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Reports | Monday April 3, 2023

AI and Human Rights in Retail

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Introduction

Technological transformation brings complex, nuanced, and systemwide risks and opportunities for the realization of human rights. These risks and opportunities are related to both the design and development of technologies, as well as how technologies are deployed and used by companies, such as retailers.  

As the retail industry continues its digital transformation, retailers need to consider the human rights impacts that may be associated with the use of artificial intelligence (AI) systems across their business and value chain. This may include the use of AI in retail stores to automate self-checkout, to personalize product recommendations on e-commerce sites, or to forecast demand and optimize supply chain operations. 

This report identifies salient human rights issues associated with the increased use of AI technology in the retail sector and makes preliminary recommendations to companies on how they can address the human rights impacts of AI in retail. 

Human Rights Impacts of AI in the Retail Industry

With the digital transformation of the retail industry, an increasing array of digital technologies are being used in combination to create automated processes, both in retail stores and in the retail supply chain. This transformation brings risks and opportunities for the realization of human rights that retailers need to consider. 

Below, we list six main categories of human rights risk that may be associated with the use of AI technologies in the retail industry. 

Human Rights That May Be Impacted

Insights+ | Tuesday March 28, 2023

Back to Nature: A Call to Action

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Blog | Thursday March 23, 2023

Transform, Finance, and Adapt: What the IPCC Report Means for Credible Corporate Climate Action

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This week, the Intergovernmental Panel on Climate Change (IPCC) released the final part of its Sixth Assessment Report, which is intended to inform government climate targets and in-country policy planning. The synthesis report, approved by 195 countries, paints a stark picture of the climate crisis and draws a narrow path to a liveable and sustainable future. UN Secretary-General António Guterres simultaneously launched the Acceleration Agenda, a set of clear and urgent measures to tackle the climate change “time bomb.” Together, these are a powerful guide for credible corporate climate action in the decisive decade.

Key IPCC Takeaways

• Global greenhouse gas (GHG) emissions have continued to increase with “unequal historical and ongoing contributions.” The world has reached 1.1°C of warming, and current policies are projected to result in global warming of 3.2°C by the end of the century. “Global warming is more likely than not to reach 1.5°C” under any scenario in the near future.
• “Climate change is a threat to human well-being and planetary health.” We need immediate and coordinated action across sectors to secure a livable and sustainable future for all. Limiting human-caused global warming requires net-zero CO2 emissions, and decarbonization across the value chain is key.
• Human-related climate change is currently affecting weather and climate extremes, with clear impacts to nature, people, and the economy. Climate impacts are more severe than previously expected and will accelerate with increased warming.
• Mitigation solutions exist and “maintaining emission-intensive systems may, in some regions and sectors, be more expensive than transitioning to low emission systems.”
• The increase in cumulative emissions makes some changes to our climate unavoidable and irreversible. But not changing course would increase “the likelihood of abrupt and/or irreversible changes, including…when tipping points are reached.”
• To deliver 1.5°C, we need “deep, rapid and sustained mitigation and accelerated implementation of adaptation actions in this decade.” This will require considerable upfront investment and “large and sometimes disruptive changes in existing economic structures, with significant distributional consequences within and between countries.”
• Climate change disproportionately impacts the global population, and approximately 3.3–3.6 billion people are highly vulnerable. The economic impacts of climate change are most visible in the agriculture, forestry, fishery, energy, and tourism industries.
• It is fundamental to focus on “equity, climate justice, social justice, inclusion and just transition processes” and to promote cooperation when implementing adaptation and ambitious mitigation. 
• Several options exist to address “emission-intensive consumption” that require behavior and lifestyle changes, but bring overall societal well-being.
• If we overshoot 1.5°C, global warming could “gradually be reduced again by achieving and sustaining net negative global CO2 emissions.” But generating negative emissions comes with larger concerns; and the overshoot will still generate irreversible impacts and risks for humans and nature.

The world is not adapting fast enough to climate impacts, and this gap “will continue to grow.” The key barriers are lack of finance and engagement from both the private and public sector. Adaptation solutions that work now will become “constrained and less effective” as warming increases.

The Acceleration Agenda

In response to the IPCC report, UN Secretary-General Guterres’ Acceleration Agenda advances specific measures to phase out fossil fuels, including the following. These begin to determine how success at the UN Climate Conference this year (COP28) in Dubai will be measured.

• No new coal, and the end of all international public and private funding of coal and of licensing or funding for new oil and gas.
• Net-zero electricity generation by 2035 for all developed countries and 2040 for the rest of the world
• A halt to the expansion of existing oil and gas reserves.
• A shift in subsidies from fossil fuels to a just energy transition
• A global phase-down of existing oil and gas production, compatible with the 2050 global net-zero target.

Company Action That Meets the Moment

With the IPCC report and Acceleration Agenda pointing to an urgent path forward, businesses can respond to their call with climate action commensurate to the latest science. 

1. Embrace 1.5°C as a floor and accelerate delivery across the value chain

The narrowing path toward 1.5°C is no reason to retreat. On the contrary, accelerating value chain reductions will limit climate impacts. Business and governments alike need to deliver decarbonization commensurate with the change required by science. This will require transformation of business models as much as incremental reductions during this decade. Areas of immediate focus include transitioning away from fossil fuels; creating and implementing clear, transparent and robust climate transition plans; and accelerating delivery of scope 3 goals. 

2. Redefine business growth within planetary boundaries

In a recent blog, we suggested it was time for companies to move beyond incremental change and explore the tension between business growth and sustainability goals which align with our planet’s boundaries. This requires an evolution in mindset and in business models to thrive within planetary boundaries.

3. Move from assessing risks to implementing adaptation solutions

The IPCC report recognizes that climate impacts are proving more severe than previously thought and will grow even more severe as global warming continues, potentially creating compound and cascading effects that are difficult to predict. Still, adaptation is absent in most business and climate strategies. Implementing adaptation solutions, including leveraging nature, will be key to limiting impacts on the workforce, surrounding communities, and global supply chains.

4. Develop holistic solutions centered around climate justice, just transition, and nature

The IPCC points out examples of “maladaptation” that blunt climate impacts but cause negative social impacts or impacts to nature. To avoid this, businesses can work toward climate justice by considering people and vulnerable communities in their climate strategies and implementation plans and integrating nature-positive solutions in their climate strategies.

5. Advocate for strong climate policy

Current policies are insufficient to avoid climate catastrophe, and we have yet to advance policies that will enable a just transition. Business can and should support climate policy at the national level in material jurisdictions and at the international level, e.g., through the We Mean Business Coalition. At the same time, it is key that businesses engage with, or withdraw from, trade associations that act against climate policy.

6. Financing climate solutions and stopping harmful funding 

Finance flows are needed to tremendously accelerate to support deep emissions cuts and adaptation in the very short term. Business can direct investment to support real climate solutions, including nature and scaling removals. 

At the same time, the financial sector can and should drastically accelerate the redirection of financial flows away from harmful investments (such as fossil fuel infrastructure) toward scaling climate solutions.

Business Resilience in the Coming Years

The IPCC’s Sixth Assessment Report not only intensifies the climate and sustainability agenda; it reminds us that climate impacts will continue to worsen as we advance, tenth of a degree by tenth of a degree, toward and past safe thresholds for our planet. Business will do more than they have before while they face increasing stakeholder pressure. As the climate deteriorates, business can focus on cross-cutting sustainability issues, from redefining business growth, to developing holistic policies, to implementing new adaptation solutions, all of which will meet the moment with credible action. 

Blog | Thursday March 23, 2023

Inside BSR: Q&A with MaryAnne Howland

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Tell us a bit about your background. Where are you from, and where are you based?

I live in Gallatin, Tennessee, and I am a proud mother to my son, John Robert. My father, Homer Howland, is a descendant of John Howland, a servant who came over on the Mayflower. My mother, June Irene, is a descendant of enslaved Africans who arrived in Virginia.

I grew into womanhood through the literature of Zora Neale Hurston, Maya Angelou, and Toni Morrison. Their influence is how and why I became a writer. My first book, Warrior Rising: How Four Men Helped a Boy on His Journey to Manhood, was published in 2020. I turned my obsession with National Geographic into a freelance career as a travel writer, and I have been published in Fielding’s and Open Roads Travel Guides. I have visited more than 100 cities, covering every continent except one.

My passions include theater, the arts, and tennis. My personal mission is to open a national dialogue on the importance of mentorship, intentional parenting, and respect and dignity for people with disabilities.

Tell us about your previous professional experiences.

I began my career as a writer in the communications department at Time Inc., convincing leaders why they need Time and Fortune Magazines for reliable business news. For over two decades, I grew as a writer to become a global business consultant, and I have served a portfolio of clients across a wide range of industries in pursuit of transformation from corporate social responsibility to corporate social significance.

In 1993, I founded Ibis Communications, an award-winning branding and marketing firm specializing in multicultural marketing, and in 2012, I founded the Global Diversity Leadership Exchange (GDLE), a forum designed to serve senior-level executives on the front lines of driving diversity in global markets. In 2014, GDLE became a member of the UN Global Compact.

In 2018, I co-founded JEDI Collaborative, an initiative created to support the natural products industry. I continue to support these enterprises that help companies elevate their brand and enhance relationships that fan the mission of justice, equity, dignity, inclusion, and sustainability.

I help communicate our mission in speeches and lectures at colleges, universities, and various corporate conferences and events, covering topics such as structural racism in business, conscious capitalism, and human value—a JEDI approach to business leadership for a compassionate economy.

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

In my years of work to help brands bridge to multicultural markets, I have learned that progress has been very slow in fulfilling the promises around diversity, equity, and inclusion (DEI). Being the mother of a Black boy with cerebral palsy and ADHD who has had to face a world ill-prepared and unwilling to embrace and nurture his talent and abilities simply because he is “different" has shaped my worldview of the level of commitment and investment that is necessary to shift from systemic inequities to justice.

Personally, I believe the move from performative acts of DEI toward measurable impact begins with understanding human value and treating everyone with dignity and respect.

I believe that “JEDI”—justice, equity, dignity, and inclusion—has never been more important to cultural transformation. JEDI is more than a traditional DEI practice—it is a mindset, a lens through which you recognize the value in others, that opens hearts and helps to build trust and authentic relationships that achieve diversity that is sustainable. Various sustainability issues, such as climate change, voting rights, and human rights, demand that all voices and perspectives are engaged and reflected in the solutions that impact each one of us.

I am excited about my new role at BSR at the intersection of sustainability and equity, justice and inclusion (EIJ) because progress cannot be made without the voices and perspectives of all of us, especially those who have been historically excluded.

International Women’s Day took place earlier this month. How can business advance on EIJ policies?

I think of the women I have met across the country and in various walks of life in cities and townships around the world, at various levels of means, working moms, single moms, sisters, daughters, some respected, some abused, undervalued, and underpaid.

From Appalachia to Afghanistan to the aborigine of Australia, from India to Iran, women of every color and every culture deserve at the very least the dignity of living wages, quality healthcare, higher education, and to be safe and protected citizens.

It is corporate and public policy that informs business practices that impact disparity gaps in nearly every aspect of quality of life for women, including ethnic minorities and people with disabilities. Business needs to start with an honest assessment and a deep cleanse of systemic inequities in all of their systems and operations and develop and implement new policies that effectively and permanently close these gaps.

People

Amina Azmat

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Amina works with partners across industries to develop and implement climate change solutions with a focus on aligning to the sustainable development goals (SDGs). 

Before joining BSR, Amina led internal consulting at the United Nations Foundation, where she provided advisory services to SDG teams. She grew and transitioned new business initiatives into their permanent operating models; oversaw the Foundation’s annual planning, risk management, and due diligence processes; and led strategic initiatives to ensure the Foundation’s programmatic, financial, and operational success. Prior to that, Amina worked on the ground in areas of conflict and migration in the Middle East, and she began her career as a market researcher in the consumer products industry.

Amina holds a BS in Business Administration with a concentration in Marketing and minors in International Affairs and Political Science from Northeastern University in Boston, Massachusetts. She speaks English and Urdu.

Blog | Thursday March 16, 2023

Redefining Business Growth within Planetary Boundaries

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The Environmental Crisis Is the Defining Issue of Our Time

Economic, equitable progress and wider prosperity that is limited to planetary boundaries are the greatest challenges that business faces–but current environmental trends are alarming.

Despite increasing commitments to reduce our global environmental impacts, already, five of the nine planetary boundaries have crossed into the high-risk area. Consequently, surpassing such boundaries greatly increases risks to our planet, people, and the economy.

Making matters worse, nine out of sixteen tipping points that regulate the state of the entire climate system are showing signs of instability—which could bring unpredictable damage to Earth, making it extremely difficult to achieve the Sustainable Development Goals. On climate, for example, the 1.5°C goal is slipping out of reach, emissions increased in the 2010s, and several climate impacts are now considered irreversible.

All of these events are occurring against the backdrop of a polycrisis, with increasing economic pressure and social inequality across the globe. The latest IPCC report confirmed that every fraction of a degree escalates further risks for people, the planet, and business.

Credible Business Action to Meet the Moment

The private sector has a key role to play in accelerating the global response to the polycrisis. Business will face increasing stakeholder scrutiny to deliver holistic solutions that truly address the environmental and social crisis and to move from commitment to delivery.

Beyond incremental change, a new phase of credible business action is required to meet the moment. In the last decades, business focused action on “low-hanging fruit” efforts to deliver efficiency (energy savings, switching to renewable energy, leaner production processes, etc.), aiming to “do less harm” and decouple environmental impacts, and GHG emissions specifically, from business growth without fundamentally shifting their traditional business model.

This has led to several examples of relative decoupling, where impacts (resource use, emissions) are reduced compared to business-as-usual. Nevertheless, overall impact continues to increase while business activity (e.g., sales) grows.

Increasingly, businesses are facing questions on whether their existing models are sustainable and resilient in the face of these challenges. Traditional growth-based business models, even ones with substantial sustainability strategies, can be at odds with long-term, transformational environmental goals necessary to deliver against the current crisis. As a result, many businesses will be forced to make compromises between their business objectives and their ambitious environmental targets (e.g., net zero, nature-positive).

Designing Alternative Business Models

While many businesses understand the need to transform their models in the face of these macro challenges, few solutions have emerged beyond experiments and pilot projects. A thriving business within planetary boundaries will need to innovate and explore new strategies, addressing the current tension between traditional growth-based models and the pursuit of environmental and societal goals.

BSR believes that exploring alternative models can improve business resilience and achieve key environmental objectives within the planetary boundaries while also ensuring long-term value. Alternative strategies can include scaling up circular approaches that remain peripheral for many businesses, but also exploring the business implications of theories such as sufficiency and degrowth, which so far remain macroeconomic concepts with limited business applications.

There are no simple, ready-made solutions to address the current challenge, but we believe business model innovation holds strong potential to deliver within planetary boundaries. BSR is ready to partner with members and explore what alternative models would look like and the role of business in this transformation to deliver our vision of a just and sustainable world.

Blog | Wednesday March 8, 2023

Accelerating Equality for Women Workers in Global Garment Supply Chains through New Initiative RISE

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This International Women’s Day, BSR is celebrating the launch of RISE (Reimagining Industry to Support Equality), a collaborative initiative from BSR’s HERproject, Gap Inc. P.A.C.E, CARE, and Better Work to scale impact and accelerate equality for women workers in global garment supply chains.

We asked Aron Cramer, President and CEO, BSR and Christine Svarer, Executive Director, RISE about the formation and ambition for the initiative.

Combining the fashion industry’s four largest women’s empowerment programs seems like a logical move. How did it come about?

Christine: Having had a relatively similar journey, since each of the four founding partners started working on women’s empowerment around 2007, we have been collaborating on specific initiatives in an ad hoc fashion. It’s been a friendly coexistence. However, in recent years, we’ve noticed bumping into each other in the same workplaces, sometimes delivering very similar activities. This means there is potential for duplication and confusion across the industry, potentially leading to fatigue in the same way we’ve seen with audits and inefficient deployment of resources, halting our ability to support a greater number of workers.

For a very long time, we have been saying to business that advancing gender equality is best done in a collaborative manner. No one entity can tackle this alone. With that, it was quickly clear that coming together as one single entity was the only way to accelerate progress on gender equality in supply chains.  

What do you hope RISE will achieve that was not possible as individual initiatives?

Aron: We are certainly proud of what we have been able to accomplish through the 15 years of HERproject. But we are also aware that there are systemic barriers to women’s empowerment, and they require systemic solutions. There are three simple and structural reasons why RISE can achieve even greater impact. First, we can remove duplication and redundancy in the delivery of our respective programs. Second, we can leverage each other’s strengths, as we each bring slightly different assets and experience to our work. And third, we can speak with one voice, and that consistency will enable greater impact both operationally and as we aim to influence markets and policy.

We believe that the result of all this will be a collective ability to reach more women—and men—to ensure women can thrive in their roles in global garment supply chains.

As it is International Women’s Day, can you give us an idea of the international reach of RISE and how it supports women garment workers?

Christine: We are immensely proud to have supported more than five million workers in over 20 countries in partnership with 70 global companies. There is still a long way to go if we want to see women workers fulfill their economic potential, supported by industry and other key stakeholders.

Women workers continue to be concentrated in low-wage, low-skilled, low-status roles. While these jobs offer women access to employment in the formal economy —which is important—women workers still face barriers such as discriminatory social norms, limited access to formal financial services, exclusion from career advancement and higher-paying opportunities, and risk of sexual harassment and gender-based violence in the world of work.

RISE works to tackle all these barriers in its workplace activities. We want to complement that by intentionally working with brands, buyers, and suppliers to activate strategies that both embed and reward progress on gender equality.

We also have plans to set up a data platform that can both map live activities to avoid duplication as well as produce a simple set of data points to support businesses in making gender-responsive decisions, inform worker representatives and policymakers, and increase the visibility of women workers.

How will RISE help the fashion industry deliver real action and impact for businesses and women workers?

Aron: We believe that RISE can truly elevate women’s empowerment in the global apparel sector. Through RISE, the industry will be able to apply leading edge programs to enable women to thrive. The initiative will provide a common platform on which all elements of the industry—buyers, suppliers, workers, workers’ representatives, and local communities—can learn from and contribute to. We hope it will be recognized as a new norm for the industry: something that both enables and demonstrates a strong commitment from all industry stakeholders.

From our experience with HERproject, we know that doing so delivers great benefits for women and strengthens the enterprises that embrace the model. We see RISE as being able to create a new norm that can define the industry at a time of immense change.

How can business get involved with RISE?

Christine: RISE is based on membership from brands, buyers, and suppliers anywhere in the world. So, the first step is to get on board as a member. In addition, we work with our member companies to enroll workplaces within their supply chain—either individually or together with other brands, buyers, and suppliers—into one of the RISE programs which we develop and deliver in partnership with local organizations. We also work with both our company and donor partners to continuously deepen our impact and scale. For example, we’re currently working with a small set of companies on evolving our approach to gender-based violence. We’re also looking for company partners who want to help us build our approach to women’s advancement and leadership.

RISE is a platform for collaborative action. Contact us. We’d very much like to hear your ideas.

Blog | Tuesday March 7, 2023

Fashion Industry’s Four Largest Women’s Empowerment Programs Form New Initiative RISE to Scale Impact

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BSR’s HERproject, Gap Inc., P.A.C.E, CARE, and Better Work have come together to form a new initiative called RISE: Reimagining Industry to Support Equality in order to scale impact and accelerate equality for women workers in global garment, footwear and home furnishings supply chains.

The launch of RISE, ahead of International Women’s Day on March 8, comes as greater support is needed for women workers. It is estimated 75 percent of the 60 million garment workers are women who may experience gender inequality, and instances of harassment or violence at work, among other systemic barriers to empowerment and gender equity (source: the ILO). The COVID-19 pandemic and an increasingly difficult financial environment add to mounting pressure on women workers.

RISE will support global brands to empower women workers in their garment, footwear and home furnishings supply chains and have a wider impact on promoting gender equality in the industry as a whole. RISE will pursue its mission through three core strategies: (1) strengthening knowledge and skills for factory workers and managers, (2) transforming business practices to include gender equality, and (3) influencing public policy and other key actors.

RISE will build on the proven approaches and expertise of the four founding partners, delivered through a growing network of local partners in Bangladesh, China, Vietnam, Cambodia, Indonesia, India, Egypt and Pakistan. A unified approach will make it easier and more efficient for industry and wider stakeholders to drive accelerated and lasting impact on gender equality. It will also improve efficiency through the coordination of activities, a shared data system, and eliminating duplication.

The four founding partner organizations already work with 50 of the world’s largest apparel, footwear and home furnishings brands and have reached more than five million women workers globally. The ambition is to increase this to up to 20 million workers over the next decade. Companies who are supporting the development of RISE include Abercrombie & Fitch Co., Aje and Aje Athletica, AEO Inc (American Eagle and Aerie), BESTSELLER, Boden, Capri Holdings, Carter’s, Columbia Sportswear Company, Dôen, Hanna Andersson, Gap Inc., Inditex, Macy’s Inc., Marks & Spencer, New Balance, Primark, PVH Corp., Ralph Lauren, Tapestry, Inc., Target, The Children’s Place, The Walt Disney Company, The Warehouse (NZ), Victoria’s Secret & Co., VF Corporation, Williams-Sonoma, Inc.

RISE’s capacity building workplace programs aim to increase women workers’ dignity and equality in the workplace, by changing both behaviors and systems. The programs expand women workers’ choices and their ability and confidence to pursue their rights and opportunities. The training also engages male managers and coworkers to challenge social norms in the workplace. Program topics range from life skills such as communication and problem solving, general and reproductive health, financial health and security, freedom from sexual harassment and gender-based violence, and women's advancement and leadership.

RISE goes beyond workplace programs to bring positive change to the whole industry and influence policy improvements. It includes workers’ voices and representation at every level from governance to project implementation, ensuring that the work responds to women workers' needs and priorities. RISE has broad stakeholder involvement at its governance: brands, suppliers, labor organizations and unions, and women's movements.

Brands, buyers and suppliers can become a member of RISE and invest in a workplace program in their garment supply chain. Programs are currently operating in Bangladesh, China, Vietnam, Cambodia, Indonesia, India, Egypt and Pakistan.

“It’s time to step up support for women workers in global garment supply chains. RISE will benefit from the proven approaches of its founding partners and go even further to reach more women, expand to more geographies and create more change. Brands and suppliers can join RISE straight away to take serious action towards gender equality,” said Christine Svarer, Executive Director, RISE.

“In joining together to establish RISE, our industry can leverage the strongest elements from each of our proven empowerment programs to have deeper, broader and more consistent impact for the women who work in our supply chains,” said Sally Gilligan, Chief Growth Transformation Officer, Gap Inc. on behalf of Gap Inc. P.A.C.E.

"CARE is excited to be part of this collaborative effort to transform the apparel industry. RISE will bring together stakeholders across the industry—brands, suppliers, women's rights organizations and unions - to achieve systemic change driven by women’s voices," said Lona Stoll, VP Innovation and Impact, CARE.

“Joining BSR’s HERproject with other leading women’s empowerment programs is the logical and necessary next step to take these proven solutions to scale. As a combined force, RISE can navigate through the complex issues of gender equality in global garment supply chains and deliver real action and impact for both businesses and women workers,” said Aron Cramer, President and CEO, BSR.

“The potential of this partnership to influence change at all levels from the enterprise up is unparalleled, as it brings together such a wide range of brands and retailers, and industry stakeholders that all agree about the importance of collaborating to improve working conditions for women, particularly in the garment sector,” said Conor Boyle, Officer in Charge, Better Work.

Better Work is a partnership between the International Labour Organization (ILO) and the International Finance Corporation (IFC), a member of the World Bank Group. Better Work promotes decent work and better business in the garment industry.

CARE is an international humanitarian organization fighting global poverty and world hunger by working alongside women and girls.

Gap Inc. P.A.C.E. program provides women and girls in the global apparel industry the opportunity to thrive with foundational life skills, technical training and support to advance at work, in their lives, and in their communities.

HERproject is a BSR collaborative initiative that strives to empower low-income women working in global supply chains. Bringing together global brands, their suppliers, and local NGOs, HERproject drives impact for women and business via workplace-based interventions on health, financial inclusion, and gender equality.

Blog | Thursday March 2, 2023

Get Comfortable with Uncertainty in 2023

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People have worried about the end of environmental, social, and corporate governance (ESG) since before it was called “ESG.” For decades now, reports of the death of ESG have been greatly exaggerated, and these concerns have continually accompanied global crises.

In 2007-2009, the Great Recession and banking crisis rattled the burgeoning field of environmental, social, and governance action. Then, in 2016, Donald Trump assumed the US presidency and withdrew the US from the Paris Agreement. In 2020, COVID-19 struck, bringing astonishing global disruption and damage. Two years later, Russia invaded Ukraine, plunging Europe into energy, human migration, and cost-of-living crises. In each case, pundits speculated: would investors and businesses drop this ESG stuff amid the terror and economic calamity of the moment?

In each case, the opposite happened: crisis led to greater awareness and more rapid action on the social and environmental challenges that affect business. To take a current example, analysis indicates that the war in Europe has "turbocharged the green transition.” Credible, strategic approaches to sustainability built on engagement with stakeholders, management of ESG risk, and contribution to the global sustainability agenda aren’t a distraction—they are a compass.

Seven Themes Shaping Sustainable Business

The tailwinds for action are stronger than ever, even if businesses face increasing uncertainty. We’ve identified seven themes to consider, beginning with issues that companies can anticipate with confidence and moving down to more volatile topics:

• Stakeholder advocacy is growing, with higher expectations of companies by consumers, employees, and civil society, all with a keen eye for greenwashing and passivity. Demographic and generational shifts are inspiring a wave of even more vigorous and effective advocacy.
• Global regulations are mandating action and disclosure. Those directives cover public and private companies alike as well as a range of sustainability issues, including climate, human rights, social impact, and board oversight.
• The financial industry is integrating and committing on ESG, driven by recognition of the value of ESG and strengthened by emerging regulatory requirements. The increase in action spans the industry, manifesting in everything from ESG asset management to mergers and acquisitions (M&A) diligence, insurance premiums, and lending terms.
• Economic drivers are strong, but may face tailwinds. For example, there is dramatic growth in government investment in green energy, and clean energy costs are coming down. While significant economic uncertainty and headwinds could stymie investment in sustainability. they could just as easily put more of a focus on “S” issues such as jobs, cost of living, social benefits, community impacts, and consumer trust.
• Regional and sub-regional action is fragmented and escalating. In the US, some state politicians seek political points by criticizing ESG, even as other states are pushing ambitious sustainability agendas. The EU’s far-reaching reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) potentially set up misalignment with US requirements. While the trend is toward more global support for action on sustainability, there is considerable fragmentation and uncertainty by geography.
• US national politics and court decisions are highly unpredictable. Some political figures are pushing a highly politicized view of ESG and often demonizing business in the process. This rhetoric threatens to create a chilling effect on the ability of companies to exercise judgment in addressing material business risks and opportunities, even as the American people seem to agree on seeking corporate accountability and action. Similarly, US courts have recently issued dramatic rulings with implications for companies and their stakeholders.
• Geopolitics are pivoting on climate and sustainability: Whether it’s climate change, human rights in supply chain issues, or technology, privacy, and expression—sustainability topics are now a major force in geopolitics and business. There is high potential for volatility and disruption.

Companies Can Take Several Measures to Navigate the Current Crosswinds

• Focus on material risks and opportunities, not jargon 
  • Understand how salient and material issues impact long-term business value
  • Be specific on risks and opportunities affecting enterprise value, people, and the environment. 
  • Strike out “jargon” in favor of using direct language and debunking myths
• Build relationships to deliver long-term impact and value
  • Engage your stakeholders to understand how they are affected, understand their expectations, substantively address your impacts, and be prepared to show your positive effects (e.g., community impacts, economic growth, health equity)
  • Work directly with investors to show effective ESG risk management and potential for increase in value
  • Seek ESG-linked financing opportunities and the potential for increase in value
• Be transparent, build integrity, anticipate global requirements
  • Anticipate global disclosure expectations, laws, and common global frameworks. Don’t “wait and see”—be bold and open about the challenges of implementation
  • Align globally to avoid inconsistencies across regions
  • Be transparent behind all claims, including addressing positive and negative impacts
• Drive purposeful leadership in policy and business 
  • Foster public leadership (e.g., communications, collaborations) and private diplomacy (e.g., engagement with policymakers) to support an operating context that enables sustainable business growth and builds trust for and in business
  • Consider ESG regulations/attitudes as part of market and geopolitical risk analysis 
  • Align policy and sustainability priorities (e.g., in political spending/donations, policy agendas) and disclose activities
• Get comfortable with uncertainty
  • Use futures analysis to identify potential risks/opportunities and potential steps for resilience, including trends assessment, scenario analysis, and visionary futures
  • Identify and prepare to respond to emerging risk events (e.g., major court decisions)
• Build board and executive support
  • Engage the board to increase understanding of ESG and its direct business relevance
  • Encourage board strategic planning, emerging risks, and stakeholder insight on ESG
  • Ensure board oversight of ESG and ESG disclosure that is consistent with global regulations

There is a storm for sustainability. But with a good compass and an eye on the long-term horizon, companies can navigate toward the just, sustainable, and thriving economy we all need.

For more on this topic, BSR members can review our recent webinar featuring additional investor insights from Morgan Stanley and stakeholder analysis from Polecat: Into the Sustainability Maelstrom: Navigating Uncertainty in 2023.

Blog | Wednesday March 1, 2023

Building Responsibly: Raising Ambition for over One Million Workers

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Philippe Fonta discusses his new role as Director of Building Responsibly, unique challenges facing industry workers, and how he plans to accelerate impact in the year ahead.

Could you tell us about “Building Responsibly”? What is your mission and strategy for impact?

Building Responsibly (BR) is a collaborative initiative led by BSR that gathers a group of leading engineering and construction companies. We promote the rights and welfare of workers in the sector across the entire supply chain.

The initiative enables members to protect worker rights across the industry—even in contexts where the rule of law is limited. By creating and adopting common principles, developing tools to support implementation, and engaging workers, clients, governments, civil society, and international organizations, BR can really make a significant impact as a collective group rather than working alone.

Representing over one million workers across more than 100 countries, BR members have committed to implementing ten Worker Welfare Principles—a global standard to advance the safety, security, and welfare of construction and engineering workers. This requires the participation and collaboration of a wide set of stakeholders (including companies, NGOs, and industry associations).

What’s your role at BR?

BSR provides executive leadership and secretariat support for BR. Having joined BSR in 2022 as Director for Industries and Transport, I have now taken up a new role as Director of BR.

Primarily, I ensure that innovation and leadership remain key drivers in our collaborative approach, while utilizing the best available resources to advance the work program and raise ambition. I check that the quality of our work really makes a difference and effectively delivers impact. It all comes down to teamwork, members are different, even if the sector’s objectives are the same for every stakeholder. I also promote BR’s mission, work program, and achievements in various meetings in order to solicit the interest of potential new members and partners.

Tell us about your previous industry experience.

I have 25 years of experience in sustainability management, both within multinational industrial companies and non-profit organizations. I understand the constraints, challenges, and opportunities for industrial conglomerates as well as the expectations of their various stakeholders and society at large.

I spent eight years leading the Cement Sustainability Initiative (CSI), one of the flagship collaborative projects of the World Business Council for Sustainable Development (WBCSD). Gathering 25 global members from the cement manufacturing sector, CSI developed and implemented commonly agreed principles on sustainable issues such as climate, health and safety, and supply chain management, implementing them, and reporting on key indicators to deliver impact. Advocacy at major international forums was also a part of my role. I promoted the work of CSI and made our work accessible to a wider community of cement manufacturers.

What are the key challenges members face when protecting workers’ rights? How can BR help?

The engineering and construction industry relies on a massive number of workers and is a major provider of employment opportunities worldwide. Large real estate and infrastructure projects have fueled a construction boom, attracting millions of migrant workers, especially when there are not enough local workers or the local workforce doesn’t have the required skills.

This rapid growth has given rise to challenges around the rights and welfare of workers, which has been further highlighted by media and civil society organizations. Many companies in the engineering and construction industry have longstanding commitments to the health, safety, and welfare of workers. They are keen to expand on their existing programs, policies, and standards to further promote the rights and welfare of workers in their operations and subcontracting chains—even in contexts where the rule of law is limited.

BR enables business to collaborate around these shared values, advance their programs by sharing best practices, agree on common approaches and standards, develop tools, and engage clients, civil society, and international organizations. As a pre-competitive initiative, BR will ensure that companies can engage in mutually beneficial measures and policies in a safe space.

So, what’s going to be keeping you busy in the coming months?

As the new Director of BR, my first task is to ensure a smooth and efficient onboarding, gain trust from BR members and build on the excellent work led by the current secretariat. I plan to bring BR to the next level, and for that, we need to ensure the effective implementation of the Welfare Workers Principles. At the same time, we will need to bring these issues (and upcoming ones) at a speed and scale that will deliver real impact. This can be achieved by enhancing outreach and communication on the work, commitments, and achievements of BR (via publications, presentations, and conferences), attract the attention of potential new members, including in Asia and Latin America, expand the type of issues managed collectively at BR while ensuring that all the legal requirements associated to sharing information within companies of a same sector are respected. This is certainly challenging, but exciting and my previous experience at CSI should be helpful!

To learn more about Building Responsibly, please contact us.