The Power of Life Cycle Assessment: A Guide for Companies

Learn why life cycle assessment is crucial for companies to reduce CO2 emissions and position themselves for the future. Life cycle assessments are guided by internationally recognized ISO standards, such as ISO 14040 and ISO 14044, which provide a framework for consistent and credible assessments. The standardized ISO framework provides a consistent way to compare products or services and makes it easier to answer questions about their environmental impact. Discover the multiple benefits of this assessment method and how it can help companies become greener and position themselves for future financing and circular economy markets. The European Commission has also played a key role in developing and harmonizing environmental footprint methodologies, further supporting the adoption of LCA across Europe.

Table of Contents

• What is a lifecycle assessment?

• Why is a life cycle assessment crucial?

• The many advantages of a life cycle assessment

• How a lifecycle assessment can help companies

• How I can help

• Frequently Asked Questions (FAQ) about Life Cycle Assessment (LCA)

What is a lifecycle assessment?

A lifecycle assessment (LCA) is a method for evaluating the environmental impact of a product, process or service over its entire lifecycle. This life cycle includes the extraction of raw materials, production, transportation, use, disposal and recycling. An LCA examines the product's life cycle by analyzing the different stages involved, from raw material extraction to end-of-life disposal. The second phase of an LCA is the life cycle inventory (LCI) analysis, which involves gathering detailed data on all inputs and outputs associated with each stage of the product's life cycle.

The key stages of an LCA typically include raw material extraction, production, use, and disposal, ensuring a comprehensive evaluation of environmental impacts throughout the product's life cycle.

The main objective of an LCA is to quantify and evaluate the environmental impacts in order to make informed decisions to reduce these impacts.

However, the focus of LCA is not limited to CO2, and companies can extend LCA to other impact categories such as ozone depletion, eutrophication, acidification, human toxicity, ecotoxicity, photochemical ozone creation, land use and resource depletion.

While LCA evaluates the environmental impacts of products or services across their life cycle, an environmental impact assessment is a formal analysis primarily used for new construction projects to assess potential environmental effects and ensure regulatory compliance.

In practice, LCA works by following a step-by-step process: defining goals and scope, compiling a life cycle inventory, assessing impacts, and interpreting results, often using real-world examples such as evaluating the environmental footprint of a laptop from production to disposal.

Definition and purpose

Life cycle assessment enables companies to understand and evaluate the environmental impact of their products and processes, providing insights into the product's impact throughout its entire life cycle. By analyzing the entire life cycle, companies can identify environmental impacts and take targeted measures to reduce these impacts. LCA also helps companies make informed material choices, which can significantly reduce environmental impacts and improve sustainability reporting. This is particularly advantageous when comparing different products, as the ecologically less harmful variant can be determined. LCA supports the development of more sustainable products by enabling the assessment and comparison of alternative materials and designs. The product design receives valuable design information and can thus close material cycles and consider the entire product life cycle. Near the end, it is essential to note that LCA is crucial for companies aiming to create sustainable products with a lower environmental footprint.

Methods and approaches

There are various methods and approaches for carrying out a life cycle assessment, including the use of iso standards, which are the primary lca standards used globally. These standards define the principles and framework conditions for conducting an LCA and provide guidelines for data collection, evaluation and interpretation. Additionally, PEF and PACT are gaining increasing attention. The product environmental footprint (PEF) is a methodology developed by the European Commission to standardize product-level environmental assessments. ISO 14025 provides a framework for Environmental Product Declarations (EPDs) that measure a product's environmental impact. Learn more about them here: Understanding LCA Methodologies and Standards: A Guide to Sustainable Product Development.

The European standard EN 15978:2011 is widely used for building LCAs. Building LCA and whole building LCA are specialized applications of LCA for the construction sector, guided by standards like ISO 21931 and EN 15978. Whole building LCAs include all materials in a building but are often limited to the materials with the largest quantities or impacts.

LCA tools such as SimaPro and openLCA are essential for conducting complex assessments efficiently. LCA software solutions can automate data collection and analysis, making the process more efficient and accessible for businesses.

Challenges

A detailed LCA study can be complex and costly as it requires the collection of extensive environmental data at each stage of the life cycle. Setting up and applying the methodology and databases requires considerable time and money. When modeling in life cycle inventory (LCI), it is important to organize both input and output data clearly to ensure accuracy and avoid confusion in the assessment.

The need for the availability of reliable data is fundamental. Databases such as Ecoinvent, which are both open use and accredited, allow information to be shared freely and enable life cycle inventory analysis for a variety of sustainability assessments. In specific sectors, aggregated data or sectoral averages are often used to estimate environmental impacts when primary data is unavailable.

The limitations of an LCA should also be understood. The focus on environmental impacts often means that economic and social challenges are not addressed. Furthermore, while the LCA methodology evaluates potential and non-real environmental impacts, it evaluates global or regional rather than local environmental effects. This means that while LCA has recognized that emissions have a global impact, local or smaller impacts on ecosystems or human health are not identified.

Importance for companies

For companies, life cycle assessment is critical to understanding and reducing their environmental impact. By implementing LCA, companies can achieve their sustainability goals, optimize their processes and make their products more environmentally friendly. LCA can also identify opportunities for cost savings by reducing resource and energy consumption. Tracking energy usage and energy used throughout the product life cycle helps companies pinpoint efficiency improvements and further reduce environmental impacts. Innovation becomes more important as questioning the status quo leads to new, profitable ways of doing things.

Understanding the Stages of a Life Cycle Assessment

Life Cycle Assessment (LCA) is a powerful tool that enables companies to evaluate the environmental aspects and potential impacts of their products, processes, or services across the entire life cycle. By taking a cradle-to-grave approach—from raw material extraction through production, use, and final disposal—LCA provides a comprehensive view of a product’s environmental footprint. This holistic cycle assessment helps organizations pinpoint where the most significant environmental impacts occur, allowing them to make informed decisions that reduce their overall environmental footprint and drive more sustainable business practices.

Overview of the Four Main Stages

The LCA process is structured into four essential stages, each playing a critical role in understanding and improving a product’s environmental performance:

1. Goal and Scope Definition: At the outset, it’s vital to clearly define the purpose of the life cycle assessment and what you aim to achieve. This includes specifying the functional unit (the basis for comparison), setting the system boundaries (what’s included or excluded in the study), and identifying which life cycle stages will be assessed. A well-defined goal and scope ensure that the assessment is relevant, focused, and aligned with your business objectives.

2. Life Cycle Inventory (LCI) Analysis: In this stage, companies gather and quantify data on all environmental inputs and outputs associated with the product system. This includes tracking resource use, energy consumption, emissions to air, water, and soil, and waste generation throughout the entire life cycle. The LCI provides a detailed map of the environmental exchanges between your operations and the environment, forming the foundation for further analysis.

3. Life Cycle Impact Assessment (LCIA): Here, the focus shifts to evaluating the potential environmental impacts identified in the LCI. This involves analyzing impact categories such as climate change, resource depletion, human health, and ecosystem quality. The LCIA helps companies understand which environmental impacts are most significant, such as global warming potential or resource use, and where targeted improvements can have the greatest effect.

4. Interpretation of Results: The final stage involves making sense of the data and drawing actionable conclusions. This includes assessing the completeness and reliability of the results, identifying significant environmental issues, and developing recommendations for reducing environmental impacts. The interpretation phase is crucial for translating complex data into practical strategies that enhance sustainability and support informed decision-making.

Key Activities in Each Stage

• Goal and Scope Definition:

• Establish the functional unit and system boundaries.

• Determine which life cycle stages and impact categories will be included.

• Clarify the intended use of the results and the target audience.

• Life Cycle Inventory (LCI) Analysis:

• Collect and quantify data on all environmental inputs (such as raw materials and energy) and outputs (emissions and waste).

• Ensure data quality, completeness, and relevance to the assessment.

• Use primary data where possible, supplemented by industry averages or databases for background processes.

• Life Cycle Impact Assessment (LCIA):

• Select relevant impact categories (e.g., climate change, resource depletion, human toxicity).

• Apply characterization factors to translate inventory data into potential environmental impacts.

• Evaluate which stages or processes contribute most to the overall environmental footprint.

• Interpretation of Results:

• Review the results for consistency, sensitivity, and completeness.

• Identify significant issues and opportunities for improvement across the value chain.

• Develop clear recommendations for reducing environmental impacts and enhancing sustainability.

By mastering these stages of the life cycle assessment process, organizations can gain valuable insights into their environmental performance, reduce their contribution to climate change, and make more sustainable choices throughout their value chain. Whether you’re aiming to minimize carbon emissions, optimize resource use, or improve your product’s environmental profile, understanding the LCA process is key to achieving your sustainability goals and maintaining a competitive edge in today’s market.

Why is a life cycle assessment crucial?

Reduction of CO2 emissions

Life cycle assessment enables companies to identify and quantify their CO2 emissions throughout the entire life cycle. By analyzing these emissions, companies can take targeted measures to reduce their carbon footprint and thus actively contribute to climate protection. Insofar as a company focuses only on CO2, something like Doconomy’s 2030 calculator is a relevant tool to get an initial feel for the interdependencies of a CO2 assessment. By highlighting the areas with the greatest environmental impact, an LCA enables targeted improvements, allowing companies to focus on the areas where changes will have the most impact on reducing their environmental footprint.

Environmentally friendly management

By implementing a continuous lifecycle assessment process, companies can develop more environmentally friendly products and processes. This not only helps to protect the environment, but can also strengthen the company’s image and increase customer satisfaction. In addition, an LCA can identify so-called “hotspots” in a lifecycle that indicate where the company or its suppliers should adapt their processes to reduce their environmental impact. Adopting a cradle to cradle approach ensures products are designed for reuse and recycling, supporting a circular economy by closing material cycles and replacing the traditional cradle-to-grave model. A better understanding of the context in which a product operates allows for a more targeted action plan to address the product’s environmental impact, as well as highlighting the critical areas where action needs to be taken. This is important because sometimes a product can perform well in terms of CO2 emissions but use too much water during its life cycle. Thanks to this broader spectrum, LCAs can also protect our oceans, biodiversity and the natural environment.

Future-oriented corporate financing

The consideration of environmental impact and sustainability aspects is becoming increasingly important for companies, especially with regard to future financing. A life cycle assessment can help companies to position themselves as sustainable and future-oriented companies, which in turn facilitates access to financing. Learn more about financed emissions for companies.

The many advantages of a life cycle assessment

• Lower costs: An LCA can provide data on inefficiencies, potentially leading to a reduction in energy or material consumption.

• New business: By communicating the results of an LCA, a product can attract customers that it might not otherwise have attracted.

• Benchmark: A benchmark of product impact serves as a future marker to show progress.

• Internal cohesion: The objectivity provided by an LCA gives different departments a better understanding of company-wide priorities and provides a common goal to achieve.

• Risk management: Finding risks and reducing the occurrence of costly incidents within the supply chain.

• Hotspots: Determine “hotspot” areas with significant environmental impacts along a product’s lifecycle.

• Discussion: By taking an open-ended view of supply chains, companies can have open discussions about supply decisions made and their rationale, both internally and with suppliers.

• Future changes: By modeling the product lifecycle, scenario testing can provide information on the impact of future product developments.

• Regulatory preparation: A lifecycle assessment can provide companies with insights into the impact of future regulations and the associated costs.

• Brand reputation: By conducting an LCA, a company demonstrates corporate responsibility and shows that it is committed to a sustainable future.

• Credibility: A LCA is an internationally recognized standard that assures external parties that a product has undergone an independent analysis to verify its sustainability.

• Marketing: The results of an LCA can be combined with other environmentally relevant information to create an environmental product declaration (EPD). Environmental product declarations are standardized documents, often developed according to EN 15804 or similar regulations, that communicate the key results of an LCA in a user-friendly format and are widely used to verify and compare the environmental impact of building materials and systems.

How a lifecycle assessment can help companies

More sustainable business

Implementing a lifecycle assessment helps companies to operate more sustainably and reduce their environmental impact. The introduction of LCAs can significantly improve a company's reputation and competitiveness in the marketplace. As consumers and stakeholders increasingly prioritize sustainability, companies that use lifecycle assessments demonstrate their commitment to transparency, environmental responsibility and a forward-looking approach. By showcasing LCA results and implementing sustainable practices, companies can build a positive brand image and strengthen their reputation as environmentally conscious businesses. This not only attracts environmentally conscious consumers, but also differentiates the company in the marketplace and positions it as a leader in sustainable business practices. Ultimately, integrating LCA into corporate strategies not only serves to mitigate environmental impacts, but also as a strategic method of gaining a competitive advantage and promoting a positive perception in the marketplace.

Positioning for future financing

A life cycle assessment can help companies to position themselves as a sustainable and future-oriented company. This can facilitate access to finance and increase investor and stakeholder confidence. By driving technological innovation, LCA not only contributes to environmental protection, but also positions companies at the innovative forefront of the industry and promotes a culture of continuous environmental improvement. 

Compliance with environmental regulations and standards

By considering environmental impacts and sustainability aspects, companies can ensure compliance with environmental regulations and standards. This helps to mitigate risk and build a responsible corporate image.

As the need to reduce operational impacts on the environment becomes more urgent, more regions, countries and industries are introducing regulations and voluntary programs that require and incentivize companies to measure and report their carbon footprint and other operational impacts. European regulation such as CSRD, with its double materiality, will benefit those companies that can speak this new language of business. Industries such as construction and textiles are also introducing specific regulations or standards that require or encourage LCA for products or processes in the supply chain. Some regulations specifically require assessments up to the factory gates or use a cradle to gate approach, focusing on the environmental impact up to the point the product leaves the factory. Analyzing the production chain helps companies understand and improve environmental impacts at each stage. In the construction sector, assessing construction materials and their embodied carbon is essential to meet sustainability standards and reduce lifecycle impacts. One example:

• The Ecodesign Directive in the European Union aims to improve the environmental performance of energy-related products and may require an LCA as part of the product design and assessment process for certain product groups.

• The introduction of a “right to repair“ has been proposed in the EU’s new Consumer Agenda and Circular Economy Action Plan. This is intended to help consumers overcome obstacles that prevent them from having defective products repaired. Such barriers can include inconvenience, lack of transparency or difficulties in the availability of repair services. The “right to repair” aims to promote repair as a more sustainable consumption choice that contributes to the climate and environmental goals of the European Green Deal.

• Public procurement policies in different countries or regions, such as the City of Hamburg, including the European Union, may require the consideration of LCA or LCA-derived environmental criteria in the procurement of products or services.

Life cycle assessment is therefore a crucial method for companies to understand and reduce their environmental impact and to position themselves for the future. By implementing LCA, companies can not only operate in a more environmentally friendly way, but also secure their financial future and position themselves as a responsible and sustainable business. For a comprehensive overview, visit our guide to life cycle assessment

How I can help

I offer specialized consulting services to help companies implement effective life cycle assessments. My comprehensive support includes:

• Goal definition and scoping: I help define what is to be measured by establishing the purpose and target audience of the LCA, defining the system boundaries, functional unit, mapping procedures and depth of analysis, what is out of scope and which impact categories are to be measured.

• Inventory analysis: I assist in collecting and structuring the data by mapping each process within the scope, modeling the data into input-output flows, defining background data and sources for each process, and collecting the required data points. After data collection, the next phase is the life cycle impact assessment, where the gathered data is translated into environmental impacts.

• Impact assessment: I translate the data into impacts by modeling the life cycle to define the life cycle inventory impacts and by calculating all environmental impact categories (e.g., the potential impact on climate change and global warming).

• Interpretation of results: I help translate impacts into conclusions and opportunities by understanding the drivers of environmental impact outcomes, determining opportunities and risks, identifying where improvements can be made across the life cycle, and calculating the opportunities for value creation from reducing environmental impacts.

By leveraging my expertise, companies can effectively implement LCAs, reduce their environmental impact, and position themselves as leaders in sustainability. In addition to traditional environmental LCAs, social LCA is an emerging approach that evaluates the social impacts of products and processes. If you would like to learn more or need assistance, feel free to contact me for a consultation.

Frequently Asked Questions (FAQ) about Life Cycle Assessment (LCA)

What is a Life Cycle Assessment (LCA)?

A Life Cycle Assessment (LCA) looks at the environmental impact of a product, service or process across its entire life – from raw materials to disposal. It helps companies understand where their biggest environmental impacts are and how to reduce them.

LCA can also be used to calculate a product's environmental footprint using standardized methodologies, such as those developed for the Product Environmental Footprint (PEF) initiative.

Why is an LCA important for businesses?

Because it shows where you can cut emissions and waste. LCA highlights the hotspots in your product lifecycle and helps you take targeted action—whether it’s reducing CO2, saving materials or improving energy use. It also boosts your credibility with investors and customers. By evaluating material choices, LCA enables companies to select options that minimize environmental impacts throughout the lifecycle.

What are the main phases of an LCA?

There are four key stages of a life cycle assessment:

• Goal & Scope: Define what you’re assessing and why.

• Inventory: Collect data on materials, energy use and emissions.

• Impact Assessment: Measure environmental impacts like CO2, water use, toxicity, etc.

• Interpretation: Draw conclusions and identify improvement opportunities.

What are the benefits of doing an LCA?

LCA helps you:

• Cut emissions and improve sustainability by supporting the development of more sustainable products through identifying opportunities for improvement

• Identify cost savings and efficiency gains

• Make better design and sourcing decisions

• Comply with regulations and upcoming laws

• Improve reputation with customers and partners

What are typical challenges in running an LCA?

The biggest challenge is often getting good data—from your own operations and from suppliers. It can also take time and expertise to model everything correctly. But with the right tools and support, it becomes manageable.

Does an LCA only focus on CO2?

No. CO2 is important, but LCA can also measure water use, toxicity, acidification, land use and more. It gives a fuller picture of your product's impact on the environment.

Do I need special software to run an LCA?

Not necessarily. You can start simple with spreadsheets and public databases, but larger or more complex LCAs usually benefit from specialised tools like openLCA, SimaPro or Ecoinvent.

Can LCA help with upcoming EU regulations?

Yes. LCA is directly relevant to CSRD, Ecodesign and the EU Green Deal. The European Commission has played a leading role in developing and harmonizing environmental assessment methodologies such as PEF, supporting these regulatory initiatives. It shows that you take environmental responsibility seriously—and that can make a real difference when talking to regulators, investors or public buyers.

How often should I update an LCA?

Best practice is to update your LCA when you change something big—like switching materials or redesigning a product. If nothing major changes, a refresh every 2–3 years is a good rhythm.

Can an LCA help me attract funding?

Absolutely. Sustainability is a key decision factor for many investors. An LCA shows that you're serious about impact, risk management, and future-proofing your business. It builds trust.