude and duration of the function as its use in a typical food service facility for one year and set the By defining a detailed functional unit – considering all expected level of quality as “clean and sanitized,” functions, quality, magnitude, and duration – Ecolab was which requires 180 °F water during use. able to quickly and accurately define their reference flow. Additionally, the information collected about the use of Using this information, the functional unit was defined as the product was used during boundary setting (chapter 7) delivering clean and sanitized dishes through an automatic to easily define the use profile. dish machine in a typical food service facility for one year.[30] Product Life Cycle Accounting and Reporting Standard