Modern extended supply chains symbolize economic efficiency.

But do their promises hide destructive impacts on society?

“Value”: a broader definition is needed

Traditionally, value is summed up as cost price minus external costs.
A customer view broadens this definition: value is the price a consumer accepts for a product that provides a benefit.
However, Marilyn Waring shows that classical economics omits crucial activities such as volunteer services, maintaining personally your property, helping the community or raising children (see the insert at the end of the article and the link to her TEDx in the sources). These contributions, invisible in financial calculations, nevertheless represent an inestimable contribution to collective and individual well-being.

Value should be defined as "any useful contribution perceived as beneficial by members of society." This definition better illuminates the analysis.

Smartphones: Globalized but Fragmented Value Chains

Smartphones are a perfect illustration of the complexity of globalized chains. The screen comes from Korea, the battery from China, the semiconductors from Taiwan. The assembly is done in Vietnam, the rare minerals often come from Congo, and the packaging can be produced in Indonesia. This fragmentation maximizes profits through the exploitation of regional advantages, while artificially minimizing apparent costs.

However, negative externalities – pollution, working conditions, and wasted resources – remain invisible in classical economic calculation.

The mirage of financial value creation

Financially, everything looks bright. The company generates comfortable margins and satisfies shareholders, employees and consumers. But by broadening the analysis, we discover impacts that have not been considered: pollution, depletion of resources, loss of biodiversity, impacts on health and social scandals. These hidden, very real costs are borne by governments, local communities, current and future generations, not by the company.

What is presented as "value creation" can turn out, in many cases, to be net destruction to the detriment of society.

Lithium batteries: an example of disguised destruction

Lithium batteries, essential for smartphones and electric cars, are a good illustration of the real cost ignored by value chains. Indeed, lithium mining threatens local communities and their ecosystems. Here's how…

Lithium Cost Comparison
(sources at the end of the article)
Estimated economic cost:
   . CAD$6,500 per tonne, including labor, energy and processing costs.
Estimated actual cost:
   . Water: CAD$1,500,000 per tonne, to compensate for one million litres of water used (CAD$1.5/L).
   . Ecosystem restoration: CAD$2,000 per tonne, to repair the damage caused.
. Social impacts: CAD 1,500 per tonne, to sustainably compensate affected populations.
Result :
The economic price ($6.5k) seriously underestimates its reality ($1.51M),
creating a value gap of 230 times.

This gap illustrates how globalization artificially minimizes costs to the detriment of vulnerable places, environments and populations.

Steering value chains: unsuitable metrics

Companies manage their chains using indicators that are most often financial: reducing costs and deadlines, maximizing margins. Social and environmental externalities are generally ignored. These omissions exacerbate destruction and reduce long-term sustainability. Current dashboards do not measure the real impacts of the chains, making informed decision-making impossible.

Reinventing the value chain: concrete solutions

Let’s transform value chains, re-evaluate their definition. Here are some avenues to explore:

1. Measure externalities: Integrate the total cost of ownership (TCO) and environmental and social impacts into management tools. (see sources at the end of the article: example of a framework for doing this)

2. Promote the circular economy: Encourage the recycling and reuse of materials to limit waste and preserve resources. Find a usage for your wastes and use waste of others as raw materials

3. Strengthen transparency: Map supply flows to identify and correct destructive practices. Inform consumers.

4. Empower stakeholders: Incentivize suppliers to adopt sustainable practices, even if it increases upfront costs, as the “real” cost will always be lower.

Expectations are changing: are you ready for the challenge?

Consumers, investors and regulators now demand transparent and concrete sustainability commitments from companies:
· Ignoring these issues means risking losing competitiveness, attractiveness and meaning.
· Answering it is an opportunity to become an actor, even a leader of change.

To avoid turning your chains into chains of destruction, broaden your conception of value.
Profitability is no longer enough. It must align with a responsible ecological and social footprint.

You want to act now for a sustainable future?
Make a diagnosis or contact us here:

To Sustainable Performance

The thesis of Marilyn Waring, former New Zealand MP
She said at the time that GDP is an imperfect indicator that ignores the immense value of unpaid work and environmental conservation. She has seen first-hand how this narrow accounting framework distorts policymaking.
She reports that in many countries unpaid work constitutes the largest economic sector, but policy makers remain blind to this crucial source of value.
She added that GDP treats the depletion of natural resources as a positive, while it is penalizing and without measured effects (= externalities).
It has thus encouraged alternatives reflecting the true wealth of societies, for example: the use of time, the quality of natural systems supporting populations, the priority given to the use of resources renewable in less than a generation.
Note :New Zealand, as well as Finland, Iceland, France, Scotland, Bhutan…
have adopted indicators to replace or complement the traditional GDP.
These metrics cover the following themes:
              •     Physical and mental health.
              •     Education and skills.
              •     Environmental quality.
              •     Equality and inclusion.
              •     Social cohesion.
              •     Ecological footprint and sustainability.
              •     Overall satisfaction or happiness.
In Canada is the CIW (Canadian Index of Well-Being)
and in Quebec, the QPI (Quebec Progress Index).