Page 209 - Design for Environment A Guide to Sustainable Product Development

Analysis Methods for Design Decisions 187

make it difficult to identify risks, and the dynamic nature of these
systems makes it difficult to acquire relevant and reliable data. Chap-
ter 20 describes the complementary approach of resilience manage-
ment, which enables enterprises to cope with unforeseen risks and
adapt to a changing business environment.

Financial Analysis
The last category of DFE analysis methods, very important but
sometimes overlooked, is the analysis of the financial implications
of design decisions. Taking a product life-cycle perspective implies
that designers must go beyond conventional cost accounting meth-
ods to consider the broader costs and benefits incurred either by
the manufacturer, its customers, or other parties at various stages
of the product life cycle.
Life-Cycle Accounting
Conventional accounting methods do not capture the costs or reve-
nues associated with environmental improvements in a useful way.
Because environmental budgets are usually
assigned to overhead accounts, DFE initiatives
MOST ACCOUNTING
in product or process engineering organiza-
SYSTEMS DO NOT
tions cannot easily be credited for their mon-
PROPERLY INTERNALIZE
etary benefits. But if the cost savings associated
with reduced energy use, reduced waste man- THE ENVIRONMENTAL
agement expenses, and salvage values of recy- IMPACTS OF DECISIONS.
cled materials are taken into account, DFE
investments become much more financially attractive.
At a broader level, most enterprise accounting systems do not
properly internalize the environmental impacts of product and pro-
cess decisions. In particular, impacts upon resources, such as materi-
als, water, soil, or energy are difficult to evaluate because market
value based on classical supply and demand mechanisms fails to
reflect the true societal value of these resources. As a consequence,
under conventional accounting methods, it is usually difficult to jus-
tify the costs of environmental performance improvement because
the benefits are not directly quantified.
To correct the above deficiencies, some companies have adopted a
new approach called life-cycle accounting, also known as environmental
accounting or total cost assessment. It can be defined as identification
and quantification of direct, indirect, and other costs across the life
cycle of a facility, product, or process, thus revealing cost-effective op -
portunities to simultaneously improve productivity and reduce waste,
while encouraging business decisions that are both financially supe-
rior and beneficial to the environment.