How it works

Life cycle analysis

The Metrics Project proposes a life cycle approach for tallying environmental effects before, during and after a product is used by the consumer. The measured effects include emissions of toxicants, energy consumption, disposal space, and biosystem degradation -- among others. A life cycle approach examines the entire supply chain up to the point of purchase, from raw materials, to manufacture, to transportation, warehousing, and finally to the point of sale. It also examines a product's use of resources and emissions during regular use, such as a vehicle's fuel, emissions, and parts for example. The last phase looks at the effects on the environment after a product's use, whether detrimental as waste or beneficial as fertilizer.

There are a few existing forms of life cycle analysis provide a methodology for tallying these effects. The challenge lies in converting life cycle analysis into a set of consistently useful measurements for manufacturer and consumer alike.

Eco-accounting

If you're successful at gathering information on, say, 20 different ecological effects, how do translate those into a single metric? First of all, you treat toxicants and energy consumption as liabilities, while accoutning for energy production and natural resources as assets. Consumption of fossil fuels is seen as a depletion of assets, while renewable energy technologies are interpreted as sources of income.

With eco-accounting, all ecological effects are converted individually into a common currency – the eco. Thus, CO2 emissions, power consumption and landfill space are linked in the same fashion as dollars, swiss francs and yen: with currency exchange rates.

To date, scientists and economists have shied away from quantifying ecological effects in this fashion. Our current state of science makes it impossible to express these effects empirically as fact – just look at the existing debate over global warming. It can take decades before current environmental theory is looked upon as scientific fact, yet there is an urgency to change behaviors and practices now.

Eco-accounting sidesteps this issue by letting the exchange rates for ecological effects change over time. With fluctuating exchange rates, enterprises can use similar software and accounting principals as those used with traditional currencies. Most importantly, it allows them to begin to use financial accounting for ecological factors long before the scientific debate is settled, by allowing an agreed-upon exchange standard to be used in the interim. Eco-accounting also provides a much-needed framework for ecological reporting and for calculating a variety of different ratios, such as return on ecological investment or ecological unit cost.

The Sustainability Score

While eco-accounting is a great approach for calculating a bottom line in ecos, we have determined a need for an index that rates a product's ecological impact. This rating is expressed as the Sustainability Score, where perfect balance is ranked at 100. Any product with a detrimental effect on the environment would score in the single or double digits, while an ecologically beneficial product would has a Sustainability Score greater than 100.
Like eco-accounting, this score sidesteps the need for a scientific agreement on how much human activity is sustainable
The Sustainability Score
While eco-accounting is a great approach for calculating a bottom line in ecos, we have determined a need for an index that rates a product's ecological impact. This rating is expressed as the Sustainability Score, where perfect balance is ranked at 100. Any product with a detrimental effect on the environment would score in the single or double digits, while an ecologically beneficial product would has a Sustainability Score greater than 100.
The Sustainability Score provides a consumer-friendly way of evaluating products against sustainability – without necessarily having to determine the exact point of sustainable human development for a given geographic area.

Ecolabeling

The last link in the chain is putting the Sustainability Score onto product packaging or making it visible at the point of sale. This allows consumers to quickly gauge the “greenness” of a given product, independently of branding and advertising. It also permits a quick comparison at the point of purchase, therefore driving more environmentally friendly consumer behavior – up to a 10% price differential.

Ecolabeling provides a competitive marketing advantage for companies that produce greener products. This competition in the marketplace creates a strong incentive for other, less eco-friendly companies to become greener – through better practices, not advertising.

Ecolabeling completes a virtuous loop in the marketplace, where metrics and labeling can drive individual purchase decisions, changing lifestyles at the micro level. These is turn drive manufacturers and service providers to be green to stay competitive.