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Blog | Friday November 8, 2019

The New Climate for Corporate Political Accountability

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Corporate political accountability has become an increasingly important issue for stakeholders, particularly investors who often rate it as one of their top corporate sustainability issues. Over the past three years, investors have filed almost 300 environmental, social, and governance (ESG) corporate resolutions on this topic alone.

Specifically, investors and other stakeholders are focused on four key aspects of political accountability: corporate lobbying, political contributions, political/industry association support, and public positions on sustainability issues. According to the Center for Responsive Politics, through its website opensecrets.org, a record amount of over $3.4 billion was spent on lobbying in the U.S. at the federal level in 2018, with the majority coming from corporations and the industry associations they support. A significant amount was also contributed at the state level.

The ever-increasing involvement of corporate money in the political process can be traced in a large extent to the Supreme Court case of Citizens United almost 10 years ago. The ruling allowed for unlimited contributions by corporations and unions, the development of political action committees (PACs), and “dark money” contributions by non-disclosed donors.  

What can corporations do to demonstrate alignment between their political activity and corporate sustainability strategies and goals? 

A large concern for an organization such as BSR, as well as many other stakeholders, is that while corporations develop sustainability strategies on environmental and social issues, subsequent political activity is not aligned with those sustainability positions. For example, many leading auto companies have strategies and goals to reduce climate and environmental impacts. It is not always clear, however, if political activity and lobbying efforts by the same auto companies are aligned with those environmental goals, particularly in cases where they are not disclosed.  

This leads to the question: What can corporations do to demonstrate alignment between their political activity and corporate sustainability strategies and goals? We recommend the following three good practice approaches.

Transparency

Although there are some legally required disclosures for corporations on their political activity, good practice – and what is increasingly expected by stakeholders – is that corporations go further. The annual CPA-Zicklin Index of Corporate Political Disclosure and Accountability, which was released in late October and is managed by the Center for Political Accountability and Zicklin Center for Business Ethics at Wharton Business School, is a well-respected and publicly available resource for companies to gauge how well they are disclosing their political activities against 24 scoring criteria.

A positive takeaway is that the Index shows there has been a “trend toward enhanced accountability, transparency, compliance, and oversight across all corporate sectors” since Citizens United. I recently spent a day with CPA-Zicklin team, as well as many leading experts on this topic, and the key takeaway from the discussion was that transparency alone is not enough – the intent of the political activity and public positions on issues are what is really important.   

Principles

A key attribute of a best practice approach is to have principles-based alignment on the topics which a corporation will advocate for/against to provide insight into the intent for political activity. A good example of leadership is Microsoft’s Public Policy Agenda which provides a framework for the sustainability issues on which they engage the political process. As a principles-based document, Microsoft provides a set of material sustainability issues – e.g. freedom of expression, immigration, privacy online, etc. – on which it plans to advocate and the general positions it will take. This Agenda allows for a clear and concise way for stakeholders to review Microsoft’s actual political activities against their own stated positions.

Partnerships  

A major form of corporate lobbying and political activity comes indirectly through political or industry associations. Many of these types of organizations have diverse supporters and take positions on a variety of public policy topics which makes it complex to determine how well aligned they are with a corporation’s sustainability interests. In addition, many corporations do not have clear criteria to decide which groups they should support and how to manage any conflicts of interest with these groups.

Shell is a good example of a company that has a publicly available report on its involvement and criteria for political/industry associations. As an proof point, Shell recently ended support for an industry association due to increasing misalignment. A lesson learned is that periodic review for alignment on material sustainability issues is needed.

Along with senior leaders from the Center for Responsive Politics, Trillium Asset Management, and BSR, I will be exploring this topic further next week during the session The New Climate for Corporate Political Accountability at the BSR Conference 2019 taking place November 12-14 in San Jose, California. I hope you can join us to participate in the discussion of how corporations can improve their efforts and adopt good practice with regards to political accountability. We look forward to seeing you there.

Blog | Thursday November 7, 2019

Sustainability at AT&T: Q&A with John Schulz, Director, External Affairs, Sustainability

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For years, the impact of a company’s sustainability strategy has been reported through footprints or isolated examples. In today’s new climate for business, the expectations are higher: stakeholders are looking to understand the sustainability impacts of the entire company—including the products and services that generate its revenue.

BSR member AT&T is an example of a company driving greater impact by making sustainability part of its revenue model. John Schulz, director of sustainability integration at AT&T, will be joining the BSR Conference 2019 next week in San Jose to speak on this topic further during the session Beyond Case Studies: Measuring and Communicating Total Impact.

We had a few minutes to catch up with John to discuss AT&T’s sustainability efforts thus far and what it’s focused on as we enter the 2020s.

As we approach 2020, what is one sustainability achievement that you are proud of at your company?
I’m very proud of AT&T’s 10x Carbon Reduction Goal to enable greenhouse gas emissions (GHG) savings for our customers 10 times the footprint of our operations by 2025. It’s ambitious at a time when we need that kind of spirit. It requires us to work two sides of the equation: reducing our own emissions and developing technology that helps our customers do the same. Our renewable energy purchases—which will surpass 1.5 gigawatts of clean energy—are also helping us advance our goal and accelerate the transition to the low-carbon economy.

I’m extremely proud that since launching our goal, we’ve reduced our scope 1 GHG emissions by just over 24 percent from our 2008 baseline. Even more, our customer solutions have enabled GHG savings just over two times the footprint of our operations. This is great progress, but we will continue to stay focused on our goal to help advance global climate goals and address climate change.

It’s been four years since AT&T launched its goal to enable carbon reductions for our customers ten times the size of its own footprint. What have you learned in that time?
It’s all about the customer. Every time we talk to customers, we’re finding new challenges that they’re facing and learning how AT&T technology can be part of their path forward. Urgency is critical— to meet the goal and to address climate change—so it’s more important than ever that we get to know our customers’ business and dig in with them to identify ways that new technologies like 5G and the Internet of Things (IoT) can transform their business and drive efficiency and sustainability.

How is the work towards the 10x goal related to the transformation of AT&T’s business and services? 
AT&T is focused on delivering services to several key verticals. We’re developing technology solutions across industries that present big opportunities to drive emissions reductions. Technologies like IoT, 5G, video analytics—all backed by AT&T’s highly secure network—have the potential to greatly reduce the environmental footprint of the key industries we serve.

What has been the response from colleagues in the business and AT&T’s customers?
Initially, our 10x goal was met with some surprise. It’s an audacious goal. And it’s not necessarily obvious how AT&T can play a role in greenhouse gas emissions reduction for our customers. But as soon as we started telling real-world stories via the 10x case study series, people started to understand it.

By transitioning from a concept to an actual implementation story, complete with calculated impacts, the light went on for customers and AT&T employees. Once that started to happen, surprise changed into excitement. The ability to collaborate with a company with the scale and expertise of AT&T can give a sense of optimism to a project. Climate change is daunting, so knowing that a company like AT&T is in the fight with our customers can help give a sense of hope that we’re going to be able to figure this thing out.

What is the biggest evolution you have seen in corporate sustainability in the last decade?
The businesspeople are becoming more and more engaged in environmental issues and solutions. They are doing this because business can play a role in helping to solve environmental challenges and because investors, employees and customers are looking to business for action and solutions. At AT&T, we’ve seen significant business engagement in our connectivity and IoT solutions that are helping our customers reduce emissions and meet their sustainability goals. In this case, it’s an example of how environmental stewardship and economic opportunity can go hand in hand. 

Blog | Wednesday November 6, 2019

The Case for Prioritizing Net Zero Carbon Emissions, Especially in Value Chains

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As we breathe smoky air from another devastating wildfire that is threatening Northern California communities, we are once again reminded of the need to aggressively address climate change locally and around the globe.

The fires follow catastrophic damage from Hurricane Dorian in the Bahamas and historic flooding in the Midwest. As the frequency and strength of extreme weather events increase, the effect of climate change on our planet and communities has become ever present—making it harder for citizens, governments, and businesses worldwide to ignore the impact.

Kaiser Permanente and BSR recently partnered with Newsweek for a survey of 300-plus multinational companies on progress toward carbon neutrality and found that 70 percent of corporations are experiencing disruptions in operations due to climate change. Now, these businesses’ efforts to reduce their carbon footprint and integrate sustainable practices into their operations have created new challenges—and opportunities—for global supply chains.

According to the 2018 National Climate Assessment, we must achieve net zero carbon emissions by 2050 or earlier to prevent irreversible harm to our planet’s health. Newsweek’s survey results indicate momentum is building across industries to embrace sustainable programs.

For example, we were encouraged to find that 76 percent of companies surveyed have set a goal to achieve net zero carbon emissions from organizations’ operations, with 90 percent aiming to reach this goal by 2030.

These findings reinforce the urgency of the situation at hand and spotlight the importance of developing adaptable policies and building resilience to stay afloat. To do so, companies must learn to prepare, plan, and adapt to changing environmental conditions to mitigate risk for the climate, customers, and bottom line.

Many businesses’ primary motivation to achieve carbon neutrality is insulation from future climate risks.

Disruptions in the Supply Chain

Globally, seven in 10 respondents reported that climate-related events had disrupted supply chains over the past year, with six in 10 experiencing direct impacts to their operations.

As seen in the aftermath of Hurricane Maria, climate-fueled events can rupture the global supply chain, leading to months of nationwide shortages for crucial supplies like saline bags at hospitals, including Kaiser Permanente’s.

Witnessing the sometimes devastating effects of climate change firsthand, it comes as no surprise that many businesses’ primary motivation to achieve carbon neutrality is insulation from future climate risks. For companies like Kaiser Permanente, this means embedding efforts to mitigate climate change into day-to-day operations—including how the company manages buildings; purchases food, medical supplies, and equipment; consumes energy; and processes waste. By reducing emissions through climate smart programs and advancing environmental stewardship across supply chains, organizations can catalyze decarbonization across the economy.

Reducing Upstream and Downstream Emissions

Focusing only on emissions that companies have under their direct ownership or operational control misses those which occur through the products and services businesses purchase and also in how their own products and services are used.

In fact, these so-called “Scope 3 emissions” account for the largest volume of emissions that companies can influence. Reducing emissions associated within a company’s value chain offers the potential for aggressively mitigating the worst impacts of climate change.

Examples of climate smart actions in the value chain include:

• Purchasing from suppliers with lower carbon emissions
• Increasing product lifespans and reducing waste
• Reducing vehicle trips by employees and customers
• Shifting investments away from fossil fuels

By addressing emissions and encouraging suppliers to follow suit, corporations targeting Scope 3 emissions are leading the charge toward net zero.

In addition to revising procurement standards, our survey results indicate leaders actively engage and support key suppliers to reduce emissions—with six in 10 executives recognizing the imperative for companies’ main suppliers to switch to renewables as part of the organization’s net zero goals.

BSR encourages its network of members to set results-driven goals and embrace an “act, enable, influence” framework to advance an effective climate strategy.

By first acting to address operational emissions, companies can then encourage and enable action by suppliers and partners to reduce downstream and upstream emissions at scale. However, Scope 3 emissions are often spread thinly across supply chains, so without an effective influence strategy, companies will not foster the policy environment needed to achieve these goals. By addressing emissions and encouraging suppliers to follow suit, corporations targeting Scope 3 emissions are leading the charge toward net zero.

A Shared Goal for All: Collaborating for a Healthier Planet

The path to achieving net zero by 2050 isn’t easy, but it’s achievable. No one organization, industry, or government can do it alone and it will take a collaborative, coordinated effort to succeed.

Leading organizations are setting themselves apart by embedding a core commitment to sustainability within their existing corporate mission. Enacting such a cohesive strategy will solidify partnerships, which is ultimately the driving force for change in the space. On average, survey respondents with net zero goals listed 10 partners from a list of 18 that they believe will have a material impact on achieving defined goals. By involving key leaders in the sustainability field, businesses can accelerate success in reaching these target numbers.

The road to net zero will require continued public-private and cross-industry collaboration from leaders.

Join Us

Partnerships with NGOs and involvement in coalitions like RE100, a network of companies committed to sourcing 100 percent renewable energy, form a critical part of Kaiser Permanente’s zero carbon strategy—Kaiser Permanente is proud to be well on its way to being carbon neutral in operations in 2020.

At Kaiser Permanente, we prioritize partnerships to develop policies and systems that strengthen community health and protect our environment. The impact of climate change on both our environment and human health is substantial and affects everyone, with the greatest impact falling on those who are most vulnerable.  

BSR continues to build its portfolio of collaborations and coalitions aimed at enabling companies to take effective climate action. Long-standing efforts, such as the Clean Cargo Working Group, Future of Fuels, and our work with the We Mean Business coalition, have been joined in the last year by our new Value Chain Risk to Resilience platform and the formal launch of the Renewable Energy Buyers Alliance, in partnership with WWF, World Resources Institute, and the Rocky Mountain Institute.

The road to net zero will require continued public-private and cross-industry collaboration from leaders. Next week, BSR will convene thought leaders to collaborate on the path forward for businesses to address the most pressing sustainability issues, including climate change, at the BSR Conference 2019: The New Climate for Business in San Jose, California.

We invite you to join us and collaborate with like-minded organizations. Together, we will pave the way for companies, people, and the planet to thrive in this era of rapid change.

Blog | Wednesday October 30, 2019

Google’s Human Rights by Design

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BSR has previously emphasized the importance of human rights by design in the technology industry. Today, Google announced the launch of a product that took this approach with its new celebrity recognition application program interface (API) for use in the media and entertainment industry. The API will enable Google enterprise customers to identify celebrities in their content at a frame-by-frame or scene-by-scene level using a database of celebrity images licensed by Google.

Google commissioned BSR to conduct a human rights assessment of the API while it was in development to identify, prevent, and mitigate potential human rights impacts. This deliberate integration of human rights into the product design process is best practice—and although it is never possible to eliminate all human rights risks, the result of this collaboration is an API with a significantly lower human rights risk profile.

Working collaboratively, BSR and Google identified a range of potential issues, challenges, and dilemmas relating to the field of celebrity recognition products. These were further analyzed by BSR for potential human rights impacts, such as privacy, freedom of expression, security, child rights, non-discrimination, and access to culture. BSR then developed recommendations to address these impacts, which Google integrated into key elements of the API’s development.

Among the BSR recommendations adopted by Google prior to the API’s launch were the following:

• Applying “Service Specific Terms” to limit the use of the celebrity recognition API to professionally filmed media content (e.g., not user generated content) that the customer owns or has adequate consent to use.
• Restricting inclusion in the celebrity database to individuals whose primary profession involves voluntarily being the subject of public media attention.
• Implementing an opt-out policy to allow celebrities to request removal from the Google-managed celebrity database.
• Establishing a customer “whitelisting” process whereby the customer must be within a qualifying industry (entertainment, media, sports), declare an allowable use case, and agree to only use professionally filmed media.

It is BSR’s view that, taken in combination, these measures serve to prevent, avoid, and mitigate potential adverse impacts and provide Google with a firm basis to reduce risks to human rights.

The result of this collaboration is an API with a significantly lower human rights risk profile.

In addition to actions that can be taken by Google, BSR’s recommendations also included action that can be taken by two other important constituencies: other providers of celebrity recognition tools and the media and entertainment industry.

Google is only one of several companies currently offering a celebrity recognition tool, and it is important that the entire industry deploy approaches that address human rights impacts. For this reason, BSR concluded that industry-wide approaches (such as industry principles or standards), public policy, and regulation may be needed to mitigate the potential human rights risks of these tools.

BSR’s assessment also emphasized the crucial role played by media and entertainment companies using the API responsibly. For this reason, BSR recommended that companies making use of celebrity recognition products and other facial recognition tools should undertake their own human rights due diligence. This builds upon BSR’s perspective that the users of artificial intelligence products need to be much more engaged in understanding their impacts.

Google’s deliberate integration of human rights into the product design and development process—prior to the launch of a product—provides an excellent case study, and we encourage other companies to adopt similar practices as they develop their own products.

Blog | Friday October 25, 2019

Human Rights in a Global Supply Chain: Challenges and Approaches

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Approaching global supply chains from a human rights management perspective can seem like a daunting challenge. Implementing a human rights program within the “four walls” of our own companies can be difficult enough, let alone extending such oversight programs beyond the first tier of suppliers—which may include tens of thousands of entities across the globe, affecting potentially hundreds of thousands of people and communities. While the UN Guiding Principles on Business and Human Rights (UNGPs) are clear that the duty to identify, prevent, mitigate, and account for adverse human rights impacts extends across a company’s value chains and business relationships (including suppliers), the UNGPs do not provide concrete guidance on how to apply such principles in practice. 

Like many challenges, the question of how business should address human rights in difficult and complex operating environments is one that benefits from a collaborative approach where companies can share best practices and learn from one another’s experiences—which is why BSR established the Human Rights Working Group (HRWG) in 2012. The collaborative initiative seeks to help companies implement the UNGPs by providing operational-level guidance and bringing together a global community of business and human rights professionals. The summer meetings of HRWG, held in St. Louis, Tokyo, and Stockholm, brought together representatives of 40 companies across sectors to connect on the field’s most pressing issues. 

Over the course of the summer meetings, HRWG’s discussion covered topics ranging from women’s empowerment in the business context to applying human rights considerations to artificial intelligence (AI) systems, as summarized in Human Rights Insights: Trends from the Human Rights Working Group’s Summer Meeting, which was published today. 

All companies, regardless of industry, should consider the human rights risks along their supply chains and take the steps above to ensure that their practices respect and protect the rights of workers and communities.

One topic that highlighted the challenge of implementing the UNGPs in complex operating environments is the question of supply chain oversight. Questions that are commonly raised when this topic is discussed include: How far down a supply chain must due diligence reach? How can a company have leverage over a supplier many tiers down the supply chain? How can a company possibly assess a supply chain that in many cases is comprised of tens of thousands of suppliers? 

The Working Group proposed the following approach to tackling these challenging questions:

• Map your key supply chains down to the commodity or raw material level where possible. Key supply chains are those that are important to the business and/or its product lines. For example, raw cocoa and dairy supply chains for a chocolate manufacturing company could be classified as key supply chains, whereas IT products for the company’s office workers would not. While the UNGPs expect companies to assess all potential risk and impacts eventually, including those in non-key supply chains, prioritization is essential, and beginning with key supply chains allows companies to capitalize on their leverage within these business relationships.
• Prioritize high-risk supply chains by analyzing factors such as country risk, commodity or product risk, supplier category risk, and more. Business considerations can also be included in this prioritization process, such as degree of spend or importance to the business; however, risk to the rightsholders in these supply chains is ultimately the most important determinant of risk. 
• Conduct a human rights impact assessment in those identified high-risk supply chains and provide remedy where there is sufficient connection via the UNGPs’ cause/contribute/directly linked framework. Given the complexity of supply chains, in many situations remedy may require a collaborative approach with other key stakeholders, such as peer companies, governments, non-governmental organizations, impacted communities, and more. 

All companies, regardless of industry, should consider the human rights risks along their supply chains and take the steps above to ensure that their practices respect and protect the rights of workers and communities. BSR has several tools that help companies work through the steps above—from mapping supply chains and gaining visibility and transparency to helping companies build leverage and improve remedy and mitigation. Many of these resources are shared in HRWG, along with lessons on implementation shared by member companies. 

BSR members interested in joining HRWG should not hesitate to reach out and connect with us.   

Reports | Friday October 25, 2019

Human Rights Insights: Trends from the Human Rights Working Group’s Summer Meeting

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The second round of BSR’s Human Rights Working Group (HRWG) meetings for 2019 was held between July and September in St. Louis, Tokyo, and Stockholm. Established in 2012, HRWG is a collaborative initiative designed to help companies implement the UN Guiding Principles on Business and Human Rights (UNGPs), bringing together approximately 40 companies from across sectors. In addition to providing operational-level guidance and best practices in the business and human rights field, HRWG has established a global network of business and human rights professionals. The summer meetings covered a mix of substantive and methodological topics, including:

• Human rights methodologies, continued from the Spring round of meetings
• Human rights and supply chains
• Responsible use of technology and Artificial Intelligence (AI)
• Legal trends
• Human rights governance

BSR member companies interested in joining the Human Rights Working Group should connect with us to learn more.

Blog | Wednesday October 23, 2019

The Building Blocks of Integrating ESG into Private Infrastructure Investments

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There is an estimated US$15 trillion global gap between current spending on infrastructure—energy, telecommunications, transportation, and water and sanitation—and what is needed between now and 2040. In many countries, including the United States, infrastructure has been aging and undermaintained for decades due to public funding constraints.

As a result, we have seen a surge of private equity (PE) firms investing in long-term infrastructure projects—often classified under alternative assets. In fact, private infrastructure funds raised over US$80 billion in 2018, double the amount raised just five years earlier. Major global PE firms, such as Ardian and EQT, recently closed multibillion-dollar funds. Some of the world’s largest infrastructure investors, such as Global Infrastructure Partners and Brookfield Infrastructure, are also working towards raising megafunds of US$20 billion or more in 2019.

Many PE firms have come to view environmental, social, and governance (ESG) issues as critical to understanding the long-term risks and unlocking value-creation opportunities with their portfolio companies. While PE firms have made significant progress in integrating ESG considerations into their company-focused equities investing models, infrastructure funds have not been as proactive in integrating ESG considerations into business decisions—and we think this is a missed opportunity.

With more and more PE firms formalizing approaches to responsible investment, we believe there are clear pathways to integrate ESG factors for private infrastructure investors and managers. For instance, the Equator Principles provides a recognized structure for banks to assess ESG risks with infrastructure financing. Given BSR’s experience working with both the world’s largest PE firms and the world’s largest infrastructure companies and our knowledge of ESG precedents and best practice, our recommendations for private infrastructure investment teams are:

1. Be Principled. Establish a corporate principle that ESG considerations for investing should apply to all asset classes. We often hear from private investors that “this fund is different from another.” While funds may be different in some ways, all types of funds should have ESG oversight.   
2. Be Consistent. Develop a separate or overarching responsible investment/ESG policy that addresses the diverse asset classes, including infrastructure, in which the firm invests. In March, BSR released a report with guidance and practical tips that firms can consider while developing an ESG policy. AMP Capital has issued an ESG Infrastructure policy and describes how it integrates these factors across the investment life cycle.
3. Be Aligned. Consider material ESG factors during diligence and align the processes with applicable standards such as the Equator Principles and the International Finance Corporation (IFC) ESG Performance Standards. BSR has been a leading part of the Equator Principles stakeholder engagement process and believes the guidance is applicable beyond just banks.
4. Be Long-term. Given the long-term nature of infrastructure investments, ESG diligence for infrastructure projects should cover the full lifecycle of projects, including monitoring, operating, and maintenance. Investment committees should identify and consider long-term (e.g. climate change) material ESG issues and potential impacts. Futures thinking and scenario analysis might be helpful tools in this regard. Lastly, use an ESG futures framework as an opportunity to highlight the long-term societal benefits that the infrastructure will bring.
5. Be Extensive. Infrastructure projects are often joint efforts, and ESG diligence should include joint-venture partners, third-party infrastructure operators, contractors, and suppliers. A good example of how this ESG partnership approach is being applied is BSR’s Building Responsibly collaboration on human rights and the construction industry.
6. Be Active. Private investors should also be active managers of infrastructure assets in the same way they manage private company investments (e.g. board participation, technical expertise, etc.). In particular, investment teams should be trained with the necessary expertise on ESG risks and opportunities. Partners Group, for example, has developed an ESG Dashboard to track relevant ESG metrics for its infrastructure assets over time, including highlighting the potential areas of improvement.
7. Be Engaged. Local communities, contractors, and other stakeholders are critical for project success. Investments often directly impact the communities in which they are located through employment, social services, and the environment. Engaged operators should be conducting internal and external stakeholder engagements with local stakeholders on a regular basis to broaden their knowledge and awareness of critical environmental and social issues over the life of the investment. GCM Grosvenor focuses its efforts on engagement in this way.
8. Be Transparent. All infrastructure has both positive and negative ESG impacts. Transparency in reporting activities and progress in a balanced way creates investor trust and accountability in the market. Some best practices include completing the annual PRI disclosures for Direct—Infrastructure, disclosing climate-related financial reporting in line with the TCFD recommendations, and engaging with GRESB’s infrastructure platform to improve performance across infrastructure and real assets.

ESG practices for infrastructure investing are still maturing, and many implementation challenges remain. These include: How can firms identify material risks and opportunities and integrate them into pre-investment decision making? How can firms ensure responsible investment principles are upheld across the multiple phases of project execution? How can firms demonstrate ESG business value to their investors and other stakeholders?

While the above guidance does not answer all of the implementation challenges, we believe that the basic building blocks we have recommended can provide the foundation for successful ESG integration and management for infrastructure investors. Our intention is to provide a good place to get started—and often getting started is the hardest part. 

Blog | Tuesday October 15, 2019

Answering the Call for Business Leadership on Climate Policy

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Our recently released letter calling for business action on climate policy—which we were delighted to publish in partnership with 10 other leading environmental and sustainability organizations—is a sign of the times.

The creation of the letter was driven by a few fundamental things, some good and some bad: First, the bad. My colleagues Aron Cramer and David Wei recently summarized the current situation and outcomes from the recent UN General Assembly and Climate Week in NYC. The bottom line? Despite mounting scientific evidence for urgent action, a growing list of leadership initiatives by companies and other “non-state actors” (cities, states, regions), and increasingly urgent demands for action by investors, employees, students, etc., national governments have demonstrated that they cannot and/or will not deliver without a significant push from key constituents.

Now the good news: That’s us and we can do this.

Working with our friends and partners in the We Mean Business coalition and the Renewable Energy Buyers Alliance, we have seen steadily increasing engagement from more and more diverse companies in climate advocacy. On an international level, business engagement has grown dramatically over the past several years and arguably played a key role in achieving the Paris Agreement. More recently, here in the US, we have seen the emergence of business stepping up to fill a leadership vacuum left by our national political leadership. Earlier this year, for example, we supported a lobby day in Washington DC, that saw more than 75 companies talk to Senate and House members on both sides of the aisle about the need for a price on carbon to underpin our efforts to build a prosperous, low-carbon economy.

What Comes Next for Business’ Climate Action

At a high level, the solution is clear and reflected in the three pillars of our call to CEOs of corporate America to adopt a science-based climate policy agenda:

1. Advocate for policies at the national, subnational, and/or sectoral level that are consistent with achieving net-zero emissions by 2050;
2. Align their trade associations’ climate policy advocacy to be consistent with the goal of net-zero emissions by 2050; and
3. Allocate advocacy spending to advance climate policies, not obstruct them.

We understand that clear is not the same thing as easy. Putting these principles into action will require that business—in partnership with like-minded players in civil society and the public sector—play an active role in addressing a number of obstacles facing each of them. Specifically:

Business must define their advocate priorities. We can and must create a coherent policy action agenda that clarifies key ‘must-haves’ vs. ‘nice-to-haves’ or specific sectoral interest that we can refer to as a guide through the rough and tumble of electoral politics. What are must-haves that will set overall direction and who will join us?    

Business must assess whether trade associations’ priorities align with their values. How can we navigate opportunities to influence the bodies that represent us and when are we better served to pull out?

Business must review how they allocate advocacy spending, again to ensure alignment with values. How can we develop a more comprehensive understanding of overall net benefit and interest in the midst of a daunting set of apparently conflicting priorities? Is it really true that we need to restrict our advocacy to the near-term and urgent (taxes, trade, etc.) at the expense of longer-term self-interest?

In order to put these principles to work, we know that we must also enable the right kind of transparency in our collective efforts. We furthermore need to this without creating new, additional platforms for disclosure and reporting at a time when there is a need to reduce duplication and fragmentation in reporting and disclosure. How and where can we best enhance the platforms we already have to provide more transparency on corporate climate lobbying?

Climate action by corporate leaders is important, and it continues to gain momentum. Soon there will be more than 700 large corporates with formal, public, science-based climate targets, including net-zero emissions by no later than 2050 and significant milestones along the way. We need effective advocacy to match that ambition, doing all we can to ensure that those 700 can actually achieve these targets and that many thousands more can join them.

We look forward to working with our members and partners to make it so.

Our shared future depends on it.

Blog | Monday October 7, 2019

Q&A with BSR Senior Advisor Susan Morgan

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A year ago, BSR’s Future of Sustainable Business report listed “technology, ethics, and human rights” as one of three issues—alongside climate resilience and automation—that will define the future of sustainable business. Since then, we’ve been making true on this belief by steadily increasing our capability to help our member companies and today, we move one step further by adding Susan Morgan as a senior advisor.

Susan has spent the past 20 years working at the cutting edge of technology across three different sectors. She spent 10 years at British Telecommunications, served as the first Executive Director of the multi-stakeholder Global Network Initiative, and as part of the Open Society Foundations, funded issues of disinformation and the health of the online public sphere.

I recently spoke with Susan to reflect on these experiences and to share the insights she has gained on how change happens in the world and how companies in all industries—not just technology—can work with other stakeholders to address disruptive technologies.

Dunstan: You’ve spent time in the private sector, at a multi-stakeholder initiative, and in a foundation. What have you learned about how to address issues arising from disruptive technology?

Susan: No one stakeholder group can singlehandedly address the challenges now facing the world. For example, in the technology sector, vital questions are posed by the rapid evolution in technology. Artificial intelligence (AI) can embed discrimination into decision-making systems, discriminating at speed and scale. Established democratic norms are vulnerable to nontransparent, poorly understood, and misleading information campaigns that are poorly regulated. And technologies such as facial recognition could fundamentally change the balance of power between citizens, governments, consumers, companies, challenging privacy, a fundamental human right.  These issues have profound societal implications, and everyone must be represented in the deliberations about them. All stakeholders need to recognize and embrace this as well as the need for public policy and regulatory frameworks that protect citizens and govern the use of these new technologies.

The sweet spot that produces progress is when all stakeholders are stretched and feeling uncomfortable. But being comfortable with being uncomfortable is not easy. It takes work.

Dunstan: You say that the balance of power between citizens, governments, and consumers may fundamentally change. How and why will this happen, and what does this imply for how we address disruptive technology?

Susan: In the last few years we have witnessed incredible consolidation of power by companies operating in the technology sector. These companies have access to huge financial resources that they can deploy to achieve their goals thanks in part to large quarterly earnings and tax regimes that are poorly adapted to the global nature of the Internet. The acquisition of AI talent leads to a concentration of technical knowledge and expertise within companies that could make it more difficult for effective oversight by regulators, governments, and others due to a scarcity of talent and human resources. This is happening at the very same time that the space within which civil society operates around the globe is under pressure due to restrictions being imposed on the funding of non-governmental organizations (NGOs), punitive registration requirements, and direct government pressure.

Although these power imbalances reflect the current reality, initiatives serious about bringing different stakeholders together to tackle a particular challenge must proactively address them to be successful. In practical terms, this means designing governance models with equal representation and power amongst different stakeholder groups, being innovative about how to address knowledge gaps, and building in mechanisms to ensure companies are accountable for commitments they make.

Dunstan: You say that cross-sector collaborations and partnerships are essential. What are the main challenges?

Susan: An important pre-condition for effective cross-sector working is an understanding that no one will get everything they want. Understanding this reality is vital. In my experience, the sweet spot that produces progress is when all stakeholders are stretched and feeling uncomfortable. But being comfortable with being uncomfortable is not easy. It takes work. It is something that people running initiatives bringing different stakeholders together need to focus on, just as participants in these initiatives need to embrace it.

Dunstan: What are the main sources of success?

Susan: Building trust between the parties, who will sometimes have started on opposing sides, is an essential component of successful cross-sector working. Leaving behind preconceived notions is essential to achieving this. NGOs need to acknowledge that companies often do the right thing or want to put something right when it goes wrong. Companies need to recognize and accept when criticism of their actions or decisions is justified or can be useful in creating momentum for internal change. Confidence and courage is needed to invest time building personal relationships with people from other stakeholders when there is often external pressure and public scrutiny. These personal qualities are insufficiently recognized as important ingredients in the success of any initiative.

Over time, the core business of companies will increasingly be driven by technology and data even if they are not classified as being companies in the tech sector.

Dunstan: What are some of the most valuable learnings from your work in the field of tech and human rights?

Susan: One of the important lessons I learned during my time as a funder was how difficult it was to predict what would gain traction or produce pressure for change. It’s far too simple to assume that those things with the most financial backing will be the successful things. Sometimes, it is something that unexpectedly captures people’s imagination, something where the timing happens to be right, or an experiment or gamble that pays off. When developing theories of change or strategy, it is essential that initiatives consider all of these options.

Dunstan: You and I have often spoken about the importance of “non-technology” companies being much more proactive in addressing technology and human rights issues. How can we accelerate that?

Susan: Over time, the core business of companies will increasingly be driven by technology and data even if they are not classified as being companies in the tech sector. But these have much less experience with the types of issues that technology companies have been facing for years, and they will have much to learn. BSR is at the intersection of many different forces, from companies where technology and data are already central and those moving in that direction to the connection between the protection of human rights and broader company sustainability strategies. It also plays an important role in bringing different stakeholders together to make progress on critical societal issues. I look forward to playing a part in that at BSR as a senior advisor.

Blog | Thursday October 3, 2019

Harnessing the Power of Data in Supply Chains: Making Women Workers Count and Be Counted

Preview

We know that we are still a long way from achieving gender parity in the workplace—in part, because the data tells us so. The G7 Gender Equality Advisory Council’s recent report reminds us that despite women’s advancement in many areas of higher education, women are still less likely to participate in the labor market (64 percent) than men (94 percent), continue to be paid less, and are less likely to be promoted to management and senior-level positions.

However, while some of the challenges women face in attaining parity are demonstrated by data-driven insights, many issues that disproportionately affect women remain inadequately captured, and the global gender data coverage is still largely insufficient. The absence of gender and outcome data has led to the development and implementation of both public and private policies and programs that fail to deliver equally beneficial outcomes for men and women—neglecting both the various barriers women face and the number of women who face them. A report from the UN Working Group on the Gender Dimensions of the Guiding Principles on Business and Human Rights reminds us that, too often, the human rights of women are overlooked by companies’ due diligence approaches, including impact assessments. Women count and need to be counted in. This is not only true when identifying, preventing, and addressing company-related human rights impacts in direct operations but also in their further-removed supply chains.

This begs the question: How can companies conduct more gender-responsive due diligence approaches, and what role does gender-disaggregated data play in this? This is the question that BSR’s new guidance Making Women Workers Count: Conducting Gender-Responsive Due Diligence in Supply Chains, funded by the C&A Foundation, sets out to address.

This practical report provides recommendations for both brands and suppliers on how to conduct deliberate gender-focused due diligence through a four-phase approach: 1) assess and analyze, 2) integrate and act, 3) track, and 4) communicate. The report also introduces a set of indicators that can be used to measure outcomes for women and men workers as well as methodologies for collecting and analyzing the data to unearth the root causes of the identified gender gaps.

In the report, we also introduce the Gender Data and Impact (GDI) tool that can be used to conduct a factory assessment to reveal gender gaps in worker outcomes. The GDI tool, publicly available online, allows brands and suppliers to shift the focus of their assessments: starting the analysis by highlighting what outcomes are achieved for women rather than which supplier commitments and practices are in place. While policies and processes do matter, their existence does not systematically guarantee positive outcomes for women and men workers. For example, the existence of reporting channels for sexual harassment, while an important first step, are only useful if workers know about them and are willing to use them, which is why the GDI measures workers’ awareness and trust in reporting mechanisms.

The GDI tool includes a mix of workforce and worker impact indicators that help capture systemic gender discrimination and support the detection of underlying drivers.

• Workforce indicators provide a general overview of the gender makeup of a specific workforce based on a set of criteria, such as contract and job types, wages, and other structural vulnerabilities. Some indicators also assess the gender dynamic of absenteeism and turnover which may be symptoms of complex and multi-faceted issues affecting women workers.
• Worker impact indicators support the evaluation of worker outcomes, perceptions, and behaviors as well as social norms that may influence and contribute to reproducing structural unequal outcomes for women. Assessing women’s empowerment holistically, these indicators spread across six categories representing key enabling dimensions deemed essential for women to thrive in the workplace, such as agency, health and safety, and freedom from violence and harassment.

These indicators, combined with country-level analysis of potential risks and barriers to gender-equal societies and workplaces, can help to illuminate the specific challenges faced by women in factories and farms.

For gender-transformative change to become a reality, we need brands and suppliers to take joint ownership of issues and drive dual accountability of meaningful factory-level improvements.

Beyond the evaluation of worker-specific data and outcomes, the report also acknowledges how important it is for companies to review and assess the impact of their own sourcing practices on workers and to understand how these may disproportionately affect women workers.

Providing a practical framework for conducting gender-responsive due diligence that focuses on outcomes rather than practices is the first step to spur real change for women workers. Implementing this framework will require setting up adequate systems and processes both at the brand and supplier level to collect, manage, analyze, and make use of the gender data for decision-making purposes. However, for gender-transformative change to become a reality, we need brands and suppliers to take joint ownership of issues and drive dual accountability of meaningful factory-level improvements. This can only be achieved through partnerships that are based on mutual trust and genuine commitment at the highest level of both organizations.

BSR is dedicated to helping companies empower women along value chains. Brands interested in learning more about gender-responsive due diligence and the Gender Data and Impact Framework should reach out for a conversation with our Women’s Empowerment team.