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Blog | Friday March 19, 2021

Forced Labor and Human Trafficking: Four Regulatory and Legislative Trends Business Should Watch

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Governments are increasingly scrutinizing human trafficking and forced labor abuses in private sector operations. In addition to the moral imperative to address these abuses, businesses should be on alert given the significant disruptions in supply chains that government regulation may cause, resulting in potential economic, legal, and/or reputational harm. Apparel, food and beverage, technology, and financial services companies in particular should closely monitor and prepare for global regulatory developments.  

1. Companies should expect more active involvement from civil society organizations in the U.S. Customs and Border Protection’s Withhold Release Order process.

The Situation

The U.S. Customs and Border Protection (CBP) has utilized Withhold Release Orders (WRO) to suspend the importation of goods at a U.S. port of entry when the agency has reasonable evidence of the use of forced labor in the manufacturing or production of a good entering the U.S. supply chain. The onus is then on the importer to demonstrate to the U.S. government that the good was not made with forced labor. In the last two years, the CBP has ramped up its use of this enforcement tool, issuing 13 WROs across multiple industries in 2020 alone.

While the CBP has welcomed the public to submit information on merchandise that could be considered for a WRO, there has been limited visibility on submissions until now. In February 2021, anti-trafficking organization Liberty Shared submitted two petitions to the CBP concerning the use of forced labor in the supply chains of the apparel industry in Leicester, UK and of Boohoo, PLC. 

What Business Can Do

Companies which have identified forced labor as a supply chain risk should be conducting ongoing human rights due diligence to identify, assess, and mitigate potential or actual risks of forced labor, engage in meaningful dialogue with rightsholders, and ensure their grievance mechanisms are working.

2. Companies should prepare for increased regulation and withholding of products sourced or manufactured in Xinjiang, China.

The Situation

Reports have described the mass internment and surveillance of over a million ethnic Muslim minorities in Xinjiang, China. News sources detail how Uyghurs and other minorities are being forced to work in factories that produce raw materials and goods which are shipped throughout China and around the world. Reports have also documented the capital provided to Chinese technology companies by financial institutions and private equity firms to support the mass surveillance of Muslim minorities. Industries implicated in these reports include food and beverage buyers, pharmaceutical companies, apparel brands, and technology and renewable energy companies.

In response to these findings, the U.S., Canada, and UK have all published advisories for companies doing business in or with links to Xinjiang. The U.S. has also passed a Uyghur Human Rights Policy Act, issued sanctions, and banned the entry of goods allegedly produced by forced labor in Xinjiang. The EU is considering implementing sanctions as well.   

What Business Can Do

Companies should map business activities and business relationships with suppliers, customers, and end users of products in China and conduct due diligence on business relationships to ensure that they are not working with entities that are involved in aiding human rights abuses. With business challenges related to Xinjiang unlikely to disappear in the short term, companies should work with third parties such as NGOs, industry associations, and business associations to better understand the human rights situation, and they should also craft and pilot traceability measures in collaboration with peers. See guidance from the CBP on best practices here.   

3. Companies should begin planning for more stringent modern slavery disclosure requirements

The Situation

In response to calls from business leaders, civil society, and legislators to strengthen the UK Modern Slavery Act, the UK government in September 2020 announced proposals that would require businesses to report against each of the six reporting areas and would make approval and sign-off requirements more stringent. In September 2020, the New South Wales government signaled its intent to enact a Modern Slavery Act (NSW MSA), which would include a provision to require more entities across Australia to submit a modern slavery statement by lowering the national reporting threshold from AU$100 million to AU$50 million. In addition, the NSW government indicated its position to levy financial penalties for breaches of the Act. A modern slavery disclosure bill was also introduced to Canada’s Senate in October 2020. While sharing similarities with Australia, California, and the UK’s disclosure legislation, Canada’s bill could be the first to allow personal liability for directors and officers for non-compliance.  

What Business Can Do

Businesses subjected to the UK Modern Slavery Act should be prepared to report against the proposed requirements. Companies that are not captured under an existing legislative scheme should at minimum understand where human trafficking risks may be present in their supply chain and proactively take prevention measures. As more governments enact modern slavery acts, more robust legislation on supply chain due diligence is on the horizon.  

4. Companies should be aware of heightened scrutiny of illicit financial flows linked to human trafficking.

The Situation

There have been some signals suggesting that companies with weak compliance systems to capture proceeds associated with human trafficking may be the subject of future attention by government authorities.

For example, in July 2020, Deutsche Bank was fined US$150 million by the New York State Department of Financial Services for failing to maintain an effective and compliant anti-money laundering program related to client Jeffrey Epstein, his sex trafficking enterprise, and correspondent banks. In September 2020, Australia’s financial intelligence agency, AUSTRAC, reached a AU$1.3 billion settlement agreement with Westpac Banking Corporation for facilitating transactions that enabled child exploitation in the Philippines.

What Business Can Do

Financial institutions should integrate indicators of human trafficking into their compliance systems to capture financial flows that may be connected to human trafficking. In addition to facing fines, financial institutions face potential criminal liability through the U.S. Trafficking Victims Protection Act and UK Criminal Finances Bill. Financial institutions should assess their links to human trafficking and forced labor holistically through their lending portfolios, core business operations, platform, and business relationships. Guidance from the FAST initiative and FinCEN on identifying and reporting human trafficking may be a good start.

To learn more about the Global Business Coalition Against Human Trafficking (GBCAT) and BSR’s work with business to address forced labor and other forms of modern slavery risks in global supply chains, please reach out to our team.

Blog | Thursday March 11, 2021

Leading with Equity: How Companies Can Promote Social Justice through DEI

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I have a very simple professional philosophy: No one voice should be louder than the other. No one hand should control every action. No one perspective encompasses everyone’s reality. No one body should take up all the space. We all add value, and we all belong. I am excited to bring this philosophy to BSR as Director of Diversity, Equity, and Inclusion (DEI) and to further our mission to build a more just world.

In my nearly 20-year career, I have had the honor and privilege of working with people from a wide array of backgrounds and experiences—ranging from the deepest of grassroots to the highest levels of government—across a wide spectrum of social justice issues as a funder, advocate, and strategist. Most recently, I have worked with companies to help reimagine their DEI strategies to center equity, a key component of social justice.

Companies are powerful stakeholders that have the ability to help shape a more inclusive world in which all people have fair access to opportunities and the ability to participate in activities to better their lives.

I believe that companies are in a unique position to drive broad impacts that extend well beyond their HR and supply chain operations. In fact, companies are powerful stakeholders that have the ability to help shape a more inclusive world in which all people have fair access to opportunities and the ability to participate in activities to better their lives. To achieve this, companies should keep the following four things in mind:

1. It’s not about outputs. It’s about impact.

To start, we need a radical shift in mindset and vision for how business can be levers for positive social change. This includes stretching beyond a focus on traditional KPIs and diversity metrics, which are normally shorter-term quantitative measures, and instead going deeper by looking at quality or effect of these efforts over a stretch of time. 

I like to think of it as the big ‘so what?’ question. This means that businesses should be more intentional about how they are setting DEI targets and see them not as mere transactions but as  opportunities to create meaningful transformation, both within the business and at the community level.

2. Companies are not independent actors. They are community stakeholders.

Setting and achieving big, bold, transformative DEI goals is not an insular endeavor; it creates ripple effects outside of a company’s day-to-day operations. The business sector must be willing to see itself as a co-conspirator in the pursuit of social justice and inclusion alongside other anchor institutions such as government, NGOs, and academia.

More importantly, companies need robust community engagement strategies that proactively seek to engage and build relationships with—not just include—the oft-forgotten voices of marginalized frontline communities. Such communities often lack power and influence but are rich with insight, ideas, and data steeped in lived experience. Their direct participation can provide businesses with information about issues relevant to their quality of life, help to identify and remove barriers to opportunity and accessing resources, and establish an added layer of external accountability.

BSR’s approach to helping businesses advance their understanding of DEI is one that will also inform how we engage with our member companies and partner agencies.

3. Aim to learn rather than to lead.

Becoming an equitable and inclusive business is an iterative process that requires a commitment to learning and a willingness to grapple with the uncertain. Unlike many other business operations, DEI is about shifting behaviors, which is an adaptive challenge where there are no one-size-fits-all approaches. Company leadership should dedicate time and resources to develop and refine a shared vision for action with stakeholders at all levels, test strategies to determine what works best given their unique set of circumstances, and understand that there are no quick fixes—changing a company’s culture takes time and requires constant experimentation.

Additionally, because it is about systems change, DEI is an area that requires collaboration over competition. Business leaders have an opportunity to establish a community of practice in which they can engage in peer-to-peer learning, have a safe environment for sharing challenges, and most importantly examine ways in which DEI can drive innovation for the sector.

4. DEI is not an add-on function. It’s a lens through which business operates.

Lastly, DEI is more than a set of aligned strategies within a company’s HR, supply chain, and corporate philanthropy departments. It is a philosophy that permeates throughout a company’s business operations and is a way to actualize its stated values.

A strong DEI plan enables a company to apply a critical lens to its policies, practices, and programs and to identify how it can be more inclusive and create opportunities for those who are systematically marginalized. It also means reimagining the power of business to drive systemic change and meet the needs of society’s most vulnerable.

The BSR approach

I am a strong adherent of modeling the behavior that we wish to see from others. BSR’s approach to helping businesses advance their understanding of DEI is one that will also inform how we engage with our member companies and partner agencies.

We see ourselves as part of a larger ecosystem of actors seeking to create a world in which everyone—regardless of identity or background—is afforded the opportunity to equal participation in all aspects of life, has fair access to resources, and can be assured that systems are operating in ways that improve the quality of life for all, and not a select few.

BSR believes that to achieve this, we must prioritize the needs and voices of those who have been and continue to be subject to marginalization and exclusion. Anchored by this belief, our DEI offerings will take on an “equity-first” approach that embodies all the above-mentioned precepts.

I will admit that this vision for BSR’s DEI work is ambitious and will at time feel fraught with discomfort and chaos. But DEI is a tool for disruption, and it is in the commotion that magic emerges. I look forward to pushing us beyond our comfort zones and tapping into that most radical part of our collective imagination—the part that sees a ‘just world’ as more than a mere aspiration, but as a reality that BSR is shaping.

Blog | Tuesday March 9, 2021

The Human Rights Impacts of Workplace Monitoring Technology

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The monitoring of employees by employers is not a new phenomenon, but it seems to be entering a distinctly new phase.

Today, it is increasingly common practice for large companies to implement employee monitoring, whether to increase productivity in warehouse distribution roles, maintain quality control in manufacturing, or bill accurately at consulting firms.

The COVID-19 pandemic has seen the sudden move of many millions of workers around the world to home-working—and this has accelerated the use of tools designed to monitor workers in new and even more invasive ways that respond to the unique conditions of a pandemic. Techniques such as screen capture, measuring keystrokes, webcam photos, and web monitoring are being used to “prove” employees at home are meeting employer expectations.

All workers face these risks with the rise in use of technology in the workplace. However, workers in low-income jobs, with insecure employment status, or irregular schedules are particularly vulnerable, and women and people of color make up a disproportionate share of these types of jobs.

Despite this widespread use of workplace monitoring already taking place, there is no internationally recognized framework governing how these tools can be deployed in a rights-respecting way. While the International Labour Organization (ILO) published a non-binding code of practice to provide guidance on the protection of workers’ personal data in 1997, there is no ILO convention or recommendation covering workplace data protection, privacy, and non-discrimination issues in a modern setting.

Employers need to consider several human rights impacts that may arise from workplace monitoring tools when implementing such technologies in the workplace:

• Erosion of privacy: There are legitimate reasons why employers need to understand what their staff are doing—such as legal obligations to ensure that sensitive data isn’t stolen or leaked. However, many emerging tools are far more intrusive and risk collecting, storing, and processing personal information that is not work related (such as movement) and use methods where employees may not be aware that monitoring is taking place (such as remote activation). The right to privacy should only be interfered with in ways that are lawful and non-arbitrary, meaning that any compromise has a legitimate purpose and is both necessary and proportionate for that purpose.
• Non-discrimination: New digital tools could accentuate existing workplace discrimination and increase risk for workers from vulnerable groups or marginalized populations. For example, monitoring how many times employees leave their desk during the workday could be paired with automated performance review processes and result in poor reviews, employees being passed over for promotions, or even termination. This disadvantages people who need to leave their desks for prayer or physical disabilities, among other things. The use of "affective technology"— purporting to identify individuals’ emotions by providing insights on an individual’s facial expressions or body language during hiring or performance reviews—present significant risks of discrimination based on gender, race, ethnicity, or other physical characteristics.

The right to privacy should only be interfered with in ways that are lawful and non-arbitrary, meaning that any compromise has a legitimate purpose and is both necessary and proportionate for that purpose.

• Informed consent: Informed consent is an essential concept in the digital sphere and is defined by both participation (i.e. the ability to participate in decisions) and empowerment (i.e. the ability to understand both risks and rights when consenting).
• Power imbalance: The severe economic downturn accompanying COVID-19 will alter the balance of power between employees and employers as unemployment rates rise—workers are much less likely to raise concerns about potentially intrusive surveillance being deployed or choose not to use it while they are concerned about the safety of their jobs.
• Human dignity and agency: The increasing use of digital tools to collect data and inform decisions raises novel issues around human dignity, autonomy, control, self-worth, and well-being, such as whether employees should reasonably expect to have their movements tracked as a metric to gauge productivity or whether insights into employee motivation, energy, and workplace satisfaction derived from psychological or sentiment analysis are a reasonable expectation of employment.
• Freedom of association: There are implications for the morale and motivation of a workforce that is being monitored as it is likely they will conclude that their employers don’t trust them. Some tools can also be used to effectively control what employees discuss, e.g. online content moderation tools that prohibit employees from using words such as “unionize” in online work chats. 

COVID-19 has turbocharged the trend of increased monitoring of employees at work. And post-COVID "back to work" planning has included monitoring of employees’ health, which is some of the most personal data employees have.

More work needs to be done to understand the impact of this kind of monitoring in different types of workplaces to lay the groundwork for the development of an international standard. BSR plans to lead this process, which must be centered on workers themselves: engaging with workers and the groups that represent them is essential. Our goal is to develop actionable guidance on how companies can implement workplace monitoring in a transparent and limited way that protects the rights of individuals and that this is developed through multi-stakeholder dialogue and engagement. We invite companies, donors, and industry and worker groups to join us in this process.

Blog | Thursday March 4, 2021

What Business Can Expect from China’s 14th Five-Year Plan

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The 19th Central Committee of the Communist Party of China (CPC) held its Fifth Plenary Sessions in Beijing in October 2020 to set the outline for the upcoming 14th Five-Year Plan (2021-2025) (14th FYP). The final version of the 14th FYP will be released at the National People's Congress in March 2021. What exactly is the 14th FYP? What are the key macro themes for the sustainability world to watch, and how will they impact business?

What is the 14th FYP and why is it particularly significant?

While every Five-Year Plan (FYP) is emblematic of its own time, the 14th FYP is particularly significant and noteworthy due to China’s impressive recovery from the pandemic, scientific and technological revolution during geopolitical tensions, and its rising profile in international affairs and role in global supply chains. Meanwhile, the time period of the 14th FYP (2021-2025) will be critical for China to lay foundation for many of its ambitious commitments, including but not limited to peaking carbon emissions by 2030 and doubling both current GDP and per capita GDP by 2035. There is no doubt that the 14th FYP will continue to steer the country’s development for the next five years.

Since 1953, four years after the founding of the People’s Republic of China, the FYPs have been the single most important guiding document. Over the last 10 years, the FYP has shifted from a political plan to policy direction for the country’s future economic and social development with strong implementation principles. And the impact of the FYP to business has become more relevant.

Published in 2016, the 13th FYP (2016-2020) put forward comprehensive and balanced development goals for the country and emphasized sustainable development through industrial upgrading, boosting domestic consumption, increasing urbanization rate, eliminating poverty, and improving environmental protection. This was the first time that China set clear sustainability goals and direction, which took root in the public as a simple phrase: "Clear water and green hills are gold and silver mountains."

Despite the U.S.- China trade war and the COVID-19 pandemic, most of the objectives outlined in the 13th FYP were achieved by the end of 2020, especially those regarding environmental protection including the “3-year Blue Sky Battle”, an action plan to improve air quality, which has shocked business operation. Other important achievements included:

• achieved economic growth and grew the middle-income population;
• accomplished environmental and ecological goals related to concentration of fine particles, carbon emissions, water quality, and the elimination of other chemical pollutants, in addition to committing to peak its emissions before 2030 and reach carbon neutrality before 2060;
• eliminated extreme poverty and lifted more than 55 million people out of penury during the period.

What sustainability themes should we expect in the 14th FYP?

The full and complete version of the 14th FYP will be launched at the National People's Congress this month. However, based on discussions in China and the documents from the Central Committee CPC’s Fifth Plenary Sessions, we know there are three major trends to watch:

1. Accelerating green economy and net-zero transition: The 14th FYP period will be the most critical time to steer the overall economic development toward China’s 2030 emission peak commitment and to lay the foundation for its green economy and 2060 net-zero goals. It is expected that environment and climate will be put firmly at the heart of the next FYP, and we also anticipate that many implementation principles and tools will be developed quickly in 2021 to steer the green transformation of key industries and push for clean energy market and solutions innovation at regional level.
   
   China will become an important market and key contributor for international businesses to achieve their climate goals, especially contributing to Scope 3 emissions reduction. This might also result in increasing collaboration opportunities between businesses and other stakeholders to build their renewable energy portfolios and Scope 3 emission reduction pathways. We expect the 14th FYP to include clear measures to guide business actions, especially regarding emission control, green energy strategy, waste management, and recycling. The sectors most likely to be affected include textile, manufacturing, transportation/logistics, agriculture, energy, and infrastructure.
    
2. Boosting domestic market through innovation and technology: In light of the challenging external macro environment and in order to continue to grow China’s national economy and personal income levels, the 14th FYP will focus on boosting the economy through strengthening "internal circulation" (domestic economic activities), accelerating industry upgrades with innovation and technology, and pushing for digitalization with increased provision of "new infrastructure" such as data centers, 5G networks, AI, and internet of things (IoT).
   
   To compete in the Chinese market, businesses will have to show a stronger commitment to innovation and digitalization. Consumer-facing brands will need to cope with and harness various digital channels for marketing, sales, consumer communication, and even product innovation. At the same time, they will need to prepare their manufacturing and research and development (R&D) for fast-changing consumer and policy demand. All of this is expected to take place in China faster than in other parts of the world.
   
   China’s overall goal is to build a well-developed nation with stronger economic power by 2035, and to do so while achieving its climate goals. In this regard, it calls for aggressive business actions to support transforming the country’s industry structure towards energy and resource efficiency. Business will need to take quick measures to transform their energy structure, embrace technology development, and marketing. This will call for business to develop a strategic plan to update their supply chain and plan for growth in tandem with this policy trend.
    
3. Improving well-being and health through enhancing social investment: On the social side, the 14th FYP will continue to improve people’s well-being and health through investing in education and healthcare, providing higher-quality employment and promoting the rural revitalization strategy. Implementation of the Healthy China 2030 vision, a plan to ensure all people in China have access to healthcare, will continue to reform the healthcare, pharmaceutical, and health insurance sectors to deliver quality products and services to people. Rural revitalization will serve as a key lever to strengthen China’s poverty relief efforts and to reduce income inequality through rural livelihood and industry development. That said, it will continue to be relevant for companies in China to enhance social investment in rural areas.
   
   China’s efforts to reduce relative poverty in order to improve overall population’s well-being through education, jobs, skill development, and better health conditions will have an impact on business. There will be opportunities across the agriculture, education, insurance, and public health sectors. Businesses in these sectors will need to develop clear strategies aligned with China’s overall innovation and technology development plan to steer business growth and impact.

All these trends are relevant and noteworthy, and businesses should pay attention over the next five years. However, the continuation of geopolitical conflicts and trade wars might jeopardize collaboration on related areas, especially stability of the supply chain when it's related to critical materials and output. It will require strong leadership from all sectors to steer these new opportunities and achieve win-win solutions for all. 

Watch this space for more as we unpack the changes, related risks, and opportunities that China’s 14th Five Year Plan will bring. BSR will continue to work on this with more in-depth research to each of the topics and their impacts on industries. Engage with us to inform your understanding and develop your China strategy.

Blog | Tuesday March 2, 2021

Beyond Former User @realdonaldtrump: A Human Rights-Based Approach to Content Governance

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The recent action taken by social media companies against former user @realDonaldTrump following the insurrection at the Capitol sparked a fierce debate.

For some, the decisions were a legitimate, necessary, and proportionate response to the obvious incitement of violence and insurrection: a new line had been crossed, and tough action was merited.

For others, this action came too late—the damage had already been done, and the lack of action against previous transgressions (such as quoting “when the looting starts, the shooting starts”) had allowed users to push the boundaries of online speech too far, for too long.

For others still, the decisions were a problematic infringement on the right to freedom of expression and a step too far for companies to take.

A debate raged on about whether and how democratically elected leaders should be treated differently online. For some, the public has a right to hear from their elected officials, no matter how objectionable the message; for others, elected officials should be afforded less freedom when incitement to violence is at stake, owing to the substantial influence that the speaker has with the audience and increased risk of harm.

These are real dilemmas with potentially conflicting rights at stake, such as freedom of expression, public safety, and the right to participate in government. There are no simple solutions (if you think there are, here is a reading list) and we have nothing but admiration for those inside social media companies genuinely seeking to take principled approaches to resolve these dilemmas. It is not an easy task, and it's one where no good deed goes unpunished.

BSR’s engagement in this dialogue has focused on how social media companies can apply a human rights-based approach to the challenge of online speech. In other words, how should a company’s responsibility to respect human rights according to the United Nations Guiding Principles on Business and Human Rights (UNGPs) manifest itself in the context of content governance?

With this objective in mind, we are publishing a short paper today setting out a four-part approach to human rights and content governance, based on a combination of the UNGPs and the various human rights principles, standards, and methodologies upon which the UNGPs were built. These four parts are as follows:

• Content policy—statements about what is and is not allowed on a social media platform should encompass all human rights, be founded upon human rights standards and instruments, and draw upon engagement with affected stakeholders.
• Content policy implementation—given the challenges of enormous scale and rapid speed, companies should prioritize implementation based on the severity of human rights risk (globally, not limited to the United States), understand the link between online content and offline harm in the relevant local context, and provide effective remedy when mistakes are made.
• Product development—the features, services, and functionalities of social media platforms are constantly evolving, and it is important that potential human rights impacts are assessed during the development and deployment process, especially for high-risk and conflict-affected markets.
• Tracking and transparency—companies should maintain quantitative and qualitative indicators of the effectiveness of their approach and be transparent about the rationale for important content decisions, with reference to relevant human rights considerations.

There are two important features to highlight about this approach.

First, these four parts constitute a robust framework of ongoing human rights due diligence that enable content decisions to be made thoughtfully, deliberately, and grounded in rights-based analysis, rather than “on the go” or according to the whim of the moment. They emphasize that the process matters as much as the decision itself—that while different people or companies may reach different decisions, these decisions should be intellectually consistent, defensible on human rights grounds, and conveyed transparently.

Second, these four parts encompass more than simply what content is and is not allowed on a platform. Our approach assumes that international human rights law and the UNGPs provide an overall framework for principled decision making and action, not a “copy and paste” set of content rules for companies to follow. The four parts are intended to be considered as a package and enable companies to adapt as the reality of social media use unfolds.

One of the concerns most frequently expressed over recent weeks has been the unease that companies have so much power—with some arguing that decisions about content should be a role for governments, not companies.

However, there are three reasons why we believe companies should play a role in content governance and thus why setting out a company-based human rights-based approach to content governance remains essential.

First, many of the most significant public policy proposals on content governance—such as the U.K. Online Harms White Paper, the EU Digital Services Act, and proposals to reform U.S. Section 230—envision a very important role for companies taking responsibility for harm associated with content on their platforms.

Second, these public policy proposals relate to specific jurisdictions, whereas the internet is global. Human rights-based approaches enable consistent approaches to be taken across international borders, including jurisdictions where laws and regulations conflict with international rights standards. Indeed, a global approach based upon international human rights standards provide a strong foundation to push back against governments seeking to suppress freedom of expression and other rights.

Third, the UNGPs state that companies have a responsibility to address the adverse human rights impacts with which they are involved. User-generated content clearly has a connection to adverse human rights impacts, and therefore a human rights-based approach to content governance is essential to meet the responsibility of companies to address this connection.

Indeed, the most promising near-term contribution to dilemmas relating to @realDonaldTrump won’t come from government, but from the independent Facebook Oversight Board, which is due to review the former user’s suspension from the platform.

We hope that this paper provides a useful contribution for how respecting human rights and implementing the UNGPs can provide a foundation for this infrastructure, and we welcome comments to amend, improve, and build on this approach.

Blog | Monday March 1, 2021

Three Ways to Improve Supply Chain Sustainability in the Decisive Decade

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2020 began with companies making new commitments to sustainability, looking to do their part to achieve the SDGs and the goals of the Paris Agreement over the course of the Decisive Decade. Then, we found ourselves in the throes of the COVID-19 pandemic, government lockdowns, and the resulting economic downturn.

Over the past year, business learned the hard way how vulnerable it is to unexpected crisis, particularly with regard to global supply chains. COVID-19 provided a wake-up call to companies about how opaque the global supply chain is.

It is now clearer than ever that we need a global supply chain model that is more transparent, more resilient, more responsible, and more sustainable. This is no longer just a strategy for companies to consider—it has become a business imperative.

Unfortunately, there are no obvious and easy solutions available. The existing commodity market has been designed to provide high-quality goods, but it has the downside of price volatility and a lack of transparency. Companies will need to experiment with creative and innovative approaches in order to find an alternative way to maintain business growth while obtaining the necessary transparency and becoming more resilient. Here are three fundamental steps for improving supply chain sustainability:

1. Set Goals and Create an Operational Roadmap

Over the years, we have witnessed an increasing number of entities make ambitious commitments to sustainability. This includes commitments related to climate and the environment (such as Science Based Targets, Net Zero Targets, Zero Deforestation, 100% of Recycled Plastic, and Science Based Targets for Nature) as well as those related to human rights and worker well-being (such as no child labor, no forced labor, and living wage).

It is not only the big brands making such commitments: Entities across all tiers of the supply chain, including retailers and fast-moving consumer goods (FMCGs) to upstream producers as well as intermediary processors and traders, are making these commitments as well. And yet only a few organizations are providing clear operational roadmaps and implementation frameworks to achieve their specific commitments.

Achieving long-term targets requires deep understanding of the issues, needs, and constraints in specific supply chains and across multiple tiers, as well as the ability to translate this assessment into operational actions that companies can take individually and collectively.

An operational roadmap would demonstrate that commitments and policies are taken seriously, based on ambitious but achievable targets. The operational roadmap should include short-, mid-, and long-term milestones and targets, as well as a strong and transparent monitoring process and regular reporting.

Goal-setting and developing an operational roadmap will start a process of creating a sustainable supply chain strategy that will both lead to secure long-term economic value and ensuring positive outcomes for the environment and people. There is always potential for failure when experimenting with how to operationalize a plan to achieve your sustainability goals; however, it’s important to remember that this will help to obtain more clarity on what does not work at the current stage, why, and then figuring out what needs to be improved.

2. Drive Collective Action

The global supply chain is a complex network involving a lot of players, tiers, regions, and issues. All players involved have a role to play and a voice to raise, their own constraints to deal with, and potential to be part of the solution.

A single entity—company, supplier, or manufacturer—on its own cannot impose its vision on the overall network anymore. Approaches like supply chain risk assessments, materiality assessments, due diligence, and supplier ranking systems must be addressed collectively and not imposed by one single player—with its own vision and definitions—upon others in the value chain.

In the effort to create supply chain sustainability and transparency, companies should ensure a common understanding of the issues and constraints, as well as the potential solutions any player at any tier can bring. To address specific issues linked to specific, individual supply chains and to be efficient and successful, all players involved at all tiers need to speak a common language.

As an example, BSR’s supply chain collaboration Action for Sustainable Derivatives (ASD) is designed to bring together value chain actors facing similar challenges to collectively drive change across the palm derivative supply chain. As a collaborative effort, ASD members can use the combined leverage of their procurement influence and spend to create meaningful action. New collaboration models are one of the key success factors of supply chain sustainability and long-term business resilience.

3. Revamp the Business Model

For any company to successfully achieve its high-level sustainability commitments, be it Science Based Targets, no deforestation, or no forced labor, it must move away from the model of the traditional commodity market. This existing model allows for the trade of commodities globally at the most efficient price, but most of the time, it comes at the cost of resilience.

Indeed, this commodity market brings a lot of opacity to global supply chains. This trading approach, where companies are unable to see beyond Tier One suppliers, makes it nearly impossible to obtain transparency on all the players involved in the supply chain and all the sourcing regions and; as such, gain accurate understanding of the risks.

This is why a new business model for our global commodity market must be developed and promoted, one that remains market driven while being fair, more transparent, and can provide more resilience. We need a business model that will help to create progress to address the critical issues that global supply chains are exposed to. However, it’s important to note that this business model can only be proposed, developed, piloted, and scaled through a collaborative approach involving representatives from all tiers of the value chain, including upstream producers or extractors, intermediary processors, FMCGs, retailers, consumers, traders, and financial institutions.

BSR works with our member companies and stakeholders across all tiers of the supply chain to support the implementation of these three imperatives in order to achieve climate, environment, and social commitments as well as broader supply chain resilience. To learn more about our work on supply chain sustainability, transparency, and resilience, please reach out to connect with the team.

Blog | Thursday February 25, 2021

Working Together to End Gender-Based Violence at the Generation Equality Forum

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As the world grapples with the impacts of a global pandemic with women on the frontlines, the Generation Equality Forum (GEF) offers a once-in-a-generation opportunity for actors around the globe, including the private sector, to come together to build an ambitious agenda to empower women and girls. BSR, the B Team, and Women Win/Win-Win Strategies are working together to engage the private sector toward making meaningful commitments to promote gender equality at the Forum. We connected with BSR member Kering’s foundation to hear more about its role as a GEF Action Coalition Lead and what motivated it to take part in the Forum. 

Generation Equality Forum seeks to establish a roadmap for how to scale up and mobilize action to achieve gender equality within a generation. Why is it important for the private sector to support the Forum?

The Generation Equality Forum, which gathers a diverse set of players from around the world, is the perfect opportunity to mobilize the private sector to support accelerated progress towards gender equality.

We know that the private sector is directly affected by gender inequality, which can have a negative impact on a company’s growth and development. We also know that gender-based violence is a societal issue that impacts the professional sphere. Because of this, we strongly believe that companies have a responsibility to take action.

A One In Three Women network study done in 2019 found that 16 percent of women and 4 percent of men who responded had experienced domestic violence within the last 12 months. Over 50 percent said it had affected their work, while 24 percent needed to take time off. 37 percent of colleagues experiencing violence spoke to someone at work.

 It is absolutely key that survivors maintain their jobs and their financial autonomy. Domestic violence is a critical issue that needs to be taken on by the private sector, in order to support its staff and ensure a safe and supportive work environment for all.

A second area of action where the private sector can be impactful is through its expansive reach and influence. It can encourage its network—its own customers, supply chain, partners and more—to join together in order to achieve Sustainable Development Goal 5 and, more specifically, to end gender-based violence.

Why has the Kering Foundation decided to step up as a private sector leader on the Generation Equality Forum Action Coalition focused on gender-based violence?

It was a natural choice. As a Foundation, positioned between the private and nonprofit sectors, we take on a complementary role to governments and civil society. By identifying new initiatives that do not yet have financing from other funders or governments, we can test new approaches, support pilot programs, and then replicate these models throughout a specific country or even internationally. We have also seen how much we can achieve when we join forces with other committed players.

In 2018, the Foundation co-founded One In Three Women, the first European network of companies engaged against gender-based violence, with the FACE Foundation. We now work alongside the other network members—Korian, L’Oréal, Carrefour, BNP Paribas, SNCF, le Fonds de Solidarité OuiCare, Publicis, PwC France and Maghreb, and EPNAK—to share best practices and co-develop tools, including an e-learning course on domestic violence and its impact on the workplace.

Our ambition as a private sector leader in the Action Coalition on Gender-Based Violence is to share our experience and network, scale up our work, and mobilize a broader group of companies, organizations, and countries to join in this combat.

The Kering Foundation has been committed to promoting gender equality and addressing gender-based violence for many years. What drove the Foundation to focus on this topic?

Empowering women has always been deeply embedded in the Kering Group’s priorities.

In 2008, Chairman and CEO of Kering, François-Henri Pinault, founded the Kering Foundation to end violence against women after becoming aware of a staggering statistic: one in three women around the world is or will be a victim of abuse during her lifetime. It is a universal issue regardless of social class, culture, nationality, age.

60 percent of Kering employees and 80 percent of its customers are women. Mr. Pinault wanted the Group to focus on a cause where it could make a real difference. This commitment has developed into a strong strategy with key feminist partnerships at its center. The Foundation focuses on three axes of action: improving support to survivors, developing prevention programs with younger generations to put an end to the intergenerational cycle of violence, and finally, bringing other actors—particularly the corporate world—on board to take collective action, both externally and internally.

Our approach to our partnerships is centered around flexible funding to local nonprofit organizations, who have a deep understanding of the local context and needs.

What do you hope to see from the private sector to support the success of the Gender-based Violence (GBV) Action Coalition and the Forum itself?

The Generation Equality Forum marks the 25th (now 26th) anniversary of the Beijing Declaration and Platform for Action, for women’s rights and empowerment. More than 25 years later, we need to define and develop new actions and approaches to respond to an ever-changing context and new challenges.

This Action Coalition—and the Forum itself—is the opportunity to bring together corporate groups, with different experiences and expertise to make effective and truly transformative change. As part of the GBV Coalition, we are working to develop a well-defined roadmap, accompanying tools, and global indicators. We would like to see the private sector join the Coalition as members and make concrete commitments in order to effectively combat violence against women.

More specifically, the private sector needs to focus on prevention programs to address the root causes of violence: changing harmful gender norms, engaging with men and boys on masculinity, and paying particular attention to the intersection of violence against women and with violence against children, in particular incest. In addition, providing sufficient resources to tackle the challenges of supporting survivors remains essential.

Of course, it is absolutely crucial to concentrate on our own teams as well: by raising awareness and training employees, including senior executives.

We are looking forward to bold, ambitious commitments from this Forum that will lead to a large coalition of diverse players, including many private sector members, all signed on to take concrete steps to putting an end to violence against women.

Blog | Wednesday February 24, 2021

How Business Should Respond to the Coup in Myanmar

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The Myanmar military’s coup and escalating use of violence against peaceful protestors have left many foreign businesses operating in the country wondering what to do. The bottom line is this: respect human rights, not only by preventing and mitigating harm linked to business activity, but also by ensuring that business activity is not rewarding the leaders of the coup.

The challenge of respecting human rights while navigating business in Myanmar is significant: engagement with the new authorities risks conferring legitimacy on them and economically enabling their illegal seizure of power, while disengagement reduces leverage, hinders delivery of essential goods and services, and terminates needed jobs. Some businesses provide essential services—such as telecommunications, transport and logistics, and infrastructure providers—and may have a greater longer-term positive human rights impact by staying in the country. Other businesses may have limited ability to prevent and mitigate the human rights impacts that occur in their value chains or may be constrained by preexisting contractual obligations. How can business navigate these trade-offs and ensure respect for human rights?

Drawing on the UN Guiding Principles on Business and Human Rights (UNGPs), UN guidance for business in conflict situations, and BSR’s own experience working with businesses in Myanmar and advising companies on human rights due diligence in high-risk contexts, here are seven practical steps that businesses with a presence in Myanmar can take:

1. Prioritize staff safety and civil liberties.

Businesses with a presence in Myanmar should prioritize the safety, security, and mental well-being of their staff and support their human rights to freedom of expression, association, and political participation.

2. Be transparent in the short term, and document abuses for the long term.

Businesses should be as transparent as possible about their presence in Myanmar, their business relationships there, and their response to the coup. Businesses whose services have been interrupted should seek to inform their customers about the reasons why as well as the scope and length of the suspension of services. Some businesses and staff may be subject to coercion and victims of violence themselves; in these cases, businesses can document and collect information for future disclosure. Information collected by businesses now may be valuable evidence for use in potential criminal tribunals later.

3. Undertake rapid human rights due diligence on your business operations in Myanmar.

Businesses are not neutral actors in conflict situations. They have a responsibility to understand how their supply chains, direct operations, and the use of their products and services can influence local conflict dynamics. In the context of Myanmar, rapid human rights due diligence should look in particular at risks to staff safety and how business relationships and activities may impact on the political context—for example, by enabling or constraining freedom of expression and association or by directing payments either to or away from the military. Effective due diligence in Myanmar’s rapidly changing context will also require that businesses collaborate, share information, and engage in collective action with home governments, embassies, investment and trade associations, peer businesses, and (in a safe and secure manner) local civil society.

Businesses should use this information in the short term to prevent and mitigate any actual and potential human rights impacts in Myanmar, which they may cause or contribute to through their own business actions or to which they may be linked through their business relationships. They should also use this information to identify and utilize leverage to prevent the use of their products, services, and assets in atrocity crimes and other human rights abuses.

4. Take proactive steps to respect human rights.

Democracy and rule of law set the stage for the realization of human rights—as well as for a stable business environment—and companies should consider how they can proactively support this. In the immediate term, companies should consider making a statement voicing opposition to the coup and support for human rights, either alone or collectively (for example, by signing on to the statement organized by the Myanmar Centre for Responsible Business).

Companies should also determine how their business activity can support civil liberties and rule of law in the country and how they can support human rights defenders (including journalists, trade unionists, and their own protesting employees) through dialogue as well as funding, logistical, or communications support.

Collective action will be critical in the weeks to come, enabling joint advocacy to protect human rights and rule of law as well as information sharing with other business, government, and civil society stakeholders to identify corruption, military aliases, and hidden military beneficial ownership arrangements in business value chains. Companies’ home governments have a particularly important role to play in helping them to navigate human rights dilemmas so that they can fulfil their responsibility to respect human rights. This is in line with UNGP Principle 7, which stipulates that since “the risk of gross human rights abuses is heightened in conflict-affected areas, States should help ensure that business enterprises operating in those contexts are not involved with such abuses.”

Businesses should especially seek to maintain their operational-level grievance mechanisms, even if they pull out of the country. These grievance mechanisms may be essential tools for providing non-judicial access to remedy to Myanmar people during and after the coup, when the Myanmar judiciary may not be functioning correctly. These grievance mechanisms should be accessible to vulnerable groups and ethnic minorities. Companies may also be asked to cooperate in future criminal tribunals for atrocity crimes, as well as provide reparations where appropriate.

5. Support targeted economic sanctions.

Many international stakeholders are calling upon businesses in Myanmar to support targeted international sanctions to prompt the Myanmar military to step away from the coup. Several governments have already imposed or proposed new sanctions against the coup regime, including the U.S., the UK, Canada, and the EU. Foreign companies operating in Myanmar can help to shape effective sanctions by assessing the impact of those under consideration and providing inputs to inform foreign governments’ planning, with a focus on demonstrating the impact of targeted sanctions on the ability of companies to invest responsibly and recommendations for mitigating that impact.

6. Terminate all military business relationships and minimize government contact.

Many foreign companies operating in Myanmar have long since ended or avoided business relationships with the Myanmar military, including military-owned conglomerates Myanmar Economic Holdings Limited (MEHL) and Myanmar Economic Corporation (MEC) and their subsidiaries and business partners. This is in line with recommendations from the UN’s 2019 fact-finding mission report, which recognizes that companies should respect the standards of international humanitarian law and ensure that they do not aid and abet the Myanmar military by knowingly providing them financial, logistical, or any other practical assistance or encouragement. Other companies are still seeking to identify the often murky ties that they may have to military-affiliated individuals or organizations in their value chains. Many of these relationships are hidden by opaque beneficial ownership arrangements, corrupt business practices, and the use of aliases by both businesses and individuals. To avoid conferring legitimacy on the coup leaders, companies should minimize contact with government outside its role as a regulator.

7. Exit responsibly, if you are unable to stay.

Businesses that choose to leave Myanmar should do so in a way that respects human rights. This includes providing reasonable notice to all stakeholders, ensuring staff continue to receive income or support to mitigate loss of employment, and ensuring the security of staff who cannot be evacuated.

We are facing a quickly closing window of opportunity for business to signal the economic costs of the coup to its leaders and to take action in support of human rights. Complicit or not in the coup, all foreign businesses operating in the country have both the moral obligation and economic influence to take swift and powerful actions to respect and promote the protection of the human rights of the Myanmar people.

Blog | Tuesday February 23, 2021

Accelerating Progress for Gender Equality through the Generation Equality Forum

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“Human rights are women’s rights, and women’s rights are human rights,” Hillary Clinton boldly declared at the UN Fourth World Congress on Women. In 1995, this was a landmark statement.  

The same event would go on to produce the most ambitious and inclusive agenda for global women’s rights: the Beijing Declaration and Platform for Action.

Twenty-five years later, the world is grappling with a global pandemic that has deeply exacerbated gender inequality. At the same time, we have a once-in-a-generation opportunity to drive progress for gender equality: the Generation Equality Forum is a global gathering that will establish a roadmap for how to scale up and mobilize urgent action—in order to achieve gender equality within a generation.

BSR is partnering with the B Team and Women Win/Win-Win Strategies to engage the private sector—mobilizing both companies with established women’s empowerment programs and those looking to get involved in the movement—toward making meaningful commitments to promote gender equality through the Forum and across six key themes, or Action Coalitions:

• Gender-based violence
• Economic justice and rights
• Bodily autonomy and sexual and reproductive health and rights
• Feminist action for climate justice
• Technology and innovation for gender equality
• Feminist movements and leadership

The Forum is organized through a multi-stakeholder and multigenerational campaign, including the private sector, governments, foundations, and civil society organizations. Active participation of business leaders and the collective expertise of the private sector will be an essential component to the success of the Forum—and ultimately, our ability to achieve the goal of gender equality.

Women intersect with business throughout the value chain, providing multiple entry points to promote gender equality. The Forum offers an opportunity to leverage these entry points across the workplace, marketplace and community. Through collective action and partnerships with governments and civil society, business can help to catalyze meaningful change for women across value chains, industries, and regions.

Corporate action for gender equality is not new: more than 3,000 companies have signed on to the Women’s Empowerment Principles (WEPs). And many companies are taking steps specifically to address gender equality in their supply chain. For example, Kering partnered with BSR to review the workplace gender equality policies and practices of 189 suppliers and the perceptions and experiences of 880 workers in their Italian luxury supply chain. The research highlighted significant challenges for women workers and identified clear opportunities for the luxury sector to lead efforts toward more gender-inclusive supply chains in Italy.

We have seen mounting evidence that prioritizing gender equality creates strategic advantages for companies. Gender-diverse workforces help to attract talent, reduce turnover, and can contribute to building trust with clients and consumers. Companies with women in leadership outperform their competitors, with a McKinsey study finding a 55 percent increase in average company earnings before interest and tax. On a macro level, achieving gender equality could add upwards of US$12 trillion to the world’s economy. 

Despite the momentum from the Beijing commitments and the Sustainable Development Goals (where Goal 5 is Gender Equality), gender equality remains an elusive goal. The COVID-19 pandemic has greatly exacerbated social and economic inequalities, and it is estimated that it could wipe out 25 years of global progress toward gender equality.

At the same time, the current crisis has shed light on the essential role women play as leaders, caregivers, frontline workers, and activists. New research across 17 countries highlights the growing consensus on gender equality: 80 percent of respondents believe gender equality is an important cause to work toward, and 60 percent feel gender equality is essential to end poverty in all countries.

Now is the time to join this critical movement as Generation Equality Commitment Makers, encouraging your company to make a bold and transformative commitment to one or several Action Coalitions to define and drive catalytic change for gender equality. Companies like Kering, Microsoft, and PayPal have already joined as Action Coalition Leaders.

We invite all companies to join BSR, the B Team, and Women Win/Win-Win Strategies for a webinar on March 2, 2021 to explore the types of engagement opportunities that companies can expect at the Generation Equality Forum and why you should get involved.

Blog | Monday February 22, 2021

Inside BSR: Q&A with Francesca Manta

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Inside BSR is our monthly interview series highlighting BSR team members around the globe. This month, we connected with Francesca Manta, an Associate Director in our Copenhagen office, on everything from her childhood as a "lawyer of lost causes" to the variety of cities that she has lived and worked in to her experience of working remotely and raising preschoolers during the COVID-19 pandemic.

Tell us a bit about your background. Where are you from, where are you based, and how are you handling COVID-19 lockdowns and the remote work situation?  

I’m originally from a tiny, not very known region in the south of Italy, between the “toes and the heel” as I usually say. My current home however is Copenhagen, Denmark, where I have been for about 13 years now.  

Before settling in Denmark, I lived in a few different places: Rome, where I studied Political Science and International Relations; Uppsala, Sweden, for my exchange year; Washington, D.C., for project work at the International Law Institute; Nairobi, Kenya, working with microfinance; and Singapore, with my former employer Vestas.  

Copenhagen won the contest for best home base because of family reasons, but also because of great work opportunities and obviously, the fantastic weather.  

The pandemic has been a little earthquake of chaos. But I do believe we are creatures of habit, so I would say I have now settled into new routines and new confined spaces—sharing the home office with my husband and cat, doing a "fake" morning commute around the office, and spending a lot more time with our children.  

However, nothing can fill the big gap of not doing project work on the field, seeing colleagues daily, and visiting my family in Italy. 

What issues are you passionate about and why? Does your work at BSR reflect that? 

If you ask my mom, she would say that I was always the “lawyer of lost causes” when I was little: taking the side of the weakest, arguing impossible cases in the name of justice and fairness. I would say that passion is still there now: justice and equity, seen obviously from a sustainability angle.  

How can I contribute to making the world more equitable, especially for our children and grandchildren? How can I use my expertise to change the status quo and advance sustainability and human rights as business as usual, part of the new social contract? 

I feel so lucky I get to do exactly this at BSR every day, through our projects, member engagement, research and partnership with donors.  

Off-work passions are more mundane: I love knitting, doing creative projects, exponentially increased during lockdown, cooking, and baking. I am an avid reader and love rowing. 

How did you get into working on sustainable business? How long have you been at BSR? What is your current role and what does that entail? 

I thought I would become a diplomat, as international relations and politics had always been my passion. While writing my bachelor thesis, I started researching global supply chains in China and India and suddenly found a new love in sustainability—which was called corporate social responsibility (CSR) back then.  

Luckily, I could study a business master's degree focused on sustainability and development at Copenhagen Business School, which led me to my first work opportunity with the Danish Institute for Human Rights, where I specialized in human rights and business and later on, in broader sustainability issues at various companies.  

I have been at BSR almost two years, and I am part of the Human Rights team. Some of my work involves leading projects with members on implementing the UN Guiding Principles on Business and Human Rights and conducting human rights assessments of their operations and supply chains. I also work more broadly on gender, supply chain, and sustainability management issues across different industries.  

In addition, I support some of our Nordic and European members in advancing their sustainability work through BSR membership—something I particularly enjoy as I feel like I’m very much an extended part of their teams! 

What are some interesting projects that you get to work on as part of your role at BSR? What do you enjoy about them?  

Learning and impact are my favorite things about all the fantastic projects I get to work on at BSR. There is always a new topic, an unpredictable angle, a gnarly conundrum to solve—whether human rights, diversity, supplier management, or reporting. We also work very collaboratively yet independently across teams, joined by a particularly inspiring synergy which is reflected in the quality and integrity of projects.  

Some of my favorite projects have been doing field work on agricultural supply chains in Ethiopia and Egypt, developing global harassment policies and programs for some of our members, and taking an active role in the integration of gender and human rights, which even brought me to the United Nations to present BSR’s groundbreaking work on gender due diligence back in 2019. 

2020 was undoubtedly a difficult year. What were the things that brought you joy amid lockdowns/quarantines? What are you most looking forward to in 2021/when the pandemic is over? 

If I were to pick a word for 2020, that would be gratitude. It’s been a tough year no doubt—lockdown and working from home with preschoolers is no walk in the park, and being separated from colleagues, friends, and family has been straining mentally and physically.  

However, I continued to work and supported even more interesting projects, with 2020 being an incredibly impactful year at BSR.  

My family, near and far, felt never so close, and spending a lot of time with my young children made me appreciate these years much more than if I were caught in the hamster wheel of "normal" life.  

And lastly, I live in a beautiful and green city where we still enjoyed a lot of freedom despite the lockdowns. We could replenish the happiness tank with walks, the allowed take-away food, and biking along the now frozen Copenhagen lakes.  

What I am taking with me when this is over is resilience, patience, creativity, and appreciation of the simple joys of life. Crossing my fingers that very soon I can eat bad plane food, sit comfortably in crowded restaurants without wearing a mask, starfish on hotel beds after a long day on the ground, and laugh with friends and family again.