Proceedings of t he Int ernat ional Symposium on

Sust ainable Syst ems and Technologies, v2 (2014)

Assessing Social Impacts: The Good, the Bad and the Ugly
Lise Laurin EarthShift, llaurin@earthshift.com
Melissa Hamilton EarthShift, melissa@earthshift.com
Abstract. The UNEP /SETAC Life Cycle Initiative has put together an extensive list of social
impacts that can be used within a Life Cycle Assessment (LCA) framework (Benoit and Mazjin
2009). The goal of this project is to enable assessment of a supply chains social impacts in
a Social LCA, much the same way as environmental LCA assesses environmental
impacts. Two examples of these social impacts are Child Labor and Freedom of Association/
Collective Bargaining. A closer look at how assessment of these two impacts might be used
reveals some disturbing potential outcomes that may be indicative of flaws in the concept of
using LCA to assess social impacts. There are, however, limited applications of Social LCA
that seem to offer value. Consideration of worker illness and injury, for example, appears to
result in metrics that can be used to identify hot spots, much in the way that a life
cycle measurement of respiratory inorganics (particulates) can. EarthShift has been working
with an alternative method to assess social impacts called Sustainability Return on
Investment. This methodology uses environmental LCA results, environmental and
social risk assessment and traditional cost accounting to achieve a coherent triple
bottom line assessment. After using this methodology for more than 10 years, we have found
it addresses many of the weaknesses of Social LCA, while bringing in the benefits of
multicriteria decision analysis and transdisciplinarity. Extensive use of uncertainty
and stakeholder perspective make this a robust methodology.
Introduction. The group within the UNEP /SETAC Life Cycle Initiative working on Social LCA
has put together a list of fourteen social impacts that can be used within a Life Cycle
Assessment (LCA) framework (UNEP/SETAC Life Cycle Initiative n.d.), based on social
pressure categories listed in Table 1. The goal of this project is to enable assessment of a
supply chains social impacts in much the same way as environmental LCA assesses
environmental impacts. To date, data for some factors contributing to these impacts have been
gathered on a geographic level, including the population living in poverty, child labor, and
collective bargaining for a number of countries and, where appropriate, for a number of sectors.
Most LCAs using these impacts have focused on only one or two of these indicators, in contrast
to the many indicators used to inform an environmental life cycle assessment.
Proceedings of the International Symposium on Sustainable Systems and Technologies (ISSN 2329-9169) is
published annually by the Sustainable Conoscente Network. Melissa Bilec and J un-Ki Choi, co-editors.
ISSSTNetwork@gmail.com.
Cite as:
Assessing Social Impacts: the Good, the Bad and the Ugly. Proc. ISSST, Laurin, L; Hamiliton, M. http://
dx.doi.org/10.6084/m9.figshare.1120664. v2 (2014)
Copyright 2014 by Lise Laurin, Melissa Hamilton Licensed under CC-BY 3.0.
Assessing Social Impacts: The Good, the Bad and the Ugly
One could see, however, how the accumulation of data over time and their integration with LCA
tools would allow the generation of metrics which companies and other enterprises could use for
decision-making.
Table 1: Social pressure categories (complete list from UNEP SETAC) (Weidema, Course: Introduction to
Social LCA 2011)
Occupational health Unequal opportunities
Productivity loss from missing education Inadequate access to health care
Productivity loss from corruption Unemployment and underemployment
Effect of trade barriers Inadequate access to pensions or social security
Labour rights violations Stressful working conditions
Productivity loss from lacking physical infrastructure Poverty
Excessive work Appropriation of indigenous resources
Implementation of the UNEP/SETAC framework. The proponents of the UNEP/SETAC
framework propose that social metrics can be assessed in the same way as environmental
impacts using the same tools (New Earth 2013). When using this framework, making decisions
based on social impacts becomes straightforward, to the point that there is a potential risk of
oversimplification, as we will show. If Product A is made where employees have collective
bargaining rights and Product B is not, it is easy for a company or consumer to choose the
better product, Product A with bargaining rights.
Figure 1 is a pictorial view of countries organized labor used by proponents of the
UNEP/SETAC framework. Countries with more organized labor are shown larger, while those
with fewer organized workers are shrunken. The UNEP/SETAC framework considers more
organized labor in a country to be a good thing. Using this framework we would find that
countries like China and the United Kingdom are good to purchase from because they have
more organized labor, whereas Canada appears to be much less desirable. This appears to be
in line with the European perspective. Bo Weidema explained to us in a Social LCA class
(Weidema, Course: Introduction to Social LCA 2011) that it is assumed if an employee is
allowed to join a union, they will.
L. Laurin, et al
Figure 1: Trade Union Membership. Countries with higher percentages of organized labor are shown as larger than
actual in the map, while those with fewer workers in unions are sunken. Copyright Sasi Group (University of
Sheffield) and Mark Newman (University of Michigan). (Colors indicate only the continent and have no meaning with
regard to trade union membership.)
From a North American perspective, this is not intuitive. In North America, the rights of an
individual are more important than those of the group, and so our best companies use that
culture to advantage. As a result, Fortune Magazines list of Best 100 Places to Work, shows
few companies with any unions (see Table 2). Companies like Google and salesforce.com are
well known for the perks they offer employees. When unions form on this continent, on the other
hand, it is typically in response to mistreatment by the employer.
Table 2: Fortune Magazine's list of "Best 100 Places to Work" 2013 (Fortune Magazine 2013). Companies with
union workers shown in red.
1. Google, Inc. 11. Qualcomm (3%of non-US employees)
2. CHG Healthcare Services 12. DreamWorks Animation
3. Wegmans Food Markets, Inc. 13. Quicken Loans, Inc.
4. SAS 14. Robert W. Baird & Co
5. The Boston Consulting Group 15. DPR Construction
6. NetApp 16. The Container Store
7. Hilcorp Energy Company 17. Recreational Equipment, Inc.
8. Edward Jones 18. Burns & McDonnell
9. Ultimate Software 19. salesforce.com
10. Camden Property Trust 20. Millennium: The Takeda Oncology Company
(The parent company has union workers)
The child labor impact is of even more concern. When companies begin to purchase Product A,
what happens to the children making Product B? We have history to give us information about
that. After the Child Labor Deterrence Act was introduced in the US, companies moved their
supply from countries in South Asia where child labor was prevalent to other countries. The
result was that those children were left with no means of support. UNICEF's 1997 State of the
World's Children study (Unicef 1997) found that with the lack of sweatshop jobs, many children
in these countries resorted to jobs such as "stone-crushing, street hustling, and prostitution."
The study found these alternative jobs "more hazardous and exploitative than garment
production." In India, child labor raids force children back to poor families where there is nothing
to eat. They get sent out to hidden jobs where there is even less oversight of how they are
treated (Goering 2008).
Members of the Initiative argue that Social LCA will encourage companies to work with their
supply chain to improve the conditions of workers. We hope that governmental and NGO groups
that apply Social LCA will, in fact, use Social LCA results to improve the lives of those under
these social pressures. In our experience, however, LCA for corporate decisions is done by one
or two lower level analysts or by a consultancy. The results are simply a number around which a
designer or even a procurement agent makes a decision. Those decisions center around which
is better, A or B and how to meet the corporate metrics without regard to what happens if A is
selected over B, particularly if impacts are far up the supply chain. If we extrapolate this trend to
Social LCA, we can see that assessing organized labor can lead to support of worse places to
work and assessing child labor can result in child hunger or slavery instead. Boiling sensitive
issues like child labor into an engineering assessment of A versus B measured in numbers can
have disastrous unintended consequences.
Assessing Social Impacts: The Good, the Bad and the Ugly
Impacts outside the supply chain. A straightforward LCA of biofuels a few years ago would
find that the use of soy for production of a diesel substitute or corn for ethanol produced lower
greenhouse gas emissions than petroleum diesel or gasoline (see for example (Maclean, et al.
n.d.). Today we understand that the demand for corn for ethanol in the United States drove soy
farmers to switch to corn (United States Department of Agriculture 2014). To provide the soy
need for the global cattle industry, farmers in Brazil increased their cultivation of soy. To
increase their production, they needed more land, so they burned down sections of the Amazon
rainforest (Laurance 2008). The action of clearing the land released far more greenhouse gases
than the switch from gasoline to corn ethanol save (Searchinger, et al. 2008). This indirect land
use change is an example of how environmental impacts can be outside the direct supply chain
and therefore, difficult to measure with traditional process-based LCA.
During the same era, the subsidies on corn ethanol caused an increase in corn prices, and
funneled corn from food production to fuel production. As a result, Mexico ended up with a
tortilla shortage (Matalon 2008). More than environmental effects, the effects of decisions have
the potential to have social affects outside of the supply chain. Because LCA is by definition
focused on the supply chain, these impacts are difficult or impossible to capture using an-LCA-
like approach.
Cultural Bias. Capturing cultural perspectives and norms is integral to a comprehensive social
assessment and Social LCA is not able to accomplish this. The example of organized labor
shows how different cultures may view social issues differently. While Europeans and
Americans both come from a Western mind-set, they still have different views on whether
organized labor is something to be encouraged. Another area, noticeably absent from the UNEP
SETAC Methodological Sheets is the percentage of women in executive positions. A typical US
metric, this metric had traditionally not been used in Europe where the ability of a woman to stay
home with her children was valued above her ability to stay in the workforce long enough to
reach an executive position. This value is changing, but not because the US viewpoint is right.
When we look at cultures different from Western ones, the differences in values change further.
The recent efforts by Apple and others to improve working conditions at Foxconn included a
reduction in worker hours to 49 per week. One of the goals for employees is to have more time
with their families. Many of Foxconns employees, however, are from other parts of China. They
would prefer to work as many hours as they can while at Foxconn, so they can leave sooner
and with more in their pocket when they go back to their families. (Greenfield 2012).
A Different (limited) approach. Kelly Scanlon, an industrial hygienist, worked on a specific
application of Social LCA, looking at occupational health through an LCA lens (Scanlon, et al.
2013). Using an Input-Output approach, she gathered occupational health statistics for each
industry and assesses them using disability adjusted life years (DALYs), a metric common for
human health in LCA. She was able to add this data to the input-output data in the CEDA
database (Suh 2010). By choosing the US Input-Output database, she kept the perspective
within the US culture. While the occupational DALYs are assessed separately, called WE-
DALYs or Work Environment DALYs, they could easily be added into a human health damage
category along with environmental impacts. This methodology is well in line with traditional LCA,
relying on statistics and the relatively universal concept that living longer with fewer disabilities
is a good thing. Like high quality environmental LCA data, the data Scanlon uses is scientific,
quantitative, and transparent.
A more comprehensive assessment with an important feature. Tsuda, et al., have also
used Safety as an important societal issue in their Social LCA methodology (Tsuda, et al. 2007).
In addition, they include Health, Comfort, and Happiness. They extend safety issues beyond
L. Laurin, et al
occupational ones, including such things as accident rates during commutes, once again using
the concept of DALYs for the assessment. Health issues also use statistics and DALYs. They
tend to focus their comfort index on the use of electronics, looking at simplicity of use and the
ubiquity of service.
The most interesting part of this assessment is the happiness assessment. While all the other
metrics use traditional LCA techniques of inventory data gathering and assessment, the
happiness index relies on surveys. This allows practitioners to bring in the cultural perspective
of the user of the service. As an example, the authors applied this technique to an assessment
of video conferencing in contrast with live meetings in J apan and in France (Takahashi, et al.
2009). In both cases, they assessed the potential for accidents during travel to the live meeting
using available statistics. The inconvenience of the trip and the benefits of meeting face to face
were assessed via survey, however, allowing cultural differences to appear.
The methodology does not yet give a way to assess the happiness index back through the
supply chain or to other stakeholders. It does give a good idea how cultural perspectives can be
brought into the analysis through some form of dialogue.
Some alternatives to LCA. There are a number of methodologies that assess social impacts that
lie outside of the LCA realm. These include Social Impact Assessment and Social Return on
Investment. The first is used for investments that have a direct purpose of improving social
impacts, such as investments by non-profits. The second can be used for any type of project
that might be assessed using LCA. Social Return on Investment, or Social ROI, has seven
principles (The SROI Network Intl. n.d.):
1. Involve stakeholders
2. Understand what changes
3. Value what matters
4. Only include what is material
5. Do not over-claim
6. Be transparent
7. Verify the result
Both Social Impact Assessment and Social ROI tend to use monetary valuation as a way to
measure societal impact. Because of its perspective, Social ROI may not assess the entire life
cycle.
A number of researchers in the area of multicriteria decision analysis (MCDA) have included
stakeholder viewpoints of various environmental impacts, which by its very nature includes
societal impacts. Many of these researchers have found that stakeholder engagement is critical
to making informed decisions and also offers a bridge to begin consensus building (Scholz and
Tietje 2002) (Linkov and Moberg 2012). Most MCDA methods boil the results down to one
average viewpoint, however, from which to make a decision. They also may not include social
impacts that are not related to the environment.
One example of MCDA which explicitly includes societal impacts is the Sustainability Return on
Investment (S-ROI,) methodology. Like the other MCDA methodologies, this methodology relies
on input from stakeholders or their representatives. Like the Social ROI methodology, it uses
monetization as a weighting mechanism. It also uses the Social ROI concept of valuing what
matters. S-ROI differentiates itself from other methods by assessing a decision with the
perspective of each stakeholder, showing winners and losers in the decision. Environmental
impacts from an LCA or risk assessment can be explicitly included in the assessment. The
methodology is highly transparent and incorporates the viewpoints of all stakeholders in the
results.
Assessing Social Impacts: The Good, the Bad and the Ugly
Introduction to S-ROI. Briefly, S-ROI uses stakeholder participation to comprehensively identify
everyone who may be affected by a decision (stakeholders) and generate social, environmental
and economic risk assessments for each stakeholder. A cost benefit analysis is then applied to
each scenario. Stakeholders also apply a cost analysis to the LCA results for the same decision,
determining (broadly) who will be affected and what the cost of that impact will be. The results of
the cost benefit analyses are added to traditional return on investment analysis using a Monte
Carlo analysis to understand the uncertainty associated with both costs and the probability of
the scenario. The result is a probability curve of net present value return for each stakeholder.
The extensive nature of this methodology captures stakeholders who may be negatively
affected as well as those who may benefit from a decision, and the extent of risk to each.
Our work in S-ROI has uncovered an aspect of social impacts that are not addressed well by an
LCA-type methodology. Often the worst social impacts come from outside the supply chain. As
an example, a cogeneration system in a J apanese sawmill has the potential to jeopardize the
health of the local cattle since they may no longer have sawdust for bedding, resulting in
possible catastrophe for the cattle farmera participant completely outside the lumber supply
chain. These indirect effects, similar to indirect land use change, have the potential to be much
larger than the direct effects of our actions. At the same time, they are difficult to identify and
track down without firsthand knowledge. Through S-ROI, we are able to identify potential risks
and opportunities outside of a supply chain and perform causal chain analysis, and therefore
understand the domino effect of an action or decision. This is an important element that Social
LCA is unable to address.
As an alternative, S-ROI has the potential to identify both the direct and indirect social impacts
associated with a decision. More importantly, S-ROI encourages dialogsomething completely
missing from the LCA methodology. We have seen this dialog generate solutions that are more
sustainable from both an environmental and a social perspective than were obvious to the
decision maker before the assessment.
Unlike Social Return on Investment, Sustainability Return on Investment explicitly includes
environmental effects and can consider effects to future generations, which is also missing from
the Social LCA methodology. In addition, S-ROI uses uncertainty to look at potential risks and
opportunities to build a picture of the future that includes best case, worst case and the cases in
between.
Taken together, the S-ROI benefits offer a distinct advantage over Social LCA. In addition, it
uses the best of MCDA and Social ROI methodologies to provide a robust, achievable
assessment that can help corporations, governments and Nongovernmental Organizations
make better decisions.
Conclusion. There are a number of methods being proposed to assess social impacts as one
pillar of sustainability. Of these, Social LCA tries to take subjective information and boil it down
into engineering-like metrics. When users of the methodology focus on the metrics instead of
the mechanisms, there will likely be many unintended consequences. Additionally, a
comprehensive social assessment needs to take into consideration some very important
elements that are missing in the Social LCA approach; causal chain effects, cultural
perspectives and norms, and the impact to future generations.
Various multicriteria decision analysis methods and social impact assessment methods rely on
dialog to identify and quantify social impacts. With dialog, there will be fewer surprises and more
compromise. One of these methods, Sustainability Return on Investment, brings in the best of
many of these other methods and allows the inclusion of environmental and economic impacts
as well.
L. Laurin, et al
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