January 13, 2014
Aron Cramer, President and CEO, BSR
Note: This year, BSR President and CEO Aron Cramer considers the most important stories of 2014 in two acts. In his first post, he explored how we can create the right conditions for international agreements in 2015 on climate change and sustainable development. Here, he outlines three questions that will determine how much progress is made in the coming year.
In my previous post, I argued that the sustainability agenda for 2014 is actually all about progress toward global agreements on climate change and sustainable development to be completed at the end of 2015. And while international agreements are necessary, they are not, in themselves, sufficient to achieve the goals they establish. As we have learned from Kyoto, treaties alone do not bring results.
With this in mind, three questions will tell the tale about how much progress is made in the coming year, and will be key to how well any agreements in 2015 can actually be advanced.
- Will markets finally embrace long-term value creation? Ideally, investors will help deliver a virtuous circle that rewards companies that take a long-term view and reject externalized costs, rather than focus on churning for quick profits. One important signal will be how fast integrated reporting and natural capital accounting accelerate in the year ahead. More and more companies are embracing this model and also inserting sustainability information in their regulatory disclosures. These developments should continue to grow, and one hopes that they will convince investors that sustainability, and long-term value, are their business, too.
- Will consumers put their money where their mouth is? The mature economies continue to waste massive amounts of water, energy, or food. While more people are speaking about the importance of sustainable consumption, the consumption-based economy steams ahead. Market pressure to demonstrate growth above all remains overwhelming. There are, however, some signs of change. The sharing economy is gaining traction, but it is early days yet. Car sharing and urban farming in Brooklyn or Berkeley won’t get the job done, but these are positive signs that a generational change in consumer attitudes may be coming. For companies, the challenge will be how to translate these signals into new business models that generate both profitability and brand value.
- Will the tragic lessons from Bangladesh lead to more decisive action to reform global supply chains? So far, the jury is out. The two initiatives in Bangladesh are still getting started, and their efforts are limited to that one country. Twenty years after codes of conduct proliferated, much has been accomplished, but further action to change purchasing practices and improve public governance are needed to achieve more systemic improvements. The challenge in the year ahead is how to convert the urgency generated by Rana Plaza tragedy into improved purchasing practices, greater commitment by local governments to enforce their own laws, strengthened collaboration, and more worker engagement and empowerment. This combination can prevent future tragedies.
These questions will play out over the next 12 months. The answers will depend in large part on the unexpected events that will shape the year to come. After all, at this time last year, no one had heard of Edward Snowden or Rana Plaza, let alone the devastation of Typhoon Haiyan. Unfortunately, these surprises revealed serious steps backward on key issues. As every year does, 2014 will deliver surprises as well.
But even following a year marked by significant setbacks, there are reasons to be optimistic. Late last year, I spoke at the UN Forum on Business and Human Rights in Geneva, where nearly 2,000 people spent two days debating how to translate the UN Guiding Principles on Business and Human Rights into a reality. Having joined BSR in 1995 to launch our human rights work, it is immensely gratifying to see a global community of business executives, activists, and government officials gathered to cement the link between business and human rights. It is very often the case that problems are visually arresting, and progress happens under the radar.
And so let us hope that the surprises ahead are about expanded human rights, a becalmed environment, and a renewed commitment to a just and sustainable world. And let us hope that in 2014 we lay the groundwork that allows for a smooth glide to global consensus—and commitment—on climate and sustainable development.
Read Part I of Cramer’s series on important sustainability issues for 2014, where he explores how we can create the right conditions for international agreements in 2015 on climate change and sustainable development.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.