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Reports | Thursday July 15, 2021

Human Rights Due Diligence of Products and Services

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Overview

Human rights due diligence (HRDD) of products and services—also known as “downstream HRDD” or “end use HRDD”—has been a requirement of the UN Guiding Principles on Business and Human Rights (UNGPs) since their endorsement by the UN Human Rights Council in 2011. However, its relevance has skyrocketed in the past few years due to the rise of technology products like social media and artificial intelligence.

As the field of supply chain due diligence has matured, the downstream value chain is increasingly becoming a focal point for more traditional sectors like pharmaceuticals and heavy industry. Now more than ever, we can see and feel the human rights impacts of business products and services, which in turn has elevated the need for businesses to take a serious look at how their products and services are designed and developed, who they are sold to, how they are used, and how they may be misused.

What Is Downstream Human Rights Due Diligence?

Downstream human rights due diligence is the assessment and prioritization of human rights impacts that occur as a result of company actions or omissions during the design, development, promotion, deployment, sale, licensing, or use of products or services. It differs from other types of business human rights due diligence because it focuses entirely on the downstream value chain, rather than the upstream supply chain or direct business operations.

Blog | Tuesday July 13, 2021

What Companies Need to Know about the International Financial Reporting Standards Foundation

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“The sustainability reporting landscape is undergoing a transformation” has been a sustainability truism for years now, but the chorus promoting this adage is growing stronger, louder, and more convincing. Why?

We’re finally starting to see tangible change. The International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB) have merged into the Value Reporting Foundation. They and three other sustainability reporting bodies—CDP, Climate Disclosure Standards Board (CDSB) and Global Reporting Initiative (GRI), known as the Group of Five—have called for closer coordination and launched a prototype climate-related financial disclosure standard.

The standard-setters that have historically governed financial reporting are also getting involved. In addition to the SEC, which recently closed a 90-day consultation on potentially mandatory climate disclosure (as well as broader ESG disclosure), the EU has adopted a proposal for a new Corporate Sustainability Reporting Directive and a game-changing EU Taxonomy.

The International Financial Reporting Standards (IFRS) Foundation, which sets reporting standards to “bring transparency, accountability, and efficiency to financial markets around the world,” is also considering how it might engage. Its financial reporting standards, developed and approved by the International Accounting Standards Board (IASB), are required in more than 140 jurisdictions around the world. In a manner similar to the IASB, the IFRS Foundation is exploring whether and how to set up an International Sustainability Standards Board (ISSB).

Feedback on a consultation paper published by the IFRS Foundation in September 2020 indicates strong interest in the organization’s potential involvement in setting sustainability reporting standards to complement financial reporting standards. As a result, the IFRS Foundation is leading a Technical Readiness Working Group to provide a “running start” for the potential ISSB to develop a sustainability reporting standard, based on financial materiality, that provides relevant information to investors.

Governments are supportive of the effort. The G7 Finance Ministers recently voiced their support for the IFRS Foundation to develop a baseline standard, and the International Organization of Securities Commissions (IOSCO) echoed their statement. This baseline standard would build on the Task Force on Climate-related Financial Disclosures (TCFD) framework and the existing work of sustainability standards-setters such as the Group of Five.

We welcome the elevation of ESG data so it is treated with the same level of rigor as financials—comparable, assurable, and recognized as critical to understanding both the impact of material ESG issues on the business and a business’s impacts on the issues.

So, what does all of this mean for you? Here are three opportunities and risks that businesses should know about the potential new sustainability standards:

1. ESG issues are material to a range of stakeholders, and non-investor audiences should also be considered. 

The IFRS proposal and creation of an ISSB will enhance reporting on enterprise value, as well as enable quality and comparability of reporting that yields better decision-making by investors. However, the reporting landscape needs standardization that provides information for stakeholders beyond investors and capital markets. There is a risk that the current framing excludes or supersedes companies’ reporting on their outward impacts on ESG issues in favor of purely the financial dimension of materiality.

2. Reporting standards need to be interoperable across regions and jurisdictions. 

The ISSB would function within the architecture and governance structure of a standard-setting body that has already been adopted by over 140 jurisdictions, enabling immediate scale and uptake of common sustainability reporting standards. However, there remains a need to align with the standards under development in the EU, and a continued question around whether or how the US follows suit (e.g. if the SEC develops a separate system for climate or ESG disclosure). Overall, if the IFRS-developed sustainability reporting standards come to fruition as a global disclosure baseline, they may best serve stakeholders if jurisdictions’ additional requirements are harmonized.

3. ESG issues should be covered by reporting standards. 

Standardized disclosure on a range of ESG issues backed by oversight bodies that link to financial reporting and public authorities is in sight. Climate is a natural starting point given the urgency of the challenge, the existence of the TCFD, and some governments (e.g. the UK and New Zealand) already mandating climate disclosure and others (e.g. the US) now exploring the matter. However, climate alone is too narrow, and the IFRS (and SEC) should reflect the fact that no responsible company today reports only on this one issue. Material non-climate ESG issues such as human rights; diversity, equity, and inclusion; and biodiversity will also need to be reported in a similar manner. This presents a risk that companies will move from a unified report to a collection of issue-specific reports that lack cohesion.

The IFRS Foundation’s recognition that investor-focused standards on enterprise value creation are interdependent with others that center on value creation for society and the environment is a positive step. A company that discloses only on the financial impact of ESG issues remains exposed to business risks stemming from their outward impacts on society and the environment. It is for this reason that both dimensions of materiality are critical; we strongly recommend a building blocks approach to reporting that takes interoperability between the dimensions into account.

A company that discloses only on the financial impact of ESG issues remains exposed to business risks stemming from their outward impacts on society and the environment.

We believe these developments are moving the reporting field in a positive direction. We must not forget, however, that financial materiality is but one lens, and a climate disclosure standard is the first step on a broader path to holistic ESG disclosure. We look forward to seeing the results of the IFRS Foundation-led working group and to continuing our engagement in the process. We strongly advise companies and reporting practitioners to do the same. The outcome will have implications for companies’ reporting governance and approval structures, integration of ESG data with financials, and where and how ESG data points are collected and reported.

This blog builds on insights shared within BSR’s Future of Reporting collaboration. Companies interested in discussing the topic further are welcome and encouraged to join the initiative, which has been closely tracking these developments.

Blog | Wednesday June 30, 2021

Accelerating the Use of Technology to Combat Human Trafficking

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Last week, Tech Against Trafficking launched its second Accelerator program, welcoming Seattle Against Slavery and Unseen UK into the community. Both organizations have shown exceptional innovation and potential in their deployment of technology solutions, and this investment in support and expertise by Tech Against Trafficking member companies aims to exponentially accelerate their respective impact over the coming years.

Launched in 2019, the Tech Against Trafficking Accelerator Program aims to identify promising uses of technology in the anti-trafficking field, harnessing the expertise and resources of member companies to advance and scale the work of organizations deploying technology that assists victims, law enforcement, business, and civil society.

For nine months, selected organizations work with member companies—Amazon, BT, Microsoft, and Salesforce—to advance and scale their technology solutions. The rigorous selection process evaluates the impact, scalability, sustainability, interoperability, and effectiveness of the participants’ initiatives and brings them in to help address key technological challenges or barriers that may prevent them from scaling their work efficiently and effectively.  

Looking Back: The Success of the First Accelerator Program

The 2021 program comes on the heels of the inaugural Accelerator with the Counter Trafficking Data Collaborative (CTDC), completed in 2020. Together, CTDC and the Tech Against Trafficking members:

1. Developed a new, innovative privacy-preserving solution that allows for access to more data, more accurate data, and the means to analyze it more deeply than otherwise possible without compromising confidentiality;
2. Addressed data inconsistencies across the field through a new data standard for human trafficking and accompanying guidance for the implementation of the standard. 

Looking Ahead: Introducing the 2021 Accelerator Cohort

The Tech Against Trafficking selection process for the 2021 cohort sought to build on our initial investment in privacy-preserving mechanisms and best practices related to data standardization by identifying anti-trafficking organizations that can leverage these advancements in pursuit of their unique objectives. Seattle Against Slavery and Unseen UK were chosen in part for their ability to meet this criterion, in addition to bringing new opportunities related to the use of technology to combat trafficking that can benefit the anti-trafficking field as a whole. 

Over the course of the second Accelerator, Seattle Against Slavery, Unseen UK, and Tech Against Trafficking members and advisors will work with participating organizations on a number of different focus areas, ranging from the optimization of data infrastructure systems to the evaluation and innovation of sustainable business models for technology products and platforms.

Seattle Against Slavery is an organization dedicated to combatting labor and sex trafficking through education, technology, and justice and accountability among men. They’ve built Freedom Signal, an online platform to help advocates develop ongoing relationships with potential victims of online sex trafficking or sexual exploitation through texting. With an ever-increasing number of victims identified and supported, Seattle Against Slavery has demonstrated impressive reach and impact. Seattle Against Slavery will be focusing on both technical and organizational workstreams during the accelerator. 

Liz Rush, Director of Technology at Seattle Against Slavery, said: 

“Through helping us tackle some of the biggest and most challenging questions in the anti-trafficking technology world, the Tech Against Trafficking Accelerator has our organization energized to develop new solutions and partnerships to address online commercial sexual exploitation.”

Unseen UK is an organization dedicated to eradicating modern slavery. It runs the Modern Slavery & Exploitation Helpline and Resource Centre as well as the Unseen App, both of which provide victims and the public with access to information and support on issues related to human trafficking and exploitation on a 24/7 basis. Over the course of the Accelerator, Unseen will work with Tech Against Trafficking member companies to develop a technology roadmap for translating data collected from the helpline into actionable trends and insights that will benefit the entire anti-trafficking space.

Justine Currell, Executive Director at Unseen UK, explained: 

 “We are delighted to have been chosen as one of the partners to benefit from the experience, tools, and skills afforded through Tech Against Trafficking. Developing our technological capabilities to better educate the public, law enforcement, and businesses—and reach more potential victims to get them the help they need through the Modern Slavery & Exploitation Helpline—is invaluable.

Technology is the key to providing enhanced services to potential victims, understanding emerging trends and links between cases, and maximizing the data collated through the Helpline to raise awareness of risk areas and inform prevention activities. We are extremely excited to see the real difference we can make to those who are being abused and exploited through our collaboration with Tech Against Trafficking’s Accelerator Program.”

Tech Against Trafficking looks forward to sharing the outcomes of the Accelerator with the broader anti-trafficking community in Spring 2022. To be the first to hear about the outcomes of this initiative and future opportunities, contact us.

Blog | Tuesday June 29, 2021

The Corporate Rainbow: Going beyond Pride Celebrations and Creating Lasting Impact

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I can recall the first time I emerged from the Castro MUNI tunnels in awe, staring up at the biggest rainbow flag I had ever seen. I wore a rainbow bracelet, had hung up a rainbow flag on my bedroom wall, and loved seeing the array of colors in every shop window as I strolled through downtown San Francisco in June. The rainbow had become symbolic to my challenges with coming out and getting comfortable with my identity as a lesbian. I felt accepted by the increasing visibility in my environment.

Today, after a decade of corporate Pride campaigns consisting of rainbow logos featured on social media, parade floats, and banners as well as endless rainbow merch, I find myself needing to see more. I, and the queer community at large, urge companies to support Pride in ways that deliver long-lasting impact for members of society who are still facing social and political inequity and denied basic human rights.

In the last few years, companies have been criticized for both performative allyship and rainbow-washing:

• Performative allyship is a form of action appearing to promote change but that, in reality, raises little to no impact and maintains the status quo. It is usually acted out by people who have privilege and power and serves as a way to minimize scrutiny and garner approval.
• Rainbow-washing is a form of performative allyship. It provides optics that suggest allyship, but there is no substantive action behind the visual cues. It serves as a way to co-opt and commodify movement.

These themes are especially relevant to the latest criticism facing companies in the U.S. For example, companies are being challenged for celebrating Pride while also donating to politicians and political candidates who sponsor discriminatory anti-transgender legislation. According to data highlighted by PBS, 2021 has set a record in anti-trans bills in America. With this growth in oppression, allies and advocates—as individuals and companies—can show solidarity and advocacy in combatting increasing transphobia in society, socially and politically.

Pride is not important just because we want to celebrate our right to love and be ourselves—it exists so that we remember the continued sacrifice of surviving in a world that has been systemically and socially structured to repress our identities.

How Companies Can Combat Performative Allyship and Rainbow-Washing

To fully support the LGBTIQ+ community in ways that create long-lasting impact, companies can take several actions across the business:

• Ask yourself questions to recognize when a Pride campaign lacks impact. What is the transformative impact you seek to have within the LGBTIQ+ community? How can you be inclusive of stakeholders with lived experience? Beyond Pride month, how can you integrate this into regular business operations and culture?
• Share resources for allyship and advocacy with your employees internally. Check out this Human Rights Campaign allyship toolkit as a start.
• Celebrate intersectionality in the LGBTIQ+ community. Use the Progress Pride Flag in your graphics and highlight the history of the Black trans women and other LGBTIQ+ people of color who have been instrumental in the progress of Pride celebrations.
• Invest in your LGBTIQ+ employee resource groups. Provide resources and development opportunities for employees to raise their voices and set up a rewards system for those leading LGBTIQ+ projects in addition to their existing workloads.
• Select LGBTIQ+ suppliers for your Pride campaigns and celebrations and include them as part of your corporate diversity supplier program.
• Address LGBTIQ+ discrimination in countries outside the U.S. by partnering with global civil society organizations and local community NGOs, such as the LGBTIQ+ Workplace Equality Index in India partnership or the Tent Partnership for Refugees.
• Use your influence to combat discrimination in political actions, such as through supporting the passage of the Equality Act, and by incorporating diversity, equity, and inclusion work into corporate political spending.

To be clear, I admire the progress in visibility and LGBTIQ+ support that multinational companies and small businesses have made. I appreciate the Pride flags in the windows, the advertisements that include non-heterosexual couples and non-binary individuals, and portions of proceeds that are donated to LGBTIQ+ nonprofits.

However, visibility does not mean inclusion. Pride is not important just because we want to celebrate our right to love and be ourselves—it exists so that we remember the continued sacrifice of surviving in a world that has been systemically and socially structured to repress our identities.

We celebrate Pride because children are still growing up thinking they do not belong in this world, resulting in deep trauma and violence. We need to keep pushing progress forward. Companies participating in Pride cannot celebrate without also helping the LGBTIQ+ community thrive in a world that has historically—to this day—oppressed our human rights. Rather, they have a powerful opportunity to act, enable, and influence to champion LGBTIQ+ rights and generate lasting impact.

Blog | Thursday June 24, 2021

Inside BSR: Q&A with Cameron Steagall

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Inside BSR is our monthly series featuring BSR team members from around the world. This month, we connected with Cameron Steagall, who recently joined BSR’s Transport and Green Freight team as an Associate.

Cameron chatted with us about how public relations brought him to climate work, his passion for the Earth and its people, and why taking on additional projects in LGBTIQ+ rights and diversity, equity, and inclusion (DEI) is important to him.

Tell us a bit about your background. Where are you from, where are you based, and how have you been dealing with working from home?

I grew up in Raleigh, North Carolina—where I also recently returned to during COVID. While it’s a bit far from the New York City office, I’m grateful for the situation because my parents have needed some extra support during the pandemic, and it allowed me to step in to help them out.

I’ve always had jobs that allowed me to work from home a decent amount, so the transition has felt natural for me. I’m also happy that I can spend extra time with family and my dog. 

How did you get into sustainable business, and what made you decide to apply to BSR? Talk to us about your new role here.

While I originally moved to New York to pursue a career in journalism, it soon evolved into public relations work. That experience exposed me to multiple environmental organizations and gave me the opportunity to work directly with sustainable food companies—it was then that I realized my environmental passion could actually turn into a career. That’s why I decided to apply to Middlebury for my M.A. in International Environmental Policy. 

I first heard about BSR during school and was immediately interested. It felt like the perfect place for me to leverage my private sector background with my environmental degree. Working at a mission-driven organization was an imperative; I need to feel like I am doing work that matters in the world and with an organization that won’t sacrifice values for profit. I was lucky to find that in BSR. 

I joined BSR with a background in the maritime sector, climate adaptation, and climate justice, which allowed me to quickly jump into the Transport and Green Freight team to help lead two of our collaborative initiatives: the Clean Cargo Working Group and the Sustainable Air Freight Alliance (SAFA). This role has been exciting for me because I get to collaborate directly with members, work on one of the most difficult-to-decarbonize sectors, and ultimately learn directly from the companies.

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

I really love working on Clean Cargo and SAFA because, beyond everything I get to learn, I feel a sense of commitment and dedication to the long-term work. I have also had great experiences on projects where I have been asked to leverage my experience and expertise on port sustainability, low- and zero-emission fuels, DEI, and climate justice.

Recently, I had an opportunity to work with a BSR member to help them better understand the ramifications on LGBTIQ+ staff should they expand into countries that still criminalize same-sex or non-traditional relationships. As an openly gay man, it’s important for me to be able to share my knowledge, lived experience, and passion for equality with others who want to learn and take steps toward inclusion and equity. 

My favorite thing about working at BSR is that I feel that I am asked to take on completely different types of projects like LGBTIQ+ rights, climate justice, and transportation sector decarbonization, and still have space to explore other interests.  

What issues are you passionate about and why? What do you hope to do and learn while at BSR?

I have always felt a connection with the Earth, which makes me passionate about preserving biodiversity, product circularity, decarbonization, and DEI. One of the main reasons I joined BSR, aside from the development of more climate justice work, is the increased focus on DEI efforts internally. We, like many organizations, have a long way to go, but working with others who share my vision and mission for a better, more sustainable, and more equitable future is imperative for me to find happiness in a career. 

There are certain things we cannot compromise on, such as equal rights and equity for all people and protecting our planet for future generations, and I’m grateful to be surrounded by people at BSR who feel similarly.

My one hope for working at BSR is that I will continue to pursue my passion, make a difference, and never stop learning. There are so many problems that seem insurmountable today, but I know with the help of so many passionate experts, we can change the world for the better.

2020 was undoubtedly a difficult year. What brought you joy amid lockdowns?

2020 was a difficult year for me. I was living in California for school and had to graduate over Zoom, enter the job market when nearly every company was downsizing or in a hiring freeze, move home to my parents’ house in North Carolina, and, of course, deal with a pandemic.

However, I found happiness in adopting my dog (the very cute and cuddly Staffy), spending time with family after a decade of living out-of-state, and trying new hobbies like surfing, starting a business, and cooking.

Ultimately, I’ve learned to be more grateful overall, but especially about the fact that I was able to try new things and find a work-life balance that I don’t think I would have found living in a big city and working in the office every day.

Blog | Tuesday June 22, 2021

UNGPs’ 10th Anniversary: The Next Decade of Business and Human Rights

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This June 2021, we mark the 10th anniversary of the UN Guiding Principles for Business and Human Rights (UNGPs). Unanimously endorsed by the UN Human Rights Commission in 2011, the UNGPs have become the universal standard guiding business responsibility to respect human rights.

At BSR, we have seen tremendous progress over the past decade as we have worked with businesses to align their policies and practices with the UNGPs. The broad consensus around the UNGPs has given companies across sectors—and their partners in government and civil society—a shared roadmap for respecting human rights and has driven the development of corporate commitments, policies, and procedures to better prevent and mitigate harm due to business activity.

Our work is far from over, however.

Corporate commitment and process has not always translated into impact in real life, and we continue to see headlines associating companies with human rights abuses through their operations, sourcing, and sales.

Why is this? In part, this is due to the gap between commitment and implementation—the ongoing need to better resource and more meaningfully embed efforts to avoid, prevent, mitigate, and remedy human rights violations across corporate functions.

But this is also due to the scale and complexity of the great challenges of our time—climate change, rising inequality, persistent marginalization of women and people of color, and growing geopolitical tensions, to name just a few. These challenges exacerbate the risk that business activity will be involved with harm.

How can we close the gap between aspiration and impact? Throughout 2021, to mark the 10th anniversary of the UNGPs, BSR is reflecting on what additional action business and other actors can take to shape a future where human rights are realized in law and in practice. In the coming months, we will publish deep dives into emerging issues and evolving approaches that will shape the next decade of business and human rights, including:

1. The Shared Opportunity to Promote Human Rights: Based on the premise that the absence of action to promote human rights presents severe risks to their fulfillment, our first paper draws upon BSR experience over the past decade to propose a framework for the shared promotion of human rights.
2. Downstream Human Rights Due Diligence: This primer provides a practical overview of human rights due diligence of products and services.
3. Climate Change and Human Rights: This paper explores the anticipated linkages between climate change and adverse human rights impacts, as well as mitigating measures that companies can take to prevent harm.
4. Business in High-Risk Contexts: Building on the UN report on business, human rights, and conflict, this issue brief lays out practical steps companies can take to conduct enhanced human rights due diligence in conflict-affected and high-risk areas.
5. Access to Remedy: Delving into the oft-neglected third pillar of the UNGPs, this issue brief explores challenges as well as best practices in providing remedy for human rights harms.
6. Human Rights Assessment: Drawing on over 25 years of experience, this paper lays out BSR’s synthesized learning and refreshed approach to conducting decision-useful human rights assessments for companies.

In a world facing increased climate impacts, rapidly changing technologies, and shifting geopolitics, resilient business strategies are critical to business success. By embedding human rights approaches across business, sales, and supply chain operations, companies can not only build resilience but help to create a more just, sustainable world. Join us as we explore what this means for business in this decisive decade.

Reports | Tuesday June 22, 2021

The Shared Opportunity to Promote: A Second-Decade Priority for the UNGPs

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Introduction

The UN Human Rights Council endorsed the UN Guiding Principles on Business and Human Rights (UNGPs) 10 years ago. Since then, the UNGPs have been used by a growing number of global companies, integrated into the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises, and referred to by governments, investors, and civil society organizations everywhere.

At BSR, we have learned a great deal by helping companies implement the UNGPs in practice. Our methods have evolved with each company engagement, and we have been struck by how often referring to the precise text of the UNGPs helps identify how we may improve our approaches for the next project. Ten years later, we are still learning, and that is a testament to the richness of the UNGPs.

The three UNGP pillars of “state duty to protect,” “corporate responsibility to respect,” and “access to remedy” have provided much-needed clarity for our work with companies, providing clear direction for company action to address adverse human rights impacts.

However, we believe that a step change in the interpretation of these three pillars is needed to more effectively prevent human rights violations associated with business activities and secure the wider enjoyment of human rights.

Specifically, we believe that the business and human rights field will benefit from a framework for the enjoyment, realization, and fulfillment of human rights—a shared opportunity to promote human rights—that moves beyond a perception that the UNGPs’ three pillars are solely about avoiding harm.

Based on the premise that the absence of action to promote human rights presents very severe risks to their fulfillment, this paper draws upon BSR experience over the past decade to propose a framework for the shared promotion of human rights.

We view the promotion of human rights to be a key part of fulfilling the corporate responsibility to respect human rights.

Reports | Tuesday June 22, 2021

The Next Decade of Business and Human Rights

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This June 2021, we mark the 10th anniversary of the UN Guiding Principles for Business and Human Rights (UNGPs)

For 25 years, BSR has been at the forefront of helping companies turn human rights principles into practice, undertaking over 150 human rights assessments across all industries. And we have seen tremendous progress over the past decade as we have worked with business to align their policies and practices with the UNGPs.

As we enter the Decisive Decade, where the public and private sectors alike must act with urgency to achieve the SDGs and the Paris Agreement targets, we also see an opportunity to strengthen respect for and protection of human rights.

Throughout 2021, to mark the 10th anniversary of the UNGPs, BSR is reflecting on what additional action business can take to shape a rights-respecting future.

In the coming months, we will publish deep dives into two emerging issues and four evolving approaches that will shape the next decade of business and human rights.

In a world facing increased climate impacts, rapidly changing technologies, and shifting geopolitics, resilient business strategies are critical to business success. By embedding human rights approaches across business and supply chain operations, companies can not only build resilience but help to create a more just, sustainable world.

Explore these topics below.

Blog | Monday June 21, 2021

Five Considerations for Companies Setting up Digital Ethics Advisory Boards

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How can artificial intelligence (AI) expediate research and drug discovery without leaving out key demographics? What are the potentially negative impacts of new technology that helps individuals match makeup to their skin tone or that helps forecast demand for the newest clothing line? Does the use of AI systems for employee recruitment and hiring bring more harm than benefit?

As digital transformation accelerates, companies are questioning how to maximize the benefits and address the risks of innovation.

A well-established governance mechanism can help them manage ethical challenges that arise with the use of digital technologies.

What Does Digital Ethics Governance Look Like?

BSR works with companies across industries to surface best practices on the governance of digital ethics. Typically, following the creation of guiding principles and standards, companies build governance structures that guide decision-making and oversee the implementation of principles into practice.

The creation of such governance structures often includes establishing expert working groups, or advisory boards, to advise on these new and emerging topics. These boards can take the shape of an internal committee, an external advisory panel, or a hybrid structure that includes employees (team leads and internal experts) as well as subject matter experts from outside the company. They are often intended to bring in diverse perspectives and create the space for debate and informed decision-making.

Examples include Microsoft’s Aether Committee, Twitter’s Trust and Safety Council, and Merck KGaA’s Digital Ethics Board. Although not directly focused on digital ethics, the Novartis Independent Bioethics Advisory Board and the Recruit Holdings Sustainability Committee also offer best practices on how companies can feed external guidance and insights into company processes.

Five Considerations for Establishing Digital Ethics Advisory Boards

There are five considerations for companies setting up advisory boards for digital ethics. These high-level considerations apply to all kinds of advisory boards; however, they are particularly relevant for the new and evolving field of digital ethics.

1. Decide whether an internal, external, or hybrid board will be most effective. 

This decision will depend on the specific needs of the company. An external board increases the range of perspectives and the credibility of company decisions and actions, while internal representation can help strengthen buy-in and the integration of issues across teams. Some companies have built hybrid boards, where a set group of internal participants are accompanied by external experts as needed.

Companies with less internal expertise on these issues may also choose to consult with independent bodies, such as The World Federation of Advertisers' (WFA) Data Ethics Board and the AI Research Review Committee by the Future of Privacy Forum.

2. Include diverse voices on the board. 

Boards facilitate engagement with external stakeholders. Companies should pay special attention to including the voices of vulnerable populations that may be affected through the company’s use of technology. For digital ethics boards specifically, it is also important to have the right level of technical, social, and industry expertise.

However, companies must also strike the right size; a board that is too big can be unwieldy. Instead of striving to create a board that includes all backgrounds, companies can create a structure that allows for flexibility to bring in external experts and stakeholders as needed. For example, Twitter has formed smaller Advisory Groups under its Trust and Safety Council to enable a more nimble engagement process with external experts.

3. Create an environment that allows different rightsholders to participate. 

An important factor to consider here is compensation. Compensating external members of the board allows for the participation of individuals, particularly those from underrepresented populations, who might not otherwise be able to do so. In our experience, we have not seen that compensating members of a board leads to conflict of interest or reduces the quality of outcomes.

4. Establish a team responsible for facilitating engagement with the board.

One of the most helpful “process” steps is establishing an internal lead, or working group, to manage the relationship with the board and assist with the dissemination and implementation of the board’s guidance. The working group can help solicit, manage, and coordinate with teams across the company who surface technology use cases for review or who would like to engage with the board on specific questions and topics.

5. Complement top-down governance structures with bottom-up approaches. 

Advisory boards can be immensely helpful in the management of digital ethics at a company. However, raising internal awareness around these systems and integrating them across the organization is equally important.

Ultimately, many of the decisions concerning digital ethics are made by engineers, product teams, or sales teams on the frontlines of technology development and deployment. Companies should make sure that all teams understand how the guiding principles translate to their day-to-day jobs, and there should be a clear process for employees to surface digital ethics challenges up to the advisory board.

Creative examples we have seen include H&M’s Ethical AI Debate Club that helps make AI ethics top of mind for employees, and Microsoft’s AI Champs program, where Responsible AI Champs throughout the company help roll out Microsoft’s AI Principles and train their teams to recognize and raise ethical challenges.

Maximizing the opportunities and addressing the risks of digital technology innovation requires companies to proactively set up structures and processes that can help address ethical challenges and dilemmas as they emerge. Well-established governance mechanisms can help companies identify and tackle risks early on and focus on the positive impacts the technology offers. 

To further discuss operationalizing digital ethics principles and processes, get in touch with us.

Blog | Thursday June 17, 2021

The Case for SEC-Mandated Climate and ESG Disclosure

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The landscape shaping reporting and disclosure on ESG issues is changing quickly. After three decades of experimentation with voluntary frameworks, a fragmented environment is limiting the impact of reporting and creating undue confusion and cost on the part of reporters. In addition, the regulatory framework has not yet fully embraced the notion that ESG matters should be embedded into legal requirements.

We have a historic opportunity to accelerate progress toward a strengthened and more unified approach, one that aligns incentives and rewards companies investing in business transformation which can help to create a more just and sustainable world. This is why BSR strongly supports the SEC’s interest in taking steps to require climate disclosure and, ideally, ESG matters more broadly. 

Last week, we submitted our response to the SEC Consultation. We believe that the SEC should enable crucial steps to provide consistent, comparable, and reliable information that will strengthen investors’ ability to make decisions considering all relevant information, provide incentives for business to generate long-term value, and lead to a market economy that delivers on society’s greatest needs. 

Within our response to the SEC, we encouraged the Commission to adopt the following approach:

1. While the urgency of climate disclosure is obvious, the SEC should require disclosure across other material ESG issues too.

The Commission should prepare a holistic approach to ESG disclosure that encompasses topics such as human capital development environmental issues apart from climate change; diversity, equity, and inclusion; and governance of ESG matters. We believe that a comprehensive ESG disclosure standard will best serve business, investors, and society and is already in high demand from investors.

Comprehensive disclosure is badly needed to create an integrated framework rather than a piecemeal approach that risks creating multiple reporting requirements. No responsible company today reports only on climate, and the SEC should take an approach that reflects that reality.

2. Existing reporting frameworks and standards, such as the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD), and the Global Reporting Initiative (GRI), all provide logical starting places upon which to build.

The fragmentation between reporting standards, differing by jurisdiction, company, and issue, hinders improved performance on sustainability and decreases comparability across reports. Though the current reporting landscape is fragmented, each standard provides a strong foundation for sustainability disclosure. We believe the SEC should utilize existing standards as a baseline to create new mandatory climate/ESG disclosures. Not only will this ease reporting practitioners’ burdens to comply with another new disclosure, but these have also been well consulted and provide widely accepted metrics and disclosure requirements.

Climate change provides but one example of how the SEC can build on existing reporting frameworks and standards. For example, for climate disclosure the SEC should consider a two-part model with (1) climate disclosure requirements for all companies based on the TCFD guidelines (recommended for adoption by the G7 as of this month) and (2) industry-specific disclosures that utilize the SASB standards and metrics.

3. SEC efforts to mandate climate/ESG disclosure should respect the need for reporting harmonization at the global level.

Companies and investors alike would benefit from a harmonized global approach to sustainability reporting. Jurisdiction-specific requirements (such as those being proposed by the EU and the SEC) need to be consistent with international sustainability accounting standards and with each other. Furthermore, in order to be flexible on important emerging issues, the disclosure standard should be updated and augmented over time to keep pace with emerging issues and our changing world. We encourage the SEC to collaborate with other jurisdictions (most notably the EU) and standard-setting organizations playing a leading role in the harmonization process (most notably the International Financial Reporting Standards Foundation). We also encourage the SEC to work with these institutions to adopt interoperable and globally consistent standards.

4. Strategic and forward-looking.

Investors benefit from having access to a forward-looking mix of qualitative and quantitative information, and the SEC’s approach will be strongest if it takes this into account. For climate disclosure specifically, we believe it is important for companies to disclose key features of rigorous forward-looking climate change scenarios, as recommended by the TCFD. This should be accompanied by core quantitative information, specifically scopes 1, 2, and 3 emissions and associated science-based reduction targets.

5. ESG information should be held to a high level of rigor, recognizing the distinctive nature of certain forms of information.

For this reason, BSR believes that certain core ESG and climate disclosures regulated by the SEC (e.g., for climate specifically: scopes 1, 2, and 3 emissions as well as approaches to climate change governance, strategy, risk management, and metrics and targets) should be provided within a company’s annual Form 10-K. To this end, we also support the requirement of issuers to utilize a third-party assurance provider to ensure quality of disclosure.

However, we also note (1) that investors benefit from disclosures made by companies regardless of the location, (2) that some ESG and climate disclosures do not yet have the level of rigor that merit inclusion in the Form 10-K or are available on different timeframes, and (3) that some companies may take a minimalist and “compliance only” approach for Form 10-K disclosure. Thus, we believe that some ESG and climate disclosures can be “furnished to” the SEC via Form 8-K rather than “filed with.”

To conclude, BSR believes that SEC-mandated ESG reporting will not only help to create consistent, reliable, and comparable disclosures, but it will play an essential role in the creation of the resilient business strategies needed to support a just and sustainable future. We are looking forward to continuing to engage and comment on this issue and discuss the issue in our Future of Reporting collaborative initiative. We encourage all companies to engage with the SEC on this historic opportunity.