APPLYING LIFE CYCLE ASSESSMENT TO DETERMINE THE ENVIRONMENTAL POTENTIAL THE EXISTING FACILITIES OFFER TO THE USER ORGANIZATION

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1 The 2005 World Sustainable Building Conference, APPLYING LIFE CYCLE ASSESSMENT TO DETERMINE THE ENVIRONMENTAL POTENTIAL THE EXISTING FACILITIES OFFER TO THE USER ORGANIZATION Seppo JUNNILA 1 Mikko NOUSIAINEN 2 1 Construction Economics and Management, Helsinki University of Technology, P.O.Box 9800, HUT, Finland, seppo.junnila@hut.fi 2 Construction Economics and Management, Helsinki University of Technology, P.O.Box 9800, HUT, Finland, mikko.nousiainen@hut.fi Keywords: life cycle assessment, service industry, significant activities, environmental management, LCA Summary Sustainability has become a strategic issue in many companies operating in service industries. However, the environmentally significant activites of those organizations are not yet well known. This study applies life cycle assessment (LCA) to quantify the environmental impacts of a U.S. based service organization. In addition, an operation cost computation has been conducted in order to be able to compare both the environmental impacts and costs of the facility operations to those of other operations in the organization. The result showed that whilst only representing around 7% of the company's expenses the use of office building caused over half of the environmental impact of the organization. From the range of individual activities, the use of office building was clearly found to impact the environment the most. Its average contribution to the environmental impact was 54%, ranging from 17% in the summer smog category to 83% in the heavy metals category. Other activities that had substantial impact were the commuting (20%), the business travel (13%), and the office equipment (9%). The result would suggest that sustainable facility management could offer a great opportunity to improve companies environmental performance. 1. Introduction Sustainability has become a strategic issue for many international companies. One very clear indication of this is the record-breaking use of ISO environmental management certificates (ISO 2004). From sustainability perspective, the companies operating in light and service industries are especially interesting, because their importance is constantly growing. At present the service industries produce around 70% of the gross national product and workplaces in western countries (BEA 2004). The service industries have a reputation of a clean industry with low environmental impact. As a consequence, the industry has paid only a little attention to minimizing its environmental impact until lately (Charter 2000). In spite of the fact that the environmental impact per turnover of a service company is quite low, the absolute environmental impact it produces can be significant. In the U.S., for example, the climate change impact of service industries is estimated to be almost as big as that of manufacturing industries (Rosenblum et al. 2000). Furthermore, the potential of reducing the environmental impact of the companies operating in service industries is estimated to be significant (Graedel 1998). At the same time, the companies in service industries are typically highly visible to the public; thus, they have a growing pressure from stakeholders to improve their environmental performance (Jayne 2000). Although the work in service industries is typically office intensive, only very few companies in the industry have emphasized the actions taken to improve the performance of their office facilities as a strategy for improving their environmental performance. Nousiainen et al. (2004) have studied the environmental objectives of U.S. and Europe based service companies and have not found any indications that the facility activities would be among top-priorities in their environmental management. Other activities, such as environmentally sound purchasing and commuting, were often mentioned. One reason for the low visibility of facility activities may be that hardly any studies have quantified the environmental significance of companies facility operations and compared them with the other operations of the companies. In one study, Junnila (2004a) has estimated the environmental significance of facilities in European service companies, but no similar studies can be found from U.S. As a matter of fact, Fava et al. (2004) have stated that North America has lacked the capabilities to exploit life cycle thinking before the last few years. Another reason for the low visibility of facilities management (FM) organizations in companies environmental strategy may be that the facility operations are not typically taught as a central part of the strategy of a global service company

2 2. Purpose and method This study uses life cycle assessment to quantify the environmental impact of a U.S. based service organization. The study aims to demonstrate the importance of sustainable facility management in the environmental strategy of the company. Along with the life cycle assessment method (LCA), which has been used to calculate the environmental impact of the case organization, an operation cost computation has been conducted in order to be able to compare both the environmental impact and the cost of the facility operations to those of other operations in the company. 3. Scope of the LCA The scope of the LCA covers one year in the operation of a service organization. The functional unit of the LCA is the yearly operation of an organization per one employee. The organization studied provides construction and facilities management services inside a large global company having thus a supportive function. The organization is situated in the southern U.S.A., and it mostly operates in North and Central America, but also a little in Europe and South America. The case organization has 26 employees. The LCA performed included all the organization's activities. The activities were defined based on the organization's bookkeeping records. Commuting by the company s personnel was also included in the LCA, although it is typically not controlled by the company. Commuting was included because it is closely related to the working processes of a service company (teleworking, etc.), and it is often voluntarily included in the environmental objectives of a service company (Nousiainen et al. 2004). For those activities that involved capital investment, the repayment periods used in the environmental calculation were: buildings 50 years, furniture 8 years, PC and other similar electrical office equipment 4 years, and mobile phones 2 years. The main characteristics of the inputs of the studied system are presented in Table 1. The LCA inventory proceeded using the following main steps: 1. The activities of the company were divided into two groups, intangible and tangible expenses, based on a detailed profit and loss statement. Intangible expenses included such items as wages and salaries, social expenses, and daily allowances. The tangible expenses included materials, energy and purchased services. 2. The tangible expenses were matched to the original invoices, and based on these invoices the amount and type of material, energy and services was quantified. 3. The commuting data were collected based on both the postal addresses of the employees and interviews about the means of transportation. The commuting distance of each employee was calculated with a digital distance calculation service (Yahoo 2003). 4. The LCA flowchart was based on data from tangible expenses and commuting. The primary data in the inventory stage, i.e. the data directly obtained from the organization case, were collected during the years 2002 and The data were compiled mainly based on the profit and loss statement and the bookkeeping of the organization. Other data sources used were interviews, archival records and direct observations. The primary data for the company s activities were collected under six main headings: purchased services, use of office building, business travel, equipment, office supplies and commuting. The purchased services included advertising, banking and insurance, catering and restaurant, cleaning, computer, education and training, entertainment, medical, post and telecommunication, publishing and printing, and engineering and consulting services. In the purchased services the original subject of the service was defined in around 90% of the invoices. The rest of the services were assumed to have an average content of another similar case study (Junnila et al. 2004). The office-use consisted of operating electricity and heat, the original construction of the office facility (i.e. building materials, construction work, maintenance and demolition), waste management, and other facility related operations (i.e. water and wastewater treatment, courtyard care). The travel consisted of business travel divided into flights (i.e. short and long-distance flights), use of passenger cars, other business travel (i.e. buses, rail, ferries). The office equipment consisted of furniture, manufacturing of electrical office equipment, and electricity for operating the equipment. The office supplies consisted of A4 sheet (i.e. all white and copy paper, and envelopes), books and papers (i.e. books, periodicals, newspapers, magazines), and other office supplies (i.e. pencils, rubbers, etc.). The commuting included journeys to and fro work.

3 Table 1 The main characteristics of the system studied (organization case). Infrastructure Electricity mix Water treatment plant, efficiency Transport network 12 % gas 52 % coal 24 % nuclear 0,4 % hydro 12 % others 94 % BOD, w 90 % P, w 80 % N, w Yes car No bus No local train, etc. Yes pedestrian, cycle, etc. Facility Space utilization efficiency 29 net-m2/person Electricity consumption 79 kwh/m3/year Heat consumption 0 kwh/m3/year Expected life cycle 50 year Maintenance ranges -external envelope 40 year -roof 30 year -ventilation plant 25 year -external surfaces 15 year -internal surfaces 10 year Wastes 24 kg/person/year -sorting rate 28 % Business travel km/person/year Flights 90 % km/person/year Personal car 10 % km/person/year Others 0 % km/person/year Office equipments Furniture, expected life cycle 8 year Computers, expected life cycle 4 year Mobile phones, expected life cycle 2 year Paper and other office supplies Papers 466 kg/person/year Office supplies 150 /person/year Services 41 k /person/year Commuting km/person/year Passenger car 100 % Buss 0 % Rail 0 % Cycle, walk, etc. 0 % The secondary data from the inventory (data obtained from published sources) were collected both from the actual energy producers in the region, and from different LCA databases. All the main inputs were followed from cradle to grave. Energy production data were collected from the actual energy providers (TXU 2002) with the complementation of the up-stream emissions from a two LCA database for energy (Franklin US LCI database 1998, Virtanen et al. 1996). The data for building materials were taken based on the average of three European office buildings and were allocated based on the floor area the organization is using (Junnila 2004b). The data for other materials were taken from commercial LCA databases (KCL-ECO 2003, SimaPro 2002, Boustead 1997). Water treatment data were taken from a European company providing water and wastewater services (Helsingin vesi 1999). The transportation data were taken from the above-mentioned commercial databases. The data for services were taken from SimaPro (2002) using economic-input-output tables. The quality of used data was targeted at the level of 3 (out of 5) in the selected data quality estimation framework (Lindfors et al. 1995).

4 The following impact categories were included in the impact assessment: climate change, acidification, eutrophication, and dispersion of harmful substances, which included summer smog and heavy metals. The impact categories were chosen to be on the short list of environmental themes that most environmental experts agree to be of high importance in all regions of the world and for all corporate functions (Schmidt et al. 2002). The potential environmental impacts in selected categories were calculated using KCL-ECO (2003) LCA software and characterized with the equivalency factors suggested by the European Commission (1997). The impact assessment was conducted only at the end of the mandatory stage of the impact assessment, where the emissions from the inventory were classified and characterized but not valuated (UNEP 2003). However, in some graphs the average contribution of environmental impacts has been presented in order to help the interpretation of the result. A remark should be made here that the calculation of an average impact already includes a subjective assumption (weighting) that all impact categories are of equal value, and belong thus to the optional elements of an LCA. 4. Results 4.1 Environmental impact of the organization The environmental impact along with the expenses from organization s activities is presented in table 2. As we can see from the table, the numerical value of impact in different impact categories varies significantly, from 3 grams to 12 thousand kilograms. However, the magnitude of numerical values does not directly correlate with the significance of different impact categories. Without valuation of impact, which is not in the scope of this study, the numerical values should only be interpreted as proportion inside one impact category, as presented in Figure 1. As can be seen from the figure, the environmental impact does not seem to correlate with the expenses. The purchased services, for example, produce the most expenses of all the activities but the least impact. Also, equipment has higher expenses than their impact. In contrast, office-use and business travel have a clearly lower proportion of expenses than their impact. Table 2 The tangible expenses and the environmental impact values of the organization case. Expenses Climate change Acidification Summer smog Eutrophication Heavy metals k Mg CO 2 -equiv. kg SO 2 -equiv. kg C 2 H 4 -equiv. kg PO 4 -equiv. g Pb-equiv. Services 41 0,1 0,2 0,31 0,03 0,00 Office-use 8 7,0 57,0 0,90 3,51 2,47 Equipment 8 1,1 9,4 0,14 0,55 0,45 Travel 3 2,4 8,6 0,71 1,51 0,00 Office supplies 1 0,2 1,0 0,15 0,35 0,05 Commuting 0 1,5 8,0 2,94 1,43 0,00 Total ,2 7,4 3,0 From the range of activities studied, the use of the office impacts on the environment the most. Its average contribution to the environmental impact is around 45%, ranging from 17% in the summer smog category to 83% in the heavy metals category. Other activities that have a major impact are the commuting, the business travel and the office equipment having an average impact of around 10% to 20% each. Two remaining activities, services and office supplies, clearly produce less environmental impact, below 5%. The contribution of activities in different impact categories varies considerably. The use of the office building has the highest impact in the heavy metals, acidification, climate change and eutrophication categories and commuting in the summer smog categories. Business travel has a relatively high contribution to the eutrophication and climate change category, and office equipment to the heavy metals category.

5 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % Expenses Average impact Climate change Acidification Summer smog Eutrophication Heavy metals Services Office-use Equipment Travel Office supplies Commuting Figure 1 The environmental impact of the case organization by main activities. 4.2 Expenses versus environmental impact The idea here is to compare the contribution of the office building in both economic (budget) and environmental (impact) terms. Both the tangible and intangible activities of the case organization are included in the calculations. The comparison of expenses and the impact of the office-use and other activities of the case organization is presented in Figure 2. As can be seen from the chart office-use is responsible for only around 7% of the overall expenses in the organization case but produces on average around 55% of the environmental impact. The impact of the use of the office building is around 50% or more in all except in the summer smog category; thus the use of office is clearly the most significant environmental aspect of the organization case. Heavy metals Eutrophication Summer smog Acidification Climate change Office-use Other activities Average impact Expenses 0 % 20 % 40 % 60 % 80 % 100 % Figure 2 The expenses and the environmental impact of facility operations compared to the other activities in the organization case.

6 4.3 Data quality assessment The suitability of the used data for the purpose of the study was assessed with a qualitative assessment framework developed for LCA studies (Lindfors et al. 1995). The results of the data quality assessment are presented in Table 3. Data quality indicators score generally from 2 to 4, with the average of 3, which corresponds with the original target of 3. On average the data have the following quality definitions: calculated data based on measurements and partly on assumptions, verified information from an enterprise with an interest in the study, representative data from a small number of sites, data that is less than five years old, data from area with similar production conditions, and data from processes and materials under study but from different technology. The activities scoring worse than the targeted 3 were the equipment with the technical correlation and acquisition method indicators, and the services and office supplies with the technical correlation indicator. In the technical correlation the data score 4 corresponds to the data on related processes or materials instead of same processes. In the acquisition method the data score 4 means that the data is based partly on a qualified estimate by industrial expert and not only on measurements and calculations. However, the three activities that score the least are also the activities having the lowest environmental impact, all together less than 13% of the impact; thus, the lower data-quality should not have any major impact on the validity of the overall findings. Table 2 The quality of used data according to Lindfors et al. (1995). Data Quality Table* Services Office-use Travel Equipment Office suppl. Commuting Acquisition method Independence of data supplier Representativeness Temporal correlation Geographical correlation Technological correlation *Highest quality = 1, Lowest quality = 5 5. Discussion and conclusion The purpose of the study was to assess the environmental impact of a U.S. based service organization. A life cycle assessment and an operation cost computation were conducted in order to compare both the environmental impacts and expenses of company s facility operations to those of its other operations. The study aimed to examine the significance of sustainable facility management in the environmental strategy of a service company. The result showed that whilst only representing around 7% of the organization s expenses the use of office buildings caused over half of the environmental impact of the organization. From the range of individual activities, the use of office facilities was clearly found to impact the environment the most. Its average contribution to the environmental impact was 54%, ranging from 17% in the summer smog category to 83% in the heavy metals category. Other activities that had substantial impact were the commuting (20%), the business travel (13%), and the office equipment (9%). The two remaining activities, the purchased services and the office supplies, clearly produced less environmental impact, below 3%. Only few previous studies have been published on the subject. In one, Junnila et al. (2004) have conducted a similar case study for a North European organization. When the results of that study are compared with the ones in this study, two major observations can be made. First, the environmental impact of the European organization seems to be significantly lower than that of the U.S. organization having less than half of the impact compared to the similar U.S. organization. The difference in absolute impact values seems to be a consequence of both the greater use of material and energy resources (input) to produce the service and the higher emission content of those resources (output). At the same time, however, the proportion of organizations activities seems to be quite similar in both cases. In the European organization the contribution percentages of different activities were office-use 45%, commuting 29%, business travel 12%, office equipment 8%, office supplies 4% and purchased services 2%. The corresponding percentages for the

7 U.S. organization were 54%, 20%, 13%, 9%, 2% and 2% respectively. As we can see, the order of importance in both cases is the same, and also the percentage values are quite close with each other. Some assumptions limit the validity of the study. For example, European emission data was used for the U.S. organization in the following phases of the studied system: the construction materials, the furniture, the water and wastewater services, and the purchased services. In addition, the study combined environmental data from both economic input-output tables (for purchased services) and process based database (other activities). Finally, the overall quality of used data was targeted at the level of 3 (out of 5), which is perhaps a level suitable for a good screening LCA, but not for a detailed LCA. As a single case study, the study does not allow any statistical generalization. However, together with previous studies some analytical generalization could be made from the findings. The results would imply that the significant environmental aspects of a service organization could be found from the group of following activities: the use of office facilities, the commuting and the business travel. From the named activities the use of facilities seems to be the most significant aspect, because with less than 10% of the organization s expenses it tends to produce around 50% of its environmental impact. The result would also suggest that enhancing the facility management to support the environmental work in companies could produce a great environmental improvement potential and that the management costs from that strategy would be quite low compared to other strategic alternatives. In future, more similar case studies should be conducted in order to determine whether the results apply more generally. Future studies could also try to determine the actual improvement potentials of facility activities, because a significant amount of impact does not necessary correlate with significant improvement potential. REFERENCES BEA. 2004, Bureau of Economic Analysis, U.S Department of Commerce. accessed December 31, Boustead, I. 1997, The Boustead Model 3 for Life Cycle Inventory Calculations. Boustead Consulting Ltd, UK. Charter, M. 2000, Integrated product policy and eco-product development: lecture at the 5th Towards Sustainable Product Design Conference, Stuttgart, October 2000, Farnham: The Centre for Sustainable Design. European Commission. 1997, European methodology for the evaluation of environmental impact of buildings, Application of life cycle analysis to buildings, Detailed description and review. European Commission, Directorate general XII for science, Research and development, Programme Apas, Regener project, Final Reports. 145 p. Fava, J.A., Cooper, J.S Life-Cycle Assessment in North America. An Update on Capacity Building. Journal of Industrial Ecology, vol.8, no.3, p Franklin US LCI database. 1998, SimaPro 5.1., LCA calculation programme. PRé Consultants, Amersfoort, The Netherlands. Graedel, T.E., 1998, Life-cycle assessment in the service industries. Journal of industrial ecology, 1(4): Helsingin vesi Environmental Report (Ympäristöraportti). In Finnish. Helsinki, Finland. International Organization for Standardization (ISO) The ISO Survey of ISO 9001:2000 and ISO Certificates Available at: Accessed at September 17, Jayne, M. R. 2000, Managing Environmental Risk in Existing Light Industrial Estates. Business Strategy and the Environment, 10: Junnila, S. 2004a, The environmental significance of facilities in service sector companies, Facilities, Vol. 22 No. 7. P Junnila, S. 2004b, The Environmental Impact of an Office Building Throughout Its Life Cycle. Civil and Environmental Engineering. Helsinki University of Technology. Academic dissertations. accessed January, Junnila, S., Nousiainen. M., 2004, Environmental Contribution of Office Buildings to User Organization s Environmental Impact, Proceedings of the CIB Working Commission 070 Facilities Management and Maintenance Hong Kong 2004 Symposium. Hong Kong. December 7-8, CIB Proceedings: Publication 297. ISBN X. KCL-ECO , LCA software. Finnish Pulp and Paper Research Institute, Espoo, Finland.

8 Lindfors, L.-G., Christiansen, K., Hoffman, L., Virtanen, Y., Juntilla, V., Hanssen, O.-J., Rønning, A., Ekvall, T. and Finnveden, G. 1995, Nordic Guidelines on Life Cycle Assessment. Nord 1995:20. Nordic Council of Ministers. Copenhagen, Denmark. 222 p. Nousiainen, M. and Junnila, S Environmental Management of Facilities in Service and Light Industries, Proceedings of EuroFM 2004 conference, May 12-14, 2004, Copenhagen, Denmark. Rosenblum, J., Horvath, A., and Hendrickson, C. 2000, Environmental Implications of Service Industries. Environmental Science & Technology, 34(4): , U.S.A, American Chemical Society. Schmidt, W.-P. and Sullivan, J. 2002, "Weighting in Life Cycle Assessments in a Global Context." International Journal of Life Cycle Assessment, Vol. 7, No. 1, pp. 5-10, Ecomed Publishers, Germany. SimaPro , LCA calculation programme. PRé Consultants. Amersfoort. The Netherlands. TXU. 2002, TXU Environmental review. Dallas, Texas. UNEP. 2003, Evaluation of environmental impact in life cycle assessment. United Nations Environmental Programme, Division of Technology, Industry and Economics. Production and Consumption Branch. La Fenice Graphica, Rome, Italy. 108 p. Virtanen, Y., Askola, R. and Junttila, V. 1996, The life cycle data base of Finnish energy production parts I-VI (Kenttäsuuntautunut elinkaaritietojen hankintamenetelmä. Suomen energiantuotannon elinkaaritietokanta). In Finnish. VTT Technical Research Centre of Finland, VTT Research Notes 1996, No Espoo, Finland. Yahoo. 2003, Yahoo! Driving Directions. accessed February, 2003.