Blog | Thursday December 5, 2019

Blockchain through the Whole Supply Chain: Traceability at the Source Depends on Trust

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This blog is the second in a series where BSR and Envisible document their project to support a global brand and its supply chain partners to establish a blockchain-enabled traceable supply chain that delivers sustainability benefits to all the actors in the supply chain. It follows up on this blog, originally published in July 2019. 

In the green hills of a small village, a group of about 300 farmers and members of a smallholder co-op are gathered around a converted schoolhouse, waiting.

Inside the building, a team from the cooperative is managing a well-organized crop sale as farmers file in one by one to participate in the sale process: presenting their product, having it graded and sorted, weighing it, and agreeing to the price. Finally, they are issued a paper bill to show what they are owed, and then they watch as the cooperative team enter the details on an Excel spreadsheet.

Our team (BSR and Envisible) was there to digitize and simplify this last step—collecting data electronically—with the hope of building upon the trust-based relationship that already exists between the co-op and the farmers and then enabling this data to be shared downstream to the rest of the supply chain, ultimately a global corporation and its consumers.

“Card,” Léon said to the farmer standing before him. Léon is a member of the co-op team responsible for ensuring that the weight, quality, and price data are correct and accurately recorded at the last step of the process before the farmers are paid.

The farmer reached into his bag and pulled out a newly issued membership card that identified him as a card-carrying member of the cooperative. Léon scanned the QR code on the card with his mobile phone, prepopulating a Wholechain digital record with key information about the farmer, coop, and location, and then added the agreed weight of the product sold. Finally, he clicked “send” to electronically send the record to the trader. Léon looked up, pleased.

“We’ve done 200.”

Léon was amazed that the app worked on the limited connectivity of the mobile network in the village (just above 2G) in the jungle. And he liked it significantly better than the manual data entry that he was used to.

At the end of a long day, 227 records of farmer transactions were saved on the blockchain, all reinforcing the facts: 227 farmers had shown up that day in that village and had sold hundreds of kilos of a critical agricultural commodity to their cooperative. These transactions, now immutable records on the blockchain, would form the foundation of a traceable chain of custody, forever linking these farmers to the global supply chain and ultimately the products sold far away from the quiet villages.

The foundation of this traceable supply chain is now in place, and the next steps over the coming months will be critical to completing the picture. Digitization and blockchain alone do not improve farmers’ lives; traceability is not equal to sustainability. What they do is provide a gateway—an immutable view into the specific community providing the raw material, altering how we think about raw material supply chains. Involving smallholder farmers directly in a traceability system is a powerful way to lay the groundwork to ensure that sustainability requirements are aligned to the needs of this key community since every transaction ultimately links back to them as the source.

The traceability system needs to make sense for and provide value to the farmers at the source. We left the village and the sale not only with digitized records on the blockchain, but with the following lessons that are critical for success when digital tools are introduced into supply chains such as this one:

1. Simplicity is critical. During the sale, the team members were doing multiple tasks at once that demanded their attention. The system needs to be simple, easy to use, and work in challenging network environments.
2. Digital tools must fit into existing systems. Rather than creating new processes, applications must enhance and reinforce existing ones. In the case of this sale, Wholechain only served to simplify an existing system.
3. Digitization can enhance trust, but certainly not replace it. What we saw that day in the village was a great reminder that blockchain does not create trust. Blockchain is not “trustless” either. Blockchain enhances and builds on trust that is already there.

There is no denying that digitization can provide value to players way upstream: the farmers and cooperative appreciated the enhancements and are looking forward to more. Technology and digitization was seen as a reward for good practice and hard work between the farmers and the buyer. The connection has been established between the brand and the farmers at the source of a critical raw material. Let’s see what we can build from here.

Blog | Tuesday December 3, 2019

Challenges and Opportunities for Gender Equality in a European Luxury Supply Chain

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What is the significance of the prized “Made in Italy” label that is well known in the luxury world?

Many fashionistas will associate it with glamorous designers creating sophisticated and high-quality products, from ready-to-wear apparel, fashion accessories, textiles and fabrics, and shoes to leather goods and eyewear.

Many experts of the luxury sector will know that many of these products are manufactured by a great number of small- and medium-sized enterprises (SMEs). These are generally highly specialized, yet still predominantly artisanal companies, and they are usually family owned and employ less than 50 employees on average. These companies are considered a fundamental asset to the luxury industry and to Italy in general. For example, Italy represents 87.8 percent of the global supply chain of the Kering Group, one of the major global players in the luxury sector. According to a recent study, a third of the global luxury goods market is Italian, and in 2018, it represented four percent of the Italian GDP.

But with these data, we are just scraping the surface: WHO is really behind your “made in Italy” bag, scarf, your glamorous glasses?

The short answer is: most of the time, women.

The long answer can be found in the report Supporting Women in the Luxury Supply Chain: A Focus on Italy, which found that while women are vital to the luxury sector, gender inequality throughout the supply chain still impacts them in the short- and long-term. However, both brands and suppliers are well placed to lead efforts towards improved gender equality in Italy, in both supply chains and in the country’s overall sociocultural context.

The study presents the results of a year-long research study commissioned by Kering and its family of Italian brands, Bottega Veneta, Gucci, Kering Eyewear and Pomellato. This study was conducted in partnership with local organizations Camera Nazionale della Moda and Valore D. With this project, BSR and a local partner Wise Growth engaged 189 suppliers of the Italian luxury supply chain to gather insights related to gender equality policies and practices as well as perceptions and experiences of 880 workers, including 620 women workers.

Women are key to the luxury sector. As outlined in a report published in 2018 by BSR’s Responsible Luxury Initiative, in 2015, women accounted for 85 percent of luxury sales, representing about four percent of designers and the majority of people entering the industry across the value chain. This gender ratio was also apparent in the research study—across the 189 suppliers involved in the research, women represented 63 percent of the workforce.

Although the “Made in Italy” label is well regarded, Italy itself, like many other countries, still faces difficulties with gender inequality. According to the World Economic Forum Global Gender Gap Report 2018, gender inequality in Italy is particularly evident when it comes to women’s active participation in the labor market as they face more limited access to job opportunities and career progression and greater exposure to vertical segregation and harassment, among other obstacles.

Despite these facts, little was known to date about gender inequalities that may be faced by women working in the luxury supply chain, their status, and the predominant challenges they face. This research intends to contribute to closing this gap of knowledge as well as outlining potential next steps to address the issue. The report draws four conclusions:

1. Women do not have access to the same working conditions and economic opportunities as men: Women represent 63 percent of the workforce, but only 25 percent of management positions, remaining predominantly in traditional roles as blue collar workers within the factories. Lower positions lead to lower salaries and the perception among women of discrimination in remuneration and that they cannot earn a living wage.
2. Women rarely hold leadership positions and have limited opportunities of professional career advancement: Breaking the glass ceiling is particularly challenging, and 59 percent of women feel discriminated against across the employment cycle. Overall, and not surprisingly in the context of SMEs, there is overall limited investment in career advancement and professional training opportunities. Women also tend to accept the lack of career growth prospects as a precondition tied to their interest in having more flexible working hours, and they also stigmatize female colleagues in leadership positions.
3. The impacts of familial responsibilities are seen as obstacles to gender equality: Motherhood in particular is perceived as a burden by 39 percent of women, who fear its consequences on their job upon returning to work and its overall impact on getting and sustaining a job and on professional growth. In addition to that, shared parental responsibilities are still rare: for 69 percent of women, domestic and family care responsibilities still predominantly fall on their shoulders and impact their work-life balance.
4. Women have a harder time voicing challenges and concerns: This study did not uncover highly concerning results in terms of the number of cases of sexual harassment that women may have experienced or heard of in their lives. At the same time, there is relatively low awareness of what constitutes harassment and inappropriate behaviors. Much more would need to be done to educate workers on this issue as well as creating an enabling environment for voicing concerns through grievance mechanisms and speak-up channels and ensuring that women feel empowered and confident enough to voice their concerns.  

In terms of potential next steps, there are clear opportunities for the luxury sector to lead efforts towards more gender-inclusive supply chains in Italy and more generally contribute to breaking down barriers and gender stereotypes in and out of the workplace. To achieve this and to build a potential path forward for future programming in support of gender equality, the report outlines a set of recommendations structured under BSR’s “Act, Enable, Influence” framework.

Following the research and the recommendations outlined in the report, Kering and its family of four brands have committed to take action to help advance gender equality through supplier engagement and in cooperation with relevant stakeholders. We look forward to seeing how this will contribute to driving impact and positive outcomes for women in the Italian luxury supply chain.

If you are interested in learning about how BSR can support you in promoting gender equality in your supply chains, please contact us.

Reports | Tuesday December 3, 2019

Supporting Women in the Luxury Supply Chain: A Focus on Italy

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Luxury brands have committed to supporting women’s empowerment across their value chains. Women not only represent a significant share of luxury brands’ customers and employees—they are also a critical part of luxury companies’ supply chains. Italy, in particular, is well known for being a primary sourcing country for the sector, yet the status of women in the supply chain and opportunities to support women’s economic and social empowerment remain largely unknown and unaddressed.

Across many different countries, women face multiple barriers to achieving gender equality. These include:

• Economic barriers such as overall low labor force participation, high proportion in the informal sector, prevalence in part-time roles, challenges advancing in their careers and into leadership and decision-making roles, unequal compensation levels, and a disproportionate amount of unpaid care work.
• Social barriers such as high rates of gender-based violence and harassment, challenges accessing sexual and reproductive health services, migration and human trafficking risks, weak implementation of anti-discrimination laws, traditional roles of women in society and in the workplace, and hidden gender biases and social norms that are difficult to eradicate.

Italy is no exception. Working women in the country face numerous challenges in the labor market, and little is known about gender equality efforts and the gender gaps impacting women working in the Italian luxury supply chain. With this context in mind, Kering and its family of Italian brands, Bottega Veneta, Gucci, Kering Eyewear, and Pomellato, have engaged BSR to better understand the challenges, ambitions, and opportunities of women workers in today’s luxury supply chain in Italy and identify ways to support their success.

This paper aims to:

• Shed light on the status and challenges faced by women workers in Italy, particularly those working in the luxury sector.
• Identify areas of intervention and provide practical recommendations on actionable next steps, programs, and initiatives that luxury brands could pursue, in cooperation with their suppliers and relevant stakeholders, to address gaps and concerns raised by women workers and work toward the realization of gender equality in the workplace.

This paper summarizes the insights gained from a variety of activities conducted by BSR and Wise Growth between February and September 2019.

Blog | Thursday November 21, 2019

Can Corruption in Your Value Chain Lead to Complicity in Gross Human Rights Abuses?

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This blog forms part of a series on conducting enhanced human rights due diligence in conflict-affected and high-risk areas.

The jury may still be out on whether freedom from corruption should be a human right, but in the business and human rights community, there is increasing momentum for articulating the relationship between corrupt business practices and their associated negative human rights impacts. These impacts are amplified in likelihood and severity when they happen in conflict-affected and high-risk areas, such as Myanmar, Colombia, or Palestine. Should businesses fail to conduct conflict-sensitive human rights due diligence and integrate their anti-corruption and human rights efforts, both upstream and downstream of their business operations, they may find themselves directly or indirectly linked to and complicit in gross human rights abuses that are conducted by a third party. These include human trafficking, child labor, and even crimes under international humanitarian and criminal law like genocide and crimes against humanity.

In situations like these, traditional human rights due diligence is often insufficient. BSR recommends enhanced human rights due diligence that is both conflict-sensitive and that integrates corruption risk. Tying these two narratives more closely together will reveal far more insight about the nexus of power relationships that companies need to navigate to do business with integrity.

Should businesses fail to conduct conflict-sensitive human rights due diligence and integrate their anti-corruption and human rights efforts, both up- and down-stream of their business operations, they may find themselves directly or indirectly linked to and complicit in gross human rights abuses that are conducted by a third party.

Corruption can lead to negative impacts on human rights; as such, part of business’s responsibility to address human rights impacts involves actively combating corruption. In some cases, the link between corruption and negative human rights impacts is clear: corrupt practices and illegal building extensions were contributing factors in the tragic collapse of Rana Plaza in Bangladesh in 2013, which led to more than 1,100 deaths.

In other cases, the link between corruption and human rights is more indirect, but the consequences are no less severe. Businesses may find themselves engaging with partners, suppliers, customers, or end-users who deal with military-associated entities or politically exposed persons. Sometimes, a national government may be the perpetrator of gross human rights abuses. Many businesses have little choice but to enter partnerships with government bodies, particularly in industries such as oil, mining, telecommunications, and infrastructure. This can leave them directly linked to human rights impacts driven by the government in question.

One example of exposure to human rights risks as a result of corruption is through corporate philanthropy. In some cases, there is a fine line between philanthropic donations and facilitation payments for “getting things done” and securing permission to operate from authorities in challenging legal environments without effective rule of law. These donations could be provided by the in-country business unit, by business partners, by landowners from which your company leases land or the land management business. In these situations, the link between corruption and complicity becomes clear when the donations are directly or indirectly funding military operations or authoritarian regimes linked to gross human rights abuses. This link was made explicit by the UN Fact-Finding Mission to Myanmar in an August 2019 report.

Another example of corruption-related human rights risks can be found deep within the supply chain: the OECD recently published a report on the role that corruption plays in amplifying and perpetuating human rights abuses associated with armed conflict in copper and cobalt supply chains in the Democratic Republic of the Congo. Related activities include illegal payments to government officials and business relationships with entities that are partly or wholly owned by criminal or military enterprises. These suppliers are often several times removed from the multinational company that is sourcing the raw materials, which makes building leverage and oversight challenging. In this case—and as BSR wrote earlier this year—collective action could incentivize suppliers throughout the supply chain to support an anti-corruption environment.

BSR recommends enhanced human rights due diligence that is both conflict-sensitive and that integrates corruption risk. Tying these two narratives more closely together will reveal far more insight about the nexus of power relationships that companies need to navigate to do business with integrity.

At BSR, we help companies to integrate corruption risk into their human rights due diligence. Our enhanced human rights due diligence toolkit was developed for use in conflict-affected and high-risk areas. This toolkit includes support for integrating the compliance and corporate responsibility/human rights teams to coordinate on assessing the risk of business partnerships in high-risk contexts, as well as recommendations for enhanced know-your-customer, beneficial ownership, and political/military-associated entity background checks.

If you would like more information on how BSR can support you to address conflict- and corruption-related human rights risks in your business value chain, please don’t hesitate to get in touch with our team.

Blog | Tuesday November 19, 2019

Action for Sustainable Derivatives: A BSR/Transitions Collaboration

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Palm-based derivatives are a key ingredient to many products we use on a daily basis, such as soap and shampoo. Sourcing palm oil or palm kernel oil responsibly, however, is a challenge for the companies behind these products. Despite increasingly common commitments to ‘No Deforestation, No Peat, No Exploitation’ (NDPE) in both the downstream and upstream industry, the situation in the field remains critical—palm oil production continues to be a source of deforestation and human rights abuses, as highlighted by Greenpeace’s recent Countdown to Extinction report:

• In 2016-2017, Indonesia lost three million hectares of natural forests.
• Changes in land use in Indonesia and Malaysia due to the palm industry have led to the emission of approximately 500 million tons of CO2e each year from 2015-2018.
• The International Union for Conservation of Nature (IUCN) found that palm oil production has affected at least 193 threatened species.
• Evidence of human rights abuses persist throughout the sector in Indonesia and Malaysia.

To respond to these challenges, companies must undertake profound changes in their operating methods to optimize their social and environmental footprint. These necessary changes must be increasingly ambitious to adequately address the critical environmental and social issues related to palm derivatives production and distribution.

To accelerate compliance of supply chains with deforestation-free and responsible sourcing principles, BSR and Transitions are excited to launch a new collaborative initiative for corporate buyers of palm-based derivatives, alongside 11 member companies, including L'Oréal, Beiersdorf, The Body Shop, Croda, The Estée Lauder Companies, Henkel, and Zschimmer & Schwarz Italiana: Action for Sustainable Derivatives (ASD).

Ensuring a Sustainable Supply Chain

This collaborative approach was born out of a recognition that, while companies are increasingly seeking to accelerate compliance with deforestation-free and responsible sourcing principles, individual supply chain dynamics and overlapping comparable approaches have led to significant duplication of efforts in this area.

By harmonizing requirements, standardizing tools and methodologies, and mutualizing efforts, ASD intends to increase the transparency of the global derivatives supply chain, collectively monitor risks and activities along the supply chain, and implement collective action projects to address social and environmental issues on the ground. By moving beyond competition and joining forces to address non-compliance issues in the supply chain, ASD participants have the opportunity to translate individual policies into concrete results.

A Vision for the Future of Palm Derivatives

ASD will address key challenges such as deforestation, climate change, resource consumption, respect for local communities, and working conditions. Through collaborative approaches with all direct and indirect stakeholders of the value chain, the initiative seeks to tackle issues at every step of the supply chain in order to reduce impacts and sustainably support the evolution of practices linked to the production of palm oil. This collaboration is designed to achieve the following results:

• Create a global, transparent mapping of the palm derivatives supply chain.
• Maximize the potential for success in reaching the 2020 NDPE target by sharing solutions.
• Harmonize approaches on transparency, risk monitoring, and evaluation.
• Explore opportunities for multilateral collaboration and collective action, including on pilots of tools, methodologies, and sustainable field projects.
• Unite as a sector to increase external recognition of the singular complexity of the palm derivatives supply chain and to leverage influence over major upstream supply chain players.

BSR and Transitions aspire for this collaborative work to drive broad-reaching impacts that create social and environmental value. We invite companies from cosmetics, detergent, and oleochemicals industries to join ASD. For more information, please contact us.

Blog | Wednesday November 13, 2019

One Year In: How CoLab Is Mobilizing the Collective Power of Business

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From the climate crisis to a rise in employee activism, many factors are contributing to the creation of a new climate for business. These new challenges will not be solved by any one actor: no single government, business, or NGO acting alone can address the issues of today. What the world needs are new collaborations of unprecedented scale and ambition to create a future in which both societies and companies thrive.

To that end, at our 2018 Conference, BSR launched CoLab, an incubator and accelerator of private-sector collaboration, to mobilize the collective power of business to solve some of the world’s biggest sustainability challenges. Driven by the collective ingenuity of business and stakeholders, CoLab ideates, designs, and scales collaborations that have transformational impacts and contribute to realizing the Sustainable Development Goals. 

CoLab focuses on the Ideate, Design, and Explore phases of private-sector collaborative solutions. Successful solutions are then moved forward to Accelerate and Scale in our portfolio of active Collaborative Initiatives. Our 2019 progress report, Mobilizing the Collective Power of Business, highlights our accomplishments over the past year, which include the launches of the following Collaborations:

• Value Chain Risk to Resilience (R2R) seeks to build climate resilience for communities, farmers, and workers along value chains.
• Action for Sustainable Derivatives (ASD) promotes responsible palm oil sourcing and collective action to increase transparency and address social and sustainability issues.
• Partnership for Global LGBTI Equality (PGLE) is a coalition of organizations committed to leveraging their individual and collective advocacy to accelerate LGBTI equality and inclusion globally.
• Supply Chain Living Wage Data Platform (SCLWDP) aims to leverage existing and new sources of information to create accurate global living wage data.
• Sustainable Air Freight Alliance (SAFA) is a buyer-supplier collaboration steering responsible air freight via sustainable procurement and decarbonization.

Looking ahead, we have developed the following focus areas for 2020. These are areas where we see strong demand for action, where we can add strategic value, and where there is potential for growth and impact. We plan to continue to grow our portfolio of collaborations in these areas: 

• Sustainable “Green” Freight
  • Challenge: Zero-emission freight by 2050 is a major global goal requiring collaborative innovation at scale.
• Inequality
  • Challenge: Companies are under pressure to create high-quality jobs with living wages and affordable products and services.
• Sustainable Commodities
  • Challenge: Supply chains must change to become resource- and cost-efficient, equitable to workers and partners, and transparent and traceable.

In addition, outside of these broad focus areas, we have also identified and are pursuing specific priority opportunities to address the following key sustainability challenges:

• Ocean Plastics
  • Challenge: Asia is the source of 60 percent of plastic waste and coordination is needed to address this issue.
• Circular Fashion
  • Challenge: There are potential negative impacts of a shift to circular fashion on job opportunities and quality.
• EU/Asia Sustainability Reporting
  • Challenge: Improving sustainability reporting is an ongoing requirement and challenge for companies, with differing standards and practices.

As we look ahead to the 2020s and the looming 2030 deadline for the Sustainable Development Goals, it is clear that collaboration will be key if we hope to achieve the Global Goals. BSR’s CoLab is ready to work with you on existing opportunities—or on the ideation of new business-led sustainability collaborations. If you’re interested in joining an existing collaborative initiative, helping to launch a new collaboration, or looking for more information, please reach out and connect with our team.  

Reports | Wednesday November 13, 2019

CoLab Progress Report: Mobilizing the Collective Power of Business

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From the climate crisis to a rise in employee activism, many factors are contributing to the creation of a new climate for business. These new challenges will not be solved by any one actor: no single government, business, or NGO acting alone can address the issues of today. What the world needs are new collaborations of unprecedented scale and ambition to create a future in which both societies and companies thrive.

To that end, at our 2018 Conference, BSR launched CoLab, an incubator and accelerator of private-sector collaboration, to mobilize the collective power of business to solve some of the world’s biggest sustainability challenges. Our 2019 progress report, Mobilizing the Collective Power of Business, highlights our accomplishments over the past year and outlines opportunities for engagement with CoLab in 2020.

Blog | Tuesday November 12, 2019

The New Climate for Business

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We are at a hinge point in history.

The French refer to the 30 years after the end of World War II as “Les Trente Glorieuses,” or “The Glorious 30 Years,” when prosperity flowered, culture was dynamic, and peaceful conditions prevailed after two devastating wars.

For business, the three decades following the fall of the Berlin Wall in 1989 can be seen the same way. During that time, the market economy has been the world’s dominant organizing principle, business has largely thrived (notwithstanding the global financial crisis), innovation has flowered, and huge numbers of people have enjoyed improved living conditions, especially in the Global South.

As we enter the 2020s, we are at a new hinge point in history. Every business today is facing three strategic challenges:

• First, there is the need to redefine the role of business in society, in sync with changing expectations, and establish clear business purpose that goes beyond short-term profits.
• Second, we face the urgent objective to shift the economy to a path that delivers truly shared prosperity that respects the natural boundaries of our planet, not least the climate crisis.
• Third, every company must craft a strategy that navigates an unprecedented set of disruptions—and in some cases existential questions—that are rapidly reshaping the competitive environment.

These strategic challenges come as a result of major paradigm shifts that have taken place in recent years. Changes in policy, politics, public perception, and the natural world are creating profound impacts for business.

First and foremost, after decades when markets were seen as the ultimate, efficient vehicle to deliver broad societal benefits, the public today is increasingly skeptical about this model, and the light-touch regulation that has marked the past several decades is now distrusted by many.

Our natural resources are also under threat, with considerable impacts for public health and stable, thriving economies. Simply put, the commodities on which we rely for sustenance and enjoyment can no longer be taken for granted.

The rising tide of innovation has also had a fairly wide berth; today, there is more concern about the impacts of new technologies and business models, bringing about the “techlash.”

The accumulation of wealth in the hands of a few is being questioned at a time when the “precariat” is growing, with public anxiety about declining living standards leading to political and economic backlash. And for many interconnected reasons, the consumption-driven economy that has been an engine of growth can no longer be taken for granted as the dominant model. The “religion” of ever-increasing economic growth is losing adherents, and there are signs that many people are seeking satisfaction in new and different ways that do not involve consumption of products.

In this context, many are calling for more activist government. At the same time, nation-states are struggling to deal with global challenges, with many turning toward populism and nationalism and a crackdown on civil society. Political uncertainty and distrust have become endemic.

All of this adds up to a New Climate for Business. The framework conditions that have shaped our world, and the world of business, have changed.

The Decisive Decade Ahead

The fundamental changes reshaping our energy systems, our food supply, and water availability demand comprehensive systemic solutions. Sustainability disconnected from investors, policymakers, and communities will have no credibility.

These changes come as we enter 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 Sustainable Development Goals (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.

Here is what we know for certain: The diverse and powerful assets of business are essential if we are to build a resilient, fair, and sustainable economy. It is impossible to imagine achieving the promise of the decade ahead without business. And it is equally impossible to imagine that outcome with business as usual. This is a time when the scale of change and challenge requires big vision, high levels of ambition, and a strong sense of urgency.

The inescapable implication of this is that sustainable business as we have known it is not enough. So, standalone sustainability projects will have their place, but incremental improvements won’t deliver the SDGs. The fundamental changes reshaping our energy systems, our food supply, and water availability demand comprehensive systemic solutions. Sustainability disconnected from investors, policymakers, and communities will have no credibility. Measurement and reporting that fails to embrace all forms of value misleads markets and leads to bad outcomes. And, in an era of profound change, risk averse leadership only creates more ... risk.

The New Climate for Business demands a radically new approach to business and markets. As Marc Benioff wrote recently in the New York Times, “Capitalism as we have known it is dead.” Business as we need it, however, is only getting started. As we enter the 2020s, businesses will be judged by their purpose, their ambition, their urgency, their openness, and their innovation. The only businesses that will thrive in the decade to come, and quite possibly the only businesses that will survive for the long-run, are the ones who will master these challenges.

The question then is how business will “meet the moment.”

How Will Business Meet the Moment?

At this critical time, when business leadership is so badly needed, how do we define it?

This starts with purpose. As the Financial Times wrote in September, “businesses that combine profit with a wider purpose will benefit from the reinforced commitment of employees and customers. Those that fail to do so will not survive to become the companies of the future.” For all the talk these days about purpose, this hits the right note: It is only those companies with a clear and motivating purpose that will make it through the fundamental changes reshaping our world and the world of business. And more and more, businesses are defining their purpose in terms that make important contributions to the achievement of the SDGs: through nutrition, clean transportation, financial independence, and healthcare, for example.

Business is traditionally reticent about expressing big goals without being sure that it can achieve them. This caution is as unsuited to today’s world as the rotary phone or an all-male board of directors.

The businesses that will thrive in the decade to come will be the ones with the most ambitious plans. Business is traditionally reticent about expressing big goals without being sure that it can achieve them. This caution is as unsuited to today’s world as the rotary phone or an all-male board of directors. Ambition is the best way to create truly resilient business strategies.

Ambition must start with climate, where the drive for net-zero carbon objectives has fast taken hold. What’s intriguing about this is that many of those embracing net zero—from nation-states like the United Kingdom to companies like Maersk—cannot be sure about the precise pathway to this achievement, but state the goal nonetheless. Big questions require big solutions, and it is exciting to see companies and business leaders shed their timidity about what is possible. There can be little doubt that this approach is not only the only way to achieve big goals, but also motivates and attracts staff and provides a north star during a time of change.

Business leadership will also be defined increasingly by a company’s commitment to and facility for collaboration. The vision of leadership as a solitary exercise by a singular visionary leader must be retired. The leaders we need today know the limits of what they can accomplish on their own, know how to partner effectively, and understand that achieving their goals with respect to sustainability can only happen through systemic change. We are facing systemic challenges: an economy that has exacerbated inequality, an energy system that must shift to net zero, food systems under threat, and a social contract that is failing to meet 21st-century realities. It is only with a commitment to large-scale collaboration that we can shift these systems in a more positive direction.

Today’s Priorities

And it is the Sustainable Development Goals that provide the north star for business and the world. To reach big long-term goals, we must act with urgency today. Here is an urgency agenda for 2020, built to deliver for 2030.

In Conclusion

Let us use every day to turn business to the task of innovating for social benefit, attacking climate change, and reversing inequality.

Les Trente Glorieuses (The Glorious 30 Years) is part of history—one of prosperous growth and peaceful society. So too is the period since 1989. Now we face another hinge point in history, and it is up to us to build the future, and to work toward a “Glorious 2030.”

Dean Acheson, the U.S. Secretary of State in the aftermath of World War II, was famously “present at the creation” of the postwar order that led to considerable human progress. We, who are present at the creation of our new era, would do well to remember his words: “Always remember that the future comes one day at a time.” As we grapple with this New Climate for Business, let us use every day to turn business to the task of innovating for social benefit, attacking climate change, and reversing inequality.

Blog | Tuesday November 12, 2019

The State of Sustainable Business 2019: Toward a Critical Decade

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When BSR launched its first State of Sustainable Business survey with GlobeScan in 2008, it would have been inconceivable for influential corporate leaders and major investors to engage in a very public, candid, and existential conversation questioning the future viability of capitalism, the foundation of our economic and social systems for the past three centuries.

Fast forward to 2019: We see influential CEOs declaring that “capitalism as we know it is dead” and calling for a new capitalism that values purpose alongside profit. The CEOs of the Business Roundtable have essentially called for a redefinition of the purpose of a corporation, embracing a form of “conscious capitalism” in which the need to deliver value to all stakeholders has surpassed the previously unchallenged primacy of shareholders. 

These are welcome and long-overdue conversations and developments and provide a particularly compelling backdrop for us to unveil the findings of our 11th annual State of Sustainable Business survey, which includes responses from business leaders representing 125 global companies—half of BSR’s global membership network. As it has been since its launch, the survey features the perspective of the business leaders who do sustainability work daily inside some of the largest and most influential companies in the world.

This survey is also our last before we move into the 2020s, and as many companies had sustainability strategies with a 2020 end date, we wanted to find out how our members think they fared. More than half of BSR companies surveyed reported having a sustainability strategy with a 2020 end date or milestone, but only 45 percent of those said they considered their company to have achieved a great deal of success in reaching their objectives—which suggests we are off track to achieve global sustainability targets. 

We need business to dramatically increase its sustainability ambitions over the coming decade. 

Given the urgency of bending the curve on emissions and lifting communities and people out of poverty while supporting fundamental human rights, the message here is clear: We need business to dramatically increase its sustainability ambitions over the coming decade. 

Furthermore, to truly achieve the sustainable change we need, significantly more effort must focus on a company’s value chain. Half of respondents say their efforts to address sustainability within supply chains have been ineffective—though they report being more effective in cases where they have been able to apply new technologies like blockchain.

One of the more interesting findings was that while a majority of companies plan on embedding sustainability more deeply into the business, less than half will be emphasizing long-term value creation, and fewer still are focused on trying to influence policy-making frameworks. 

While about half of companies report a “fair amount” of focus on public policy across all issues, with human rights and climate change drawing somewhat more attention than inclusive growth and women’s empowerment, we do see an opportunity for companies to make it more of a focal point. Given the significant business influence over policy frameworks and the urgency of achieving sustainability goals, we hope to see more companies speaking out strongly on these vital issues.

Another noteworthy insight is that investor interest has become a major driver of corporate sustainability efforts overall. While reputation risks and customer/consumer demand continue to be identified as the most important drivers of company sustainability efforts, professionals citing investor interest as one of key drivers of sustainability efforts has increased significantly over the past year, with 40 percent citing it as a top three driver, up from 25 percent in 2018.  

The integration of sustainability into the core of business strategy continues to be an opportunity for more ambitious company action. Despite continued CEO focus—more than half of companies say sustainability is among their CEOs’ top five priorities—and rising investor interest, little has changed in the past three years in the level of self-reported integration of sustainability into the core of the business.  

Overall, 66 percent of companies say that sustainability is at least fairly well integrated, exactly the same as it was in 2016. Integration of sustainability into strategic planning and into products and services is being pursued by only about half of the companies surveyed. 

Climate change, ethics and integrity, diversity and inclusion, and human rights remain the top sustainability priorities for companies. 

As we move into the 2020s, the survey also revealed that climate change, ethics and integrity, diversity and inclusion, and human rights remain the top sustainability priorities for companies. 

However, in 2019, climate change has emerged from the pack, making a significant jump with more than 50 percent of respondents citing it as a “very significant” priority over the coming year. Company leaders exploring how they can move toward net-zero carbon emissions, while also assessing their climate risk scenarios, are no doubt also well aware of the increased sense of urgency expressed by scientists and other experts and the surge of public demonstrations demanding urgent action to limit global temperature rise to 1.5°C.   

It is worth noting that despite its ranking as a top corporate priority, the survey reveals minimal movement in the number of companies setting an internal price on carbon.  Only 31 percent of companies either already have, or are moving to implement, an internal carbon price. In addition, only one-third of companies say they are focused on managing climate change through tier-2 suppliers and supply chains. Most businesses with science-based targets will need to address these emissions as part of the global effort to bend the curve on emissions and limit global temperature rise to 1.5°C.

Companies are becoming more interested in deepening their relationship with stakeholders. 

Finally, we were heartened to discover that companies are becoming more interested in deepening their relationship with stakeholders. As we noted in our report, Five Steps to Stakeholder Engagement, earlier this year, we are living in an era of increased investor interest, widely accepted international agreements, heightened public transparency, and a digital media environment in which information is shared at lightning speed. Stakeholder engagement is more important than ever, and the fact that companies are taking it seriously is good news indeed.

We will be looking forward to connecting with our own stakeholders, including our members and other partners from business, civil society, and the broader sustainability community, at the BSR Conference 2019 in San Jose this week, where The New Climate for Business will take center stage. We’ll discuss our common challenges, and the opportunities for stepped-up corporate action on sustainability as we prepare for the critical decade of the 2020s.

Reports | Tuesday November 12, 2019

The State of Sustainable Business in 2019

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