Sustainability risk assessment in manufacturing: A Life Cycle Assessment-based Failure Mode and Effects Analysis approach

Abstract

This study introduces a methodology integrating Life Cycle Assessment (LCA) with Failure Mode and Effects Analysis (FMEA) to identify and assess environmental sustainability risks in manufacturing processes in alignment with the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS). In contrast to existing top-down approaches at sector and company level, this methodology specifically addresses the challenge of transitory sustainability risks in manufacturing, driven by rapid changes in regulatory frameworks and market expectations, by providing a robust and adaptable framework for comprehensive, bottom-up risk assessment directly on the manufacturing shop floor. Through a detailed literature review, the paper identifies gaps in current risk assessment methods and proposes a novel approach that enhances traditional FMEA by incorporating LCA results, thereby facilitating a comprehensive, quantitative analysis of sustainability risks. The practical application of this methodology is demonstrated through a case study, underscoring its effectiveness in real-world settings and potential for broader applications in sustainable manufacturing. The results presented in the paper also include quantitative sustainability performance benchmarks for the EU28 industrial sector, offering a strategic tool for manufacturers to improve sustainability practices, align operations with environmental standards, and mitigate transitory sustainability risks. This research contributes to the sustainable evolution of manufacturing, providing a methodological foundation for understanding and managing sustainability risks.