Purpose
Sustainability investors are in need of updated standards, indexes and in general better tools and instruments to facilitate company information on its impacts on people, planet and profit. Such instruments to reveal reliable, independent metrics and indicators to evaluate companies’ performances on sustainability exist, however, in research fields that previously have not been used extensively, for instance, life cycle assessments (LCAs). ISO 14001:2015 has implemented life cycle perspective, however, without being explicitly clear on which methodology is preferred. This paper aims to investigate LCA as to improve companies’ transparency towards sustainability investors through a literature review on sustainable investment evaluation.
Design/methodology/approach
The literature review is conducted through the search engine Google Scholar, which to date hosts the most comprehensive academic database across other databases such as Scopus, ISI Web of Knowledge, Science Direct, etc. Search words such as “Sustainable finance”, “Sustainable Investments”, “Performance metrics”, “Life cycle assessment”, “LCA”, “Environmental Management Systems”, “EMS” and “Environmental Profit and Loss Account” were used. Special journals that publish research on LCA such as International Journal of Life Cycle Assessment, Journal of Cleaner Production and Journal of Industrial Ecology were also investigated in-depth.
Findings
The combination of using LCA in, for instance, environmental profit and loss accounts studied in this paper shows a comprehensive and reliable tool for sustainability investors, as well as for social responsibility standards such as ISO 14001, ISO 26000, UN Global Compact, GIIN, IRIS and GRI to incorporate. With a LCA-based hybrid input-output account, both upstream and downstream’s impact on the environment and society can be assessed by companies to attract more funding from sustainability investors such as shareholders, governments and intergovernmental bodies.
Research limitations/implications
The literature review is based on publicly disclosed academic papers as well as five displayed company Environmental Profit and Loss accounts from the Kering Group, PUMA, Stella McCartney company, Novo Nordisk and Arla Group. Other company experiences with integration of LCA as a reporting tool have not been found, yet it is not to conclude that these five companies are the only ones to work extensively with LCA.
Practical implications
The paper may contribute to the clarification of LCA-thinking and perspective implementation in both ISO 14001 and ISO 26000, as well as in other social responsibility standards such as the UN Global Compact, the Global Impact Investing Networks, IRIS performance metrics, the Global Reporting Initiative and others.
Originality/value
The paper is one of the first that evaluates LCA and environmental profit and loss accounts for sustainability investors, as well as for consideration of implementation in social responsibility standards such as the ISO 14001 and ISO 26000, as well as in other social responsibility standards such as the UN Global Compact, the Global Impact Investing Networks, IRIS performance metrics and the Global Reporting Initiative.
Geographic Variations in the Early Diffusion of Corporate Voluntary Standards: Comparing ISO 14001 and the Global Compact