Carbon accounting and Life Cycle Assessment are two of the most widely recognized and used methodologies for measuring our environmental impact on the planet. However, it’s important to understand that while they both quantify carbon emissions, they largely differ when it comes to focus and methodologies. One tool is for reporting and the other is for managing and reducing. So, which is which?
Read on to understand how carbon accounting and LCA are actually complementary and how you should be leveraging both to access actionable levers for your sustainability strategy.
In a previous article, we went in depth to elaborate on the limitations of a carbon-focused climate strategy and argue in favor of a more rounded approach that takes multiple environmental indicators into account. Let’s dig deeper into this through a more practical lens by comparing carbon accounting and Life Cycle Analysis.
By definition, carbon accounting is akin to a financial audit but for greenhouse gas emissions. It is all about measuring the carbon footprint of an organization or product in a given period. Essentially, it totals up all the greenhouse gases (carbon dioxide, methane, nitrous oxide) expressed in terms of carbon dioxide equivalent (CO2e) released into the atmosphere. Carbon accounting is guided by scientific standards such as the Greenhouse Gas Protocol, the Bilan Carbone® in France, and ISO 14064 et 14069, and is relatively simple to carry out with data being readily available.
Carbon accounting fulfills its obligation of being informative, making it useful for compliance with regulations and reporting to stakeholders. Carrying it out allows you to know the emissions coming from your direct operations (Scope 1), purchased electricity (Scope 2) and your supply chain (Scope 3), where, in most cases, more than 80% of your emissions comes from.
Life Cycle Assessment (LCA) is a standardized evaluation method used to carry out a multi-criteria, multi-stage environmental assessment of a product or service over its entire life cycle. This means looking at everything from raw material extraction to consumption or disposal. It puts a magnifying glass over the production of not just the finished product but also of the raw agricultural ingredients used. LCA is scientifically robust and globally recognized, which enables the comparison of the performance of different products or services. It’s a useful tool for finding opportunities to improve sustainability across the whole supply chain, not just within your Scope 1 and 2. It is the tool for assessing your Scope 3 emissions.
One of the key benefits of LCA is its comprehensive approach, which is especially beneficial for the food industry's complex supply chains that rely on agriculture. It doesn’t just focus on carbon emissions but is multi-criteria, looking at other factors like land use, water consumption, resource depletion and even biodiversity loss. While it is certainly more complex than carbon accounting, LCA gives a complete picture of a product's environmental footprint, helping companies make better-informed decisions within operational teams such as procurement, R&D and marketing.
There are two widely practiced methodologies for carbon accounting: one that is based on spend and another that is based on activity.
Spend-based carbon accounting estimates greenhouse gas (GHG) emissions based on the amount of money spent on goods and services. This method involves analyzing an organization's financial expenditures across various categories, such as raw materials, energy, and transportation. Emission factors—standardized values estimating emissions per unit of currency spent—are then applied to these expenditures. Spend-based carbon accounting is relatively straightforward, leveraging existing financial data to provide a broad overview of emissions. However, it offers less precision, relying on estimates that may not reflect specific operational nuances.
Let’s illustrate this by taking a food brand that produces packaged snacks as an example. If they’re carrying out a spend-based carbon accounting, it would mean collecting data on all its spending, such as purchasing raw ingredients, manufacturing processes, packaging materials, transportation, and even office supplies. By applying emission factors to these expenses, the company can estimate the carbon footprint of each stage of their operations. So, if the food brand spends €1,000,000 annually on packaging, and the emission factor for their packaging materials is 2 kg CO2e per euro spent, the carbon footprint for packaging would be 2,000 t CO2e.
Activity-based carbon accounting, on the other hand, measures GHG emissions based on activities and processes within an organization. This approach involves collecting data on direct activities, such as energy consumption (kWh), transportation (km) or waste production (kg). Emission factors specific to these activities are applied to calculate emissions. Though more complex and data-intensive, this approach is more precise as it deals with data from a company’s activities.
So, taking the example of the same food brand, if their manufacturing process in one of their factories uses 1,000,000 kWh of electricity per day, then that is multiplied by the corresponding emission factor (0.05 kg CO2e per kWh) to come up with the carbon footprint for that activity. In this example, that’s 50 t CO2e per day.
Both methodologies offer valuable insights. Spend-based accounting is ideal for a broad overview and initial assessments, while activity-based accounting is centered on a granular examination of a company’s carbon emissions.
LCA is considered to be the most advanced, scientifically-backed method for assessing the environmental impact at product-level. Its methodology follows the ISO 14040 and 14044. Unlike carbon accounting, LCA is multi-criteria. While LCA has been around longer than carbon accounting, its adoption has been largely limited to large companies due to it being resource-intensive. However, with more advanced ways of collecting data today, automating LCA is now possible across entire product portfolios, making it much more accessible than before.
With automated LCA, Carbon Maps’ software collects data from the entire supply chain—covering everything from raw material sourcing and manufacturing processes to packaging, distribution, consumption and even waste disposal. Through automated LCA, all this data is processed rapidly to create a comprehensive dataset. It then applies impact assessment models to evaluate environmental impacts, considering factors like carbon emissions, water consumption, and impact on soil health. The software identifies key areas where you can reduce your environmental footprint at the product-level, such as swapping ingredients, switching to more sustainable packaging materials or even evaluating your current suppliers’ own sustainability strategies.
Traditionally, an LCA is a long process taking an average of six months but with automated LCA, that cuts it down to a matter of just a few weeks from set-up to having a view of your environmental impact in a clear and user-friendly dashboard. By automating LCAs, you can achieve a thorough and accurate understanding of your products' impacts with greater efficiency and precision. This modern approach also enables:
Carbon accounting is excellent for reporting because it provides a clear and quantifiable measure of an organization's carbon footprint, making it straightforward to track emissions over time and demonstrate compliance with regulations. However, carbon accounting is primarily focused on firm-level carbon emissions, which means it offers a broad overview rather than detailed insights. This approach is great for transparency and accountability, but it falls short when it comes to identifying specific opportunities for reducing environmental impact. As a company grows, its overall emissions are likely to increase as well, reflecting the scale of its operations without necessarily driving sustainable practices.
With LCA, businesses have the tools to produce more sustainably, managing growth in a way that minimizes environmental impact. This means that even as a company scales up production, it can implement strategies to reduce its overall environmental impact, achieving sustainable growth rather than just expanding its carbon footprint. In contrast to carbon accounting, LCA delves into the environmental impact at the product level, providing a comprehensive view not limited to just carbon emissions. This is worth seriously considering, especially for the food industry as accelerating biodiversity loss, water depletion and soil degradation have real grave impacts on food supply chains. A carbon-focused strategy is not enough to safeguard long-term sustainability.
Let’s say you are a food brand that manufactures dairy products. With carbon accounting, you start by measuring your company’s overall carbon footprint, identifying significant sources of emissions. Your footprint reveals that most of your emissions come from your supply chain, specifically, the agricultural production of your raw materials like milk and sugar.
To dive deeper, you turn to LCA to analyze the environmental impact of your best-selling yogurt throughout its entire life cycle. Armed with detailed information about your product, you can take targeted actions to improve its sustainability. For example, you might switch to suppliers who use more sustainable farming practices, or eco-design the packaging to have a lower impact.
By leveraging both carbon accounting and LCA, you can report your overall carbon footprint to stakeholders and regulatory bodies and implement specific strategies to reduce your environmental impact at the product level, ensuring that your growth is sustainable.
The Carbon Maps platform is specifically designed to address the Scope 3 challenge that the food industry faces. Given that nature is the foundation upon which the industry is built, we believe strongly that product-level assessments that take agricultural practices into account via LCA are key to understanding where real reduction opportunities lie. The only way to reduce your supply chain impact is through collaboration across the entire chain, from farmers to consumers.
Book a demo with us to learn more about how our platform carries out both carbon accounting for your organization and automated LCA across your entire product portfolio.
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