a Business Guide to Sustainability Training Materials List The Life Cycle Management a Business Guide to Sustainability Training materials are comprised of the following resources

Life Cycle Management

a Business Guide to Sustainability

Trainer’s Manual for Session I:

Introduction to Life Cycle Management

November 2006

ii

Table of Contents

Context & Introduction to Training ................................................................................... iii

Training Materials List .................................................................................................. iv Overview of the Training Program Session........................................................................ v

I. Introduction to Life Cycle Management ................................................................. v Introduction to Life Cycle Management Slides ................................................................. vi

Context & Introduction to Training Training Session Booklet I (Trainer): Introduction to Life Cycle Management is companion to a set of training slides, and supporting booklets for both trainers and delegates and is intended to support Trainers in conducting a training session on Life Cycle Management (LCM). (A list of these materials can be seen on the next page.) Life Cycle Management is a unique framework of concepts, techniques and procedures with the goal of creating sustainable development. Rather than focusing specifically on environmental, social or economic impacts and/or benefits, LCM combines a variety of tools and approaches to look at all of these factors, how they are interconnected and how to best address these issues throughout the product or material’s life cycle. How these factors are weighted and balanced will depend on what is important to the organisation responsible for the management and what is deemed the most important issues throughout the product’s or material’s life cycle. This training kit presents the central messages of Life Cycle Management in a format accessible to a broad audience. The training kit will present LCM in four topics:

• Introduction to LCM • How LCM is Used in Practice • Communicating LCM Results • LCM & Stakeholder Expectations

Illustrative examples of LCM are inserted throughout the training slides, together with slide notes which act as a guide for the trainer. LCM practices relevant to less developed countries will be emphasised within each of the four topics. In many instances trainers will find there is material which may not be relevant to their audience or is too detailed given time constraints. Trainers are encouraged to use the agendas provided as a guide, and to remove or revise materials according to the interests of their audience. The slide notes, provided for each slide, should help the trainer to select the materials and examples most relevant to their audience. For instance, trainers can augment an example given in these materials with current examples from their organisation or region. Or, trainers may revise one of the exercises provided to reflect a recent situation in their organisation or region.

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Training Materials List The Life Cycle Management a Business Guide to Sustainability Training materials are comprised of the following resources for Trainers and for Delegates: For the Trainer

Trainer’s Manual: Introduction, Case Studies & Resources

Trainer’s Manual for Session I: Introduction to Life Cycle Management This document

Slides for Session I: Introduction to Life Cycle Management

Trainer’s Manual for Session II: How LCM is used in Practice

Slides for Session II: How LCM is used in Practice

Trainer’s Manual for Session III: Communicating LCM Results

Slides for Session III: Communicating LCM Results

Trainer’s Manual for Session IV: LCM and Stakeholder Expectations

Slides for Session IV: LCM and Stakeholder Expectations

For the Delegate

Delegate’s Manual: Introduction, Case Studies & Resources

Delegate’s Manual for Session I: Introduction to Life Cycle Management

Delegate’s Manual for Session II: How LCM is used in Practice

Delegate’s Manual for Session III: Communicating LCM Results

Delegate’s Manual for Session IV: LCM and Stakeholder Expectations

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Overview of the Training Program Session

I. Introduction to Life Cycle Management Learning Objectives for Session One This section will provide users with a good understanding of the theoretical basis of LCM and its history. Participants should be able to answer the following questions by the end of the session:

● What is a life cycle – impacts and value created along the life cycle of a product of service?

● What makes LCM unique from other approaches? ● Why LCM is needed in business and in government?

Outline for Session One Day One Session One

08.00-08.30 What is a life-cycle? Impacts & value created along the life cycle of a product or service - Definitions - History - Use

08.30-08.40 Why LCM is needed in business and in government? - Drivers

08.40-09.15 What does LCM encompass? - What are the unique aspects of LCM?

09.15-10.00 Group exercise

10.00-10.30 Break for coffee & refreshments

vi

Introduction to Life Cycle Management Slides and Notes

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1

Life Cycle Managementa Business Guide to Sustainability

Training Session 1 of 4November 2006

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2

Life Cycle Management Training -Outline • Introduction to LCM

– This Session!

• How LCM is used in Practice– Second Session

• Communicating LCM Results– Third Session

• LCM and Stakeholder Expectations– Fourth Session

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3

• Introduction to LCM– This Session!

What does LCM encompass?What are the unique aspects of LCM?

08.40-09.15

Break for coffee & refreshments10.00-10.30

Learning Objective: Understand the theoretical basis of life cycle management & its history

Group exercise09.15-10.00

Why LCM is needed in business and in government?

Drivers

08.30-08.40

What is a life-cycle? Impacts & value created along the life cycle of a product or service

DefinitionsHistoryUse

08.00-08.30

Here is our agenda for this session, and a statement of learning objectives – The session will last no longer than 2.5 hours

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• How LCM is used in Practice– Second Session

A process for implementing LCMPlan – Do – Check – AdjustA focus on designFurther examples to illustrate

11.00-12.00

Break for lunch12.30-13.30

Learning Objective: Understand the practical aspects of LCM in policy development & business operations, through discussions of how to integrate it into decision making & through case examples


LCM involves…Learning from a range of examples

10.45-11.00

Life cycle managementDefinition & Benefits

10.30-10.45

Here is a preview of the agenda for the second session - - to give you an understanding of what we’ll cover next

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• Communicating LCM Results– Third Session

Case-studiesSector-specific driversCommunication strategiesCombination of tools

09.00-09.45

Break for coffee & refreshments10.00-10.30

Learning Objective: Provide a good understanding of communication tools and strategies. Why and how can they be valuable to business?


Communication toolboxMain features and link with LCMExamples and diffusion of tools

08.15-09.00

Why communicating LCM? To whom? Definition and scope, drivers, target groups of communication

08.00-08.15

Here is a preview of the agenda for the third session - -

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• LCM and Stakeholder Expectations– Fourth Session

Case example11.00-11.45

Importance of Including StakeholdersRisk AvoidanceOpportunity Creation

10.45-11.00

Break for lunch12.30-13.30

Learning Objective: Understand how to identify stakeholders, as well as their priorities & concerns


Identifying StakeholdersPotential StakeholdersAsk the right peopleRanking

10.35-10.45

Why Engage Stakeholders?10.30-10.35

Here is a preview of the agenda for the fourth session - -

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Life Cycle Management is…

… the application of life cycle thinking to business practices, with the aim to systematically manage the life cycle of an organisation’s products and services

… the systematic management of product and material life cycles, to promote production and consumption patterns that are more sustainable than the ones we have today

…a flexible integrated, management framework of concepts, techniques and procedures to address environmental, economic, and social aspect of products, procedures and organisations

(This definition is adapted from Background Report UNEP Guide to LCM – A bridge to Sustainable Products Feb 2006)

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… the application of life cycle thinking to business practices, with the aim to systematically manage the life cycle of an organisation’s products & services

… the systematic management of product & material life cycles, to promote production & consumption patterns that are more sustainablethan the ones we have today

…a flexible integrated, management framework of concepts, techniques & procedures to address environmental, economic & social aspect of products, procedures & organisations

Let’s define, and discuss, the terms in bold...

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The life cycle

A product’s full Life Cycle is the series of stages that each product inevitably goes through. The life cycle can be from the time raw materials are first removed from the ground, continues through various stages of manufacturing and transportation, through use and finally to re-capture, recycling and perhaps final discard and deposition. In many cases, the life cycle of a product will include re-use of components, and recycling of materials.

Supporting Case Study, “ESAB Welding Consumables & Equipment” – see “Case Studies and Resources” section in manual – It illustrates how “recycling” is considered a business opportunity at the product “end of life” phase in the life cycle

Supporting Case Study, “Green Management at Sony” – see “Case Studies and Resources” section in manual – It illustrates how the company examines the entire life cycle of a product, in order to identify points in the life cycle at which environmental impacts are greatest, and thus, priorities for improvement

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Worldwatch Institute, Worldwatch Paper 166: Purchasing Power: Harnessing Institutional Procurement for People and the Planet, July 2003, www.worldwatch.org

The Life Cycle – An Example

This representation of the life cycle stages of a cotton t-shirt illustrates some of the environmental aspects, and types of issues that come to mind when you consider the entire system, using life cycle thinking. Note this representation does not incorporate the social issues associated with a typical t-Shirt.

[Note to Trainer: The exercise at the end of the module looks at the life cycle of a piece of clothing and re-uses this diagram there to generate some thought]

Supporting Case Study, “Good Coffee” - see “Case Studies and Resources” section of manual – It illustrates how social issues along the life cycle of coffee are considered, and addressed

Supporting Case Study, “LCA Application: Chair Manufacturing” - see “Case Studies and Resources” section of manual – It illustrates, in very technical terms, how to quantify environmental impacts associated with manufacturing a chair (FOR TECHNICAL AUDIENCE ONLY)

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Life Cycle Thinking

Life Cycle Thinking

Life cycle thinking means recognising various impacts occur at all points along the life cycle of the product, or material. It also means recognising how certain choices (what material to use, what manufacturing process to use, what sources of energy to use, where to sell) influence those impacts – In practice, life cycle thinking means evaluating potential impacts as part of the decision making process.

The main goals of life cycle thinking are to reduce resource use and emissions to the environment as well as improve the socio-economic performance in various stages of a product’s life. This facilitates the links between the economic, social and environmental dimensions within a company and through its entire value chain.

Supporting Case Study, “Bright Ideas Yield Green Flagships at Philips”, in “Case Studies and Resources section of manuals – it illustrates how eco-design procedures at Philips prompt consinderation of all points in the life cycle.

Life cycle thinking is an essential contribution to a sustainable development. It often requires an organisation to widen its view of the world, by expanding the traditional focus on the production site and manufacturing processes. The organisation then maintains an interest (an economic or environmental interest) in its products from the start of the life cycle all the way through to the end. That is, the organisation may recognise risks and opportunities to improve performance at any stages ofthe life cycle (e.g. to reduce costs associated with using hazardous materials, or to gain revenue by collecting recyclable materials)

The impacts, both environmental and social, occuring at each point in the life cycle can be assessed qualitatively (life cycle thinking) or quantitatively using a Life Cycle Assessment or LCA. There is an international standard on how to conduct LCA (ISO 14040), and LCA is now a recognised decision making tool to help measure environmental burdens and evaluate the environmental consequences of a product, process or service over its life cycle from cradle to grave. An organisation needs not to “jump into” comprehensive tools like LCA. Instead it could take a step-by- step approach and begin with focusing on the life cycle perspective and on concrete possibilities to improve the environmental characteristics of a product. (“ISO 14040:2006 describes the principles and framework for life cycle assessment (LCA) including: definition of the goal and scope of the LCA, the life cycle inventory analysis (LCI) phase, the life cycle impact assessment (LCIA) phase, the life cycle interpretation phase, reporting and critical review of the LCA, limitations of the LCA, the relationship between the LCA phases, and conditions for use of value choices and optional elements” www.iso.org)

Supporting Case Study, “Use the Lessons Learned” - see “Case Studies and Resources” section of manual

Resources: A UNEP Guide to Life Cycle Management, UNITED NATIONS PUBLICATION, DTI/0889/PA, ISBN: 978-92-807-2772-2

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More sustainable

Sustainable development

“meets the needs of the

present …

$

Sustainable Development:In 1987 the Brundtland Commission defined Sustainable Development as “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: the concept of "needs", in particular the essential needs of the world's poor, to which overriding priority should be given; and the idea of limitations imposed by the state of technology and social organisation on the environment's ability to meet present and the future needs.”

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More sustainable

$

…without compromising the

ability of future generations to

meet their own needs.”

Sustainable development

“meets the needs of the

present …

Sustainable Development:

Sustainable development should ideally improve the quality of life for every individual without expending the earth’s resources beyond its capacity. The journey towards sustainable development requires that businesses, governments and individuals take action, i.e., changing consumption and production behaviors, setting policies and changing practices, improving the quality of life. Businesses have to find innovative ways to be profitableand at the same time improve the environmental performance of production processes and products.


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Environmental Social Economic – The Triple Bottom Line

Before moving on it is important to emphasize that all sustainability is anchored by the Triple Bottom Line. This refers to the Economic, Environmental and Social aspects of sustainable development. Without addressing all three of these dimensions, together, throughout the life cycle, we lessen our ability to contribute to development that is sustainable.

In the business community sustainability has been coined “the triple bottom line” that industry have to expand the traditional economic focus to include environmental and social dimensions, to create a more “sustainable” business (John Elkington, 1998).

In the 1990s, when the concept of sustainable development was taking root, the President and CEO of 3M, L. D. DeSimone, believed sustainable development was a core element of business success. It was under his leadership (1991-2001) that 3M first launched its Life Cycle Management program to manage all aspects of a product, from the idea phase through customer use and disposal. According to DeSimone, “[Life Cycle Management was] a commitment we must embrace to maintain our environmental leadership and to strengthen our competitive position.”

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Where does LCM apply in the organisation?

Product development

Life Cycle Management

Management

Distribution

Production

Procurement Sales & Marketing

All Departments - Opportunities to apply LCM permeate every level of an organisation from the most Senior to the most Junior members. Within each typical division of a company one can point to tools, strategies and concepts that can support improving environmental, economic and social performance. For example in product development one could apply life cycle thinking to identify solvent emissions as a potential environmental issue re-design the product to use water-based paints (which will reduce solvent emissions). For example, within procurement, one could use some basic supplier questionnaires to learn which suppliers are taking a leadership role in managing and improving environmental and social performance.

Supporting Case Study, “First car with an environmental certificate”, in “Case Studies and Resources section of manuals – it illustrates how life-cycle thinking integrated into the product design & development phases has influenced new products

Supporting Case Study, “First with A Code of Conduct ”, in “Case Studies and Resources section of manuals –it illustrates the considerations Lego has added to its contracting and procurement practices

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Products & Services

LCM can be applied to nearly every product – from natural resources and extraction through to advanced electrical equipment – and to every service – from hotel accommodations to banking

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… the application of life cycle thinking to business practices, with the aim to systematically manage the life cycle of an organisation’s products & services

… the systematic management of product & material life cycles, to promote production & consumption patterns that are more sustainablethan the ones we have today

…a flexible integrated, management framework of concepts, techniques & procedures to address environmental, economic & social aspect of products, procedures & organisations

Review the definition of Life Cycle Management... Any Questions?

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1989Exxon Valdez

History of LCM

Incr

easi

ng n

umbe

r & c

ompl

exity

of e

xpec

tatio

ns

Time

1962Silent Spring

1971Green Peace

& FOE

1972FCCA

1974SOLAS

1984Union Carbide,

Bhopal 1986

ResponsibleCare

1980Superfund

1982Seveso

Directive

1986Right to Know

Act

1989ILO Convention on Ind. People

1987Our Common

Future

1989CERES

Principles1987Montreal Protocol

1989The Natural

Step

1986Chernobyl

1993TRI

1997Kyoto Protocol

1996Nigeria

1997SA8000

1999AA1000

1998Global Mining

Initiative

1999OECD Principles

of Corporate Governance

1993ISM Code

1992UNCED/

Agenda 211990

Domini Index Fund

1990sGlobalization

of Media

1995Brent Spar

1990sGrowth in SRI

1996Blue Water

Network

1992/97UNEP Finance

Initiatives

1999Seattle Riots-

WTO

1996ISO14001

1999DJSI

1999Global Sullivan

Principles

1999Nike Labour

Practices Campaign

1990sRise of the

Internet

2001OECD EPR Guidelines

2000GRI SD Reporting

Guidelines

2000Starlink Corn /

GMO

2000UN Global Compact

2001Exxon & BP Shareholder

Activism

2001EU Green Paper IPP

2001European

Green Paper on CSR

2001FTSE4Good

Index

2002Sarbanes-Oxley

Act

2001ISPS Code

2004ISO 14001

2001 GRIGuidelines

2005South Asian

Tsunami

2006Hurricane

Katrina

History of LCM:

There have been a number of events including both catastrophes, such as the Bhobal incident and the 2004 Tsunami, and legislative actions, such as Kyoto and Sarbanes-Oxley that have raised people’s awareness of a number of sustainability issues. This graph demonstrates how these have been increasing with time and have been getting consistently more sophisticated...

(Click) ... Life Cycle Thinking has followed a similar progression driven by crises and regulations the analysis and demand for greater depth and sophistication has followed suite. This has led to organisations first becoming aware of environmental concerns (1960s- late 1980s), initial attempts to address these concerns (1980s-early 1990s), improved decision and support tools such as LCA (1990s-early 2000s), and now expanded tools such as LCM (2000s-) which provides a greater scope analysis of Life Cycle Concerns.

(Click) 1980s – Pollution prevention measures undertaken as a result of government policies and market demand led to improvements not only in environmental performance, but also in overall production efficiency through reduced resource use, emissions and waste leading to improved economic performance.

(Click) 1990s – especially with the introduction of the concept of eco-efficiency by the World Business Council for Sustainable Development (WBCSD) in 1992 the focus on a product’s impact and not just its production process became increasingly popular. Their approach to eco-efficiency highlights the link between environmental and economic benefits which are summed up by the statement “creating more value with less burden.” Further, data sets for Life Cycle Assessments were developed and refined over this period and continue to this day. These provide greater accuracy of predictions and analysis of a product or service’s impact.

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History of LCM

Time

Early Environmental Movement

Improved Corporate Environmental Performance

Life Cycle Assessment

Life Cycle ManagementIn

crea

sing

num

ber &

com

plex

ity o

f exp

ecta

tions

Time

21st Century – The business case for improved environmental performance has become clear to a number of corporations that can see how:-Cleaner production processes lead to resource savings-Environmental management can improve their image-Cleaner production leads to a competitive advantage

Along with this improved performance has come greater expectations of companies role in society including tangible social issues such as worker safety through to, and this is especially true in developing countries, their larger impact in society not only in relation to employees but their families and the local community in general. This latter role can manifest itself in things such as training, local procurement, provision of medical services, access to potable water, and other infrastructure services.

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Who is Active in Life Cycle Thinking Today?

DAIMLERCHRYSLER

These are just a few examples of the companies, organisations, and multilateral organisations around the world who are adopting life cycle thinking into their operations or policy positions.

Supporting Case Study, “3M - a pioneer in LCM”, in “Case Studies and Resources section of manuals

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Why is LCM Needed? Anticipate & Respond to Drivers

1. Business Strategy Drivers• Decision Making • Efficiency• Total Cost• Design

2. Market Drivers• Market Share• Access• Public Relations

3. Financial Sector Drivers• Predictability• Competitive Advantage

4. Legislative Drivers• Removal of Banned Substances• End of Life Responsibility

Many external and internal factors can influence an organisation to consider improvements towards sustainability, and to develop policies, implement tools and structure programs that integrate LCM into the core operations of businesses. Key drivers for implementing a LCM approach are

•business strategy•market demands•increasing requirements from the finance sector•regulations in a range of countries around the world


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LCM Business Drivers – 1. Business Strategy

• Decision Making– Getting a complete picture– New business

opportunities• Efficiency

– Eco-Efficiency• Total Cost• Design

– Improved value or performance

• Avoided Risk

Decision Making•A complete picture - - By applying LCM decision makers can build up a complete picture of opportunities and risks rather than making decisions which may be beneficial in the short term but have unintended, unacceptable long term consequences. Further this helps organisations avoid catch-up costs. As the collection of data, institution of policies anddevelopment of credibility takes time, organisations that fall behind others are likely to struggle to regain their competitive advantages due to time lags and loss of reputation.

•New Business Opportunities - - By considering the function or use phase of a product new ideas can emerge regarding additional market opportunities or design improvements to serve these needs... Life cycle thinking means learning from others along the supply chain, which can reveal new partnerships with suppliers, customers, even local communities, authorities and NGOs... Investigation consumers’ use of a product may reveal new ideas and provide product developers new knowledge and inspiration for future improvements.

Efficiency•Eco-Efficiency - - “Do More with Less” A number of firms have used this adage (coined “eco-efficiency”) to find ways to remove hazardous materials from their products, reduce the number and quantity of inputs into their products, link production systems to improve efficiency and reduce costs, as well as, to re-evaluate their processes and refine them using the lens of sustainability to discover opportunities for greater efficiency.

Supporting Case Study, “Green Management at SONY”, in “Case Studies and Resources” section of manuals

Total Cost•By incorporating life cycle considerations and extending cost forecasts to include the full costs of inputs many firms find thatthey are able to identify opportunities to cut costs over the long term and gain an advantage over their competitors. Green building designs are an example of this. Many firms are selecting green building designs for their operations as they dramatically reduce their operating costs (utilities, maintenance) with limited or no additional up front costs. Savings are substantial as the costs of operating a building over its lifetime are estimated to be close to 100 times the initial capital costs of its construction. (Some green buildings reduce energy needs by nearly 50% of a standard building.)

Design•Integration of environmental and socio-economic concerns into design and product development is expected to reduce costs, promote innovation, facilitate supply chain integration, and assure initiatives are aligned with overall business strategy.... Design determines 80% of the total costs and consequently most life cycle impacts, so a strategy that evaluates impacts prior to product development can eliminate expenses of retrofitting a designed-in problem.

Avoided Risk•The experience of Armstrong with Asbestos and their resulting bankruptcy or Shell’s experience in Nigeria with the bad press and associated campaigns associated with the Ken Saro Wiwa trial have acted as warnings to corporations of the dangers of not acting responsibly, and proactively, any where in the world. Today, Armstrong and Shell are recognised for their strong environmental and social programs, respectively.

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LCM Business Drivers – 2. Market

• Shifting expectations– Aware consumers– Procurement– Retailers

Shifting Expectations

“Of the world's 100 largest economic entities, 42 are now corporations, not countries” - CSIS, 2004

Aware Consumers – Through direct impacts (such as higher gas prices) and greater global communications including 24 hour news channels people are both interested and aware of events and companies’ roles in them, wherever they happen....

NEXT SLIDE

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Aware Consumers – Through direct impacts (such as higher gas prices) and greater global communications including 24 hour news channels people are both interested and aware of events and companies’ roles in them, wherever they happen. Consumers are, slowly, beginning to hold companies responsible for their actions by what they do, and do not, purchase.

“Americans spend over one million dollars on energy every minute... So who has the power to change that?”Chevron, advertisement in

Scientific American September 2006, p58

For proactive organisations, improved environmental and social performance can lead to greater market share as consumers continue to incorporate environmental and social considerations into their selection process. There are clear opportunities created by this, and also drivers related to avoiding risks. For instance firms spend millions developing brand recognition, and an incident half way around the world can easily undermine these efforts. In the West Exxon, Shell, Nike, and Talisman have all seen their brands tarnished by environmental or social irresponsibility.

“Businesses are going green for many reasons, not just to enhance their image. Some are seeking a competitive advantage.”

The New York Times “The Business of Green”Business Section, 26 May 2006

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Aware Consumers –

The outdoor apparel manufacturer, Timberland, recently created a label on the environmental performance of one of its shoes, in the style of a nutrition label typically found on food products. It appears Timberland recognises its customers are aware of environmental issues associated with the products they buy, and would be interested receiving detailed information about actual impacts across the life cycle.

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• Shifting expectations– Aware consumers– Retailers – Procurement

RETAILERS – Wal-Mart announced commitments to stock shelves with organic cotton and to promote the sale of compact fluorescent bulbs. Wal-Mart’s reach spans 60,000 suppliers* and each week, 176 million consumers walking through Wal-Mart stores. The retail giant predicts these 2 initiatives will: **

•Prevent use of 15,880,00 kg of chemicals > Eliminate need for 7,571,000,000 litres of water > Offer additional value for the customer•Compact fluorescent bulbs lasts 8 to 12 times longer > keeps 8-12 bulbs from the landfill > Uses 80% less electricity > Saves $30-$80on power bill (USD) > Prevents 225 kg of coal or 1 barrel of oil from being burned to generate electricity (as majority of US electricity comes from coal fired power plants) > Keeps 1 tonne of CO2 out of the air

PROCUREMENT - Suppliers, even raw material ones, are also seeing increased scrutiny of their operations. Many firms are now asking them to complete some form of Supplier Evaluation Form which can lead to being screened out of potential contracts for not meeting sustainability criteria sufficiently. Ericsson for example, is a company with a relatively long history of asking suppliers about environmental performance – specifically, it asks suppliers whether they are willing to share life cycle data, to contribute to Ericsson’s environmental design initiatives. In this regard companies that are both able to answer these questions about the life cycle performance of their goods, and able demonstrate their performance, have a distinct advantage over their competitors. Further, surveys in Japan and the US indicate over 40% of firms were actively calculating life cycle costs of their products (total cost of owning and operating the product) in order to demonstrate to customers that their product lowered total costs.

* Source: CNNMoney.com, Marc Gunther, Fortune Magazine, 31 July 2006** Source: http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=670

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LCM Business Drivers – 3. Financial Sector

Total Growth in Social Investing in the US Between 1995 and 2005

0

500

1000

1500

2000

2500

1995 1997 1999 2001 2003 2005

Year

Valu

e in

Bill

ions

Effective and proactive management of social and environmental impacts are becoming increasingly important to a number of investors, banks, insurance companies, lenders, and ranking institutions. This is driven in large part by two factors. First, these organisations have a demonstrated preference for measurable risks and predictability of performance. Second, performance in these areas is quickly becoming a proxy for effective management of a number of issues including such intangible issues as employee engagement and innovation. In numerous studies it is being shown that sustainability indexes are either outperforming or at least not losing ground to standard market benchmarks. For example a study backdated five years from 2002 demonstrated that the Dow Jones Sustainability Index outperformed both the Dow Jones Global Index and the Morgan Stanley Capital International Index. Further a number of these indexes have proven to be less volatile improving their perception in the market.

As demonstrated by the above growth in Social Investing this is becoming a larger and clearly important factor in the investment community. Realizing this investment pool companies are responding by proactively communicating their performance in these areas. Further, a number of institutional investors are starting to ask companies for their environmental or social strategies. As an example the Carbon Disclosure Project, which in 2006 represented 211 institutional investors with over $31 Billion USD in assets, sends a questionnaire to close to 2000 companies requesting information on their policies and strategies to avoid risks and capture opportunities created by climate change.

•EXAMPLE : A failure to address environmental and social issues can directly lead to negative perception of a company and direct financial impacts. This is demonstrated by a Norwegian Government announcement that their Government Pension Fund ($240 billion) will no longer invest in both Walmart and Freeport–McMoRanCopper & Gold as a result of recommendations from their fund’s ethical council. In the past other companies had been excluded from the fund as a result of being involved in producing anti-personnel landmines, cluster bombs or nuclear weapons, however Walmart was excluded due to, “serious and systematic,” abuses of human and labour rights, including employing minors against international rules and blocking workers’ attempts at forming unions. Freeport-McMoRan was excluded based on serious environmental damage, specifically due to disposal of tailings for a copper mine in a natural river system in Indonesia. (“Norway dumps Wal-Mart from $240 Billion investment fund”. Reuters.)

Source: Graph developed using data from "Report on Responsible Investing Trends in the U.S. 2005” , the Social Investment Forum

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LCM Business Drivers – 3. Financial Sector

This graph from the Dow Jones Sustainability Index (from: http://www.sustainability-index.com/djsi_pdf/news/MonthlyUpdates/DJSI_Update_0202.pdf) demonstrates the financial performance of Sustainable companies over a decade. These figures are actually looking backward given that the DJSI wasn’t initiated until 1999. However, it does a good job of demonstrating both the actual and accelerating nature of the financial performance of these firms.

Supporting Case Study, “Sustainability-Driven Innovation”, in “Case Studies and Resources” section of manual -provides insight into the value LCM can create in organisations

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LCM Business Drivers – 4. Legislation

• Legislative Impact– Becoming more stringent– Targeting Firms

• Simplicity• Globalization• Declining trust

Legislative Impacts are affecting firms in two ways. First they are becoming both more sophisticated and comprehensive (that life cycle thinking approach!!). Second there is a clear tendency towards policies and legislation that target firms, rather than final consumers.

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WEEE

RoHSEnd-of-life vehicle directive

3R Initiative

Japan’s Environmental Policy Priorities Index (JEPIX)

Environmental Preferable Purchasing Program

Regulation for Pollution Control of Electronics Products (RPCEP)

Policy makers in a number of countries including those above are starting to realize the importance of controlling substances of concern, benefits of ensuring that companies are held responsible for the disposal of their products, and using policy mechanisms to encourage companies to operate in a sustainable manner.

The European Union has been the clear leader in this area; however, because of their market size their decisions have a great deal of influence around the world. For example China’s for Pollution Control of Electronics Products program is a direct result of the EU’s policies governing waste electronics. This ensures that Chinese products and inputs can maintain their access to the EU’s markets.

Supporting Case Study, “Innovation. Legislation. An Industry-Government Cooperation”, in “Case Studies and Resources” section of manual – it illustrates how Nokia is working with the European Commission with respect to the Commission’s Integrated Product Policy approach... An approach intended to “reduce the environment impacts from products through their life-cycle, harnessing, where possible, a market-driven approach, within which competitiveness concerns are integrated”

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Public awareness – As people grow increasingly interested and aware of environmental and social issues, it is leading to greater pressure by the public on governments to demonstrate effort to address these issues. In some cases, the public’s trust of the market’s ability to solve certain issues, quickly enough, has declined. In turn, legislators have more public support for certain product-oriented legislation, when a sufficient number of organisations do not act voluntarily.

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All over the world there are examples of how the market has not been able to find a profitable solution to certain environmental and social impacts of operations. As a result governments are creating the context that requires organisations to absorb the costs of cleaning these up. Examples of this include product take-back legislation, imposing costs for the disposal of materials and for cleaning up polluted sites.

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What Does LCM Encompass?

Strategies &

Concepts

Systems &

Processes

Programmes

Data Information & Models

Tools&

Techniques

Life Cycle

Management

Life Cycle Management entails coordinating many existing, effective tools and approaches, in order to continually improve the environmental, social and financial performance of an organisation. These tools and approaches can be grouped into 5 headings:

1. Strategies & Concepts2. Systems & Processes3. Programmes4. Tools & Techniques5. Data Information & Models

LCM - Pick and choose from among the tools and approaches – which will be introduced within these 5 headings – in order to establish systematic management of the life cycle of your products and services that will help you continually improve environmental, economic and social performance... This, is LCM. In the end, it is a flexible integrated, management framework of concepts, techniques and procedures, to promote innovative production and consumption patterns that are more sustainable than the ones we have today

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Inputs

• Data Sources

• Tools

• Concepts

• Systems

• Policies

What makes LCM unique from other approaches?

LCM

Output

•Strategy improvements

•Market Share

•Access to Financing

•Regulatory Compliance

This diagram is a visual representation of how an LCM approach acts as a lens helping organisations translate the output of research, tools and concepts into benefits such as: strategy improvements, market share, access to financing. This is just another way of thinking about the concepts and slides we have gone through to date.

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Strategies &

Concepts

Systems &

Processes

Programmes


Tools&

Techniques

Life Cycle

Management

We begin by looking at “Strategies & Concepts”...

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Life Cycle

ManagementIndustrial Ecology

Dematerialization

Cleaner Production

Eco-efficiency

Strategies &

Concepts

Dematerialisation:•For the wind turbine manufacturer VESTAS, LCA has been used to identify that the main burdens of a wind turbine is a result from the consumption of materials when constructing the windmill. As a result of that the main focus in the product development at VESTAS is to reduce the material consumption per kWh of wind energy produced•Supporting Case Study, “Use the Lessons Learned”, in “Case Studies and Resources” section of manual

Cleaner Production:•Supporting Case Study, “Teamwork to Flag Valuable Improvements”, in “Case Studies and Resources” section of manual

Source: WBCSD and Five Winds International, 2005, eco-efficiency LEARNING MODULE. ISBN: 2-940240-84-1

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Strategies &

Concepts

Dematerialization

Dematerialization refers to the removal of excess product or material in a product. This may include such items as the removal of toxic substances, reducing the number or mass of inputs into a product, or avoided over-engineering of products.

Case Study Magna International – Environmentally Friendly Door Panel Development

Drivers – The automotive industry are facing both legislative and market drivers to re-evaluate their designs.

The European End of Life Vehicle Directive (which is being adopted by Original Equipment Manufacturers in North America) require 85%/wieght recoverability of materials from vehicles. This is causing Original Equipment Manufacturers and their suppliers to determine ways that they can meet these new targets.

Escalating gas prices are also driving consumer demand for lighter vehicles with higher fuel efficiency. This creates an incentive for producers to use more lightweight plastics; however, this reduces plastics impact on the overall weight recoverability from vehicles.

In 2000 Magna’s interior design group undertook the development of an environmentally friendly door. They focused on what they saw as the largest impact phase the end of life. With that in mind they incorporated design and material choices that facilitated disassembly and recovery of the materials. However, since this was being designed for a concept car they had no means of comparison to standard door designs. Following Life Cycle Management awareness training and use of Life Cycle Assessment software they were able to develop an appropriate benchmark and assess the performance of the new design. Their findings were surprising in that they found the real benefits from the concept door were in reduced energy requirements in the production phase. Further, the use of Life Cycle Management also identified a number of raw materials whose production was particularly energy intensive and thus highlighted opportunities for improved environmental performance through different material choices. (See “Life Cycle Management” by Brady, Saur and Nielsen, Five Winds International)

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Strategies &

Concepts

Dematerialization

Cleaner Production

- Is an environmental strategy

- Can be applied to processes, products and services

- Can increase overall efficiency and reduce risks to humans and the environment

Cleaner Production is the continuous application of an integrated preventive environmental strategy to processes, products, and services to increase overall efficiency, and reduce risks to humans and the environment. Cleaner Production can be applied to the processes used in any industry, to products themselves and to various services provided in society. - UNEP

Case Study – Nicaraguan Bottling Company (taken from http://www.unido.org/doc/4533 and the UNIDO/UNEP Cleaner Production Program)

Vienna, Austria, 15 January 2001 The losses of a Nicaraguan national beverage company, which produces pepsi cola drinks using the PEPSICO's concentrates, were in some sections as high as 80 per cent due to mechanical reasons and 20 per cent due to incorrect housekeeping measures. These were the main conclusions of a cleaner production assessment on the company's performance prepared by a team of national and international experts of the Cleaner Production Centre (CPC) in Nicaragua. The study was prepared in close cooperation with the company's 260 employees.The CPC experts suggested introducing a number of cleaner production (CP) measures. The project resulted in a reduction in product losses and a gain in savings of 0.41 per cent in annual production, equivalent to US$ 50,000. The CP assessment on water conservation indicated that the company used some 11 liters of water for one liters of finished product, in comparison with similar European companies that use only 2 - 3 liters of water. After introducing CP solutions, the use of water will be cut by half. The CPC team recommended the implementation of CP options in the use of the principal source of process energy. The savings for the use of electricity for refrigeration will amount to 12 per cent and for air conditioning to 40 per cent. Overall, the cost for fuel will be cut by 30 per cent. In addition, a number of training courses for the employees enabled the company to reduce costs for broken bottles by 30 per cent, equal to a saving of US$26,000 annually. As a result the enterprise staff is able to maintain the introduced changes and continuously improve the environmental performance of the production process. This saves not only money, it also improves the company's ability to recognize and address future environmental risks. The success of the project has encouraged many companies in Nicaragua and Central America to implement CP measures in good housekeeping methods, administrative changes and upgrading of capabilities of the company.

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Industrial Ecology

Dematerialization

Cleaner Production

Industrial Ecosystems

Balancing Production and Natural Capacity

Dematerialization Emulating metabolic Pathways

Improved energy use patterns

Policy Alignment

Strategies &

Concepts

From: http://www.uneptie.org/pc/cp/understanding_cp/related_concepts.htm#2

Industrial ecology and industrial metabolism are concepts for new patterns of industrial production and are closely related to the Cleaner Production concept. Industrial ecology and industrial metabolism are studies of industrial systems and economic activities, and their links to fundamental natural systems. Basically, they aim to imitate the material recycling aspect of an ecosystem - a material flow management is the crucial aspect of these approaches.

Six principal elements of industrial ecology/industrial metabolism: 1. The creation of industrial ecosystems: maximizing use of recycled materials in production, optimising use of

materials and embedded energy, minimizing waste generation, and re-evaluating "wastes" as raw material for other processes.

2. Balancing industrial input and output to natural ecosystem capacity: understanding the ability of the larger natural system to deal with toxics and other industrial wastes in typical and catastrophic situations.

3. Dematerialization of industrial output: reducing materials and energy intensity in industrial production.

4. Improving the metabolic pathways of industrial processes and materials use: reducing or simplifying industrial processes to emulate natural, highly efficient ones.

5. Systemic patterns of energy use: promote the development of an energy supply system that functions as a part of the industrial ecosystem, and is free of the negative environmental impacts associated with current patterns of energy use.

6. Policy alignment with a long-term perspective of industrial system evolution: nations working together to integrate social, economic and environmental policies.

There are other opportunities as well for industries to minimize their impacts or access opportunities, chemical leasing would be an example of this.

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Strategies &

Concepts

Industrial Ecology

Dematerialization

Cleaner Production

Eco-efficiency

“Creating more value with less impact” (WBCSD)

Introduced in 1992 by the World Business Council for Sustainable Development Eco-Efficiency is defined simply as the creation of more value with less impact.

Examples of the returns to Eco-Efficiency programs include:•Interface, one of the world’s largest producers of commercial floor covering, saved over $200 million from 1996 to 2002 through its sustainability efforts.•HP in California reduced its waste by 95% and saved $870,564 in 1998.•STMicroelectronics, a Swiss-based technology manufacturer, saved•£38 million in energy and $8 million in water costs, with a total saving over a decade predicted at $900 million.•Dupont reduced energy use by one-third at one facility saving over $17 million per year on power while reducing greenhouse gas pollution per pound of product by half. In 2000, it saved almost $400 million due to resource and productivity improvement.•In five years, SC Johnson increased production by 50% while waste emissions were cut by half, resulting in annual cost savings of more than $125 million.•United Technologies Corporation’s sites eliminated almost 40,000 gallons per year of waste water and saved over US$50,000 per year with a fundamental change in the way it manages its test cells, underground storage tanks and waste streams.

Source: WBCSD and Five Winds International, 2005, eco-efficiency LEARNING MODULE. ISBN: 2-940240-84-1

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Certification

Extended Producer Responsibility (EPR)

Integrated and Environmental Management Systems (i.e. ISO 14000, EMAS, EFQM)

Systems &

Processes

Integrated Product Policy (IPP)

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Systems &

Processes

Management Systems are:

•A structured approach towards managing assets and liabilities to pursue a policy of continual improvement•It is an evolutionary and cultural change, not a “Magic Bullet” to create instant results•Management Systems are an effort to “engineer” human systems

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MS in Action

MS Bodyof Knowledge

“Plan”

“Do”“Feedback”

“Check”

• Annual Budget [and Five Year Plan]• Environmental Management Programs

[Objectives, Targets, Resources]

• AwarenessTraining

• CorrectiveActions

• EmergencyResponse


• Communi-cation

• PurchasingPractices

• Significant Aspects• Legal and Other Req.• Op. Controls:SOP/SWI• Training Programs• Monitoring Programs• Comm. Program• Emergency Response

• Measurement and Monitoring• Aspect & Legal Reviews

• ManagementReview

• Industrymeetings

• Discoursewith

regulators

© Five WindsInternational

• Auditing

• RoutineDocumentation

New Best Management

Practices

Revisedmanagement

priorities

BudgetaryPlanning

ContinualImprovement

NewEmployee Training

NewDevelopments or Activities

Response to Public Inquiries

EMS Document Reviews vs. Actual

Processes

Corporate, Internal &

Regulatory Audits

MS in Action

MS Bodyof Knowledge

“Plan”

“Do”“Feedback”

“Check”

• Annual Budget [and Five Year Plan]• Environmental Management Programs

[Objectives, Targets, Resources]

• AwarenessTraining


• EmergencyResponse


• Communi-cation

• PurchasingPractices

• Significant Aspects• Legal and Other Req.• Op. Controls:SOP/SWI• Training Programs• Monitoring Programs• Comm. Program• Emergency Response

• Measurement and Monitoring• Aspect & Legal Reviews

• ManagementReview

• Industrymeetings

• Discoursewith

regulators

© Five WindsInternational

• Auditing

• RoutineDocumentation

New Best Management

Practices

Revisedmanagement

priorities

BudgetaryPlanning

ContinualImprovement

NewEmployee Training

NewDevelopments or Activities

Response to Public Inquiries

EMS Document Reviews vs. Actual

Processes

Corporate, Internal &

Regulatory Audits

Management systems are comprehensive and as such can in fact become quite complicated, BUT

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Systems &

Processes

At their heart, management systems embody the principles of Plan – Do – Check – Feedback/Improve, to enable continuous improvement

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Systems &

Processes

It is generally accepted that EPR refers to producers taking physical, and or financial, responsibility for the post use phase of their products. In some cases this can be achieved through market mechanisms such as in the case of Interface flooring where used products are used as a source of ‘reclaimed’ material inputs for future products and in the case of Armstrong Building Products, where old ceiling tiles are collected upon delivery of new tiles, brought back to the manufacturing plant and used to create new tiles. In other cases the drivers are legislative, such as with the End of Life Vehicle directive or WEEE initiative in the EU. In both these cases EPR is seen as a means of aligning the incentives of firms with reducing waste at the end of life of products. The clearest example of this is when products are designed for disassembly and in turn facilitate the recycling of the products variety of material content.

Initiatives such as the “Green Dot” program provide consumers with an indication of a firm’s commitment to invest in reducing packaging. In this case firms pay into a fund which invests in packaging recycling infrastructure and education programs – And in fact, the fee each firm pays is based on a calculation of the weight, volume and composition of the packaging it uses, so the incentive is intended to drive designs which cause less waste!

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Classic Responsibility

INPUTSFinal Product

Systems &

Processes

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INPUTSFinal Product

Waste

WasteUse


Benefit

Systems &

Processes

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Systems &

Processes


By using a variety of tools it is possible to develop a

policy that addresses the system wide impacts of

products or processes

Integrated product policy (IPP) is a government policy approach that seeks to minimize environmental degradation by addressing all phases of a product’s life cycle and taking action where it is most effective. The premise of IPP is that a variety of tools — such as economic instruments, Extended Producer Responsibility type programs, substance bans, voluntary agreements, environmental labelling and product design guidelines — can be used to address the system wide (life cycle) impacts of the many different products and processes that exist.

Although elements of IPP are in wide use (e.g., labelling, green procurement, and design for environment programs) there is very little integration with the exception of a few national efforts (e.g., Sweden, Netherlands and Denmark). IPP is not one specific policy tool, but an unifying approach that seeks to optimize government decisions and policies related to reducing the environmental impacts of products.

Supporting Case Study, “Innovation. Legislation. An Industry-Government Cooperation”, in “Case Studies and Resources” section of manual – it illustrates how Nokia is working with the European Commission with respect to the Commission’s Integrated Product Policy approach... An approach intended to “reduce the environment impacts from products through their life-cycle, harnessing, where possible, a market-driven approach, within which competitiveness concerns are integrated”

Source: Five Winds International www.fivewinds.com/uploadedfiles_shared/ IntegratedProductPolicy040127.pdf

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Certification



Systems &

Processes

Certification allows a producer to distinguish their product from their competitors and allows consumers to select towards more sustainable options.

For example the Forestry Stewardship Council (FSC) provides certification for responsible Forestry companies that commit to a number of criteria. According to the Canadian FSC “FSC globally represents a $5 billion market and over 73 million ha of boreal, temperate and tropical forest in 65 countries are certified to FSC'sstandards (Nov. 2005). There are over 4,200 chain of custody certificate holders in 73 countries, and the FSC has offices in 36 countries around the world.”

Source: http://www.fsccanada.org/FSCquickfacts.htm

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Supply Chain Management

Communication

Corporate Social Responsibility (CSR)

Stakeholder Engagement

Public Green Procurement

Design for Environment (DfE)

Programmes

Additional items that could be part of this list include: Environment-oriented product policy (e.g. IPP), Product Stewardship, Supplier evaluation, Sustainable Design, Product communication (including Ecolabeling and Environmental Product Declarations), Public Green Procurement, or Resource productivity.

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The systematic integration of environmental

considerations into product and process

design.

•Internal Drivers

•External Drivers

Programmes

DfE: Internal Drivers: Need to stimulate innovation, Image improvement, need for increased product quality, a sense of responsibility, boost employee motivation, need to reduce costs:

External Drivers: Government Policy (WEEE and RoHS directives), market demand/competitiveness, environmental requirements for design awards, trade/industrial organisations, waste charges

Design•Integration of environmental and socio-economic concerns into design and product development is expected to reduce costs, promote innovation, facilitate supply chain integration, and assure initiatives are aligned with overall business strategy.... Design determines 80% of the total costs and consequently most life cycle impacts, so a strategy that evaluates impacts prior to product development can eliminate expenses of retrofitting a designed-in problem.

Supporting Case Study, “Mercedes” in “Case Studies & Resources” section of ManualSupporting Case Study, “Product Sustainability Assessment Tool” in “Case Studies & Resources” section of Manual

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• Procurement policies, and

procedures, are a common, and

effective, gate by which life cycle

management can develop in a firm

• Working with suppliers and supply

chain issues is rapidly increasing as

an important strategic consideration

Programmes

Supply Chain Management:

Firms are requiring suppliers to divulge information about the goods they supply, such as materials and substances used and systems for tracking and management of environmental impacts.

Two key reasons for a firm to build solid, interactive relationships with suppliers (Hunkeler et al. 2004):•To ensure that an externally designed component system meets all requirements, a firm must effectively interact with their suppliers. •As firms search for the most effective and efficient point to make improvements along different stages of the product life cycle, they will inevitably have to act at points beyond their internal operations. Effective relationships are forecasted to be essential to finding the best points to act and to develop efficient actions.

Supporting Case Study, “Involving the supply chain in Peruvian Mining Activities – Case Study of IMINSUR” in “Case Studies & Resources” section of Manual


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• The best value for money considerations such as,

price, quality, availability, functionality, etc.;

• Considers the entire Life Cycle of products;

• Social aspects: effects on issues such as poverty

eradication, international equity in the distribution of

resources, labour conditions, human rights.

Programmes

The inclusion of sustainable development principles in procurement practices is already a reality in a number of countries such as Canada, the Netherlands, Norway, United States and South Africa. The experiences in these countries indicate that incorporating sustainable production and consumption considerations into public purchasing is not only a viable option, but also helps to develop sustainable markets.Source: http://www.uneptie.org/pc/sustain/design/green-background.htm

Example: The Greater Vancouver Regional District (GVRD) created a Sustainable Purchasing Guide for regional businesses. The guide describes sustainable purchasing and how it can benefit businesses, provides a Seven-Step Sustainable Purchasing Checklist with simple suggestions and tips to help procurement managers and individual employees make their next purchase more sustainable, and outlines how to further integrate sustainable purchasing so it becomes a routine part of business decision-making. Development of the Guide was informed by a review of existing resources on sustainable purchasing and a focus group session with local businesses. GVRD also created five customized sustainable purchasing guides applicable to a range of businesses on the following topics: Cleaning Products and Services, Vehicles, Office Furniture, Office Equipment and Leasing.Source: SUSTAINABLE PURCHASING GUIDE, Greater Vancouver Regional District, Canada www.fivewinds.com/uploadedfiles_shared/SustainablePurchasingGuide.pdf

Example: Envision Financial Credit Union in British Columbia, Canada purchased enough Green Power Certificates to entirely power its new Langley branch, and plans to add to its portfolio each year until it has purchased enough certificates to power all 17 of its branches.Source: www.bchydro.com/business/success/success1033.html

Example: The Secretariat of Environment and Natural Resources (Secretaria de Medio Ambiente y RecursosNaturales – Smarnat) carries ont eh Sustainable Mangement Program the main purpose of which is to decrease the negative environmental impact of our day-to-day activities at the workplace. The principle lines of action are: electrical energy savings, rational water use, responsible usage of paper, and sound waste management. Appropriate paper usage includes so-called “green purchases.”Source: Five Winds International, March 2003, “Green Procurement: Good Environmental Stories for North America” http://www.cec.org/files/PDF/ECONOMY/2003-GreenProcurementReview_en.pdf

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“… Value creation for everyone involved in enterprise is

fundamental to creating common purpose and

addressing the complex issues facing the planet.”

- The Stakeholder Engagement Manual

Programmes

Stakeholder Engagement: is the process of identifying relevant parties, those affected by or with an interest in a project, and engaging with them to both increase one’s awareness of potential issues, communicate impacts and progress, and to identify potential solutions to emerging risks.

Source: The Stakeholder Engagement Manual VOLUME 1: THE GUIDE TO PRACTITIONERS’ PERSPECTIVES ON STAKEHOLDER ENGAGEMENT (UNEP 2005)

•Stakeholder engagement is a valuable tool for risk/opportunities management that can lead to the avoidance or minimisation of costs and the creation and optimisation of value

•Businesses and their stakeholders recognise that today’s complex issues cannot be solved by any single actor. They require a coordinated effort with multiple stakeholders contributing to innovative and sustainable solutions

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• Integration of social and environmental concerns in

their business operations and in their interaction

with their stakeholders

Programmes

CSR: Source: The Stakeholder Engagement Manual VOLUME 1: THE GUIDE TO PRACTITIONERS’ PERSPECTIVES ON STAKEHOLDER ENGAGEMENT (UNEP 2005)

•Other terms used to refer to the same concept include CESR (corporate environmental and social responsibility), corporate citizenship and corporate responsibility.

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Communication




• Any manner of information sharing with

stakeholders, generally through one-way,

non-iterative processes, i.e. Corporate

Sustainability Reporting

Programmes

Communication: The Stakeholder Engagement Manual VOLUME 1: THE GUIDE TO PRACTITIONERS’ PERSPECTIVES ON STAKEHOLDER ENGAGEMENT (UNEP 2005)

See Session III, the third part of this training kit & associated materials

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Analytical

Procedural

Supportive

Tools&

Techniques

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Analytical

• Input – Output Analysis

• Material Intensity

Tools&

Techniques

Analytical Tools support LCM by helping organisations measure life cycle impacts, which in turn guides priorities for improvement.

Input/Output Analysis: Input-output analysis is one of a set of related methods which show how the parts of a system are affected by a change in one part of that system. Input-output analysis specifically shows how industries are linked together through supplying inputs for the output of an economy. (http://www.sjsu.edu/faculty/watkins/inputoutput.htm)

Material Intensity: “Material Intensity Analysis (MAIA)” is an analytical tool to assess material inputs along the whole life cycle of a product, including the total sum of all materials which are not physically included in the economic output under consideration, but which were necessary for production, use, recycling and disposal. (www.ecoeco.org/publica/encyc_entries/Material.pdf )

Other examples of Analytical Tools include:- Life Cycle Assessment (LCA)- Material/Substance Flow Analysis (MFA/SFA)- Environmental Risk Assessment (ERA)- Comprehensive Environmental Assessment (CEA), etc.- Cost-Benefit/ Total Cost Analysis- Quality Function Deployment (QFD)- Risk Analysis

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Analytical

Procedural

• Audits

• Checklists Tools

& Techniques

Procedural Tools support LCM by formalizing plans for programs and strategies.

Audits and Checklists: The goal of all of these tools is to identify opportunities and significant areas of concern during a products’ life cycle. The tools Indicate improvement options for areas where environmental problems are identified. (COMPREHENSIVE TRAINING MODULE For in AUTOMOTIVE PART DESIGN Design-for-Environment & Eco-Efficiency. Five Winds International, 2001.)

Other examples of Procedural Tools include:- Environmental Performance Evaluation (EPE)- Labeling- Environmental Impact Assessment (EIA)- Strategic Environmental Assessment

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Analytical

Procedural

Supportive

• Standards

• Voluntary Agreements

Tools&

Techniques

Supportive Tools support LCM are often external to the organisation and serve as references or incentives for carrying out programs and strategies.

Standards: Standards are often created after a consumer organisation, trade/industry association or a government department, has observed a need for improvement in a specific industry or sector. Standards may include the international ISO 14000 series on Environmental Management Systems (EMS), as well as standards on Sustainable Forest Management, Environmental Site Assessment, Waste Management, and Environmental Technology, etc. (www.csa.ca)

Voluntary Agreements: These agreements generally refer to a contract between a public administration and industry in which the firm agrees to achieve a certain environmental objective. This agreement may result in the industry receiving a subsidy to change its technology though R&D and innovation, for example. (http://glossary.eea.europa.eu)

Other Examples of Supportive Tools include:- Weighting- Uncertainty- Sensitivity/Dominance- Backcasting

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Data: Databases, Data Warehousing, Controlling

Best Practice: Best Practice Benchmarks, References, etc.

Models: Fate, Dose-Response, etc.


Importance of role on baseline data:Although collecting data on current and past performance can be onerous, it can be helpful to LCM because it creates a baseline from which to set targets to improve from.

Importance of Benchmarking:Benchmarking against the practices of other peers and competitors is also helpful to LCM. It is less data intensive, but serves as a good basis for establishing targets and improving.

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Strategies &

Concepts

Systems &

Processes

Programmes


Life Cycle

Management

Tools&

Techniques

GOALSustainableDevelopment

LCM - Pick and choose from among the tools and approaches – which have been introduced – in order to establish systematic management of the life cycle of your products and services that will help you continually improve environmental, economic and social performance... This, is LCM. In the end, it is a flexible integrated, management framework of concepts, techniques and procedures, to promote innovative production and consumption patterns that are more sustainable than the ones we have today

Rather than focusing specifically on environmental, social or economic impacts and/or benefits, Life Cycle Management combines a variety of tools and approaches to look at all of these factors, how they are interconnected and how to best address these issues throughout the product or material’s life cycle. How these factors are weighted and balanced will depend on what is important to the organisation responsible for the management and what is deemed the most important issues throughout the product’s/material’s life cycle.

LCM is a dynamic process - Start with small goals and objectives, appropriate to the resources at hand, then grow more ambitious over time. No need to “jump into” advanced tools like LCA. Instead take a step-by-step approach and begin with focusing on a life-cycle perspective and on concrete possibilities to improve the environmental characteristics of a product.

Source: A UNEP Guide to Life Cycle Management, UNITED NATIONS PUBLICATION, DTI/0889/PA, ISBN: 978-92-807-2772-2

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LCM in MyOrganisation

Best Practice Benchmarks

Communication

Certification

EcoEfficiency

Strategies &

Concepts

Systems &

Processes

Programmes


Tools&

Techniques

Life Cycle

Management

Supportive, ISO standards on product eco-labeling

For Instance... EcoEfficiency guiding concept, Product certification & communication, External support from ISO standards as tools for creating credible product labels, and Best practice benchmarking to set targets for improvement

To implement LCM, each organisation will pick and choose from among the tools and approaches, to create systematic management of the life cycle of your products and services that will help you continually improve environmental, economic and social performance. In the end, LCM is a flexible integrated, management framework of concepts, techniques and procedures, to promote innovative production and consumption patterns that are more sustainable than the ones we have today

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LCM in HerOrganisation

Databases

Design for Environment

Dematerialization

Strategies &

Concepts

Systems &

Processes

Programmes


Tools&

Techniques

Life Cycle

Management

Analytical, LCA

Extended Producer Responsibility

For Instance... Dematerialisation strategy, A system to ensure Extended Producer Responsibility (product take-back) is effective & drives improvement in product design, A design-for-environment program to identify opportunities to enhance product’s env/social performance, LCA tools to measure impacts and set targets, and life cycle inventory databases...


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LCM in HisOrganisation


Cleaner Production

Strategies &

Concepts

Systems &

Processes

Programmes


Tools&

Techniques

Life Cycle

Management

Procedural, Supplier AuditsBenchmark supplier management best practices

Integrated Management Systems (i.e. ISO 14000, EMAS, EFQM)

For Instance... Cleaner Production Strategy, supported by an integrated environmental & social management system, A program with targets for supplier environmental and social performance, tracked via supplier audits and questionnaires, And a regular process for researching best practices in other firms (peers and competitors) against which to compare, and enhance, the organisation’s initiatives


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LCM In Context – An Example

Life Cycle Management can be applied to nearly any product as it is an approach to identifying, understanding and incorporating the potential risks and rewards associated with a product or service. To demonstrate this we will consider the impacts of a simple everyday product – The T-shirt.

Traditional views, say those of the 1980s, saw the T-shirt as a product that provided a comfortable clothing option which created some demand for basic inputs such as cotton and labour. Social impacts were seen as limited to the jobs created by them and the messages which were printed on them...

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In the 1990s with a greater appreciation of the environmental impacts of production, in part as a result of ISO standards on Life Cycle Assessment, products were evaluated through each stage of their life-cycle to ascertain the environmental impacts associated with:

•Extraction or acquisition of raw materials•Manufacturing and processing•Distribution and transportation•Use and reuse•Recycling•Disposal

For each stage, users identify inputs of materials and energy received; outputs of useful product and waste emissions and find optimal points for improvement. This led to a clear understanding of the unintended, adverse impacts and a recognition of the potential to address those. Today, we have seen a number of improvements in the impacts created by a t-shirt’s production.

This thinking has helped companies to think through the multiple and often complex environmental impacts of providing a product or service. However, it has its limitations in that it does not incorporate social and economic impacts in an overt or targeted manner....

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Geoffrey Gaudreault, NPR

Life Cycle Management on the other hand looks at the even bigger picture! Life Cycle Management is an approach to help firms consider everything from the impacts that are created by the location of production on social dynamics through to the economic consequences of in this case where t-shirts are sent to be reused... And then to prioritise where, and how, to focus actions.

For example the maquidollara system which flourished along the US-Mexico border following the signing of the NAFTA in 1994 created substantial demographic changes in both the concentrations and demographics of populations in the major cities of Monterrey and Guadalajara. With the removal of a number of trade restrictions in the textile sector in 2005 a number of clothing manufacturing jobs have since moved to Asian countries with even lower labour and production costs. The location of textile manufacturing plants are seen as particularly important given that they are often labour rather than skill or technologically intensive, which can provide an important step up for a developing country attempting to integrate itself into the world economy. On the other hand there have been a number of controversies around the use of child or unjust labour practices to keep costs low.

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In regards to the disposal of t-shirts they are often sent to less developed countries to be re-sold (often in markets such as this). This provides a low cost alternative to purchasing new clothing in these countries. However, it also undermines the local demand for new products and makes it difficult if not impossible for local manufacturers to leverage local economies of scale to then compete on the international stage. It also shifts the burden of disposal to these countries and may affect demand patterns leading people to replace shirts at a higher rate than normal as a result of their low cost.

These two latter points demonstrate the types of considerations that are captured by taking a more comprehensive Life Cycle MANAGEMENT approach rather than a Life Cycle ASSESSMENT approach.

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What are the impacts of your clothes?

Purpose and Objectives: This exercise is designed to introduce the participants to other members of the group while discussing the topics introduced by the presentation thus far.

Materials: Note pads for each group and a method of documenting a group discussion at the end of the exercise.

Facilitating the Activity:•Ask the group to break off into groups of three to five•Get each group to select one article of clothing from one of its members and look at the tag to see where the article was made.•Ask each group to brainstorm / discuss the social, economic and environmental impacts and benefits of this product throughout its life cycle keeping in mind what has been discussed about Life Cycle Management (15 to 20 minutes)•Example Questions: What tools, concepts, strategies, etc. should be used in considering the impact of the article of clothing throughout its lifecycle? What could be done at each step of the production process to minimize impacts / maximize the benefits of this product?

•Once the groups have had sufficient time to work through the exercise, re-group and ask each to present key points raised during their discussions. Compare and contrast the themes, issues and ideas amongst groups, discuss solutions groups raised, and address questions that arose from the exercise.

Note: If training group is less than 10 people the whole group may re-form for this part of the exercise, however if the group is larger than 10 people it may be more effective to combine 3 sub-groups to discuss findings rather than the entire training group.

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What are the impacts of your clothes?

Time to discuss…

Example Questions: What tools, concepts, strategies, etc. should be used in considering the impact of the article of clothing throughout its lifecycle? What could be done at each step of the production process to minimize impacts / maximize the benefits of this product?

•Once the groups have had sufficient time to work through the exercise, re-group and ask each to present key points raised during their discussions. Compare and contrast the themes, issues and ideas amongst groups, discuss solutions groups raised, and address questions that arose from the exercise.

Note: If training group is less than 10 people the whole group may re-form for this part of the exercise, however if the group is larger than 10 people it may be more effective to combine 3 sub-groups to discuss findings rather than the entire training group.

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Life Cycle Management Training -Outline • Introduction to LCM

– This Session!

• How LCM is used in Practice– Next session!

• Communicating LCM Results– Subsequent Session

• LCM and Stakeholder Expectations– Subsequent Session

Acknowledgements Very many people donated their time and expertise to review these training materials, and provide examples that illustrate Life Cycle Management practices. Special thanks to the following key contributors: Gil Anderi da Silva, Universidade de São Paulo

Sarah Basden, Rio Tinto

Francesc Castells, Universitat Rovira i Virgili

Viviana Carrillo, FEBE EcoLogic

Olivia la O’Castillo, APRSCP

Kishore Chenna

Arturo González, ARGOS Consultants

Norihiro Itsubo, National Institute of Advanced Industrial Science and Technology

Lienne Carla Pires, 3M do Brasil Ltda

Dariush Rafinejad, Stanford University

Elena Rosa Dominguez, Universidad Central de las Villas

Andrea Russell, Rio Tinto Minerals

Reginald B.H. Tan, National University of Singapore

Mohammed Tawfic, SCU Faculty of Agriculture

Alexander Voronov, JSC Legal service

The primary authors – Jennifer Cooper, Josh Hendry, Chris Peterson and James Fava of Five Winds International, Greg Schiefer of SETAC North America, Sonia Valdivia & Guido Sonnemann of UNEP, Allan Astrup Jensen of FORCE Technology, Paolo Frankl of Ecobilancio, – are grateful to all who contributed. These training materials also incorporate ideas and examples from Life Cycle Management: a Business Guide to Sustainability prepared by Allan Astrup Jensen of FORCE Technology, Jeppe Frydendal of Danish Standards and Arne Remmen of Aalborg University (2006, DTI/0889/PA, ISBN: 978-92-807-2772-2).

About us

The UNEP SETAC Life Cycle Initiative

UNEP DTIE, SETAC & the Life Cycle Initiative

UNEP and SETAC have established a global life cycle assessment initiative. Among other things, the Life Cycle Initiative builds upon and provides support to the ongoing work of UNEP on sustainable consumption and production, such as Industry Outreach, Industrial Pollution Management, Sustainable Consumption, Cleaner and Safer Production, Global Reporting Initiative (GRI), Global Compact, UN Consumer Guidelines, Tourism, Advertising, Eco-design and Product Service Systems. The Initiative’s efforts are complemented by SETAC’s international infrastructure and its publishing efforts in support of the LCA community. The Life Cycle Initiative is a response to the call from governments for a life cycle

economy in the Malmö Declaration (2000). It contributes to the 10-year framework of programmes to promote sustainable consumption and production patterns, as requested at the World Summit on Sustainable Development (WSSD) in Johannesburg (2002). Our mission is to develop and disseminate practical tools for evaluating the opportunities, risks, and trade-offs associated with products and services over their entire life cycle to achieve sustainable development. The programmes aim at putting life cycle thinking into practice and at improving the supporting tools through better data and indicators by hosting and facilitating expert groups whose work results in webbased information systems.

1. The Life Cycle Management (LCM) programme creates awareness and improves skills of decision-makers by producing information materials, establishing forums for sharing best practice, and carrying out training programmes in all parts of the world. 2. The Life Cycle Impact Assessment (LCIA) programme increases the quality and global reach of life cycle indicators by promoting the exchange of views among experts whose work results in a set of widely accepted recommendations. 3. The Life Cycle Inventory (LCI) programme improves global access to transparent, highquality life cycle data. Learn more at: http://www.uneptie.org/pc/sustain/lcinitiative.

created by

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UNEP SETAC Life Cycle Initiative

Documents

a Business Guide to Sustainability Training Materials List The Life Cycle Management a Business Guide to Sustainability Training materials are comprised of the following resources