Blog archive: September 2015

Quantifying the social footprint

September 8, 2015 by Bo Weidema

As already described in a previous blog-post on social LCA my first entry into the world of LCA in the early 1990’ies was from a social (fair trade and organic agriculture) perspective. Compared to then, we have now much better data and also better methods for social impact assessment. My role in the development of social LCA has mainly been – and continues to be – to insist on the need and feasibility of a quantitative approach to measuring social pressures and impacts, as you can find e.g. in my suggestions of social indicators and characterisation methods (Weidema 2006a, 2006b).

While developing these indicators and methods, I divided the impacts in two groups: Those that were the responsibility of and could be influenced by governments and those that industry could directly influence, and thus be responsible for. Since most LCAs not to evaluate public governance, but rather for industries, I disregarded the former and focused on the latter.

I now realise that this was a mistake. Because industry plays a key role in influencing governments. And it makes all the difference whether industries play their roles passively, taking advantages of low labour costs or even perpetuating the unfair distribution of resources, or whether they play active and positive roles, by paying taxes – directly or indirectly – and creating shared value in their societies. This choice – between a passive and an active role – implies a co-responsibility of industries for the current state of the economies in which they operate. And using this concept, we have now found a way to quantify the overall social impact that an industry (and its products) has, both positively (in re-distributing income to low-income groups and by actively contributing to activities that create shared value together with the local communities) and negatively (via the co-responsibility for the missing local governance that comes with low labour costs). The net impact, measured in utility-weighted monetary units, we call the “social footprint”.

The quantification of the “social footprint” is based on the concept of potential productivity (Weidema 2009) and the quantification of relative income inequality (Layard et al. 2008), and has become possible due to the recent availability of global input-output databases with a high country and sector detail, such as EXIOBASE and EORA. Using standard LCA methodology, the “social footprint” provides a top-down aggregated value of all the externalities related to human activities, both biophysical, economic and social, and a breakdown by country and industry.

In contrast to other social LCA methods it does not initially require site-specific data and does not provide a breakdown of all the possible contributing impacts. Further development of the method will provide more details on specific social impact categories. For inclusion of positive impacts from creating shared value in the local social hotspots identified by the method, company-specific data will of course still be required. Currently, we proudly present, share and further develop the method and database through our new social LCA club.

 

References

Layard R, Nickell S, Mayraz G. (2008). The marginal utility of income. Journal of Public Economics 92:1846–1857.

Weidema B P (2006a). The integration of economic and social aspects in life cycle impact assessment. International Journal of Life Cycle Assessment 11(1):89‑96. https://lca-net.com/p/1024

Weidema B P (2006b). Social impact categories, indicators, characterisation and damage modelling. Presentation for the 29th Swiss LCA Discussion Forum, 2006‑06‑15. https://lca-net.com/p/1021

Weidema B P (2009). Using the budget constraint to monetarise impact assessment results. Ecological Economics 68(6):1591‑1598. https://lca-net.com/p/194