The Industrial Green Game. 1997. Pp. 124–131.

Washington, DC: National Academy Press.

Environmental Prioritization

INGE HORKEBY

Volvo's environmental initiatives, which began in the early 1970s, have evolved into a holistic approach to considering the environmental impacts of its products. In essence, the company has adopted a total systems approach to reduce the environmental impact of its products and production processes. This means that all aspects of a product's life cycle, from development through production and everyday use to disposal and recycling, are considered in addressing environmental concerns.

This total systems approach led Volvo in 1989 to initiate development of a sophisticated life cycle analysis system to examine the environmental impacts of materials and products. The system, known as Environmental Priority Strategies in Product Design (EPS), was developed collaboratively with the Swedish Environmental Research Institute and the Federation of Swedish Industries.

Internationally, two trends prompted the development of a tool to help select environmentally preferable materials. The first was the development of the life cycle assessment (LCA) concept from simple inventories of materials inputs and outputs into more sophisticated decision-support tools that also assessed associated environmental impacts. The Society for Environmental Toxicology and Chemistry (SETAC) emerged as a forum for international scientific exchange on LCA issues. Standard-setting organizations, such as the International Standards Organization and Comite European de Normalization, and business consortia, such as International Chamber of Commerce, started to show interest in LCA although most of the LCA studies conducted were (and continue to be) conducted on simple products of low design (packaging such as cans) or simple chemical compounds. Volvo wondered how such a tool might be used by a producer of a complex product such as a car.



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The Industrial Green Game: Implications for Environmental Design and Management The Industrial Green Game. 1997. Pp. 124–131. Washington, DC: National Academy Press. Environmental Prioritization INGE HORKEBY Volvo's environmental initiatives, which began in the early 1970s, have evolved into a holistic approach to considering the environmental impacts of its products. In essence, the company has adopted a total systems approach to reduce the environmental impact of its products and production processes. This means that all aspects of a product's life cycle, from development through production and everyday use to disposal and recycling, are considered in addressing environmental concerns. This total systems approach led Volvo in 1989 to initiate development of a sophisticated life cycle analysis system to examine the environmental impacts of materials and products. The system, known as Environmental Priority Strategies in Product Design (EPS), was developed collaboratively with the Swedish Environmental Research Institute and the Federation of Swedish Industries. Internationally, two trends prompted the development of a tool to help select environmentally preferable materials. The first was the development of the life cycle assessment (LCA) concept from simple inventories of materials inputs and outputs into more sophisticated decision-support tools that also assessed associated environmental impacts. The Society for Environmental Toxicology and Chemistry (SETAC) emerged as a forum for international scientific exchange on LCA issues. Standard-setting organizations, such as the International Standards Organization and Comite European de Normalization, and business consortia, such as International Chamber of Commerce, started to show interest in LCA although most of the LCA studies conducted were (and continue to be) conducted on simple products of low design (packaging such as cans) or simple chemical compounds. Volvo wondered how such a tool might be used by a producer of a complex product such as a car.

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The Industrial Green Game: Implications for Environmental Design and Management The second force behind the development of EPS was the emergence and acceptance of the sustainability concept in governments and the scientific community. United Nations Environment Program director Mustafa Tolba's statement, ''The 1990s will witness enormous changes in most sectors of society, but in almost none will they be as evident as in industry and environment and the new relationship that has formed between them," captured the trend as it affected industry. In the quest for sustainability, countries began experimenting with creating a "green" gross national product that would include an accounting of the state of the environment. It seems likely that there would be a monetary evaluation of the state of the environment in the future. Such a valuation of the state of the environment meant that any activity that affected the environment could also be valued on the basis of its impact. The implications of these trends to the firm are uncertain. It is clear, however, that it would be useful to know and understand a firm's environmental impacts. VOLVO'S DESIGN FOR THE ENVIRONMENT APPROACH Volvo's response to these trends builds on its 1983 efforts to design a low-weight component car. Many new ideas were tested in the process of designing a low-energy-consuming car. However, it was not easy to evaluate the environmental implications of different designs. For example, a low-weight material might have been produced with a lot of energy but its contribution to a low-weight vehicle implied a potential for reducing fuel consumption during vehicle operation. When Volvo launched the Environmental Concept Car in 1992, Volvo designers wanted a tool that could aid in the selection among design alternatives. Designers routinely handle several different criteria in their design process. The product definition gives the designer many things to consider. The success or failure of the design often hinges on related product attributes that may be of equal importance. Examples of such design elements include design for quality, for safety, against corrosion, for manufacturability, for assembly, and for service-ability. To the designer, design for the environment (DFE) would be another design element. Volvo's aims were to fit DFE as a module into the design element list that guides company designers and to develop a tool for environmentally prioritizing product designs. An equally important aspect of the car design process is the degree to which computers are used. Modern car design teams use computer-aided design software that can incorporate standard component modules. Volvo designers required a DFE tool that aggregated environmental impacts and was computer based; flexible; transparent;

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The Industrial Green Game: Implications for Environmental Design and Management reasonably fast; capable of carrying out multiple analyses; able to adjust to changes in best practice and best available technique; compatible with environmental inventory tools; product, processes, and industry oriented; capable of integrating new scientific findings; and transparent or neutral in assigning values to environmental attributes. DEVELOPMENT OF THE EPS SYSTEM Volvo designers, the Swedish Federation of Industries, and the Swedish Environmental Research Institute began discussing ways to develop a tool that could help guide decisions about environmental preferability. The tool was to be a compass, guiding appropriate environmental choices, not necessarily providing a definitive answer. During 1990, the first version of a tool (EPS-system, version 1.0) was developed (Ryding and Steen, 1991). A top-down approach was used to develop the system. The first question posed was, "What decisions do we need to make"? The last was, "What knowledge base do we need"? Relatively little attention was paid to well-known factors. Most of the work was done on factors such as certain environmental issues and the subjective values placed on environmental goods that could be barriers to the use of the system. To examine the use of the system and to develop it further, a second phase, the Product Ecology Project, was initiated. The project was led by the Swedish Federation of Industries and included the participation of 15 Swedish companies, Chalmers University of Technology, and the Swedish Environmental Research Institute. The second phase included the development of a newer version of the EPS system (Steen and Ryding, 1992), which is being tested by several companies. The development of the system was funded mainly by the Swedish Waste Research Council. The council carried out an international evaluation of the system concept in September 1993. The experiences from those activities will be included in the EPS system design. The system structure has been published in several articles and reports, but the databases and the software are still being developed and are not fully available for public use. The data for particular materials have to be proprietary to avoid a lot of unnecessary inconvenience for their manufacturers. For development purposes, however, less precise data have been used. THE EPS SYSTEM The EPS system assesses environmental impacts in terms of ecological and health consequences. It provides an opportunity to enumerate and assess environmental

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The Industrial Green Game: Implications for Environmental Design and Management TABLE 1 Factors Considered in Calculating Environmental Indices Factor Meaning Scope General impression of the environmental impact Distribution Extent of affected area Frequency or Intensity Regularity and intensity of the problem in the affected area Durability Permanency of the effect Contribution Significance of 1 kilogram emission of the substance in relation to the total effect Remediability Relative cost to reduce the emission by 1 kilogram Environmental Index = Scope X, Distribution X, Frequency or Intensity X, Durability X, Contribution X, Remediability X impacts of various human activities, such as emissions, energy use, raw materials use, and land use, at every material and product life stage before these data are aggregated and finally evaluated. Both basic assessments of values of environmental qualities as well as changes in these values resulting from human activities are estimated. The EPS system allows bookkeeping of environmental impacts. The principle tools of the EPS system are the definition of so-called environmental load indices for natural resource and energy use and for pollutant emissions. On the basis of these inputs, environmental indices for materials and processes are calculated (Table 1). The background information originates from an LCA-based inventory of materials and processes under study. Using the environmental load indices for materials and processes, an environmental load unit (ELU) per kilogram of any substance is calculated by multiplying the environmental index by the amount of substance released to the environment for the activity, process, or product life cycle under study. These can then be aggregated. The results of this analysis are grouped in various levels of aggregation suitable for any use. For instance, the environmental impact from production of steel can be expressed as a value relative to the impact from another activity. Any such number may be broken down into its components for further analysis, and the user can choose the analysis's level of complexity. Because uncertainty is inherent in much environmental data and many analyses, another necessary aspect of the EPS methodology is its use in sensitivity analysis. Sensitivity analysis responds to the need to know and allows the determination of how any quantity entered into the calculations influences the decision at hand. What data or change in environmental impacts would change the ELU value? Because most decisions are based on the comparison between two options, the measure of sensitivity for a certain quantity, X, is chosen to be the ratio between the standard deviation of X and the change in X necessary to alter the priority of the options.

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The Industrial Green Game: Implications for Environmental Design and Management For an error analysis to be made, the figure entered into the system must be expressed in terms of best estimate and an error function. The error function is, in most cases, assumed to be a log-normal distribution and it described by the geometric standard deviation. GENERAL CONSIDERATIONS There are many different ways to evaluate environmental impacts arising from such diverse concerns as depletion of resources or emissions. No system, even if it is developed systematically, is likely to be infallible, however. Today, only a couple of methods are published and available for evaluating different emissions on the basis of existing national targets for emission reductions. One is the effect category method (Baumann et al., 1992b; McKinsey & Company, 1991). This method evaluates data from the life cycle inventory (Table 1) with respect to their contribution to relevant environmental effects, called effect categories. The Chalmers University of Technology in Sweden has refined the method so that the effects also reflect the impact of political decisions and critical environmental loads. Another method, the ecoscarcity method, was developed by the Environmental Agency in Switzerland (Ahbe et al., 1990; Baumann et al., 1992a). Ecological scarcity is defined as the relation between the total environmental load on a defined geographical area and the critical load that area can withstand. The critical load was originally defined in terms of ecological limits. The Swedes have defined the critical load in terms of environmental targets set by law. However, the EPS system does not use national targets; it estimates the environmental ecological consequences. The Swedish Parliament has decided that the objective of the Swedish environmental policy is to protect human health, preserve biological diversity, maintain a long-term husbandry of natural resources, and protect the natural and cultural landscape. Five environmental safeguard subjects have been defined (Table 2). In refining the EPS system, these safeguard subjects are chosen to describe and measure all impact types in the environment of interest. It is, however, possible to TABLE 2 Objectives of the Swedish Environmental Policy Safeguard Subject Valuation Principle Biodiversity Society's cost for protecting biodiversity Human Health Society's cost for reducing excess deaths caused by various risks, and people's willingness to pay to avoid diseases, suffering, and irritation Production Organization for Economic Cooperation and Development market prices Resources Impact on the other safeguard subjects when restoring the resource Aesthetic Values People's willingness to pay

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The Industrial Green Game: Implications for Environmental Design and Management test other valuations in the EPS system, if necessary. The EPS method sets a value to a specific change in the environment (especially in terms of the safeguard subjects) and estimates what contribution a certain resource depletion, emission, or other activity will give to this value for this change in the environment This exercise results in a value, the ELU. When the value is expressed as ELU per kilogram or ELU per some other unit, it is referred to as an environmental load index. The environment load index can be used to compare various materials and aggregate materials with one another. Practical Use One of the weaknesses of LCA is its lack of practical application except in very special situations. The main objective in developing the EPS system has been to create a tool for use in everyday design situations in which one value expresses the total environmental impact of a material or process. The EPS uses a value that is not equal to money but can be compared with monetary value so that the potential environmental impact of a product can be quantified. In many cases, the answer obtained by using the EPS system requires further, more profound analysis. The system is designed so that users can access the calculations and basic data used to obtain any value. Users can choose the level of complexity and then run a sensitivity analysis to determine how changes in valuations and estimations may alter a design decision. Often, there are points in the product-development process where environmental issues have to be handled in different ways—from a fast screening of ideas to a more thorough analysis of the final concept. Implementation The development of EPS, which enables the car designer to incorporate the environmental properties of a product from the initial development stage, has continued since it was initiated in 1989. As the initiator, Volvo has taken an active part in developing the system. The key element of EPS is the environmental index. This index enables the adverse effects of emissions and the use of natural resources to be quantified. A unique feature of the system is that different factors can be weighed together to produce a single value describing the total environmental load. This makes it possible to create environmental indices not only for pure materials, but also for processes or parts of processes of interest in different design options, such as casting, forging, rolling, riveting, chromium plating, zinc plating, powder plating, and painting. Hundreds of indices of interest have been created. The Product Ecology Project, which brought together several industry sectors, made the creation of these indices possible. The best source of information about the environmental

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The Industrial Green Game: Implications for Environmental Design and Management impact of material production and processes is, of course, those in the industries making the materials and using the processes. For many years, Swedish industry conducted environmental impact analyses to obtain environmental permits from government authorities. As of 1991, as prescribed by law, companies large enough to need an environmental permit are required to provide yearly environmental reports that include environmental impact information. Information about the environmental impacts is publicly available, and industry is less reluctant than before to reveal the details of the emissions to those other than the authorities. The information in the environmental reports is insufficient to create environmental indices for the EPS system. More detailed information of the emissions, especially from various parts of operations, is needed. The Product Ecology Project and the cooperation between the 15 Swedish industrial firms enabled more detailed information to be used, which facilitated development of the inventory used in the EPS. The EPS system has been tested in important projects such as the Volvo Environmental Concept Car and the development of the new range of heavy-duty trucks. These tests have been extremely important in determining best ways to improve the system. Volvo is now deciding on the next step in implementing the EPS system. The challenge the company faces is to find the best level for introducing EPS within its design organization. One solution is to use the EPS system in groups devoted to the design of aggregated assembled products. The main advantage of using a system such as EPS is that it forces the designer to incorporate concerns at an early stage of forming new products. This step is far more important than the specific data that the system produces. EPS system data are not absolute values that can be used separately. The system should be used to compare different design alternatives and to ensure that good decisions are made. The detailed analysis can be used to assess where in the life cycle the worst environmental impact occurs and to determine what variables are crucial to making alternative design decisions. Very different environmental impacts are compared in the system through a valuation process. This step is more subjective than inventorying data and can be a cause of grave concern. However, total life cycle analysis sooner or later requires that value judgments be made. Clearly, the valuation of different environmental impacts is never going to be accepted universally. Values may vary between countries, between times, and among individuals. Therefore, it is important to have a system that can adjust for such changes quite easily. The EPS system is flexible enough to do that and is a practical tool that can be used in design process. It is an important tool but not the only element in design-for-environment strategies. The EPS system also can never substitute for other company procedures that are effective in continuous improvement of environmental performance. Often,

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The Industrial Green Game: Implications for Environmental Design and Management design constraints are contained in a company's environmental policy, objectives, and programs. Communication between the designers and company specialists (such as environmental chemists and technologists) is a vital source of information for the design phase and cannot be replaced by an expert system. Introducing a system such as EPS without a strong organization of environmental specialists within the company to back it up could be counterproductive. EPS could give a false sense of security in the absence of discussions and questions that arise when the system is used to test and environmentally assess different design alternatives. The EPS system is not a troubleshooter, it merely provides decision-makers with a summary of complicated patterns of energy, materials, and pollutant emissions in a manageable, easily understood, and reviewable form. Even the best LCA study needs a competent end user to make optimal use of the sensitivity and error analyses and to interpret the outcome in a way that matches other decision making inputs (such as economic and technical factors). The complexity of nature raises questions about efforts to model its structure and function as well as the merits of using the results of such models. It is, therefore, more a question of ambition and will than indisputable data inputs and comprehensive coverage of all data to carry out LCA and other approaches for assessing environmental consequences of human activities. At the very least, even a weak LCA-based system can increase the interest in a systems approach to addressing future environmental problems and to involving a wider community of stakeholders. REFERENCES Ahbe, S.,A. Braunschweig, and R. Muller-Wenk. 1990. Methodik füer Oekobilanzen auf der Basis Oekologischer Optimierung Schriftenreihe Umwelt nr 133. Bern: The Environmental Agency in Switzerland (BUWAL). Baumann, H., C.A. Bostrom, T. Ekvall, E. Eriksson, T. Rydberg, S.O. Ryding , B. Steen, G. Svensson, T. Svensson, and A. M. Tillman. 1992a. Miljöbedömning av förpackningsutredningens slutsatser. FoU nr 71. Stiftelsen REFORSK, Malmö. Baumann, H., T. Ekvall, E. Eriksson, M. Kullman, T. Rydberg, S. O. Ryding, B. Steen, and G. Svensson. 1992b. Environmental Comparison between Recycling/Re-use and Incineration/Landfilling. (In Swedish.) FoU Report No. 79, REFORSK. McKinsey & Company. 1991. Integrated Substance Chain Management, Appendix. Commissioned by Association of Dutch Chemical Industry (VNCI). September. Ryding, S. O., and B. Steen. 1991. The EPS System. IVL report No. B 1022. Göteborg, Sweden: Swedish Environmental Research Institute. Steen, B., and S. O. Ryding. 1992. The EPS Enviro-Accounting Method: An Application of Accounting Principles for Evaluation and Valuation of Environmental Impact in Production Design. IVL Report B 1080. Göteborg, Sweden: Swedish Environmental Research Institute.