Monetisation of external socio-economic costs of industrial production: A social-LCA-based case of clothing production

Abstract The purpose of this study is to benchmark production processes and production chains of clothing products, by means of social life cycle assessment (S-LCA). In this paper we present the socio-economic costs (s-eco-costs) method for monetisation of external socio-economic burden for workers. The method is applied to six cases of garment production chains. The s-eco-costs are the marginal prevention costs to reach a sustainable level (the Performance Reference Point, PRP) for wages and are the monetary compensation costs beyond the PRP to account for unacceptable exploitation of workers. The s-eco-costs (in €) include five sub-indicators, proposed as a base-line for several social issues in S-LCA: - Minimum Acceptable Wage (based on minimum wages in rich countries and statistics on economic migrants) - Child Labour (forced labour, not able to attend school) - Extreme Poverty (derived from World Bank absolute poverty line) - Excessive Working Hours (forced labour, involuntary) - Occupational Safety and Health (based on statistics of ILO) These s-eco-costs have been calculated for cotton T-shirts and pairs of jeans for three garment production chains: USA-Europe (Western ‘W’); India-Bangladesh (Asian ‘A’); China/India-Bangladesh (Asian Best Practice ‘ABP’), revealing the hotspots in these chains, and enabling benchmarking. The total results for the s-eco-costs of T-shirts are: W = € 0.05; A = € 1.46 and ABP = € 0.33. The results for the jeans are: W = € 0.38; A = € 12.56 and ABP = € 2.67. The most important hotspots are in the cotton fields in India and the garment production phase in Bangladesh. The authors hope that the proposed system will inspire others in the field of S-LCA to proceed with the development of quantitative indicator systems.