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Lessons from Kraft and Tesco on Making LCA Count

There have been two particularly “mediatized” stories recently in the food industry that I felt needed some reality checking. The first was the coverage of Kraft’s news that after many months and dollars spent their environmental impact analysis (LCA) revealed that most of their hotspots are in the production of their raw materials and not the rest of their supply chain. And the second was the more recent announcement by Tesco in the UK that it would abandon carbon footprint labeling efforts on the 70,000 products on shelves. Tesco embarked on the labeling initiative using the Carbon Trust method and the project is being dropped because this method is too expensive, and they were disappointed that the uptake across the industry was not happening. In both instances, there are some very important lessons about getting maximum benefit of LCA work with less time and resource investment.

Kraft: Taking the Long Way

First, let’s look at the Kraft work. They spent tens, if not hundreds, of thousands of dollars with a very well established and credible consultancy looking at their entire operations to determine that 90 percent of their impacts came from outside their immediate facilities — with 60 percent coming from the production of raw materials.

If you work in food manufacturing, know that this is a common finding for food products. The production of your raw materials – probably not the plastic or the aluminium as you may assume, but the wheat, the corn, the beef, the dairy, and even the vegetables – are where you’ll find your hotspots . And by taking into account the production methods of each ingredient (greenhouse, fertilizer, irrigation) your impacts could vary widely. It’s not enough to change your light bulbs (although that’s a good first step and will reduce your electricity bill and help sell sustainability internally), your responsibility extends to your entire supply chain down to how your raw ingredients are produced. Get a handle on your numbers by running affordable LCAs  to make the best decisions about your supply chain.

Tesco: focusing on supply chain efficiencies

Now on to Tesco. The Carbon Trust method relies on a couple of key components. One, that consumers care. And that by declaring the “carbon reduction value,” consumer behavior will change and therefore all other retailers will get on board. Not only is it unlikely that consumer behavior will change and that other retailers will jump on the bandwagon, what Tesco hasn’t publicly addressed yet is that the real benefit to measuring the impacts along the product lifecycle comes in the form of supply chain efficiencies, specifically in waste and cost reduction. Unfortunately for Tesco, their exposure concerning their labeling activities for “consumer engagement” objectives has been global, therefore they had to back off from this goal publically in order to continue to reap the benefits that they’re seeing behind the scenes.

The second key component that the Carbon Trust has relied on is the (costly) purist theory that every element in the lifecycle is of equal importance and therefore needs to be measured down to the most granular detail. This is incorrect statistically and results in countless wasted dollars in days traveling to farms and production facilities, and analyzing every machine on the factory floor. In many cases, the data collected is biased by the situation and therefore not a good number to work with for a quantitative analysis.

The easiest example is to think about transport. Should you go and measure the carbon dioxide output of every train in Germany or every truck in Argentina, or is it good enough to know the average output of a train or a truck depending on fill rates? Food ingredient production can be done the same way, at least as a first pass. Once the hotspots in the supply chain have been identified, then another layer of detail can be rolled back to see if there are insights to be gained below the top level. This dramatically reduces the amount of work needed to get accurate and quality outputs and makes carbon footprinting for external publishing or internal benchmarking affordable and accessible.

The Clash of Two Approaches

We have been advocating for a smarter approach for more than three years now. Our simplified lifecycle approach has been fighting upstream against the likes of the Carbon Trust and numerous universities that have been promoting the purist approach for years. We’re hopeful that these two announcements and the reactions to them will finally open eyes across the food industry to the fact that there are alternative, credible, affordable, and much easier methods that can quantify environmental impact and unveil the mysteries of LCA.

Supply chain efficiency, reducing cost and waste, reducing risk, securing quality supply through reinforced supplier relationships, and ultimately establishing a sustainable, profitable business over the long term are the very real gains that can be expected.

Sara Pax is the president of Bluehorse Associates, a developer of environmental sustainability metrics solutions specialized in the food and beverages industry that includes the web-based, lifecycle assessment and product carbon footprinting tool Carbonostics.

Sara Pax
Sara Pax is the president of Bluehorse Associates, a developer of sustainability metrics specialized in the food and beverages industry with its smart product-level lifecycle assessment solution, Carbonostics (cost + carbon + nutrition). www.carbonostics.com
 
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One thought on “Lessons from Kraft and Tesco on Making LCA Count

  1. Sara,

    Thanks for the article. You make some good points and I think you bring some nice level of additional thought to what these aspects really mean on a bigger picture. However, I have to ask about the point you made with Tesco where “countless wasted dollars in days traveling to farms and production facilities, and analyzing every machine on the factory floor. In many cases, the data collected is biased by the situation and therefore not a good number to work with for a quantitative analysis”
    Is this really how they did the data collection, or is this how you believe the data was collected? If this is how they were gather the footprint information, clearly there is room for improvement and I am not sure scrapping the whole program would make sense.
    If this is accurate, I don’t believe the travel and other aspects associated with data collection need to be an in person venture. You can leverage the internet to link all facilities and remote locations into a centralized system which greatly helps to reduce the costs of such manual means. (In full disclosure, this is what I and Locus help companies do) In relation to the equipment that might be an onsite aspect, but that can also be handled locally, and it need not be every year. For example, with AB32 in California the verifiers are required to complete an onsite site visits to check calibration, but only 1 tine ever 3 years. And in theory, those calibration records can be included/attached online to the facility records and inspected should an issue arise or more information is needed.
    After collecting and gathering the information related to your inputs, you can then use the conversion factors and other calculations (depending of course on the methodology and standards selected for reporting). This can all be done by existing personal who handle their facilities, or centrally managed by corporate after the fact. One entered, all of this can be rolled up into a corporate footprint, or in Tesco’s case, at a product specific level if the correct data is originally capture at initial point of input.
    In regards to the shipping aspect you mentioned for things like trucks, trains, ships…etc, you can leverage fuel consumption data fairly accurately. And if this is capture in real time (or relatively real) you can also use that data to track fuel costs and other information around the operations, not just the Carbon footprint or other GHG information. While CEMS systems and real time data metering at the initial source would be ideal and the most accurate, it’s neither realistic nor cost effective to expect a company to manage in that manner.
    Basically, it sounds like Tesco(and their US based Fresh & Easy) was trying to lead the way and I applaud the effort, but it sounds like there is room for improvement from an operation perspective and I would be curious to learn more about the actual day to day data collection efforts.

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