Investors seeking true sustainability must look beyond surface claims and evaluate the total greenhouse gases released at every stage of a product’s life. By understanding lifecycle emissions, you can make decisions that drive genuine environmental progress.

Defining Lifecycle Emissions

Lifecycle emissions encompass all greenhouse gases emitted during the full journey of a product or service, from raw material extraction to disposal or recycling. This comprehensive view contrasts with operational emissions, which only track the use phase.

Ignoring the early or late stages can lead to misleading environmental claims and hidden costs. To avoid such pitfalls, investors must demand data that captures every emission source.

• Extraction of raw materials
• Manufacturing and production
• Distribution and transport
• Usage and maintenance
• End-of-life disposal or recycling

Life Cycle Assessment Methodology

Life Cycle Assessment (LCA) is the standardized approach for measuring environmental impacts across defined stages. Following ISO 14040/44, LCA consists of four main phases:

• Goal and scope definition
• Life cycle inventory (data collection on inputs and outputs)
• Impact assessment (quantifying effects like global warming)
• Interpretation of results to guide decisions

Through LCA, investors gain more accurate environmental assessments and can compare products or services on a level playing field.

Incorporating Circular Economy Practices

A circular economy aims to minimize waste and maximize resource use. By integrating reuse, recycling, and repair, lifecycle assessments reveal whether these strategies actually reduce emissions or simply shift them.

Investors should watch for closing the resource loop efforts that extend product life and cut downstream impacts.

• Reuse and remanufacturing initiatives
• Recycling and material recovery
• Product durability and repair programs

Lifecycle Emissions in the Context of Impact Funds

Impact funds commit capital to deliver both financial returns and measurable sustainability benefits. Key fund principles include:

• Intentional aim for positive impact—explicit environmental or social goals
• Additionality—achievements that wouldn’t occur without the investment
• Impact measurement—tracking real outcomes, not just intentions

When evaluating these funds, financed emissions—the share of a company’s total Scope 1, 2, and 3 emissions attributed to investors—are critical. For example, owning 10% of a firm with 100 tCO₂e emissions means 10 tCO₂e in financed emissions.

Regulations such as the EU’s SFDR Article 9 require funds to disclose how they meet sustainability objectives, increasing transparency on lifecycle and sustainability risks.

Practical Steps for Investors

To ensure your investment aligns with true environmental progress, follow these actionable steps:

• Review fund disclosures for Scope 1, 2, and 3 lifecycle emissions
• Check if the fund uses primary LCA data instead of industry averages
• Assess how the fund integrates circular economy strategies
• Look for transparent financed emissions reporting
• Engage with fund managers about data quality and assumptions

By adopting these practices, you’ll avoid avoiding misleading conclusions from limited data and support investments that truly reduce environmental harm.

Conclusion

Understanding lifecycle emissions transforms how we evaluate impact funds. Rather than accepting superficial claims, investors equipped with LCA insights can drive capital toward solutions that genuinely lower greenhouse gases across every stage.

As you assess your next impact fund, remember that only a full-lifecycle perspective delivers the rigorous impact measurement needed to achieve net-zero goals and prevent greenwashing. Empower your portfolio by demanding transparency, embracing circularity, and championing investments that make a lasting difference.