As key contributors to households’ electricity consumption, appliances have a direct and significant impact on energy demand. The appliances value chain includes activities that produce household and professional appliances as well as associated retail activities and supply chain. It is usually split between large domestic and professional appliances (refrigeration, cooking and washing/drying equipment) and small domestic appliances (such as kitchen robots, lighting items etc.).
The primary impact of these products, especially large products, is on climate due to the high amounts of electricity consumed during use phase. Altogether, appliances account for most of a household’s electricity consumption despite continuous increases in performance. When devices are using water, such as dishwashers or washing machines, water consumption per unit washed has a significant impact too.
In order to account for these impacts, products’ energy and water efficiency can be benchmarked against market average (the average performance of products available in the market). Therefore, the most relevant information on performance and/or consumption is collected at the product level, through products’ EU environmental labelling for instance.
Example of environmental products labelling
The main challenge of this comparison to market average is the rapidly improving performance of appliances, which can make the best energy rating an actual market average (As illustrated by the case of washing machines below). Based on available market data, a NEC scale has been built for each component and each product type, with the best performing available product as the Eco-solution.
Moreover, impacts associated with appliance material use (especially plastics and metals) and end-of-life (significant waste volumes to manage) can be improved via responsible corporate business practices, especially through specific policies that enhance product lifespans, which can be estimated using reliability testing and warranty conditions or effectively measured, in particular for professional equipment.
How the NEC measures the impacts of appliances
In brief, the methodology used to calculate the environmental impacts of appliances is based on available products’ energy and water efficiency, and on qualitative assessment of business practices on a -33% to +33% NEC scale, as the framework impact intensity is moderate.
The primary environmental issues that are both key for the sector and measurable at product category and company level are products’ climate impact, via energy efficiency, products’ water consumption (if relevant, e.g. washing devices), and business practices (products’ warranty and reliability).
+ Product efficiency in term of energy consumption (kWh/unit) and water consumption (liter/unit) via environmental labelling or third-party comparative assessment + Business practices: qualitative scale assessing product quality, reliability, lifespan and/or warranty conditions
For instance, built-in obsolescence is assessed via a negative NEC for the business practices component, based on the related lifespan reduction.
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WHAT IS THE NEC METRIC?
Designed to inform and empower investment decision makers, it uses physical data from across the whole value chain to provide a snapshot of an activity’s net environmental contribution and it can be applied at a company, portfolio, index or product/source level.
The NEC evaluates the impact of economic activities based on environmental issues including climate change, water and biodiversity impacts.
Discover how the tool can be used by investors and corporates.