Applications

Our partners invest and pioneer in Product Social Impact Assessment as they understand how essential it is to support better decision-making and reporting.

The motivations of the Core Partners to invest in the development of the Handbook reveals that they see a clear business case, as they see concrete applications. While each company has its own strategy and ambition regarding sustainability, we highlight a few commonly mentioned applications to illustrate the power of social metrics covering the entire value chain.

Steering product portfolios:
Many companies have started to assess their product portfolios focussing on environmental impacts, now they add the social dimension.

Reporting against the SDGs:
Many performance indicators in the SDG framework relate to social issues. In a separate project we are creating a strong and rational link between the SDGs and the Product Social Impact Assessment.

Mitigating risks, better sourcing:
Using materials from supply-chains where social impacts are unacceptable is a risk. However understanding these beyond Tier 1 is a challenge which we have addressed extensively.

Broadening Sustainability reporting:
The release of the IIRC Guidelines is based on the same thinking as we developed in the Handbook; reporting on social issues will be key when policies that require Due Diligence become mainstream.

Steering product portfolios

2022 Whitepaper on Reporting

Mitigating risks, better sourcing

Broadening Sustainability reporting

Steering product portfolios

Many companies have started to assess their product portfolios focussing on environmental impacts, Now they broaden their scope by adding the social dimension.

Our member company DSM explicitly states how they see the business value generated from understanding and addressing sustainability issues. The key DSM sustainability drivers are represented by their “purpose-led, performance driven” strategy and their sustainability portfolio steering Brighter Living Solutions, which is measured based on a product life cycle approach, for both social and environmental. By focussing on innovations to develop solutions, significant business growth can be achieved, as illustrated with the figure below:

This ambition can only be realised if the organisation is very competent and efficient in understanding these megatrends and translating this into attractive proposals to their clients. This is where the implementation of product social impact assessment comes in. The DSM People plus method is largely compliant with the Framework for PSIA. DSM has been contributing to the Methodology over the last 7 years and is currently a Core Partner.

You can find more on Steering Product Portfolios in the Implementation Guide, where we also discuss the WBCSD Portfolio Sustainability Assessment approach, using the PARC (Product Application Region Combination) concept.

Source: Framework for Portfolio Sustainability (PSA), WBCSD, October 2017 and Social Life Cycle Metrics for Chemical Products, WBCSD, November 2016.

2022 Whitepaper on Reporting

During 2021 our core members from Corbion, DSM and Fuji-Oil sat together and shared their views and experiences how the Handbook is already helping to improve their sustainability reporting. The discussions cantered around three questions:

Why are we looking for improved reporting?
How is improved reporting implemented?
What are the benefits of using the Handbook in improved reporting?

In the report the answers are provided that can be summarised as follows:

Why are we looking for improved reporting?

The primamry reason for all three is that the companies had already formuleted ambitions targets and policies, and all feld they needed to further develop the metrics to support these policies. There is also a strong connection to the upcoming regulations such as the Due dilligence and Taxonomy law in Europe and other reporting requirements

How is improved reporting implemented?

The companies in this group had a similar procedure, which usually has the following steps:

Materiality assessment and hotspot analysis in the value chain (similar to what is described in the Handbook
Management approach, including target setting, development of governance structure, data collection
Impact assessment and preparing the communication do different audiences and preparing for upcoming legislation.

What are the benefits of using the Handbook in improved reporting?

The materiality assessment, and the availability of a well defined broad scope social topics were a very important contribution to the improved reporting cycle. It helped toprovide focus and itsupported target setting. Another important benefit is the approach to screen the entire scope three in the hotspot identification phase and the data tools we discovered and started to use during our journey. This is very important as most ESG reporting focusses not further then tier 1 of the supply-chain. The Due Diligence legislation typically requires to identify social hotspots in the entire value chain.

The Whitepaper can be downloaded from here.

For more information on the Corbion approach: Click here.

You can find more on reporting against the SDGs in this interim report presentation of the SDG project here.

Mitigating risks, better sourcing

Sourcing from supply-chains where social impacts are unacceptable is a risk. However understanding these beyond tier 1 is a challenge which we have addressed extensively.

BASF

In the Implementation guide (page 31), BASF had submitted the following quote:

At BASF more and more, strategic decision-making processes require holistic sustainability assessments including social impacts. We developed our Social Analysis within the SEEbalance® method, see figure 5.6, based on the guidelines of the Handbook. A harmonized method that delivers meaningful results help decision-makers in their work to consider sustainability aspects based on a sound methodology. As it is common today to consider environmental impacts, it will be standard to consider social impacts as well. Furthermore, Social Analysis identifies improvement opportunities and can support the definition of priorities of activities.

The Social Analysis that BASF applies, delivers completely new findings because the approach is significantly different to the classical LCA approach and not just a repetition of an LCA with different figures. We extended that approach to agro business as well with the AgBalance method. Both methods are implemented by the sustainability strategy department and is run all over the world with the same approaches. That ensures the same mode of work and allows the comparison of findings as well as the collaboration with different sustainability centers in the world. Sustainability Strategy has the worldwide responsibility for the assessment methods and will implement applicable, accepted and harmonized methods based on different standards. ISO standards can play here an important role in the future. Furthermore, the workload must be acceptable, to generate a relatively high output of studies per year at reasonable costs. The results must be transferred to easy understandable final results to give guidance for non-experts as well.

ArcelorMittal

The implementation guide also contains reference to the work done by ArcelorMittal

Over the years ArcelorMittal has developed expertise and knowledge on environmental life cycle assessments. As part of the sustainability journey, ArcelorMittal has explored social value of steel and is developing experience in the field of social life cycle assessments. During phase 6 of the Roundtable, ArcelorMittal performed a case study intended to evaluate the two social life cycle assessment databases currently available on the market: Social Hotspot Database (SHDB) and Product Social Impact Life Cycle Assessment (PSIA) data-base. The main goal of the case study was to gain experience and develop working knowledge of the two databases. The intent was to develop an illustrative example that could be used to transfer the lessons learned to wider audience within ArcelorMittal, thus raising awareness within the company and initiating discussions.

The report and overall learnings show a number of weaknesses in these databases. The overall conclusion is formulated in this way: All in all, this study suggests the results from the databases can provide a good starting point for evaluating social risks associated with production of steel, different product systems, etc. Social life cycle database can complement the existing knowledge of social risks or highlight the areas that require further investigation. However, the raw results the social life cycle databases should be used with caution due to uncertainty de-rived from the input-output models, the social data used and use of worker-hours as an activity variable.

Broadening Sustainability Reporting

More and more organisations realise that it is strange to have separate reports on financial performance and social responsibility performance; the solution is an integrated report, where companies show their contribution to all stakeholders, not just the shareholders.

An important voice is the International Integrated Reporting Council, the IIRC that has just released the new 2021 guidelines. These guidelines are based on the same principles as we used in the Handbook. The cornerstone is the 6 capitals approach, also described more extensively in the Methodology Report and several other reports (see competence center). The IIRC website has many casestudies and supporting documents on their Resources page.

The Integrated Reporting Framework can be found here.