Life Cycle Assessments and Environmental Product Declarations: An Emerging Trend
Sustainability is becoming an increasingly important factor in consumers’ purchasing decisions. According to a 2022 report released by First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania, 68% of surveyed consumers were willing to pay more for sustainable products and 72% said sustainability is very or somewhat important when making a purchase.[1] The lesson for businesses? Not only is sustainability a good choice for the environment; it makes sense financially as well.
Businesses are adapting to this emerging consumer preference by conducting life cycle assessments (LCAs) and releasing environmental product declarations (EPDs). LCAs provide businesses with comprehensive sustainability metrics for their products and EPDs allow businesses to market these metrics to environmentally-conscious consumers. In all, these tools lead to greater transparency and more informed purchasing decisions.
What is a life cycle assessment (LCA) and environmental product declaration (EPD)?
An LCA is a report that evaluates a product’s environmental impact throughout its life cycle, including its creation, transportation, use, and disposal. The process of creating this report is determined, in part, by “product category rules” (PCRs), which provide guidance on how to conduct an LCA based on the type of product being evaluated. PCRs ensure that “functionally similar products are assessed in the same way.”[2] An LCA is typically completed by a third-party (e.g., an LCA analyst) to ensure its results are truthful and unbiased and are subject to certain internationally recognized standards created by the International Organization for Standardization (ISO). Specifically, ISO 14025 governs what information needs to be included in an LCA.
According to ISO 14025, an LCA should be completed in four distinct phases:[3]
- Goal and Scope Definition
- Life Cycle Inventory Analysis
- Life Cycle Impact Assessment
- Interpretation of Results
First, the scope and intended use of the LCA must be identified. At this step, a business must determine what environmental impact metric(s) and stages of the products’ life cycle it wants the report to include. This is, in part, a practical consideration given the time and resources a business would need to devote to develop a completely comprehensive LCA. Second, the analyst must identify and quantify a product’s inputs—all resources that are utilized to make the product—and outputs—all wastes and emissions generated by the product during its life cycle. Third, the analyst must convert the input and output data into a metric(s) that meaningfully expresses the environmental impact, creating a life cycle impact assessment. Fourth, the LCA analyst must interpret the results of that assessment. This can include key measures to reduce environmental impact and opportunities to make the product more sustainable.
The LCA is a complex document, and, therefore, is typically most useful to the entity that commissioned the assessment. Thus, the EPD is the “final report” that summarizes the LCA in an accessible form for consumers and other businesses. EPDs have been described as nutrition labels for products because they give customers/companies a way to compare similar products based on their environmental performance.
An EPD is considered a “type III ecolabel,” and once completed, is typically registered in a database, such as the International EPD system. There are additional types of “ecolabels” a company may choose to employ, such as a type I ecolabel, which does not utilize product categories and is governed by ISO 14024, and a type II ecolabel, which does not require an independent verification of the data or conclusions in the LCA and is governed by ISO 14021. However, type III ecolabels are generally preferred because they are third-party verified and provide the most comprehensive assessment for a products’ life cycle. This translates to a more accurate comparison between products.
EPDs can also vary in terms of level of product, supply chain, and region. For example, there are industry-wide EPDs, which evaluate an “average product” in a specific sector and geographic area; product-specific EPDs, which evaluate a particular product made by one company; and facility-specific EPDs, which evaluate products subject to the same steps and processes in a designated manufacturing facility. There are strengths and weaknesses to each level of EPD, so the level most suitable for a specific project depends on the intended use of that EPD.
Are these reports required? If not, why should a business utilize them?
In most areas, businesses are not legally required to provide EPDs to other businesses or consumers. However, some US states and foreign countries are beginning to require them for specific products. In the United States, California, Minnesota, New York, Colorado, Oregon, New Jersey, Washington, and the City of Portland have either introduced or passed legislation requiring EPDs in certain scenarios.[4] Abroad, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Ireland, Japan, New Zealand, the Netherlands, Norway, Saudi Arabia, Spain, Sweden, Switzerland, and the United Kingdom have EPD requirements as well.[5]
Even in locales and sectors with no EPD requirement, their popularity is growing. As discussed previously, this is partly due to the fact that consumers factor sustainability and environmental stewardship into their buying decisions more than they used to. This includes both individual consumers and other businesses that are interested in working with sustainability-minded companies. As a result, LCAs and EPDs are effective tools in marketing and brand building initiatives. LCAs and EPDs can also be used by a business internally to help it achieve its own environmental goals. For example, LCAs and EPDs can reveal what process, equipment, or material carries the largest environmental impact, and allow that company to adjust accordingly. This information can then be used to draw in new customers or appease investors. For more information on the benefits of preparing an EPD report, see Why EPD.
[1] First Insight & Baker Retailing Center at the Wharton School of the University of Pennsylvania, The Sustainability Disconnect Between Consumers and Retail Executives (Jan. 2022), https://www.firstinsight.com/white-papers-posts/the-sustainability-disconnect-between-consumers-and-retail-executives.
[2] The International EPD System, Product Category Rules, https://www.environdec.com/product-category-rules-pcr/the-pcr (last visited Feb. 2, 2024).
[3] Rochester Institute of Technology, Golisano Institute for Sustainability, What is a Life Cycle Assessment (LCA)? (July 2, 2020), https://www.rit.edu/sustainabilityinstitute/blog/what-life-cycle-assessment-lca.
[4] Meghan Lewis et al., Environmental Product Declaration Requirements in Procurement Policies, Carbon Leadership Forum (July 2021), https://carbonleadershipforum.org/epd-requirements-in-procurement-policies/.
[5] One Click LCA, Global EPD Requirements by Country, https://www.oneclicklca.com/guide-to-global-epd-requirements-by-country/ (last visited Feb. 2, 2024).
