jen ace,
the corporate environmentalist
Fame (Or At Least Publication) At Last!
Below is the text of an article I wrote for The Sustainable Enterprise Report, a publication which aims to bring new thought leadership on issues related to climate change to C-level executives. You can visit my article directly here, or browse the The Sustainable Enterprise Report here.
Environmental Decisions Driven by Data
How understanding your environmental impact can save your company money and generate business opportunities.
By Jen Ace
Have you heard that going green can save your company money? One of the most useful tools for greening your business is called Life Cycle Analysis, which can help you find good answers to a range of questions: Can your company find surprising ways to save money while showing customers that you care about the environment? Can you look beyond old ideas about how energy gets wasted? Can you expand your business by building from current expertise to future opportunities?
As major American companies have recently discovered, each of those questions can be lead to profit-enhancing answers thanks partly to Life Cycle Analysis (LCA), which analyzes a product’s environmental impact through the duration of its life or, as analysts sometimes say, from "cradle to grave": beginning with the extraction of raw materials, continuing through manufacture by your company and use by your customer, and ending in disposal. Anyone interested in seeing how LCA can help a company be green might want to take note of Stonyfield Farm’s experience. LCA helped Stonyfield save money – by making a choice that seemed far from green.
Managers at Stonyfield Farm, the third largest yogurt brand in the U.S., know exactly where greenhouse gas emissions occur at each phase of their products’ life cycles: not just in their yogurt-culturing factory but also at the dairy farms that produce their milk, at the distributors that provide transport via truck, and at the recyclers that used to handle their plastic yogurt containers. Stonyfield markets its organic products to an environmentally aware consumer – often one who is committed to recycling empty plastic containers.
Yet Stonyfield sells yogurt in containers that aren’t recyclable – for a surprisingly green reason. Instead of using recyclable High Density Polyethylene (HDPE; #2 plastic) for its containers, Stonyfield uses hard-to-recycle Polypropylene (#5). The company’s life cycle analysis study indicated that the vast majority of a plastic container’s environmental impact occurs in the manufacture and transportation stages, and polypropylene's structure produces a container with thinner and lighter walls that still hold the same volume of yogurt. The seemingly intuitive notion that recycling always is best for the environment turned out not to be true. Indeed, Stonyfield discovered a fact that would shock many a would-be recycler: Because wide-mouthed HDPE containers like yogurt pots have a higher melting point than more common HDPE products like milk containers, trash haulers usually route those yogurt pots not to recycling facilities but to trash dumps, and only accept them as recyclable to reduce consumer confusion. Had Stonyfield not conducted an LCA, it would not have been able to make its informed decision to prioritize genuine waste reduction over recycling practices that only seemed ‘green’.
Nancy Hirshberg, Stonyfield’s Director of Natural Resources, notes that the company has saved the manufacture of over 100 tons of plastic annually, the transportation impacts associated with moving 100 tons of weight from the manufacturer to Stonyfield to consumers, and “millions of dollars annually”. These benefits far outweigh those offered by consumer recycling. “Life Cycle Analysis shows people that we are using information, rather than emotions, to make decisions,” adds Hirshberg. The seemingly intuitive notion that recycling always is best for the environment turned out not to be true, and Stonyfield would not have been able to make this informed decision to prioritize waste reduction over recycling if it had not conducted an LCA.
It isn’t just relatively small companies with few product lines who can save energy and money thanks to LCA. Johnson & Johnson, for whom I recently wrote an Introduction to Life Cycle Analysis, is beginning to analyze some of their simpler products, such as tampons and shampoo. “Johnson & Johnson encourages managers to think from a life-cycle perspective to make sure we’re working on the right things to create improvements,” says Al Iannuzzi, the company’s Senior Director of Product Stewardship. “When Proctor & Gamble did an LCA on their detergent, they found that heating the washing water represented by far the biggest impact – so they created Tide Coldwater.” And since cold water washing can reduce families' energy costs, Tide Coldwater has the potential to improve Tide's market share and bottom line. Johnson & Johnson hopes that similar life cycle thinking – and perhaps conducting LCAs in some major product categories – will help the company make environmental improvements that pay off for both company and customer.
LCA can help companies to make valid environmental claims, rather than flawed claims that are anathema to risk-averse companies like Johnson & Johnson, whose most valuable asset is its brand image. One issue that must be considered related to marketing claims lies in the distinction between two types of environmental impacts: absolute impacts, such as “the manufacture of my product releases 20lbs of carbon dioxide to the environment,” and relative impacts: “the manufacturing process of my product emits 20% less carbon dioxide to the environment than that of my competitor’s product.” Given accurate data inputs, LCA evaluates absolute impacts very accurately, but these do not typically mean much to a consumer who is attempting to compare two products in the aisle at the grocery store. An analysis of relative impacts could help you to make this type of claim about how your product performs compared with another product, but it is very difficult to produce a legally defensible statement, which is often what a marketing department hopes an LCA will produce.
The cutting edge of LCA is an open-source product called Earthster, designed by Greg Norris, who heads the LCA consulting firm Sylvatica and lectures on LCA at Harvard University. Many duplicative LCAs are conducted on similar products by companies who keep results private, so Earthster will create a forum in which companies can share LCA findings without exposing confidential data. Companies will be able to conduct a free LCA on the product’s raw materials extraction and manufacturing stages using Earthster’s web-based software, which allows managers to compare their product’s performance with published data on similar products. Managers can then choose to publish the top-level findings – but not the data underlying those findings, which remains confidential - on Earthster’s website.
More importantly, Earthster will allow a company to help its suppliers conduct their own impact assessments, and this data will then become a part of the first company’s product impact. For example, perhaps your company wants to conduct an LCA, but you are having trouble obtaining data from your suppliers about the components that make up your product. You could encourage your suppliers to conduct their own LCA on Earthster, and could then use their results as your input. This methodology has some very positive implications for LCA. Most of the data currently used by LCA software products is 10-20 years old and was produced by European countries based on European information. By contrast, Earthster will provide the old data where it remains the best available, but will allow managers to obtain more up-to-date data for their own LCAs. Secondly, managers will be able to model environmentally friendly processes where these now exist. Perhaps 50% of your greenhouse gas impacts come from steel manufacture, but you know that your supplier uses a more efficient process than that used by most steel companies. You can ask your steel supplier to conduct an LCA on Earthster and use those results as your input, which now gives a true picture of your product’s improved environmental performance.
When used skillfully, LCA provides data a company can use to make decisions according to its environmental goals. Managers must still carefully communicate these decisions to their stakeholders, especially where the findings – such as Stonyfield’s - are counter-intuitive. In a world where companies are pressed by stakeholders on myriad competing environmental concerns, LCA provides a tool for managers to make and justify decisions driven by data – and may also uncover some new, financially rewarding business opportunities.
the blog: publication in
the sustainable enterprise report
