Many companies are currently focusing on sustainability reporting and assessing the environmental impact of their products and processes through Life Cycle Assessment (LCA). This trend is driven both by regulatory requirements from the EU and regional governments, as well as by changing consumer behavior and the growing demand from certain customer groups for climate-neutral and environmentally friendly products.

An LCA is the most comprehensive way to evaluate a product's environmental impact throughout its entire life cycle. Depending on the approach, this can include all phases, from production and packaging, through usage, to disposal of the product and the resources involved.

LCA standards and standardized approaches have now been established. We will introduce these to you, allowing you to decide which method is best suited for your products or services. If your challenge is more complex: at the end of the article, we present a case study where a company achieved significant benefits using our custom LCA software.

As of 2024, LCAs are mandatory for some energy- and resource-intensive products and industries. For instance, rechargeable industrial and transaction batteries with internal storage are required to have an LCA. The Non-Financial Reporting Directive (NFRD) already obligates large, publicly traded companies, credit institutions, and insurance companies to produce sustainability reports in addition to regular financial reports. The 2023 Energy Efficiency Act also sets goals for 2030, mandating LCAs for more industries. Starting in 2030, LCAs will become mandatory for the construction industry, among others.

The Corporate Sustainability Reporting Directive (CSRD) will replace the NFRD in 2024, expanding the number of companies required to report non-financial information. Starting in 2024, non-financial information will include sustainability impacts. Companies covered by the CSRD will need to address their carbon footprint and disclose it. An estimated 49,000 companies across the EU will be affected by this regulation.

For many companies and industries, LCAs are still voluntary. However, more and more companies are conducting LCAs, and the risk of falling behind competitors is increasing. The German Federal Environmental Agency emphasizes the benefits of LCAs:

An LCA helps companies improve their environmental performance and operate more sustainably in the long term. Here are some specific reasons why conducting an LCA makes sense.

1. Meeting Legal Requirements
   The EU Non-Financial Reporting Directive (NFRD) and the upcoming Corporate Sustainability Reporting Directive (CSRD) require some companies to disclose their environmental impact. An LCA provides a solid foundation for transparent and data-driven reporting.
2. Identifying Optimization Potential
   LCAs help identify hidden environmental impacts along the entire value chain. This enables companies to optimize processes, save resources, and reduce costs in the long run.
3. Improving Competitiveness
   Customers and business partners increasingly value transparency and sustainability. Companies that certify their products as environmentally friendly through an LCA enhance their market opportunities and strengthen their image with an increasingly eco-conscious audience.
4. Promoting Innovation
   By analyzing environmental impacts, weak points in product design become apparent, leading to innovation. This helps companies develop new, more sustainable products.
5. Long-term Cost Savings
   Conserving resources benefits both the environment and operational costs. Less material consumption and more efficient processes result in long-term savings.
6. Risk Minimization
   Companies that understand and reduce their environmental impact minimize risks associated with future environmental regulations and rising raw material costs.
7. Supporting Certification Efforts
   Environmental certifications, such as ISO 14001 or the EU Ecolabel, require an understanding of environmental impacts. An LCA provides the necessary data and supports the certification process.

In summary, conducting an LCA is a key step towards greater sustainability while also securing long-term economic advantages for companies.

The DIN EN ISO 14040 and 14044 standards form the international framework for conducting LCAs. They ensure that LCAs are performed uniformly and transparently, regardless of the product or process being examined. These standards offer companies a reliable method for assessing environmental impacts and enable comparability between different studies.

1. Defining the Goal and Scope
   The first step is to define the purpose and scope of the study. This involves deciding which product life phases (e.g., raw material extraction, production, transportation, use, disposal) to consider and which environmental impacts to analyze. Depending on the application, it may make sense to focus on different phases of the product’s life.
2. Life Cycle Inventory (LCI)
   In this step, data is collected. All inputs (raw materials, energy, water) and outputs (resource consumption, emissions, waste) throughout the product’s life cycle are recorded. This data forms the basis for the further analysis.
3. Life Cycle Impact Assessment (LCIA)
   The collected data is then translated into environmental impacts. This includes evaluating effects on various environmental categories, such as climate change (CO₂), ozone depletion, acidification, or eutrophication.
4. Interpretation and Evaluation
   Finally, the results are summarized, interpreted, and evaluated against the defined goals. This step results in recommendations for actions to reduce negative environmental impacts.

The DIN EN ISO 14040/14044 standards ensure that all LCA steps are transparent and consistent. By adhering to these standards, the results are scientifically sound and comparable. LCA software can be used to assist with all four steps.

There are various approaches to conducting a Life Cycle Assessment (LCA), depending on which part of a product's or process's life cycle you want to evaluate. The most common methods are Cradle to Grave, Cradle to Cradle, and Gate to Gate. These approaches primarily differ in how comprehensive the analysis is and which life cycle phases are covered.

The Cradle to Grave approach examines the entire life cycle of a product, from "cradle" to "grave." This means every step is analyzed, from raw material extraction to production and usage, all the way through to disposal. This method provides a complete overview of environmental impacts and highlights where the greatest savings potential exists along the product's life cycle.

The Cradle to Cradle approach goes a step further. It also analyzes the entire life cycle but with the goal of returning the product to the cycle after its use phase. The focus here is on designing materials and resources so that they can be reused or recycled after use, without generating waste. The concept is based on a circular economy, where there is no "grave," and products continuously flow into new production processes.

Cradle to Gate is a partial view of the product life cycle. It analyzes the product’s life cycle from raw material extraction ("Cradle") up to the point where it leaves the factory ("Gate"). The usage and disposal phases of the product are not included in this approach. It is often used when companies want to assess only the production process without considering the subsequent phases.

The Gate to Gate approach focuses on a specific section of the life cycle, particularly the processes within a specific production step or company area. This partial analysis can be useful for evaluating the environmental impacts of a single production process without considering the product’s full life cycle. Gate to Gate is often applied when companies want to optimize individual production steps.

The Gate to Grave approach focuses only on the usage and disposal phases of a product. It begins when the product leaves the factory ("Gate") and ends with its disposal ("Grave"). This approach is used to concentrate on the environmental impacts after the product’s manufacturing, such as energy consumption during use or its recyclability at the end of its life.

This method is commonly used in the energy and transport sectors. Well to Wheel considers the entire energy flow of a system, from raw material extraction (e.g., oil extraction) to use (e.g., combustion in a vehicle engine). It is a specialized form of LCA mainly applied to evaluate fuels or energy carriers, focusing on efficiency and environmental impacts throughout the entire energy chain.

Well to Tank is a part of the Well to Wheel approach, focusing on the environmental impacts of fuel supply, from raw material extraction up until the moment the fuel reaches the vehicle tank. In this approach, the upstream energy production is evaluated without considering the actual use in the end product.

Each of these methods serves specific purposes and helps businesses analyze various aspects of the life cycle. Depending on the objectives of the analysis and the processes to be optimized, it may be useful to choose one of the above-mentioned approaches or even combine several methods.

Once you have defined the goals and scope of your LCA, the next step is the Life Cycle Inventory (LCI), where the necessary data is collected. Throughout this process, several challenges arise. One of the biggest is the vast amount of data that must be collected and managed. Additionally, new measurements often emerge that must be accounted for. For new products, data gaps frequently occur because certain materials or process steps are not yet available in common environmental databases.

In such cases, secondary data from comparable products or processes is often used. Usage data, such as product lifespan or disposal, is also often not directly available for new products. In these instances, estimates, scenarios, or mathematical models are frequently employed to fill in the missing information.

Two different LCA methods can be applied for the Life Cycle Inventory: a Screening LCA or a Scientific LCA.

A Screening LCA is a simplified method aimed at quickly providing an initial overview of the environmental impacts of a product or process. This option is particularly suitable when time is limited or when a first assessment of optimization potential is needed. Secondary data or averages are often used instead of extensive data collection, allowing potential environmental "hotspots" to be identified quickly.

However, this comes at the cost of accuracy, as the Screening LCA is primarily intended for rough preliminary assessments, and the results are not as precise as those obtained from detailed analyses.

In contrast, the Scientific LCA provides a comprehensive and precise analysis. Here, as much primary data as possible is gathered to assess the environmental impacts in detail. This method is more complex and time-consuming, as it requires the full collection of all relevant substances and processes. LCA consultants use various mathematical models to calculate missing values. Working with LCA consultants is essential to close the gaps in environmental databases and still obtain the most accurate results possible.

The advantage of this method is significantly higher accuracy, making it indispensable for scientific research and robust findings. It provides reliable results that can serve as the basis for strategic decisions or certified environmental labels.

The Life Cycle Inventory (LCI) is the most complex part of an LCA. To complete it, various LCA software tools are available that assist with data collection and analysis. These tools are connected to environmental databases and can access existing data sets.

However, the more detailed the LCI needs to be and the more complex the products and production chains are, the harder it becomes to manage the LCI using standard LCA software.

• Standard software often cannot meet the highly specific needs of individual companies.
• They are designed for broad, cross-industry use. Frequently, these tools are built for either highly qualified LCA consultants or the end customer, but not both user groups.

For a large drugstore chain, we developed specialized LCA software to comprehensively assess the environmental impacts of their products. The software tracks environmental impacts across the entire value chain and displays them transparently. Automated processes significantly reduce the time and effort required for manual data collection and evaluation, saving both time and costs. Additionally, the software’s user-friendly interface allows for the integration of various stakeholders and environmental databases, further improving the accuracy and efficiency of the LCA.