Phases of a Life Cycle

The following figure illustrates three key phases in a life cycle. Cradle is the resource extraction or impacts of elements that serve as inputs to the process. Throughout the business activity or process, there are inputs and outputs, including water, energy, emissions, and waste. Upon completion of the activity, the finished output of the activity is at the gate. The gate is the defining point when a business output activity is completed and it moves beyond the organization to the next step in its life cycle. For example, the gate at a factory that produces tablet PCs is when the manufactured tablet is boxed and ready to be shipped from the factory. Between the gate and up until the grave is the active use phase of the output of the organization, with the grave being the ultimate disposal of the output.

Two terms that are associated with the life cycle are upstreamThe portion of the value chain that plays a role in the supply chain of the producing organization. This can include extraction and transportation of raw materials. and downstreamThe portion of the value chain that plays a role in a later step in the product life cycle past the producing organization itself. This can include the distribution, use, or disposal of goods. processes. Upstream refers to activities occurring before the organization (supply chain) and downstream refers to activities occurring after the organization (product distribution and product use and disposal). Upstream and downstream can also be in reference to a specific point in the life cycle. For example, a company might be interested in the impacts of all activities “upstream” of a specific supplier. While business life cycles frequently are focused on products or tangible goods, it can also apply to services.

Figure 4.3 Key Components of Life Cycle

Life cycle management does not need to consider the entire life cycle, but instead, it can consider discrete phases or parts. This depends on the needs of the organization. Sometimes, the greatest opportunities for reducing environmental or social impacts may exist outside a company’s own operations and in its supply chain, in which case, life cycle management would focus on its supply chain. Or the assembly of a product might be quite complex, and life cycle management is focused on one specific part of the assembly process.

Different types of life cycle management include the following:

• Cradle to grave includes the whole product life cycle from beginning to disposal.
• Cradle to gate focuses on the phase from input extraction through the organization output, but not downstream impact.
• Cradle to cradle specifically focuses on the end-of-life step being recycling. This type of life cycle management is becoming more in focus where considerable attention is paid in designing products so that they can become part of another beneficial use and not be disposed of as waste.

Life Cycle of a Cheeseburger

Figure 4.4 A Burger

An example of a life cycle would be a hamburger from a fast food restaurant. There are economic, social, and environmental impacts associated with the harvesting of the wheat, vegetables, and beef required as inputs to the burger. Other impacts would be associated with the napkins, packaging, condiments, and other supplies. There are also impacts associated with the transportation of these inputs to the restaurant. These impacts would be considered upstream.

As part of the transformation process, inputs—such as water, electricity, and raw ingredients—are required. Waste is generated in the process of producing the burger and pollution emissions are generated—for example, carbon dioxide and other forms of air pollution are generated depending on the type of power plant that generated the electricity.

The gate would be the customer receiving the burger at the checkout counter. All impacts after this point would be considered downstream. The useful life of the burger would be the customer eating the burger and the grave would be the disposal of the packaging for the burger in to a trash or recycle bin.

Energy Use for a CheeseburgerSwiss Federal Institute of Technology, Energy Use in the Food Sector: A Data Survey, http://www.infra.kth.se/fms/pdf/energyuse.pdf.

One sustainable performance indicator (SPI) that could be used in life cycle thinking is to consider the total energy used in the production of a product. A 500-calorie cheeseburger requires about 1,700 calories of energy from oil and electricity to make it from the farm to the finished product at a restaurant. This means that it takes more energy to make a burger than we receive from eating the burger. This negative energy flow and its dependence on fossil fuels has its own implications for the sustainability of eating cheeseburgers, but from the restaurant owner perspective, they would be most interested in the areas where changes to their business practices would have the most impact in reducing energy use.

One option for the restaurant owner is to consider which ingredients of the burger have the greatest energy impact in their life cycle. Almost 80 percent of the energy in a cheeseburger comes from all the steps associated with producing, preparing, and cooking of the hamburger meat. This would be an area for the restaurant owner to focus on. Cheese and bread are also two ingredients that require a significant amount of energy in the cheeseburger life cycle.

Cheeseburger ingredient energy requirements.

Ingredients	Calories	Percentage
Bread	229	13
Hamburger	1338	77
Lettuce	22	1
Onions	14	1
Pickle	11	1
Cheese	129	7
Total	1743	100

Another option for the restaurant owner would be to consider which steps have the greatest energy impact in the life cycle of a cheeseburger. The area with the biggest impact on the energy use of a cheeseburger is agricultural activities, or the activities that occur at the farm. This suggests that the biggest impacts on energy use that a restaurant owner can make actually occur in his supply chain and not at his own facility. This might be a finding that the owner may never have expected or have known about without considering his operations from a life cycle perspective. Only about 10 percent of the energy in the entire cheeseburger life cycle is generated on-site in the cooking of the burger; the other 90 percent comes from various upstream activities.

Cheeseburger life cycle phase energy requirements.

Step	Calories	Percentage
Agriculture	953	55
Processing	251	14
Storage	190	11
Transportation	160	9
Cooking	189	11
Total	1743	100

Carbon Footprint

One of the key drivers for sustainability reporting relates to greenhouse gas emissions reporting. A popular and specific application of life cycle management is to calculate a carbon footprintThe total set of greenhouse gas (GHG) emissions caused by an organization, event, product, or person.. A carbon footprint measures all greenhouse gas (GHG) emissions associated with the life cycle of a product, service, or business operation, including carbon dioxide, methane, and nitrous oxide.

To help organizations, standards have emerged to assist with the complexities of calculating carbon footprints. As carbon footprints involve the complex interaction of organizations, supply chains, retail activities, and consumers, there is often imperfect data and uncertainty in the total emissions impacts of a business activity. These standards help provide organizations with a consistent way of reporting and addressing common problem areas, such as the double counting of emissions and system boundariesThe defining of what is and is not included in a life cycle..

Organizations are calculating their carbon footprints to

• forecast future emissions,
• provide data for allowances management to allow organizations to manage voluntary or mandatory emissions trading programs,
• provide data for carbon offsets and clean energy projects,
• provide sustainability information to their stakeholders, including customers,
• provide carbon registration and reporting (such as for the Carbon Disclosure Project).

Greenhouse Gas Protocolhttp://www.ghgprotocol.org/files/ghgp/public/ghg-protocol-revised.pdf.

The Greenhouse Gas Protocol (GHG Protocol) Corporate Standard is the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. This standard was developed by the World Resources Institute and the World Business Council for Sustainable Development, whose working committee includes the World Wildlife Fund, the United Nations, Ford, BP, PricewaterhouseCoopers, the US EPA, and other organizations. The standard was originally released in 2001, with a revised version released in 2004.

The GHG Protocol Corporate Standard focuses on the accounting and reporting of emissions. Entities using this accounting system include the European Emissions Trading program and California’s voluntary Climate Action Registry Protocol.

Source: Greenhouse Gas Protocol Initiative, http://www.ghgprotocol.org/files/ghgp/Final%20Scope%203%20Graphic.png.

The GHG Protocol Corporate Standard considers three different scopes. Scope one consists of direct emissions from an organization’s operations. An example of scope one would be emissions from fuel consumed to heat a building. Scope two emissions are emissions from energy purchased by the organization that are generated outside of the organization. Typically, this would be the emissions from power plants for the electricity used by an organization. Scope three emissions are emissions from sources outside of the organization but related to an organization’s business activities. Supplier emissions and emissions related to transportation not directly owned by the organization would fall under scope three emissions.

Table 4.6 Scope of Carbon Footprint Emissions

Scope	Description	Examples
Scope one	Direct emissions from an organization’s operations	Emissions from fuels consumed for company vehicles and equipment and emissions from fuel consumed on-site to manufacture products or generate heat
Scope two	Indirect emissions from energy purchased by the organization	Emissions from fuels burned by power plants that provide electricity to company facilities
Scope three	Indirect emissions from sources not owned by the organization	Emissions from fuel used in airplanes for business travel, emissions associated with supply chain activities, and emissions associated with the use and disposal of an organizations products
The standard is available at http://www.ghgprotocol.org/standards.

Water Footprint

Watershed.

Source: Water Footprint, http://www.waterfootprint.org/downloads/WaterFootprintManual2009.pdf

Another common application of life cycle management is to calculate a water footprint. The water footprint is an indicator of water use that looks at both direct and indirect water use. A product or corporate water footprint is the first step toward identifying the processes and activities, which significantly influence an organization’s water use. The water footprint of a product (good or service) is the volume of fresh water used to produce the product, summed over the various steps of the value chain. The water footprint of a business consists of its direct water use for producing, manufacturing, and supporting activities plus its indirect water use—that is, the water used in the business’s supply chain.Institute for Water Education, Water Neutral: Reducing and Offsetting the Impacts of Water Footprints, http://www.waterfootprint.org/Reports/Report28-WaterNeutral.pdf.

As freshwater becomes an increasingly scarce resource—especially in some parts of the world—companies that are able to understand, measure, and manage their water footprints and water scarcity risks can gain competitive advantage over those organizations that do not.

A water footprint has three components:

1. Green water footprint. Use of rainwater stored in the soil as moisture.
2. Blue water footprint. Use of surface and ground water.
3. Grey water footprint. Use of freshwater required to absorb pollutants based on water quality standards.

Components of a water footprint.

Source: Water Footprint Manual (2009).

Applications of a water footprint are as follows:

• Measurement of corporate water use and wastewater discharge both in direct operations and in the supply chain
• Assessment of local and regional water resources
• Water risk assessment to map vulnerable watersheds, ecosystems, and communities

Water Footprint Accounting at Coca-Colahttp://www.thecoca-colacompany.com/presscenter/TCCC_TNC_WaterFootprintAssessments.pdf.

In 2008, Coca-Cola Enterprises undertook a water footprint assessment for the company’s most popular beverage, Coca-Cola. They evaluated the water used in a 0.5-liter PET bottle of Coca-Cola produced at CCE’s Dongen bottling plant in the Netherlands.

Direct and indirect water footprint components.

Source: Coca-Cola Enterprises, Inc.

The accounting process began with the water used in the supply chain to produce ingredients and other components (e.g., bottles, labels, and packing materials). Ingredients include sugar made from sugar beets grown in the Netherlands, carbon dioxide (CO₂), caramel, phosphoric acid, and caffeine. The supply chain water footprint also included overhead, which accounts for water used to produce the energy that powers the plants; building materials; office paper; vehicles; fuel; and other items not directly related to operations.

Source: Water Footprint of a 0.5 liter of Coca-Cola,Coca-Cola Enterprises, Inc.

Coca-Cola found that to produce a 0.5 liter of Coca-Cola, 15 liters of green water, 8 liters of blue water, and 12 liters of grey water were required. A key finding of the assessment was that the water footprint of sugar was a significant component of the overall water footprint of Coca-Cola. More than two-thirds of the total water footprint of a 0.5-liter PET bottle came from blue and green water used in the supply chain to grow sugar beets. The operational water footprint only accounted for 1 percent of the total water footprint.

This study resulted in Coca-Cola taking a closer look at the water use associated with sugar beet production and supported the business value of conducting a water footprint. Coca-Cola Company and Nature Conservancy, Product Water Footprint Assessments: Practical Application in Corporate Water Stewardship, http://www.thecoca-colacompany.com/presscenter/TCCC_TNC_WaterFootprintAssessments.pdf.