Measuring, reducing and communicating Accuracy Scores is of high importance when it comes to a business’s climate strategy. Only through understanding how accurate impact calculations are and adopting more transparent communication can brands and retailers take real steps forward.
Impact assessments can sometimes seem abstract because they involve intricate calculations of often “behind-the-scenes” product life cycle elements. Uncertainty adds another layer of complexity — a caveat — to the results we obtain from these calculations. That’s why measuring and understanding uncertainty is essential; it helps us demystify how precise these intricate calculations are.
What is Uncertainty in Life Cycle Assessment (LCA)?
In the realm of Life Cycle Assessment (LCA), grappling with uncertainty is a persistent challenge due to the scarcity of precise primary data, especially in today’s intricate supply chains and particularly within Scope 3. In LCA, uncertainty means that data isn’t just one fixed number; it can span a range of possible values.
Understanding and measuring this uncertainty is pivotal for ensuring the credibility of LCA findings. To address this challenge, LCA practitioners are increasingly turning to innovative solutions. One key approach is to focus on specific activities and their environmental impact, providing more insights when primary data is limited.
Additionally, integrating advanced technologies like Artificial Intelligence (AI) and Machine Learning (ML) can help fill data gaps, offer predictive insights, and refine estimates. By harnessing the capabilities of AI and ML, LCA experts not only improve the accuracy of their assessments but also gain a dynamic toolkit to adapt to the ever-evolving complexities of supply chains. This blend of activity-based calculation and cutting-edge technologies presents a proactive strategy for managing uncertainty, empowering LCA professionals to deliver more robust and dependable assessments.
Uncertainty in LCA inevitably affects the reliability of results and, consequently, the decision-making processes built upon them. Therefore, it’s essential to consider various aspects of uncertainty when conducting LCA analyses.
Step 1: Measure — How Vaayu Calculates Uncertainty and Accuracy Score
At Vaayu, we employ a robust methodology to measure and calculate uncertainty as part of our life cycle assessments, recognizing the dual nature of this challenge. Both qualitative and quantitative approaches offer something unique to the calculation of accuracy, so we combine both.
Qualitative uncertainty evaluates the data variability (every single data point that goes into the product life cycle impact assessment) based on its reliability, completeness, temporal correlation, geographic correlation, and other technological factors. At Vaayu, our dedicated LCA team determines the quality of the data by assessing each data point based on five criteria, then each criteria is assessed on a scale from 1 to 5, assigning quality ratings to turn these characteristics into uncertainty factors.
Quantitative uncertainty is about the natural ups and downs and random variations in values. At Vaayu, we use quantitative methods to figure out something called model uncertainty, which relates to the math we use to calculate emissions in LCIA methods. It's like uncertainty about the math tools we pick. In the early planning stage, when we decide things like what to measure, where to measure it, and when to measure it, we introduce something called scenario uncertainty.
A Method Employing Both Approaches
Combining both quantitative and qualitative uncertainties, Vaayu calculates an overall uncertainty measure to provide Vaayu’s proprietary Accuracy Score with every calculation. We determine a range of uncertainty in our assessments by using both high and low estimates. This range accounts for factors like how big our data sample is, how reliable the data is and how complete it is.
Calculating Accuracy Scores is a detailed process we follow to grasp and share how accurate our product footprint assessments are likely to be. It's an integral aspect of our commitment to transparency and assisting our customers. We aim to guide them by highlighting specific areas and data points that can contribute to an improved Accuracy Score.
Step 2: Reduce — Actionable Steps to Reduce Uncertainty and Improve Accuracy Score
Once companies gain insight into the Accuracy Score of their product footprint assessment, it’s time to act on it and implement measures that help lower the uncertainty. That means adding more or better data, or ideally both, to the mix.
Using Activity-Based Calculations Over Spend-Based Models
Shifting from a spend-based approach to an activity-based approach is a tried and tested way for better measurement of environmental impact. Unlike the traditional spend-based method that dominates the market, the activity-based approach zeroes in on actual operations and their associated emissions.
This shift is crucial for moving away from relying solely on financial data to incorporating physical data, providing a much more accurate picture of environmental impact.
Improving Data Collection Practices Throughout the Value Chain
Enhanced data collection across the value chain enables a clearer understanding and reduction of uncertainty. By refining data collection practices, companies can attain more accurate and reliable environmental impact metrics, thus fostering informed decision-making and robust action plans to tackle identified hotspots.
Collecting and Leveraging Primary Supplier-Specific Data
Supplier-specific data is primary data that provides granular insights into the environmental impact within the supply chain, as opposed to generalized data. Transitioning to supplier-specific data is a key step in reducing uncertainty, improving the accuracy rate of environmental impact metrics and aligning efforts more closely with actual environmental outcomes.
Vaayu’s Approach to Improving Accuracy Scores
Vaayu’s tooling and capabilities in uncertainty assessment go beyond just calculations. The technology makes immediate AI-powered recommendations on how companies can boost their Accuracy Scores. By applying the above actions to its good practice methodology, Vaayu’s technology highlights specific data points (for example product weight, utilities consumption, distance travelled) that make a real difference to data quality overall, ensuring companies have a clear roadmap for improving the accuracy of their environmental impact assessment.
Step 3: Communicate — Share Your Accuracy Rate
Meeting Legal Requirements
Communicating uncertainty is a key pillar of substantiating product footprint communication with customers and is essential to ensure that claims are not misleading. Avoiding greenwashing and ensuring any green claims related to products are substantiated are crucial in meeting legal requirements around how products are marketed, with uncertainty being one of the mandatory disclosures when communicating product carbon footprints.
Transparency is the bedrock of effective communication when dealing with uncertainty. Communicating the Accuracy Score includes clearly articulating your threshold of uncertainty, current status and the plan moving forward to both internal and external stakeholders.
Adopting a conservative approach in progress communications becomes pivotal, guarding against potential backlash in case assumptions or evidence are too uncertain to be considered best practices.
Navigating the Consumer Landscape
In a world where most consumers are unfamiliar with terms surrounding accuracy and uncertainty, it becomes imperative to communicate transparently about the uncertainties involved. To avoid unsubstantiated green claims and misleading the public, it's essential to convey the accuracy clearly.
This communication should emphasize that LCA calculations often rely on estimates and assumptions. Disclosing the methodology used adds another layer of transparency, helping to build trust by providing consumers with a clear understanding of the basis for environmental impact assessments.
Leading the Industry in the Right Direction
When one business sets an example by adhering to good practices, it often triggers a domino effect in the industry. Others take note and are encouraged to follow suit, especially if consumers react positively to the change. This collective effort not only elevates industry standards but also paves the way for a more sustainable and responsible future, proving that actions taken today can shape better paths for tomorrow.
That’s why with every climate impact calculation made at Vaayu, we provide an automated Accuracy Score alongside it. Our partners are pioneering this approach and helping to make the retail industry more transparent and credible, lowering its impact on our planet.
Addressing and navigating uncertainty in company, product, logistics, packaging and supply chain emissions is not just a task that is on your agenda, but a strategic move in itself. By measuring, managing and taking action on uncertainties, your company can maintain focus on priority areas and preserve its credibility.
To find out more about Vaayu’s proprietary Accuracy Score or how we’re providing the most granular and accurate life cycle assessments for our retail partners, get in touch.