IMHO: Life cycle assessment: the pillar of proof for circular governance

New Zealand directors are operating in an environment where sustainability claims are no longer taken at face value. Cost pressures, infrastructure constraints, climate risk and increasingly complex trade settings are forcing boards to interrogate how value is created and lost across supply chains.

Against this backdrop, the circular economy is gaining attention as a practical lever to improve productivity, manage resource risk and build organisational resilience. But circularity only delivers value when it is grounded in evidence. The challenge is moving from circular ambition to disciplined decision-making.

Life cycle assessment (LCA) provides that discipline.

Why life cycle thinking matters in Aotearoa New Zealand

New Zealand’s economy is deeply resource dependent. Construction, infrastructure, agriculture, manufacturing and exports all rely on materials and energy that are increasingly exposed to volatility, whether through global supply disruption, carbon pricing, regulatory change or physical climate risk.

At the same time, directors are facing heightened scrutiny. Public procurement expectations, investor pressure, emissions reporting requirements and product stewardship obligations are converging. Boards are expected to demonstrate not just intent, but credible decision-making that balances cost, performance and environmental outcomes.

LCA brings a whole-of-system lens to these challenges. Rather than focusing on a single stage such as manufacturing emissions or end-of-life waste, LCA examines impacts across the full life of a product, service or asset: raw material extraction, processing, transport, use, maintenance and recovery.

This matters to boards because many sustainability trade-offs are not intuitive. A material that appears sustainable at first glance may have significant impacts in other areas. A circular intervention may reduce waste but increase energy use over time. LCA helps directors and management teams identify these interactions.

From technical tool to governance enabler

Historically, LCA has sat with engineers or sustainability specialists. Increasingly, it deserves a seat at the boardroom table.

First, LCA strengthens investment decisions. Whether approving major capital projects, infrastructure upgrades or product redesign, boards need confidence that choices will stand up over the long term. Whole-of-life analysis helps avoid locking in assets that are cheap upfront but costly, financially or environmentally, over time.

This is particularly relevant in New Zealand’s built environment, where decisions made today will shape emissions, maintenance costs and resilience for decades. LCA supports informed oversight of trade-offs between upfront capital, operational cost and long-term risk.

Second, LCA supports supply chain resilience. New Zealand organisations are often price-takers in global markets, exposed to material shortages and shipping disruption. Life cycle data can reveal hidden dependencies on imported materials, energy-intensive processes or vulnerable suppliers allowing boards to better understand risk concentration and diversification options.

Third, LCA underpins credibility and authentic communication. Directors are increasingly accountable for sustainability disclosures and public claims. LCA provides an evidence base that supports transparency and reduces greenwashing risk. Tools such as Environmental Product Declarations (EPDs), which are grounded in LCA, are becoming more relevant in procurement and infrastructure decisions across New Zealand.

Enabling circular advantage

Importantly, LCA does not compete with circular economy thinking – it enables it.

Circular strategies are often framed around reuse, recycling or alternative materials. LCA helps boards identify where these interventions genuinely deliver value and where they may not. In many cases, the biggest gains come from asking more fundamental questions: Can demand be reduced? Can assets be designed for adaptability? Can materials stay in use longer through better design and maintenance?

These questions speak directly to productivity. Smarter design that empowers using less, for longer typically reduces both environmental impact and cost. LCA delivers the evidence to prioritise these opportunities and avoid spreading effort too thinly across low-impact initiatives.

Timing is critical. LCA is most powerful when used early, shaping strategy, design and investment rather than retrospectively justifying decisions. This reinforces the governance role of setting expectations upfront, not simply reviewing outcomes at the end.

What New Zealand boards should be asking

Directors don’t need to become LCA practitioners. But they do need to ensure their organisations are using life cycle thinking effectively. Practical board-level questions include:

• • Are circular economy initiatives supported by robust, whole-of-life evidence?
  • How is life cycle data informing capital allocation, procurement and product design?
  • Where are we most exposed to material, energy or regulatory risk across our value chain?
  • How do we test competing sustainability claims and avoid unintended consequences?
  • Are incentives and performance measures aligned with long-term value, not short-term optics?

These questions help shift sustainability from aspiration to accountability.

Closing the loop

For New Zealand organisations, the circular economy offers a pathway to greater resilience, productivity and competitiveness, particularly as resource constraints and trade complexity intensify. But circularity without evidence risks becoming another layer of complexity rather than a source of advantage.

LCA provides boards with the clarity needed to govern circular strategies with confidence. It enables better investment decisions, strengthens supply chain oversight and supports credible engagement with regulators, customers and communities.

In a governance environment where scrutiny is rising and margins are tight, LCA is not a technical nice-to-have. It’s the pillar of proof that allows boards to transform circular ambition into circular advantage.

Jonas Bengtsson is the Global Director of Impact and Co-Founder of Edge Impact in Australia, New Zealand, USA and Chile, founder of BPI Rating tech platform, Director and past President of the Australian Life Cycle Assessment Society (ALCAS) and Vice-chair of the EPD Australasia’s Technical Advisory Group.