Applying sustainability reporting
to decision making: product focus
and life cycle assessment
Janice A. Loftus and John A. Purcell
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Introduction
2
About the authors
2
Background
3
Some important definitions
3
Sustainability and competitive advantage: an evolving approach
to decision making
3
Review of frameworks
5
The utility of a product or entity focus
5
What is meant by life cycle assessment?
5
A more detailed examination of the LCA components
6
Overlap between LCA and boundary concepts applied by the GRI
6
Issues in applying LCA
8
Case study of an airline
9
The product
9
Direct and indirect effects of producing a flight service
9
Direct activities
10
–– Flying the aircraft
10
–– In-flight services
11
–– Ground services
12
–– Engineering and maintenance
15
Indirect activities
16
–– Building the aircraft
16
–– Treatment of waste
18
Concluding comments
20
1
Introduction
The motivation for this paper is to describe evident trends in
sustainability reporting towards a greater level of integration
of stakeholder disclosure and underlying decision making.
The paper initially sets the scene by presenting some basic
definitions of sustainability, indicating its underpinning in a
widening recognition of corporate social responsibility (CSR).
A significant parallel development in understanding is the
extent to which a sustainability orientation in strategic decision
making can present the basis of achieving competitive advantage.
With the above as background, the paper then focuses
attention on emergent methodologies which have been
developed to assist organisations to identify a broader scope
of non-financial dimensions associated with their commercial
or operating activities. It suggested that a range of firmbased and wider public policy decision making processes
can be enhanced by these insights. As such, these productoriented and organisational boundary approaches reflect an
understanding of the embedding of products and business
entities respectively, in a chain of relationships extending both
backward and forward. The case study, which forms the major
part of this paper, illustrates how these techniques might be
applied in practice and, equally significantly, identifies the types
of difficulties that might be encountered in identifying and
treating relationships.
About the authors
Janice Loftus is a senior lecturer in accounting in the School
of Business, The University of Sydney.
John Purcell is a policy adviser, Professional Standards,
CPA Australia.
2
Background
Some important definitions
To establish a context and scope of discussion, it is
appropriate to commence with some definitions.1
‘Triple bottom line’ (Elkington 1998) refers to the notion that
organisations need to think, and in turn report, in terms of
social and environmental dimensions alongside the traditional
financial ‘bottom line’.2 Other dimensions recently considered
include cultural sustainability and corporate governance—the
latter giving rise to the notion of a ‘quadruple bottom line’.
According to Brundtland (World Commission on Environment
and Development, 1987), ‘sustainability’ is defined as ‘meeting
the needs of the present generation without compromising the
ability of future generations to meet their needs’.
Increasingly ‘triple bottom line’ (TBL) and ‘sustainability’
are embraced within a wider debate around ‘corporate
social responsibility’ (CSR) which, more critically, calls
into question the role of the corporation in effecting positive
environmental and social change—many of the problems of
which are perceived to have been manifested in the presumed
commercial imperatives at the heart of the corporation’s
objectives and ongoing conduct. With this perspective in
mind, one of the more useful definitions of ‘corporate social
responsibility’ is that provided by Parkinson:
… behaviour that involves voluntarily sacrificing profits,
either by incurring additional costs in the course of the
company’s production processes or by making transfers
to non-shareholder groups out of the surplus thereby
generated, in the belief that such behaviour will have
consequences superior to those flowing from a policy of
pure profit maximisation.3
Underlying the notion of CSR is the emergence of
performance-assessing criteria that are tempered increasingly
by the consideration of trade-offs between long-term and
short-term objectives. Moreover, promoted therein are
behavioural considerations of preserving future capacity for
meeting the needs of a widening base of stakeholder interests
at an ‘inter-generational’ level.
What then, does this all mean for the topic at the centre
of this paper; that of business decision making? And
particularly, what are the implications for market-based
competitive behaviour which remains, not withstanding these
emerging understandings and pressures, the premise upon
which business is conducted with a view to risk-based
wealth generation?
Consideration of such issues should not be taken to infer that
the challenges here are unique to the private sector. Quite
clearly, many Australian government business enterprises
and other public-sector entities have been at the forefront in
responding to changing performance expectations, particularly
in terms of their environmental impacts both vertically within a
supply-chain and ‘longitudinally’ over expanding time-horizons
of performance.
The answer to the above questions, we suggest, can be found
in an understanding of the interrelationship between innovation
and competitive advantage. Thus, before embarking upon a
description of key features of some of the frameworks that have
emerged to identify and describe these widening dimensions
of business performance, it is worthwhile identifying how
sustainability-based innovative business practices might be a
source of enduring competitive advantage.
‘Sustainability’ and
competitive advantage:
an evolving approach to
decision making
Within the pivotal sustainability dimension of CSR, many of the
decisions that are being made by managers are no longer one
dimensional issues; such as assessing the trade-off between
short-term profit sacrifice and future returns, or the capacity
to shift the burden of incremental costs to customers. Rather,
sustainability itself is increasingly identified as a source of
business success beyond merely enhancing reputation. While
this trend is not universal amongst business, it provides a
substantial base upon which future leadership and direction
might be developed.
Research conducted by Goldsmith and Samson4 shows
that highly successful companies identified as leaders in
sustainable development business practices—whose source of
competitive advantage contrasted between the innovative and
quality / service / reliability—demonstrated a limited number of
key generic strategic orientations:
Efficiency referring to the range of sustainable
development practices that make a direct or indirect
contribution to the company’s financial performance; and
1 Note the discussion here is derived from our related Congress paper (K1) Sustainability Reporting: Driving a Universal Standard and Global Recognition through the
Global Reporting Initiative.
2 J. Elkington, Cannibals with Forks: The Triple Bottom Line of 21st Century Business New Society Publishers, Canada (1998).
3 J.E. Parkinson, Corporate Power and Responsibility Clarendon Press, Oxford (1993) pp. 260-261.
4 “Sustainable Development and Business Success: Reaching beyond the rhetoric to superior performance”, Foundation for Sustainable Economic Development
University of Melbourne, March 2005.
3
Market edge describing those practices that contribute
to the company’s market opportunities in terms of
new markets, market share and profit opportunity.
Research and development, innovation, and supply chain
improvements are all examples.5
The research conducted by Goldsmith and Samson further
dispels the myth that sustainability practices and conducting a
profitable commercial enterprise are mutually exclusive. They
confirm that as the sustainability orientation becomes deeper
aligned and congruent with other facets of strategy, improved
adaptability, efficiency and market edge ensue. This orientation
thus forms the basis of both continuous improvement and the
identification of novel opportunities. Nonetheless, capacity
for economy and society-wide movement in this direction is
embedded in wider issues of appropriate policy mix and a
consideration of the role and capacity of business amongst
‘other players’ to effect positive social change. As such,
the improved conduct of business provides a vital, though
incremental, component to a more sustainable future.
In these terms, a key feature of doing business successfully
into the future will be the attainment of approval, cooperation
and satisfaction (though not necessarily formal) of a widening
body of stakeholders6 – the dilemma, of course, being how
to identify and then assess and fairly satisfy the demands of
this non-shareholder constituency. Attitudes, within decision
making, that are conducive to identifying and embedding
sustainable business practices cannot be developed through
simple formulaic or prescriptive solutions. Such decisions
require a thorough understanding of many facets of a
business’ operations:
… sustainability development practices are a sub-set of
business practice engaged in to achieve sound strategy
and performance outcomes. There is no single set of
sustainable development practices because every
firm has a unique business strategy.7 (emphasis added)
Underlying this perspective is the notion of linkages between
stakeholder engagement and the role of information, by which
the interests of third parties are balanced with those of the
company as part of decision making processes within the
context of corporate responsibility.
5 Ibid. at 8.
6“Sustainable Development and Business Success: Reaching beyond the rhetoric to superior performance”, Foundation for Sustainable Economic Development
University of Melbourne, March 2005 at 6.
7 Ibid. at 7.
4
Review of frameworks
It is now appropriate to turn attention to a review of evolving
frameworks that have sought to provide a basis for identifying
the reach in business activity, fundamental to both describing
and managing the full gamut of business activity in a more
sustainable manner. The first, ‘life cycle assessment’, applies
a more product-based orientation; whilst the second, the
Global Reporting Initiative’s 2005 Boundary Protocol, adopts
a corporate or organisational perspective—though, as will be
demonstrated, there are overlaps in approach.
The utility of a product or
entity focus
At the outset it is reasonable to acknowledge the appeal of
adopting a product focus, as it is potentially the appropriate level
of disaggregation in which to assess, measure and manage
sustainability impacts. Moreover, it is quite reasonable to
suggest that a product perspective is the most valid means by
which there can be captured the type of sustainability-oriented
competitive advantage described by Goldsmith and Samson.
Nonetheless, reporting that focuses on the economic,
environmental and social impacts of each product is not
considered as an alternative to sustainability reporting at the
entity level but, rather, as a supplement to it; or as reporting
relevant to different users and decision contexts, such as
product-related decisions by management and also for
stakeholders who are users of end products.
The focus of most sustainability reporting is thus entityfocused. This approach is also implicit in frameworks such as
the Global Reporting Initiative (GRI) G3 Guidelines. Arguments
supporting a product focus in external reporting tend to
assume the end user is the stakeholder, but consumers are not
necessarily the most representative stakeholder reflected in the
GRI framework or the sustainability reports of other entities.
Further support for this preference towards an entity focus
can perhaps again be found in Goldsmith and Samson’s
observations. Critical to their view that, increasingly, the capacity
to do business will be dictated by ‘the attainment of approval,
cooperation and satisfaction of a range of stakeholders’8, is
the manner in which legitimate stakeholder empowerment
is achieved. Stakeholder empowerment amongst leading
companies, as Goldsmith and Samson see it, has shifted
substantially away from transactional relationships towards a
recognition that ‘power and influence becomes shared between
the two parties: business and each stakeholder’9 —leading, by
inference, to a declining product orientation.
Product-based assessment nonetheless presents a worthwhile
adjunct to a more widely accepted corporate perspective
on describing the non-financial dimensions of business
and, moreover, provides a potentially useful starting point of
disaggregation. As such, perhaps one of the approaches of
greater utility is ‘life cycle assessment’10 which is described in
the next section.
What is meant by life cycle
assessment?
Product life cycle refers to all activities undertaken from:
Raw materials
End product, including
recycling and waste disposal
Thus, all upstream and downstream activities and impacts are
included. Pflieger et al. (2005) refer to all operations occurring
at the production site (therefore, under the control of the entity)
and operations occurring beyond the site. While this implies
both upstream and downstream activities, examples and
discussion of indirect activities referred to by Pflieger et al. are
generally confined to upstream activities.
The meaning of product life cycle should be clearly
distinguished from the use of that term to refer to the stages
of a product’s life—from its introduction to the market,
its growth, maturity and eventual decline, after which it is
replaced by alternative products—a tool commonly applied
to the examination of marketing and pricing strategies. It is
nonetheless suggested here that a sustainability perspective
might be adapted to this type of LCA. Manufacturing process
and related set-up decisions are made at a time even prior
to the introduction of a product to a market, thus having far
reaching environmental and related consequences potentially
embedding into a succession of ‘product life cycles’.
Similarly, as products enter a stage of decline, which
depending upon their nature may span many years, the
opportunity is presented to critically evaluate the most
appropriate basis of renewal. These considerations have
perhaps their most obvious application to infra-structure
renewal and other significant capital investment decisions.
The key conclusion to be drawn is that sustainabilitybased strategic decision making applies to a multiplicity of
dimensions of business activity.
8“Sustainable Development and Business Success: Reaching beyond the rhetoric to superior performance”, Foundation for Sustainable Economic Development
University of Melbourne, March 2005 at 6.
9 Ibid. at 7.
10J. Plieger, M. Fischer, T. Kupfer and P. Eyerer, “The contribution of life cycle assessment to global sustainability reporting of organisation” (2005) 16(2) Management of
Environmental Quality: An International Journal pp. 167-179.
5
The more vertically-based perspective on product LCA can be
conceptualised as encompassing direct and indirect effects.
Again some clarification is warranted because the use of
direct and indirect differs from their application in management
accounting (see Pflieger et al. p. 170). Thus, some activities
are considered direct because they are controlled (e.g. power
consumed to provide lighting in the factory, and administrative
functions supporting the production and sale of the product)
but their costs would be treated as an indirect product cost
or an indirect cost allocated under activity-based costing.
In essence, Pflieger et al. argue that both direct and indirect
economic, environmental and social effects are relevant (at
least to some users and decision contexts).
A more detailed examination
of the LCA components
In their LCA-based approach to sustainability reporting,
Pflieger et al. suggest the need for a ‘paradigm-shift’ in which
there is a recognised and adjusted-for dichotomy between
inventory data (which can be directly measured and thus
accumulated) and impact data (which are the consequences
of that which is included within the inventory parameter).
They present an example of carbon dioxide emission as a
product-derived outcome which can be accumulated under
an inventory parameter and thus, in turn, global warming as an
example of a consequential impact.
A trend amongst both policy regulators and consumers
to demand product-related sustainability information is
identified by Pflieger et al., who suggest that developments
in data accumulation techniques around products, in the
terms described, may drive both internal and external
communications of corporate performance. Notwithstanding
our views that entity-level sustainability reporting would be
more useful for assessment of corporate performance, the
technique suggested by Pflieger et al. serves as a potentially
useful adjunct or framework of analysis, complementary to
more standard methods of strategic decision assessment
(such as net-present-value) used by management.
This paper thus presents an example of this approach applied
hypothetically to the airline industry. Firstly, however, the key
premises of the LCA approach are identified and, in turn,
contrasted with the more ‘entity-based’ Boundary Protocol
described by the GRI.
The common central problem addressed by these emergent
techniques is that of ‘boundaries’, which acknowledges that
the reach and consequences of commercial activity extend
beyond the immediate physical, ownership and control
structures. Thus, by ‘regarding the life cycle of a product
from raw material extraction through production processes
and use to end-of-life recycling’11 , a wider range of effects
can be identified and thus coordinated towards a continuous
improvement process, in terms similarly described by
Goldsmith and Samson. Moreover, by introducing the notion
of measurable indirect economic, social and environmental
impacts throughout the supply chain identified by way of
the product-derived LCA, the externalities of economic
activity can be better recognised. This, in turn, would enable
better assessment around public-policy responses and the
transparency of product pricing.
In these terms, because of potential uncertainty around
interrelationship and causality, external communications12
should contain two streams of reporting; that derived from
inventory parameters and that identified at the impact level.
Moreover, this more holistic approach to describing and
communicating performance negates against the potentially
distorting effect of altering the inventory parameters.
Overlap between LCA and
boundary concepts applied
by the GRI13
The GRI Boundary Protocol recommends the determination
of report boundaries based on control, significant influence
and significant impact. A three-tiered reporting approach is
recommended, reflecting the practical difficulties of accessing
information from entities over which the reporting entity
does not exercise control (page 19, GRI G3 Sustainability
Reporting Guidelines):
At minimum, the reporting organization should include the
following entities in using these approaches:
• Entities over which the organization exercises control
should be covered by indicators of Operational
Performance; and
• Entities over which the organization exercises
significant influence should be covered by Disclosures
on Management Approach.
The boundaries for narrative disclosures should include
entities over which the organization does not exercise
control / significant influence, but which are associated with
key challenges for the organization because their impacts
are significant.
This acknowledged divergence in reporting from ownership
and investment structure—along with the alluded mixed
11 J. Pflieger et al. ibid. at 170.
12 Ibid. at 171.
13The evolving basis and widening application of the GRI are described in our related Congress paper (K1) Sustainability Reporting: Driving a Universal Standard and
Global Recognition through the Global Reporting Initiative.
6
form of quantitative non-financial and narrative techniques—
suggests why, at least for the foreseeable future, development
of sustainability reporting should evolve via non-government
organisations and professional guidance, rather than through
government or regulator-mandated practice. The problem
of ‘dovetailing’ sustainability disclosures with the traditional
corporate context of reporting is similarly described by Pflieger
et al. (2005) in the context of accumulating contrasting
inventory and impact data: ‘aggregation of the sustainability
parameters is … not possible in a uniform way’14 .
To determine those entities to be included within the reporting
boundary, the GRI suggests the use of a mapping process
which combines, on respective vertical and horizontal
axes: thresholds of high / low significance of related entity
sustainability impact; and in turn, influence / control (the
influence measure further disaggregated to a threshold of
significant versus non-significant). This entity analysis, or
categorisation, is then applied to a ‘scale’ of reporting ranging
from the inclusion of operating data for high-impact / highcontrol entities, down to narrative (by exception) information for
low-impact / low-influence entities.
Similarity between product LCA and boundaries in GRI:
• GRI principle of completeness is consistent with the
comprehensiveness of the approach of the product life
cycle assessment.
Table 1: GRI and upstream-downstream (product life
cycle) considerations
GRI G3 Guidelines
Environmental
Energy
Core
EN4. Indirect energy use.
As per GRI Guidelines 2002
Additional
EN7. Initiatives to reduce indirect energy
consumption and reductions achieved.
Emissions,
effluents and
waste
Core
EN17. Other relevant indirect greenhouse
gas emissions by weight.
Social
Human rights
Core
HR2. Percentage of major suppliers and
contractors that have undergone screening
on human rights and actions taken.
Differences between product LCA and boundaries in
GRI:
• Different assumptions about the stakeholder for whom the
sustainability report or sustainability information is intended
and their decision needs.
• Consideration (by the GRI) of practical issues regarding
access to information and assurability; the LCA is
presented very much at a conceptual level.
The GRI is based upon a structure of quantitative and
qualitative indicators. It is therefore possible to construct a
table of indicators that, in general terms, would be the applied
outcome of a boundary setting analysis. In addition to the
report boundary protocols, the GRI captures upstream and
downstream environmental considerations in some of its core
and additional indicators (see Table 1). The GRI distinguishes
between core and additional indicators—a core indicator
is one which is considered by the GRI, based on extensive
consultative processes, to be relevant to most entities and
useful to most stakeholders.
14
J. Plieger et al. ibid. at 168.
7
Table 2 identifies environmental indicators that provide
information at the product level, rather than aggregated at
the entity level as typified in the GRI frameworks.
Table 2: GRI and product life cycle or other social or
environmental considerations at the product level
GRI G3 Guidelines
Environmental
Energy
Additional
EN6. Initiatives to provide energy-efficient
or renewable energy-based products
and services and reductions in energy
requirements as a result of these initiatives.
Core
Products
and services
EN26. Initiatives to mitigate environmental
impacts of products and services, and extent
of impact mitigation.
EN27. Percentage of products sold and their
packaging materials that are reclaimed by
category.
Product responsibility
Customer
health and
safety
Core
PR1. Life cycle stages in which health and
safety impacts of products and services are
assessed for improvement and percentage of
significant products and services categories
subject to such procedures.
Additional
PR2. Total number of incidents of noncompliance with regulations and voluntary
codes concerning health and safety
impacts of products and services, by type
of outcomes.
Product
and service
labelling
Core
PR3. Type of product and service information
required by procedures and percentage of
significant products and services subject to
such information requirements.
Additional
PR4. Total number of incidents of noncompliance with regulations and voluntary
codes concerning product and service
information and labelling, by type of outcome.
8
Issues in applying LCA
The following conceptual and practical issues may arise in both
the application of LCA and the identification of boundaries in
sustainability reporting:
• Corporate group structure has implications for what
is direct and what is indirect (also affects which tier of
reporting would be applied in GRI Boundary Protocol).
• Outsourcing has implications for what is direct and what
is indirect. While economic impacts are captured through
price paid for outsourced activity, social and environmental
impacts may effectively go ‘off-balance sheet’.
• The effect of whether an activity is within the boundary (e.g.
an outsourced activity would only be in the report boundary
if it has significant impacts, and then, only at the third tier
of reporting).
• Selected outsourced upstream activities are captured in
GRI indicators, such as those reporting on procurement
policies.
• Outsourcing decisions may influence or distort the
identification of the report boundary.
• Consideration of product-related decisions, such as
outsourcing, based exclusively on financial / economic
factors (on which information is available), may have
considerable environmental and social consequences that
are inconsistent with the entity’s sustainability objectives.
• Outsourcing decisions that do not fully consider social and
environmental implications may result in significant risks to
the entity if activities move outside of their control (e.g. if an
entity outsources production and, further upstream, the line
activity is sub-contracted to a source that employs child
labour, the entity may be challenged in the implementation
of its own human rights policies).
• Choice of location of operations and location of outsourced
activity may have sustainability implications.
Case study of an airline
The following case study illustrates the potential application of
LCA to the airline industry. It is not intended to represent any
particular airline, nor is it intended to be comprehensive with
respect to the operations and significant environmental and
social impacts of airlines. The case draws on selected operating
arrangements and focuses on a sample of environmental and
social effects to illustrate the issues pertaining to the application
of LCA identified in the preceding discussion.
Some activities are more readily traced to individual flight
services than others. For example, while most of the output
of catering activities can be traced to particular flights, some
processes within catering (such as refrigeration) are not
easily traced to specific flights. Engineering and maintenance
activities are generally not readily traceable to specific flight
services, although they would ordinarily be easily traced to a
particular aircraft.
The case study will examine the identification of environmental
and social effects of direct activities and upstream and
downstream indirect activities. It will consider the implications
of outsourcing, as well as intra- and inter-period allocation of
effects pertaining to activities that are not feasibly traceable
to specific products. For purposes of the illustration, the
identification of impacts is confined to inventory parameters,
such as carbon dioxide emissions. The analysis of
performance on inventory parameters and translation to ‘core
indicators’ of sustainable development, such as contribution to
global warming, is beyond the scope of this study.
Furthermore, while some activities may be readily traceable
to a particular flight service, not all of the consequential
environmental and social effects of the activity may be readily
identified with a particular flight service. For example, waste
produced from in-flight services (such as provisions of meals)
may be readily traceable to a flight; but the environmental
effects of disposal of the waste, such as energy consumed in a
recycling process, are not readily traceable because the waste
output from multiple flights is removed and treated in a bulk
handling process.
The product
The airline’s major products are flight services; each scheduled
flight may be considered as a separate product. Management
may require information for decisions about specific flights,
such as whether to operate the flight or whether to use a
Boeing 747 or a Boeing 767. Some decisions may be made in
relation to groups of products, such as whether to continue air
services to a particular destination. External stakeholders, such
as passengers, may also need information for product-related
decisions, such as whether to travel by plane or use other
forms of transport.
Direct and indirect effects of
producing a flight service
Numerous activities contribute to the airline’s provision of
flight services for passengers, such as flying the plane,
in-flight services, and ground services (including baggage
handling, passenger handling, waste disposal, engineering
and maintenance, finance, marketing and human resource
management). The classification of the effects of each activity
as direct or indirect, in the context of LCA, is based on the
presence of control over the activity by the airline.
For example, the operation of the flight is usually controlled
by the airline and the economic, social and environmental
effects of the flight are classified as direct. Some aspects of
waste disposal, however, are often performed beyond the site
and outside the control of the airline. The economic, social
and environmental effects of waste disposal undertaken by
other entities are therefore classified as indirect effects of the
airline’s activities.
A selection of direct and indirect activities involved in the
delivery of flights is illustrated in Figure 1.
Figure 1: Selected activities in LCA of flight services
Build aircraft
Ground services eg:
• Baggage handling
• Load passengers
• Catering
Fly aircraft
In-flight services
Ground services eg:
• Baggage handling
• Unload passengers
• Cleaning
• Engineering
Waste
• Reusable items
• Recyclable
– paper, plastic
• Disposable
– bio waste
9
Direct activities
This case study commences by analysing selected
environmental and social effects of three major direct activities
that contribute to the provision of flight services: flying the
plane, in-flight services, and ground services.
When numerous tasks and operations combine to form a
service, the distinction between activities (such as flying the
plane and ground services) can be arbitrary, to some extent.
For instance, the use of the push-back tractor to push the
aircraft away from the terminal could be considered as part of
flying the aircraft or as part of ground services—in this case
it is included within ground services, reflecting the typical
operational structure adopted in the airline industry. In terms of
LCA, the classification of an activity as part of the operations of
one department or another is of no consequence as the focus
is on the accumulated social and environmental effects and
impacts of the product throughout its life cycle, rather than on
the contributions of various departments.15
Flying the aircraft
The specific operations classified as flying the aircraft include:
generation of thrust to enable the aircraft to take off; travel to
the flight destination and landing; and all operations formed by
flight staff including the pilot, co-pilot and, on some aircraft, the
flight engineer.16
Selected environmental effects of flying the aircraft to the
flight destination are listed in Table 3.17 The environmental
performance data are expressed at the inventory level,
consistent with the information generated by an environmental
management information system tailored to the provision
of product.
Table 3: Environmental effects of flying the plane to the
flight destination
Environmental effect
(inventory)
Description
Materials
Consumption of jet fuel
Aviation-grade kerosene
consumed in the preparation
for and execution of the
flight.
Emissions, effluents and waste
Greenhouse gas emissions
CO2 emissions by aircraft
engines.
Nitrous oxides (NOx) and
sulphur oxides (SOx)
emissions
Emissions generated by
aircraft engines.
Other direct effects of flying the aircraft are the wear and
tear and eventual consumption of the aircraft, giving rise
to maintenance costs, replacement of parts and eventual
retirement of the aircraft. For purposes of LCA, these effects
are classified as direct to the extent that they are controlled
by the airline. Wear and tear is considered in the context
of engineering and maintenance, a component of ground
services, while the eventual retirement of the aircraft is grouped
with other downstream waste disposal activities.
Each scheduled flight contributes to the social effects of flying
the aircraft and can, to varying degrees, be measured at the
product level. For instance, data for labour practices can be
collected and reported for flight crew assigned to the flight.
Table 4 lists a selection of social effects of flying the aircraft18
drawing from social performance indicators used in the
GRI G3 Guidelines.
15However, measuring the total environmental and social impacts of certain activities may provide useful input to monitoring performance and discharging
accountability, such that the classification of the operation should be aligned with areas of responsibility.
16In-flight services, which refer to services provided to passengers during the flight, are considered separately.
17 The list of environmental effects of flying the aircraft to the flight
destination is not intended to be exhaustive.
18The list of social effects of flying the aircraft to the flight destination is not intended to be exhaustive.
10
Table 4: Social effects of flying the plane to the flight
destination
Social effect (inventory)
Description
Labour practices and decent work
In-flight services
In-flight services refer to all of the functions performed by the
cabin crew during the flight. Some of the inputs to in-flight
services are outputs of other activities that form part of the
product life cycle of the flight service. For example, the outputs
of catering activities are inputs to in-flight services. Inputs that
represent outputs of another direct activity are not considered,
so as to avoid double counting.19 Selected environmental and
social effects of in-flight services20 are identified in Table 5 and
Table 6, respectively.
Breakdown of workforce
(casual / permanent; full-time
/ part-time etc.)
Data collated for flight crew
assigned to the flight.
Percentage of workforce
represented by trade union
organisations or collective
bargaining agreements
Data collated for flight crew
assigned to the flight.
Policies for reporting
accidents
Policies applicable to
accidents involving flight
crew.
Environmental effect
(inventory)
Injuries (days lost)
Injuries and days lost for
flight crew resulting from
incidents occurring on the
flight service.
Newspapers and magazines,
headsets, antimacassar, rugs
and pillows, eating utensils,
trays, toiletries
Staff training (in hours)
Training of flight crew, prorata if staff are engaged on
multiple flight services.
Water
Table 5: Environmental effects of in-flight services
Society
Noise problems
Noise generated by the flight,
particularly if using airlines
located near residential
areas.
Description
Materials
Water consumed
Provision of meals,
entertainment, lavatory
supplies and other comforts
for passengers during the
flight.
Water used for drinking,
washing and flushing.
Emissions, effluents and waste
Insecticide spray
Sprays required before
entry to terminals at certain
destinations (e.g. New
Zealand).
Waste: paper, aluminium,
recyclable plastics, glass,
etc.
Waste from newspapers
and magazines, linen /
paper antimacassar, meals
(food and beverage) and
packaging (aluminium cans
and covers; recyclable
plastics from cutlery, cups,
eating utensils and trays;
glass).
Bacteria and viruses
Potentially transferring
bacteria and viruses to areas
with little or no immunity.
19While all inputs can ultimately be traced further upstream to some basic elements in the measurement of an ecological footprint, in the interests of brevity this will not
be pursued in this case study.
20The lists of environmental and social effects of in-flight services are not intended to be exhaustive.
11
Table 6: Social effects of in-flight services
Social effect (inventory)
Description
Labour practices and decent work
Breakdown of workforce
(casual / permanent; full-time
/ part-time etc.)
Data collated for cabin crew
assigned to the flight.
Percentage of workforce
represented by trade union
organisations or collective
bargaining agreements
Data collated for cabin crew
assigned to the flight.
Policies for reporting
accidents, illnesses and
diseases
Policies applicable to
accidents, illnesses, etc.
involving cabin crew and
passengers.
Injuries (days lost)
Injuries and days lost for
cabin crew from incidents
during the flight service.
Staff training (in hours)
Training of cabin crew, prorata if staff are engaged on
multiple flight services.
Human rights
Ground services
Ground services occur before and after the flight.
Pre-flight ground services include: facilities for passengers
and guests awaiting departure at the airport, loading passengers
and baggage onto the flight, safety checks by maintenance and
engineering, and the preparation of food and beverages.
Post-flight ground services include: unloading passengers
and baggage, facilities for guests awaiting arrivals, and
cleaning and maintenance of the aircraft.
Activities before and after the flight are analysed in the following
tables, consistent with the manner in which environmental
and social information systems would typically record and
collate the information as part of one responsibility centre.
Selected environmental effects of ground services21, excluding
engineering and maintenance, are listed in Table 7.
While engineering and maintenance activities form part
of ground services, they are considered separately as an
illustration of the issues involved in the intra- and inter-period
allocation of environmental and social effects to products.
Issues of outsourcing are also considered in the context of
ground services with reference to catering.
Human rights policies applied Applied in choice of
in procurement of supplies
suppliers, e.g. caterers at
and outsourcing
point of flight destination.
Policies against
discrimination
Policies to cater for disabled
access to the aircraft cabin
as well as medical and
religious dietary requirements
on each flight.
Society
Policies addressing bribery
and corruption
Applicable to cabin crew
interacting with passengers
during the flight.
Product responsibility
Policy for preserving
customer health and safety
Safety talks, safety cards,
anti-terrorist precautions,
security measures,
prohibition on smoking,
disclosures about deep vein
thrombosis.
Policies and procedures for
product labelling
Policy on labelling on food
packaging.
Policy for consumer privacy
Passenger list privacy policy.
21The list of environmental effects of ground services other than engineering and maintenance is not intended to be exhaustive.
12
Table 7: Environmental effects of ground services
excluding maintenance and engineering
Environmental effect
(inventory)
Description
Materials
Inputs of food and beverage
Use of recycled paper
Preparation of meals by
catering.
Boarding passes, luggage
tags etc.
Energy
Electricity consumed
Ground power unit used
while aircraft is on the ground
(for lighting, cleaning, door
operations, avionic systems);
at the terminal (for baggage
handling, air conditioning,
cleaning, heating, automatic
doors, lighting, conveyer
belts, escalators, elevators);
and in catering for food
preparation, cooking,
refrigeration and freezing.
Water
Water consumed
Water used for washing the
aircraft and other vehicles;
consumed by ground power
units and other vehicles; used
as drinking water and to flush
toilets at the terminals; used
to remove ice and snow from
the plane, if applicable; and
used in food preparation.
Emissions, effluents and waste
Greenhouse gas emissions
CO2 emissions from ground
power unit, pneumatic
ground cart, baggage
handling, push-back tractor
and other vehicles.
NOx and SOx emissions
Ground power unit,
pneumatic ground cart,
baggage handling, pushback tractor, other vehicles,
incineration of quarantined
items (international).
Discharge to water
Washing aircraft and other
vehicles.
Some of the operations, such as the consumption of water
at the terminal, are not feasibly traceable to a particular flight.
Drinking fountains, bathrooms and lavatories at the terminal
are used by passengers and visitors associated with the
many flights scheduled to arrive at, or depart from, the airport.
Nevertheless, the water consumption at the terminal is part of
the process of operating each flight.
In the application of LCA, environmental effects should be
allocated to each product using an appropriate driver, in a
similar manner as economic overhead costs are allocated
to products using an appropriate cost driver. For instance,
the consumption of water at the terminal may be allocated
to flights on the basis of the number of passenger hours22
spent at the terminal.
In this case study, catering is treated as a direct activity;
however, the airline may choose to outsource some or all
of its catering, in which case the activity would be classified
as indirect. The environmental effects of catering may be
included in the entity-focused sustainability report of an airline
to the extent that the activity is controlled by the reporting
entity, as recommended in the GRI Boundary Protocol. The
GRI G3 Guidelines suggests that if the activity is neither
controlled nor significantly influenced, but the environmental
impact is significant, narrative disclosure should be included.
Thus, in applying the GRI G3 Guidelines to reporting on
the environmental effects of an airline’s catering services,
environmental performance indicators would be provided
to the extent that the catering services are controlled while
reporting would be confined to narrative disclosure for
outsourced catering services.
In contrast, product LCA makes no distinction between
controlled and outsourced activities, other than to classify
them as direct or indirect components of the product’s life.
In practical terms there may be some limitations on access
to information about the environmental and social effects of
activities beyond the control of the reporting entity.
Biodiversity
Impermeable surface as % of Concrete area at airports and
entity’s land
related sites.
22Passenger hours at the terminal may be a more appropriate allocation base than the number of passengers if there are significant differences in check in
requirements prior to departure for flights operated by the airline. This occurs, for instance, if the airline operates both domestic and international flights
from the same airports.
13
Table 8: Social effects of ground services excluding
maintenance and engineering
Social effect (inventory)
Description
Labour practices and decent work
Breakdown of workforce
(casual / permanent; full-time
/ part-time etc.)
Data collated for
ground crew.
Percentage of workforce
represented by trade union
organisations or collective
bargaining agreements
Data collated for
ground crew.
Policies for consultation
regarding changes such as
restructuring
Policies applicable to
ground crew.
Policies for reporting
accidents
Policies applicable to ground
crew activities.
Occupational health and
safety committees
Committees for ground crew.
Injuries (days lost)
Injuries and days lost for ground
crew from incidents traced or
allocated to the flight service.
Staff training (in hours)
Training of ground crew.
Human rights
Human rights policies applied Applied in choice of suppliers,
in procurement of supplies
(e.g. source of ingredients for
and outsourcing
in-house catering).
Policies against
discrimination
Policies to cater for disabled
access around the terminal,
religious beliefs (such as prayer
rooms) and dietary requirements.
Policies for freedom of
association
Policies applicable to
ground crew.
Society
Procedures for engaging with Passengers and visitors
stakeholders
using the terminal.
Policies addressing bribery
and corruption
Applicable to ground crew
interacting with passengers
and handling baggage.
Product responsibility
Policy for preserving
customer health and safety
Safety procedures for
passenger handling.
Policy for consumer privacy
Privacy in relation to security
checks and passenger
identification.
Social effects, such as labour practices, may vary between
flights due to differences in labour laws and regulations in
the various jurisdictions in which the airline’s ground crew
are employed. Table 8 lists selected social effects of ground
services, excluding engineering and maintenance.23
Some social effects, such as certain labour practices, may
be more readily traceable to specific flight services than
others. For example, hours lost due to injuries resulting from
a baggage handling accident may be easily associated with
a flight service, while hours lost due to repetitive strain injury
are unlikely to be specific to an individual flight service. The
social effects of activities with a high labour component can be
allocated to flight services based on a measure of labour hours
used in the production of each product or service.
In measuring the social effects of human rights policies on the
freedom of association, it is necessary to determine weighting
applicable to different labour input, to the extent that labour
resources used in the production of the flight service are not
covered by the same policies. For example, due to differences
in labour laws between countries, ground crew employed
offshore (either directly by the airline or as part of an indirect
activity performed at the destination airport) might not have
the freedom of association enjoyed by domestic ground crew.
In measuring the effect on freedom of association for the
flight service it is necessary to identify the portion of labour
contributed by workers who have freedom of association. This
could be achieved by measuring the actual or expected labour
hours of the relevant categories of workers per flight service.
Quantitative social indicators, such as the amount of staff
training, present additional complexities when measuring effects
at the product level. In allocating the staff training of ground
crew to a flight service it is necessary to consider the amount
of training undertaken by ground crew within a specified period
of time. This will vary between staff and employment category,
with more training time experienced by employees engaged in
apprenticeships. The accumulated training time may then be
allocated to flight services, based on a measure of actual or
expected labour hours (or minutes). For example, if baggage
handlers undertook 8,000 hours of training during the year and
performed 320,000 hours of service, then 0.025 hours of staff
training would be allocated to a flight service for every man-hour
of baggage handling;24 this process could then be repeated for
other categories of employment.
23The list of social effects of ground services other than engineering and maintenance is not intended to be exhaustive.
24 8,000 hours of training / 320,000 hours of service
14
Engineering and maintenance
The operations of the engineering and maintenance
departments of an airline include: maintaining, inspecting,
repairing and testing avionics (such as navigation systems and
electrical power systems); overhauling, repairing, modifying and
testing components of hydraulic systems, engines, pneumatic
systems and landing gear; and the manufacture and repair of
aircraft components, such as flight control surfaces and the
structural framework of the aircraft. Selected environmental
effects25 of engineering and maintenance activities are listed
in Table 9.
The inspection, maintenance, repair, overhaul, modification
and testing of the components of the aircraft are ongoing
activities over the life of the aircraft; these activities are not
readily traceable to flight services. The environmental and
social effects of these activities, however, can be allocated
to flight services in a manner similar to the allocation of
economic effects, such as the allocation of maintenance
costs and other ground costs using techniques applied in
activity-based costing.
The allocation of environmental and social effects of
engineering and maintenance activities in the application
of LCA poses additional complexities where operations
performed in one period, such as the overhaul of an engine,
pertain to the production of flight services over multiple
periods. When accumulating environmental effects of
engineering and maintenance activities it is often necessary
to consider a longer horizon than one year.26
We illustrate this process for the overhaul of aircraft engines.
The schedule for overhauling aircraft engines is based on
hours of operation. For example, the overhaul of an aircraft
engine is scheduled after each cycle of a specified number of
engine hours,27 irrespective of whether the engine hours are
spent on the ground or in flight. The environmental and social
effects of the labour, materials, energy and waste associated
with the overhaul can then be allocated to flight services based
on the actual or expected number of engine hours consumed
by each flight service.
Table 9: Environmental effects of engineering and
maintenance activities
Environmental effect Description
(inventory)
Materials
Inputs of spare parts,
grease, oil, fuels,
aluminium (in sheet,
bar and rod forms),
composite materials,
various plastics, wires,
bolts, etc.
Materials used in the maintenance,
repair and overhaul of components
of the aircraft.
Overalls and safety
wear
Materials consumed by engineering
and maintenance ground crew.
Recycled components
Rags used for cleaning.
Energy
Electricity consumed
Operation of lighting and equipment.
Gas consumed
Operation of equipment and heating.
Water
Water consumed
Cleaning and cooling processes.
Emissions, effluents and waste
Greenhouse gas
emissions
Jet engine testing, CO2 emissions
from push-back tractor, emergency
diesel generators, various
engineering vehicles.
Ozone depleting
emissions
Emissions from specialised
cleaning agents used to clean
aircraft parts; recharging and
servicing air-conditioning systems.
NOx and SOx
emissions
Jet engine testing, push-back tractor,
emergency diesel generators, various
engineering vehicles.
Waste: rags, used oil
and cleaning fluids,
material off-cuts, used
tyres, scrap parts
Recyclable and non-recyclable waste
from replaced parts; and materials
used in processes of repairs,
maintenance and testing of aircraft.
Discharge to water
Washing parts, hand washing,
laundry (uniforms / overalls).
Significant spills
Potential chemical and oil spills.
Impermeable surface
as % of entity’s land
Concreted surfaces used in and
around engineering workshops.
Selected social effects of engineering and maintenance
activities28 are listed in Table 10.
25The list of environmental effects of engineering and maintenance activities is not intended to be exhaustive.
26This is not to suggest that inter-period allocation of environmental and social effects of activities in the application of product life cycle analysis is confined to
engineering and maintenance activities.
27Additional engine overhauls may be scheduled on inspection after incidents such as bird strikes or the use of power in excess of the normal maximum under
emergency conditions, causing potential reduction in the expected life of the engine.
28The list of social effects of engineering and maintenance activities is not intended to be exhaustive.
15
Table 10: Social effects of engineering and maintenance
activities
Social effect (inventory)
Description
Labour practices and decent work
Breakdown of workforce
(casual / permanent; fulltime / part-time etc.)
Data collated for engineering
and maintenance staff.
Percentage of workforce
represented by trade union
organisations or collective
bargaining agreements
Data collated for engineering
and maintenance staff.
Policies for consultation
regarding changes such as
restructuring
Policies applicable to
engineering and maintenance
staff.
Policies for reporting
accidents
Policies applicable to
engineering and maintenance
staff.
Occupational health and
safety committees
Committees for engineering
and maintenance staff.
Injuries (days lost)
Injuries and days lost by
engineering and maintenance
staff from incidents traced or
allocated to the flight service.
Staff training (in hours)
Apprenticeship programmes in
engineering and maintenance;
staff training programmes.
Human rights
Human rights policies
applied in procurement of
supplies
Applied in choice of suppliers
of spare parts* and other
materials.
Consideration of human
rights policies in the supply
chain
Consideration of human rights
policies of suppliers of spare
parts and other materials.
Policies against
discrimination
EEO for engineering and
maintenance staff.
Policies for freedom of
association
Policies applicable to
engineering and maintenance
crew.
Society
Noise problems
Noise generated in testing jet
engines.
Product responsibility
Policy for preserving
customer health and safety
Procedures and regulations for
safety and monitoring systems
(e.g. certified staff on certain
tasks; formal and regulated
training), aircraft engineers’
log books.
*Extensive regulation in the airline industry imposes significant restrictions on the
choice of suppliers for spare parts, thus limiting the potential influence of the
airline’s procurement policies.
16
Indirect activities
Two indirect activities are considered in this study: building
the aircraft, and off-site waste disposal. Focus on building the
aircraft amplifies the issues involved in application of the LCA
approach to sustainability reporting with respect to upstream
activities. Issues surrounding the identification and reporting of
environmental and social effects of downstream activities are
considered in the context of waste disposal.
Operations that are neither controlled nor significantly influenced by
the entity are typically outside the boundary of sustainability reports
at the entity level.29 Nevertheless, the relevance of the effects of an
upstream activity to the sustainability assessment of a product is
not diminished by the level of vertical integration of the entity.
The following discussion illustrates the identification of
environmental and social effects of indirect upstream and
downstream activities that form part of the life cycle of the
production of a flight service. The activities, from Figure 1, that
have been selected for this analysis are building the aircraft
and the treatment of waste.
Building the aircraft
Building the aircraft used in the provision of flight services is an
upstream indirect activity. Ultimately, there are further upstream
activities beyond the construction of the aircraft, such as mining
for bauxite used in the manufacture of aluminium which, in turn,
is used to build the aircraft. For purposes of this illustration,
however, the analysis of upstream activities are limited to on-site
operations undertaken by the entity building the aircraft.
The ability of the airline to incorporate environmental and
social effects of operations undertaken by the entity building
the aircraft is dependent upon the level of disclosure in the
supply chain. For instance, consider the measurement of the
proportion of labour resources employed in the production
of a flight service that are represented by a trade union
organisation—while the entity building the aircraft may report
that 70% of its employees are represented by trade union
organisations, this proportion may vary between product
lines (that is, alternative aircraft types), reflecting differences
in labour practices and regulations in the various locations in
which aircraft are built or in which component parts are made
by subsidiaries and subcontractors. If disclosures are not
made at the product level, the purchaser of an aircraft would
not be able to determine this indicator of social effect for the
aircraft that forms an input into its product, the flight service.
The environmental and social effects of building the aircraft30
are identified in Tables 11 and 12, respectively.31
29The GRI Boundary Protocol recommends narrative disclosure in relation
to entities that contribute to operations but over which the reporting entity
does not have control or significant influence, where the impacts of their
operations are significant.
30The lists of environmental and social effects of building the aircraft are not
intended to be exhaustive.
31The reclaimable and reclaimed portion of the aircraft is considered further
in the context of waste treatment.
Table 11: Environmental effects of building the aircraft
Environmental effect
(inventory)
Description
Social effect (inventory)
Aluminium, composite fibres,
steel, electronic components,
fabric, titanium, plastics, paint,
sealants, rubber, oils, etc.
Materials used to build
and test the aircraft (e.g.
fibreglass used in wing
panels).
Use of recycled materials:
aluminium, plastics
Used in the manufacture
of aluminium and plastics,
varies with supply chain and
stress requirements of parts.
Energy
Electricity consumed
Electricity for lighting and
machinery.
Gas consumed
Gas used for heating furnaces.
Water
Water used for cleaning, heat
treating, cooling and testing.
Breakdown of workforce
(casual / permanent; fulltime / part-time etc.)
Data, if reported, for employees
of the entity building the
aircraft.
Percentage of workforce
represented by trade union
organisations or collective
bargaining agreements
Data, if reported, for employees
of the entity building the
aircraft.
Policies for consultation
regarding changes such as
restructuring
Policies of the entity building
the aircraft.
Policies for reporting
accidents
Policies of the entity building
the aircraft.
Occupational health and
safety committees
Committees in place for the
entity building the aircraft.
Injuries (days lost)
Injuries and days lost by
employees of the entity building
the aircraft.
Staff training (in hours)
Apprenticeship programmes,
staff training programmes of the
entity building the aircraft.
Emissions, effluents and waste
Greenhouse gas emissions
Ozone depleting emissions
NOx and SOx emissions
CO2 from combustion
engines in fork lift trucks and
testing aircraft engines.
Emissions from specialised
gases and liquids used in
cleaning and testing aircraft
parts; filling of refrigeration
systems used on aircraft; and
in the production facilities,
due to the need to control
temperature and humidity in
the manufacture and testing
of aviation instrumentation.
Emissions from combustion
engines in fork lift trucks and
testing engines.
Human rights
Human rights policies in
operations
Policies applied by aircraft
builder within its operations.
Human rights policies
applied in procurement of
supplies
Policies applied by aircraft
builder (e.g. in purchasing
curtain fabric).
Consideration of human
rights policies in the supply
chain
Policies of suppliers of spare
parts and other materials to
entity building the aircraft.
Policies against
discrimination
EEO policies of entity building
aircraft.
Policies for freedom of
association
Policies applicable to
employees of the entity building
the aircraft.
Society
Noise problems
Effects of noise from engine
testing on local community.
Odour problems
Detergent in run-off from
wash bays.
Effects of chemical odours from
operations on local community.
Policies addressing bribery
and corruption
Policies of the entity building
the aircraft.
Potential spills of chemicals
and oils used in cleaning and
testing parts.
Policies addressing lobbying Policies of the entity building
and political contributions
the aircraft.
Waste: recycling metal
off-cuts, rags, paper, and
contaminated chemicals
E.g. metal off-cuts sent to
scrap merchants.
Discharge to water
Significant spills
Products and services
% of product reclaimable /
reclaimed
Description
Labour practices and decent work
Materials
Water consumed
Table 12: Social effects of building the aircraft
Aluminium used in the
aircraft.
Product responsibility
Policies regarding public
health and safety of the
aircraft
Policies and compliance with
regulations for safety and
quality assurance policies and
procedures.
Policies and procedures for
product labelling
Labelling on aircraft (e.g.
instructions on opening doors).
17
Treatment of waste
Waste is an output of the product cycle that does not form
part of product to the consumer. In the case of a flight
service, most materials will become waste. Examples of
waste generated in the production of a flight service include:
cans, bottles, plastics and paper from in-flight meal services;
food scraps; human bio-waste; chemicals and oils used in
engineering and maintenance and building the aircraft; and
non-recyclable plastic used in landfill. Waste can be classified
by destination—that is, the method by which it is treated,32
including composting, reuse, recycling, recovery, incineration
and use for landfill.33 The treatment of waste may include
further processing (such as disassembly), cleaning and heating
in the course of recycling, or decontamination and crushing for
use in landfill.
The extent to which treatment of waste is a downstream
operation of the airline will vary between different items and
destinations of waste. For instance, if the airline incinerates
quarantined food brought into the terminal by passengers, the
activity is direct. Conversely, if the incineration were undertaken
by an airport authority that is not controlled by the airline, the
activity would be classified as indirect.
While the decision of whether to recycle or discard waste may
be made by the airline, control over the recycling activities
may be limited to the collection of items for recycling and the
choice of transport provider and recycler. For some operations,
such as the treatment of paper and glass waste at destination
airports, the choice of transport provider and recycler may
be made by the airport or by local authorities; however, the
decision to operate flights to a destination is within the control
of the entity. The LCA approach captures the sustainability
impacts of the provision of the product, providing input to
multi-dimensional decisions at the product level.
Eventually, the aircraft will be retired and scrapped. Various
reusable items, such as engines, may be removed and sold.
Sometimes, entire planes are purchased for specialised
purposes such as film production. Many aircraft, however, may
remain in the desert—reflecting the high economic costs of
disassembling the aircraft, separating component parts and
mitigating risk of contamination in preparation for purchase by
scrap metal merchants.
While the airline may, in applying its own sustainability
principles, prefer a high level of recycling, the decisions made
by downstream operators may reflect a greater weighting on
economic considerations. Similarly, the measurement of the
environmental and social effects of downstream recycling
may be complicated by the potential deferral of decisions and
actions—for instance, recycling may occur many years after
the airline has ceased to operate the aircraft.
The emission of methane gases from decomposing food
scraps provides another illustration of environmental effects in
the product life cycle that are dependent on decisions made
by other service providers. Methane gas is a greenhouse gas
and, as such, its emission is considered an environmental cost.
On the other hand, if the methane gas is used as a source of
power, it can be seen as contributing to the environment as an
energy source.
The environmental and social effects of the treatment of waste
generated throughout the life cycle of a flight service are
identified in Tables 13 and 14, respectively.
Difficulties in management of the environmental and social
effects of the treatment of waste may arise where the activity
is predominantly beyond the control of the entity. For example,
when an aircraft reaches the end of its useful life to one airline,
it may be sold to another airline. In the event that a purchaser
is not available, the aircraft is mothballed34 and may be sent to
a storage facility, such as the aircraft parking lot in the Mojave
Desert in the Unites States,35 where long-term storage requires
daily labour-intensive maintenance.36
32Global Reporting Initiative, (2002), GRI Guidelines, Environmental Performance Indicator EN11, http://www.globalreporting.org/guidelines/2002/c48.asp
33Some categories are not mutually exclusive over the long term. For instance, a reused item may eventually reach the end of its useful life and a different treatment
will be applied, such as landfill or recycling.
34Mothballing the aircraft refers to its preparation for long-term storage, including procedures such as covering windows, sealing engines and other openings, and
replacement of regular fuels and oils with alternatives with special preservatives.
35This location is chosen for its low humidity resulting in minimal corrosion.
36Discovery Channel - http://www.exn.ca/flight/video/ - “Plane Graveyard”
18
Table 13: Environmental effects of the treatment of
waste
Environmental effect
(inventory)
Description
Materials
Cans, bottles, plastics,
paper, aircraft, etc.
Material used in waste;
outputs of other processes
forming the inputs of waste
treatment.
Energy
Electricity consumed
Electricity used by recycling
and processing activities,
particularly heating processes.
Gas consumed
Gas heating used for
recycling glass.
Water
Water consumed
Water used in recycling
paper.
Table 14: Social effects of the treatment of waste
Social effect (inventory)
Breakdown of workforce
(casual / permanent; full-time
/ part-time etc.)
Data, if reported, for
employees of the entities
undertaking waste treatment.
Percentage of workforce
represented by trade union
organisations or collective
bargaining agreements
Data, if reported, for
employees of the entities
undertaking waste treatment.
Policies for consultation
regarding changes such as
restructuring
Policies of the entities
undertaking waste treatment.
Policies for reporting
accidents
Policies of the entities
undertaking waste treatment.
Occupational health and
safety committees
Committees in place for the
entities undertaking waste
treatment.
Injuries (days lost)
Injuries and days lost by
employees of the entities
undertaking waste treatment.
Staff training (in hours)
Staff training programmes.
Emissions, effluents and waste
Greenhouse gas emissions
CO2 emission from
transportation of waste, gas
heating used for recycling
glass, and vehicles used at
landfill dumps.
CH4 methane emissions
from decomposing food
scraps in landfill dumps and
processing bio-waste.
NOx and SOx emissions
Emissions from gas heating
used for recycling glass,
from vehicles used in
transportation of waste to
recycling sites and at landfill
dumps.
Discharge to water
Processed bio-waste (treated
effluent) discharged to water
after processing by Water
Authority.
Description
Labour practices and decent work
Human rights
Human rights policies applied Policies applied by waste
in procurement of supplies
treatment entities (e.g. in
purchasing chemicals used in
recycling).
Consideration of human
rights policies in the supply
chain
Policies of suppliers of
materials to entities treating
waste.
Policies for freedom of
association
Policies applicable to
employees of the entities
treating waste (could vary
between countries in which
waste is treated).
Policies for excluding child
labour
Extent of policies in place,
particularly if downstream
waste disposal is in countries
where child labour is a social
issue.
Products and services
Society
Aluminium used in the aircraft Proportion of product that is
reclaimable and reclaimed.
Noise problems
Effects of noise on local
communities near landfill
dumps and bio-waste
treatment facilities.
Odour problems
Effects of odour on local
communities near landfill
dumps and bio-waste
treatment facilities.
Dust problems
Effects of dust on local
communities near landfill
dumps.
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Concluding comments
Sustainability reporting at an entity level provides useful
information for the evaluation of performance on broader
environmental and social dimensions, together with the
economic dimension reflected in traditional financial reporting.
Parallel to the development of economic measures at the
product level—such as alternative approaches to product
costing including full costs, or activity-based costing—is the
burgeoning product-focused approach to ‘triple bottom line’
reporting. This approach, combined with life cycle assessment,
incorporates the economic, environmental and social impacts
of the direct and indirect activities that collectively contribute to
the products delivered to end consumers.
Information incorporating the indirect environmental and
social effects over the product life cycle enables productrelated decision making by management and stakeholders to
reflect sustainability considerations. Ultimately, sustainability
information at the product level provides capacity for
sustainable operations to be driven by market transactions.
Information about the environmental and social impacts at
the product level is also useful for management decisions
about the continuation of existing product lines, new product
developments, or investments by facilitating assessment
of the potential impact of product-related decisions on the
entity’s objectives of satisfying stakeholders’ expectations of
environmental and social performance.
The application of LCA was illustrated using a case study of an
airline. Conceptual and practical issue were identified in that
context, but are not unique to the airline industry. Outsourcing
and group structures have implications for boundary
definition, and the type of reporting applied in entity-focused
sustainability reporting in accordance with the Global Reporting
Initiative Boundary Protocol. By adopting a life cycle approach,
however, the environmental and social effects are included in
sustainability measures, irrespective of the level of control over
the activity by the reporting entity.
A difficulty that may be encountered in the practical application
of LCA, with respect to indirect activities, is access to
the information comprising the inventory parameters of
environmental and social effects. The ability of the entity
and other stakeholders, such as consumers, to analyse the
sustainability dimension at the product level is subject to
the level of transparency of environmental and social effects
throughout the supply chain.
Other complexities arise when the resources used in the
production process, such as waste disposal, are not readily
traceable to the end product. This can be addressed through
intra- and inter-period allocation, analogous to the allocation of
manufacturing overheads in product costing and administrative
and marketing expenditure in activity-based costing.
Clearly, management accounting can play a significant role in
the adaptation of established techniques to the development
of sustainability reporting for decision making by management
and other stakeholders.
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21
CPA154352 08/2010
CPA123208 10/2010