The Handbook

The Handbook for Product Social Impact Assessment (PSIA) describes a consensus-based methodology to assess positive and negative social impacts of products and services on four stakeholder groups: workers, local communities, small-scale entrepreneurs and users. Uniquely, the methodology focuses on assessing social impacts of products and services over the entire value chain. This approach is sometimes also referred to as Social Lifecycle Assessment or Social LCA.

It is important to be aware of some key differences between environmental life cycle approaches and social life cycle approaches. Social LCA is not just an extension of environmental LCA.  While we can assume 1 kg of CO2 is half as bad as 2 kg we cannot say 10 slaves working is half as serious as 20 slaves working. Companies want zero slaves, but do accept some CO2 emissions. Likewise we can more or less predict a range of emissions of steelmaking as many companies use the same blast furnace technologies, some will do this more efficient than others. The social impacts with steel manufacturing however can vary widely between two different companies. In fact the conditions in a steel company can be as bad as in a cotton farm. There is a very weak correlation between the technology and the social conditions. This difference has huge consequences for the data collection procedures.

There are four basic steps in the Handbook, (1) Prepare, (2) define Goal and Scope, (3) identify Hotspots and (4) apply our impact assessment procedures. The Reference guide below can be downloaded as PDF; click on the figure.

The Social Topics report

The Social Topic Report contains the definitions, reference scales and performance indicators for all social topics for the four stakeholder groups. It also contains many links to important data sources for each topic.

In 2020 all social topics where reviewed and better linkages were made with international standards and guidelines. This also resulted in a new set-up of the reference scales with clear guidance on how you can develop from an unacceptable situation to the development of positive impact and therefore a contribution to shared value.

Below an example is given on how the scale for Occupational Health and Safety for workers is defined in the Social Topics report. The first column contains the scale levels; the second contains the description of the level and the third provides the performance indicators. These are generally described as true/false. Data collection is done on the performance indicator level; not that only one Performance indicator needs to be assessed. The introduction of the report provides some further instructions. For a deeper understanding of how the scales have been developed we refer to chapter 4 of the Methodology Report.

The Methodology report

The Methodology Report describes the scientific basis for the selection of the social topics and the way the scales are built. The selection of topics is based on our understanding about how companies are dependent on social, human and other capitals in the society they operate in and how they have a contributing or detrimental influence on these.

Each company needs a society that functions well and has a healthy well-educated workforce. If no suitably skilled workforce is available, or if there are many tensions which hampers groups of people to cooperate and communicate, it will have negative effects on the company. The availability of healthy, educated people are examples of characteristics we refer to as the Human Capital of a society. The quality of relationships and the interaction within the society can be seen as the Social Capital in a society. Societies also consist of Natural Capital, Financial and Manufactured Capital such as infrastructure or electricity.

While recognising the dependencies, we can also assess whether companies contribute or have a detrimental effect on these capitals. Examples of contributions are in training, avoiding accidents, sharing infrastructure etc. The picture above illustrates the dependency on the capital flows on the input side and the contribution of the flows at the output side.

Once the topics have been selected the topic scales needed to be constructed. The scales are based on three ideas: setting the baseline (zero level), describing indicators to flag the detrimental behaviour and describing indicators for contributing to the societal capitals. For describing the contributions, we used to Theory of Change to understand what we want to assess. Our focus is on assessing outputs, as we think it is far too difficult to assess outcomes and impacts, as for instance it can take years before an activity results in a substantial outcome.

Implementation guide

Ad-hoc case studies as described in the Handbook are a great way to explore and learn about the business value of social metrics. However, when the company grows in maturity more and more departments get involved and after some time the method is formalized and integrated in the different policies of the company such as the Code of Conduct and reporting mechanisms.

The Implementation Guide therefore is written to describe this process and assist companies to implement social assessment in the organization. The Guide is based on the Maturity Matrix concept, which describes four stages of development towards maturity. It is based on what we learned about the growth in maturity during the different phases of the Roundtable and follows in detail the experiences of the different companies in the Roundtable.

Companies can perform a self-assessment to determine at which stage they are and set the ambitions for the development over the coming period. Below the result is shown of the self-assessment of the members in 2019.