How are eco costs calculated?
Eco costs show the total environmental impact (all impact categories) of a product, expressed in Euros (€). It's an impact KPI, but the costs also represent the € amount a company should invest in reduction measures, to prevent this impact from happening in the future.
The methodology behind the eco-costs model is illustrated in the system graph below.
Single impact categories (carbon footprint) vs eco costs (total)
When you calculate the impact of a product with a Life Cycle Assessment method (LCA), you get many more impact results than carbon impact. 12 impact categories to be precise. Think of the impact of land use, impact of water scarcity, or impact of fine dust, and 9 more. In LCA terms, these impact categories are called "midpoint indicators".
We can look at these midpoint indicators individually, for example by looking at the kg CO2-equivalent for the carbon footprint. But adding them up to see the total impact isn't possible, as they all have different scientific formulas.
From 12 impact results to 4 main categories
The eco-cost system adds a monetary value weighed specifically to these individual midpoint categories and categorizes them into 4 main categories required by EU ESG Reporting. Called: monetary endpoints (see image below).
From 4 main categories to 1 single result
We can now in turn - add up the monetary values (€) of these 4 monetary ednpoints to get the total impact of a packaging product!
The result: A single indicator that shows the total impact of a product, instead of limiting ourselves to a single category like carbon footprint. This enables us to finally compare the total impact of products, and apply the benefits of true cost accounting (TCA).
The eco-costs system complies with ISO 14008 (“Monetary valuation of environmental impacts and related environmental aspects”) and uses the ‘averting costs method’, also called ‘(marginal) prevention costs method’ (see section 6.3).
