Is your company worried about EU’s taxonomy obligations? Keep calm with enhanced R&D processes and LCA tools

The taxonomy regulations, enforced from January 2024, address four environmental targets and two climate targets the EU aims to reach. They force industrial companies to assess their environmental impact and sustainability, including recycling and repairability. The assessments must entail the complete lifecycle of products from cradle to grave.

“This links taxonomy directly to product development. Therefore, companies must pay closer attention to converting their operations into a more sustainable form already in the R&D process,” says Juha Nieminen, Etteplan’s Services Development Director.

"However, this isn’t completely new to most of our customers who have been active in their green transition. For instance, improving materials and energy efficiency as well as reducing waste have been long-standing norms.”

Nieminen points out that the business environment has long been becoming more and more complex. The taxonomy adds a new spice to this complexity.

“What is crucial also regarding taxonomy is the maturity level of product development and management. The higher the level, and the more agile the company is, the better it manages itself in a fluid environment,” he emphasizes.

When looking closely at the taxonomy process, it includes a gap analysis about the state of each environmental aspect. This requires information, for instance, about the carbon footprint of the company and its products. Such information is gathered by lifecycle assessments (LCA). What makes LCA particularly powerful is how it dives deep into the specifics of a product’s lifecycle—from raw material extraction to production, use, and eventual recycling and energy utilization.

“LCA allows us to pinpoint exactly where environmental impacts occur and how big they are,” says Antti T. Niskanen, the director of Etteplan’s LCA department. His department makes environmental impact estimation using lifecycle assessment methods.

Based on LCA results, experts can present R&D teams with alternatives, for instance, in materials, technologies, or energy. Then, the developers can select the ones that would reduce emissions and be the most sustainable and cost-efficient.

“Several customers are producers of liquid chemicals, and for them, we can do recipe comparisons, for instance, considering the share of bio-based and fossils-based components.”

The EU’s focus on sustainability also encourages companies to consider how easily a product can be repaired, its components replaced, or software upgraded to extend its lifespan.

.“Here again, LCA is a crucial tool for R&D teams, because it covers the end-of-life phase. If a product’s lifecycle can be extended, it reduces the need for new materials and minimizes waste,” notes Niskanen.

Now, more than ever, industries must apply a holistic approach to product development with integrated environmental impact assessments.

“To create change, companies need to look at the future. Instead of only doing calculations for taxonomy obligations afterward, integrating LCA into R&D is much more cost-efficient and optimal,” says Niskanen.

Taxonomy examinations with LCA benefit greatly from artificial intelligence. For instance, AI-models accelerate the generation of simulations about manufacturing processes and potential environmental risks. This makes it much easier to use LCA in a predictive fashion and raises the quality and efficiency of the whole LCA process.

By having experts involved already when planning a new product or even a production plant enables capturing and integrating environmental requirements during concept and technology design phase. It can ensure material and energy efficiency in terms of material and component selections with lifecycle data. As a result, in-house R&D teams can focus on their own area of expertise and business targets.

“We can evaluate various scenarios regarding the location, manufacturing process, raw materials, components, technologies, and logistics to prevent that choices made by internal R&D teams would be eligible and aligned with EU requirements.”

Alignment with taxonomy criteria can raise the potential for groundbreaking innovation, which lifts the business to new heights. But truly elevating to a new level takes more. It requires cross-scientific R&D, requirement management, and technology platforms.

“I’m keen to highlight the importance of systematic and methodological orchestration and governance in product development and product management. The perspective you get through assessing the complete product lifecycle is essential to navigate the transforming business environment. It also provides a basis for ensuring sustainable products, production, and aftermarket services,” states Etteplan’s Juha Nieminen.

He reminds that instead of trying to do everything from scratch, companies must find research, development, and technology partners.

“You should partner with someone who is a broad generalist but specialized in the industrial domain. At Etteplan, we work constantly with hundreds of industrial customers and have been accumulating insight on what it takes to embed various requirements such as taxonomy in R&D processes”.

A good partner helps in making sustainable choices in product development.

“By incorporating LCA in R&D, companies can optimize their processes and materials as well as the energy use, leading to products that are not only compliant with EU regulations but also better for the environment and business,” says Antti T. Niskanen.

Do you want to know more about taxonomy and how to ensure regulatory compliance through improving R&D processes, governance, product management, and LCA? Check out our guidebook about R&D here.