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



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.


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.


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.


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



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.


  1. Achabou MA, Dekhili S (2013) Luxury and sustainable development: is there a match? J Bus Res 66:1896–1903CrossRefGoogle Scholar
  2. Achtnicht M (2012) German car buyers’ willingness to pay to reduce CO2 emissionsGoogle Scholar
  3. Backhaus K, Erichson B, Plinke W, Weiber R (2011a) Multivariate Analysemethoden. Eine anwendungsorientierte Einführung, 13th edn. Springer-Verlag, Berlin, HeidelbergGoogle Scholar
  4. Backhaus K, Erichson B, Weiber R (2011b) Fortgeschrittene multivariate Analysemethoden. Eine anwendungsorientierte Einführung, 1st edn. Springer-Verlag, Berlin, HeidelbergCrossRefGoogle Scholar
  5. Backhaus K, Voeth M, Sichtmann C, Wilken R (2005) Conjoint-Analyse versus direkte Preisabfrage zur Erhebung von Zahlungsbereitschaften: eine modifizierte Replikationsstudie. Die Betriebswirtschaft DBW 65:439–457Google Scholar
  6. Baier D, Brusch M (eds) (2009) Conjointanalyse. Springer Berlin Heidelberg, Berlin, HeidelbergGoogle Scholar
  7. Baumgartner B, Steiner WJ (2009) Hierarchisch bayesianische Methoden bei der Conjointanalyse. In: Conjointanalyse. Springer Berlin Heidelberg, Berlin, Heidelberg, pp 147–159CrossRefGoogle Scholar
  8. Baxter T, Bebbington J, Cutteridge D, Harvey G (2003) The sustainability assessment model (SAM): measuring sustainable development performance. Offshore Europe. Society of Petroleum Engineers, InGoogle Scholar
  9. Bebbington J, Brown J, Frame B (2007) Accounting technologies and sustainability assessment models. Ecol Econ 61:224–236CrossRefGoogle Scholar
  10. Behzadian M, Kazemzadeh RB, Albadvi A, Aghdasi M (2010) PROMETHEE: a comprehensive literature review on methodologies and applications. Eur J Oper Res 200:198–215CrossRefGoogle Scholar
  11. Ben-Akiva M, Boccara B (1995) Discrete choice models with latent choice sets. Int J Res Mark 12:9–24CrossRefGoogle Scholar
  12. Benayoun R, Roy B, Sussmann B (1966) ELECTRE: une méthode pour guider le choix en présence de points de vue multiples SEMAGoogle Scholar
  13. Biesalski & Company (2014) Wertschöfungsreport Nachhaltigkeit 2014 - Was ist gutes Gewissen wert? In: 1–26Google Scholar
  14. Biswas A (2016) A study of consumers’ willingness to pay for green products. J Adv Manag Sci:211–215Google Scholar
  15. Brans JP (1982) L’ingénièrie de la décision; Elaboration d’instruments d’aide à la décision. La méthode PROMETHEE. In: Nadeau R, Landry M (eds) L’aide à la décision. Nature, Instruments et Perspectives d’Avenir. Presses de l’Université Laval, Québec, pp 183–213Google Scholar
  16. Cai Z, Aguilar FX (2013) Meta-analysis of consumer’s willingness-to-pay premiums for certified wood products. J For Econ 19:15–31Google Scholar
  17. Ciravegna L, Romano P, Pilkington A (2013) Outsourcing practices in automotive supply networks: an exploratory study of full service vehicle suppliers. Int J Prod Res 51:2478–2490CrossRefGoogle Scholar
  18. Cohen S (1997) Perfect union. CBCA marries the best of conjoint and discrete choice models. Mark res. Spring 9:12–17Google Scholar
  19. Davies GR (2013) Appraising weak and strong sustainability: searching for a middle ground. Consilience. J. Sustain Dev 10(1):111–124Google Scholar
  20. de Groot R (2006) Function-analysis and valuation as a tool to assess land use conflicts in planning for sustainable, multi-functional landscapes. Landsc Urban Plan 75:175–186CrossRefGoogle Scholar
  21. de Groot RS, Wilson MA, Boumans RM (2002) A typology for the classification, description and valuation of ecosystem functions, goods and services. Ecol Econ 41:393–408CrossRefGoogle Scholar
  22. Ding M, Eliashberg J, Huber J, Saini R (2005) Emotional bidders—an analytical and experimental examination of consumers’ behavior in a Priceline-like reverse auction. Manag Sci 51:352–364CrossRefGoogle Scholar
  23. European Commission (2005) ExternE Externalities of Energy - Methodology 2005 UpdateGoogle Scholar
  24. European Commission (2007) Setting emission performance standards for new passenger cars as part of the Community’s integrated approach to reduce CO2 emissions from light-duty vehiclesGoogle Scholar
  25. European Commission (2008) Special Eurobarometer 295 - Attitudes of European citizens towards the environmentGoogle Scholar
  26. European Commission (2013) Flash Eurobarometer 367 - Attitudes of Europeans Towards Building the Single Market for Green ProductsGoogle Scholar
  27. Figge F (2005) Capital substitutability and weak sustainability revisited: the conditions for capital substitution in the presence of risk. Environ Values 14:185–201CrossRefGoogle Scholar
  28. Figge F, Hahn T (2004) Sustainable value added - measuring corporate contributions to sustainability beyond eco-efficiency. Ecol Econ 48:173–187CrossRefGoogle Scholar
  29. Figge F, Hahn T (2005) The cost of sustainability capital and the creation of sustainable value by companies. J Ind Ecol 9:47–58CrossRefGoogle Scholar
  30. Finkbeiner M, Reimann K, Ackermann R (2008) Life cycle sustainability assessment (LCSA) for products and processes. In: SETAC Europe 18th Annual Meeting, 25–29 May. Warsaw, PolandGoogle Scholar
  31. Finkbeiner M, Schau EM, Lehmann A, Traverso M (2010) Towards life cycle sustainability assessment. Sustainability 2:3309–3322CrossRefGoogle Scholar
  32. Fontes J, Bolhuis A, Bogaers K et al (2015) Handbook for Product Social Impact Assessment, 2.0. PRé Sustainability, AmsterdamGoogle Scholar
  33. Fontes J, Tarne P, Traverso M, Bernstein P (2016) Product social impact assessment. Int J life cycle assessGoogle Scholar
  34. Frame B, Cavanagh J (2009) Experiences of sustainability assessment: an awkward adolescence. Account Forum 33:195–208CrossRefGoogle Scholar
  35. Gelman A, Carlin J, Stern H, Rubin D (2004) Bayesian Data Analysis, 2. CRC Press, Boca Raton, FloridaGoogle Scholar
  36. Govindan K, Jepsen MB (2016) ELECTRE: a comprehensive literature review on methodologies and applications. Eur J Oper Res 250:1–29CrossRefGoogle Scholar
  37. Groening C, Inman JJ, Ross WT (2015) The role of carbon emissions in consumer purchase decisions. Int J Environ Policy Decis Mak 1:261CrossRefGoogle Scholar
  38. Ha-Brookshire JE, Norum PS (2011) Willingness to pay for socially responsible products: case of cotton apparel. J Consum Mark 28:344–353CrossRefGoogle Scholar
  39. Hahn T, Figge F, Barkemeyer R, et al (2013) Sustainable value in automobile manufacturing - an analysis of the sustainability performance of automobile manufacturers worldwide. Sustainable Value Research, Marseille and LeedsGoogle Scholar
  40. Hetterich J, Bonnemeier S, Pritzke M, Georgiadis A (2012) Ecological sustainability – a customer requirement? Evidence from the automotive industry. J Environ Plan Manag 55:1111–1133CrossRefGoogle Scholar
  41. Johnson R, Orme B (1996) How Many Questions Should You Ask in Choice-Based Conjoint Studies? Sawtooth Softw Research P:23Google Scholar
  42. Jørgensen A, Hermann I, Mortensen J (2010) Is LCC relevant in a sustainability assessment? Int J Life Cycle Assess 15:531–532CrossRefGoogle Scholar
  43. JRC (2012) Towards a Life-Cycle Based European Sustainability Footprint Framework. Publications Office of the European Union, LuxembourgGoogle Scholar
  44. Kagel J (1995) Auctions: A Survey of Experimental Research. In: Kagel J, Roth A (eds) The Handbook of Experimental Economics. Princetown University Press, Princetown, pp 501–585Google Scholar
  45. Kaltenborn T, Fiedler H, Lanwehr R, Melles T (2013) Conjoint-analyse. In: Spieß M, Matiaske W (eds) Sozialwissenschaftliche Forschungsmethoden, Band 7, 1st edn. Rainer Hampp Verlag, Munich and Mering, p 143Google Scholar
  46. Karlewski H (2016) Social life cycle assessment in the automotive industry. Technische Universität Berlin, BerlinGoogle Scholar
  47. Klöpffer W (2003) Life-cycle based methods for sustainable product development. Int J Life Cycle Assess 8:157–159CrossRefGoogle Scholar
  48. Klöpffer W (2008) Life cycle sustainability assessment of products. Int J Life Cycle Assess 13:89–95CrossRefGoogle Scholar
  49. Klöpffer W, Grahl B (2014) From LCA to sustainability assessment. In: Life cycle assessment (LCA). Wiley-VCH Verlag GmbH & Co. KGaA, Weinheim, pp 357–374CrossRefGoogle Scholar
  50. Krupa JS, Rizzo DM, Eppstein MJ, Brad Lanute D, Gaalema DE, Lakkaraju K, Warrender CE (2014) Analysis of a consumer survey on plug-in hybrid electric vehicles. Transp Res Part A Policy Pract 64:14–31CrossRefGoogle Scholar
  51. Kruschke JK, Vanpaemel W (2015) Bayesian estimation in hierarchical models. In: Busemeyer JR, Wang Z, Townsend JT, Eidels A (eds) The Oxford handbook of computational and mathematical psychology. Oxford University Press, Oxford, pp 279–299Google Scholar
  52. Lankoski L (2010) Customer willingness to pay for sustainability in the food sector: An examination of three WTP typesGoogle Scholar
  53. List JA, Gallet CA (2001) What experimental protocol influence disparities between actual and hypothetical stated values? Environ Resour Econ 20:241–254CrossRefGoogle Scholar
  54. Liu Y (2014) Household demand and willingness to pay for hybrid vehicles. Energy Econ 44:191–197CrossRefGoogle Scholar
  55. Markandya A (2012) Externalities from electricity generation and renewable energy, methodology and application in Europe and Spain. Cuad Económicos ICE 83:85–100Google Scholar
  56. Martínez-Blanco J, Lehmann A, Muñoz P, Antón A, Traverso M, Rieradevall J, Finkbeiner M (2014) Application challenges for the social life cycle assessment of fertilizers within life cycle sustainability assessment. J Clean Prod 69:34–48CrossRefGoogle Scholar
  57. Meadows D, Meadows D, Randers J, Behrens W (1972) The limits to growth. Universe BooksGoogle Scholar
  58. Meadows D, Randers J, Meadows D (2007a) Grenzen des Wachstums das 30-Jahre update - signal zum Kurswechsel, 2. Auflage. S. Hirzel Verlag, StuttgartGoogle Scholar
  59. Meadows D, Randers J, Meadows D (2007b) Limits to Growth - the 30 Year Update Earthscan, London, United KingdomGoogle Scholar
  60. Müller H (2008) Empirische Untersuchung zur Messung der Preiswahrnehmung mittels Pricesensitivity-meter. Otto-von-Guericke-Universität, MagdeburgGoogle Scholar
  61. Murphy JJ, Allen PG, Stevens TH, Weatherhead D (2005) A meta-analysis of hypothetical Bias in stated preference valuation. Environ Resour Econ 30:313–325CrossRefGoogle Scholar
  62. Natural Capital Coalition (2016) Natural Capital ProtocolGoogle Scholar
  63. Neugebauer S, Forin S, Finkbeiner M (2016) From life cycle costing to economic life cycle assessment—introducing an economic impact pathway. Sustainability 8:428CrossRefGoogle Scholar
  64. Opricovic S, Tzeng G-H (2004) Compromise solution by MCDM methods: a comparative analysis of VIKOR and TOPSIS. Eur J Oper Res 156:445–455CrossRefGoogle Scholar
  65. Opricovic S, Tzeng G-H (2007) Extended VIKOR method in comparison with outranking methods. Eur J Oper Res 178:514–529CrossRefGoogle Scholar
  66. Ottman JA, Stafford ER, Hartman CL (2006) Avoiding Green Marketing Myopia. Environment 48:22Google Scholar
  67. Parguel B, Benoît-Moreau F, Larceneux F (2011) How sustainability ratings might deter “greenwashing”: a closer look at ethical corporate communication. J Bus Ethics 102:15–28CrossRefGoogle Scholar
  68. PUMA (2011) PUMA’s Environmental Profit and Loss Account for the year ended 31 December 2010Google Scholar
  69. Reinecke S, Mühlmeier S, Fischer P (2009) Die van Westendorp-Methode: Ein zu Unrecht vernachlässigtes Verfahren zur Ermittlung der Zahlungsbereitschaft? Wirtschaftswissenschaftliches Stud 38(2):97–100CrossRefGoogle Scholar
  70. Roll O, Pastuch K, Buchwald G (2012) Praxishandbuch Preismanagement: Strategien-management-Lösungen. John Wiley & SonsGoogle Scholar
  71. Sattler H, Nitschke T (2003) Ein empirischer Vergleich von Instrumenten zur Erhebung von Zahlungsbereitschaften. Schmalenbachs Zeitschrift für betriebswirtschaftliche Forsch ZfbF 55:364–381CrossRefGoogle Scholar
  72. Sichtmann C, Stingel S (2007) Limit conjoint analysis and Vickrey auction as methods to elicit consumers’ willingness-to-pay. Eur J Mark 41:1359–1374CrossRefGoogle Scholar
  73. Simon H, Fassnacht M (2009) Preismanagement. Gabler Verlag, WiesbadenGoogle Scholar
  74. Singh RK, Murty HR, Gupta SK, Dikshit AK (2009) An overview of sustainability assessment methodologies. Ecol Indic 15:281–299CrossRefGoogle Scholar
  75. Skiera B, Gensler S (2002) Berechnung von Nutzenfunktionen und Marktsimulationen mit Hilfe der Conjoint-Analyse, Teil I. Wirtschaftswissenschaftliches Stud 31(4):200–206CrossRefGoogle Scholar
  76. Stanton EA (2012) The tragedy of maldistribution: climate, sustainability, and equity. Sustainability 4:394–411CrossRefGoogle Scholar
  77. Sundt S, Rehdanz K (2015) Consumers’ willingness to pay for green electricity: a meta-analysis of the literature. Energy Econ 51:1–8CrossRefGoogle Scholar
  78. Tarne P, Lehmann A, Finkbeiner M (2018) Introducing Weights to Life Cycle Sustainability Assessment – How Do Decision Makers Weight Sustainability Dimensions?Google Scholar
  79. Tarne P, Traverso M, Finkbeiner M (2017) Review of life cycle sustainability assessment and potential for its adoption at an automotive company. Sustainability 9:670CrossRefGoogle Scholar
  80. Traverso M, Finkbeiner M, Jørgensen A, Schneider L (2012) Life cycle sustainability dashboard. J Ind Ecol 16:680–688CrossRefGoogle Scholar
  81. Tully SM, Winer RS (2013) Are people willing to pay more for socially responsible products: a meta-analysis. SSRN Electron J.
  82. van Westendorp P (1976) NSS Pricesensitivity-meter (PSM) – a new approach to study consumer perception of prices. In: Proceedings of the 29th ESOMAR Congress, Venice, 5–9 September 1976, pp 139–167Google Scholar
  83. Veisten K (2007) Willingness to pay for eco-labelled wood furniture: choice-based conjoint analysis versus open-ended contingent valuation. J For Econ 13:29–48Google Scholar
  84. Voeth M, Niederauer C (2008) Ermittlung von Preisbereitschaften und Preisabsatzfunktionen. In: Handbuch Marktforschung: Methoden, Anwendungen, Praxisbeispiele. Gabler Verlag, Wiesbaden, pp 1073–1095Google Scholar
  85. Völker R, Tachkov P (2013) Der Wert nachhaltiger Produkteigenschaften. Bestimmung der Zahlungsbereitschaft für umweltfreundliche Güter Ökologisches Wirtschaften 28:46–59CrossRefGoogle Scholar
  86. Wood R, Hertwich EG (2013) Economic modelling and indicators in life cycle sustainability assessment. Int J Life Cycle Assess 18:1710–1721CrossRefGoogle Scholar

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

Personalised recommendations