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Blog | Thursday January 30, 2020

Coming in from the Cold: ESG Has Its Davos Moment

Preview

Last week’s gathering at Davos included an unprecedented focus on sustainability, as the 50th Annual Meeting of the World Economic Forum was dedicated to “stakeholder capitalism.”

I have been going to the WEF meetings at Davos since 2005. Fifteen years later, it is remarkable to see how sustainable business (or responsible capitalism or whatever term you want to use) has—to use an appropriate metaphor for the Swiss Alps in January—come in from the cold.

A lot has changed: in 2005, climate discussions were few and Al Gore’s sessions, coming months before “An Inconvenient Truth” was released, were lightly attended. Human rights were little discussed, and LGBTQI+ issues were nowhere to be found.  I am not sure Greta Thunberg’s parents would have imagined that their then two-year-old daughter would be one of the most influential voices at this global gathering at age 17.

This year, it was heartening to see the many new initiatives and announcements that emerged in the run up to and throughout the week at Davos. One that deserves specific attention is the effort to create a single Environmental, Social, and Governance (ESG) reporting and disclosure framework, something that’s become a bit of a “holy grail” in the sustainability world.

This effort could be an important turning point, but only if certain core principles, in the words of the report, potentially lead to “a generally accepted international accounting standard” for sustainable value creation.

The vehicle for the latest effort is a report released last week by the WEF’s International Business Council (IBC), a gathering of more than 100 large company CEOs. The report, Toward Common Metrics and Consistent Reporting of Sustainable Value Creation, reflects two intersecting developments: growing recognition of the importance of sustainability performance, both for business and the wider world, and growing frustration with the welter of reporting and disclosure frameworks, as well as the seemingly endless number of ratings and rankings.

The IBC’s interest and initiative is very welcome—a sign that it’s time to get serious about committing to assessing businesses on their impacts, and not only the shareholder capitalism model that has lost considerable credibility, especially in the last year.

This effort could be an important turning point, but only if certain core principles, in the words of the report, potentially lead to “a generally accepted international accounting standard” for sustainable value creation. The principles that should be at the core of this effort, and others that may emerge alongside it, are the following:

Material and Ambitious

There is great value in establishing a common baseline for what is material to investors as it relates to corporate sustainability performance. This approach sets a baseline, which is important. It is also essential that this model not reflect a lowest common denominator approach. The IBC seems to understand this in taking on—whether or not sufficiently—the issue of corporate tax disclosures, which is a very positive step.  As this effort evolves, it is essential that it have sufficient ambition across all topics.

Inclusive and Credible

There has been much grumbling about this effort—and also much interest and initiative—on the part of existing sustainability reporting standard setters. It is essential that the seminal work of these organizations be fully considered and integrated into the IBC effort. The drive to embed sustainable value creation in corporate reporting and listing requirements will not succeed if the views of broader society are not fully considered. If uptake by markets undermines uptake of disclosure by the wider world, little will have been accomplished. I was encouraged to see that the initial report makes extensive use of the work done to date by the GRI, SASB, TCFD, IIRC, etc. as well as well-recognized frameworks such as the UN Guiding Principles on Business and Human Rights.  Similarly, it remains an open question whether the Big 4 accounting firms are the right partners for this effort. They have massively important expertise and credibility with business—whether they have all the expertise they need and the credibility with wider society is subject to debate.

Consistent and Flexible

The IBC does well to propose both core and expanded metrics. This is absolutely critical for a variety of reasons. First, it is essential to have a “common core” that all companies are expected to report against. Indeed, the uptake of the Task Force for Climate-Related Financial Disclosure’s (TCFD) recommendations is testament to the fact that climate change is material for every company, though not always in the same ways or to the same extent.  It is also the case that the essence of sustainable business is the need to address the intersection of business and society, which for obvious reasons is always evolving. To take just two examples from the past five years, recognition of the need to restrict ocean plastics and support the rights of LBGTI people have skyrocketed up the business agenda. There will, therefore, be a need to ensure that emerging issues are explored and addressed on an ongoing basis. Time scales are crucial here: what is material and relevant today will be different in five years, let alone by 2050. This model needs to find a way to balance the needs of today and tomorrow… which is after all the essence of sustainability.

The “S” in ESG to Should Not Be Silent

Social issues are more challenging than many others. They reflect diverse societal norms and laws. They are often measured qualitatively rather than quantitatively. The “cross-cuts” on various issues, for example gender impacts of climate change, are essential but hard to measure.  However, these considerations often dominate public impressions of a company’s performance and the brand value that comprises such a large portion of a company’s assets.

Governance Matters

This effort risks being only words on a page if corporate governance does not evolve in a way that will ensure that Boards have the breadth of perspective to fully understand the import of the topics in whatever framework emerges. In the halls in Davos, it is widely accepted, though not often stated publicly, that Boards lack the expertise (and far too often, the inclination) to understand many ESG issues, not least, those on the social side. A parallel effort to ensure that Boards can bring their “A game” to making this framework real will be essential.

It is almost certain that we will see a profound transformation of corporate reporting and measurement in this decisive decade of the 2020s; the world badly needs it, and so do CEOs, Boards, and investors. Whether the IBC’s nascent effort provides the foundation for such reforms will depend on whether the principles established here are pursued fully and openly. Initial signs are good and there is much work yet to be done.

Blog | Wednesday January 29, 2020

In Conversation with Ross Rachey, Director, Global Fleet & Products, Amazon Logistics

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Climate change has risen to the forefront of the business agenda. Companies like Amazon and other members of BSR’s Future of Fuels collaboration are exploring sustainable fuel technologies to minimize their greenhouse gas emissions and are in turn helping to accelerate the transition to a sustainable road freight system.

Private-sector collaborations are key to addressing broad challenges like climate change. By sharing best practices and fostering peer learning, companies in BSR’s Future of Fuels can accelerate and scale the adoption of sustainable fuel technologies faster than doing so alone. To that end, Future of Fuels launched its case study library in 2018 to provide a forum for our members and Sustainable Fuel Buyers’ Principles signatories who have tested sustainable fuel technologies to share their best practices, challenges encountered during implementation, and recommendations to other companies exploring similar fuel technologies.

Our latest addition to the Future of Fuels case study library is from Amazon, which collected operational data from electric delivery vans used in Paris, Milan, and Madrid over six months in 2018. Recently, I spoke with Ross Rachey, Director of Global Fleet & Products, Amazon Logistics at Amazon, to discuss the company’s approach to sustainable fuel technologies and how their work supports their broader climate and sustainability agenda.

The Amazon Case Study

Denielle: Amazon has strong ambitions on climate change mitigation. Talk me through the climate commitments Amazon has made on renewable energy, being carbon neutral, and Shipment Zero.

Ross: In September 2019, Amazon co-founded The Climate Pledge with Global Optimism, and Amazon became the first signatory to The Pledge. The Climate Pledge calls on signatories to be net zero carbon across their businesses by 2040—a decade ahead of the Paris Agreement goals. Within this commitment, we are working on goals to eliminate carbon emissions from specific portions of our operations even sooner.  For example, Shipment Zero is focused on customer shipments, aiming to deliver 50 percent of our packages with net zero carbon by 2030. And, our goals to become 80 percent powered by renewable energy by 2024 and 100 percent by 2030 will eliminate carbon emissions from the electricity that supplies Amazon’s fulfillment centers, data centers, and other operations. 

Denielle: Why did Amazon launch Shipment Zero? How do sustainable fuel technologies, such as electric delivery vans, fit into Amazon’s vision?

Ross: We are working backwards from our desire to innovate on behalf of customers, using a science-based approach to implement sustainable technologies and practices across our business. Last year, Amazon culminated a multi-year effort to measure greenhouse gas emissions from our business—and release it publicly—so that we could prioritize the parts of our business where we want to focus our decarbonization efforts. We plan to implement strategies in line with the Paris Agreement, including efficiency improvements, renewable energy, materials reductions, transportation electrification, and other strategies. This includes our plan to purchase 100,000 Rivian fully-electric delivery vehicles, with the first vehicles starting to deliver packages in 2021.

Denielle: How did Amazon come to the decision to explore and test electric vans?

Ross: Through participation in BSR's Future of Fuels collaboration, other public forums, and a review of available academic literature, we’ve spent the last three and a half years learning where clean transportation technologies and operational duty cycles are aligned, what Calstart calls the “Beachhead Strategy”, to decarbonize the transportation sector. In line with the logic of that strategy, Amazon has already deployed battery and fuel cell forklifts, and other clean technologies in many of our logistics facilities. Electrification of last-mile delivery is the logical next step. The last-mile duty cycle with daily routes and overnight parking and charging is well-suited to electrification.

As the share of clean and renewable energy sources grow, efforts to electrify transportation systems will deliver greater dividends and greater environmental impacts. 

Denielle: Why did Amazon begin testing electric vans in Europe? Are there particular advantages of testing in the European market compared to the United States and other markets?

Ross: We began testing in Europe because EV delivery vans that potentially suit our duty cycle were available from multiple manufacturers. We were excited about the opportunity to get vehicles on the road and begin learning more about electric vehicle operations. We’ve carried these learnings to pilots we’ve launched in other countries including United States, India, etc., and the learnings were foundational for the electric vehicle orders we are currently placing globally.

Denielle: Given your commitment to Shipment Zero and electric last-mile delivery vehicles, what’s next for Amazon in sustainable fuel technologies?

Ross: Amazon will continue working to deepen our knowledge when it comes to zero emissions transportation. While we are committed to electrification in some duty cycles, there are other technologies like renewable natural gas and hydrogen fuel cells that may be better suited to other duty cycles, and we will continue exploring these opportunities as they develop.

Understanding Sustainable Fuel Adoption

Denielle: Many companies are hesitant to explore various fuel technologies and build a portfolio, primarily due to concerns over operational complexity and financial risk. From your experience, what is the benefit of a company developing a portfolio of sustainable fuel technology options?

Ross: It’s true, there are costs, risks, and complexities in adopting a new technology, but technological innovation is in Amazon’s DNA, and we want to work with the innovators of today to ensure the clean technologies of tomorrow are designed to meet the demands of our customer-obsessed approach. We are confident that electric vehicle technology presents a host of advantages over traditional combustion engines, and we are excited to play an active role on further advancing electric transportation and continuing to explore additional alternative sustainable fuel technologies.

How to Enable and Influence the Future of Fuels

Denielle: In the context of Amazon’s climate commitments, using electricity as a fuel technology presents an interesting dilemma. While there are no tailpipe emissions, there can be emissions from electricity use if the electricity is not produced with renewable energy. How important is the "greening" of global energy infrastructure and increasing the renewable energy available on the grid to achieving Amazon’s goals, and what can companies do to promote that shift?

Ross: Clean energy is critical if we are going to rely on transportation electrification as a key strategy in the toolkit to fight climate change, but we can’t wait for a clean grid before we electrify transportation systems with the appropriate duty cycles. Just as Amazon has set a Shipment Zero target to deliver 50 percent of customer shipments net zero carbon by 2030, Amazon has publicly committed to achieve 100 percent renewable energy supply globally by 2030, in collaboration with utilities and renewable energy developers. As the share of clean and renewable energy sources grow, efforts to electrify transportation systems will deliver greater dividends and greater environmental impacts. 

Blog | Tuesday January 21, 2020

Five Insights on the Future of Reporting from Uber’s Safety Report

Preview

In December, Uber published its first-ever U.S. Safety Report, sharing the company’s approach to serious safety incidents—such as injuries, fatalities, and sexual assault or misconduct—and describing its recent safety investments. The report contains a wealth of quantitative data and qualitative information to help readers interpret the company’s safety performance and better understand the scale and characteristics of the issues at stake. For example, one surprising insight is that while media coverage tends to portray drivers as the most frequent sexual assault offenders, the data show that drivers report assaults at roughly the same rate as riders.

Some data provide good news for ride-sharing firms: The Uber-related motor vehicle fatality rate is about half the national average, likely owing to driver screening, minimum driver ages, and younger vehicles. But other data did not make for such positive reading: while reported incidents of sexual assault represent a very minor percentage of total trips (less than 0.0001 percent), that still accounts for more than 3,000 cases a year.

What was most noteworthy to us at BSR was that Uber would publish this report at all—the first of its kind published by a company and unlike anything published by its peers. Indeed, Uber deserves praise for voluntarily reporting on these important challenges, and its publication provides important lessons for other companies on the value of reporting.

Here are five insights on the future of transparency and disclosure from Uber’s report:

• Companies acting alone can use transparency and disclosure to shape a positive agenda. Uber’s Chief Legal Officer Tony West introduces the report by explaining that while most companies don’t talk about issues like sexual violence, “confronting sexual violence requires honesty, and it’s only by shining a light on these issues that we can begin to provide clarity on something that touches every corner of society.” We’re reminded of Google’s first “transparency report” a decade ago describing government demands for user data and content restrictions. Companies back then were reluctant to discuss these issues in public, yet Google chose to break the mold—and today, the quality of public dialogue on these issues is vastly improved. Companies have the potential to use transparency and disclosure to generate new momentum on shared challenges and not just wait for action by others.

• Companies facing similar challenges should publish comparable disclosures. The issues raised in the Uber report are not unique to Uber and cannot be addressed by Uber acting alone. For this reason, we found Uber’s challenge to its industry peers to be one of the most important elements of the U.S. Safety Report, with Uber encouraging “all organizations—airline, taxi, ridesharing, home-sharing, and hotel companies, as well as others—to share their safety records with their customers and exceed this report.” This also reminded us of the Google case, as since Google’s first effort, more than 70 internet and telecommunications companies have started publishing regular law enforcement relationship reports, with significant benefits for civil society organizations, policy makers, and other advocates. We’d like to see the same pattern emerge with safety too.

• Partnerships with those who use the data are essential. One of the challenges with being a first mover in disclosure is knowing what to report—what data is most likely to influence decision-making and provide value for those working on the issues at stake? In Uber’s case, the company partnered with the National Sexual Violence Resource Center (NSVRC) and the Urban Institute to develop a new data taxonomy to understand the reality of unwanted sexual experiences. This did not previously exist and has now been made available for use by other companies and organizations. This provides a very strong foundation for other companies to publish their own reports that are directly comparable to Uber’s report and paves the way for industry-wide efforts to emerge.

• Issue-specific reporting will grow in significance. Four years ago, we published our perspective that “the future of reporting will be triangular,” with short and general disclosures at the top of the triangle and detailed issue-specific disclosures towards the bottom. The Uber report is just one signal among many that some of the most interesting company disclosures today are happening at the bottom of the triangle—whether it is privacy, diversity, climate change, or supply chain labor conditions, companies are increasingly publishing issue-specific reports with very particular audiences in mind.

• Reporting should be harnessed to improve performance. The new consistent data taxonomy established by Uber for sexual harassment, misconduct, and assault is very important, particularly because without a consistent taxonomy, the field has struggled to enact reforms. We hope this consistent taxonomy can improve the performance of Uber and its peers by enhancing the quality of training, informing what safety technologies to invest in, and enhancing the impact of partnerships. As Karen Baker, CEO of the NSVRC, highlighted in her foreword to the report, the NSVRC “didn’t anticipate how much we would learn about informing and enhancing the way industries and corporations enact meaningful change, and how those changes contribute to efforts to prevent and end all forms of sexual violence.” We hope that transparency is used to help shift culture among drivers, riders, and staff toward a world where it is understood that safety incidents can, should, and will be taken seriously.

It is easy to criticize companies for ignoring their negative social impacts, but the fact is that shaping system-wide approaches to shared challenges is a difficult endeavor. Ironically, by raising the profile of Uber’s approach to safety, the number of incidents reported will likely go up before they go down—but rather than being portrayed as bad news, we hope this is welcomed as a sign that important issues are being openly addressed. We look forward to reading more in future reports about the impact of Uber’s safety efforts, such as new technologies, Community Guidelines, and the Safety Advisory Board. Most of all, we hope that Uber’s investment in a new reporting taxonomy for safety issues is adopted by other companies—as well as by Uber in their operations outside the U.S.—and that these reports improve our collective efforts to address sexual assault and misconduct.

Blog | Friday January 17, 2020

Davos 2020: Progress in a Time of Turmoil?

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The 2020s dawn with the 50th Annual Meeting of the World Economic Forum (WEF) in Davos, which calls for a cohesive and sustainable world. This first Davos meeting of the “Decisive Decade,” however, comes amid a world in turmoil.

U.S. President Donald Trump returns to Davos just as his impeachment trial opens in Washington. Meanwhile, U.K. Prime Minister Boris Johnson is proclaiming loudly that he wants to achieve a breakthrough as the host of COP26 but has mandated that his government boycott Davos, forfeiting the chance to lobby for climate action in the name of “Getting Brexit Done.” The governments of France and China face challenges to their leadership on the streets of Paris and Hong Kong. Australia continues to suffer horrific wildfires, and Jakarta has suffered monumental floods.

All this means that the new decade has arrived at a time when the global community (if such a thing can even be said to exist right now) is at a crossroads. The need to achieve genuinely shared prosperity and decisive climate action has never been clearer, nor has the science, which is increasingly driving policies and action on climate action and biodiversity. Indeed, the WEF’s latest Global Risks Report, released this week, unprecedentedly cites environmental issues as the top five risks in the world. Peoples’ movements and political figures are calling—ever more loudly—for a fairer economy to reverse growing inequality. And people in the streets are—quite rightly—standing up for the protection of democratic principles that have come under increasing threat.

The need to achieve genuinely shared prosperity and decisive climate action has never been clearer, nor has the science, which is increasingly driving policies and action on climate action and biodiversity.

The answer to this disquiet is found in the following shared goals that broadly reflect the aspirations of the Sustainable Development Goals. And the need for business leaders to recommit to these objectives is more compelling than ever. Entering Davos Week 2020, there is clearly a new climate for business. To face it successfully, here is the agenda that all the leaders who are making the journey should embrace:

• More widely shared prosperity: Markets are trusted less and less each year. Younger Americans are expressing rising support for socialism. There are many reasons for this, but it all boils down to growing concerns about extreme wealth at the top and diminishing opportunities in the middle and lower ends of the economic scale. When the public loses faith in basic economic fairness, no matter what statistics say, change will be demanded. New social contracts are needed to ensure that societies progress together, and fairly.
• Net zero carbon: The number of nations, states, and cities—along with businesses—that have committed to net zero carbon by mid-century is growing fast. Our collective task is to expand these commitments and even more so, translate them into lasting change in the “real economy.” This will achieve more than any COP can.
• Technologies aligned with human rights and ethics: The 2020s will not see technology maximize its benefit to society without greater trust. Something akin to the concept of the precautionary principle applied to old technologies should become the new normal. This may slow the rollout of some ideas and business models, but it will lead to more lasting innovation that society actually supports.
• Women’s empowerment: The fact is that the #MeToo movement risks being left behind as new ideas and crises emerge. This would be a tragic mistake. The 2010s erased any doubt about the unequal treatment of women in business. The 2020s need to be a time when more women are CEOs and Directors, pay equity becomes a reality, and all women are able to pursue opportunities to contribute in all fields the same way men are.
• Support for open societies: Finally, business cannot stand aside while the principles on which open societies are based are being attacked. CEOs are reluctant to step into “political” issues, but there is a clear need for basic civil liberties to be supported. Business depends on stable operating environments to succeed, including the rule of law, fair treatment of all people, the protection of democratic processes, and the protection of global human rights. There is risk involved in supporting these bedrock principles…but there is more risk is allowing them to vanish.

As we pointed out in our Doing Business in 2030 scenarios, the road ahead likely will be marked by increased decentralization of power and influence. While Davos may be an example of the abiding influence of the most powerful, the world away from the Magic Mountain is increasingly influenced by a diverse array of actors.

What the world so urgently needs is action, with far more commitment than we have seen in the half century since Davos launched.

Stakeholder capitalism is embedded into the program at Davos this year—that’s fantastic. The latest “Larry Fink Letter” on the eve of Davos signals that capital markets are moving faster to meet the challenge. But this more equitable and sustainable vision of capitalism must be more than a theme, a process, or a matter of talk. It needs to reflect a seriousness of purpose and a commitment to an agenda that resonates not only in Davos but in the places where people believe that Davos Man (and increasingly, Woman) are ignoring their needs.

The stakeholder model advanced 50 years ago by Forum Founder and Executive Chairman Klaus Schwab is the right one. Making it work in a fragmenting world is no small thing. Davos often frames global debates, and that is no small thing, though conference themes come and go. What the world so urgently needs is action, with far more commitment than we have seen in the half century since Davos launched. If we are to achieve human progress—and avoid exacerbating the turmoil that greets the 2020s—over the course of the coming decade, we have no choice.  And the prize—truly shared prosperity that averts climate crisis—should be all the motivation we need.

Blog | Wednesday January 15, 2020

Business Leadership in Defending Inclusive Societies and LGBTI Rights at Davos 2020

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Despite recent progress from Taiwan, which became the first country in Asia to pass marriage equality, to Botswana, where a colonial-era ban on same-sex relations was struck down, the ILGA World’s 2019 Map shows the breadth of discrimination currently facing LGBTI people across the globe. Nearly 70 countries still criminalize homosexuality, unconscionably very few countries legally recognize the identity of trans people, and only a handful protect the rights of intersex people. Tragically, for many LGBTI people around the world, homophobia, fear, and hate remain a daily reality. 

Next week, the World Economic Forum will host its 50th Annual Meeting, bringing together the world’s top leaders from the private sector, government, civil society, media, and academia to “address the most pressing issues on the global agenda.” The Partnership for Global LGBTI Equality (PGLE) is pleased that the economic inclusion discussion in Davos will shine a light on the discrimination faced by millions of lesbian, gay, bisexual, transgender and intersex people worldwide every day—more than fifty years after Stonewall, the “birth” of the gay liberation movement. 

Recognizing that the power of business could be leveraged to advance LGBTI inclusivity, in 2016, a group of companies organized a meeting in Davos that, according to UN Human Rights, “was a turning point in a long-overdue conversation among prominent business leaders and activists about practical measures companies can and should take to tackle LGBTI discrimination.” That conversation led to the UN Standards of Conduct for Business Tackling Discrimination against Lesbian, Gay, Bi, Trans, & Intersex People (UN Standards), issued by the UN in September 2017. 

From local jurisdictions to national assemblies, thought-leading companies have worked with a broad range of stakeholders across the world to fight homophobia, fear, and hate and to advance human rights for members of the LGBTI community. 

That meeting four years ago is but one of many examples of the key role that the business community has played in advancing LGBTI equality, diversity, and inclusion globally. From local jurisdictions to national assemblies, thought-leading companies have worked with a broad range of stakeholders across the world to fight homophobia, fear, and hate and to advance human rights for members of the LGBTI community. 

Like the UN Standards, the idea for forming the Partnership for Global LGBTI Equality was born in Davos—but a few years earlier—when some of the companies that later became our Founding Members organized an LGBTI roundtable discussion.  Over the years, the breadth of the Davos LGBTI discussions grew and, since 2015, have been part of the Forum’s official Annual Meeting program. 

Through the leadership, commitment, and support of our Founding Member companies, PGLE was formally launched by the Forum in Davos last year as a project of its Platform for Shaping the Future of the New Economy and Society. In addition to being a project of the World Economic Forum, PGLE is also working in collaboration with UN Human Rights and our civil society partners, Human Rights Watch and OutRight Action International. 

To quote in part from the Forum’s press release in announcing the creation of PGLE:

“Discrimination based on sexual orientation and gender identity not only violates universal basic human rights, it also adversely impacts the long-term economic prospects of individuals, businesses and countries. A 2017 UNAIDS study estimated the global cost of LGBTI discrimination at $100 billion per year. Businesses have an important role to play in respecting and protecting human rights through fostering workplace inclusion for LGBTI people.”

Simply put, PGLE is a coalition of organizations committed to leveraging their individual and collective advocacy to accelerate LGBTI equality and inclusion in the workplace and in the broader communities in which they operate. PGLE member companies recognize and take responsibility not just for the impact they have on their employees' lives but also on the broader communities in which they operate.

If you are in Davos next week, we hope you will join us for a discussion of “LGBTI Rights and the Role of the Private Sector” on January 21, 2020, from 7:30-9 a.m. at the SDG Tent (Ocean Room), 139 Promenade, Davos. Please RSVP here. 

We look forward to seeing you in Davos. If you’re unable to join us for the event, you can tune in to the livestream on the PGLE site. In addition, if you’re interested in learning more about leveraging the power of business to advance LGBTI equality, please feel free to connect with us.

Live from the World Economic Forum 2020: LGBTI Rights and the Role of the Private Sector

Blog | Tuesday January 14, 2020

Five Tips for Setting Bold Sustainability Goals for 2020 and Beyond

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2020, which for so long seemed like a distant future, is here. As we reflect on the past decade of sustainability goals, we recognize the substantial progress: commitments for financing renewable energy in developing countries have witnessed a tenfold increase since the early 2000s; 600 million more people have connected to the mobile internet since 2015, the majority in low- and middle-income countries; and extreme poverty continues to fall along with child mortality rates. Unfortunately, these encouraging trends ultimately do not create enough momentum to achieve a just and sustainable world. Progress on many of the Sustainable Development Goals (SDGs) has been too slow and, in some cases, continues in the wrong direction: both hunger and greenhouse gas emissions continue to rise.

And now, we are in the decisive decade. As BSR CEO and President Aron Cramer put it in his 2019 annual letter, “[We’re now entering] the decisive decade of the 2020s. The next 10 years will be decisive for business, and for all of us. We will either deliver on the [SDGs] or we won’t. We will peak emissions in line with the Paris Agreement or we won’t. Business will regain public trust or it won’t. We will re-establish social mobility and reduce income inequality or we won’t."

So, how can companies make sure they’re on the right side of history?

In order to achieve the change we seek, it is clear we need business. But the tactics used by businesses to set goals in the past—benchmarking and forecasting—are inadequate. Incremental improvements in sustainability, while still relevant, are no longer enough. We need business to be willing to boldly tackle the complex challenges that society faces by committing to progress, even without a concrete plan. We need moonshots. Increased ambition is not just the way to achieve the SDGs—it’s also the best way to create truly resilient business strategies.

Increased ambition is not just the way to achieve the SDGs—it’s also the best way to create truly resilient business strategies.

In practice, we know that committing to a bold goal is not an easy task, but here are three reasons you should persevere:

• The Ethical Imperative. As we just outlined, society cannot achieve the SDGs without the full participation of business. High-quality employees gravitate toward work with a purpose and companies that they feel make a positive difference in the world.
• The Business Imperative. The climate for business is changing rapidly, and companies that are not proactively helping to shape the new paradigm risk obsolescence. Bold goals help to hedge against risks and spark disruptive innovation. Plus, companies that set innovative goals set the bar for good performance and often receive more support from partners—NGOs, foundations, governments—in attaining their goals than companies that don’t.
• The Stakeholder Imperative. Key stakeholders (employees, customers, investors, local communities) expect bold action. With the proliferation of sustainability data platforms and a rapidly increasing set of corporate “report cards” emerging, it’s more important than ever to take a visible leadership role.

You may be asking yourself: But what if we set this big goal and we fail? The answer is that it’s okay. We have seen time and again that stakeholders—even investors—are more likely to celebrate companies for setting a bold time-bound sustainability goal than penalize them for missing their targets. In fact, in today’s business operating environment, stakeholders are more likely to look askance if you hit a modest sustainability target early than if you miss an ambitious target.

Stakeholders—even investors—are more likely to celebrate companies for setting a bold time-bound sustainability goal than penalize them for missing their targets.

We’ve talked a lot about the why, so now let’s tackle the how. The tools that businesses have used for the past decade are no longer fit for purpose, so how are leading companies going about increasing their ambition?

1. They’re focusing on what matters most. The achievement of a bold goal is highly resource-intensive. Therefore, companies should be highly selective in determining where to go big and where to focus on continuous improvement. Big goals should be centered around issues that are highly material and core to the business. Most companies place no more than 10 big bets, with many focusing on just one or two key issues.
2. They’re seeing the big picture. A context-based goal is any goal that considers a company’s “fair share” of a societal challenge. For example, science-based goals, such as science-based climate targets, are a subset of context-based goals. Companies are enhancing their understanding of context using science (e.g., context-based water targets), international frameworks (e.g., the SDGs), or good old-fashioned stakeholder engagement. The thing they have in common is that they’re setting goals by determining what needs to be accomplished, not by determining what they think they can achieve.
3. They’re starting at the end and working backward. Whereas forecasting starts from the past and extrapolates forward to see where we might end up in the future, backcasting starts with an ideal future state (e.g., achievement of an SDG) and works backwards towards the present to identify what would need to happen to get there. Leading companies are defining the impact they want to achieve and using backcasting to understand the steps needed to get there.
4. They’re building holistic approaches based on quantifiable impacts. According to the Impact Management Project (IMP), impact management is the ongoing practice of measuring our risk of negative impacts and our positive impacts so that we can reduce the negative and increase the positive. For example, a company with a bold climate goal should consider all its impacts on climate—from direct emissions, to supply chain emissions, to policy statements, and lobbying activities. The quantification process adds rigor as it necessitates the development of a clear problem statement and theory of change, with a thorough understanding of the different dimensions of possible company impact. 
5. They’re not letting the perfect be the enemy of the good. Leading companies understand that their goal will not be perfect, but they act anyway with the understanding that they may need to course-correct over the life of the goal as they get new information, as the business changes, and as the operating context evolves. To that end, it can be helpful to pair a set of bold goals with a longer time horizon (e.g., at 10 years) with a set of achievable shorter-term milestones (e.g., three to five years). In addition, business can bring stakeholders on the journey by transparently reporting progress, both the successes and the challenges, at regular intervals. This will then help them understand if you need to make an adjustment to the original goals. 

It’s clear that we face a new climate for business—environmental and societal risks have overtaken economic and geopolitical risks in terms of both likelihood and impact in the World Economic Forum’s annual global risk reports. The critical role of business in successfully addressing societal and environmental challenges and the imperative for business to ensure a stable operating environment are increasingly apparent. 

The bottom line: go big (but credible) or go home—your business, your stakeholders, and the world will thank you. We look forward to working with businesses committed to a just and sustainable world on setting bold goals for 2030 and beyond. Please feel free to connect with us to learn more.

Blog | Wednesday December 18, 2019

COP25: National Governments Fail to Seize the Day, but Business Climate Action Continues

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As we enter the decisive decade of the 2020s—when significant steps towards decarbonization have to happen if we are to stave off the worst impacts of climate change—the 2019 UN climate conference in Madrid, COP25, was a poor jumping-off point.

This year’s COP was designed to pave the way for greater ambition on the part of national governments. Unfortunately, they failed to live up to the importance of the moment. In advance of the climate conference, the UN Environment Programme’s Emissions Gap report called for annual emissions reductions of 7.6 percent if the world is to keep global heating to 1.5°C. Measured against that benchmark, the last COP of the 2010s represents a serious setback.

There were multiple disappointments in Madrid. There was no agreement on alignment of carbon market rules, which would provide guidelines on how countries can trade emissions internationally. Also, countries did not prioritize the ground rules that would protect vulnerable nations after a climate disaster.

Even the aspirational language emerging from the negotiations took a step backwards from the more concrete commitments to heightened ambition in the run-up to next year’s pivotal COP26, when the “ratchet” of national contributions is intended to happen. And while 121 nations have committed to net-zero emissions, this is less significant in terms of impact: these countries represent only 15 percent of global emissions. 

There is little doubt that this reflects, in part, the absence of American leadership under the current administration in Washington. While American business and investors were visible and there was political representation from a climate-friendly delegation of congressmembers, state governors, and mayors, they are not able to shift national government commitments. While the We Are Still In coalition remains vibrant and important, it cannot make up for the loss of climate diplomacy from the White House. And with the exception of the European Union, other major emitting nations did not step up either.

But while this was clearly a COP where national governments did not seize the day, there were still some glimmers of hope.

Because while national government action matters—a lot—it is far from the only pathway to progress. And in many other areas, COP showed important steps forward. Many businesses, reflecting what is known in the hallways of the climate talks as “the real economy,” continue to make new commitments. Nearly 800 companies are now committed to net-zero emissions by mid-century.

Many businesses, reflecting what is known in the hallways of the climate talks as “the real economy,” continue to make new commitments. 

While many heavy-emitting industries remain on the sidelines, there are some interesting new commitments. For example, Spanish oil and gas producer Repsol made its COP host country proud by announcing the first net-zero commitment in that sector to include Scope 3 emissions. More broadly, the number of companies joining the UN Global Compact’s Climate Ambition Coalition, committing to a 1.5°C target has doubled since September, expanding to 177 companies representing US$2.8 trillion in market capitalization. Goldman Sachs and AXA have both announced new divestment strategies.

In addition to action by businesses and investors, public demand for climate action continues to be heard. Coinciding with COP, Time named Greta Thunberg the Person of the Year for 2019, and “climate emergency” was named the word of the year by Oxford Dictionaries. It is clear public expectations about climate action are stronger than ever and growing.  

What does this mean for business? Looking ahead to 2020, business has both the interest and the opportunity to continue to raise its ambition. Companies can act by joining the growing parade of businesses committed to 100 percent renewable energy in service of augmented science-based targets and aligning their business strategies with the 1.5°C target.

Companies also can enable progress by working with their supply chains as the number of businesses seeking deep Scope 3 emissions cuts continues to grow. And finally, business should leverage its influence by calling on governments to drop the timidity that was—unfortunately—on display in Madrid.  A loud business voice was vital in the run-up to the Paris Agreement in 2015, and it will be essential to delivering the strong result that will be badly needed at COP26 next November in Glasgow.

The need for heightened urgency is coming from the science, the streets, and the employees of global companies. 2020 must be a year when the promise of Paris is given new life in Glasgow. With business engagement in the year ahead, we can redefine Madrid as a footnote in history, rather than lasting damage to climate ambition.

Blog | Tuesday December 17, 2019

Our Top Sustainability Insights of 2019

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As 2019 comes to a close, we are taking a moment to look back at the news and initiatives that shaped the year. The most popular blog posts and reports BSR published this year show reader interest in a variety of topics, from collaboration to climate change, that are sure to impact sustainability strategies for the decade to come.

Some common themes we saw across our most read content of the year were:

• Understanding the business landscape: We kicked off the year sharing our take on BlackRock CEO Larry Fink’s annual letter and its emphasis on ‘purpose’ and came full circle in November, publishing our President and CEO Aron Cramer’s first annual letter on the New Climate for Business, which presents an agenda for business leaders to take on in the decisive decade to come.
• Seeking a clearer picture of the future: The popularity of future-oriented content, from our report analyzing how the ‘future of work’ will affect gender disparities to a blog post on developing a 2030 strategy, demonstrates that our readers are thinking ahead.
• Staying on top of trends: Much of our top 2019 content looks at the latest trends—in sustainability reporting, stakeholder engagement, supply chain visibility, and private equity to name a few.

What insights will be the most valuable to take from 2019 and bring into 2020? See the list below of our most read publications from the past year and decide for yourself.

Most Read BSR Blog Posts of 2019

1. The New Climate for Business: In his first annual letter, BSR President and CEO Aron Cramer addresses the new climate for business and presented the urgency agenda for the 2020s—the decisive decade, now only days away.
2. Global Tech Companies, Partners Identify Tools to Fight Human Trafficking: This article provides a progress report on the Tech Against Trafficking initiative and their ambitious project to understand and map the landscape of existing tech tools being used in the anti-trafficking sector.
3. Supply Chain Visibility: Traceability, Transparency, and Mapping Explained: BSR experts explain three concepts for gaining and demonstrating visibility in multi-tier supply chains: traceability, mapping, and transparency. What are these concepts, how do they differ, and what do they offer?
4. How Private Equity Can Address TCFD and Climate Change: BSR suggests two types of approach for how private equity firms can address climate risks and opportunities in an actionable, meaningful way.
5. Three Questions to Think About for Your 2030 Strategy: With many sustainability strategies and goals expiring in 2020, companies should reflect on three questions as they begin to shape their 2030 strategies.
6. What Larry Fink's 2019 Letter Means for the Future of Business: Our four main takeaways from the 2019 letter of BlackRock's Larry Fink to CEOs, which mentioned the word ‘purpose’ 21 times.

Most Read BSR Reports of 2019

1. Five-Step Approach to Stakeholder Engagement: This year, we released an update to our extremely popular 2011 report, providing a comprehensive stakeholder engagement approach and toolkit to help companies build and retain stakeholder trust as it becomes more important than ever.
2. ESG in Private Equity: How to Write a Responsible Investment Policy: Over the past 10 years, the private equity sector has seen responsible investment approaches move from exception to expectation. Formalized integration of environmental, social, and governance (ESG) considerations is becoming the norm. For all firms, a meaningful policy is fundamental to responsible investment and ESG integration.
3. Five Reporting Trends for 2019: Insights on the Future of Reporting: BSR's Future of Reporting collaborative initiative seeks to help members create sustainability reports that result in improved sustainability performance at companies and informed decision-making by stakeholders. In this report, it outlines the five innovations it was seeking to improve reporting and disclosure in 2019.
4. The State of Sustainable Business in 2019: The 11th annual BSR/GlobeScan State of Sustainable Business survey found the rise of climate change as the most significant issue and investor interest as a key driver in sustainability, among other insights into the world of sustainable business. 
5. How Business Can Build a 'Future of Work' That Works for Women: Businesses have a responsibility not only to help workers prepare and transition for the ‘future of work,’ but also enact strategies that create positive change and economic advances for women. This report outlines how to do so.
6. Making Women Workers Count: A Framework for Conducting Gender Responsive Due Diligence in Supply Chains: How can companies conduct more gender-responsive due diligence approaches, and what role does gender-disaggregated data play in this? This report, funded by the C&A Foundation, sets out to address this question.  

We published a lot of other great content this year on critical issues of the moment, from blogs on employee and CEO activism to reports on topics in supply chains, such as gender equality and leadership through maturity models. We also continued our Sustainability Short Takes video series, which highlighted the many major issues discussed at our BSR Conference 2019.

All of us here at BSR wish you and your colleagues a happy and safe new year, and as the new decade dawns, we look forward to working together to build a just and sustainable world.

Blog | Friday December 13, 2019

BSR19 Summary for Japanese Market

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Blog | Thursday December 12, 2019

A Human Rights Review of the Facebook Oversight Board

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Facebook makes decisions to take down, leave up, or restore content every day, and some of these decisions can be very challenging, with strong arguments for either removing or leaving up the content. Many users can disagree with these decisions, and millions are appealed each year.

In November 2018, Mark Zuckerberg announced plans to “create a new way for people to appeal content decisions to an independent body, whose decisions would be transparent and binding.” This idea has since become known as the Facebook Oversight Board, with the Governance Charter for the Oversight Board released in September.

The Oversight Board is intended to assess difficult content decisions and provide policy opinions, particularly where there is tension between the freedom of expression rights of users with other values, such as safety, privacy, and dignity. In this sense, the Oversight Board represents a new opportunity to provide enhanced access to remedy for individual users while also informing actions by Facebook to mitigate potential future harms.

Today, we are releasing a human rights review conducted by BSR to inform how the Oversight Board will work in practice.

The purpose of our human rights review is to inform the governance and operations of the Oversight Board such that it is consistent with human rights-based approaches, principles, standards, and methodologies. To achieve this outcome, we used an assessment methodology based on the UN Guiding Principles on Business and Human Rights (UNGPs), combined with a review of the various human rights principles, standards, and methodologies upon which the UNGPs are based.

One important challenge was immediately obvious to BSR upon commencing our work: Efforts to provide access to remedy in other industries typically meet the needs of a limited number of rightsholders, based in clearly defined geographical areas, and speaking a limited number of languages. By sharp contrast, the Facebook Oversight Board needs to meet the needs of billions of rightsholders, who could be anywhere in the world, and who may speak any language.

Combine this issue with the Oversight Board’s independent decision-making authority, and Facebook is creating an institution unlike anything ever previously created by a company. It’s a real leap into the unknown—to our knowledge, no company in any industry has ever established an oversight mechanism with binding decision-making power—and a leap that should be made in a manner consistent with human rights.

With this context, BSR’s review explored seven key human rights themes for the Oversight Board:

• Harms and Impacts: Addressing a wide variety of human rights issues and prioritizing the most severe cases
• Vulnerable Groups: Addressing the rights and needs of individuals from groups or populations at heightened risk of becoming vulnerable or marginalized
• Remedy: Providing pathways to effective remedy (i.e., efforts to restore the victim to the same or equivalent position before the harm) and adhering to the access to remedy and operational-level grievance mechanism expectations of the UNGPs
• Decision-Making: Ensuring that Oversight Board members are fully aware of the international human rights standards and that Oversight Board decisions are effectively integrated into Facebook
• Informed Consent: Ensuring that relevant users (e.g., those posting or featured in content) provide consent for each case and understand both their risks and their rights when consenting
• Safety and Integrity: Addressing new human rights risks arising from the existence of the Oversight Board
• Transparency: Accounting for how human rights impacts are addressed through external communications

In our report, BSR provided recommendations for Facebook and the board itself in each theme. In addition, three high-level insights emerged:

1. We determined that all human rights—not only freedom of expression and personal safety and security—can be impacted by content decisions. This implies that it will be important for the Oversight Board to understand the various human rights impacts at stake in each case.
2. The Oversight Board can help prevent and mitigate future human rights harms through both policy recommendations to Facebook and through the action Facebook takes to implement Oversight Board decisions. Policy recommendations could include new or modified language in the Facebook Community Standards, revisions to guidance on how content moderators interpret and enforce the Community Standards, and potential expansions to the scope of the Board’s mandate itself.
3. We believe it will be important for the Oversight Board to have a mechanism to identify novel cases, emerging trends, and cases that may become more prevalent or severe alongside upcoming social, political, or economic developments. This will enable the Oversight Board to proactively address areas of risk and anticipate future harms.

BSR undertook the human rights review at the same time that Facebook created the Oversight Board, thus enabling Facebook to integrate many of our recommendations into the governance and operations of the Oversight Board. The result is an Oversight Board more consistent with human rights-based approaches, principles, standards, and methodologies. We welcome the following steps already taken by Facebook:

• The charter requires the board to pay particular attention to the impact of removing content in light of human rights norms protecting free expression. In his letter on the Oversight Board Charter, Mark Zuckerberg sets out how the values accompanying Facebook’s Community Standards—authenticity, safety, privacy, and dignity—are guided by international human rights standards.
• When prioritizing cases to refer to the Oversight Board, Facebook will consider factors consistent with the UNGPs, such as the severity of impact on someone’s voice, safety, privacy, or dignity, as well as the number of people affected.
• The board will be composed of a diverse set of members, including those who have familiarity with free expression, civic discourse, safety, privacy and technology.
• Facebook will provide resources to enable the board to hear cases in multiple languages.
• Facebook has designed the tooling and submission process with accessibility to vulnerable groups in mind, including prompts to assist users in submitting their cases and allow individuals to submit their case using a mobile device.
• The board will be empowered to instruct Facebook to allow or remove content, which is a form of remedy for users.
• Facebook commits to implementing decisions in a timely manner and communicating the implementation of the decision to the user, in line with some of the effectiveness criteria contained in the UNGPs.

Facebook is by no means the only social media platform facing the challenges of content moderation, and we hope that the BSR human rights review provides considerable value to other social media platforms, stakeholders, and policymakers addressing similar challenges.

While many companies have created advisory committees to provide guidance on human rights topics, to our knowledge, no company has ever established an independent body in this way. We are hopeful that this report will have lasting impact on the Oversight Board. It will be important for dialogue with the international human rights community to continue, especially as the board starts in earnest to formalize and implement its procedures for deliberation and decision-making.

This board represents a significant innovation in the field of business and human rights, and we look forward to learning how such a novel idea proceeds in practice.