Comprehensive life cycle assessment by transferring of preventative costs in the supply chain of products. A first draft of the Oiconomy system

Abstract

A major part of global unsustainability is embedded in consumption and the processes involved in the lifecycle of products, but there is currently no comprehensive and objective method for product sustainability measurement, including both environmental and social issues. This requires a life cycle approach. Current life cycle assessment (LCA) systems, developed to compare environmental performance of products and production alternatives, have many shortcomings if used to comprehensively measure product sustainability. The most important shortcomings are: the lack of a measuring standard, the top-down approach, the weighting of different issues, the very laborious procedures of addressing specific supply chains, limitation to environmental aspects, the very complex nature of impact based data, and difficult database maintenance. This article presents a new type of “bottom-up” and “product-specific LCA” for the comprehensive measurement of the hidden environmental and social costs of products. Every supply chain actor collects the upstream supply chain hidden costs, calculates and adds its own contribution and transfers the result to the next link by means of a monetary unit, the “Eco Social Cost Unit” (ESCU). Every ESCU allocation is the product of a quantitative factor for an issue and a price factor. The uniform measurement of the quantitative factor, their transfer through the supply chain, and the creation of a self learning database of the price factors is achieved by means of a standard. The price factor represents the marginal preventative costs for the relative impact category of sustainability issues. For initial determination of the price factor this article extends the EcoCost/Value ratio system, developed by Vogtländer et al., to social issues, discusses implications of the system, its principles, advantages, research challenges and limitations and proposes system boundaries for application of the system and future research contributions to the project.