Towards a method for poverty reduction potential in social life cycle assessment with application to the cobalt supply chain

Abstract Purpose About 8% of the world population lives in extreme poverty. The importance of poverty reduction is acknowledged both in the general sustainability literature and within social life cycle assessment (S-LCA). Existing approaches in S-LCA typically consider the prevalence of poverty, but not how poverty can be reduced. The aim of this paper is therefore to propose a social life cycle impact assessment (S-LCIA) method for poverty reduction potential based on an impact pathway approach. Methods The basis of the S-LCIA method proposed is a literature review about poverty reduction, primarily in the field of development economics. Based on this literature, an impact pathway and a quantitative S-LCIA method were developed. The S-LCIA method was then applied to the case of the cobalt supply chain to illustrate its applicability, covering production of cobalt hydroxide in the Democratic Republic of the Congo (DRC) and cobalt sulfate in China. Results and discussion The literature review showed that economic growth is the most important factor for poverty reduction and that no country has escaped poverty without economic growth. This suggests that the value added, the process-level contribution to economic growth, is an important product-related parameter for an S-LCIA method on poverty reduction. However, not all growth benefits the poor, and to capture this, the developed method includes parameters accounting for corruption, inequality, and the share of people living below poverty thresholds. The exemplary case study shows that the potential poverty reduction is higher in the DRC than in China, mainly due to the higher value added generated in the DRC and the larger share of people living in poverty. Conclusions The developed S-LCIA method constitutes a first attempt at accounting for how products influence poverty, rather than considering the mere prevalence of poverty. It allows for an identification of the largest contributions to poverty reduction, and an analysis of underlying causes in terms of value added, corruption, equality, and poverty levels. Further developments are recommended, particularly regarding estimating the share of the economic growth that actually benefits the poor.