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Blog | Tuesday October 3, 2017

The Increasing Importance of Articulating Long-Term Value

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A few months ago, my colleague Laura Gitman wrote a blog post about the rise of short-termism in financial markets, describing how hedge fund activists are increasingly successful at influencing boards to maximize stock price before they sell off their shares. Indeed, there has long been a perception that investors care about short-term financial returns over long-term, sustainable growth.

However, some institutional investors are increasingly vocal about taking a long-term value approach to their decisions, and these investors care about environmental, social, and governance (ESG) issues. There is an opportunity for companies to rebalance their engagement to focus on these long-term investors: Companies likely have more ability to shape the agenda than they believe, and communicating their sustainability stories can be a central part of their approach.

The reality is that investors are a diverse set of stakeholders with various objectives and time horizons. As one BSR member company representative commented in a recent interview, “True investors are interested in long-term value. Traders are interested in the short-term share value. Raiders are interested in break-up value. We are the target of activists from all sides, and there is an inherent tension in managing those constituencies.”

In navigating the complexities of conflicting investor beliefs and objectives, companies should keep in mind that long-term investors are actually the majority. Calvert estimates that institutional investors hold an average of 84 percent of the shares of the 500 largest companies in the world. These include pension funds, insurance funds, mutual funds, and sovereign wealth funds, all of which invest on behalf of long-term savers and tax payers.

Long-term investors understand the link between sustainability and long-term value creation. In his letter to CEOs, Blackrock CEO Larry Fink writes that, “over the long-term, ESG issues—ranging from climate change to diversity to board effectiveness—have real and quantifiable financial impacts.”   

He isn’t alone in this perception. The U.K. pension fund Universities Superannuation Scheme states in its Statement of Investment Principles that it expects ESG investing "to both protect and enhance the value of the fund in the long-term ... The trustee therefore requires its investment managers to integrate all material financial factors, including corporate governance, environmental, social, and ethical considerations, into the decision-making process for all fund investments.”

This interest from investors in companies that embrace long-term perspectives is not surprising—a 2017 McKinsey report shows that companies with a long-term view outperform their peers.

Unilever, which made headlines for scrapping quarterly earnings guidance, conducted a survey last March to better understand its investors’ perspectives on investment horizons, quarterly reporting, and sustainability. Of those that responded, 70 percent indicated that they typically held equities for more than three years, and 80 percent agreed that the Unilever Sustainable Living Plan, the company’s sustainable business strategy, is a fundamental driver of long-term value creation.

Companies that are interested in attracting long-term investors can start by better articulating a compelling story on how their businesses are designed to create long-term value. A study of company reporting in the U.S., U.K., Eurozone, Singapore, and Chile found that few companies report on this in a relevant way.

What do effective communications about a long-term value proposition look like? Novozymes, a global leader in biological solutions, provides one example. The company has published a set of long-term financial and sustainability targets, which includes its goal of an earnings before tax and interest (EBIT) margin at 26 percent or above presented alongside its intent to reach six billion people with its biological solutions and deliver 10 transformative innovations. Johnson & Johnson’s CEO letter to shareholders addressing how the company invests for long-term growth also demonstrates what this can look like.

Tools are emerging that help companies assess and communicate the financial impact of their sustainability strategies to investors. For example, using linear regression analysis, SAP quantifies for its stakeholders that a one percentage point change in employee engagement could lead to a €45 million to €55 million change in operating profit.

Companies can proactively engage and attract long-term investors who value ESG commitments. The sustainability team can play an important role in these efforts by collaborating with the investor relations team to shape their company’s long-term value creation story and deliver these messages through regular investor communications. 

Blog | Monday October 2, 2017

Q&A: The Future of Supply Chain Sustainability

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As part of our Q&A series with our experts on the past, present, and future of sustainable business, we sat down with Supply Chain Sustainability lead Tara Norton to discuss innovations, opportunities, and challenges in the field.

Elisabeth Best: What has been the single most important innovation in supply chain sustainability in the last 25 years?

Tara Norton: The first innovation came in the 1990s, with companies’ realization that the rights of workers in their global supply chains were their responsibility. This launched the labor standards and social compliance movement and the raft of industry vertical initiatives and certifications that we see today, addressing many of the most critical human rights and environmental issues in each industry’s supply chains.

I would say we are now waiting for the next innovation. There has been a definite realization that the current accepted approach is not driving meaningful change. Our leading member companies are looking for better solutions. There are many promising developments underway today, largely around the use of data and integration of technology, that are laying the groundwork for disruptive innovation. 

Best: What does sustainable business, specifically as it relates to supply chain sustainability, look like in 2030? 

Norton: What the future holds is always hard to say, but we are excited to publish a primer on the future of supply chains today that summarizes the biggest procurement trends and forces of change affecting supply chains between now and 2025.

Two big trends happening in supply chain management are the rising importance of the Chief Procurement Officer within businesses and the digitalization of supply chains. Increased digitalization is allowing for data analysis that wasn’t possible before: Companies can better analyze and therefore manage the risk in their supply chains. However, there is also the massive impact of the rise of automation in supply chains, where machines will replace people, not only as workers, but also, in some cases, as decision-makers.

One significant and related change that we anticipate is transparent supply chains, across industries. It’s going to be increasingly easy to see where things are made and how goods and finance flow, and sharing this data will become business as usual. Companies may as well get out ahead of this trend—it’s coming anyway, and it’s going to be increasingly difficult to keep supply chain information private or to hide behind the idea that supply chains are too complex for visibility. 

Best: What’s the biggest challenge or opportunity you see looking forward?

Norton: Supply chains are enablers for businesses to achieve positive human rights, climate, inclusive economy, and women’s empowerment impacts on a mass scale. This remains a huge opportunity.

One of the biggest challenges and opportunities is automation. The impacts of automation on supply chains, and specifically on the global work force, are enormous. There are obviously significant efficiency opportunities, but the impacts of automation on workers should be top of mind. The conversation about worker rights and worker empowerment changes completely when machines can replace entire workforces in factories. What is a company’s responsibility for the people in its supply chain that are being displaced by automation?

Best: What are leading companies doing today to make a sustainable future a reality? 

Norton: BSR articulates what supply chain leadership looks like in the Supply Chain Leadership Ladder—leading companies at the “driving impact” level described in our Ladder are shifting their activities away from compliance toward engagement and impact on the most critical areas of their supply chains. Leading companies are making commitments on their most material issues, integrating sustainability throughout their whole procurement lifecycles, and actively leading in the global collaborations that are improving global supply chains.

Best: What aspect of this year’s BSR Conference are you most excited about?

Norton: We have an excellent line-up of speakers, including Al Gore, and I expect to be inspired and come away with new ideas to meet the supply chain challenges of the future. I am looking forward to the discussion we are going to have during Harnessing New Technologies for Supply Chain Sustainability, where we will explore some of the trends we’ve discussed in this blog. And it’s going to be nice to hang out by the beach with an amazing group of sustainability professionals, many of whom are old friends at this point.

Blog | Thursday September 28, 2017

Momentum Builds to Scale Sustainable Fuels

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Fleet and goods owners today are faced with a proliferating set of fuel choices never before seen in road freight; most have neither the time nor the resources to evaluate every single one for cost, performance, and sustainability. Fuel sustainability is itself a broad term associated with various climate, air quality, worker health and safety, and even human rights risks—most of them far up the supply chain.

BSR’s Future of Fuels launched the Sustainable Fuel Buyers’ Principles in May 2017 to begin defining a unified vision for sustainable road fuels. The Principles tackle this proliferation of options by bringing together fleets and shippers of all sizes to set a common direction for sustainable fuel. By signing these Principles, companies send a strong joint message to the industry about the demand, the sustainability requirements, and the partnerships across the value chain that will be needed to scale investment in low-carbon fuels.

BSR launched the Principles with six major signatories: Amazon, HP, IKEA, PepsiCo, UPS, and Walmart. Less than six months later, we are delighted to more than double that number by announcing 10 new signatories: Anderson-DuBose, Armada, EARP Distribution, Golden State Foods, HAVI, Heineken, Martin Brower, McDonald’s Corporation, Mile Hi Foods, and T/C Distribution.  

Each of the seven Principles outlines concrete actions that companies can take to accelerate the development and uptake of sustainable fuels. One calls for competitiveness; another seeks measurable sustainability improvements, and another aims for more pilots and standardization. We asked several signatories to share why they decided to sign.

In response, U.S. Supply Chain Sustainability Manager at McDonald’s USA Kendra Levine observed, “The rise of fuel options with lower emissions (Principle 1) at competitive price levels (Principle 2) is key to transitioning to sustainable fuels, but as a shipper, collaboration throughout and within our supply chain is vital to achieve our sustainability goals (Principle 7); because of this, we very excited to become a signatory alongside our logistics suppliers.”

Global Lead of Logistics and Sustainability at Heineken Anne Dubost commented, “We are open to engage in partnerships with peers, carriers, and/or fuel providers to accelerate the transition to low-carbon fuels and support our ambitions to brew a better world.”

Director of Corporate Social Responsibility and Executive Director, GSF Foundation at Golden State Foods Anna Lisa Lukes shared the following perspective: “To further our efforts toward the Triple Bottom Line in green freight, the second Principle of demonstrating the competitive pricing of alternative fuel to existing options is critical. We are happy and proud to signal to our original equipment manufacturers and other vendors that we are seeking solutions to help ensure a more sustainable future.”

Current Future of Fuels members, including suppliers who will be critical partners in the transition to more sustainable fuels, are eager to make progress. Vice President of New Fuels at Shell Matthew Tipper said, “Shell welcomes the opportunity to engage with partners to build the market for a more sustainable freight system, and welcomes the development of the Fuel Principles as affirmation by fuel buyers of the need for cross-sector collaboration in this effort.”

BSR is delighted to welcome these signatories, who will collectively help to accelerate the realization of a new, sustainable model for road freight fuel. To further increase momentum and make the Principles tangible, BSR’s Future of Fuels is also developing a standard approach to sharing results of sustainable technology road freight pilots. Companies will volunteer to run their own pilots and share many of the results publicly in an accessible, useable way. We hope to release the first group of studies early next year.

Like many Collaborative Initiatives, BSR’s Future of Fuels began when various actors recognized a common challenge and an opportunity for action. After starting small with a core group of committed founding members, Future of Fuels has established a working method and begun to generate tangible results.

We are delighted to see this Collaborative Initiative expand as shippers and buyers add their powerful voices to the call for sustainable fuel. The greater the number of companies making this statement, the faster the transition will take place.

If you would like to learn more about the Principles or sign on, please contact Nate Springer.

Blog | Wednesday September 27, 2017

How We Can Use Big Data to Understand Sustainability Risks and Opportunities

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We live in a world where sustainability challenges are among the most contentious topics of conversation for millions of individuals who are now able to publish their experiences, hopes, dreams, and fears online. Local conflicts and problems can quickly escalate into global reputational threats to companies, as stakeholders share their perceptions and concerns across online and social media, driving fluid and evolving advocacy agendas. At the same time, businesses have unprecedented opportunities to engage with customers, employees, suppliers, and communities to enhance their products and services, manage their risks, and tackle systemic challenges.

In short, stakeholder engagement has never been more important—or the opportunities to leverage it to better understand material issues this diverse. That is why today we are delighted to announce our new partnership with big data intelligence firm Polecat. Polecat is an award-winning and analyst-endorsed software firm based in London that helps organizations interrogate online conversations to identify strategic and operational risks for their reputations and licenses to operate. The company uses artificial and human intelligence to scan and interpret the universe of unstructured data from online and social media, giving users rapid insight into key trends and influencers shaping debate about their businesses as related to specific assets, brands, geographies, and value drivers to enable faster, smarter decisions and interventions.  

BSR will use the Polecat platform to help our members understand and anticipate changes in our current dynamic environment—work that will complement our new Sustainable Futures Lab, which we introduced last week. This will allow BSR to scope consulting and research projects that use big data analysis to amplify our expertise on key sustainability topics.

Polecat’s platform will enhance our ability to help members explore stakeholder perceptions about their material risks and opportunities, conduct sector and country analysis, and design more robust engagement plans. We will be able to provide data-driven insights on material issues, which can be used to define, sense, or differentiate sustainability priorities. We will also be able to examine both existing perceptions and emerging issues, or ‘weak signals,’ to help organizations create more future-oriented strategies. Over time, we will work with Polecat to design new offerings and tools for our members.

“We are proud and delighted that BSR has chosen to work with Polecat to help enhance its members’ insights and decisions with regard to the many pressing sustainability challenges that the world faces, and where business and markets have a critical role to play in helping shape the future,” said Polecat CEO James Lawn. “Our software is developed precisely to provide actionable intelligence on these types of risks and opportunities that are so defining of corporate reputations today.”

By combining Polecat’s insights with our deep expertise in climate change, human rights, inclusive economy, supply chain sustainability, sustainability management, and women’s empowerment, we will continue to help companies create transformative strategies that are fit for the future.

As BSR celebrates its 25th anniversary and Polecat its 10th, we look forward to collaborating to enhance how we advise and support our members in making the smartest, best-informed decisions for a just and sustainable world. Caroline Skipsey from Polecat will speak on a panel on the "Era of Misinformation" at the BSR Conference 2017 in Huntington Beach, California, this October, and we invite you to join us to discuss opportunities to leverage these capabilities for your sustainability strategy.

Blog | Tuesday September 26, 2017

Introducing the Sustainable Business Playbook

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Last week in New York, leaders from business, government, and civil society descended on New York City during the United Nations General Assembly (UNGA) for the whirlwind of meetings, briefings, and announcements that have become the sustainability world’s answer to Fashion Week.

What has been known as Climate Week for almost a decade is now also joined by a flurry of activity related to the UN Sustainable Development Goals (SDGs). This creates a platform for new commitments; new announcements, including that of the 2018 Global Climate Action Summit; and new dialogues like those hosted by the World Economic Forum and Bloomberg Philanthropies (both looking to fill the space left unoccupied by the end of the Clinton Global Initiative).

This is all to the good. Yet at the same time, each year these events inspire the nagging sensation that the sustainable business community excels at engaging with the already-committed, while the “outside world” continues on without regard for the vision articulated by the SDGs.

The aftermath of the 2016 election in the U.S. only places that view into sharp relief, as the White House is held by people who deny climate science, disregard human rights, and close borders, not to mention aim to slash funding of the very efforts that are needed to achieve the SDGs. The question on our minds last week was this: How do we break through these barriers to ensure that business continues to exert leadership when Washington appears to have ceded its role?

One of the great stories of 2017 is that business leaders have reinforced their commitment to climate action; stated their opposition to the travel ban, and expressed revulsion at the apparent tolerance of hate groups. Just this past weekend, the National Football League became the latest enterprise to express its opposition to divisive speech from the White House.

These steps have had impact, and they have reinforced support for what we would like to believe are universal values. However, what is also needed is a positive agenda that will guide business in the U.S.—one that takes a proactive, comprehensive approach to defining what our future should look like. BSR is therefore pleased to release a Playbook for Sustainable Business in the United States as a contribution to shape and support the actions that will ensure that the vision of a just and sustainable world becomes a reality.

We developed this Playbook as the outcome of a dialogue we have led with 15 U.S.-headquartered companies, mainly in heavy manufacturing, over the past several months. This group came together to exchange views on how to navigate a new political environment while remaining committed to keeping sustainability front and center for their organizations.

The Playbook aims to provide direction for business in the U.S. (whether headquartered or with significant operations in the country) to devise effective strategies that respond to the current context while also staying focused on the longer haul. It is based on the premise that advocating for sustainability in clear business terms is much more likely to build effective, broad, and cross-party coalitions.

During these discussions, participants surfaced five key perspectives about the role of sustainable business in the U.S. today:

• Sustainability enhances competitiveness: The connections between sustainability, business success, and economic growth in the U.S. are strengthening. The short-, medium-, and long-term competitiveness of the U.S. economy requires investment in sustainable business models, technologies, and products.
• Business should stay the course: Sustainable business leaders for the most part are “staying the course” on sustainability, and can continue to do that by reinforcing commitments to meaningful business action on climate change, human rights, and the SDGs.
• Business should demonstrate relevance and benefits to the public: It is essential that sustainable business leaders become more effective at connecting sustainability challenges with priorities that resonate with the general public, through innovation, employment, and competitiveness.
• Sustainable business leaders can shape effective public policy frameworks: Sustainable business leaders have a unique opportunity to shape the public policy and regulatory frameworks that will support the long-term success of sustainable business and the U.S. economy. By directly connecting sustainability to business success, sustainable business leaders can help bridge the political divide with a shared vision for U.S. economic prosperity. The business voice needs to be heard in policy fora, not only in Washington, but also in the states and cities where problem-solving remains very much on the agenda.
• Coalition development advances progress: Systemic change requires deep collaboration, and this is even more true when policy frameworks grow more fragmented. The need for companies to build coalitions, along the lines of the “We Are Still In” effort that responded forcefully to the stated decision to withdraw the U.S. from the Paris Agreement, is just one example of why and how this is important.

Today’s unique political landscape, while threatening to interfere with progress at the surface, presents a unique opportunity to redefine the future of sustainable business. We hope you find this Playbook useful, and we believe its elements not only respond to a particular moment in the U.S., but also provide a framework that can be applied in other contexts.

As we look forward to advancing the objectives of this effort in the coming months and years, we invite you to join us in collaborative efforts to shape an approach to sustainable business that is fit for purpose in turbulent times and charts a path that will serve companies and wider society well in the coming decades.

Blog | Monday September 25, 2017

Q&A: The Future of Business and Human Rights

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To continue our Q&A series with our experts on the past, present, and future of sustainable business, we sat down with our Human Rights lead Margaret Jungk to discuss innovations, opportunities, and challenges in the field.

Elisabeth Best: What has been the single most important innovation in the human rights and business field in the last 25 years?

Margaret Jungk: The easy answer is that the single most important innovation in the human rights and business field in the last 25 years was the UN Guiding Principles on Business and Human Rights (UNGPs), unanimously endorsed in the UN in 2011 by states across the political divide, from India to Russia, Argentina, Norway, and the U.S. The UNGPs were also strongly supported across the business and NGO divide, from The Coca Cola Company to Amnesty International and the Chinese national mining authority. These aren’t a mere set of principles: They are the formula through which we apply international human rights principles to the business context. 

Incredible strides, including the extension of principles of equality to LGBTQI populations and sophisticated methodologies for monitoring and reporting violations, have been made through numerous international human rights instruments that are being actively used in the business realm, too.

Best: What does sustainable business, specifically as it relates to human rights, look like in 2030?

Jungk: Given the rapid pace of developments in the human rights and business field over the past 12 years, I’m going to stretch far when imagining what the next 12 years will bring, taking us to 2030.

They will bring much greater scrutiny on companies, as advances in technology continue enable a community member to transmit a picture or video around the world almost instantly, for example of a community displaced by a large infrastructure project or a factory managed under poor conditions. The future will also bring much greater engagement by companies, not only in response to the negative pressures mentioned above, but also as a more active positive force in society at large. I think statements by business leaders like those on the Trump Administration’s immigration policy will become far more commonplace.

One of the big questions we are running through BSR’s new Sustainable Futures Lab is the question of how new technologies like artificial intelligence will affect the application of human rights principles, down to very basic questions like ‘what constitutes a human.’ 

Best: What’s the biggest challenge or opportunity you see looking forward?

Jungk: Two words: collective impacts. The human rights field is pretty advanced when it comes to addressing singular-level impacts on human rights—for example, if a company has a discriminatory labor practice or an unsafe working environment. However, if we talk about a negative impact resulting from the combined actions of multiple companies—like a group of extractives companies polluting a water system when no single company exceeds the pollution level, but the combination of polluters in the area makes the water unfit for drinking, assigning responsibility becomes more difficult. Another example of a collective impact is climate change; supply chain issues often also implicate multiple companies.

These collective impacts are by no means rare—rather, they are probably the majority of negative human rights impacts. Yet it’s tremendously difficult to establish due diligence requirements for companies to prevent and mitigate collective level impacts, and to collaborate on remedy for those impacts when they do occur. 

Best: What are leading companies doing today to make a sustainable future a reality?

Jungk: True leaders are engaging in the development of what we call the ‘human rights ecosystem.’ 

It’s an acknowledgement that companies never operate in a vacuum. Instead, they operate as part of a larger ecosystem consisting of competitors, suppliers, government regulators, and civil society organizations, among others. This larger social ecosystem can be geared in a way that supports and reinforces human rights, or, in some countries, it actively undermines them. We see some companies working to build the capacity for respecting human rights throughout multiple tiers of their supply chains, while others are actively engaging their peers or even their governments to help ensure good public policy that is aligned with human rights. This stuff isn’t quick, and it isn’t easy, but I have no doubt that the longer-term, systemic-level impacts generated by these efforts have tremendously positive ripple effects.

Best: What aspect of this year’s BSR Conference are you most excited about? 

Jungk: I must admit to being a bit of an introvert, so usually big conferences aren’t my cup of tea. I make an exception for the BSR Conference, because it’s one where I have tremendously interesting conversations. Last year over one coffee break, I moved from a conversation with a company struggling to implement grievance mechanisms in its supply chain (where it has very little leverage), to one with another company confronting a community protest related to competition over scarce water resources. It’s these real-life challenges and the opportunity to help people find viable solutions to impasses between companies and community rights that I look forward to most.  

Blog | Friday September 22, 2017

Introducing the Sustainable Futures Lab

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From extreme weather events around the globe, to the election of Donald Trump, to China’s decision to phase out cars fueled by fossil fuels, the world is changing profoundly and rapidly. Almost every business is facing fundamental changes—changes that are causing companies everywhere to rethink their business models, their customers, how they deliver value, and who their competitors are. The landscape for business and sustainability is being reshaped.

Not only are the speed and scope of these changes hard to fathom, but they are all interacting with each other to produce bewildering complexity. The automation of garment production, for example, has massive implications not only for manufacturing, but also for international development, global supply chains, human rights, and retail.

Discussing the impact of automation on retail at BSR’s recent Responsible Retail Symposium, Sebastian Vanderzeil, a director and analyst at Cornerstone Capital Group, said, “By 2025, things will be so completely different that I don't even know what they look like.”

The Need for Futures Thinking

In times like these, any business that plans for the future by extrapolating from the past is unlikely to succeed. One example of how quickly the world is shifting? Four years ago, the Energy Information Agency forecast that global coal use would grow 39 percent by 2040. This year, however, it revised that forecast downward to just 1 percent.

For organizations to survive and thrive in such turbulent times, they need ways to grapple with rapid change, uncertainty, and complexity. Futures thinking, also known as strategic foresight, provides a set of tools to do this. These methodologies provide structured ways to spot signals of change on the horizon, explore multiple possible futures, and chart a path forward that assumes turbulence.

To meet the increasing need for futures thinking, BSR has launched a new Sustainable Futures Lab, which will enable foresight-driven engagement with a broad spectrum of changes across various domains that are reshaping the context for business overall, and for companies committed to advancing sustainability in particular. Sustainability is fundamentally about creating a future that is fit for purpose, and the Sustainable Futures Lab will build upon BSR’s 25-year legacy of thinking about how to create a better future.

As its name suggests, the Lab will be experimental in its approach. It will test hypotheses and prototype new solutions across BSR’s three key areas of activity: research, consulting, and collaboration.

Research: Horizon Scanning and Big Data

At the foundation of a robust strategic foresight practice is horizon scanning: a systematic exploration across multiple domains to identify emerging issues, new threats and opportunities, and signals of change. Our new horizon-scanning practice will combine human intelligence with cutting-edge machine learning.

This practice will generate new topics for inquiry that will build upon and extend BSR’s research agenda. Our work on topics such as a sustainable transition to automation and the sustainability challenges and opportunities of 3-D printing will be augmented by examinations of new issues we see reshaping sustainable business, such as algorithmic bias and the business implications of universal basic income.

Consulting: Scenario Planning and “Future-Proofing”

Transforming insight into impact is core to BSR’s theory of change, and the Sustainable Futures Lab will offer our members new tools for finding the business opportunities in creating a more just and sustainable world.

To spot these opportunities under conditions of such profound uncertainty, it is essential that businesses take into account multiple possible futures—rather than betting the farm on one “expected future.” One of the most powerful tools for doing this is scenario planning, which makes use of an entire set of plausible futures to test and enhance strategy. As a recent article in MIT Sloan Management Review observes, “Many senior executives are coming to the view that smart management benefits from a richer understanding of the present possibilities afforded from multiple views about possible futures.”

BSR will now offer scenario planning as a strategic foresight service to its members. In addition, we will be sharing new approaches to “future proof” existing offerings, such as materiality assessments, stakeholder engagement, and climate resilience strategies.

Strategic Collaborations

Solving humanity’s most pressing challenges often requires work that goes beyond what one company can do alone—and the Sustainable Futures Lab will use strategic foresight to enhance BSR’s collaborative initiatives. Horizon scanning will be leveraged to identify new opportunity spaces. Scenario planning will be used to help members of collaborative initiatives consider different futures and align around a preferred vision. And the Lab will also aim to launch a dedicated collaborative initiative offering members the opportunity for hands-on engagement with the people and the issues shaping the future.

What’s Next

The Sustainable Futures Lab will host several sessions at the BSR Conference in Huntington Beach, California, next month: Join us for a futures-thinking design sprint and conversations about how futures can help us redefine sustainable business. The BSR University course on Preparing Sustainability Strategies will also address strategic foresight topics, including scenario planning. Finally, we are also in the process of planning futures workshops and a global roadshow later this year and early next year.

If you’d like to discuss how futures might be useful for your organization, please get in touch.

Blog | Thursday September 21, 2017

Redefining Sustainable Business: Radical Collaboration, Inside and Out 

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As our CEO Aron Cramer articulated in his recent post, our continually evolving landscape means “a new agenda for business, new tools for sustainability leaders, and, in a world of political volatility, a new approach to business leadership” are urgently needed.

The world is increasingly looking to businesses—and business leaders—to chart a path forward on a range of critical topics, from diversity and inclusion to climate action.

One key element of this new approach will be a dramatically increased role for collaboration, both within organizations and between companies and their stakeholders.

For example, at BSR we are engaging member companies in the development of formal strategies and plans to understand and address vulnerability to climate change and related impacts across their entire value chains. These rapidly growing efforts aimed at building climate resilience provide a useful case study of what sustainable business will increasingly require.

While we are still in the early stages of this work, two things have become clear.

First, business can’t do it alone.

The challenge of building resilience to climate change—as so painfully illustrated by recent extreme weather events around the world—is the very definition of a “systems challenge.” Most companies have some degree of business continuity planning in place focused on the “hardening” of physical company infrastructure. This is of course critically important, but it is just the beginning of a journey that must also address the following questions:

• Even if our facilities are secured, will our employees be able to make it work?
• Will our suppliers be able to provide the inputs we need to maintain production?
• How well equipped are the communities we operate in to restore/resume operations and commerce in the aftermath of a storm or other disruptive event?
• What investments can and should we make in building critical infrastructure and capabilities across our value chain—and what is our best role vis-a-vis public sector and other players?

Even more important than the increased expectations of business is the stark reality that business cannot achieve its objectives without working with other sectors. Specifically, business needs to step up its approach to advocacy and collaboration, using the full range of its core competencies to enable and influence stakeholders in the public sector and civil society.

And the sustainability department certainly can’t do it alone.

This leads us to a second, more internally focused point about addressing resilience and other critical systemic challenges. The scope and complexity of issues and efforts necessitate a whole organization approach to sustainability, leveraging the combined competencies of multiple functions and disciplines. Here are just a few examples of how departments across companies are engaging on climate resilience:

• A dramatically expanded approach to enterprise risk management, with participation from strategic planning, is critical to development and acceptance of an expended approach to risk assessment/management.
• Operations and transport/logistics teams assess vulnerability across company-owned operations and networks, while global supply chain and procurement organizations do the same for key input providers, and these departments will be the owners of programs and partnerships to address their respective vulnerabilities.
• Public affairs and government relations teams evaluate climate-related regulatory and policy risks and determine how best to address them in the context of companies’ overall public policy objectives.
• The human resources team develops enhancements to workplace policies, training, and capability-building.
• A company’s foundation identifies how to allocate resources and pursue partnerships key to the implementation of the resilience strategy.

What does this mean for CSOs and sustainability teams?

Sustainability leaders and their teams will play important roles in enabling other parts of the business, both internally through cross-functional work and externally via significantly greater collaboration and advocacy. In order to do this, however, most sustainability teams will need to increase their focus on organizational change and capability-building.

Sustainability teams will also need to leverage their external engagement and relationships with unusual actors to help other departments spot trends and proactively respond to issues as they arise. They will be called upon to incubate new public-private projects and partnerships, too—sometimes in conjunction with their company foundations. The UN Sustainable Development Goals in particular can serve as a vehicle for sustainability teams to build coalitions around key issues and priorities for the organization.

The bottom line: Sustainability departments need to embrace and promote a spirit of “radical collaboration” if they are to achieve their objectives in a rapidly changing environment.

Join us to continue the conversation on how business leads at the BSR Conference 2017 in Huntington Beach, California, from October 22-24.

This week, we are featuring several blog posts about the role of collaboration in shaping our climate future. Follow @BSRnews on Twitter for updates from Global Goals Week and Climate Week NYC; see our recent blog post for the full list of where we’ll be.

Blog | Wednesday September 20, 2017

New Climate Leadership to Realize the Paris Vision

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As world leaders gather in New York for the UN General Assembly and Climate Week NYC, we are excited to discuss how we can all contribute to the achievement of the UN Sustainable Development Goals (SDGs): to end poverty, protect the planet, and secure shared prosperity.

Since the SDGs and the Paris Climate Agreement were adopted in 2015, we have seen a wide range of actors around the globe commit to bold action in support of this vision. Although the United States government indicated its intent earlier this year to withdraw from the Paris Agreement, in their G20 Declaration this year, “the Leaders of the other G20 members state that the Paris Agreement is irreversible.”   

Back in May, we expressed our confidence that the business community would continue to lead on climate action, realizing the Paris vision of a resilient, low-carbon economy that sparks innovation, creates jobs, and puts the world on a safer, more prosperous path. In fact, business leadership has been on display since the U.S. announcement, and it is especially visible this week. Through the We Are Still In declaration, 2,300 American businesses, investors, and other actors have re-committed to delivering on the promise of the Paris Agreement. America’s Pledge, led by California Governor Jerry Brown and Michael Bloomberg, is an effort to quantify and aggregate the impact of these and other American actors implementing emissions reductions and building climate resilience on the ground.

It’s exciting to see more companies engaged on climate than ever before, and individual companies are also making commitments on an unprecedented scale. Walmart’s Project Gigaton aims to remove one billion tons of emissions from its supply chain, and HPE’s supply chain management program seeks to avoid 100 million tons of emissions. Climate action up and down and value chain is fast becoming a hallmark of leadership: General Mills has a 28 percent emissions reduction target by 2025 from “farm to fork to landfill,” Carlsberg has a 2030 target to reduce emissions “beer in hand” by 30 percent, and Mars recently announced a 2025 target to reduce emissions by 27 percent across its value chain as part of its Sustainable in a Generation Plan. These goals not only align with the latest science on what is necessary to keep warming well below 2°C—they represent commitments to collaborate with suppliers and customers to create the climate future we need.

Equally important is leadership in assessing and disclosing climate risks and building resilience to these risks, in recognition of the climate impacts we now face. Yesterday, the We Mean Business coalition, of which BSR is a proud founding partner, launched a commitment to implement the recommendations of the Task Force on Climate-Related Financial Disclosures. Ten companies across seven sectors have become the first to commit to disclose information about the financial implications of their climate-related risks and opportunities.

This new climate leadership, and many other examples like it, will be on display a year from now at the 2018 Global Climate Action Summit convened by Governor Brown. BSR is very pleased to serve on the Steering Committee of the Summit as the representative of the business community, and we will create channels for business input as plans for this event evolve. 

The 2018 Global Climate Action Summit will demonstrate how business, investors, states and regions, cities, civil society, and citizens are implementing climate action, inspiring new ambition, and creating an inclusive economy that works for everyone. It will be an opportunity for new climate leadership to shine, and to build momentum for the 2018 UN Climate Conference, when governments will take stock of the world’s progress towards the Paris goals and begin preparations to update their own targets in 2020.

To bring the Paris vision to life, it’s essential that we work together across industries, sectors, and borders. We are thrilled to represent business at next year’s Summit and excited to see this trend of bold, collaborative leadership continue. 

This week, we are featuring several blog posts about the role of collaboration in shaping our climate future. Follow @BSRnews on Twitter for updates from Global Goals Week and Climate Week NYC; see our recent blog post for the full list of where we’ll be.

Blog | Monday September 18, 2017

Collaborating to Achieve Climate Leadership

Preview

This week, leaders from around the globe will converge in New York City to participate in the conversation about the UN Sustainable Development Goals and our climate future.

Corporate climate action has been on the rise for a few years now: Since We Mean Business launched in 2014, 596 companies have made 1,030 climate commitments; almost 300 of those are commitments to set science-based targets for greenhouse gas (GHG) emissions reductions.

For the world’s largest companies, climate action increasingly means collaboration. As ambitious as these companies are, they cannot reach their GHG emissions reduction goals without forging partnerships in their value chains and beyond. Moreover, they are finding that collaboration can reap benefits beyond emissions reductions.

This past June, BSR and CDP convened 19 companies in Stockholm to share their insights on the value of partnerships in reducing GHG emissions. Stora Enso, who hosted the event in its new innovation center in the Swedish capital, demonstrated how its own climate programs are driven by deep collaboration. The company, a leading provider of renewable solutions in packaging, biomaterials, wooden constructions, and paper, has entered into many fruitful public and private partnerships in support of its climate ambitions, including the following:

• 13 of its mills provide biofuels to local municipal district heating systems.
• In Belgium, its Langerbrugge mill is helping Volvo Car Gent cut CO2 emissions via a district heating connection that uses industrial waste for energy production.
• The company’s Montes del Plata pulp mill produces electricity from biomass and delivers five percent of Uruguay’s annual consumption to the national grid.
• Stora Enso has entered a Carbon Pact with Maersk Line to jointly reduce their GHG emissions.

These types of partnerships were a common theme in the discussion around the table—Electrolux, IKEA Group, and H&M, for instance, also shared their own experiences collaborating, with suppliers in particular, to pursue ambitious emissions reduction goals.

Other recent major climate announcements have similarly strong collaboration components. For example, Mars announced that it will spend US$1 billion in the coming years to tackle sustainability issues, including climate change. Specifically, Mars will focus on its supply chain, acting on the words of CEO Mark Reid, that “We must work together, because the engine of global business—its supply chain—is broken, and requires transformational, cross-industry collaboration to fix it.” Mars already had goals in place to reach net zero emissions within its own operations by 2040, but under its new “Sustainable in a Generation” plan (which will complement existing targets), the company has committed to reduce emissions across its value chains by 67 percent by 2050.

Last year, Walmart—the world’s largest employer and largest company in the world by revenue—launched its Project Gigaton to pursue an absolute greenhouse gas emissions reduction of 18 percent by 2025 and further work to prevent the release of 1 gigaton of emissions in its global supply chain by 2030. With this project, Walmart will provide an emissions reduction toolkit to a broad network of its suppliers, focusing on areas such as manufacturing, materials, and use of products.  

As these examples reveal, the future of climate action is a path charted with innovative and transformative partnerships, and many companies are already working with their various stakeholders toward a climate-compatible future.

I invite you to join me at the annual BSR Conference next month in Huntington Beach, California, as business pioneers this new territory. I will be moderating a conversation with Björn Hannappel, head of responsibility strategy and standards, Deutsche Post DHL Group, and Brandon Owens, director of environmental strategy and analytics, GE, to explore how current modes of production, manufacturing, consumption, product design, and financing tools will be affected by climate change, as well as how collaboration can help companies face risks and seize opportunities as leaders in a low-carbon economy.

This week, we will feature several blog posts about the role of collaboration in shaping our climate future. Follow @BSRnews on Twitter for updates from Global Goals Week and Climate Week NYC; see our recent blog post for the full list of where we’ll be.