The single most important aspect of Trucost's approach is that it enables raw environmental emissions and energy usage data to be converted from little-understood physical units to the one currency that business managers are comfortable with: dollars and cents. Environmental impacts can be seen directly in monetary terms, enabling investors and organizations to make business judgements on sustainability criteria, possibly for the first time.
The most common approach to environmental data handling, is LCA, or life-cycle assessment. LCA takes a bottom-up approach by analyzing the environmental impacts of raw material production, manufacture, distribution, use and disposal caused by a product’s existence. The precision available from such an approach does come at greater cost in terms of time and money.
In contrast, Trucost’s approach is based on an advanced development of an input-output data model. It provides a top-down approach which is reliable, but less expensive or time-consuming compared to LCA.
The good news is that Trucost’s data model can be hybridised to incorporate LCA data, ensuring the benefits of these traditionally competing approaches – accuracy and efficiency – are uniquely available in a single product.
How does Trucost’s data model differ from other input-output models in existence? In many ways, it turns out:
- There are industry input-output models which can provide the environmental impacts of an average company in a single sector; Trucost’s data model takes into account 464 different industries across the world – substantially more than any other input-output model.
- Trucost can incorporate disclosures of physical emissions and energy usage into its data model, making its reporting on each company much more specific than possible with any other input-output model. So, for example, a company purchasing electricity from a wind farm will have the benefits of this approach reflected in its carbon impacts, as calculated by Trucost
- Where LCA data exists for products or product ranges, Trucost can incorporate these into its data model.
- Most input-output models cover just a few environmental impacts, such as carbon or greenhouse gases. Trucost, in comparison, assesses over 700 impacts in its data model from carbon and other greenhouse gases to water, waste, metals and chemicals.