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Audio | Tuesday June 4, 2024

The Environmental Impacts of AI

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Ameer Azim, Climate Change Director, chats with David Stearns on the Environmental Impact of AI, exploring:

• Why it’s important to assess the environmental impacts of a technology like AI.
• Through what type of activities or upgrades does the use of AI increase a company’s CO2 emissions?
• Beyond carbon emissions, what are some of the other environmental impacts associated with the rise of AI that companies should anticipate dealing with as they embrace this technology?
• What are some of the steps that companies can take to address these negative impacts?
• Can AI be used to combat climate change?

Blog | Monday June 3, 2024

Double Materiality and Decision Quality: An Opportunity for the Courageous

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Sustainability impacts have always presented business risks, but they’ve often struggled to gain traction in the face of more obvious and shorter-term operational and financial concerns. Emerging sustainability regulations have driven greater alignment and integration between practices in sustainability and risk management. The likes of the EU’s Corporate Sustainability Reporting Directive (CSRD) and its Corporate Sustainability Due Diligence Directive (CSDDD) will force a deeper integration of sustainability topics into the job descriptions of risk management practitioners.

On the face of it, this is a positive development—more alignment between how we understand different kinds of risk is a good thing. But, ensuring that integration results in better decision-making presents several challenges that companies will need to navigate.

First, traditional approaches to managing risk are often not equipped to handle the increasingly wide array of interconnected uncertainties—from climate change, to geopolitics, and societal polarisation. These defy the often ‘neat’ risk categories which are used to treat risks in discrete and self-contained ways as part of Enterprise Risk Management (ERM) frameworks. They raise difficult trade-offs, challenge values, and cut across organizational structures and siloes.

In addition to this is a second challenge that has long plagued traditional risk management. Approaches to ERM are—in the main—practiced separately from when and how companies make decisions. Risk information is too often collated, reported, and discussed as a compliance and governance exercise after companies decide to enter or exit markets, launch products, acquire competitors, set budgets, make operational changes, or major investments.

In spite of decades of ERM practice, the signs of strain are apparent. For instance, a recent study reveals that not only do the vast majority (83%) of risk professionals state that interconnected risks are emerging more rapidly, but 72% say that their capabilities have not kept pace.

As sustainability practices and risk practices converge, sustainability professionals need to ensure that their activities don’t similarly become perceived as a box-ticking exercise, struggling to keep up with the pace of change in the world. But this moment also presents an interesting opportunity for both sustainability and risk management practitioners to reexamine and reimagine how they influence the decisions that organizations make.

The CSRD’s mandatory Double Materiality Assessment (DMA)—which identifies sustainability topics most material to both companies and their key stakeholders—and the CSDDD’s requirement to identify, assess, prevent, and mitigate sustainability impacts together have the potential to provide the much-needed refresh to how companies navigate these challenges. 

Doing so, however, requires an approach to assessments that treats them as a strategic exercise, incorporated within—and as a key component of—organizational decision-making. DMA’s are in many ways the most comprehensive examination of a company’s sustainability-related impacts, risks, and opportunities. They can help companies identify tough trade-offs, prioritise sustainability initiatives, and navigate uncertainty and complexity successfully. However, doing so requires courage, and involves treating compliance as the by-product, not the objective of the assessment process.

With this in mind, we recommend three essential ingredients for success: 

1. Integrate and align internal approaches—Internal risk, sustainability, compliance, and other functions can get in their own way via the use of separate and sometimes contradictory methodologies and approaches, replete with their own jargon. Frameworks, processes, criteria and supporting systems can and should be designed with decision-makers in mind. That means the use of common understandable terms, methods, processes, decision-making criteria, heuristics, rules, tools, and related approaches that “join-up” clearly with one another. They should make the complexities faced by decision-makers more understandable. In integrating DMA, this may mean ensuring that a long enough time horizon is considered, external stakeholder views are incorporated and that both the upside and downside of outcomes are adequately reflected. 
2. Focus on decision quality—“Decision quality” is all about making the best possible decisions, based on what is known when decisions are made, not after the fact. A DMA can be an invaluable source of decision quality—but only if there is adequate focus placed on this. While DMA’s are often conducted as annual strategic exercises, their findings can have profound and positive reverberations throughout an organisation’s decision-making practices. For example, for large-scale, one-off decisions such as entering a new market or launching a new product, a review of the DMA findings or point-in-time DMA refresh can reveal a potential negative reaction from a key stakeholder, which may not have been identified otherwise. Similarly, the findings from a DMA can improve the quality of recurring decisions, such as choosing suppliers or dealing with customer contracts by integrating material stakeholder concerns into those operational decisions. However, to unlock these areas of value, both risk and sustainability practitioners must find ways to get involved in organisational decisions, when those decisions get made. 
3. Leverage the uncomfortable benefits of outside-in perspectives—One of the most powerful benefits of a DMA is its ability to surface alternative perspectives from key external stakeholders. Decision quality within organizations suffers adversely from a range of biases such as ‘groupthink,’ optimism bias and something called the “false consensus effect” in which we frequently overestimate how much others share our beliefs and values. Great decision-making involves seeking challenging views. This can be uncomfortable, but ultimately leads to better decisions and over time, better outcomes. By actively and regularly seeking views from a variety of critical stakeholders, a strategic approach to DMA can incorporate these benefits as a matter of regular practice. 

It is fortuitous that regulatory trends to align and integrate sustainability and risk management practices are occurring at a time in which a refresh in the latter is overdue. Businesses that lean into the challenge of getting this right—driving assessment results deep into decision-making—will ultimately empower choices in an uncertain world for themselves and their key stakeholders, while simultaneously doing their part to create a more just and sustainable world. 

If you’d like further information on BSR’s approach to double materiality or to discuss what’s right for your organization, please don’t hesitate to reach out to us. Wherever you are in your sustainability journey, we’d love to help! 

People

Ben Cattaneo

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Blog | Thursday May 30, 2024

1.5°C Targets: The Business Case for a Climate Transition Plan

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The future of corporate climate targets has been a theme of fierce debate recently, especially in relation to announcements and steps taken by the main corporate climate target-setting framework, the Science Based Targets Initiative (SBTi), which generated uncertainty in the market, and some signs of companies watering down ambition in an uncertain environment. But don’t be fooled—in 2024, 1.5°C aligned corporate targets are here to stay, and for most companies, different drivers such as regulations and customers have moved the conversation beyond targets, and toward developing 1.5°C aligned climate transition plans.

SBTi momentum has steadily grown over the past three years, while recent announcements generated uncertainty and put its governance into question. 

In 2015, when the SBTi was first created, there were no science-aligned climate target methodologies, or externally validated near-term or long-term climate targets aligned with the Paris Agreement. In 2024, SBTi is the common reference initiative in the space and currently the only framework for third party-validated, climate science-aligned targets for businesses: its growth is therefore an important sign of the momentum behind climate targets. SBTi-validated targets have grown 100 percent annually over the past three years, to over 5000 approved targets worldwide to date.

Recently, a small group of companies (around 10) withdrew from SBTi, mostly due to methodological misalignment. 

SBTi got into the spotlight for the recent statement from its Board of Trustees on changing rules regarding the use of environmental attribute certificates (EACs) within Scope 3. The initiative has since put forward a clearer process and timeline to establish any changes to its guidance. But this issue puts the initiatives’ governance mechanisms into question, and trust will need to be rebuilt. 

A small group of corporate commitments were for the first time removed from the SBTi website, as part of an effort for corporate accountability.

In 2024, for the first time SBTi removed 284 expired corporate commitments that were set in 2021 as part of the Business Ambition for 1.5°C campaign, in which companies did not submit for validation in time. There are several reasons why companies were not able to submit their target in time, from internal staff changes delaying the process, to confusion about SBTi evolving methodologies, to changes in companies structures making the initial commitment irrelevant. The three most common reasons revolve around the SBTi Net-Zero Guidance being published after the time of commitment, concerns about the feasibility of targets, and challenges with Scope 3. While many reasons are valid, removing expired commitments is crucial for holding companies accountable.

What’s more, most of the removed commitments are related to long-term targets, with the same companies having already validated near-term SBT. This points to the fact that long-term targets require the ability to navigate complexity and uncertainty, fundamental shifts well beyond incremental change, and pulling systemic levers that are critical for transformation. 

1.5°C targets, and how to achieve them, are clearly embedded in regulations.

Setting and delivering 1.5°C targets continues to be a top priority for companies worldwide. While cases exist of companies pulling back their climate targets, the overall trend is in the opposite direction, pushed by regulations as well as customers. The regulatory landscape points toward a doubling down in climate action and ambition, driven by EU’s Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). 

• Under CSRD, climate is de facto a material issue unless a company can prove otherwise. The CSRD’s European Sustainability Reporting Standards (ESRS) requires disclosure of Scope 1, 2, and 3 GHG emissions in line with GHG Protocol; absolute emissions reduction targets; and reporting and disclosure of a transition plan to a 1.5°C future. Companies with SBTs are well placed for the CSRD target requirement, as this WWF analysis shows.
• CSDDD requires companies to develop a climate transition plan, including a 1.5°C aligned time-bound target “for 2030 and in 5-years steps up to 2050.” 

Companies should stay focused on setting and implementing 1.5°C targets, build 1.5°C climate transition plans, and collaborate to unlock the net-zero transformation.

BSR encourages its members not to lose focus on the end goal outlined in the Paris Agreement, so staying focused on setting and implementing 1.5°C targets. This should include both near-term and long-term (2050) goals, as well as a plan to reach them. Today, SBTs are the only externally certifiable science-based climate target companies can use. External validation and transparency on methodology are key for accountability, so we encourage BSR members to continue on their SBT journey. 

High-quality carbon credits are critical for quickly scaling the desperately needed investments in the nature-based solutions necessary for addressing the twin climate and nature crisis. BSR encourages an approach to credits that is differentiated from Scope 3, and stands ready to support its members navigate the volatile space with integrity.

Finally, transformative business action is critical to address the climate crisis: developing 1.5°C-aligned climate transition plans is the way to do so. BSR stands ready to work alongside our members to understand climate transition plan requirements, build climate transition strategies, and collaborate to unlock systemic barriers to net zero. If you still aren’t sure how to move forward with your climate targets, or would like to learn more about BSR’s work on Climate Transition plans, please don’t hesitate to reach out to the Climate team.

Reports | Thursday May 23, 2024

Effective Engagement with Technology Companies

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Civil society has long sought to influence the policies and practices of technology companies in order to address adverse impacts on people and society and advocate for user rights. Technology companies, on the other hand, should engage with affected stakeholders as part of their responsibilities under the UN Guiding Principles on Business and Human Rights (UNGPs, PDF). Stakeholder engagement is also increasingly required as part of compliance with emerging regulation, such as the EU Digital Services Act (DSA).

Achieving meaningful stakeholder engagement in the technology industry benefits both civil society and companies. However, both civil society and technology companies face challenges in engaging effectively.

BSR’s new guide, funded by the Omidyar Network, is a practical resource for anyone seeking to engage with global technology companies on digital rights issues related to the development, deployment, and use of their products and services. The guide includes the following sections:

• Key terms, including the definition of “effective engagement” 
• How technology companies conduct stakeholder engagement
• Common characteristics of effective civil society-company engagement, as well as the barriers to achieving it
• Practical tips and best practices

Blog | Tuesday May 21, 2024

The EU AI Act: 11 Recommendations for Business

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This is the second of a two-part series from BSR’s Technology and Human Rights team on the latest developments around the European Union Artificial Intelligence Act and its implications for business.

With the EU’s Artificial Intelligence Act (the AI Act) soon to come into force, leaders around the world are asking themselves what it will mean for their business. The Act is broad in its scope, applying to a wide range of AI systems and companies at all parts of the AI value chain, from development to use. Therefore, it is crucial for any company that develops or uses AI to understand which requirements of the Act will be applicable. This is an exercise that many legal and compliance teams are already undertaking.

Where prioritization is needed, companies might want to look at the order in which provisions will come into force, focusing initially on ensuring there are no prohibited AI practices (since these rules will be in six months), then looking at requirements around general purpose AI models (twelve months), next AI systems that interact with people (two years), and finally high-risk AI systems (three years). 

How a human rights-based approach to AI can help 

As with other pieces of tech-related regulation stemming from the EU (such as the Digital Services Act), the protection of human rights (termed “fundamental rights” within the EU’s legal system) weaves its way throughout many of the AI Act’s provisions.

While there has been criticism from civil society that the legislation does not go far enough in, for example, prohibiting mass surveillance and facial recognition technologies, for companies developing and deploying AI systems in the future, an understanding of the potential adverse impacts on human rights of those systems is essential.

The most relevant provisions, which are particularly important for “high-risk” AI systems, are: 

1. Risk management systems: Companies will need to develop and implement risk management systems when high-risk AI systems are being developed, and these systems will need to include the identification and analysis of potential risks to human rights.
2. Data and data governance: When developing high-risk AI systems that involve training models with data, companies will need to ensure that those models are validated and tested in line with appropriate data governance and management practices, which must include an examination of possible biases that are likely to adversely impact human rights. 
3. Transparency and provision of information to deployers: Companies that deploy high-risk AI systems must design them in such a way as to ensure that their operation is “sufficiently transparent to enable deployers to interpret the system’s output and use it appropriately”. This involves providing instructions for use that include, among other things, details of any potential adverse impacts on human rights.
4. Human oversight: Companies will need to design and develop high-risk AI systems in such a way that they can be effectively overseen by a human. Such human oversight must aim at preventing or minimizing any risks to human rights that may emerge when the system is used as intended, or where it is “misused” in ways that are reasonably foreseeable (i.e. where it might be used in ways which weren’t intended). 
5. Human rights impact assessments: Before certain high-risk AI systems are deployed (primarily when systems are to be used by the public sector), deployers must undertake an assessment of the impact on human rights that the use of the system may produce. This assessment must include details of the individuals and groups likely to be affected, the specific risks of harm, and what measures are to be taken to mitigate those risks. 
6. Reporting serious incidents: Providers of high-risk AI systems placed on the EU market must report any “serious incident” to the market surveillance authorities of the member states where that incident occurred, and “serious incidents” include breaches of obligations under EU law intended to protect human rights. 

The definition of “high-risk” means that some sectors are likely to be more impacted by these requirements of the AI Act than others, such as companies involved in the provision of key public services and infrastructure, or those in the financial services sector using AI to assess a person’s creditworthiness. But some “high-risk” AI systems may be relevant for companies’ internal uses of AI, regardless of sector, such as the use of AI-based emotion recognition technologies to determine an employee’s emotions (such as whether they are bored or unhappy), or the use of AI for recruitment purposes. 

These different provisions all require companies to develop a strong understanding of the potential impacts that their development or use of AI may have on human rights, as well as to take steps to mitigate those impacts. As such, the AI Act has overlaps with other existing and upcoming regulations which require human rights due diligence. Companies will be well placed to meet these emerging regulatory requirements by taking a harmonized approach, grounded in human rights, and specifically the UN Guiding Principles on Business and Human Rights (UNGPs), across their business.

In addition to BSR’s support for companies to apply to the UNGPs, we’re developing a range of resources specially on the human rights impacts of AI, including guidance on responsible AI in the financial services, consumer, healthcare and retail sectors, as well as our upcoming sector-wide human rights assessment of generative AI.

Our key recommendations on what companies can do now are: 

1. Put together an inventory of the existing and planned AI use cases within your company. 
2. Undertake human rights due diligence of those existing and planned uses of AI to identify high risk areas. 
3. Ensure you have a clearly defined purpose for each use of AI and consider establishing use limitations.
4. Establish a governance mechanism for the responsible use of AI within the company, such as internal cross-functional oversight committees, and/or an external advisory councils. 
5. Given many of AI’s risks, connected to privacy and data protection, ensure a high level of data protection within the company reviewing existing measures, policies and processes to ensure they meet the additional risks created by AI 
6. Test AI models for bias and externalities, to mitigate potential discriminatory impacts. 
7. Undertake adversarial testing and red teaming (exercises where the AI system is stress tested to discover how the system might be misused or lead to harmful outcomes). 
8. Provide transparency to users, internally and externally, about how the AI models and systems work. 
9. Integrate feedback through a reporting channel where potential misuse and abuse of AI systems can be reported.
10. Engage in dialogue with other industry players in your sector. 
11. Engage with external stakeholders throughout the AI life cycle to help inform decisions around the development, sale and use of AI. External stakeholders could also be part of an external advisory council (see recommendation 4). 

For more information on the AI Act or to discuss its implications for your business, members can contact our Tech and Human Rights team.

Audio | Wednesday May 15, 2024

Is the U.S. Ceding its Position as a Leader in Sustainability?

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Aron Cramer, BSR President and CEO, chats with David Stearns about why the United States is at risk of marginalizing itself and its influence over the pace and trajectory of progress on sustainability, and what this means for business.

Case Studies | Wednesday May 15, 2024

Conducting a Double Materiality Assessment

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Introduction

BSR worked with Assurant, a global business services company that supports, protects, and connects major consumer purchases, to conduct a global double materiality assessment aligned with leading reporting standards and frameworks. Assurant and BSR used the materiality assessment as an opportunity to improve the company's understanding of the double materiality process and facilitate discussions with senior business leaders around stakeholder priorities and strategic implications at a regional and global level. This project enabled Assurant to confirm its strategic priorities ahead of its sustainability strategy refresh and prepare for upcoming regulatory reporting requirements like the EU Corporate Sustainability Reporting Directive ("CSRD"), given the company's presence in Europe.

Background

Assurant is a leading global business services company that supports, protects, and connects major consumer purchases through two operating segments: Global Lifestyle and Global Housing. A Fortune 500 company with approximately 13,600 employees in 21 countries, Assurant partners with the world's leading brands to deliver innovative solutions through mobile device offerings, extended service contracts, vehicle protection services, renters’ insurance, lender-placed insurance products, and other specialty products.

The Challenge

Assurant recognized the need to refresh its materiality assessment using a double materiality approach, which considers how sustainability topics influence a company's enterprise value (“financial materiality") and how the company's activities related to sustainability topics affect the environment and society (“impact materiality"). In recent years, the sustainability field has been moving away from methods that are based on stakeholder perceptions and adopting methods based on impacts. CSRD's double materiality requirement has dramatically accelerated that shift. What was once considered a nice-to-have is now non-negotiable for many companies. Adopting the concept of double materiality clarifies that many sustainability topics may not impact enterprise value, but companies still need to address them because these topics impact the environment and society, including affected stakeholders. Assurant understood the strategic value of this opportunity and wanted a partner to work closely with them on a robust assessment aligned with best practices.

With over 30 years of experience in the sustainability and human rights field, and as an early adopter of double materiality, BSR has worked with 250 companies on materiality assessments. BSR's methodology pulls from best practices in the materiality and human rights fields to systematically identify, define, and prioritize a company's positive and negative impacts on enterprise value and the environment and society, by assessing the likelihood and severity of the impacts to occur. BSR's approach to double materiality and emphasis on authentic stakeholder engagement resonated with Assurant's desire for a strategic and thoughtful process instead of a solely compliance-focused exercise.

BSR’s Response

As a company headquartered in the US with operations in the EU that are subject to CSRD, Assurant wanted to ensure that its materiality assessment incorporated a European lens as well as focused European stakeholder engagement. BSR worked with Assurant to define an efficient approach that would result in a global view, while also providing sufficient regional nuance. At the beginning of the project, BSR developed a long list of relevant sustainability topics and descriptions of impacts on business and impacts on environment and society at global and regional levels using European Sustainability Reporting Standards (ESRS) guidance, other reporting frameworks, peer reviews, strategic documents, and prior materiality results. While a high-level materiality assessment based on stakeholder perceptions can uncover impacts to enterprise value, BSR's work with Assurant and other organizations has revealed that more in-depth research using various data sources is needed to meaningfully capture impacts on environment and society by the company or its industry.

As part of our process, we engaged 45 internal and external stakeholders to analyze perspectives and emerging expectations on key sustainability topics and actual or potential impacts, risks, and opportunities (IROs). For materiality assessments, it is critical that companies involve a wide range of stakeholders in the process of identifying and assessing IROs. Internal stakeholders should include leaders and employees across the organization, covering the regions in scope, and a company's various business lines. External stakeholders commonly include clients, partners, suppliers, industry groups, rights-holders, thought leaders, NGOs, and trade unions. Based on findings from the stakeholder interviews, we refined our definitions of the key impacts associated with each topic on enterprise value, environment, and society.

The topics were ranked based on impacts to enterprise value and impacts on environment and society following CSRD requirements and using a framework that was aligned with Assurant's ERM system. The results were plotted on global and European matrices, to call out the regional nuances. The matrices were accompanied by rationale for the topic placements and the key differences between the global and European results. BSR conducted two virtual interactive workshops with Assurant's European and global executive leadership teams to validate results and discuss strategic and reporting implications.

Impact

BSR conducted a robust double materiality assessment to prepare Assurant for its upcoming strategy refresh and mandatory disclosure obligations. The finalized materiality results clarified Assurant's highest priority topics and brought consistency between global and regional sustainability strategy and reporting. This process helped to broaden the organization's knowledge of sustainability topics, related impacts, risks, and opportunities, and led to an improved understanding of and alignment with the double materiality process, as defined by CSRD. The meaningful conversations with various stakeholder groups allowed Assurant to strengthen its relationships with key partners and identify future opportunities for collaboration. As a next step to this work, Assurant is translating the findings from its materiality assessment to develop goals, targets, and action plans for its highest priority topics.

We recognized the value of extensive stakeholder engagement as a key input for the assessment, offering meaningful dialogue with our senior leadership on priority matters and amongst several key clients on common sustainability focus areas. The BSR team effectively facilitated much of the key discussion throughout the assessment's stakeholder engagement and felt like an extension of our Sustainability Team.

- Michael Bellantis, VP of Sustainability, Assurant

Conclusion

A double materiality assessment should not be viewed as a mere tick-box exercise, but a valuable strategic endeavor that will serve as the foundation for a company's sustainability strategy and reporting. Not only does it position companies to adapt to upcoming and future disclosure regulations, it also leads to stronger internal and external stakeholder relationships and more resilient business strategies that focus on long-term value.  

Get in Touch

Interested in learning more about BSR's approach to double materiality assessments? Please contact BSR's Transformation Team.

This case study was written by Megan Coffey and Beth Richmond.

Blog | Wednesday May 8, 2024

The United States Is At Risk of Marginalizing Itself on Sustainability: What Business Can Do

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This is the second of a two-part series on how developments in the United States are marginalizing its global leadership role, and creating unnecessary barriers to the achievement of a more just and sustainable global economy. 

The lack of consistent American engagement and leadership on just and sustainable business is having far-reaching consequences. The picture we painted in the first installment of this two-part series includes inconsistent and changing regulations, opposing approaches in different US states, a decline in global cooperation, and increased geopolitical conflict that interferes with global trade. These developments are bad not only for sustainable business, but also bad for business in general. 

With this in mind, what can business do? While many companies have gone quiet in the face of backlash and skepticism—mostly while maintaining commitments—that may not be the right influence strategy at a time when many forces are pulling the United States away from a more consistent and ambitious approach.  American poet Robert Frost famously wrote that when facing a problem, “the best way out is always through,” and that applies here.  To avoid further slippage of American leadership, it’s essential that companies go directly to one of the main sources of this erosion of ambition: the unfounded backlash against addressing important issues like climate action and the need for greater equity.     

While many business leaders would prefer to avoid the political risk they see in calling for more decisive direction from the US, standing aside is riskier than engaging. A failure of American leadership and constancy will only magnify and deepen the many uncertainties facing companies due to multiple disruptions.

Put more positively, companies benefit from sustained American engagement in many ways: consistent and predictable rules to enable more stable planning; global cooperation to address shared challenges; ideally, respect for rule of law; support for financial support for the energy transition, and policies that promote the innovations and investments needed to shift the economy to a fairer and more sustainable pathway.

There is a strong business case for companies to call for American engagement in support of a more sustainable world. To be credible messengers, business also needs to look in the mirror: one of the reasons that support for sustainability in the US is waning is the fact that the public has lost faith in the global economy as a driver of shared prosperity. For the private sector to exert influence in a way society embraces, it has to go further in terms of action, credible communication, and willingness to engage in advocacy.

Action: One of the reasons why much of the general public, and many policymakers, are wary of the sustainable business agenda is the insufficient evidence of progress. It is high time to close the gap between commitment and delivery. Whether on Scope 3 climate goals, diversity objectives, labor conditions in global supply chains, or designing technologies with society’s best interests in mind, there are legitimate reasons why “ESG” has become a juicy target for political opponents. What’s more, there has been little effort to make economic equity and opportunity a strong enough part of the sustainability agenda. Closing the delivery gap is easier said than done, and is a prize in itself. Doing so is a predicate for the private sector to use its voice credibly and effectively. 

Communication: Public officials’ commitment to sustainability is driven in part by tepid public support. And weak public support is due in large part to the disconnect between what sustainability advocates say and what the general public understands and feels to be true. We all know that business has not communicated effectively on sustainability, in some cases conveying grand messages on “corporate purpose” which are not sufficiently matched by actions at best, or which were never “real” to begin with at worst. Objectives also are often disconnected from the reality of peoples’ lives. The exciting innovation stories behind many sustainability initiatives is something that is either underplayed, or may not resonate with the average person. As a result, sustainability seems to be suffering from its own “vibecession,” with the progress taking place lost on people who feel vulnerable economically and nervous about the overall pace of change they are experiencing. Blaming the audience never works, however, so it is essential to make sustainability more real, and more compelling. This will have the echo effect of strengthening political support and pushing back on the backlash. 

Advocacy: Business’ influence as an advocate for supportive public policy has been stilled over the past two years, as companies have faced blowback from some elected officials, and skepticism from the media, stakeholders, and even employees. While it may be true that new commitments were trumpeted too loudly in 2020-21, it also seems true that greenhushing has gone too far now. The business voice needs to be heard. What’s more the voice that needs to be heard is in sync with business interests as well as sustainability objectives. Companies have an interest in the rules-based global trade system, consistent regulatory frameworks, and a commitment to global cooperation to address shared global challenges. Business—if it shores up its credibility based on delivering against goals—can be a powerful voice that helps to ensure that the US remains committed to these objectives and actions. Without this, the private sector could see further slippage into a combative and volatile environment that furthers neither economic vitality nor sustainability progress. 

Building an economy that works for all people is, by definition, a matter of universal concern. And while “Sustainability Americana” is not fit for purpose in today’s world, a coherent global approach to sustainability requires that America stay in the game. American leadership matters—and it won’t happen without businesses calling for ambition, cooperation, and engagement.

Reports | Monday May 6, 2024

The Elephant in the Sustainability Room

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After a decade of setting environmental commitments, the company's focus has shifted to delivery.

This implementation phase is proving challenging for many. Despite some progress, many companies find they are progressing at a slower pace than expected. While the lack of a supporting policy environment certainly contributes to these challenges, in many cases, they are also a result of business objectives that remain at odds with sustainability targets.

This foundational working paper builds on BSR’s Beyond Growth event series, and is the first in BSR’s ongoing contribution to critical business discussions to address this tension. It explores:

• The fundamental issues and barriers creating this tension
• How alternative economic models are an underexplored solution
• How can business address the tension between growth and sustainability targets, including through business model transformation

BSR is committed to exploring all paths to effectively deliver long-term sustainability goals, and will continue to contribute to this critical discussion with members.