The need to assess sustainability is growing in importance for all kinds of organizations. A variety of methods is available, and, although standardization efforts are growing significantly, the methods can be quite different in their scope and maturity. But all share three important properties:
- they adopt a holistic perspective and consider the whole life-cycle;
- Because of that, they embrace activities outside the company's domain and involve many stakeholders;
- They build a model of the considered system, and are based therefore on assumptions and simplifications.
Here we want to present and comment on three different options.
The first one is the well-known life-cycle assessment (LCA). The method has been developed for decades, meanwhile it is well accepted, standardized, and supported by different tools and databases. It is the best choice if you want to disclose the results with external stakeholders, and a must-have if you want to obtain ecolabels such as the Environmental Product Declaration (EPD), or participate in Green Public Procurement tenders. However, there are two important limitations: in its classical implementation, the method covers only environmental aspects, and topics related to material supply (virtuous closed loops such as recycling or re-use, the usage of critical raw materials) are difficult to visualize in the results.
To overcome the latter issue and give the right visibility to circular elements in your business model, you could calculate a circularity indicator of your product, for example the Material Circularity Index developed by the Ellen McArthur Foundation. In this way you have a KPI for circularity, that you can use for setting internal targets or to report to external partners. The problem here is that those indicators (MCI is only one of many) are not well standardized, nor traceable (transparent) outside the company, which makes their usage in external communication less effective. Moreover, the environmental impacts themselves are neglected: these indexes will not tell you how many tons CO2eq are generated by your product, or what the consequences for biodiversity are. Circularity indexes cannot be used stand-alone to evaluate sustainability, nevertheless are a great complement to other methods, especially if your company adopts a circular economy approach. The inputs you need are a subset of those for an LCA, so they bring more insights with little work.
Finally, the rising star among the methods: measuring your impact on the Sustainability Development Goals (SDG). By releasing the 17 SDGs the UN explicitly call businesses to engage for reaching them, and defined a set of 232 indicators in order to measure and monitor the status. The indicators, largely overlapping with the GRI reporting standards, capture very well the impact of an organization in all sustainability aspects and the interplay between them. They are able to depict the complexity of the topic, and are therefore best suited to include also indirect and structural impacts (e.g. rebound effects or benefits for the society as a whole). But they have their limitations, too. First of all, they are valid for any industry, you cannot catch the critical aspects of a specific industry with them. But things are changing, and industry-specific standards will be released in the coming years. Secondly, they can be evaluated at company's or site's level, but not (directly) at product level, they are too generic. Therefore, they cannot (directly) unleash the innovation potential hidden in more sustainable products.
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