DSM, Het Overloon 1, 6411 TE Heerlen, Netherlands N. Otte Henkel AG & Co. KGaA, Henkelstrasse 67, 40589 Düsseldorf, Germany G. Rebitzer Amcor, Thurgauerstrasse 34, 8050 Zurich, Switzerland U. W. Schenker Nestlé Research, Vers-chez-les-blanc, 26, 1000 Lausanne, Switzerland D. Schowanek Procter & Gamble, Brussels Innovation Centre, Temselaan 100, B-1853 Strombeek-Bever, Belgium G. Vollmer Merck KGaA, Frankfurter Straße 250, 64293 Darmstadt, Germany A. Wathelet Solvay, Research & Innovation, B-1120 Brussels, Belgium

Fig. 1 Development and main focusses of the International Sustainability Practitioners Network (ISPN)

exchange information and successful practices around common aspects in sustainability assessment methodologies, lifecycle thinking and management consulting. In addition, the ISPN aims at fostering Life Cycle Assessment (LCA) as a tool to support sustainable innovation and measurement. The development and common understanding of the ISPN and its function is illustrated in Fig. 1. Participating in the ISPN serves as source of inspiration for its members and helps them to implement and disseminate Life Cycle Thinking and Best Practices regarding sustainability assessment within their organization.

Since its start the International Sustainability Practitioner Network (ISPN) gained more and more members and currently consists of 15 companies from various sectors and countries as shown in Fig. 2.

## 2 LCA and Other Approaches for the Assessment of Sustainability

Although each member company uses slightly different approaches to assess its sustainability performance, the basic idea of applying LCA in decision making and as communication tool is very similar across companies and industrial sectors. Simplified LCA approaches as well as Hotspot Analysis are of particular interest within the early research and development phase or during the Eco-design of a product, service or process. In addition, LCA is used in marketing and

Fig. 2 ISPN members 2017

communication to inform customers, consumers, regulatory authorities or other stakeholders about the sustainability performance of a product, service or process. However, the areas of LCA applications are not strictly separated, i.e. a simplified LCA or a Hot-Spot Analysis needed in a decision-making process can be extended to a full LCA study for marketing and communication or a full LCA study performed for marketing can support decision making processes.

One example of such a process is shown in Fig. 3 where a sustainability evaluation is included in the Covestro stage-gate process for decision making and documentation in research and development projects. The methodology for sustainability assessment shown in Fig. 3 presents the increasing depth in sustainability evaluation in the advancing process design.

During the process design in the initial step a "Hotspot Identification" is carried out. It helps R&D departments to steer their activities in the direction of more sustainable product solutions in early development phases and without too much needs for information.

In the next phase the obtained Hotspots can lead to a more detailed analysis. Based on the results, the conduction of a Screening LCA or an update of the

Fig. 3 Covestro stage-gate process for a systematic sustainability assessment during process design

"Hotspot Analysis" is recommended for the next stage. A reason for such a recommendation can be unclear or probably negative results during the Hotspot Analysis to enhance the decision making. This might lead to the cancellation of such projects if they are not sustainable. On the other hand, a hotspot analysis may also reveal a potential unique selling point, which must be confirmed by a full LCA prior to market launch.

Successfully applied to the innovation process, LCA approaches help to steer towards given sustainability targets and can form a valuable basis for the companies' sustainability strategy. Such methods enable an overall assessment and the determination of the most significant processes and products for a successful development. Examples for a successful implementation of such methodologies in industry are the Sustainable Solution Steering® by BASF [1, 2], the Sustainable Portfolio Management by Solvay [3], the Company Footprint by P&G and I2P3® (Idea-to-People-Planet-Profit) by Evonik [4]. BASF assessed more than 65,000 product solutions to identify the most sustainable solutions and to promote those "Accelerators" in the business. Evonik's innovation unit, Creavis, manages its portfolio using the Idea-to-People-Planet-Profit (I2P3 ) process. Each strategic research project is assessed on the basis of environmental influences (planet) and societal aspects (people) as well as economic criteria (profit).

Solvay Sustainable Portfolio Management (SPM) tool enables a global and systematic assessment of more than 80% of the business portfolio revenue every year, a fact based and robust compass to steer Solvay's portfolio toward better business because it is more sustainable with 9% growth, year-to-year, for Sustainable Solutions. Similar to the Solvay approach, P&G's Company Footprint identifies 'Hotspots' for the whole company by multiplying the life cycle impacts (such as energy demand, CO2-emissions, water use or eutrophication) for a given product category and a life cycle stage with the sales. The results are then used to decide about the biggest opportunities for environmental improvement, and about the key actors along the value chain who have the biggest impact on the improvement, e.g. suppliers, production plants, transportation or consumers. This knowledge can be used in general to steer the product portfolio of the entire company. Since P&G found out that the biggest footprint is the energy used when consumers heat the water for their laundry, they expanded and improved their cold washing products. In the logic of this portfolio steering approach, a small change on a mega brand or category can be overall more effective for the environment than major design changes in small brands.

#### 3 Challenges of Data Exchange in the Value Chain

To improve the quality of sustainability assessments and to close data gaps along the value chain in situations where no industry averages from associations are available an inter-company data exchange is needed. Thus, member companies already started to collaborate on common LCA projects which involve exchange of data and information along the value chain. Several formats for data exchange that allow for the protection of Intellectual Property (IP) already exist, but still the data exchange across different software tools and the harmonization of methodologies remain issues which will be further outlined here.

Each company in a value chain generally owns accurate information about processes bound to its own operations, but faces a lack of information when it comes to manufacturing steps or application of products outside of its operations. Commercial or public LCA databases, providing generic information are one valuable source to overcome data gaps for the coverage of all relevant life cycle stages. Depending on the requirements for data quality this source of generic information may not be sufficient as the sheer number of existing raw materials, intermediates, processes and applications in reality makes it unlikely that good quality data will be available for most specific product systems. This challenge grows when proceeding in the value chain.

Thus, an exchange of data among partners in a value chain seems a viable solution in terms of data coverage and quality. Two specific problem areas were identified for a successful data exchange, both discussed in the following sections.

One issue relates to data format to be used for exchanges, another one to the exchange process and harmonization in the data exchange itself.

## 3.1 Data Formats

The application of LCA depends on the availability of data to build reliable inventories. Data- demand and dependency are determined by the position of a company in the value chain as discussed above. For cradle-to-gate assessments, early value chain users are less dependent on external data and can invest their time into the analysis of internal processes, while late value chain users have to complement their own data with pre-catalogued values from databases or from their suppliers to cover the purchased raw material and utility inputs. To avoid using generalized datasets (proxies) from commercial databases, exchange of LCA information between companies is considered as an added value for the improvement of data quality in LCA. Nevertheless, this exchange is not a standard process by now.

As an important obstacle in exchanging LCA data the need for protection of IP has been identified. LCA data has sometimes been suspected to enable retro-analysis of the underlying processes, thus violating the requirements of IP protection.

Depending on how data is to be exchanged this problem might be alleviated. LCA data could be exchanged in three different formats:

Unit process data make the production processes of an enterprise completely transparent. To that end there will be confidentiality issues for companies who employ (A) sensitive processes or (B) wish to keep their supply chain confidential. Traceability will play a role in the future for some sectors such as the energy sector. Unit process data are one way of transferring such information, while keeping flexibility.

Aggregated process data provides a reasonable level of confidentiality, as it converts the mass and energy balance for the production of the evaluated product to elementary flows which don't allow any back tracking to company specific data. The aggregated data may be used by other LCA practitioners to calculate any given impact indicator in the scope of the dataset. To that end aggregated process data provide flexibility in the assessment and protect IPs. As additional information, this aggregated dataset could be completed (or not) with metadata describing some parts of the process or modelling hypothesis like allocation rules, etc.

Impact indicator results contain the least detailed information about any process when exchanged between value chain partners. If a "fingerprint" set of indicators was defined, this set of indicators would enable calculation of all relevant environmental impacts of derived products, but mainly outside of commercial LCA tools. Since the indicators are not so transparent, a detailed guideline in the calculation of such indicators is required. The advantage of impact indicators is the application of unambiguous assessment once rules for scope have been defined. Their easy tabulation enables rapid transfer and data warehousing. The ideal format for data exchange does not exist and depends on the demands of the involved parties. If a standardized set of indicators is used such as those recommended by the Product Environmental Footprint (PEF), then exchanging these indicator results may provide sufficient information. Such exchange would not allow further investigation of environmental flows or calculation of customized impact indicators. Also, current software tools typically run on aggregated process data for unit process data. Implementing a combination of impact indicators in conjunction with process data in LCA software is not easy to handle and would not work to be a currently viable solution.

Difficulties occurring during the exchange process are often caused by different LCA software used and are therefore somehow out of the direct influence of such companies.

## 3.2 Data Exchange

Companies that want to exchange LCI or LCA data often do not run the same LCA software or data storage platform. Several examples were experienced where such an exchange failed or led to imprecise results due to inconsistency in environmental flow definitions or different implementation of LCIA methods.

Examples of issues that lead to such problems:

Matching of flows between different software systems is not precise, since one software type calculates with five different characterization factors (CF's) for eight (sub-) compartments, whereas the alternative software only considers three different CF's for three compartments. Thus, for example, the eco-toxicity impact of the same substance can vary significantly depending on the type of software/database used (Table 1). Unfortunately, this problem also appears for publicly available industry averages which are evaluated with different software tools.

From a comprehensive value chain perspective, it is desirable to have a common database format facilitating the exchange of data between different LCA systems. In the meantime, a continuous effort by an independent arbitrator could help perpetuate consistency of the data format and increased coverage of flows (typically, "mapping file") which should be implemented in all common LCA software tools to enable harmonized data exchange.

#### 4 Methodological Issues

Methodological issues of Life Cycle Assessment are one of the main reasons why LCA is not more widely applied for sustainability assessments in industry and policy today. On the one hand, methodological issues sometimes make it difficult to identify and properly apply the most appropriate way of assessing a given product

Table 1 Example eco-toxicity of chromium VI: differences for the same flow in different databases (CF = characterization factor)

or system. On the other hand, different methodological choices between actors (or stakeholders) in a supply chain or product system make it difficult to find consensus and agree on common metrics, which decreases the confidence level of the end user and decision maker in LCA as a tool.

Many review studies have compiled the most important methodological issues that remain open in LCA today. That was done e.g. in the program Sustainable Process Industry through Resource and Energy Efficiency "SPIRE" with the specific projects Sustainability assessment methods and tools project "SAMT" and Metrics for Sustainability Assessment in European Process Industries "MEASURE" in 2016, with ISPN members contribution [5]. For every industry sector, the key methodological issues are different: for example, while allocation between co-products is a key issue in the food industry and the waste sector, methods to assess (eco-) toxicity are of paramount importance for the chemicals or pharmaceuticals sector. The methodological issues of high relevance for industry can be positioned in the four phases of LCA (as defined by the ISO standards 14040 and 14044—Table 2).

The development of novel or improved guidance or standards on methodological issues needs a proper governance model; including stakeholder outreach and consultation (cf. the process applied to the development of new ISO standards). This cannot be done in the context of an informal network such as the ISPN, and also needs a proper process by which stakeholders outside the industry can be reached. Therefore, ISPN has not attempted to provide guidance or develop standards on methodological issues of LCA. Instead, a selection of key external initiatives was identified which published suggestions for it (see Fig. 4), and have decided to follow and engage in those processes. Standards and guidance processes are often industry-specific, the ISPN offers an opportunity for a given industry sector to better understand the working of other industry sectors.

While ISPN as an organization cannot take credit for the methodological advancements that have been achieved over the past years in LCA, most of the members have been involved in the development and consultation processes of influential guidance documents and standards. In ISPN, those experts have presented the most relevant methodological advancements, and ISPN has discussed the implications of these for the respective companies and industry sectors that we

Table 2 Examples of key environmental issues in LCA, currently being worked by industry, classified as per the ISO 14040 & 14044 standards

Fig. 4 Schematic overview of relevant organizations working on standardization and guidance for different parts of a LCA

represent. In that sense, the ISPN plays an important role for the methodological advancement of LCA and for the dissemination of methodological developments among experienced industry practitioners.

#### 5 Vision and Mission

The members of the ISPN have concluded that there are commonalities and differences in the interests and approaches of the participants, due to the diversity of the group and the respective industry sectors. The ISPN conceptualized why already the understanding and thus concepts and practical approaches can be different. However, we consider a common understanding to be the key to the success of a sustainability life cycle thinking in large corporations. We believe the ISPN platform serves as a good starting point to foster such a common understanding of methodologies [7, 8].

For exchanging experiences, updating or adopting methods, and generating data the ISPN was created several years ago. The ISPN is an exchange forum for LCA methodology in the context of industry and comprises sustainability experts from a range of different industry sectors. To share experiences from the different activities, the presentation will give examples of good practices of this cross-sectoral initiative and discuss opportunities for improving sustainability assessments within of companies.

To give this basic approach a more precise frame and guidance for interested parties on how this network works together and how others can benefit from the ISPN, we started to develop a "Vision and Mission" section linked with a frame that show which aspects will be covered by the work of ISPN.

It can be summarized in the following overview:

#### Vision

#### Mission

To cluster different work packages and to find out, which opportunities can be achieved by the ISPN, different topics and activities were identified. The cross-sectoral approach of ISPN allows the link of different experiences in the field of the assessment of sustainability as a starting point. The single companies work together and act as one organization defining needs and opportunities for a successful sustainability measurement. It gives guidance and defines good practices for the integration of the findings into the business and into business decision-making [9, 10].

Four activities were identified as a basis for suggesting changes and improvements of tools, methods and data systems. These four activities are using the extended expertise of the members, the exchange of experiences over the last decade, modes of collaboration in defining needs, requirements, pathways for improvement etc. The recognition by other practitioners, academia or NGOs for the ISPN will support the transportation and communication of important needs of different fields for further improvements. It shows that leading companies in the field of sustainability assessment can initiate and foster the development of new, modern, easy to use, applicable tools, methods and data sets [11, 12].

With this approach, the ISPN can support funded projects, standard generation, definition of basic requirements for sustainability assessments and of common practices. These findings will be publicly available and can be used for further improvement. Based on these findings, the ISPN can improve its way of collaboration, the definition of further topics and areas of improvements. In collaboration with other groups, new developments can be assessed, checked and be proven for applicability in different sectors (Fig. 5).

Fig. 5 Overview of processes and activities of ISPN

#### References

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## Sustainable Design of Complex Systems, Products and Services with User Integration into Design

Nicolas Perry and Julien Garcia

Abstract This is the synthesis of the presentation of the session entitled "Sustainable design of complex systems, products and services with user integration into design" of the LCM-2017 conference. This session was interested in sustainable design which is of high interest for a large range of stakeholders. Indeed, customer's expectations, regulations and market pressure are some drivers that moves design teams towards the consideration of sustainable dimensions over the life cycle of an industrial system. Integration of users into the product design development becomes more and more crucial, for example, through service oriented offers, involving the users as effective actors of the product design. One of the weak point associated being that users may have bad or unexpected behaviour during use phase, inducing then increased impacts and placing the use phase as the main contributor. New approaches, methods, and tools used by or for industrial stakeholders in order to face such challenges were presented and discussed. The session started with product oriented presentations and proposals, and slightly moved to the concepts of service oriented design and integration of human into the loop.

### 1 Product and Process

Martin Kirchner (Evonik Technology & Infrastructure), presented the PODeST (Process Optimization and Development through Sustainability) project in which sustainability becomes a parameter for process development and optimisation. Early identification of the potential opportunities and risks associated with new products and processes becomes of high importance, and Evonik's Life Cycle Management

N. Perry (&)

Arts et Métiers, I2M, CNRS, Bordeaux, France e-mail<EMAIL_ADDRESS>
J. Garcia Groupe PSA, Vélizy-Villacoublay, France

© The Author(s) 2018 E. Benetto et al. (eds.), Designing Sustainable Technologies, Products and Policies, https://doi.org/10.1007/978-3-319-66981-6\_40 365

group implements the standardized process called "PODeST". It aims at comprehensively optimising processes from a technical, economic as well as environmental perspective while exploiting the high flexibility regarding process design in early process development phases concerning all aspects of process relevance. PODeST is not striving for the highest level of accuracy but rather robustness of results (e.g. right order of magnitude). PODeST is benefiting from synergy effects by making use of mass and energy balance data already acquired during the development and planning phase.

This presentation highlighted the link between environmental evaluation of processes and product design cycle. It also opened the discussion on the Environmental Technology Verification. One key message to succeed in the integration of sustainability in design relied on the usability of tools and methods by engineers and designers, with support of LCA expert if needed.

The presentation of Julien Garcia (Groupe PSA), described the implementation of environmental requirements in the innovation process of complex systems applied to the automotive. The automotive design is restricted by environmental regulations, mainly focusing on reducing emissions of CO2 and other pollutants emitted by vehicle exhaust pipes. The eco-design strategy of Groupe PSA moves toward a more holistic point of view and experiences life cycle methodology to make environmentally virtuous design choices since seven years. A methodology and a tool have been developed for integrating the Evaluation of the Environmental Performance of Innovative Complex Sub-systems (EEPICS). It allows to integrate the requirements of Groupe PSA's environment department into the innovation procedures, to extend the environment dimension to the notions "life cycle" and "multi-criteria", and to generate an organizational learning for both innovation teams and environment/eco-design team. The eco-design framework is the central and structuring framework of environmental requirements integration, allowing the coordination of the development of a set of tools. Indeed, specific evaluation tools are customised and used, including one for evaluating the influence of innovation on vehicle recyclability, and another one for the evaluation of innovation environmental impacts. The outcomes of such analyses support the global learning. An application on the "Stop & Start" technology was carried on, leading to three significant key results involving the innovation teams from the beginning of the eco-design based innovation process facilitates the learning phases, its validation through the quality procedure is essential for the approach to be sustainable; using generic models of vehicle is sufficient to evaluate quantitatively innovative automotive sub-systems.

The discussion, based on questions from the audience focused on the involvement of suppliers and subcontractors in the approach, since innovation process, focusing at products and suppliers, manufacturing systems or end of life solutions highlighted the need of a tool like eco-design at the early stage product development.

#### 2 From Eco-design to Circular Economy

Emma Rex, (RISE), addressed in her presentation the Sustainability of design for circularity, with integration of user and its behaviour into the design choices that can be made to shift from linear to circular business models in the Swedish furniture industry. Circular business models, promoting resource productivity and pollution prevention, are currently supported and encouraged by various policy agendas, resulting in an increased interest in design for modularity, adaptability and remanufacturing. The expected environmental benefits such circular business models offer are usually perceived as obvious, and seldom evaluated. Nevertheless, different design choices will have different impacts on the amount of material used, expected lifetime of products and possibilities for recycling. User behaviour patterns are neither commonly examined, even though user acceptance has been identified as a key enabler for the transition to a circular economy. The study combines interviews with potential users of pre-owned furniture, and customer experiences from furniture producing companies. Five pieces of furniture from three different producing companies are analysed. For each type of application, the environmental impacts of linear versus circular business models are compared through the use of LCA, and different user behaviour patterns are included as scenario analyses. User interviews pointed to the importance of functionality over novelty, and indicated a potential to increase the service content in existing business offers. LCA results further show that the environmental impacts of a shift from linear to circular business models both can decrease and increase, from −30 to +50%, depending on scenario settings, type of impact categories assessed, and assumptions made. Notably, results depend on expected user behaviour following decisions taken in business development and product design. The study demonstrated the importance of including user perspectives when designing for circularity, as well as when evaluating the effects of circular design offers. Also, whilst the calculations in this study revealed the potential direct environmental effects of a circular economy shift in existing industry, they also open up for discussions on indirect and broader sustainability effects following circular design attempts.

The question of multiple cycles arisen in the discussion, as well as how to build scenarios representative of the users' behaviour, and include them to the environmental impacts. Emma Rex explained that user behaviours have been decomposed into several typologies, allowing a scenario-based analysis. The discussion also touched on the service oriented solutions.

Venkata Krishna Kumar Upadhyayula (Umeå University) presented a concept where Life Cycle Assessment is used as a Decision Making Tool for Designing Products and Engineering Systems contributing to Circular Economy. Implementation of circular economy largely depends on three factors: (a) development of industrial infrastructure capable of enhancing the resource productivities on one hand and minimizing environmental externalities on the other, (b) understand the market dynamics & consumer behaviour to promote sustainable consumption practices, (c) building sustainable cities and communities with smaller ecological footprints. However, in reality transformation leading from liner to circular economy faces multiple challenges. For example, (a) limitations of existing engineering practices which results in leakage of hazardous pollutants into biosphere, (b) introduction of new materials into economy with uncertain life cycle implications, or (c) effect of unsustainable consumer behaviours etc., are some factors that hamper implementation of circular economy. To overcome these, the future products and engineering systems must be designed for "circular economy" so to ensure circulation of technical nutrients within technosphere, return of biological nutrients safely to biosphere and decoupling economic growth from social and environmental externalities can be easily facilitated. The presentation detailed a structured framework for using Life Cycle Assessment as a tool to design new products or engineering systems for circular economy and supporting case studies were also shown.

The presenter opened on social issues to be addressed to ensure sustainability and was questioned about the reduction of the environmental footprint without reducing social and economic values.

#### 3 User Integration

Birgit Brunklaus (RISE) discussed on LCA learnings from service design, therefore focusing on the influence of user behaviour in the design of sustainable systems, with the case-study of the leisure sector. The development of services in replacement of the traditional product selling model seems to be one solution for reducing resources consumption and emissions of pollutants. Similarly to products, services are designed to fulfil customers' needs, despite they are seldom involved in the design of products and they usually are in the design process of services.

A literature review of service design and LCA studies of leisure services like the opera and theatre, tourism related services, and movies, have been performed from the supplier and consumer perspectives respectively, in order to (a) identify similarities and differences between service design and Life cycle based approaches, and (b) to derive some propositions to further develop the Life Cycle based approaches (LCA, S-LCA, LCC) in order to integrate user into the design process.

The discussion referred to the integration of users into the LCA methodology, especially on the translation of users' behaviours characteristics into quantified items.

Finally, Gregor Waltersdorfer (University of Luxembourg) discussed in his presentation a meaning-based perspective of potential users on the implications of products and services for sustainability. He proposed a design method called "MeaningMap" and a sequence for meaning-based reasoning in design, which can support designers in considering meanings by potential users. He illustrated the integration of the user perspective into design of service systems, involving sharing bikes or washing machines. Integrating the perspective of potential users into design allow to take into account their limits in the perception of the economic, social and environmental impacts induced by products and services, due to their different personal values. More precisely, capturing users' meanings enables designers to analyse different aspects: (a) what is perceived by individual potential users, (b) how do potential users conceptualize their evaluations, and(c) which evaluations show low or high levels of agreement. The presenter argued that this knowledge can inform designers on which aspects of products and services they need to prioritise in order to improve its perceived implications for sustainability, and which aspects they need to further clarify in order to improve their communicative potential. Considering the meaning-based perspective of potential users can complement more traditional product-centred approaches such as LCA in early phases of the design process.

This proposal questions the robustness of the users feedback quantification, and how to turn these information into designers choices and contribute to product evolution.

#### 4 Conclusion

The topics addressed in this session were also completed with nearly twenty posters, addressing and illustrating the will to integrate environmental considerations early in the product design phase fitting the circular economy paradigm.

Considering user centred design within a life cycle thinking approach in order to ensure the development of sustainable systems open numerous questions and requires new conceptual and methodological developments, consensus based and scientifically consistent in order to assess quantitatively users' behaviours. User oriented sustainable design intuitively leads to develop service-based models instead of product-based solutions. Then sustainable design methods and tools should be integrated with the Product Service Systems design method, which remains challenging.

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## Implementation of Environmental Considerations in the Innovation Process of Complex Systems: Groupe PSA Case Study

#### Julien Garcia, Pierre Tonnelier and Sophie Richet

Abstract Car manufacturer's innovation teams are mainly focusing on decreasing automotive consumption and may lead to risks of transfers of environmental impacts. So, engineers in innovation should be able to evaluate their innovations in a life cycle and multi-criteria perspective. In this paper, Groupe PSA's approach for integrating the environmental dimension during the innovation phase is presented. An eco-design framework of reference has been developed in a collaborative manner by the environment team together with innovation leaders. It tackles both the issues of how to deploy environmental requirements in the innovation process, and how to generate an organizational learning. This methodology is explained through the example of the Stop and Start technology. The validation in the quality procedure is essential to make the approach sustainable.

#### 1 Introduction

Climate change is the result of an increase in man-made greenhouse gas (GHG) emissions. The main GHG is carbon dioxide (CO2). CO2 is mainly emitted from fossil combustion. The transport sector is highly dependent on fossil fuels: 93% of the 2013 world transport sector energy supply came from oil products [1]. European Union has tightened European rules on CO2's emission of vehicles. By 2020, car manufacturer's fleet will have to emit less than 95 g CO2/km [2].

To reach this goal, car manufacturer's innovation teams are mainly focusing on decreasing automotive consumption. Four strategies can be highlighted: light-weighting, hybridization or electrification of the powertrain, improvements in aerodynamics and rolling resistance, and improvements in energy consumption of the vehicle (air conditioning, radio…). While innovations may contribute to reduce fuel consumption, they also may change the material composition of vehicles and

Groupe PSA, Vélizy-Villacoublay, France e-mail<EMAIL_ADDRESS>
J. Garcia (&) P. Tonnelier S. Richet

© The Author(s) 2018

E. Benetto et al. (eds.), Designing Sustainable Technologies,

lead to risks of transfers of environmental impacts: as the contribution of the use stage to the impacts is decreasing, the contribution from the manufacturing stage could relatively increase.

In order to prevent transfer of pollution, engineers in innovation should be able to evaluate their innovations in a life cycle and multi-criteria perspective. Environmental evaluation is generally carried out at the end of the product development process and results cannot be used during the design process itself. On the contrary, during innovation, less data on the future vehicle are available, but there are more time and more levers for making changes.

In order to integrate an eco-design approach within a company, tools must be suited to the company, its products, and the corresponding design phase and innovation process. Indeed, both the technical and organizational aspects need to be taken into account simultaneously [3] to ensure (1) the progressive expansion of the environmental field from a technical point of view, and (2) from an organizational point of view, a step by step integration of the environment in all organizational departments to ensure that users are more fully acquainted with the tools and to formalize environmental recommendations that are more accessible.

This article presents Groupe PSA's approach for integrating eco-design method in the innovation process, known as E3PICS (Methodology of an Evolutive integration of the Evaluation of the Environmental Performances of Innovative Complex Sub-systems). E3PICS is based on an eco-design framework of reference that incudes, in particular, a checklist for innovation leaders, and quantitative tools for simulating the effects of the innovations on the future vehicles.

## 2 Eco-designing in the Automotive Sector's Innovation Process

Groupe PSA's desire was to initiate an eco-design method during the innovation phase. For car manufacturers, most of the time, innovations have little impact on the vehicle architecture because of their incremental nature and the fact that such innovations often concern subsystems or components [4]. A set of innovations is generally proposed by the innovation team to the team in charge of the routine design of the vehicle, which Beaume represents as an "innovative feature" flow from the innovation department to the vehicle program department, during the "contextualization phase" [5]. Both structures are completely separated (see Fig. 1).

This study focuses on evaluating innovations during the "contextualization phase", i.e. between Technology Readiness Level (TRL) 5 and TRL 6. This phase aims to validate the connection of an innovation to the vehicle program and contains three milestones: TRL 5: innovation project's commitment; TRL 6: innovation project's connection to a vehicle program; and TRL 51/2: innovation project's mid-term review.

Fig. 1 Groupe PSA's innovation process

The automotive industry has developed several eco-design methods, e.g. Ford's Product Sustainability Index [6], Volvo's Environmental Priority Strategies [7] and Environmental Effect Analysis [8] methods, or Toyota's Eco-Vehicle Assessment System [9]. With the study on the life cycle design of an air intake collector, Keoleian and Kar [10] conclude that evaluating the results of integrating the innovative sub system should be carried out at the future complex system level. But in order to do this, environmental profiles of that complex system are needed. As there is very few data available during the innovation phase, complex systems must be represented by models. Neither the majority of tools developed by car manufacturers, nor the majority of tools available for eco-designing subsystems in the innovation phase [11–13] make it possible to use models to simplify the evaluation of innovative subsystems.

## 3 Groupe PSA's Method for Integrating the Environmental Dimension into the Innovation Phase

The role of Groupe PSA's "Environment" service within the "Materials" department is related to the material composition of the vehicles, and is to control a set of environmental requirements, mostly from regulations. The "Environment" service does not deal with reducing CO2 and pollutants emissions in use. It also hosts an "Eco-design" team dedicated to eco-design process and Life Cycle Assessment (LCA). The requirements driven by this service are already well integrated in the vehicle development programs, but not formalized in the innovation phase. The objective of the "Environment" service is to integrate these requirements during the innovation phase.

E3PICS methodology is based on the definition of an evolving eco-design framework of reference and its use during the innovation phase. It contains all the environmental requirements driven by the car manufacturer's "Environment" service. This eco-design framework of reference corresponds to writing the environmental requirements into the product specifications, one of the essential criteria for integrating environment in the design process [14].

E3PICS methodology is shaped by technical and organizational constraints consisting of four steps. The first one concerns the iterative design of the evolving eco-design framework of reference with the "Eco-design" team and with innovation leaders thus generating crossed learning. The second step consists in the "Eco-design" team's support for all innovation leaders so that they systematically use the eco-design framework of reference. The third step is the development of an analytical tool to assess the impact of innovations on vehicles' end-of-life recyclability rate (OSIRIS) [15]; models of vehicles must be created to solve the problem of insufficient data on the complete system during the design phase and to anticipate impacts on the future vehicle. Finally, the fourth step deals with developing a second analytical tool to evaluate the impact of innovations on vehicles' environmental life cycle performance (TEEPI). This tool also requires a method for developing environmental models of vehicles [16].

#### 4 The Eco-design Framework of Reference

The eco-design framework of reference constitutes a methodological framework which contains the nine environmental requirements (see Table 1) that the "Eco-design" team wishes to integrate in the innovation process. It is based on a checklist called "Recycling & Environment checklist" (R&E checklist) containing requirements with specific deliverables and tools (prescriptive or analytical); a standard mail for the suppliers is also available to retrieve the missing data. Environmental requirements can be divided into two categories:

Table 1 Environmental requirements of Groupe PSA's eco-design framework of reference in the innovation process

The R&E checklist aims to evaluate both intrinsic and extrinsic requirements in a "Go/No go" way. It has been co-developed by the eco-design leader and a sample of 11 voluntary innovation leaders. Moreover, for an evolutionary integration of the environmental requirements, the R&E checklist has been integrated in three steps: first, only intrinsic requirements; second, addition of the recyclability effect evaluation; and third, addition of the environmental impact evaluation. The co-development and the evolutionary integration have led to two major results:

## 5 Focus on the Environmental Impact Evaluation Requirement

Both extrinsic requirements need an analytic evaluation tool to propagate the effects of the innovation to the complete future vehicle. Here is presented TEEPI, a tool for evaluating the environmental performance of innovations.

## 5.1 TEEPI Operation

TEEPI has been developed to evaluate the impact of innovations on vehicles' environmental life cycle performance. This tool also requires a method for developing environmental models of vehicles. Indeed, in a previous paper [16] we developed a method to create Evolving Models for the Environmental Evaluation of Complex Systems (EMEECS). EMEECS are supported by Hierarchical Agglomerative Clustering (HAC) [17] for processing vehicles' available LCA results followed by an algorithm for creating optimal clusters relative to a fixed uncertainty threshold.

For building EMEECS, available results of previous LCA are collected over a fixed number of life cycle stages and of environmental indicators. The life cycle stages are:

Four environmental indicators are included in the study. These indicators are generally used by car manufacturers to communicate, or by scientific papers in the automotive sector. They are calculated using the CML 2001 method:

LCAs are processed with a HAC in order to classify the vehicles' environmental indicators values in dendrograms per life cycle stage and per environmental impact category. HAC is chosen because it is one of the most common methods to make clusters from a statistical population. As a result, each dendrogram is processed for extracting the "optimal" clusters, i.e. clusters whose error relative to real values of vehicles within the cluster is inferior to a fixed threshold. Each cluster has a value (the average value of vehicles' environmental indicators that form the cluster) and an uncertainty (the standard deviation of those same values). The EMEECS are environmental impact archetypes, calculated on several life cycle stages, of complex system clusters, i.e. the user of the proposed method would directly use the environmental impacts values of the initial and innovative solutions, and of the global system.

## 5.2 Case Studies: Micro-Hybridization Systems

TEEPI was tested on two micro-hybridization systems: fuel-electricity (Inno\_1) and fuel-compressed air (Inno\_2). The reduction in fuel consumption is achieved through supplying energy, complementary to traditional fossil energy to move the

car. Both micro-hybrid systems require extra parts to be added to the vehicle. For innovative solution Inno\_1, the hybridization requires a lead battery heavier than the normal one, an electronically-controlled gearbox instead of the manual gearbox, a reversible starter-alternator ensuring the Stop and Start function, and an ultracapacitor to supply the required power. The innovative solution is 42% heavier than the initial solution; nevertheless, a diesel consumption reduction of 11% was measured on the NEDC homologation test. Concerning innovative solution Inno\_2, the gearbox and the powertrain adaptation are largely affected, an ultracapacitor is also added, while the lead battery mass is reduced. The innovation solution is 151% heavier than the initial solution; nevertheless, a 35% reduction in gasoline consumption was measured on the NEDC homologation test. Table 2 is a synthesis of the vehicle characteristics for selecting the EMEECS, which are available to the "Eco-design" team during the innovation phase. On Fig. 2, TEEPI results are compared to the reference LCAs of Inno\_1 and Inno\_2.

We observe that the signs of the growth rates given by TEEPI are the same as those of the reference LCAs. Concerning the values of growth rates, the maximum

Fig. 2 Comparison between the results from TEEPI and the results from reference LCA for micro-hybrid systems Inno\_1 and Inno\_2

error of TEEPI on the five innovations compared to reference LCAs is 2.1%; this is obtained for the ADP indicator of Inno\_2. We can also notice that the uncertainties of POCP are significantly higher than those of the other indicators. The length of uncertainty interval of the POCP indicator is directly linked to the use phase, for which the POCP depends on the emissions of three pollutants (carbon monoxide, nitrogen oxides, and hydrocarbons). These emissions vary randomly from one vehicle to another and from one powertrain to another.

#### 6 Conclusion

E3PICS methodology has led to a successful integration of the "Environment" service's requirements in the innovation phase. Through the validation of the eco-design framework of reference in the quality procedures, the R&E checklist is systematically used for all innovations from TRL 5 to TRL 6.

TEEPI was developed to take into account one of the "Environment" service's requirements of the eco-design framework of reference. Validating the eco-design framework of reference within the innovation process implies systematic use of TEEPI for the environmental evaluation of innovations that are selected according to three criteria defined by the eco-design leader: mass of the innovative solution, material change between initial and innovative solution and impact on vehicle fuel consumption.

TEEPI was not designed for generating eco-designed innovative concepts; therefore, it would be relevant to link this tool to a decision-making design tool such as those using the problem resolution by constraint satisfaction algorithm [18].

From an organizational point of view, TEEPI has been approved for being used during the innovation process; it is currently used by the LCA expert. Each innovation is saved in a database that could be used as a case-base in order to use knowledge management systems and generate good practices in eco-designing products. Lastly, to make it easier for innovation leaders to take the environmental dimension into account, they could use a version of TEEPI integrated into a company's intranet platform administrated by the LCA expert. This would help innovation leaders to simulate several innovation options directly. However, a necessary condition would be that innovation leaders have a good knowledge of life cycle issues. The current version of TEEPI is the learning vector of this knowledge.

#### References

as part of the Community's integrated approach to reduce CO2 emissions from light-duty vehicles, 2009.

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## Development of an Environmental Evaluation Tool in the Transport Sector and Its Impact on Decision-Making in the Early Stages of Design

#### Sergio A. Brambila-Macias, Lisbeth Dahllöf, Karin Eriksson and Tomohiko Sakao

Abstract Due to government policies and regulations as well as customer and societal demands, organizations around the world are looking for ways to manage their economic, environmental and social sustainability. One of the most frequently used standards for organizations seeking to manage their environmental responsibilities is ISO 14001. This framework, however, is generic because it can be used by any organization irrespective of sector, activity or core values. Therefore, implementation of generic guidelines might result in the use of alternative tools that respond better to specific organizational needs and that provide outcomes that can be useful for decision-making. Through case study methodology, this paper shows how Volvo Group, a world-leading producer of transport solutions, developed an internal environmental evaluation tool called Environmental Screening (EnvS) to improve the environmental performance of its solutions.

### 1 Introduction

The degradation of the environment through resource extraction, manufacturing, use and disposal of products, as well as the provision of services has been one of the main drivers for societies and governments to look for more sustainable alternatives. The United Nations Conference on the Human Environment in 1972 in Stockholm was a milestone for raising awareness of the actions needed to tackle environmental deterioration. Currently, sustainable initiatives can range from global efforts, such as the UN Sustainable Development Goals [1], to regional directives

S. A. Brambila-Macias (&) T. Sakao

Department of Management and Engineering, Division of Environmental Technology and Management, Linköping University, 58183 Linköping, Sweden e-mail<EMAIL_ADDRESS>
L. Dahllöf Swedish Environmental Institute, 41133 Gothenburg, Sweden

K. Eriksson Volvo Group Trucks Technology, 41715 Gothenburg, Sweden

like the WEEE directive for electronic waste [2] and EVL for the end-of-life of vehicles in Europe [3] to local environmental objectives (e.g. Sweden's 16 environmental quality objectives) [4]. Furthermore, participatory initiatives and standards for companies and organizations such as the Global Reporting Initiative (GRI) and ISO standards demonstrate efforts undertaken towards sustainability. With regard to the environment, ISO 14001 exemplifies the participatory action that companies may take to reduce their impact on the environment. However, this standard is general and differences still remain, for example, organizations differ in how they are organized, what they offer, their business model and their core values. These differences may lead to the adoption and adaptation of tools that support decision-making in contexts suitable to the organizations and their specific circumstances [5, 6]. A problem area that is frequent in product development organizations is that environmental awareness initiatives are based at the manufacturing level and not at the product level [7], resulting in narrow coverage by an environmental program. Through case study methodology, this paper offers a unique view on how Volvo Group developed Environmental Screening (EnvS), a tool aimed at improving the environmental performance of its products and solutions. In this regard, three research questions are postulated.

#### 2 Background Research

The scientific literature provides several examples of how organizations can adopt and adapt tools to reduce the environmental impact of their operations. This is especially important in the early stages of design, given the greater potential there to reduce the environmental impact of products and services [8]. The early stages of design seem to benefit most from qualitative and easy-to-use tools. This could be partially explained by the lack of information, risk, uncertainty and subjectivity found during the early stages [7]. Schöggl et al. [9] suggest that qualitative tools are preferred at this stage, due to the lack of information and difficulty in quantifying environmental impacts. Tools and methods that address environmental impacts usually fall under the umbrella of Design for the Environment or Ecodesign [7], which can be described as an approach that addresses the environmental impact of the entire life of a product or service, from the early stages of design [6]. Tools following this approach are plentiful. Pigosso et al. [10] identified 350 publications between 1993 and 2015 dealing with tools and methods related to Ecodesign. However, Rousseaux et al. [11] suggest that there is still low uptake of such tools. Reasons for this can be due to lack of knowledge about the tools, lack of specialized staff that can use such tools, company size and low cooperation between departments. Poulikodou et al. [12] further identify obstacles to the use of environmental tools; for instance, tools may be too vague, many checklists are already available, tools need detailed information, the competence of users is low and there are delays from suppliers. Bovea and Elis [13] identified checklists, matrices and rules or guidelines (e.g. 10 golden rules of ecodesign) among the most often used qualitative and semi-quantitative tools. Knight and Jenkins [14] also suggest that some of the most common or preferred ecodesign tools are in the form of guidelines and checklists. An example of this can be seen in the work by Lindahl and Tingström [15], who adapted Failure Mode and Effect Analysis (FMEA) to develop a checklist for environmental considerations called Environmental Effect Analysis (EEA). EEA requires qualitative information as opposed to Life Cycle Assessment (LCA), which requires quantitative data and which users may find lengthy and difficult to use [13].

More recent tools not only addressing environmental aspects but also social and economic ones have also been proposed in the literature. For instance, Hallstedt [16] proposes a sustainability criteria matrix targeting the early stages of product development and a qualitative measure called sustainability index for decision support. Schöggl et al. [9, 17] propose the Checklist for Sustainable Product Development (CSPD) based on questions divided into four sustainability principles and 9 categories where a sustainability expert is crucial for the use of the tool.

Furthermore, Fitzgerald et al. [9] suggest that guidelines and checklists need to be company-specific and integrated systematically in the product development process, and that using standalone and generic tools may not be effective. Hence, specific procedures should be determined to avoid confusion on when and how to use such tools. Fitzgerald et al. [9] divide decision-making in new product development into two broad types: design decisions and management decisions. Design decisions address questions like what should be designed and determine shape, size, materials, processes and components. Management decisions address questions that attempt to ensure the design will result in a successful product. What will be done and when and who will do it—are some management questions. It is therefore important to be clear about the purpose of the tool as well as who is going to use it, the necessary inputs and the beneficial outputs. The following case study further supports the use of an environmental checklist.

#### 3 Case Study

Since 1989, Volvo Group has pledged to minimize the environmental impact of its operations through adopting a life cycle approach in its operations [18]. Today, Volvo's White, Grey and Black Lists for materials selection to substitute, caution or avoid materials, respectively [19–21], are an example of its commitment to reduce environmental impacts. With regard to environmental standards, Volvo Group began using the Environmental Failure Mode Analysis (E-FMEA) in 1997 in order to fulfil requirements in ISO 14001 for product development. However, since FMEA was a protected name the group changed it to the one described by Lindahl and Tingström, Environmental Effect Analysis (EEA) [22]. After some time, Volvo Group renamed the tool as Environmental Impact Analysis (EIA), which was later standardized within the group. Due to internal and external needs EIA was further developed, customized and replaced in some projects by the Environmental Screening (EnvS) tool.

The EIA as well as EnvS are based on forms to be filled in at cross-functional meetings for Product Development (PD) projects where representatives from PD, production including logistics, aftermarket and purchasing (when relevant) participate. A facilitator who has prepared and also has knowledge of the method and environmental aspects leads the meeting and fills in the forms. At the meeting, actions are determined and followed up on afterwards. The EIA has most frequently been used to evaluate new design of powertrain components since these components may impact the environment, especially during the use phase. The tool has also to a great extent been used to evaluate the design of packaging materials, since these are often volume products and easy to assess. It has, however, not been used for all PD projects. A reason for this is that users considered the tool to be too time consuming, and with little benefit since there already are checklists for this (e.g., chemical use and standards for marking of parts, facilitation of recycling) and environmental demands are already in place for technical requirements in PD projects. Another reason for the lack of use of the EIA tool has been that it is also highly dependent on the knowledge and experience of the meeting participants, increasing the possibility to miss environmental risks and making it more dependent on the previous knowledge and experience of the users. Figure 1 partially shows the EIA tool.

In comparison, the format with a checklist in the EnvS ensures that the environmental risk factors considered most important are covered. Furthermore, several external factors have influenced the need for EnvS as a new tool that could incorporate new demands. For instance, in 2015 a revised ISO 14001 places more emphasis on products, services and a life cycle perspective. The standard states in its Sect. 6.1.2: Within the defined scope of the environmental management system,

Fig. 1 A selected section of the environmental impact evaluation form

the organization shall determine the environmental aspects of its activities, products and services that it can control and those that it can influence, and their associated environmental impacts, considering a life cycle perspective. p. 9 [23]. Additionally, resource efficiency has increasingly become the focus of European initiatives (e.g., the EU's circular economy package) [24].

Therefore, it had been identified that the environmental analysis had to be considered in all PD projects, but to be able to make this happen, the tool had to be easier and faster to use. A reference group was put in place to develop and approve the environmental screening tool. It was also acknowledged that the connection between PD and production could be improved. The improvement work was mainly done during 2015, together with the reference group with participants for PD and production from the different parts of Volvo Group. This reference group was important, since they had an opportunity to influence the development process of the environmental design tool. As opposed to EIA, EnvS will need to be regularly reviewed and updated to secure that the most important environmental risks are covered.

Moreover, in the effort to adapt ease of use and beneficial outcomes, two Environmental Screening (EnvS) tools were developed, one for PD and one for production, with a link in-between, so if a new component affected Volvo Group production, the checklist for production would be filled in. The EnvS for PD is a tool for collecting answers to all known, relevant environmental questions that are important for PD. It may be so that another tool needs to be used to be able to answer a question, [e.g., if a question regards Design for Recycling (DfRecycling)]. To be able to answer if a new part will be designed for recycling, the DfRecycling checklist may have to be completed. The EnvS for production is a checklist on its own, with no extra checklists to consider for answering the questions. For PD, it is important that the start-up meeting is held early in the development process. If it is held before a supplier is chosen, then requirements can more easily be added to the supplier. The two EnvS tools have been tested and further developed in pilot studies. During the pilot studies the enthusiasm from engineers was also crucial in developing the tool, since they expressed their desire to make a difference.

#### 4 Discussion

The first research question can be answered by how Volvo Group established a reference group from different departments that also included users of the tool. The case study also highlighted the importance of carrying out a pilot study for useful feedback and refinement of the tool.

Regarding the identification of organizational needs and the determination of how to manage them in order to adapt or create a tool to address environmental performances, the case study showed that the context plays an important role not only in shaping company's core values, but also in its operations, use of tools and ultimately decision-making. In this case study, the organisational needs were identified by the manufacturing department as well as the engineers wanting to make a difference. It also became clear that communication between design and manufacturing had to be enhanced, and that a tool in the form of a checklist could help in strengthening that communication.

Finally regarding the identification of users, involved actors, inputs and useful outputs that tools need to consider and/or provide in order to support decision-making in the early stages of design, the EnvS tool(s) at Volvo Group identified the users of the tool as personnel from the manufacturing, engineering, purchasing, aftermarket and styling departments. The inputs for the tool came from external and internal sources, an example being the increasing awareness of environmental impact and enthusiasm from the engineering department to change the status quo.

The outputs are then useful for analysing decisions and acting on them. Information from a Design for Remanufacturing (DfReman), Design for Recycling (DfRecycling) or LCA study are some of the inputs to the EnvS checklist then providing outputs for actions such as choice of concept improvement of supplier demands and compliance with ISO 14001. It also illustrates that a checklist can serve the purpose of addressing both design and management decisions.

In order to illustrate how the checklist supports decision-making, the following diagram shows the different inputs, outputs, purpose and decision-making (actions) of the checklist. This is depicted by using the PDCA quality cycle, which stands for Plan-Do-Check-Act [25] (Fig. 2).

Fig. 2 The impact of environmental screening on decision-making

### 5 Conclusion

This methodology development, presented through a case study, showed how an organisation in the transport sector has developed a checklist named Environmental Screening (EnvS) in production and product development. From the analysis of the case study, important conclusions can be drawn.

These can potentially help interested readers in their own design and implementation of environmental tools, and can be summarised as follows (in no specific order):

It is also important to mention that this research has some limitations. The use of a single case study presents a particular example in industry. However, this research can stimulate discussion and an exchange of experiences from organizations facing similar challenges towards sustainability.

The results of this research can be insightful for companies that want to incorporate environmental tools into their design, operations and product development. They could potentially use this research when developing tools of their own. Academics that do research on design and implementation of methods can also benefit from this study. They can find and compare similar needs in other organizations and identify factors to be considered when developing tools and validating them. Finally, future work could address tools for earlier stages in design (fuzzy front end) and other sustainability aspects that can provide an insight into how needs are identified and addressed.

Acknowledgements This research was supported by the Mistra REES (Resource Efficient and Effective Solutions) program, funded by Mistra (The Swedish Foundation for Strategic Environmental Research).

#### References

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## Discussion Panel—Assessment of Externalities: Monetisation and Social LCA

#### Stéphane Morel, Marzia Traverso and Philipp Preiss

Abstract This paper aims to explore the topic of monetisation of environmental and social aspects. The content is issued from a discussion panel held in Luxembourg during the LCM2017 conference. It first explores historical and methodological aspects. The recommendations are made for companies who intend to monetise their impacts. Three industrial companies presented their contribution on their day to day use of monetisation. The key conclusions are twofold. In one hand, many challenges remain. The implementation is still not always feasible for all issues and an iterative approach is highly recommended. New methods on social LCA show a growing interest on this topic from various parties. ISO standards work is progressing and will support companies and government in their use of monetisation. From the company point of view, monetisation is a bridge between environmental and social assessment, and economic evaluation, while it provides a common unified unit (money). By using a common unit for financial and non-financial aspects, monetization allows the direct comparison of different aspects and therewith a more informed materiality assessment. By looking at impacts, a new perspective on current and future business risks and opportunities is provided. A better understanding of interdependencies enables more informed decision making. The monetary language is a door opener to access new stakeholder groups such as finance and accounting to raise awareness for sustainability.

S. Morel (&)

Renault, Alliance Technology Development, Guyancourt, France e-mail<EMAIL_ADDRESS>
M. Traverso (&) RWTH Aachen University, Aachen, Germany e-mail<EMAIL_ADDRESS>
P. Preiss

Business School, Institute for Industrial Ecology, Sustainable Technology and Innovation Management, Pforzheim University, Pforzheim, Germany

#### 1 Introduction

Social and environmental impacts occur along the product life cycle and are measured by different indicators. To assess the sustainability performance of a product life cycle, a social, economic and environmental impact assessment is needed.

Despite the absence of scientific agreement on a set of indicators to be considered in the framework of Life Cycle Sustainability Assessment (LCSA), several implementations have been already realised at companies and product levels.

However, the results of a sustainability assessment are often expressed through out several indicators, making their interpretation and the identification of the relative trade-offs challenging. A possibility to facilitate the interpretation is monetizing all impacts indicators. However, monetisation induced a set of methodological issues and choices that are debatable and that must be known before implementation. The aim of the session was to clarify the state of the art of related methodological approaches, towards a guidance for businesses and governments in order to correctly use monetisation in portfolio assessment and decision making.

Based on the outcomes of the session held at LCM 2017 conference, this paper first presents the most important elements from the methodological state of the art, and then some general guidance as well as concrete feedback from industries.

#### 2 State of the Art of the Methodology

Monetisation is nowadays growing from research to standardisation. Monetary valuation has been used in policy making for decades mostly in cost-benefit analyses, since the early 30s in the United States. More recently in the European Union where this approach is observed since the 90s, in directives such as the National Emission Ceilings Directive (NEC directive (2001/81/EC), EU research projects such as the National Energy Education Development project (NEED (2007)), and many others. By the way, an umbrella of different concepts stays under the monetization term such as: market price, abatement costs, societal costs & benefits etc.

Mr. Philipp Preiss clarify the definition as follow, based on ExternE (2005) [1, 2] researches:

Monetisation is promoted for several reasons. In the first hand, with monetisation of externalities the monetary values are shown explicitly. However, without monetisation the impacts are implicitly monetised by the difference of the internal costs of corresponding alternatives (i.e. a decision between alternative technologies or policies). Or in other words, if impacts are not monetised the external costs are taken into account as if they were zero.

On the other hand, monetisation offers an additional indicator but must not be the only basis for decision-making. At member state level, environmental agencies are involved, such as the German Federal Environmental Agency (UBA): [3] or the French ministry of environment (MEEM) who held a specific workshop on monetisation of goods and environmental services through life cycle assessment in 2017.

Currently two ISO documents (ISO 14007 and ISO 14008) are under construction in order to provide guidance and allow a wider use of monetisation.

Mr. Preiss points out some limits regarding the comparability of results of various studies. Studies are different regarding their comprehensiveness. There is a lack of transparency if the underlying assumptions and models are not displayed. And generally, there is the lack of a widespread state of the art approach.

Mr. Chanoine (Deloitte) proposed a practical guidance issued from a study carried out with the industrial consortium SCORELCA in 2012 [4] and followed by a second study also driven by SCORELCA in 2016 of which the results are not published yet. It is based on operational recommendations on how to use monetary valuation to monetize LCA results. The proposal is an iterative approach with a go/ no go process in two steps. First, a set of questions allows to determine the necessity to carry out monetisation, and how it should be done. Then nine information sheets provide explicit implementation guidance.

As a first conclusion, monetary valuation in LCA should be used when identified as necessary, depending on the objectives of the study. It has been presented as an approach to solve trade-offs. As a counterpart monetisation remains an approach potentially complex to implement due to the set of parameters to be considered in correlation to set monetary values, moreover considering the potential subjectivity of those parameters. Also, it remains especially complex when it is required to develop specific monetarisation factors, which may request time, funding, some specific competences investments and political decisions.

## 3 Feedback from the Industry on the Application of Monetisation

This section provides feedback from three chemical companies.

Mr. Sonnen (Ecomatters), in collaboration with AkzoNobel, provided insights on how a company can monitor its global activity (downstream, upstream and themselves) on economic [5], environmental costs [6, 7] and social capitals [5]. It allows the company to identify business risks, opportunities, stimulate innovation and cooperation with value chain partners. This also permits to reduce the negative and strengthen existing positive externalities.

Since 2013, BASF calculates it 'real' contribution to a sustainable future. With the Value-to-Society approach, BASF assesses its positive and negative economic, social and environmental impacts on society along the value chain in €. The results are used in positioning and communication as well as progress monitoring. Application in decision making and goal setting is piloted. However, due to data accuracy, maturity level of methods as well as conceptual challenges, for a systematic embedment further research and standardization is required. These are under construction. Mr. van Gelder stated for BASF "With Value-to-Society we have a new macro perspective on benefits and costs of our economic, environmental and social impacts along the value chain".

Mr. Wathelet (SOLVAY) introduced the Sustainable Portfolio Management (SPM) map [7, 8]. There, the products are presented on a map according to two criteria: Operations Vulnerability (monetized environmental impact of production/ sales price) and Market Alignment (analyse of a product in an application through the lens of sustainability—benefits or roadblocks). This allows to categorized the products under three categories: Solutions (outstanding sustainability contribution for the society), neutral, and challenges (Strong negative signals in sustainability, to be improved or abandoned).

Those three companies are using monetarisation of LCA results to express the environmental impacts in terms of costs. Methods to evaluate social benefits remain very diverse. They all three agree that monetarisation of social and environmental aspects is very intuitive, allowing to gather positive and negative aspects of a system on a unique scheme, and can be useful to engage with top management. They also acknowledge the needs for further research.

#### 4 Discussion and Conclusion

External cost calculation constitutes a bridge between economic decisions and environmental and social assessment while it can provide both types of results in a common unit, and is relevant to support three levels of decision: technical solution, product portfolio and the company strategy.

It can also be a support to engage with top management, allowing to align with materiality assessment and stakeholder's expectations.

Nevertheless, many challenges remain to improve the applicability of monetisation methodologies, and company acceptance. To be implemented, it is required to collect raw information from the supply chain and consumers. This starts with the life cycle inventory collection from the direct supplier to the very first one. Then the definition of monetization factor for each impact is necessary and crucial, for this last task a customer´ survey can held in order to define the wiliness to pay. In alternative, monetization factors presented in literature can be used for the first implementations.

The panel recommendations were to adapt the effort according to the pursued goal of the study. An iterative approach is highly recommended in order to first conduct a streamlined assessment, and then implement more complex methods when necessary.

The company acceptance relies on the communication of monetized results since monetization could be used at various level in companies, the targeted audience is diverse and the media shall be adapted in consequence. An exhaustive state of the art on methodological issues related to monetary valuation and on the way to interpret the monetised indicators would be valuable to the practitioners.

One remaining challenge also stands on the capability to introduce these cost and social information in decision making and performance monitoring. This raises here a new question grounded in the financial accounting. How to integrate costs and revenues which are not paid or perceived directly? Shall external cost performance be a key indicator and for whom? How to transfer the benefits and positive impact to the contributors?

As a final conclusion, despite these raising questions the panel underlined the remaining researches to be carried on, and agreed that environmental and social cost assessment, already today, have a major ability to reinforce decision making.

Acknowledgements We would like to thank the panel for their contribution: Mr. Chanoine (Deloitte), Mr. Sonnen (Ecomatters), Mr. Van Gelder (BASF) and Mr. Wathelet (SOLVAY).

#### References

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## Applying LCA to Estimate Development Energy Needs: The Cases of India and Brazil

Narasimha D. Rao, Alessio Mastrucci and Jihoon Min

Abstract This paper illustrates the use of life cycle assessment (LCA) methods to link human wellbeing to resource consumption. Based on a previously developed framework of the material requirements for human well-being, we use LCA and Input-Output (I/O) analysis, as appropriate, to estimate the life-cycle energy needed to meet the gap in living standards in two emerging economies, India and Brazil. We illustrate the relative contribution of different living standards components to energy requirements, as well as the uncertainty and trade-offs between upfront and long-term operating energy costs, and how these factors differ in the two countries. This analysis provides insights on how LCA analysis can be used to inform energy planning and its links to development goals.

## 1 Introduction

There is much potential for life cycle assessment (LCA) to inform public policy beyond its traditional use to address environmental objectives [1]. This paper illustrates how LCA can be used to inform development and energy policies related to improving living standards in emerging economies. Our motivation is that technology, material and design choices in the build-up of infrastructure can present important trade-offs between short-term (construction) and long-term (operating) energy needs, as well as different net energy requirements. These differences matter in emerging economies such as India and Brazil that expect high future economic growth and significant infrastructure investments. The Indian government anticipates 1.5 trillion dollars of infrastructure investments over the next decade [2]. Furthermore, almost a quarter of the building stock (\*50 million units), requires upgrading [3], not counting population growth and future migration to urban areas.

N. D. Rao (&) A. Mastrucci J. Min

International Institute for Applied Systems Analysis (IIASA), Energy (ENE) Program, 2361 Laxenburg, Austria e-mail<EMAIL_ADDRESS>
© The Author(s) 2018

E. Benetto et al. (eds.), Designing Sustainable Technologies,

Products and Policies, https://doi.org/10.1007/978-3-319-66981-6\_44

Brazil is a useful contrast, as it faces similar social challenges, such as high inequality, but a very different scale and with different resource endowments.

Based on a previously developed account of decent living standards ("DLS"), which define the material requirements for human wellbeing [4], we use LCA and Input-Output (I/O) analysis, as appropriate, to estimate the life-cycle energy required to meet the gap in, and sustain, DLS for all. We consider the energy associated with delivering DLS goods and services, including food production and preparation, clothing, housing, the extension of networks for water and sanitation, electricity, social infrastructure (health and education), communications, roads and transport systems. Our emphasis in this study is on methodology, not on empirical findings. That is, rather than supplying comprehensive estimates on the energy requirements for providing DLS, we aim to illustrate how LCA methods can be used to provide insights into such a quantification exercise. We make three contributions in this regard: (a) we illustrate the relative contributions of living standard components to the estimation of energy requirements for a DLS; (b) we show how uncertainty can be systematically quantified and attributed to these choices; and (c) we show the trade-offs in construction and operating energy inherent in these choices.

#### 2 Methods

The methodology includes three steps: estimation of the gaps in DLS; calculation of life-cycle material and energy requirements; uncertainty analysis.

First, we estimate the gaps in DLS (Sect. 3) in material terms, such as the number of housing units for shelter, toilets for sanitation, minimum water consumption for water supply, basic appliances, etc. based on national and international sources. The key components of the DLS can be inferred from the normative standards in Table 1. A more comprehensive description can be found in Rao and Min [4].

These normative standards are converted into material requirements, the process of which is straightforward except for social dimensions of wellbeing (health and education), whose material needs are not easily determined. For these, we rely on previous empirical analysis [4] to determine the national expenditure levels required at a minimum to achieve standards of primary education and life expectancy respectively. We use a multi-region input-output (MRIO) to estimate the energy requirements associated with this expenditure. We also use MRIO for food production, whose heterogeneity across the economy is best aggregated through an MRIO.

For material items in the DLS, such as housing, appliances and related infrastructure, we use traditional LCA calculations [5]. For housing, we identify building archetypes representative of different climatic conditions, regions (e.g. depending on material availability) and urban/rural areas and we calculate construction and operational energy using a material inventory and a dynamic energy model. Using

Table 1 Sources of uncertainty in assessing decent living standard (DLS) energy requirements

Entries in bold are illustrated in this study

this bottom-up simulation model [6] we are able to assess the influence of material, technology and design choices on both construction and operating energy requirements and finally extrapolate results to the national level. For some of the sectors, e.g. water supply and sanitation, where building a comprehensive LCA model would be out of the scope of this study, we rely instead on a set of international studies to assess the range of construction and operational energy intensities corresponding to different technologies and contextual conditions. Illustrative results of the energy requirements in different sectors for India and Brazil are shown in Sect. 4.

Uncertainty in energy estimates can arise from a number of inputs, which to yield total uncertainty. Table 1 sketches out the key dimensions of uncertainty: the extent of the gap in DLS; technology performance; and human behaviour. There may be cases where multiple estimation approaches can be used, which contribute model uncertainty. However, we do not include such cases in this study.

As indicated in the table, we use the housing and water supply analysis as the primary vehicle to illustrate the different contributions to uncertainty (Sect. 5). For each case, we varied one parameter at a time according to suitable ranges of values to obtain the total range of variation in life-cycle energy. In all other cases, we use 'status quo' conditions to quantify energy needs, to reflect present-day habits and culture and commercially available technologies.

#### 3 Gaps in Decent Living

Figure 1 compares the gaps in DLS between India and Brazil. Indians lag in all dimensions by a significant margin. Over 90% of Brazilians have access to most components of DLS, while access to DLS in India ranges from as low as 17% (refrigerators) to 100% having primary education. The main implication of this for LCA and its value to energy planning is that in India a more significant component of future energy requirements stem from the construction of new infrastructure. The assessment of the cost-performance trade-offs of either leapfrogging to new technologies at a significant cost as opposed to scaling up living standards quickly and at relatively low cost but 'locking-in' to less efficient technology becomes critical in countries like India. The uncertainty in energy demand may also be higher, which depends to a greater extent on the nature and extent of population growth, migration to cities, and the evolution of technology.

Fig. 1 Share of population with decent living conditions in India and Brazil. Notes life expectancy is a national average, shown as a proportion of 72 years (100%); hospital beds are number per 1000 people, shown as a proportion of 2.2 (100%). Sources IEA World Energy Outlook (2016); Census India (2011); UNICEF; National Health Profile 2010 (India); CIA The World Factbook; UNESCO; Seventh All-India Education Survey; NSSO 11-12 survey (India); POF 08-09 survey (Brazil); World Bank—Rural access index

#### 4 Trade-off Between Embodied and Operational Energy

Figure 2 illustrates the per capita operational, capital turnover, and total energy required for each DLS component in India and Brazil respectively. Note that both the operational and capital turnover energy represent a future scenario where

Fig. 2 Illustrative energy requirements to provide decent living standards in India and Brazil, showing capital turnover and operating energy. Note Space conditioning includes hot water production

infrastructure gaps to manufacture and deliver the DLS products/services have been filled. Many of these results are still preliminary, and not meant to convey an empirical finding. Rather, they illustrate the kinds of insights such analysis enables. For instance, the relative energy requirements for different DLS components differ widely. Food in Brazil is far more energy intensive than in India, most likely due to the preponderance of meat consumption in Brazil compared to India. The housing energy requirement in India has a moderately higher share of capital turnover from the expansion of the existing stock. However, the energy required to heat and cool (largely cool) buildings is far greater in India due to, among other things, severe climatic conditions (high temperatures and humidity). In both countries, energy for overall capital expansion is dominated by housing and transportation.

Some caveats are in order. In general, in using existing country-specific data on material and energy intensities to meet a single standard, we can't discern whether differences arise from different levels of service quality, differences in energy needs, or differences in efficiency. For instance, health and education energy requirements in Brazil are higher than in India, because energy intensity levels in Brazil are significantly higher. This may imply that quality is higher, or that existing conditions (e.g., population density) may necessitate higher energy intensities in Brazil, or that energy use is less efficient in Brazil. In subsequent work, some discernment will be possible, based on deeper analysis of the health and education sectors.

Another caveat is that the electricity demand growth assumes power plants already exist (that is, the embedded energy associated with building new electric power plants to meet incremental electricity demand has not as yet been included). This is, however, typically very small in comparison to operating energy.

#### 5 Uncertainty Analysis

An important aspect of energy demand estimation is uncertainty and its attribution to policymakers' decision variables. We illustrate this for the case of housing and water, which differ in the extent of influence of geography.

## 5.1 Housing Supply Energy Requirements

For housing, climatic conditions and building materials (accounting for local availability) are key sources of uncertainty and are analysed in this section (see Table 1 for all sources of uncertainty). We include country-specific options of traditional mud-based construction in India, and wooden homes in Brazil. For this paper, we use a single-storey building archetype for an average family in each country. Due to different average household sizes, the sample house is 30 m2 in Brazil and 40 m2 in India. Figure 3 shows the results, where the bars in the

histogram indicate energy requirements for different building technologies, and the whiskers show the range of variation in operating energy covering all climate conditions in both countries.

**(b) Brazil - reference climatic zone is warm-humid (location: Belem).**

An important takeaway regarding the use of traditional mud housing in India is that despite moderately higher operating energy (due to poorer thermal insulation of the building), the savings in construction energy lead to a net energy reduction in comparison to fired bricks, the most common choice of construction today. Furthermore, the most efficient (aerated concrete blocks) has very marginally lower overall energy requirements than the least efficient (traditional mud) technology. However, aerated concrete is likely to be far more expensive than traditional mud. On an energy cost basis, therefore, this preliminary analysis would suggest that the traditional mud option may be the most favourable option compared to the present technology of choice, fired bricks. Other inconveniences, such as water penetration and termite attack, may, however, limit its application. Another insight is that the difference in total energy requirements is driven almost entirely by construction energy differences. The variation in operating energy is much smaller. One implication of this finding is that the favourable choice of construction materials is unlikely to vary much across India due to varying climate conditions. However, if one were to consider a broader range of energy savings measures (e.g. thermal insulation, high-performance glazing, shading devices, etc.) operational energy reductions may have a more influential role.

In Brazil, building operating energy is even less important than in India, due to more moderate climatic conditions. The variation in energy from the heterogeneity of climatic conditions in the country is correspondingly lower as well. Notably, the building materials show similar relative merits with respect to total energy requirements, with the exception that the traditional (in this case, wood) housing is even more favourable, having the least total energy requirement.

## 5.2 Water Supply Energy Requirements

Key sources of uncertainty for water supply include the geography and normative standard for water demand. We compare two different systems with different geographies—one with low water conveyance (in South Africa [7]), and another with high conveyance requirements (in Florida [8]). We also vary the normative standard for water demand, between a normative minimum of 50 l per cap per day [9], and a reference of 100 l/cap/day (representing approximately the average demand in India). Notably, nothing in this analysis is actually dependent on local conditions in India or Brazil, so we show only one set of results.

In contrast to housing, water energy requirements are almost entirely composed of operating energy, which comprises pumping water through the distribution system and treating water. In this sector, construction materials matter far less than pumping technology and location. The range of variation for the two systems is higher than the mean. There may well be other locations in these countries that entail even higher conveyance costs (Fig. 4).

#### 6 Conclusions

This paper illustrated the use of LCA methods to link human wellbeing to resource consumption. This linkage enables sectoral LCA analyses to be integrated and compared for use in holistic development policy planning. This provides policymakers with insights on trade-offs, and helps assign priorities among sectors. We illustrate the relative contribution of technological uncertainty in different sectors, as well the trade-offs between upfront and long-term operating energy costs. We also show how these trade-offs differ in different geographic conditions, illustrated with India and Brazil.

We did not aim for this study to provide comprehensive empirical findings on development energy needs—for instance, we do not include here the energy associated with building out infrastructure to meet development gaps—rather, we focused on annual energy outflows and their drivers. We illustrate, nevertheless, several empirical insights. For instance, the transport sector dominates energy needs to meet a basic living standard in Brazil, but not in India. In both country we show that traditional building materials in the long term may offer a win-win for both reducing energy use and costs of housing.

#### References

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## Integrating the Concept of Planetary Boundaries into Decision Making Processes

Marcial Vargas-Gonzalez

Abstract What is absolute sustainability? This question has been the centre of discussion for many years now. During this session, several stakeholders tried to bring their own answer to the question, discussing issues like the current Science-Based Targets approach, SDGs, resource criticality and the development of targets based on the earth's regenerative capacity. And while different topics were addressed and the need to develop more robust approaches was apparent, all presenters were aligned on the need to help companies incorporate the notion of planetary boundaries in their business practices in order to address as quickly as possible the environmental issues of the 21st century.

#### 1 Introduction

What is sustainability? This question has been the centre of discussion for many years now. From the environmental point of view, sustainability was considered up until now as improving the environmental performance of your company or product. This was therefore about being more sustainable than someone else's company or product but not about becoming sustainable in absolute terms.

The Planetary Boundaries concept provides insights on what environmental sustainability means at the global level, i.e. what is the planet's resilience threshold within which we can keep developing. This being said, a major question arises: how can we translate such concepts at a corporate level to enable better decision-making processes?

Two levers are being currently investigated:

– Using Planetary Boundaries as a new normalization system in LCA approaches to assess the product's sustainability and the material challenges it faces [1, 2].

M. Vargas-Gonzalez (&)

Quantis International, Paris, France e-mail<EMAIL_ADDRESS>
© The Author(s) 2018

E. Benetto et al. (eds.), Designing Sustainable Technologies, Products and Policies, https://doi.org/10.1007/978-3-319-66981-6\_45

– Using Planetary Boundaries to define science-based corporate targets to provide a way to define environmental strategies strengthened by a recognized scientific approach. A method that has gained considerable momentum thanks to the Science-Based Targets Initiative, which focuses on the climate change issue [3].

This session was the opportunity for companies and academia to discuss the concept of Planetary Boundaries, its integration at the corporate level (the approaches and methods being developed), its operationalization but also the limits of such an approach.

### 2 Presentation Summary

Trough 5 presentations, this session helped understand how the planetary boundaries concept was first applied to carbon emissions by the existing sectorial decarbonisation approach, paving the way for new methodologies and the assessment of different aspects and sectors including: the carbon emissions of the agri-food sector, the development of targets beyond carbon, resource criticality and the alignment of SDGs and Planetary Boundaries.

## 2.1 Sectoral Pathways to Low Carbon Economy Shall Drive Transition Planning and Companies' Decision Processes: The Key Learning's from Assessing Low Carbon Transition Initiative's Pilot Phase

Recently, the main environmental concern for companies and states alike has been to drastically reduce carbon emissions in order to remain below the 2 °C target set during COP21. And while climate leaders have assimilated existing tools like carbon reporting and the Sectoral Decarbonisation Approach (SDA), carbon emissions continue to rise.

During this presentation, it was discussed how the ACT approach developed by CDP and ADEME can help companies ensure that their approach is aligned with the level of decarbonisation needed. It provides sectorial assessment methods with a holistic view helping companies in the electric utilities, automobile and retail sectors improve their climate strategy, business mode, investments, operations and GHG emissions and GHG emission management.

While ADEME's work shows that companies are ready for the transition, several hurdles remain like the inclusion of new sectors in the existing methodologies, the inclusion of SMEs in the carbon discussions and the extension of the approach to include other environmental indicators.

## 2.2 Defining Science-Based Targets for an Agri-food Company: A Case Study

In line with the observation made by ADEME, today, more than 300 companies have committed to the Science Based Targets initiative showing the way to a 2 °C temperature rise scenario. However, as previously mentioned, in order to make sure those targets are reached, it is key to define manageable targets in line with the company's structure which can be difficult when considering that several sectors are not described in the SDA approach.

This is the main purpose of Quantis & Ecofys' work, defining science-based targets for a couple of agri-food companies using the SDA approach. This showcases not only the needed methodological developments, including the development of reduction pathways for several crops, but also the need to have a common structure when building a "SBT strategy". In order to meet their goals, companies need to understand the calculations and commitments that have been validated before companies starts strategizing and acting.

The key message is that even though developments are still ongoing, it is possible for companies to start acting immediately with a pragmatic framework and approach.

## 2.3 One Planet Thinking: Towards Companies That Perform Within the Earth's Regenerative Capacity

While the main focus has been carbon issues, the fact that we used the regenerative capacity of 1.6 planets in 2012 at present consumption levels demonstrates the urgent need to act within the earth's regenerative capacity beyond carbon and to start addressing all environmental issues. As previously proved, this can be managed with a pragmatic and operational approach in line with industrial needs.

Inspired by the concept of planetary boundaries, which was introduced by Rockström et al. in 2009 [4], Ecofys developed One Planet Thinking (OPT) together with Eneco, an energy utilities company in the Netherlands, with the aim to link corporate activities to global, regional and local boundaries to set targets for climate change, particulate matter, fossil and mineral resources.

The approach has its limitations but the overall framework shows that the use of pragmatic approach can ensure the development of sustainable business practices in a company. Moreover, this presentation shows that including other environmental issues in the "science-based targets" approach is possible, even though different issues (spatial focus, time variability) must be understood and included before we consider the methodology robust and streamlined. The issue of criticality exemplifies this issue.

## 2.4 Criticality Methodology for Resources: How to Apply to Construction in the Future?

Criticality as a concept refers both to the potential impact of shortage of a resource and to the probability of such a shortage, as such it is an essential issue when discussing the absolute sustainability of resource use.

Understanding criticality is therefore a first step in the understanding of resource use mechanisms and how setting a target for resource use might be attained in the future. And even though the presented approach did not focus on the target setting aspect of criticality, it detailed what should be assessed when evaluating the sustainability of resource use including rarity and spatial level of focus. This last aspect itself is quite innovative, as resource scarcity has been classically considered as a global issue while this methodology suggests it might not be the case for all resources.

Overall, this work seems necessary in order to better understand the implications of resource scarcity and the elements to be considered before defining reduction targets for resource use.

## 2.5 Operationalization of Sustainable Development Goals Using a Planetary Boundaries-Based Life-Cycle Assessment Framework

In 2015, the international community formulated the Sustainable Development Goals (SDGs) [5], this set of goals is supposed to help achieve sustainable development. This implies that existing SDGs should lead companies and countries to develop within the earth's regenerative capacity.

However, until recently, no framework had been developed on how to integrate the idea of Planetary Boundaries with the SDGs. The work presented showed how planetary boundaries could be used to compare countries' current activities with overall SDGs, assessing if economic sectors are aligned with the international targets.

This offers a new vision of how companies and countries can simplify their approaches and use the Planetary Boundaries approach as a key to identify material issues and be aligned with SDGs, the overall goal being to reduce the number of KPIs needed to assess their activities. This underlines once more how sustainability must be operationalized if we want international targets to be met by the industrial sectors.

#### 3 Discussion

Through these five presentations several common issues transpired, showing that companies and governmental are both struggling with absolute sustainability and its implications. Most issues arise from the lack of robust methodologies and data that could be applied for different environmental aspects and for varied economic sectors. Leading to the question: are science-based and context-based approaches scientific enough?

Presenters emphasized on the need to further detail, improve and complete existing methodologies in order to consolidate the efforts and build an approach that is both scientific and operational. However, it seems unreasonable to expect stakeholders to wait before they start acting and setting targets, as environmental issues must be addressed with urgency. It therefore seems that while current approaches are only the first building blocks in the development of absolute sustainability targets, they should be integrated into decision-making quickly and improved on a regular basis.

Moreover, the work presented during these presentations showed that there is a real academic and industrial demand for science-based and context-based approaches. This leads presenters to believe that these new methodologies will develop quickly and will be aligned with current scientific practices and evolutions in the near future, with developments focusing on: the inclusion of new sectors in existing methodologies, the development of a general framework for planetary boundaries-based targets and the operationalization of existing approaches at the corporate and national level.

The main hurdle remaining is the definition of an approach that is scientific and robust but that can also be easily implemented at the corporate level and included in the decision-making process.

#### 4 Conclusions

With the definition of an international target during COP21, the attention turned away from conventional target-setting ways and companies stated their need to define their own science-based targets. The approach has quickly caught on despite the different difficulties companies have identified. It seems however necessary to address these issues in order to develop more robust approaches, including the development of approaches for issues beyond carbon, that remain operational and easy to implement and track.

And while most of the presentations focused on the methodological evolutions that will lead to a more transparent approach to target setting, all presenters were aligned on the need to help companies incorporate the notion of planetary boundaries in their business practices in order to address as quickly as possible the environmental issues of the 21st century.

#### References

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## Exploring the Linkages Between the Environmental Sustainable Development Goals and Planetary Boundaries Using the DPSIR Impact Pathway Framework

#### Chanjief Chandrakumar and Sarah J. McLaren

Abstract Most of the conventional environmental sustainability assessment methods, such as Life Cycle Assessment and environmental footprints, evaluate economic goods and services in terms of the nature or the function of the studied systems. As such, these methods overlook the variations in the overall magnitude of production and consumption patterns for the examined systems. As a result, the progress achieved in mitigating global environmental problems is likely to be slow and may be insignificant. Hence this study explores the interlinkages between the Sustainable Development Goals (SDGs) and Planetary Boundaries (PBs) using an DPSIR (Drivers-Pressures-State of the Environment-Impacts-Responses) impact pathway framework—in support of developing an absolute sustainability assessment method (ASAM). The study demonstrates that there is a substantial overlap between the SDGs and PBs. The science-based thresholds listed in the PBs can therefore be adopted as a complementary set of environmental boundaries for the SDG indicators. Overall, the study lays the foundation for advancing an ASAM that can guide policy- and decision-makers to operationalize the SDGs effectively.

#### 1 Introduction

The Planetary Boundaries (PBs) concept was introduced by Rockström and his associates [1], and was updated by Steffen et al. [2]. Rockström et al. proposed nine critical Earth system processes and associated control variables and thresholds, claiming that transgressing any of the thresholds would potentially be devastating

C. Chandrakumar (&)

S. J. McLaren

```
© The Author(s) 2018
```

```
E. Benetto et al. (eds.), Designing Sustainable Technologies,
```
Products and Policies, https://doi.org/10.1007/978-3-319-66981-6\_46

New Zealand Life Cycle Management Centre, School of Agriculture and Environment, Massey University, Palmerston North 4442, New Zealand e-mail<EMAIL_ADDRESS>
School of Engineering and Advanced Technology, Massey University, Palmerston North 4442, New Zealand

for human societies [1]. Based on the nine PBs, a safe operating space for humanity was determined [1, 2]. Here, the safe operating space refers to a relatively stable state called the Holocene epoch, in which human societies can continue to develop and thrive [2]. Today, both the scientific and political communities have agreed upon the notion that there are global limits for the Earth system and they should be respected. Consequently, studies adopting the PBs have started proliferating, and they can be classified into works that (i) define or refine the control variables and the associated thresholds [e.g. 1, 2], (ii) downscale the global PBs to sub-global levels [e.g. 3, 4], (iii) set impact reduction targets [e.g. 3, 4], and (iv) devise policies and strategies [e.g. 3, 5].

While the PBs concept sets global limits for environmental impacts to benchmark a system's performance globally, environmental sustainability assessment methods (ESAMs) such as Life Cycle Assessment (LCA) and environmental footprints evaluate the environmental performance of a so-called product system (which is usually defined in terms of supplying a specified quantity of an economic product or service). Generally, the outcomes of an LCA or environmental footprint study guide decision makers to improve the eco-efficiency of the chosen product system through identifying the environmental hotspots along its life cycle [6]. As a result, use of LCA and other related life cycle thinking approaches to support decision-making has become common within the business and academic communities [6]. However, although the outcomes of these studies guide eco-efficiency improvements, the overall progress achieved in mitigating environmental problems still remains slow and insignificant [7–9]. One contributing factor is that conventional ESAMs like LCA do not benchmark the environmental sustainability performance of a system against a set of environmental boundaries (or standards). Instead, they rank a particular system in relative terms, by comparing it with a reference system that is relevant to the nature or the function of the system under investigation, and thus, the variations in the consumption and production patterns of the examined products and services are overlooked [7–9]. For example, Product A may be superior (or more sustainable) than Product B in terms of eco-efficiency, but neither could be sustainable on an absolute scale due to the predicted growth in global production and consumption volumes of the product [7, p. 325].

Therefore, recently, the scientific community began to focus on the so-called concept of absolute sustainability. Absolute sustainability is focused on how human societies can operate within the carrying capacity of the Earth system [8, 9]. Here, the term "carrying capacity" refers to "the maximum sustained environmental interference a particular system can withstand without experiencing negative changes in structure or functioning that are difficult or impossible to revert" [6, p. 1007]. As a result of growing interest in absolute sustainability, scientists have started developing absolute sustainability assessment methods (ASAMs) by supplementing the existing ESAMs with the Earth's carrying capacity [6, 8, 9], for instance, supplementing the ecological footprint with the Earth's biocapacity (available bio-productive area) [e.g. 10], LCA with PBs [e.g. 6, 8] and environmental footprints with PBs [e.g. 5].

#### 2 Operationalisation of Sustainable Development Goals

The United Nations agreed on a set of Sustainable Development Goals (SDGs) in 2015 comprising 17 goals, 169 targets and 232 indicators [11, 12]. The SDGs aim to cover a wide range of sustainable development problems [12–14]. Overall, the SDGs are intended to be universal with a shared common vision of progressing towards a safe, just and sustainable operating space for human societies [12, 16]. However, the SDGs have been criticised as being difficult to implement due to having too many goals and targets, lacking clarity, and having overlapping objectives [16]. Additionally, the SDG proposed for safeguarding the Earth system have been criticised as being neither sufficiently comprehensive nor ambitious [13, 14]. For instance, many of the SDG indicators have been proposed without a relevant environmental boundary. Researchers therefore have begun exploring how to operationalize the SDGs within the Earth's carrying capacity, and specifically how to link them to the PBs and then to LCA [13, 15]. Dong and Hauschild classified the indicators proposed in the SDGs, PBs and LCA using an DPSIR (Drivers-Pressures-State of the Environment-Impacts-Responses) impact pathway framework (see [20] for DPSIR impact pathway framework) and showed that all three approaches overlap in terms of seven impact categories (climate change, acidification, ozone depletion, eutrophication, chemical pollution, freshwater use and change in biosphere integrity) [15]. However, the study used the older version of the SDGs listed in [11] and until recently, no studies have explored the interlinkages between the latest SDGs listed in [12], the PBs and LCA. Additionally, the potential for operationalizing the SDGs using an ASAM had not been explored yet. Therefore, this study identifies the SDG indicators that evaluate environmental problems, and then systematically explores the interlinkages with the PBs.

To that end, the rest of the paper is organised as follows: Sect. 3 outlines the ASAM framework presented in [17], Sect. 4 establishes the interlinkages between the environmental SDGs and PBs, and Sect. 5 summarises how this work underpins the development of the proposed ASAM.

#### 3 Outline of the Proposed Approach

The aim of the proposed ASAM is to operationalize the SDGs at sub-global levels (e.g. country, region, organisation, product) by estimating environmental boundaries at these different levels [17]. These boundaries can then be used to calculate distance-to-target measurements through benchmarking the system's (e.g. country, region, organisation, product) performance against the estimated boundaries. This involves, firstly, identifying the SDG indicators concerned with the conventional areas of protection (AoPs) used in LCA i.e. human health, ecosystem quality, resource scarcity and man-made environment [18].

According to [6, 19], many of the PB control variables differ from the indicators of the conventional ESAMs (including LCA), particularly with respect to the point of impact assessment although these indicators evaluate similar kinds of environmental impacts to those reported in the PBs. Hence, the chosen SDG indicators and the PB control variables are further classified into driver, pressure, state, impact and response indicators using an DPSIR impact pathway framework. Having classified them, the interlinkages between the SDGs and PBs are explored. This enables subsequent development of a complementary set of global boundaries for the SDG indicators using, where appropriate, the thresholds proposed for the control variables in the PBs. Afterwards, the global boundaries can be allocated to lower economic levels using a top-down approach. The method is operationalised by developing distance-to-target measurements based on the calculated environmental boundaries compared with the current environmental performance of the systems under analysis (calculated using conventional ESAMs like LCA and environmental footprint studies). These distance-to-target measurements could be positive or negative depending on whether the system is performing in line with the goals and targets reported under the SDGs.

#### 4 Linkages Between the SDGs and PBs

This section details how the PBs can be employed as a complementary set of global boundaries for the SDGs by providing a systematic comparison between the SDG indicators and the PB control variables. Firstly, the SDG indicators concerned with the AoPs of human health, ecosystem quality, resource scarcity and man-made environment were chosen (a total of 73 indicators). This set of SDG indicators comprised all the SDG indicators under the SDGs for clean water and sanitation (SDG 6), responsible consumption and production (SDG 12), climate action (SDG 13), life below water (SDG 14) and life on land (SDG 15), plus CO2 emission per unit of value added (SDG Indicator 9.4.1), economic loss due to natural disasters (SDG Indicator 1.5.2), levels of fine particulate matter in cities (SDG Indicator 11.6.2), and proportion of land for sustainable agriculture (SDG Indicator 2.4.1). Then, as outlined in Sect. 3, the chosen SDG indicators were mapped onto a network of cause-effect chains (developed based on the environmental problems addressed in the SDGs and PBs) along with the PB control variables and linked together wherever relevant (see Fig. 1). This mapping step further classified the SDG indicators into driver (0 SDG indicators), pressure (2 SDG indicators), state (19 SDG indicators), impact (14 SDG indicators) and response (38 SDG indicators) indicator categories.

As emphasised in [1, 2], human societies should be operating within the thresholds reported in the PBs. Therefore, this section focuses on the PBs and discusses how each PB (shown in bold text) is related to different SDGs. Steffen et al. introduced a PB called "freshwater use" and two control variables to evaluate the challenges resulting from absolute water withdrawals [2]. The proposed control

variables estimate the associated impacts at the global as well as the basin levels [2], and inform the impacts at the pressure point of the DPSIR impact pathway (see Fig. 1). Likewise, SDG Indicator 6.4.1 evaluates the same problem at the pressure point in the impact pathway (in terms of water use efficiency). Consequently, at the state point, SDG Indicator 6.4.2 accounts for the effects of excessive water withdrawals (i.e. the level of water stress), which is similar to the PB control variable [12]. However, the proposed SDG indicators do not include any absolute limits. We, therefore, recommend deploying the thresholds proposed for the freshwater use PB because the control variables and the SDG indicators largely overlap; and both inform the impacts at the pressure or state point in the impact pathway.

Increasing atmospheric CO2 concentration and the associated CO2 uptake by the oceans have resulted in ocean acidification problems [2]. As a consequence, a PB called "ocean acidification" was introduced with a control variable (state point) and a threshold for carbonate ion concentration in terms of aragonite [2]. Meanwhile, the SDGs advanced an indicator (SDG Indicator 14.3.1) that estimates the pH level of the oceans [12]. Although the control variable and the SDG Indicator apply different units to track the ocean acidification effects, the objective and the point of assessment in the DPSIR framework are the same. Moreover, both the SDG indicator and the control variable evaluate the impacts on an absolute scale. We, therefore, comprehend that the ocean acidification impacts can be measured in terms of either aragonite or pH level of the oceans.

The "changes in biosphere integrity" PB adopts two control variables to assess the two components of the biosphere: genetic and functional diversity [1, 2]. The first component evaluates the extinction of species due to human pressures, whereas the second estimates the loss of biodiversity at different ecosystem levels. According to Fig. 1, the impacts pertaining to the both components are expressed at the impact point of the DPSIR impact pathway. In this regard, the SDGs also propose a set of indicators for protecting terrestrial, marine and freshwater ecosystems [12]. SDG Indicators 14.4.1 and 14.5.1 estimate the proportion of fish stocks existing within the biologically sustainable levels and the coverage of protected marine areas, respectively. Moreover, SDG Indicator 6.6.1 tracks the changes occurring in both marine and freshwater ecosystems due to water quality degradation. Although these SDG indicators implicitly underpin the significance of operating within the Earth's carrying capacity, no relevant boundaries have been reported. However, given that the objectives of these control variables overlap with the SDG indicators, it makes sense to supplement the SDG indicators with the thresholds proposed for the "changes in biosphere integrity" PB to inform the environmental impacts in terms of genetic and functional diversities on an absolute scale.

Considering the intensive use of nutrients and the associated eutrophication effects in major ecosystems, Steffen et al. proposed the so-called "biogeochemical flows" PB and two associated control variables [2]. These control variables evaluate the eutrophication effects in oceanic, freshwater and terrestrial ecosystems. Given that the major eutrophication problems arise from N and P fertiliser use and the control variables evaluate the impacts at the pressure point (as shown in Fig. 1), thresholds have been set for N and P fertiliser application [2]. Likewise, SDG Indicator 14.1.1 evaluates the problem of marine eutrophication resulting from land-based activities, including nutrient pollution [12]. Since both SDG Indicator 14.1.1 and the relevant control variables refer to the same problem of eutrophication, and particularly at the same point of the impact pathway (i.e. pressure), the PB thresholds can be used as they are complementary to SDG Indicator 14.1.1.