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Introducing a product sustainability budget at an automotive company—one option to increase the use of LCSA results in decision-making processes

  • Peter Tarne
  • Annekatrin Lehmann
  • Michael Kantner
  • Matthias Finkbeiner
LIFE CYCLE SUSTAINABILITY ASSESSMENT
  • 36 Downloads

Abstract

Purpose

Product sustainability assessment should evaluate the impacts on all three dimensions of sustainability (environment, economy, and society). Life cycle sustainability assessment (LCSA) is a framework that extends life cycle-based product assessment to all three dimensions. Evaluation of trade-off situations poses a challenge within LCSA in a business context, especially if improvement measures for product sustainability lead to higher costs. This paper introduces the concept of the Product Sustainability Budget (PSB) to enable a decision for improvement measures despite of rising costs. It demonstrates a way to create such a PSB and how to combine it with an operationalized LCSA framework at an automotive company.

Methods

A survey was carried out asking 250 potential customers of the premium car segment in Germany via Choice-Based-Conjoint-Analysis (CBCA) about their preference of a sustainability interior package in a car. The sustainability package was one of the three specifications of a potential car interior (standard, luxury, sustainability) and was asked along four other attributes (price, drive train, engine power, and consumption). The survey was expanded by an Advanced-Van-Westendorp analysis to ask respondents about their willingness-to-pay (WTP) for such a package. The major findings of the study (take rate and price for the sustainability interior package) were then implemented in a business case logic from which the PSB was created.

Results and discussion

Nineteen percent of the entire sample would prefer the sustainability interior package to the other packages (=potential take rate) while the rest (81%) favored the luxury package. The package should be sold to this (potential) target group at price premium of 1.3–1.7% for a middle class limousine (or 0.4–1.1% when corrected for overstated WTP). It could be shown in a theoretical business case logic for such a sustainability package that the profit could be converted to form the PSB, which could compensate an increase in costs caused by a measure to improve product sustainability. The PSB opened up a solution space to identify the ideal set out of several possible improvement measures.

Conclusions

The introduction of an LCSA evaluation scheme on component level in combination with the proposed Product Sustainability Budget could enable substantial product sustainability improvement even when costs increase. The combination of an implicit CBCA and an explicit WTP study delivered a sound basis for creating this Product Sustainability Budget. The proposed concept should be applied in a business context to test its viability and additionally investigate customers’ WTP for improved social impacts.

Keywords

Advanced-Van-Westendorp analysis CBCA Choice-based conjoint analysis Life cycle sustainability assessment Monetary valuation Monetization Willingness-to-pay WTP 

Notes

Acknowledgements

This paper is part of a PhD thesis sponsored by the BMW Group. The authors thank the valuable input of two anonymous reviewers that greatly contributed to the improvement of the manuscript.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Institute of Environmental TechnologyTechnische Universität BerlinBerlinGermany
  2. 2.Product Sustainability, BMW GroupMunichGermany
  3. 3.Corporate Strategy & Development, REWAG & Co KGRegensburgGermany

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