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Blog | Wednesday April 8, 2020

Resilient Business Strategies: The Road to Recovery Based on Sustainability Principles

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Resilience is having its moment, as the world reels from the massive health and economic impact of the coronavirus. The concept has suddenly gone from overlooked buzzword to urgent objective.

In fact, the importance of resilience was understood even before this pandemic. Speaking at Wharton earlier this year, before the impact of the coronavirus was widely felt, Mohammed el-Erian, chief economic advisor at Allianz and former CEO of PIMCO, said: “The world in which you’re living in is fluid, unpredictable, less stable. The dramatic shift...is part of a bigger reality that speaks to continuing fluidity, more unthinkables becoming reality, and trickier decision-making challenges.”

Resilience, he said, was the objective to aim for in such an environment.

In early 2018, we wrote that “integrating sustainability into business” was no longer fit for purpose. Instead, we advised that resilient business strategies should be the objective for every business and that topics and processes traditionally understood as being part of the sustainability agenda were a central part of that vision.

The era of stand-alone sustainability strategies, with subsequent integration of sustainability into company strategy, needs to end; the creation of resilient business strategies that take sustainability as their foundation needs to begin.

In the wake of the pandemic, we are calling for business to “meet the moment and build the future.” In doing so, resilient business strategies will be fundamentally important to business success as well as economic and social recovery.

The road to resilience relies heavily on sustainability principles, and the following will be even more important coming out of this crisis than they were coming in:

• Apply Futures Thinking: It is impossible to create a resilient business without understanding the range of possible futures a company might face. The contrast in outcomes between South Korea (which conducted a pandemic scenario exercise last fall) and the U.S. vividly illustrates how acting quickly and decisively can mean the difference between manageable disruption on one hand and a health and economic cataclysm on the other. BSR created its Sustainable Futures Lab to strengthen our efforts and help our member companies understand the intersection of various possible futures and fundamentally important sustainability challenges, from climate to circular economy. Organizations that take seriously and develop plans anticipating a variety of potential scenarios are far better prepared to act quickly and decisively when “normal” shifts overnight. This principle has been enshrined in the Task Force on Climate-Related Financial Disclosures (TCFD), and its value extends far beyond climate. Understanding and preparing for a range of scenarios has value on multiple topics and provides an essential “stress test” for business strategy.
• Rethink Economic Value and Optimization:  Our measures of economic value do both business and society a disservice. We will produce more resilient companies and economies through three main steps. First, it is time to relegate the concept of “externalities” to the dustbin of history and embrace measurement of so-called intangible assets—social capital, natural capital, human capital, reputation—more fully. Second, we need to abandon optimization as the default approach to decision-making. We have removed slack in everything, from supply chains to public health systems to airline schedules; and we are now living with the harsh reality of why that can be self-defeating. Strategic efficiency is a core value of business; relentless optimization of everything is not. Finally, this crisis should lead to changes in capital markets that sound the death knell for short-term shareholder value in favor of long-term value creation for all stakeholders. 

Business cannot thrive in a society that is failing....The pandemic is an extreme test for the social safety net, but we know that there were significant stresses before it hit. 

• Embrace Diverse Perspectives: Groupthink is no way to achieve resilience. Resilience starts in the boardroom, and that will happen only if diversity—including of experience and perspective—is present to deliver the lateral thinking which strengthens an organization’s ability to identify and prepare for shocks to the business. External advisory boards, which are often freer to forecast and consider the unexpected, are another tool that can help ensure that companies identify and prepare for change. Decision-making is also strengthened by more systematic listening to stakeholders, employees, and customers, who will challenge inflexible mindsets to the benefit of the decision makers.
• Redefine the Social Contract: Many have said—correctly—that business cannot thrive in a society that is failing. Today, the social contract has proven inadequate in many countries in no small part because public services have not been resourced properly: the social and work arrangements present when our current social contract were developed are no longer in place, and new challenges—namely the transition to a digital, net-zero carbon economy—need to be tackled. The pandemic is an extreme test for the social safety net, but we know that there were significant stresses before it hit. We were already well aware of the need to redefine the future of work, address the needs of contingent and other workers previously seen as “disposable,” improve skill development, and to address educational needs in a modern context. Business, as we articulated in this discussion paper BSR developed last year, has both key assets and responsibilities to bring to this essential challenge, working in partnership with government, civil society, and others.

There is little doubt that business and other sectors will make significant changes to their objectives, processes, thinking, and measurement of value as the economy—and public health—recover. The core of business, including strategy, capital allocation, public policies and market rules, and employee relations will be remade in the wake of the crisis. Investors will want to know whether a company can prove to be resilient. No business strategy can possibly succeed if it doesn’t take account of the impacts of the climate crisis, supply chains subject to rapid disruption, and fast-changing political environments. The year 2020 has proved that resilience will be how every business strategy, CEO, and Board will be judged.

The world is learning a painful lesson about the damage that can come from a lack of resilience. Epochal events on the scale of the pandemic always bring structural changes in their wake. If we prioritize resilience, we can not only meet the moment, but also build a better future.

Blog | Monday April 6, 2020

How Sustainability Teams Can Meet the Moment

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It’s still too early to know the full human and economic impact of the COVID-19 pandemic, and our attention today is rightfully on caring for the sick, protecting the vulnerable, and preventing the disease’s continued spread.

The global business community is responding to the pandemic in real time, providing support for their staff, their suppliers, their contractors, their customers, and their communities. As an example, Just Capital is tracking responses from U.S. businesses.  

But eventually, we will need to begin to ponder the question: how will we rebuild once the crisis has passed? And how can we rebuild in a way that enables our systems to be more resilient, and just, in the future? We have learned not only that change is necessary, but that it is possible, and this will have an impact on every aspect of society: from global supply chains to community health programs to the very nature of work, policy, education, and everything in between.

The questions that I’m getting from BSR member companies today fall in between what’s the best immediate response and how do we drive systemic change. What do I do right now? How do I maintain my company’s commitment to our sustainability priorities? Will I lose executive attention or budget? How do I maintain momentum in such a volatile environment?

There is certainly no one-size-fits-all answer to these questions. That said, I have found that times of crises don’t change as much as they reveal the state of sustainability inside a business. For companies in which sustainability was already sidelined or was created mainly for public relations purposes without much real business integration, we can expect to see those commitments waver.

But for companies which are focused on material sustainability issues—those issues are only going to be more relevant moving forward. This is the time to pull out that materiality matrix—remember the specific ways that certain issues directly impact your business success and focus your efforts there. If you have integrated sustainability well, the case for a resilient strategy is being made for you. Today’s crisis is the pandemic, but tomorrow’s may be due to climate change, and sustainability teams can drive that connection and the strategies needed to prepare companies to succeed.

Stakeholder expectations for businesses don’t disappear when things get hard—and stakeholders will remember which companies step up in times of crises and which don’t. 

Crises also breed innovation and emphasize the need for collaboration. Sustainability teams benefit from both. So, if you were struggling to get your company to pursue an industry solution or to completely change how a certain process is done, now is your time. Sustainability professionals will be leading experts inside their businesses to help navigate unexpected challenges and to drive the important changes needed in our global systems.

Our 2018 report Redefining Sustainable Business: Management for a Rapidly Changing World stated that the sustainability function should reimagine its role in four key ways that seem even more true today.

 

• Value Creators: Identify opportunities to create business value and play a catalytic role in generating such opportunities.
• Change Agents: Enhance and leverage organizational change and influence skills
• Coalition Builders: Seek traction in the areas where the company has the most advanced and innovative thinking and adopt a more structured way of thinking about sustainability’s place in the organization.
• Futurists: Identify long-term sustainability factors that drive risk and generate value; engage with the uncertainty, complexity, and volatility of how consumers, policy makers, and other key stakeholders respond to these long-term sustainability factors.

Sustainability functions would be well-served to think about these four roles and to more formally and informally embed them inside their organizational structures.

Finally, stakeholder expectations for businesses don’t disappear when things get hard—and stakeholders will remember which companies step up in times of crises and which don’t. 

And the parallels to a previous crisis are also becoming all too clear. I still have investors or NGOs bring up examples of which banks handled the 2008 financial crisis in a way that reinforced their ethics and integrity and which did not. We’ve already seen NGOs call for companies to be responsible for the impacts in their extended value chains, such as for displaced garment workers.  Employees at Amazon and GE have already walked out, either to protest how employees are treated or to demand that their company become part of the solution by making ventilators.

The year 2020 began with increasing expectations from investors about sustainability and long-term value, and in a time of general market volatility, it will be even more obvious to investors, customers, and employees which companies are well-positioned for the long-term. This is the role of the sustainability team, and this is your moment.

Reports | Thursday April 2, 2020

Climate Action in the Value Chain: Reducing Scope 3 Emissions and Achieving Science-Based Targets

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Business has a vital role to play in the effort to limit global warming to 1.5°C in line with the Paris Agreement targets—and ambition is rising. To date, over 800 companies have committed to setting science-based targets (SBTs) to reduce their greenhouse gas (GHG) emissions in line with climate science.

Achieving such goals requires companies to identify their most significant emissions reduction leverages, including those found throughout their value chains. Most companies pursuing science-based targets have a good understanding of their Scope 1 emissions, generated by their own operations, as well as their Scope 2 emissions, generated from the energy sources that power their operations. Yet according to CDP, a company’s supply chain emissions are on average 5.5 times larger than its Scope 1 and 2 emissions. While some companies have begun piloting projects to reduce Scope 3 emissions, action in this area remains fragmented and limited. 

A new approach for tackling Scope 3 emissions is needed. In this paper, BSR presents our three-step approach that can serve as a roadmap for business, providing a way into the topic for companies at the beginning of their journey and guidance for companies already taking action to scale their efforts. We recommend business to take the following approach:

• Map the value chain to locate the greatest GHG reduction potential. To do so, companies can adopt a “reverse sourcing” approach—rather than moving down the value chain by first engaging Tier 1 Suppliers, companies need to assess their entire value chain to identify where the most potential for emissions reductions lies.
• Demonstrate emission reductions through pilot projects. Pilot projects allow companies to determine the best structure for a project and to demonstrate the opportunity to achieve GHG reductions at scale in the value chain. Pilots will provide learnings that set the company up for large scale deployment and greater industry collaboration.
• Scale up and engage value chain partners and peers. To effectively achieve their Scope 3 targets, businesses will need to widen the scope of collaboration with value chain players and peers and ensure that the right internal processes, such as procurement and marketing, are in place to shift the value chain.

Blog | Wednesday April 1, 2020

The Urgency of a New Social Contract

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The COVID-19 crisis makes one thing abundantly clear: the social contract between government, business, employees, and people is not working as it should.   

In the United States, the crisis we are experiencing has laid bare the failure of the current social contract in many ways: the lack of access to healthcare owing to the tying of health insurance to paid employment; the extreme vulnerability of gig-economy workers to a sudden downturn of business; and for many workers, the absence of paid sick leave, inadequate childcare, and insufficient unemployment insurance.  

The social contract was not fit for purpose before the COVID-19 pandemic struck, but these and many other shortcomings have now been revealed in the most human, tragic, and devastating ways.   

During this public health and economic emergency, the attention of business and government is understandably on near-term priorities, like maintaining employment, providing sick leave for those who need it, helping with short-term financial needs, and supporting the immediate needs of our healthcare system. 

But let’s not kid ourselves. These are not sustainable solutions. 

In due course, we will need to turn our attention to modernizing our social contract for the 21st century—a social contract that allows the overall economy to thrive by enabling everyone to participate in, and benefit from, economic activity. 

The social contract was not fit for purpose before the COVID-19 pandemic struck, but these and many other shortcomings have now been revealed in the most human, tragic, and devastating ways.   

But what does “modernizing the social contract” mean in practice?  

• It means recognizing the fundamental changes in work, technology, demographics and family structures that have occurred since our current models were developed. 
• It means a radical overhaul of the social safety net, including pensions, unemployment insurance and sick leave.  
• It means investment in families, including parental and elder care leave, childcare, and annual leave. 
• It means improved conditions for workers, including predictable schedules, portable benefits, living wages, and flexible working arrangements that benefit businesses and workers alike. 
• It means creating fair tax policies, addressing inequity, enhancing the status of women in the workplace, and providing opportunities for historically marginalized communities. 

And it means investing in our workforce by providing access to education and skills development and enabling people to thrive as automation and the transition to a low-carbon economy take hold. 

Crucially, it also means taking these steps in ways that enable business innovation to flourish.  

The response of many companies to the crisis has been excellent in the near term. Numerous businesses are rising to the occasion by preserving employment, supporting their workers and communities, and calling for government to reinforce the social safety net when it most badly needed.   

But more is needed. At BSR, we want to make sure we build for the future beyond this extraordinary moment, to create and realize a new vision for the shared interests of government, business, employees, and people. We want to make sure that we “build back better” by activating today’s intense focus on the failings of our current social contract and turning it into a movement for long-term change.   

Critically important to achieving this ambition is the fact that the many private and public sector innovations across different social and economic issues and institutions will provide experiments grounded in reality, not theory, and can be built upon to envision, design, and implement new social and economic structures, policies, and programs.   

The social contract is not going to be (and should not be) modernized by business alone. It requires a common effort that brings together companies, government at all levels, worker representatives, and civil society organizations.  

Last year, BSR launched an effort calling for a modernized social contract for the 21st century, and prior to the COVID-19 pandemic, we had plans to engage our member companies during 2020 to advance this effort. However, now is the time to accelerate and increase our ambition.  

For this reason, we’re inviting all our member companies and partners interested in seizing this moment to modernize the social contract to get in touch and co-create a plan of action.  

There are several additional steps that businesses can and should take to remake the social contract once the current crisis passes.   

• Call for wage levels that enable working families to support themselves and that also create a level playing field so that all businesses can compete fairly.  
• Promote portable benefits systems that allow labor market flexibility alongside stability and security for workers. 
• Reinforce pension systems that recognize and are prepared for longer life spans, the decline of defined benefit pensions, and more frequent job changes. 
• Family leave policies that recognize a more diverse set of family structures and the need for both childcare and elder care. 
• Skill development that delivers a thriving economy and access to livelihoods for people who will work longer and need to develop new capabilities as the economy changes. 
• Ensure that the new social contract reflects new factors: the transition to a net zero carbon economy, the need to manage data safely, and the diversity imperative. 

These steps would undoubtedly benefit from a common vision of modern social contracts and a united business voice conveying that vision. We hope that the six principles for 21st-century social contracts that we highlighted earlier can act as a starting point. 

Moreover, the social contract is not going to be (and should not be) modernized by business alone. It requires a common effort that brings together companies, government at all levels, worker representatives, and civil society organizations.  

Times of crisis are very often seen in retrospect as the flowering of innovations that lead to human flourishing in ways we could not have imagined. We are living through an epic historical moment. Let us hope that when history looks back on 2020, the story is one of resilience in the moment and creativity for a better future.  

Blog | Tuesday March 31, 2020

Meet the Moment. Build the Future.

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As the health and economic impacts of the coronavirus pandemic continue to spread, we at BSR are working hard to continue supporting our member companies around the world, along with our many other partners, as you navigate this extraordinary and unprecedented time and contribute to our collective well-being.

From speaking with many of you, we know how challenging it is to manage effectively during this difficult and uncertain period, which poses significant impacts on your businesses, employees, and supply chains. Many of us are also coping with the stress of health impacts on ourselves, our families, and our communities.

This remarkable moment calls on all of us to bring our very best. We are quite literally writing history through countless acts and decisions we make every day.

Our approach at BSR can be summed up in six words: Meet the Moment. Build the Future.

Here’s what we mean by this.

Meet the Moment

It is essential for all of us to adapt sustainability activities to address the profound short-term needs faced by companies, employees, and communities in these challenging times. From speaking with many of you over the past few weeks, we know that you are facing new, unprecedented questions. How do I ensure that we continue with our commitments when our business is in such difficulty, with budgets under intense pressure? What is the right thing to do to support our employees, and those who are employed in our supply chains? How is the economic crisis impacting traditionally marginalized groups, and how can we respond to that? Can we reorient manufacturing to deliver on health care needs? Should we publish our sustainability report at a time when doing so might appear tone deaf?

We have been proud to see so many of you take action to protect employment, help generate badly needed medical equipment, provide capital, and support essential public policy steps to address the health and economic impacts of this pandemic. We are here to help you think through how to respond, to build partnerships, and to amplify your efforts.

Build the Future

As challenging as the day-to-day is right now, this is also a time to think ahead to building a fundamentally different future. For business, this means more emphasis on resilient business strategies, something which we have been discussing with many of you, and is now much more than an abstract concept. Sustainability questions can and should be a core element of such strategies. We also see the rising importance of ensuring societal resilience. This is why business has a strong interest in remaking the social contract to meet 21st-century needs, ensuring economic vitality, stability, and security. We know also that the next challenge to resilience could come from environmental challenges that risk creating serious social disruption and economic loss. The future may not seem relevant right now, but if this episode teaches us anything, it is that change can come more quickly and powerfully than we might think.

BSR’s Efforts

We are here to help you both meet the moment and begin to think about how to build a different future. We know that the pandemic is having a profound impact on your business. We also know that sustainability can be one of the core elements of navigating this crisis while also bolstering your position once the crisis passes. To help you achieve these goals, we are re-orienting some of our activities to help you meet these extraordinary circumstances, while also staying focused on longer-term objectives that remain extremely important, and indeed, could be seen as even more important.

• Communications: We will be producing a series of blogs and webinars to help you understand and discuss the impacts of the pandemic on sustainable business, both overall, and on specific issues like human rights, women’s empowerment, and the impact on ESG investing. In addition, our industry teams are bringing member companies together to share challenges and best practices within their sectors.
• Collaboration: We have shifted many of our collaborative initiatives to virtual formats, and the initial signs are that these are delivering on group objectives well, in some cases with even more participation as virtual models take hold. We are also speaking with many of you on how we can generate new collaborations that meet the moment, whether staying focused on climate action despite turbulent times or designing more resilient supply chains that will be needed once the crisis subsides, and we welcome your inputs on other matters we can help you navigate with peers. We also remain mobilized to support you one-on-one via advisory work.
• 21st-Century Social Contracts: We are accelerating our work on 21st-century social contracts. We welcome your engagement on this crucial issue, and will have content coming in the next two weeks on how business can not only meet short-term needs, but also contribute to more resilient social contracts that enable economic vitality, as well as economic mobility and security in a fast-changing world.
• Emerging Issues/Scenarios: To help you stay focused on the future, we are launching the first in a series of emerging issues briefs in June. This will be delivered by our Sustainable Futures Lab and will be based in part on a virtual salon in late April.

This crisis will pass. Our world, our businesses, and our economies will not look the same in the post-pandemic environment. But our values and objectives will not only endure, they will provide the very basis for seeing us through the crisis. They will also serve as the foundation for structural changes that produce more resilience, more economic fairness, and an ongoing commitment to preserve natural resources.

And these values will guide us as we meet this moment and build the future—together.

Blog | Monday March 30, 2020

COVID-19: A Rapid Human Rights Due Diligence Tool for Companies

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The critical role of business during the time of COVID-19 is clear for everyone to see. Whether it is providing access to accurate information, continuing to pay hourly waged staff, or ensuring continuity of emergency supplies, companies are central to our collective response.

It also seems clear that this role won’t just continue, but it will intensify and become more difficult over time. Companies are going to run low on income, operate with reduced human capacity, and face increasing pressure from governments to assist with emergency COVID-19 efforts.

The severity of the COVID-19 pandemic has reached such a level of imminent threat to public health that restrictions on certain human rights, such as limiting freedom of movement, appear to be justified. A lot has been written about human rights and the role of governments during this time of emergency, such as this analysis from Human Rights Watch on the application of human rights law and this appeal from leading UN human rights experts for states not to abuse emergency measures to suppress human rights.

But this begs a critically important question: what are the key human rights principles for companies to uphold during this public emergency?

While noting that public health may be invoked as grounds for limiting certain human rights, such measures should only be specifically aimed at preventing disease or providing care.

The UN Guiding Principles on Business and Human Rights (UNGPs) expect companies to identify and assess actual or potential adverse human rights impacts and to take appropriate action to address them. Under normal circumstances, companies have weeks, months, or even years to complete this due diligence; not so in the age of COVID-19, when decisions are being made by the hour.

Using the UNGPs and the various human rights principles, standards, and methodologies upon which the UNGPs were built, BSR had previously developed a rapid human rights due diligence tool to help with this rapid decision-making challenge. We’re making this tool publicly available today.

The range of human rights issues at stake today is huge:

• Under what circumstances might a company share personal data with others—such as governments, public health agencies, researchers, or civil society organizations—to support public health efforts?
• In what circumstances—such as the provision of essential products and services—should employees be required to continue working for the public good even though it may adversely impact their own health and safety?
• How should companies act if governments abuse their emergency powers by limiting human rights by more or for longer than is necessary?

The BSR tool guides companies through human rights due diligence in situations when very little time is available. The tool also makes specific reference to the Siracusa Principles, adopted by the UN Economic and Social Council in 1984, which describe limitations on the restriction on human rights that governments may apply for reasons of public health or national emergency.

While noting that public health may be invoked as grounds for limiting certain human rights, such measures should only be specifically aimed at preventing disease or providing care. The Siracusa Principles set out very important guardrails, such as being undertaken in accordance with law, being directed towards a legitimate aim, being proportionate to that aim, being strictly necessary, using no more restrictive means than are required for the achievement of the purpose of the limitation, and being of limited duration.

BSR member companies are welcome to get in touch with Jenny Vaughan for further guidance on this dynamic situation and assistance using this tool and tailoring it to your unique needs.

Download the Tool

Blog | Tuesday March 24, 2020

So, Your Sourcing and Manufacturing Footprint Is Changing: Six Sustainability Considerations

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2019 continued the existing movement of supply chains out of China. This movement was driven in part by rising wage rates in China, a Chinese focus on reducing pollution, and the government policy to export low value-added manufacturing processes, and it was further exacerbated by trade tensions. As the exodus of manufacturing continued and accelerated, both manufacturing groups and global buyers sought opportunities to re-globalize their value chains. This Globalization 2.0 trend will continue over the coming decade. 

Now, 2020 brings us COVID-19. The impacts of consolidated risks in global supply chains are thrown into even sharper relief. Consequently, risk mitigation and the need to build resilience into global supply chains are going to accelerate the re-globalization of these supply chains.  

This means markets which already are sourcing platforms (e.g., Vietnam) are going to be seeing considerable growth, while more nascent markets, from Myanmar to Uzbekistan, will be increasingly on the map. It also means suppliers and buyers will be encountering new challenges in new markets as they set up shop.

Here are six sustainability considerations to help your company create Globalization 2.0 plans which can help achieve long-term success.   

1. Understand your own intent. It may seem obvious, but it’s still worth stating: your starting point should be understanding the business intent behind a supply-base diversification strategy. Pricing, delivery, quality, mechanization, de-carbonization, proximity and access to markets, resilience in key component manufacturing, risk diversification, and alignment with strategic partners may be all part of the business purpose and should provide context for the subsequent due diligence.

2. Look broadly at the sustainability and human rights risks of a country. The tools you used to qualify a factory in the early 2000s are not enough anymore. A factory audit isn’t sufficient and you should be aware of the broader environmental, social, and governance risks of the country in which you/your supply chain will be operating. Understand and map the relevant country risks—from pollution, natural disasters, and labor and employment standards to graft and corruption. These are just a few risk areas—these will vary by country and certainly should be integrated into risk frameworks and due diligence processes. Understanding (and engaging) key stakeholders with relevant knowledge can help you understand these risk areas. Surprises are not excusable.

3. Understand your (potential) partner(s). Ask the right questions in order to understand exactly who you are doing business with and to determine your risk exposure. Who are the beneficial owners of the partner?  What is the land/industrial zone permitting and history? What are the current relationships and reputation of that partner, based on past history (if any) in the sourcing country? Does this supply chain partner share your values and will they be a trusted partner in navigating the (inevitably) changing environment and the next crisis?

4. Do your supplier due diligence. Ensure a high-quality assessment of actual working conditions, management attitudes, and factory systems. Auditable information (fact gathering) on all the traditional compliance issues is important and a solid assessment of environmental (e.g., waste, energy, etc.), social (e.g., employee welfare, health and safety, human rights) and governance issues (e.g., grievance systems, anti-corruption, community engagement and transparency) is important. So too is the social dialogue inside the factory (industrial dialogue, communication systems, harassment issues) and the investment of the supplier in human capital (from hiring to training). Robustness of management systems and the qualifications of the actual leaders underlie the resilience of your partner(s).

5. Plan (and budget) for developing supplier resilience. How well is the supplier positioned to work through the key risk factors inherent in the country? Is the supplier making the investments which will enable resilience through critical times? Investments in grievance and dispute resolution systems, worker engagement, supervisor skills, and internal dialogue help mitigate risks during times of labor strife. Internal controls and strong external community relations enable resilience during times of changing external governance. Preparation and planning integrated into disaster risk reduction plans are important for preparing for weather, health, or other possible risk scenarios.

6. Plan (and budget) for buyer impact. What scenarios are you planning for: disasters, carbon prices, labor shortages, industrial action, rapid market expansion? How well-prepared will you, as the buyer, be in terms of expectations for local transparency and community needs? What opportunities are there for collaborative industry approaches or public-private partnerships? How might these create value for you or your supply chain? Plan for your own opportunities and needs in terms of people, resources, transparency, and stakeholder engagement. 

In short, think beyond compliance, understand the “total cost of ownership” of your supply chain plans, and know that your partners are aligned with your vision, values, and goals. Build resilience and plan for the next disruption. As Globalization 2.0 continues and supply chains diversify in new locations, let’s learn from the experience of the past three decades. Companies should continue to try to holistically understand and mitigate risk while finding collaborative opportunities for impact. At BSR, we know these actions work and can help build more equitable and resilient supply chains. 

Blog | Wednesday March 18, 2020

An Update from BSR on COVID-19

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Dear BSR Members and Valued Partners,

The COVID-19 coronavirus pandemic is presenting the world with a fast-changing and unprecedented global health situation. 

We hope that you and your families and communities are staying safe and healthy, and applying the values that underlie our collective work on sustainability to see us through this challenging time.

In addition, as a global business network dedicated to advancing sustainable business, we remain focused on our work while also adapting to address the ever-shifting environment in our offices around the world.

We remain very much open for business, with our teams working remotely (though in Hong Kong, some have been able to return to the office safely), at as close to regular capacity as the situation permits, and in accordance with the guidelines provided by relevant national, regional, and local health authorities. You can find us online, with all meetings conducted remotely via video teleconferencing platforms. 

Our work with you, our member companies and many partners, matters now more than ever. At moments like this, we welcome and encourage more dialogue with you, and more collaboration amongst our network.  

This week we will be rolling out new platforms and opportunities for engagement with BSR issue and industry experts, and for networking with other BSR member companies, partners, and thought leaders.  

We’ll also be offering a series of perspectives from our industry and issue experts, with the latest thinking on how business can continue to advance the sustainability agenda while navigating the challenge of the coronavirus. Our new COVID-19 content hub already features insights from BSR staff, including business lessons from the first phase of the pandemic, how to protect human rights while protecting public health, and the pandemic’s impact on workers and supply chains in China. We will be adding content in the days and weeks to come.

Finally, we will be encouraging additional engagement from you, our members, as we navigate this crisis together. This includes:

1. Information sharing and problem solving: We want to hear from you if you have perspectives to share on how this pandemic is affecting your business and your sustainability efforts; or support in solving particular challenges you face throughout your business, whether arising from the impacts of the pandemic or the long-term objectives that remain crucially important. In addition, as part of your BSR membership, you have access to high-level insights on how the coronavirus is impacting your digital (online and social media) profile through BSR’s reputation intelligence partner, Polecat. Please reach out to your relationship manager to learn more.
2. Project support: We will continue to support and work with members on one-on-one projects, using all of the remote tools at our disposal.
3. Networking: We will be looking at additional ways to enable you to share your experiences with other BSR member company contacts through online webinars or examples of responses to the pandemic via contributions to the new content hub. Reach out to your BSR relationship manager if you have ideas for a webinar, or an idea for a blog that you think may be of interest to the broader BSR network.
4. Collaboration: Our collaborative initiatives continue to operate with an immediate shift to virtual gatherings. If the systemic failures made apparent during this pandemic have inspired you to think more long term about how you can collaborate to build a more resilient business and a more resilient system, our collaborations offer a powerful platform. BSR’s CoLab, our incubator and accelerator of private-sector collaboration, works with companies and other partners on a range of sustainability issues, including global health. And BSR’s Healthy Business Coalition is a great resource for collaboration with private-sector peers on public health issues that affect companies and workers. Please reach out to your BSR contact if you’re interested in more information about this.
5. BSR Conference 2020: The Decisive Decade: The BSR Conference 2020 is still set for October 27-29 in New York, and the program will be launched formally later this spring. We will of course be monitoring the situation and re-evaluating the feasibility of hosting an in-person event as the pandemic situation evolves. We will provide updates as we learn more.

We are all facing a monumental challenge, which will undoubtedly have both short- and long-term impacts on the economy, and on the health and well-being of businesses, workers, and communities around the world. Our movement for resilient, sustainable business has never been more relevant, or important.

Our collective ability to achieve a world in which everyone can live a prosperous and dignified life within the planet’s natural boundaries remains fundamentally important. It is up to all of us to redouble our commitments, with urgency and kindness, to unlock the capabilities, ingenuity, knowledge, and resources of the private sector to achieve that vision.

Please stay tuned for further updates and visit this website and our social media channels for the latest information.

All of us at BSR wish you, your colleagues, and your families good health and safety during this challenging moment.

With thanks,

Aron Cramer
President and CEO, BSR

Blog | Monday March 16, 2020

Business Lessons from Phase One of the COVID-19 Pandemic

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How quickly life can change.

We are only in phase one of a pandemic that has changed the rhythm of daily life like no other recent event. As we take time to think first of the health of our families, friends, and communities, we are already learning lessons that will help us to navigate the urgent trials we face today as well as the fundamentally important challenges awaiting us once the worst of the pandemic passes.

Here are five lessons to guide us through these turbulent times and the uncertainties which lie ahead.

1. The virus makes clearer than ever that the social contract in many places is not fit for purpose and needs to be reformed.

The social contract, meaning the roles and responsibilities of government and business and the needs of citizens and employees, is being tested in an extreme way right now, but it was already clear that it was not fit for purpose before the pandemic struck. In the wake of the pandemic, the lack of access to health care in the United States has come into even sharper relief, this time in a potentially devastating way. We have also seen examples of the social contract being adapted, as with Denmark’s move—through tripartite discussion between government, business, and trade unions—to extend benefits to help Danes get through this difficult time. It is also interesting to see how different societies accept data sharing and transparency, which trade some privacy for increased protection. Businesses should certainly step up to help their staff sustain themselves in the context of much economic activity apparently being stopped. And while we are seeing in real time how well the social safety net functions, there are also long-term questions that business would do well to address more forcefully after this crisis is behind us. BSR has launched an effort calling for a modernized social contract for the 21st century, with more attention to the changing nature of work, access to education and skill development, and the financial stability of our pension systems, amongst other issues. The COVID-19 pandemic reveals this to be deeply relevant for business and society and can serve to catalyze more business action to ensure our social contracts are fit for purpose. The business responses to the crisis have in many cases been excellent: this leadership can also be applied in non-crisis situations.

2. Resilience is not just a catchphrase; it’s a necessity, and it’s having its moment.

Every single Board of Directors should learn from this global challenge and invest more time and thought in exploring where its business faces other risks. There is little doubt, of course, that climate change could deliver a blow to many companies that is as profound as COVID-19, but with far more lasting impacts. We have also seen unexpected political shifts over the past few years, and businesses that have assumed broad support for a globalized economy have seen their plans upended. Resilience in the face of fast-changing attitudes and actions on the part of a company’s workforce also present questions of fundamental importance. And we also know that political change can come overnight and test our models. In many ways, the rise of ESG investing is asking one simple question: is your business resilient in the face of massive change? We are experiencing in real time how hard it can be when the answer is no.

In an era when powerful political leaders call for walls and barriers and play to publics who can be swayed in that direction, this difficult episode teaches us the importance of collaborative solutions.

3. We must not turn our backs on our interdependent globalized world.

It should go without saying that we are all connected and interdependent; the virus proves just how true that is. But in an era when powerful political leaders call for walls and barriers and play to publics who can be swayed in that direction, this difficult episode teaches us the importance of collaborative solutions. Credit should be given to French President Emmanuel Macron for convening a virtual G7 Summit and to the tireless workers at the World Health Organization for providing valid and valuable information, enabling testing, and supporting health systems that need it most. In short, we need each other, and crises often remind us of that. This one certainly should be doing exactly that. It is folly to suffer the negative consequences of our connectedness without maximizing the benefits. Business has a strong interest in advocating for open societies, effective public governance, and the rules-based international system that has come under attack in recent years.

4. Futures thinking may be the most essential tool we have, so let’s use it.

One of the best ways to build a resilient strategy is to employ futures thinking. BSR launched its Sustainable Futures Lab in 2017, and we have worked with many companies and other partners to build scenarios to help them to map and understand possible pathways to create more desirable future outcomes. This is no academic exercise, as we now see. Indeed, one in a set of climate scenarios we began developing late last year began with an animal-borne virus emerging from China to undermine economic and human health globally. The steps called for in the Task Force for Climate-Related Financial Disclosures (TCFD) embrace scenarios as a core of TCFD disclosures. The concept underlying the TCFD should be extended well beyond climate, to ensure that companies can prepare for the diverse array of futures that may well emerge.

The need for progress on climate and other environmental challenges don’t vanish during a recession. The need to invest in communities and people whose economic circumstances are diminished only grows more important.

5. Action on climate and the SDGs cannot be put off.

The world’s attention is quite rightly focused on the urgent need to save lives and avert immediate economic distress. But we are here for the long term also. We need both to address this shock in the first year of the decisive decade and remain 100 percent committed to building the world we are committed to building in 2030. Even as every company, large and small, is understandably focused on the here and now, this is a time when business leaders and companies should speak out to reinforce the need to make significant, tangible progress towards the SDGs. And even if the virus leaves a recession in its wake, it is essential that business remain focused on achieving the SDGs. The need for progress on climate and other environmental challenges don’t vanish during a recession. The need to invest in communities and people whose economic circumstances are diminished only grows more important. And the march of technology needs to be aligned with human rights and ethics regardless of which direction global stock markets head.

We have spoken about the “new climate for business” over the past year as we entered this “decisive decade.” As we work through this rocky start to the new decade, it is essential that we remember the central importance of staying committed to our long-term goals, while adjusting to an altered reality that has much to teach us when we inevitably emerge from this crisis.

Blog | Friday March 13, 2020

Respecting Human Rights While Protecting Public Health

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As the COVID-19 coronavirus outbreak disrupts global supply chains and shutters factories and stores around the world, companies are grappling in real time with the human rights implications of the coronavirus response. This raises a question that we have had little opportunity to ask ourselves before: How can we best protect public health while respecting individual human rights?

Coronavirus is raising a range of human rights dilemmas for business, including:

• Discrimination, notably against ethnically Chinese and Asian persons (including persons of Asian descent and appearance). The outbreak of coronavirus, which originated in Wuhan, Hubei Province, China, has seen a global rise in anti-Chinese and anti-Asian sentiment spurred by fear and anxiety, leading to stigmatization. For example, there have been reports that some businesses worldwide, including restaurants, have barred entry to Chinese and Asian customers. Such discriminatory actions have been further fueled by media sensationalism as some news outlets have been criticized on how they have been reporting the crisis.
• Privacy, as health and other personal data are collected in the workplace and in public, often via integration with facial recognition and other biometric technologies (including temperature testing). This in turn raises concerns about security of data storage, future use and misuse of data, and the risks of empowering authoritarian governments. Companies are now beginning to develop more sophisticated technologies with the ability to identify persons wearing face masks. Critics of such facial recognition technologies are concerned that coronavirus is giving authorities and companies the opportunity to ramp up surveillance.
• Labor rights and worker welfare, with heightened risks for vulnerable workers and those in forced labor. On the one hand, workers risk unhealthy and stressful living and working conditions if employers do not set policies to allow people to work from home, self-quarantine, or take paid sick leave. On the other hand, workers risk lost wages or job loss if employers terminate contracts or withhold pay due to absences for illness, quarantine, or caring for a sick family member. Companies may also increase working hours to compensate for a reduced workforce, risking exploitation of their workers and undermining their health and well-being.
• Freedom of expression, as employees face consequences for speaking publicly about working conditions, and companies address increased risks of disinformation. Employees who are critical of working conditions as well as business approaches to health and safety risk backlash, censorship, and in extreme cases termination of employment. It was recently alleged that an employee in Hong Kong was dismissed after he posted comments on Facebook criticizing his company’s response to coronavirus, specifically for not implementing a work-from-home policy and providing sub-standard face masks.

Coronavirus has put us all on notice that we must be ready with measures to ensure respect for human rights while protecting public health. The question for today is, “What’s the best way to do that?”

Companies can consider the following recommended actions to minimize adverse impacts on human rights stemming from their response to coronavirus or other public health crises in the future:

• Limit employee exposure to coronavirus in the workplace through a suite of actions: personal protective measures (e.g., hand and respiratory hygiene supported by proactive training and distribution of hand sanitizers), environmental measures (e.g., cleaning of frequently used surfaces and common spaces, appropriate ventilations), workplace policies (e.g., screening at the entrance in the facilities, social distancing, and others), and work arrangements (e.g., rotational schedules that reduce person-to-person contact, and work-from-home arrangements for non-essential staff).
• Provide paid leave in case of illness, quarantine, or to care for a sick family member. Employees who are required to work from home due to the outbreak should continue to receive their normal pay and benefits.
• Develop a plan with suppliers to ensure worker welfare while supporting business continuity, such as flexible quotas and delivery schedules.
• Ensure that any measures to increase working hours to compensate for workforce reductions are time-bound.
• Establish non-discrimination policies and proactive measures to protect staff and customers from discrimination.
• Ensure that personal data collection follows applicable regulations (e.g., GDPR), is limited to what is medically necessary (e.g., temperature), is provided under informed consent, and is not stored or used for purposes beyond public health measures to prevent the spread of coronavirus.

Pandemics are increasingly likely in today’s hyperconnected world, and our collective well-being is shaped by the well-being of the most vulnerable among us. Coronavirus has put us all on notice that we must be ready with measures to ensure respect for human rights while protecting public health. The question for today is, “What’s the best way to do that?”

And the question for tomorrow is, “How can we see the next one coming?”