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Life Cycle Thinking - Measuring and Managing
The document discusses the importance of lifecycle thinking and measuring environmental impact at every stage of a product's lifecycle to support circular economy initiatives. It highlights the Ecochain process, which incorporates cross-functional collaboration and data analysis to address environmental impacts, and includes examples such as Philips' sustainability-linked financial agreements. Key metrics are focused on reducing overall environmental footprints while enhancing the understanding of natural capital's economic value.
Life Cycle Thinking - Measuring and Managing
- 1. “What gets measured,gets managed” Adrian Segens Managing Director asegens@ecochain.com
- 2. Materials Distribution ManufactureEnd of Life Use Lifecyclethinking ©EcoChain Technologies 2018 Every value chain activity contributes to making and distributing products 1 CH4 N2O HFCsPFPs SF6CO2 Every value chain activity has impact 2 Every product embodies impact 3 THE PRODUCT
- 3. Materials Distribution Manufacture Use Lifecycle thinking ©EcoChain Technologies2018 End of Life Every value chain activity contributes to making and distributing products 1 Every value chain activity has impact 2 Every product embodies impact 3 Every value chain activity has different magnitudes and nature of impact 4 Life cycle thinking and a means of measuring and managing impact at every stage of a product lifecycle, is essential for the Circular Economy Every value chain activity has consequences at other stages of the life cycle - risk of “burden shift” 5 X THE PRODUCT
- 4. At site orcompany level: • GHG analysis, scope 1,2 & 3 • Operations impacts, >20 indicators • Process impacts, >20 indicators • Material impacts, >20 indicators At each facility, assemble a a cross-functional team : Finance, Sourcing, Manufacturing and Operations The EcoChain process requires just a few data sets, entered in a 4-stage process to the EcoChain platform Compan y 1 Certification for each product: • Lifecycle assessment • Environmental Product Declaration • Product Environmental Footprint EcoChain – activity based footprinting Utilities – energy and water Materials purchased Supplier location Input Per product • Bill of Materials • Processes used • Quantity made Input All production processes Utilities used by each Input Process scenarios Material scenarios Use scenarios End of Life scenarios Input Model4Product3Process2 Output ”Hot spot” analysis: • Waste • Energy use • Materials
- 5. Ecosystem services havean economic value = ‘Natural Capital’ EP&L accounting means that: • Impact is understandable - €, $, £ not ‘Kg CFC-11-eq’ • Different impact categories are made comparable • Managers are able to measure RoI with environmental insights • Risk of dependency on environmental resources is highlighted • Strategic focus can be understood at a glance ING press release - April 2017 “Philips have signed an agreement for a new €1 billion loan with an interest rate that’s coupled to the company’s sustainability performance and rating. If the rating goes up, the interest rate goes down— and vice versa.” 'Green’ Working Capital Lifecycle thinking at Philips Leadership “Designing products and services for a circular economy drives breakthrough thinking and superior margins. Companies solving the problem of resource constraints will have an advantage” ©EcoChain Technologies 2018 Environmental Profit & Loss
- 6. Lifecycle thinking atPhilips ©EcoChain Technologies 2018 Industrial Sites €30m Non-Industrial Sites €10m €10 m Business Travel €35m Logistics €130m Materials Supply Chain €785m 90% 10% metals and electronics plastics Use €6,200m Total EP&L - €7.2b • 96% of impact outside of direct control • 86% use phase • 10% supply chain End of Life €10 m 2017 environmental profit and loss
- 7. Lifecycle thinking atPhilips ©EcoChain Technologies 2018 Product Development EcoChain Life-Cycle Assessments (LCAs) of the entire product portfolio steer EcoDesign programmes – with as the objective LCAs identify the best performing products in Green Focal Areas (GFAs) - product characteristics like energy weight and product lifetime that determine environmental impact in the use phase The best performers for the basis of Philips ‘Green’ Products portfolio Value Chain Engagement “next step to extend the scope from individual product value chains to Philips’ complete value chain. It will support the direction of our sustainability strategy by providing insights into the main environmental hotspots from an overall business point of view.”
- 8. Just the start… ©EcoChainTechnologies 2018 “The idea of natural capital is now mainstream. Companies appreciate that there are benefits for business, but… what is required is the magnitude of the win-win for business to become more apparent Prof. Mark Reed Newcastle University
Editor's Notes
- #5 EcoChain is built around our unique methodology -Activity-Based Footprinting. A scientifically validated technique that assesses the environmental impacts associated with all the stages of a product's life cycle, from raw material extraction, through materials processing, manufacture, distribution, use, maintenance to disposal or recycling. Unlike conventional tools, EcoChain enables manufacturers to calculate the full Life Cycle Assessments (LCAs) of their entire product range simultaneously to give a full insight into the eco-efficiency of a factory. If required, these LCAs can then be certified and published, to match sustainable products with sustainable procurement initiatives.