Considerations on the Quantification of Corruption in Preventative Costs based SLCA

Context: A large body of literature demonstrates the detrimental impact of corruption in all three sustainability pillars of Planet, People and Prosperity (PPP), e.g. (Campos & Pradhan 2007; International Chamber of Commerce... [ view full abstract ]

Context:
A large body of literature demonstrates the detrimental impact of corruption in all three sustainability pillars of Planet, People and Prosperity (PPP), e.g. (Campos & Pradhan 2007; International Chamber of Commerce et al. 2008; Mauro 1997; Søreide 2014; Wei 1999; Fagan 2010; World Bank 2016).
The UNEP guidelines for SLCA of products mention corruption as a subcategory (Benoît & Mazijn 2009, p.49). (Ekener-Petersen & Finnveden 2013) identify corruption as an important hotspot in SLCA. But to date there is no literature on the quantification of corruption in SLCA. Therefore, we may conclude that there is a research gap in the quantification of corruption in SLCA.
Objective
The objective of this presentation is to consider the available options to quantify corruption in SLCA, and especially preventative costs based SLCA, and to make a first proposal for quantification.

Method
The literature was reviewed on the options for quantification of corruption in SLCA.
For a first proposal of quantification, the Oiconomy method was followed, as described in our article (Croes & Vermeulen 2014). In this system the supply chain actors self-determine and transfer their product’s cost distance to sustainability by copying their financial bookkeeping for the hidden preventative costs. If actors cannot demonstrate their own preventative costs, default values are used, equal to the marginal preventative costs. First a target (or performance reference point) is determined and thereafter the costs are determined of the preventative measures necessary to reach that target. The last and most expensive necessary measure represents the marginal costs.

Results
For the issue of corruption the official internationally accepted target is “zero tolerance”. However below a corruption index < 3.3 corruption does not seem to harm human health.
Because the ultimate business choice under pressure of corruption is not doing the business, the net profit margin is proposed as the marginal preventative measure and quantitative indicator for SLCA.

Proposed is to use a proportion of the profit margin, depending on the risk of corruption, measured by similar criteria of standard risk based certification standards, such as ISO 14001, and a scoring technique that values the common experience that reliability fast degrades with the number of governance shortcomings. A model for such scoring is proposed, which could be improved e.g. by weighting of criteria by an expert panel of experienced auditors and auditees