Do companies need regulations to get them to do LCA?

Blog Author: Lise Laurin

I’m recently back from the LCIC conference in Berlin where I was again met with shock by the Europeans when I say that there are only a very few, very recent regulations in the US requiring LCA. Not so much because we don’t have regulations, but because there are a large number of companies in the US doing LCA. So, if there are no regulations, why are we doing it?

It turns out, there are a lot of reasons to do LCA that don’t have to do with regulation. The first, and one that has been a huge driver in the building and electronics industries, are certifications such as LEED (Leadership in Energy and Environmental Design) and EPEAT (Electronic Product Environmental Assessment Tool). While both federal and state governments have put requirements for government construction and electronics purchases with these certifications, in both cases, an LCA has been until recently only required for an optional credit. Yet every supplier in the building industry sees that having their LCA completed is a possible benefit over their competition and many in the electronics industry feel the same.

Another reason companies do LCA is to guide innovation. Adding environmental constraints on products at the outset spurs new ways of thinking, which can lead to new product ideas and new business models. It also ensures that they stay out ahead of their competition. Our Amos Ncube suggests that North American companies generally try to stay ahead of regulation. That enables them to solve the problems in their own way, on their own time. And even companies with no domestic regulatory requirements increasingly conduct LCA because they sell into markets where customers or governments expect or require environmental footprint information.

At early stages of product design and development, LCA can provide direction, minimizing the cost to change at a later date. Increasingly, startups are contracting for LCAs, both for that early direction, what has to happen for them to meet their sustainability goals, and to show impact investors that they really will make an impact. Even some of the largest investment banks are paying for LCA for their portfolio companies. LCA at this stage and at later stages can also pinpoint potential for cost reduction. High waste in the supply chain is one such area. Another is energy use. High global warming potential often indicates high energy use, and energy costs money. Where it’s not energy, it might be leaking methane (waste) or expensive chemical usage. Reduce those impacts, reduce costs.

A good reason to do an LCA is to discover potential risks in the supply chain. An early LCA we conducted found pesticides banned in the US used to grow the feedstock for their biobased rubber. Finding an alternative feedstock or working with the rubber company’s supply chain would eliminate or reduce the risk of discovery by a vocal NGO.

Companies like HP, Interface, and Cargill do LCA because it’s part of their brand. Whether it’s a commitment to sustainability, as in Interface and Cargill’s cases, or part of the larger quality stance at HP, these companies believe that brand value that includes LCA brings revenue, investment, or both. And in my S-ROI work, I’ve found that risks and opportunities in a company’s brand can be the largest costs and benefits in an investment.

Regulation undoubtedly accelerates adoption, and Europe has demonstrated how effective that can be. But the North American experience shows that regulation is not the only driver. Customers, investors, certification programs, product innovation, risk management and competitive advantage all create compelling business cases for LCA. In many industries, companies are measuring environmental performance not because they have to, but because it helps them build better products, understand their supply chain and build stronger businesses.

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