Search Results

Blog | Tuesday December 10, 2019

Human Rights Day 2019: BSR Reflections on the UN Forum on Business and Human Rights

Preview

Under the theme "Time to Act: Governments as Catalysts for Business Respect for Human Rights," the eighth annual UN Forum on Business and Human Rights brought together over 2,000 representatives of companies, civil society, and states in Geneva in the final week of November to discuss best practices and emerging issues in business and human rights. BSR attended the event both to share our learnings from working with leading companies on business and human rights over the course of the year and to keep our finger on the pulse of the latest trends.

As we look ahead to 2020—and to the dawn of this decisive decade when the decisions we make as a society on how to address economic inequality, climate change, technological innovation, and political polarization will shape our shared future for generations to come—what are the pivotal human rights issues that businesses should be paying attention to? Here’s what we heard at the Forum:

States and regulators are responding to the call to action to protect human rights through mandatory due diligence and increased regulation.

A crucial discussion throughout the Forum highlighted the role of states and regional regulators to take on their duty to protect human rights and close the gap in implementing the UN Guiding Principles on Business and Human Rights (UNGPs), as Pillar One, the state duty to protect human rights, remains the true catalyst to realize corporate respect beyond voluntary measures.

Mandatory due diligence in national legislation is gaining ground, with the latest laws being enacted in France, the Netherlands, and Australia and with more legislation proposed. What’s more, mandatory frameworks are only expected to increase. Comments by the European Union, the Council of Europe, and the OECD all stressed the importance of policy coherence at the state and regional levels. Regional bodies such as the EU and the African Union—which will soon be publishing its first human rights and business policy—are playing a growing role in creating a level playing field and strong systems for human rights protection and business accountability. Similarly, trade investments, public procurement practices, and state involvement in investments such as mega-sporting events must integrate human rights due diligence in project screening as well as regulatory measures to ensure law and trade agreements include respect for human rights. With interventions by states from all over the globe, notable leadership was taken by northern European countries Norway, Sweden, the Netherlands, and Finland, reflecting the region’s long-standing commitment to sustainable development and human rights.

Translating businesses’ numerous commitments to gender equality will require practical action.

Equality and inclusion must be prominent enablers in realizing the UNGPs.

The world is facing a profound inequality crisis as the divide between low- and high-income groups continues to deepen and discrimination remains a burden to the realization of human rights, especially for vulnerable groups. Creating and fostering equal and inclusive societies was the theme of many sessions, with emphasis on equal workplaces and supply chains.

BSR was represented on two panels, the first on the role of the private sector in protecting LGBTI rights and the second on applying a gender lens to the UNGPs in practice. According to the panel facilitated by Dan Bross, Executive Director of the Partnership for Global LGBTI Equality (PGLE), commitment to implementing the UN Standards of Business Conduct must be a priority of business, and joint action to decriminalize sexual orientation will be central to creating inclusive workplaces and enabling regulatory environments.

Similarly, we are at a point where translating businesses’ numerous commitments to gender equality will require practical action. BSR Manager Francesca Manta’s contribution to the panel on gender and the UNGPs stressed the importance of ensuring gender-specific impacts and issues are made visible and taken into account by using a new framework for context analysis and data collection in global supply chains. Diversity and Inclusion policies and commitments to the Women’s Empowerment Principles (WEPs) as well as to the UNGPs may remain a paper exercise if differentiated impacts are not identified, monitored, and acted upon, using operational tools such as the Gender Impact and Data tool (GDI), which BSR developed for supply chain due diligence. It is time for due diligence to stop being gender-blind and make women visible and counted.

In an increasingly fragile world characterized by rising violence, closing civic space, and more authoritarian governance, business has a critical role to play in preventing corrupt practices and human rights violations. 

Addressing corruption and conflict must become a priority of business and states if we are to realize a future of peace and stability.

In line with this year’s theme, the Forum had numerous sessions on the linkages between corruption, conflict, and human rights and the role both states and companies must play to eradicate unethical practices and resolve regional and global conflicts.

Whispered already as the theme of next year’s Forum, corruption took center stage with discussions ranging from the integration of compliance and human rights due diligence processes to holistic approaches to context analysis such as the one at the session facilitated by the UN Global Compact networks. Corruption is often seen as a ‘victimless crime,’ and the panels urged participants to recognize corruption as a strong contributor to human rights abuses. In an increasingly fragile world characterized by rising violence, closing civic space, and more authoritarian governance, business has a critical role to play in preventing corrupt practices and human rights violations. The UN Working Group on Business and Human Rights is currently working on the connection between anti-corruption efforts and implementation of the UNGPs to inform its 2020 report to the UN Human Rights Council. In conflict-affected and high-risk areas, part of business’s responsibility to respect human rights involves actively combating corruption by integrating their anti-corruption and human rights efforts. Companies cannot successfully respect human rights without also addressing issues of corruption in the environment where they operate and that impact their supply chain.

The digital sphere is now indivisible from human rights impacts.

In a world where nearly every company can be considered a technology company, another important theme at the Forum was how human rights are affected by digital activities and what due diligence will mean in this sphere regardless of industry. Discussions spanned from the use of AI and biometrics in high-risk sectors such as defense and surveillance, to what accountability, attribution, and remedy look like in case of adverse impacts from digital activities, to how even digital marketing has far-reaching impacts on organized crime and online and offline hate crimes, and also explored how due diligence is key to ensuring ethical advertising by any brand. Every company should seek to understand the nature of its digital activities—data collection and processing, content management, advertising—and prioritize due diligence to understand human rights impacts from both intended and unintended misuse of their technology or digital activity. States, particularly those in Europe thanks to GDPR, are more and more involved in corporate dialogue and regulations in this sphere, including interesting initiatives such as the Tech Ambassador, which was instituted by Denmark to promote diplomatic activities with technology companies.

Climate is the biggest business and human rights issue of our time, and aggressive emission reductions by both states and businesses should be a core human rights demand.

Climate is our biggest challenge and will have profound human rights implications.

Another theme throughout the three days, the Forum stressed how the climate crisis is now inextricably linked to the current and upcoming human rights impacts—on human life, inequality, health, access to livelihoods, migration. The Forum concluded with a powerful final session on the theme where a unanimous panel agreed that climate is the biggest business and human rights issue of our time and aggressive emission reductions by both states and businesses should be a core human rights demand. There are indeed positive developments and companies that are truly transitioning to fossil-free business models, such as the panelist Scania, but the pace is still too slow to keep emissions under control, particularly in light of the newly published UNEP Emission Gap Report 2019 which predicts increase in temperatures by 3 degrees Celsius. Again, policy coherence was called upon to urge states and businesses to be true to their commitment to the Paris Agreement and act immediately to address climate change in how they operate and our growth models.

We believe these key themes will take even more prominence as we enter the decisive decade next year, and we look forward to working with our members and partners to accelerate change and contribute to a just and sustainable future. To learn more about our work on human rights, please don’t hesitate to reach out and connect with our team.

Blog | Monday May 1, 2017

The Future Looks Clean: New Sustainable Fuel Buyers' Principles

Preview

When it comes to predicting the future, even the best forecasters rarely provide the crisp detail most of us need to make confident decisions in the present. Nowhere is this more true than in sustainable fuels used in road freight.

We know we’re headed toward a low-emission future where different fuels—compressed natural gas, liquefied natural gas, biofuels, renewable diesel, and electricity—will be needed to serve different purposes, depending on unique fleet requirements. We also have a picture of the potential technological options.

Despite this directional clarity, buyers and suppliers still lack the certainty they need to make investments at scale. Buyers can’t make decisions because the technology isn’t far enough along, and it’s hard to weigh different fuel options based on sustainability because the social and environmental impacts are not always clear. Moreover, suppliers can’t make decisions because they don’t have a clear sense of the scale and shape of buyer demand.

When it comes to low-emission fuels—especially low-carbon fuels—it’s time for a new crystal ball. Enter the Sustainable Fuel Buyers’ Principles, which launch today at the Advanced Clean Transportation (ACT) Expo in Long Beach, California.

The inaugural signatories—including HP Inc.; IKEA Group; PepsiCo, Inc.; United Parcel Service, Inc. (UPS); and Wal-Mart Stores, Inc.—are committed to accelerating the transition to sustainable, low-carbon fuel and related technologies. These companies represent many of the country’s largest fleets and freight buyers.

Created by the members of BSR’s Future of Fuels and vetted through our network of 600 expert and industry stakeholders, these principles are intended to achieve three main goals: build the market for low-carbon fuels, ensure progress toward a sustainable set of fuel options, and create opportunities for partnership and collaboration.

The principles will do this by:

• Signaling the magnitude of business demand for more sustainable, low-carbon fuels for freight: Signatories join a growing group of companies that want more sustainable fuels, and BSR is planning to measure their demand annually starting this year.
• Clearly articulating criteria to increase buyers’ use of low-carbon fuels: For suppliers, these principles will clearly define what “sustainability” means to buyers. And the buyers—fleet owners and shippers—can use the Principles as a basis to develop custom criteria that fit their needs.
• Encouraging value chain engagement to boost collaboration and pilots of new fuel investments: The Principles promote pilots and partnerships focused on testing and scaling up low-carbon fuels.

While we can’t predict the precise mix of fuels and technologies, we know for sure that the future of fuels will include many different low-carbon options. And BSR’s Future of Fuels group is working to sharpen the focus by engaging partners across the value chain, sending stronger demand signals, and creating clear criteria needed for success.

We invite fuel purchasers and shippers to sign on to these principles. There is no cost to join, but we ask for companies to offer a sincere commitment to use these principles to proactively engage with their value chains around sustainable, low-carbon fuels. View the full list of signatories and the Principles themselves here.

Case Studies | Tuesday June 1, 2010

Walmart: Improving Supplier Energy Efficiency

Preview

The Challenge

In 2008, Walmart committed to improving the energy efficiency of its top 200 suppliers’ factories in China by 20 percent by 2012. With the aim not only to benefit the environment but also to help suppliers become more competitive, Walmart sought to replicate the success it has had in Europe and the United States in increasing supply chain efficiency. In China, however, the company found that its suppliers often prioritize overall growth over increased energy efficiency. As a result, operations managers commonly lack the necessary incentives and know-how to achieve efficiency improvements. An additional challenge in China is the lack of a developed professional energy-efficiency industry to provide equipment and data-measurement tools that make this process easier in other regions. To help overcome these barriers, Walmart enlisted BSR’s help.

Our Strategy

We focused our work on identifying and addressing suppliers’ needs that prevented them from taking advantage of energy-efficiency opportunities. The most common needs we found were buy-in and support from senior managers and performance incentives for staff. Therefore, we centered our initial efforts on launch meetings to educate executives about the business opportunities associated with energy efficiency. Each meeting involved more than 300 executives and representatives from technical service providers.

Next, the BSR expert embedded in Walmart’s global procurement headquarters in Shenzhen, China, created a data-collection tool that enabled factories to measure their energy use and a framework that allowed Walmart to verify the factories’ performance reporting. Our surveys of suppliers showed that many managers lacked the skills and knowledge needed to manage energy more effectively. To address this critical need, BSR’s China Training Institute in Guangzhou led practical workshops focused on energy management for suppliers. We also worked with partners such as the Environmental Defense Fund to educate suppliers about the “low-hanging-fruit” opportunities in their facilities.

Finally, to enable better access by suppliers to energy- efficiency technology, we improved communication between suppliers and technical service providers through joint workshops and a common auditing tool that allowed for easier comparison between providers.

Our Impact

By the end of 2009, more than 100 factories had improved energy efficiency by more than 5 percent, beating Walmart’s expectations. The company also reported that dialogue between suppliers and technical service providers improved.

This created new lines of accountability within supplier factories, leading them to pursue efficiency programs for energy and other resources in the future. And it put participants on track to profit from saving energy—the largest budget item for many companies—while playing a key role in addressing climate change.

Following the initial success of this commitment, in early 2010, Walmart unveiled a new, sweeping goal of reducing 20 million tons of greenhouse gas emissions in its supply chain over the next five years. Ultimately, these efforts set the stage for Walmart to expand its program to Africa, the Middle East, and South Asia, while providing an example of how other companies can leverage the power of their networks by building win-win efficiency programs with their suppliers.

Case Studies | Monday October 22, 2012

The Boeing Company: Assessing the Maturity of Environmental Systems

Preview

The Challenge

As the world's largest aerospace company, whose commercial jetliners and defense, space, and security systems are used in 150 countries, Boeing operates a diverse network of manufacturing facilities that produce and maintain aircraft and aviation systems. In today’s operating environment, the company faces growing pressure from customers and reporting standards to quickly aggregate common data from across its manufacturing sites and report on its overall environmental performance.

Additionally, Boeing’s five-year environmental targets focus on key impacts, including carbon-dioxide emissions, energy use, water use, and waste. The company was on track to meet or exceed its 1 percent absolute reduction goals, which were set to expire in 2012, and Boeing needed to develop a comprehensive set of new targets. Additionally, given the steady increase in requests for corporate sustainability information from surveys, analysts, and customers, the company wanted to ensure that new targets could satisfy future data needs.

Boeing enlisted BSR to help develop its next set of performance targets and assess the viability and usefulness of the company’s current data, and the systems underlying environmental management at the various manufacturing sites.

Our Strategy

Our goal was to understand the state of Boeing’s environmental data across key manufacturing sites, and whether these data were “mature,” or robust, useful, and forward-looking enough to satisfy emerging sustainability data requirements. BSR and Boeing also created a “maturity model” to assess governance of environmental data across manufacturing sites.

We gathered this information by reviewing management systems documentation and holding a series of meetings with facility and corporate environmental leaders at multiple sites. We also interviewed select manufacturing peers within the BSR member network to understand their approaches to environmental data governance. Based on this, we facilitated a discussion with senior management about the development of new targets, highlighting where Boeing could set ambitious targets verses where continuous improvement to systems and processes could be made to address future needs.

Our Impact

Our work produced a more detailed understanding of how environmental data varied across Boeing sites, the maturity of environmental governance, and the company’s readiness for increasing the scope of its existing environmental metrics. Boeing developed a set of post-2012 environmental targets based on this new understanding.

Lessons Learned

• By assessing the maturity of the data, we were able to highlight both the gaps and the opportunities for future reporting needs.
• Traditional environmental, health, and safety data; systems; and processes need to shift to an overall sustainability framework—one that is future-looking and takes into account stakeholder needs.
• Boeing has relatively standardized data and processes to collect that information, and this is supported by strong management systems. Nonetheless, variation in data still exists. Potential benefits of data maturity include:
  • Reputation/brand enhancement and risk reduction: Better, more proactive responses to public reporting and customer environmental data requests can reduce risk.
  • Streamlined operations: Standardized, centralized, and automated data systems improve access, reduce duplication, and simplify monitoring.
  • Opportunity identification: Tracking and highlighting opportunities can further reduce impacts such as waste.
  • Improved best-practice sharing: Improving internal communications makes it easier for sites to track and compare each other’s performance.

Blog | Tuesday July 3, 2018

How to Prevent Your Sustainability Collaboration from Failing

Preview

More than ever before, companies are collaborating with stakeholders across their value chains, and even across entire regional or global governance systems, to learn about the systemic issues that curb long-term business growth—such as keystone species extinction, talent shortages, and climate-threatened supply chains—and agree on joint actions to address them.

There are numerous examples of successful and impactful multistakeholder collaborations for sustainable development: For instance, half a billion children have been vaccinated and more than nine million lives have been saved in the world’s poorest countries since the founding of Gavi, the Vaccine Alliance, in 2000. And the Maritime Anti-Corruption Network (MACN) is successfully driving progress to eliminate corruption across the maritime industry’s value chain, including influencing country regulatory frameworks to increase the efficiency, integrity, and transparency of vessel inspections.

But it is also important to acknowledge the numerous collaborations that never get off the ground, are bogged down in governance negotiations, or struggle to drive meaningful action from participants to meet their impact goals. Learning from both the failures and successes helps to ensure that future collaborations do not repeat the mistakes of the past.

In our recent report, Private-Sector Collaboration for Sustainable Development, we reviewed 21 current and previous collaborations and interviewed more than 40 experts about collaborating for sustainability. From this research, we identified risk factors across the lifecycle of collaborations, from start-up to early implementation to scaling. These include launching prematurely (before participants have had the opportunity to build trust and buy into the proposed solutions), insufficient resources to meet the ambitions of the collaboration, breaches of trust between participants, lack of leadership succession planning, and mission creep.

If you are thinking of starting or joining a collaboration or are currently involved in one, you may encounter some of these red flags. Below are our recommendations for how to address or mitigate them. Some of these steps will require collective action from your collaboration, but you and your partners can improve the odds of success by raising issues as they arise, demonstrating commitment, and taking actions to reduce the risk of failure.   

In the Start-Up Phase

• Spend the time to prepare and engage critical participants. Multistakeholder initiatives take an average of 18 months to move from early discussions to launch. This is a longer time frame than most participants expect, but the time is well spent on attaining buy-in and refining the initiative’s value proposition. Organizations that launch more rapidly are more likely to face challenges early in their growth because they don’t have sufficient participant support or an initial strategy for impact
• Diversify funding. Seeking seed funding from foundations or governments can help initiatives build their value proposition for companies to eventually back the effort themselves. This diverse funding can also make a collaboration better plan for the long term and can help to avoid the “free rider” problem, where competing companies avoid being the sole contributors to an effort that they see as beneficial to their peers.

During Early Implementation

• Prioritize personal relationships and trust-building. Trust is the glue that holds organizations together when the going gets rough. Scheduling meetings in person–while time-intensive and expensive–can be an important investment in building relationships between participants, increasing their commitment to each other and the effort.
• Build a database of participant contacts. Relying too heavily on one point of contact for a participating organization can lead to burnout or loss of the relationship with his or her firm if that person leaves. Collaborations do well to identify several participant contacts and keep them informed about the collaboration’s progress, in case they need to step in.

When Scaling

• Rotate leaders. Some initiatives expose more people to leadership roles by instituting terms for key positions, such as the steering committee. This allows more organizations to participate in governance and creates natural periods for an initiative to refresh its strategic vision under new leadership. To maintain some consistency, it can be helpful to stagger terms. For example, a vice-chair could remain in office when a new chair is elected.
• Agree up front on milestones for scaling or sunsetting. When designing the initiative, members can agree on indicators or milestones to review during each strategy cycle to determine when it may be time to consider different growth paths, including scaling to new geographies or sectors, spinning off, merging, pivoting, or sunsetting the initiative. Some initiatives may determine from the beginning that they will be time-bound, lasting only a few years to accomplish their objective.

Private-sector collaboration for sustainability has enormous potential—but it is challenging to do well. Rushing into a collaboration without the necessary structures and planning can be a recipe for failure.

At BSR, we have 20 years of experience in designing, implementing, and scaling collaborative initiatives. Some have run for decades with ever-growing impact; some have sunset with relative satisfaction; and some have failed to take off. These successes and the failures help us build our expertise in managing collaborative initiatives.

If you are planning to collaborate for sustainability, let us help you do it right. Contact us for more information.

Case Studies | Friday June 3, 2011

Leading Business Action on Conflict Minerals

Preview

The Challenge

In the eastern Democratic Republic of the Congo (DRC), where armed conflict has claimed more than 5.4 million lives over the past 15 years, militant groups controlling most of the region’s mines use the trade in tin, tantalum, tungsten, and gold as important sources of funding. At the same time, this trade—which feeds into complex supply chains for products ranging from cell phones and cutting tools to jet engines and jewelry—is an important source of income for a million people in the region.

The situation presents a dilemma: How can business support the people who rely on these minerals for their livelihoods without perpetuating the use of “conflict minerals” in this war zone? Campaigning NGOs, development organizations, governments, and industry working groups are addressing this important situation in a variety of ways. BSR is promoting collective action to reduce human suffering and advance economic development through a working group that began in 2009 with companies including Dell, HP, Intel, and Motorola.

Our Strategy

The complexity of these issues—the need to improve supply chain transparency, sever the link between the minerals trade and conflict, and continue to support local communities—requires multidimensional solutions involving business, governments, and others working toward a common goal. Using BSR’s experience building collaborative solutions to human rights dilemmas, and working with our extensive network of NGO partners, we developed a plan to raise companies’ awareness of the issues and facilitate constructive dialogue among business, investors, government, and NGOs. This necessary step laid the groundwork for further work in 2011 focusing on identifying actions companies can take to reduce their use of conflict minerals.

Following an initial BSR-led forum in 2009 that gathered nearly 50 people to strategize potential actions, we partnered with the GE Foundation to expand our efforts and bring in additional industries. In May 2010, we published a report highlighting critical supply chain issues, opportunities to support diplomatic peace-building efforts, and ways to promote local economic empowerment. We concurrently convened a second forum with more than 100 industry, investor, and NGO representatives to explore action in these areas.

Our Impact

Already, our efforts have increased business leaders’ awareness, promoted action on the DRC conflict and its link to the minerals trade, and helped build a shared understanding between civil society and business on how the private sector can contribute to conflict reduction. In collaboration with the shareholder advocacy group As You Sow, we catalyzed new partnerships among companies, investors, and NGOs to address these challenges.

BSR worked with these organizations to prepare the only multi-stakeholder input to the U.S. Securities and Exchange Commission’s (SEC) regulations requiring publicly listed companies to report on their use of conflict minerals. More than 20 companies, investors, and NGOs signed the consensus document, which included recommendations for reliable supply chain due diligence processes, third-party auditing, and company disclosures.

While our work has supported company initiatives and the development of strong, consensus-based SEC requirements, we are acutely aware that there is no easy solution to the conflict minerals issue. We continue to advise companies on ways to address conflict minerals in their supply chains and support ongoing multi-stakeholder engagement to solve this complex challenge.

Blog | Monday March 7, 2022

Applying the UNGPs to Technology: Our Point of View

Preview

The UN Human Rights Council recently initiated an expert consultation on the practical application of the Guiding Principles on Business and Human Rights (UNGPs) to the activities of technology companies, and it sought formal input from stakeholders.

This consultation is very timely given the increasing relevance of technology to the realization of human rights in practice and the prominent role of the private sector in how technology is designed, developed, and deployed.

Over the past two decades, BSR has gained significant experience working with technology companies on human rights due diligence, including around 100 human rights assessments.

We have also led collaborative efforts (such as facilitating the creation of the Global Network Initiative, Responsible Business Alliance, and Technology Against Trafficking) and published research (such as Human Rights-Based Approaches to Content Governance in the Social Media Industry).

We’ve drawn upon this experience to make a submission to the consultation, which is available in full. We hope the submission provides a thoughtful contribution to the application of the UNGPs to the activities of technology companies. The key points are summarized below:

Human Rights Risks in Business Models

The need to understand the human rights impacts arising from company business models has rightly grown in focus over recent years. However, human rights due diligence practitioners can further define what human rights due diligence of business models means in practice, and the venture capital industry—an essential gatekeeper for technologies making it to market—requires more attention.

Human Rights Due Diligence and End-Use

Case Studies | Tuesday February 27, 2018

The Maritime Anti-Corruption Network: Argentina Collective Action

Preview

The Maritime Anti-Corruption Network (MACN) is a global business network working toward the vision of a maritime industry free of corruption that enables fair trade to the benefit of society at large. The network promotes good corporate practices through the MACN Anti-Corruption Principles and collaboration with key stakeholders, including governments and international organizations, to identify and mitigate the root causes of corruption.

As one of its efforts, MACN pursued a collective action in Argentina, which resulted last year in the successful adoption of a new regulatory framework for dry bulk shipping that reduces corruption risks for the industry and elevates the country’s culture of integrity.

The Challenge

In 2014, MACN recognized through its anonymous incident reporting mechanism frequent recurring reports of financial demands made during the vessel clearance process in Argentina.

Every cargo ship entering Argentine waters must pass certain inspections, including those carried out by the Servicio Nacional de Sanidad y Calidad Agroalimentaria (SENASA), the government agency that guarantees the quality and healthiness of Argentine agricultural products. SENASA performs an important regulatory function. However, several problematic incentives converged to undermine the integrity of the system:

1. Inspections were at the discretion of the inspectors and not objective, as the criteria for rejecting a hold were unspecified and unclear.
2. Failing an inspection was costly, since it meant ships were considered off-hire. Depending on market conditions, port costs and commercial delays accrued from each extra day in port could amount to more than US$50,000 per day.
3. Inspections were recorded with paper records, which made data aggregation difficult or impossible.
4. The system lacked a reliable appeal or reporting mechanism to allow companies to seek redress for alleged non-compliance.

Together, these conditions facilitated bribery (where ships in bad condition would pay to obtain clearance) and commercial extortion (where officials would not provide clearance to ships in good condition without a facilitation payment). 

Our Strategy

To address this challenge, MACN sought to understand the root causes and devise solutions with a coalition of champions. MACN and local partner Governance Latam, in collaboration with other industry stakeholders, catalyzed a collective action program to investigate the root causes of the problem and support SENASA in reforming its procedures to tackle systemic corruption.

MACN and Governance Latam first interviewed more than 40 ship owners (MACN members), port agents, private surveyors, public inspectors, maritime lawyers, maritime insurance officials, representatives of grain houses, and public officials from the maritime sector. These interviews established that a mid-level public-private network of individuals was responding to a corruption-drive incentive structure. As a result of this dialogue, MACN defined the objective of the project as the modernization of the inspections system to be less discretionary, more transparent, and more accountable.

MACN and Governance Latam developed a broad coalition to develop and agree on the key points for a new system that would be both integrity-oriented and feasible, balancing the commercial interests of multiple stakeholders in the context of a process that remains critical to Argentina’s foreign trade.

In parallel, we also prepared for the implementation phase, seeking funding to support training and the development of communication materials to inform stakeholders of the new practices.

Our Outcomes and Impact

Following a series of public consultations on the new regulation, MACN’s collective action resulted in a new regulatory framework in Argentina that reduces discretion in the inspection of holds and tanks, establishes a system of cross-checks to increase integrity, provides an escalation process when disputes occur, and creates an e-governance system to underpin the framework. Inspections will be conducted by registered private surveyors, and, in case of conflict, bulk carriers will be able to request supervision of these inspectors from SENASA.

Moving to a system of inspections primarily conducted by private surveyors has great potential to reduce solicitation and extortion, as incidents may be resolved in an expedited fashion. Facing an improper demand from a private surveyor, a vessel’s master or its local agent can simply call the surveyor’s office, report the incident, and request intervention by SENASA, making the private inspector and its employer subject to sanctions and even disbarment.

MACN believes that these changes will increase the efficiency, integrity, and transparency of inspections, reducing the possibility of ship delays for unclear or unfounded reasons and facilitating the smooth passage of vessels to the benefit of frontline crew, global trade, and the Argentine economy.

Since implementation of the new system, MACN has provided information to industry, inspectors, and other stakeholders explaining the changes, including hotline contact details. Thanks to funding from the A/S D/S Orient's Fond, Governance Latam has also provided training to more than 400 local industry, private-sector, and public-sector stakeholders, and the course has become official government training material for SENASA staff.

Lessons Learned

To effectively address corruption from country to country, we have learned that it is critical to recognize different interests and drive ownership for sustainable change. The following lessons in particular stand out:

• Understand how corruption works in specific instances by answering questions like these:
  • Who is actually getting the illegal payments, and for doing what?
  • What are the economic drivers of the corruption scheme?
  • How do incentives work for each stakeholder?
  • Why has the corrupt scheme endured?
• Understand the good-faith commercial interests of each group of stakeholders, as well as the operational and practical limitations to regulatory change.
  • Commercial incentives and operational practices may be as or even more important than legal risks in determining the stakeholders’ behaviors.
  • The pursued reform should therefore be business-driven as well as integrity-driven: It should make sense in the context of business, either by making it easier or less costly for the stakeholders involved to do business.

Further, once the above facts are established, a successful anti-corruption initiative requires a coalition of the willing and local ownership from government, civil society, and local business networks. Companies are just one part of a larger system, and the entire system needs to be engaged in the process for change—raising the bar on efficiency, integrity, and good governance.

Finally, while local ownership is critical for implementation, support from international headquarters is essential to ensure that all business partners are aligned on expected integrity practices, from the maritime companies, port agents, and inspectors to the cargo owners whose products are being shipped around the world.

MACN’s work in Argentina is a model example of how stakeholders can work together to successfully combat corruption for the benefit of society at large.

Blog | Wednesday July 13, 2022

What the ESG Critics Are Right About—And Where They’re Misguided

Preview

Editor's Note:

It is obvious that we are living through a time of profound and accelerating change. Our world has been rocked by a series of disruptions: COVID-19, war and social conflict, rollback of rights and democracy, and now high inflation and the risk of recession. These developments have jolted society, and business.

These and other developments are also reshaping the world of just and sustainable business. After considerable momentum, there is now a backlash against elements of the sustainable business agenda. Claims of greenwashing are rising, including legal actions. The regulatory environment is changing, with heightened requirements for business on human rights, reporting and disclosure, and other matters. Generational change is reshaping public views about business. The rollback of human rights and democratic institutions is leading to calls for business to “take a stand.”

To help our 300+ member companies navigate this volatile environment, we are launching a series of blogs over the coming weeks to build insight into how to shape business approaches that address this unique moment.

We begin with this initial piece on the “backlash” against ESG. Future entries in the series will explore changing expectations of business in protecting rule of law, rights, and democracy; the emerging harmonization of reporting and disclosure standards; the implications of increased regulation of sustainability; the role of business in combating societal fragmentation.

 We’ll conclude with a deeper dive look into how BSR’s 2025 strategy can help your company to navigate these turbulent times—and how you can collaborate with our global network to push us further, faster, to achieve a more equitable, just world for all.

Like consumer prices, sustainable business has been on a rollercoaster since COVID-19 emerged over two years ago. Sustainability or ESG (environment, social, and governance) considerations were a business, investor, and media darling. Until recently.

Judging from 2022’s headlines, a casual observer might conclude that sustainable business has gone from hero to zero overnight. Regulators are looking to set rules to govern when investment funds earn the ESG label. Media, consumers, and now regulators are leveling claims of greenwashing on a frequent basis. The public asks: “If every company is doing what they say, and airing slick commercials to convince me how good they are, why is climate change and income inequality getting worse?” And “ESG insiders” have come out of the woodwork to assert that “the ESG emperor has no clothes.”

Some of these questions are not only legitimate, but hugely important.  Some questions, which reflect political backlash, are much less so. And for all of us focused on just and sustainable business, we ignore this backlash at our peril.

To start, the critics get three big things right.

First, there is undeniably a gap between aspiration and delivery. The rise of “net zero” carbon commitments is necessary, but clearly insufficient—so far—to put the world on a trajectory towards a stable climate that can sustain a healthy economy. The same is true with respect to companies seeking to protect biodiversity and oceans by being “nature positive” but not yet achieving the promised benefits. These big aspirations mark a leap in ambition from even five years ago. We need simultaneously to ensure accountability without creating incentives for business to retreat to incremental change.

Second, it also is true that there remains a disconnect between companies’ aspirations and what they—or more often their trade associations—do to oppose public policies needed to put our economies on a more sustainable path. For example, too many companies prioritize opposition to tax reform over full-throated support for climate action through efforts such as Build Back Better and other measures. It is critical that business close the “say-do” gap both with respect to their actions and their policy advocacy.

Third, there is widespread and legitimate confusion over what the terms “sustainability,” “ESG,” and "net zero” actually mean. The rise of consistent standards is welcome and overdue. The promise of global standards defining what companies can and cannot label “ESG,” through efforts like the International Sustainability Standards Board (ISSB), will help bring badly needed order to the current chaos. This will help reduce concerns about greenwashing for the public, and will provide the certainty business needs to make ambitious commitments.

These critiques are both valid and valuable. It is also the case that those fostering the backlash get some big things badly wrong.  

First, sustainable business is about long-term change; it is, by definition, complicated to gauge progress quarter to quarter or year to year. Climate is the best test of this principle, with most net-zero targets up to decades away from full delivery. Showing progress today is needed, but it is to be expected that full delivery will take time. There is a big difference between critiquing illusory commitments and embracing structural change that, by definition, takes time. There must be space for companies to make long-term, high-ambition commitments, even as they know that technological innovation, consumer behavior, and public policy are massive dependencies that will also play a role in whether change takes hold.

Second, some of the backlash seems to be designed to provide an “off-ramp” for businesspeople who have been skeptical about the value of sustainability to begin with. It is remarkable how much media attention has been lavished on Stuart Kirk, who has now left HSBC after his infamous jeremiad against climate alarmists, or Tariq Fancy, who now claims that ESG investing is largely useless.

The media seem to be applying the same “bothsidesism” that climate skeptics have used to their advantage, never mind the science. Basic facts suggest that their critiques are at best overstated.  Climate and the destruction of nature quite clearly threaten business, imposing costs, and disruption. The flip side is also true: increased investments in new technologies, from energy storage to plant-based foods to inclusive hiring, deliver clear benefits. There will be inevitable ups and downs as these new markets mature and take hold; dismissing them is short-termism at its worst.

The final and most corrosive element of the backlash has immense importance, especially in the United States. Many political figures, including several aspirants for the Republican nomination for president in 2024 have attacked so-called “woke capitalism.” This is nothing more than political opportunism, unfairly dragging ESG into toxic culture wars. “Green-baiting” in the 2020s is no more justified than the red-baiting that injected venom into the American political scene in the 1950s. It has been laudable to see business leaders including JP Morgan Chase’s Jamie Dimon and BlackRock’s Larry Fink push back on this narrative. One would think that Dimon and Fink’s bona fides as capitalists would put these specious arguments to rest, but the attacks continue nonetheless.

It is obvious that our world faces immense challenges. Business action can be a great asset in creating innovative solutions and new investments in a world that is safer, fairer, healthier, and more resilient. By all means, business should be held accountable, and greenwashing should be called out for what it is. If sustainable business is going to deliver the goods, and navigate a new level of scrutiny because of its importance and prominence, it’s time to get more serious. It is also time to push back on specious arguments that say more about critics’ self-interest than our mutual interest in human progress.

Blog | Wednesday July 12, 2017

Insights from Telia Company's Human Rights Impact Assessments

Preview

This week, Telia Company published the human rights impact assessments (HRIAs) undertaken by BSR of the company’s subsidiaries in Sweden and Lithuania. This follows the company’s earlier publication (in summary form) of similar HRIAs undertaken by BSR of the company’s subsidiaries in Azerbaijan, Georgia, Kazakhstan, Moldova, Tajikistan, and Uzbekistan.

Taken together, these publications by Telia Company represent an impressive commitment to transparency on human rights impacts and how they are addressed. This level of transparency remains rare in the business and human rights field, and we hope these steps by Telia Company are frequently cited as a leading example for other companies to follow.

These HRIAs represent a substantial body of work. Along the way, BSR and Telia Company gained many new insights into how to apply the UN Guiding Principles on Business and Human Rights, and we want to share four of them here:

• Stakeholder and rightsholder engagement is essential. To develop the eight HRIAs, BSR and Telia Company met with around 100 stakeholders and rightsholders, including human rights defenders, advocates, policymakers, diplomats, and regulators. Some were experts in telecoms, while others were not; some focused on the broad human rights agenda, while others specialized in specific areas, such as privacy, LGBTIQ+ rights, or gender equality. While companies can be hesitant to engage externally, with the right preparation, companies can gain valuable insights from these conversations and forge new relationships that are essential for the successful implementation of HRIA recommendations.
• Transparency by companies on human rights issues has impact. Over recent years, a number of internet and telecoms companies, including Telia Company, have become much more transparent in their approach to freedom of expression and privacy, especially when it comes to how they respond to government demands that risk violating the human rights of their users. These reports can be long and detailed, so it is tempting to assume they sit unread on a digital shelf. They are not—indeed, quite the opposite. In these Telia Company HRIAs, and in HRIAs BSR has undertaken with other internet and telecoms companies, it has been striking to learn how local human rights defenders and advocates have put them to use—for instance to inform their policy positions.
• An industry lens is required. The UN Guiding Principles on Business and Human Rights are written for all companies in all industries, so applying them to a specific telecoms company raises new questions that require industry knowledge. What is the responsibility of a telecoms company when compliance with local laws, regulations, and licenses can result in human rights violations? How can telecoms companies reconcile the huge freedom of expression benefits of their services with their accompanying risks? What unintended consequences does a telecoms regulatory change have in a country with strong rule of law (such as Sweden) when that same change is replicated in countries without the same legal protections? How will disruptive technologies, such as artificial intelligence and the internet of things, alter human rights risks? Industry organizations such as the Global Network Initiative can help explore what these questions mean for telecoms companies.
• The link between ethics and human rights is strong. While freedom from corruption is not a human right, it was clear throughout our assessments in all eight countries that there are strong links between ethics, corruption, and human rights. An ethics violation—such as the selection of an unqualified supplier with poor health and safety practices—can result in significant human rights consequences. The victims of both ethics and human rights violations are often the most vulnerable populations. Upon completing the HRIAs, we became even more convinced of the need for holistic approaches to manage ethics, corruption, and human rights. We even believe a case could be made to acknowledge freedom from corruption as a human right.

We hope Telia Company’s publication of these HRIAs serves three key functions. First, we hope it enhances Telia Company’s ambition to integrate human rights into business decision-making. Second, we hope it informs further dialogue on human rights in the eight markets covered. And third, we hope it provides insights for the broader business and human rights community on how to undertake HRIAs.

Indeed, we at BSR are also taking a risk by being transparent about our own work. We are committed to being at the leading edge of business and human rights methodology, and we believe our approach can be improved by transparency and constructive criticism. Both Telia Company and BSR look forward to feedback and dialogue. 

View the full case study of our human rights impact assessments for Telia Company.