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Blog | Thursday February 16, 2017

Three Reasons Why Collaboration Is Key to Green Freight

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Freight movement is the lifeblood of global supply chains and economic development in many regions. It is also at the heart of many 21st-century challenges to global business: Markets want shipping to be faster, more flexible, and more sustainable. Yet freight is a distributed, global system, in which no single entity controls central decision-making—and, likewise, green freight efforts are dispersed and interconnected in unexpected ways.

These conditions require collaboration to make progress. For example, last year, governments around the globe ratified an agreement to drastically cut greenhouse gas emissions that contribute to climate change by midcentury. Freight is responsible for 7 percent of these emissions and is one of the fastest growing emissions sources—but who along the value chain, specifically, should be accountable? And how does the responsible party work with business partners, governments, and logistics suppliers to be more sustainable?

BSR’s Clean Cargo Working Group (CCWG) has been addressing these questions within the shipping industry for nearly 15 years. It offers a prime example of successful green freight collaboration: a business-to-business leadership initiative involving major brands, cargo carriers, and freight forwarders dedicated to reducing the environmental impacts of global goods transportation and promoting responsible shipping.

In our work, which now represents 85 percent of ocean container shipping volume, we have seen the value to companies in addressing these challenges collaboratively. We have learned there are several reasons why globally dispersed green freight challenges like a greener shipping industry require collaboration:

• Alignment and standardization is impossible for any single company. Freight carriers cannot track their own improvements, and shippers cannot compare the environmental performance of their carriers, unless all parties use the same standards. Therefore, we facilitated collaboration among carriers and shippers to develop a standardized methodology for reporting environmental performance. This has allowed CCWG to track emissions reductions in the group: Our member carriers have reduced their emissions by more than 34 percent per container, per kilometer since 2009. Members work together annually to refine the methodology and improve their performance management tools, including, most recently, by updating our verification protocol. This protocol, which ensures data quality with third-party assurance, now covers 100 percent of our carrier members. And we shape alignment across the entire logistics value chain through our influence in the Global Logistics Emissions Council (GLEC) framework and with BSR’s partnerships with the U.S. Environmental Protection Agency’s SmartWay, Green Freight Europe, Green Freight Asia, and other initiatives.
• Integration stalls without discussion and best-practice sharing. Companies encounter many of the same issues when integrating environmental performance into their business decisions. Through CCWG, we created a forum for discussion and sharing best practices, which we complement with members-only reports, case studies, meetings, and webinars. Our members consistently rate our in-person member meetings, held in different regions twice each year, as one of the top values of the group. We bring together representatives from our 45 member companies and select industry experts for two-and-a-half days of presentations and discussion on green freight trends, to make progress on our own work plan, and to enable members to share best practices. Members return from these meetings and then disseminate this information to colleagues, start new projects with their business partners and other stakeholders, and apply lessons to accelerate progress on their own goals. 
• The best solutions come from across the value chain. Freight shipping involves a range of stakeholders, and profitable progress on sustainability depends on many contingencies among them. In CCWG, we create a space where industry and other experts can tackle challenges, such as performance measurement, and where we can build a collective voice to catalyze change in other areas. In October 2016, our members jointly released a climate statement and call to action to announce the industry’s intent to continue making progress on climate action, while calling on innovators and policymakers to double down on finding solutions. We are just now finalizing research that will define an emissions reductions pathway for the container shipping industry that will match the ambition of the global climate goals, as well as a commitment to progress that each of our member companies can make and track publicly.

Through our work with and support of the GLEC, one global framework for logistics emissions accounting now exists across all freight modes. Yet we will need to expand standardized data collection efforts into other geographies—Africa, Asia, Latin America—and in other modes, such as air and rail. Once this challenge is overcome, collaborations like CCWG will be able to consolidate and harmonize data on emissions, providing clear guidance for carriers and clear metrics for buyers. CCWG will continue to support and drive these efforts collaboratively and globally.

At BSR, we are excited about the future for CCWG—and we continue to extend these lessons to other green freight challenges through our Future of Fuels initiative, as well as to other challenges on the 21st-century sustainable business agenda through our more than 20 other industry collaborations.

For more information on CCWG or to speak with the team, please email ccwg@bsr.org. 

This blog is part of our February spotlight on collaboration. To find out more about BSR’s Collaborative Initiatives, read our overview blog or visit the Collaboration page.

Blog | Wednesday February 15, 2017

Calling All Sustainability Reporting Practitioners

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We’ve been thinking a lot recently about the role of company sustainability practitioners in the future of sustainability reporting. By holding the pen while reports are written, practitioners occupy a very special position in shaping this future.

Not only do practitioners form the contents of reports, but they also possess unique insights into the successes and shortcomings of sustainability reporting that others in the field simply don’t have.

In theory, sustainability reporting achieves two main objectives: It improves company sustainability performance, and it enables informed decision-making by stakeholders. We’ve reached the conclusion that it is the practitioner who usually knows more than most about how, why, and when sustainability reports achieve these objectives—or don’t.

It is for this reason that BSR is launching a new “Future of Sustainability Reporting” collaborative initiative.

At its most basic, the collaborative initiative will provide a space for practitioners to share learning, insights, and perspectives on how, why, and when sustainability reporting supports improved company performance and informed decision-making.

However, we would like the collaborative initiative to be much more ambitious than that.

Specifically, we believe there is an important and timely opportunity for practitioners to influence the future of sustainability reporting. We would like the collaborative initiative to address important questions, such as:

• Which sustainability reporting strategies and approaches actually improve sustainability performance at companies—and which do not?
• What approaches to sustainability reporting allow a diverse range of audiences (investors, civil society, policymakers, etc.) to make informed decisions?
• How should the various reporting frameworks and standards evolve to better support these desired outcomes in reporting?
• How can consistency among the various reporting frameworks improve, while still allowing them to fulfill their different objectives?
• What practical approaches to reporting—such as different report structures, or use of key performance indicators (KPIs) accompanied by key performance narratives (KPNs)—are most effective?

The Future of Sustainability Reporting will initially seek to achieve these objectives in three ways: shared learning among members of the group, dialogue with reporting organizations, and publishing a point of view in the form of a white paper. During 2017, it is our hope that the group will meet monthly by phone and twice in person.

To avoid confusion, it is important to emphasize three further points about the new collaborative initiative.

First, when we say “sustainability reporting,” we’re referring to all company sustainability disclosures, be that in the Form-10K, traditional sustainability reports, or in-depth reports focused on a single topic, such as climate change or human rights.

Second, BSR is frameworks-agnostic. We believe that all the various reporting frameworks (GRI, IIRC, SASB, and all the many issue-specific frameworks) have vital roles to play, but that the consistency among them and their user-friendliness can be substantially improved. 

Third, when we say “practitioner led,” we mean it. We are very interested in evolving the activities and outputs of the group based on what you, the practitioner, would find most valuable.

Late last year, BSR’s Triangles, Numbers, and Narratives paper set out the main features of reporting that we believe improve performance and enable informed decision-making and proposed a conceptual model for the future of sustainability reporting based on a triangular structure and a KPI-KPN table.

While the ideas presented in the paper were an imperfect work in progress, we hoped that they point in a direction that would both simplify the reporting process and increase its impact.

The ideas shared in the report resulted from many informal discussions among practitioners, and the report concluded with a call to action for companies to join BSR in developing these solutions further. We have established the Future of Reporting to do just that—come and join us.

Blog | Tuesday February 14, 2017

Turning Global Challenges into Collaborative Solutions: BSR’s Collaborative Initiatives

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Since being founded 25 years ago, BSR has had a consistent focus on uniting the business community and its stakeholders in collaborative initiatives that co-create solutions to systemic business and sustainability challenges. Today, we’re engaging more than 200 companies in 20-plus initiatives, covering a wide range of sectors and issues—from clean fuel for commercial road freight to ethical practices in luxury-industry value chains. And BSR had a hand in developing several well-known initiatives that today operate as independent organizations.

With the continuous efforts of our members and stakeholders, this collaborative work generates concrete positive outcomes for business, societies, and the environment through sharing best practices, changing business norms, and driving collective, sustainable solutions. For example:

• The Healthcare Working Group has developed the Guiding Principles on Access to Healthcare, through which CEOs of 13 major pharmaceutical companies have framed their efforts to reduce the global burden of disease by helping ensure that medicines, vaccines, diagnostics, and other medical technology and assistance are effectively developed and deployed.
• Through the Future of Internet Power, more than 20 technology companies have committed to sourcing 100 percent renewable energy for their data centers.
• Companies in the Responsible Luxury Initiative have developed and adopted a set of high-level principles for the sourcing of leather, fur, and exotic skins.
• The Clean Cargo Working Group continues to provide a leading industry platform for promoting responsible shipping, as well as reliable year-on-year emissions performance data from 23 of the world’s leading ocean carriers that represent approximately 85 percent of global ocean container capacity.
• The Maritime Anti-Corruption Network, now with more than 80 corporate members, is working with governments, local authorities, and civil society stakeholders around the world to improve the transparency, efficiency, and integrity of business operations at global trading hubs. 

Commitment to Transformative Change

The growth and impact of these initiatives demonstrate a clear desire among companies and stakeholders for coordinated action—but we’re convinced that we can go even further to drive truly transformative change. Last year, the United Nations reinforced this message with the inclusion of the 17th Sustainable Development Goal (SDG), which recognizes that the other 16 goals will only be achieved through “partnership that brings together governments, civil society, the private sector, the United Nations system, and other actors and mobilizes all available resources.”  

This year, we are strengthening BSR’s capacity to convene business and stakeholders to develop and scale collaborative initiatives that overcome the challenges the SDGs present. We will seek to radically evolve our capacity to drive transformative change through collaborative initiatives, using the following principles for success:

• Collaboration requires meticulous management: We’ll strengthen our operational capabilities, such as communication, technology, governance, and administration platforms.
• Impact requires scale: We’ll strengthen and scale our existing Collaborative Initiatives through several approaches, including by partnering more effectively with stakeholders, funders, and governments.
• Innovation requires multistakeholder involvement: We’ll employ inclusive and interactive innovation processes to incubate and develop new collaborative initiatives.

This work will build on our platform of key initiatives that tackle systemic challenges, and we will actively engage with our members to ensure that the new collaborations address their business needs, as well as drive positive societal and environmental change. This includes reaching out to our network to understand which issues our members and partners most want solved, as well as hosting a series of multi-day, multistakeholder workshops focused on systemic challenges and new ideas for collaboration.

Look out for further opportunities to engage as we build out this key element of BSR’s business leadership strategy for a just and sustainable world.

Over the next two weeks, we’ll highlight outcomes and impacts from BSR collaborations in a social media campaign—follow @BSRnews—and on the BSR blog.  

Blog | Tuesday February 7, 2017

Redefining Business Leadership in a New Environment

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Donald Trump ran for president of the United States as an unconventional candidate, and in the third week of his presidency, it is undeniable that change has arrived.

And while he pledged to “shake up Washington,” in a very short time, he has changed the way we define business leadership, too. To meet this moment—in the United States and beyond—it is time to rethink how businesses lead not only through their actions but also their words. This presents important opportunities and also complexities for CEOs and their companies.

It is important to note that here in the United States, BSR has worked effectively with both Democratic and Republican administrations and other officeholders for 25 years. There are leaders in both parties committed to our core issues of human rights, climate action, women’s empowerment, and inclusive economic growth.

Unfortunately, we—and the business community overall—are not experiencing a policy debate on how to make progress on these issues. Instead, we are seeing early signs of a systematic assault on the foundations for a just and sustainable world: open societies, climate science, transparency, diversity, inclusion, and at its essence, the concept of collaborative global engagement to solve global challenges.

This presents a new situation for companies and CEOs: How do you respond when basic principles are under attack?

The travel ban put all these questions into sharp relief, and the responses from various companies show how complex the new environment is. We have seen companies (e.g., Ford, Google, Microsoft) lauded for standing up against the travel ban, companies (e.g., Uber) pilloried for being seen to enable the ban, and companies (e.g., Starbucks) both applauded and attacked for opposing the ban.

In navigating this environment, there are four core principles that CEOs should keep in mind:

• Values are non-negotiable: Now is the time for CEOs to act on the basis of core values. All the assertions that businesses should have a “purpose” are being tested. No company can survive if principles are either undermined or revealed to be nothing more than words on a website. To put it another way, values are meant to endure over decades; they cannot be abandoned when political winds change.
• Your employees and customers are watching what you do—and say: When 2,000 Google employees walked off the job last week to protest the travel ban, it was the most visible example of how company employees are viewing the current environment. No CEO has a politically unified workforce. But there is growing evidence that employees are indeed watching what their leaders do and acting accordingly—evidence suggests that Travis Kalanick’s resignation from the president’s CEO council was driven by unrest from Uber’s employees and customers.
• There is strength in numbers: CEOs face multiple pressures in deciding how to engage. There are several bread-and-butter economic matters being decided by the new government. No CEO can afford to abandon those interests. Collaboration is more important than ever, because it allows companies to express their values as one voice, while maintaining the opportunity for influence in other matters. The many companies that joined the state of Washington’s lawsuit challenging the travel ban is but one example of that principle.
• Opposition alone is insufficient—it’s time for a powerful, positive vision of progress: Business leaders need to reinforce their vision of the future. In the absence of leadership in Washington, and frankly, with a bleak picture coming from the White House, it is essential that business leaders illustrate what we have to gain through sustainability. Businesses know firsthand that a shift to low-carbon models brings innovations that deliver great value with fewer societal costs. Business leaders know that diverse teams are more creative. Business leaders know that open societies are, in fact, a crucial engine of American innovation and competitiveness (a point that is equally true in every country). The world needs to hear these messages from business leaders, lest we manage and govern from a position of fear and suspicion.

We all know that every company has a mix of interests at stake with the government. Acting in overt opposition to an administration prone to singling out individual companies for abuse is no small decision. But equally so, failing to act when core principles are being eroded presents a comparable problem. At some point, maintaining dialogue with the administration could become irrelevant and counterproductive, and while we are not there yet, possibly toxic.

The stakes are high, and business has a powerful voice. As former U.S. Treasury Secretary Lawrence Summers said in Harvard Business Review last week: “If CEOs who employ hundreds of thousands of people are not in a position to speak truth to power, who is going to be in a position to speak truth to power?”

With basic rights, respect for science, and rule of law being questioned, this is the question: Which companies will meet the moment?

Blog | Tuesday February 7, 2017

Corporate Transparency under a Trump Administration

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It is perhaps not surprising that we have already experienced setbacks for corporate transparency during the early days of the Trump administration.

Last week, the U.S. Congress voted to repeal Section 1504 of the Dodd-Frank Act, which required the disclosure of tax and other payments to host governments by extractives companies listed with the U.S. Securities and Exchange Commission (SEC).

It also looks increasingly likely that the implementation of Section 1502 of the Dodd-Frank Act, which requires companies to report on conflict minerals due diligence efforts, will be defunded. And it would not be surprising if Section 1502 were entirely repealed in the near future.

At the same time, avenues to improve the quality of company transparency on sustainability issues—such as the SEC’s consultation in 2016 on the future of Regulation S-K, which raised the possibility of enhanced sustainability disclosures in Form 10-K reports to investors on companies’ annual performance—are almost certainly closed off for the time being.

I believe that these and other similar developments raise three main implications for the future of corporate transparency on sustainability issues—and all three point to the increasing importance of taking proactive and strategic approaches to transparency.

First, there are lots of reasons why the trend toward increased transparency will continue, rather than decline:

• Transparency requirements continue to increase outside the United States and at the U.S. state level. For example, reporting requirements on payments to governments by extractives companies are taking hold in the European Union as the Accounting and Transparency Directives are implemented in member states, and similar developments are underway on conflict minerals transparency. Requirements at the U.S. state level continue, such as the California Transparency in Supply Chains Act.
• Stakeholder pressure for disclosure will increase. In an environment of declining regulatory requirements on transparency, the likely corollary is increased pressure from stakeholders. Companies should expect that civil society organizations will initiate well-organized campaigns against companies that retreat from their previous levels of transparency.
• There are good business reasons for disclosure. Over the past decade, we have witnessed a substantial increase in companies proactively using transparency to pursue business objectives. The voluntary disclosures from internet and telecoms companies on personal data requests from governments seeks to promote user trust, while many companies are using climate change reporting requirements to increase supply chain efficiency. Transparency on sustainability performance is often required by government and business customers worldwide.
• The internet isn’t going away. The hyper-transparency made possible by the internet leaves few hiding places and the ability to leak huge amounts of information (such as Snowden or the Panama Papers) makes proactive disclosures by companies a more attractive proposition.

Second, there is a need to reinforce and defend voluntary disclosure mechanisms to maintain progress on sustainability:

• If government requirements for transparency decline, then companies and their stakeholders need to invest in robust voluntary mechanisms. For example, repealing Section 1502 of the Dodd-Frank Act or removing federal procurement rules around human trafficking and forced labor could reduce the quality and availability of data available to companies, especially if their suppliers choose to scale back on their efforts. Collective industry and multistakeholder efforts (such as the EICC/CFSI and EITI) are vitally important countermeasures.
• Existing voluntary disclosures need to be defended. Recent growth in corporate disclosure on controversial topics—such as law enforcement requests for personal information from internet and telecoms companies—could face legal restriction by the new administration. It will be important to develop a strong narrative that defends the rights of companies to make these disclosures.

Third, these political developments are a warning sign that we in the business and sustainability profession would be wise to review our transparency models for conceptual robustness and alter course accordingly. A starting point is as follows:

• Pushing for issue-specific disclosure mandates based on SEC rules is not a sustainable strategy. The criticism that detailed disclosures on precise topics (such as conflict minerals) result in a large volume of information with limited value for “the reasonable investor” is real. Taking an issue-by-issue approach to mandatory disclosure overseen by the SEC is not a scalable model and is too easily dismissed by critics.
• For disclosures targeted at investors, the materiality principle is critical. An increasing range of sustainability issues, such as climate change, can be very material to investors. The case made by the Sustainability Accounting Standards Board (SASB)—that “the reasonable investor” will benefit from standardized, decision-useful information on material sustainability issues defined by the company, and that there is a role for the SEC in making this happen—is conceptually compelling. A recent report by the Task Force on Climate-Related Financial Disclosures makes a similarly strong case.
• Disclosure on issues of material significance to society but not of material significance to investors is essential—but they require disclosure mechanisms other than SEC requirements. There is more to life than return on capital employed, and it is perfectly reasonable to require companies to disclose information of material interest to society, even if not of material interest to investors. GRI (Global Reporting Initiative) and other reporting frameworks argue that society (or “the reasonable citizen”) will also benefit from standardized, decision-useful information on issues material to them. There is a strong long-term rationale to build these disclosure requirements into law, but using investor-oriented bodies (such as the SEC) to achieve these outcomes may not be the right approach.

The tide of history is on the side of transparency, and attempts to limit corporate transparency are futile—as well as being bad for business and the mission to create a just and sustainable world. Our advice is that companies should continue on the upward transparency path that existed prior to the Trump administration, while the broader sustainable business profession should continue developing transparency models that are sound, scalable, and conceptually robust.

Blog | Monday February 6, 2017

When the Business Case and Shared Value Aren’t Enough

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The concept of shared value came from a seminal 2011 article in Harvard Business Review, written by Michael Porter and Mark Kramer, which defined shared value as a management strategy “which involves creating economic value in a way that also creates value for society by addressing its needs and challenges.”

Many businesses embraced the concept because it allowed them to focus on growing their business. In contrast, many in the sustainability/corporate social responsibility (CSR) community criticized the concept as new clothes for an old concept—arguing that strategic CSR was already about value creation, not philanthropy.

Essentially, no matter what we call it, our field has been focused on “proving the business case” for a long time. To gain credibility and buy-in for sustainability efforts, corporate responsibility consultants and practitioners focus on how such actions drive reputation, engage employees, manage risks, create operational efficiencies, and foster innovation and access to new markets. These business drivers have led to tremendous progress on issues such as working conditions, climate change, or access to healthcare—to name only a few. We should be proud of this progress and continue to find ways to drive alignment between business and societal objectives.

Yet, as I’ve been reflecting on the current political environment in the United States, as well as the significant power and influence of large corporations and their CEOs, I can’t help but wonder if we’ve gone down the wrong path in the corporate sustainability field. Shared value sounds nice, but it essentially means self-interest. It has given permission for companies to care about society only when it provides benefits to them. Yes, businesses have to earn profits and provide a return to their investors, but has the focus on a business case for everything undermined what it means to be a good corporate citizen?

While we can make a case for long-term business drivers for any sustainability action, the truth is, sometimes it just costs more to treat your workers with dignity and to pay them a living wage, and you may not be able to prove the financial benefits. It costs more to prevent pollution, yet the direct benefits are reaped by the public, not the company. Regulation serves to address this market failure, but with weakened regulation all but guaranteed in the United States for the next few years, will the business case always exist? Beyond cost and prioritization of activities, as more “controversial” issues gain attention, employees, customers, and civil society will be looking for business to take a stance. Businesses will need to make a choice: Stakeholders will interpret the lack of a response as the same as supporting a specific side of the issue.

With a few exceptions, companies were notably quiet during the 2016 election and the first few weeks of the new administration. Many are understandably cautious and waiting to see what transpires and what issues they’ll have to prioritize. Others are looking forward to reduced corporate taxes and regulations, and don’t want to “rock the boat.” Many companies, especially in the technology sector, finally spoke out against the immigration ban.

But those examples reflect self-interest, not corporate citizenship: When something directly and materially impacts their business, companies speak up. But why does there have to be a business case to stand up for your values?

For years, I—and many others in the sustainability field—have downplayed the moral arguments. We believed that we could drive much greater progress through a focus on business benefits. I fear we’ve given license to ignore morality. We shouldn’t only protect our environment, our communities, and our workers because it creates shared value; we should do so because we have shared values.

Now is the time when those shared values are coming increasingly under threat—in our politics, in our climate, in our communities. If a corporation is an organization with the legal rights and duties of an individual, then a corporation has rights and duties toward the greater societal good, too. Corporations do not need to be amoral, agnostic entities: They should have a declared purpose and values. With many societal and environmental values under threat, companies will need to make a choice. This can be a transformational moment for the private sector to show how businesses can lead—not just because it’s in their own long-term self-interest, because it’s in the best interest of society. 

Blog | Thursday January 26, 2017

Four Stakeholder Engagement Trends to Watch in 2017

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It is already axiomatic to say that 2017 has ushered in a new era of uncertainty, though core assumptions driving multinational business have been under threat for some time. The ascendancy of competitive nationalism and populist politics in the United States and Europe has simply made these trends impossible to ignore. Developed markets and large emerging markets can no longer be considered benign and predictable from a political risk perspective, and business can no longer assume that we are on a steady journey toward ever greater economic liberalization and regulatory convergence.

These shifts in the operating environment have been accompanied by a dramatic collapse in public trust in institutions, including business, according to the 2017 Edelman Trust Barometer. Though only 37 percent of respondents now find CEOs to be trustworthy, perceptions of the media, NGOs, and governments are even lower. But despite a far more difficult operating environment, business still has an opportunity to provide leadership, innovation, and inclusivity.

There are clear drivers for multinationals to rethink their approaches to risk, resilience, and corporate responsibility. A far wider range of plausible scenarios is in play, and traditional risk management and strategy tools are not well placed to address current challenges. And open, interactive communication with those that are affected by, or have power to influence, a company’s strategy and agenda just shot to the top of the priority list.

Therefore, companies should pay attention to four stakeholder trends in 2017:

1. The corollary of weaker regulation is greater stakeholder activism. The new U.S. government has already signaled that it would like to weaken or dismantle regulation in key sectors, such as finance and energy. But this is unlikely to ease operating conditions for business, as any weakening of regulation at the country level will be accompanied by an increase in stakeholder activism, amplified by the contentious political climate. Companies must learn to proactively address collapsing public trust via consideration of ethics that go beyond mere legal compliance. Many companies are setting up ethics functions that interact with, but are separate from, compliance. Others are exploring synergies among the audit, compliance, and sustainability functions to best promote their values.
2. Local conflicts can now gain global platforms. Hyper-transparency means that community disputes can be amplified to win worldwide prominence. For example, indigenous rights groups in Latin America are partnering with global advocacy organizations to draw attention to their grievances. In agriculture, extractives, and infrastructure, companies that have long differentiated between project-level community engagement and corporate reputation management are finding this distinction increasingly difficult to maintain. Other companies that have traditionally thought of stakeholder engagement as an annual exercise conducted by headquarters are trying to define and understand their stakeholders more deeply, which is a complex exercise when it is not defined by the geographic focus of a project. Shifting migration patterns and cumulative impacts only complicate the exercise.
3. Political and social risk are converging. Demographic shifts and automation are transforming the labor market and putting social services under extreme pressure—just as demands for sustainable, broad-based economic growth gain momentum. In the Global South, the growth of the middle class has increased individual and collective empowerment, while transforming the dynamics of political and social risk. Public opposition to government and business is coalescing around a common language of environmental justice, anti-corruption, and human rights. When protestors voice disillusionment with self-interested and inefficient regimes, local elites move with varying degrees of success to shore up their power. Companies can no longer separate social and political risk considerations, which means understanding the interaction among stakeholders—not just how stakeholders engage with companies.
4. Understanding your impacts is no longer optional. The field of business and human rights has come of age, highlighting the need to extend risk analysis to understanding impacts. The launch of the Sustainable Development Goals in September 2015, too, is encouraging businesses to develop robust frameworks to measure the consequences of their activities. Human rights practitioners have rightly identified oversight of global supply chains as a key corporate vulnerability, with scrutiny of trafficking and slavery by regulators and the public giving rise to fresh norms and expectations. It has become clear to all that corruption everywhere is facilitated by global financial flows and can no longer be characterized as a developing-market problem. And while shareholder value remains any business’s dominant consideration, activists are scrutinizing the effects of tax avoidance upon human rights and broadly questioning the effectiveness of current corporate governance standards.

Neither legal compliance nor standard risk management tools are sufficient for companies who wish to survive and thrive in the new era. Rather, resilient companies will focus on core values, leadership, and a more inclusive approach to business. 

Blog | Wednesday January 25, 2017

Advancing Women’s Empowerment, at Work and Home, through the Technology Sector

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For working women everywhere—whether on an assembly line or in front of a computer—the question “how does she do it all?” can easily trigger eye rolls. Working women continue to carry a disproportionate burden in comparison to men because, more often, they are responsible for both their jobs and being the primary family caregivers. However, the technology sector can play a significant role in empowering women both in the workplace and at home—and businesses stand to benefit if these efforts are pursued strategically.

Last year, BSR published a report, “Building Effective Women’s Economic Empowerment Strategies,” encouraging companies to apply a holistic and integrated approach in empowering women. While the report highlights eight building blocks for such an approach, ICT companies can focus on two areas to support both women climbing the corporate ladder in Silicon Valley or in an electronics factory in Bangalore, as well as female consumers of ICT products and services.

1. Transparent Reporting and Commitments Across the Value Chain

As in other sectors, women in the technology field are paid less than men and have lower representation in senior roles. Men in U.S. tech companies typically make 10 percent more than their female counterparts—a smaller gap compared to other industries but still far from equal. Because of employment discrimination in terms of both compensation and employment opportunities, women are some of the lowest-paid workers in the electronics manufacturing supply chain and often work in difficult conditions, including long hours, potential exposure to health hazards, limited professional development opportunities, and vulnerability to human rights abuses.

In regard to senior leadership, women make up 10 percent of executives within the Silicon Valley 150 (the Bay Area's top tech companies), compared to 20 percent of leaders for companies in the S&P 150. With talent pipeline shortages in the tech industry expected to reach an estimated 1.4 million by 2020, women are essential to ensuring the industry continues to meet rising demands for its services.

Strengthening transparency in reporting on pay equity and gender diversity in leadership roles is an important step toward improving equitable employment opportunities at ICT companies. For example:

• Salesforce conducted a salary review of its 17,000 employees, making subsequent pay adjustments where deemed appropriate, and has invested nearly US$3 million to eliminate statistically significant differences in pay.
• Intel has publicly disclosed diversity numbers for more than a decade, and Google, Microsoft, Apple, Symantec, and several other leading ICT companies have begun doing so as well, helping companies set and publicly work toward leadership diversity goals.
• Jabil has seen improved productivity in its supply chain after implementing HERproject, BSR’s onsite training program that empowers female factory workers through health and financial training. Benefits to the business include increased operational efficiency, higher retention, and improved worker-management relations.
• ICT companies have made public commitments to gender equality by signing the President’s Equal Pay Pledge, and nearly 90 of the 1,368 CEO signatories to the Women’s Empowerment Principles belong to those in the technology sector.

2. Innovative Products and Services for All

ICT companies can offer products and services that all industries and consumers can use to support women’s empowerment efforts and the work-life challenges that women disproportionately face. For example:

• ICT platforms can support employee engagement through interactive training programs and services related to gender equality or discrimination. When these platforms are publicized, like Google did with its unconscious-bias materials, non-tech companies can utilize the material for their own purposes.
• LinkedIn is drawing on user data to provide insight into gender equality across every industry and is researching gender differences in how users promote themselves in personal profiles.
• ICT products can increase access to health and finance. Electronic or mobile healthcare can empower women worldwide to take charge of their health and wellness, learn important health knowledge, and access health services—notably, for reproductive health. In China, BSR’s HERhealth mobile app provides workers with convenient access to educational materials so that they can learn about general and sexual health and share this knowledge with their friends and family members.
• Online outsourcing, the business practice of contracting third-party providers (often overseas) to supply products or services that are delivered over the internet, allows women around the world access to digital jobs and more opportunities to earn a living. Through this model, Samasource has employed more than 8,000 people in Haiti, India, Kenya, and Uganda.
• Improved conference-call software and internet access can enable flexible work schedules. The Women and the Web Alliance (which grew out of Intel’s She Will Connect program) seeks to address the internet gender gap by bringing more than 600,000 young women online in Nigeria and Kenya in the next three years.

There is more work to be done within the ICT industry to advance gender equality, but also many avenues that ICT companies can explore to help other sectors and their consumers use digital resources to advance women as skilled professionals and empowered individuals. Companies can start by making public disclosures and commitments, then assess how their practices and business strategy can improve women’s empowerment efforts for both their female workforce and consumer base.

Learn more about making and putting gender equity commitments into action through BSR’s women’s empowerment practice, which includes a new working group, the Business Action for Women coalition, and our flagship training program, HERproject. 

Blog | Tuesday January 24, 2017

Forging the Missing Link: What the 2017 CDP Supply Chain Report Says About Supplier Engagement

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Supply chains may be the most under-recognized opportunity for companies to address climate change. While companies tend to focus, understandably, on energy efficiency and greenhouse gas reductions in business operations and products, supply chains often account for the majority of product greenhouse gas emissions.

To call attention to supply chain opportunities, BSR has again partnered with CDP on the annual CDP Supply Chain Report—this year, teamed with the Carbon Trust and supported by funding from ClimateWorks Foundation.

Although in many ways encouraging, our findings highlighted the need for urgency. The 4,300 suppliers that reported to CDP increasingly identify business opportunities coupled with their actions to address climate change—benefits like brand and product differentiation, energy and operational efficiency, or the ability to attract and retain talent. But at the same time, the number of companies taking significant action on climate change remains far too low. Only 34 percent of companies reported an overall emissions decrease, while a similar percentage were unable to track their progress. Such limited management both contributes to ongoing climate change and limits the ability of companies to build resilience in the face of increasingly severe climate impacts.

Supply chain engagement remains a challenge: Companies generally have much less control over their supply chains than they do over their owned operations or products, and supply chain emissions typically come from multiple, independent companies—many of which may be several steps removed from the purchasing company attempting to act on climate change. For example, significant emissions in electronics supply chains may happen in extraction and processing of raw materials—but these mining and processing companies are suppliers of suppliers (of suppliers … ) of the company that makes your smartphone.

Supply chain engagement may not be simple. But it is worth the effort. By working with their suppliers, companies can better identify and address the specific and growing physical, regulatory, and other risks they face from climate change. And they can take advantage of opportunities to build closer relationships and help suppliers build their own climate resilience. Because of these types of efforts, suppliers reporting to CDP in 2016 saved more than US$12 billion from emissions reduction projects—a significant increase compared to 2015. Understanding the types of climate risks that suppliers are facing and building resilient supply chain networks will help companies thrive over the long term.

BSR, CDP, and the Carbon Trust plan to continue using the lessons learned from the CDP supply chain program to help companies understand their risks and support greater climate resilience. Whether working with our members to establish and implement bold climate goals, as BSR did with General Mills and Walmart, or conducting industry benchmarking and other research to identify opportunities for action, we look forward to the coming year’s engagements, and we hope to see further improvements in next year’s report.

Blog | Thursday January 19, 2017

How Good Is Your Sustainable Supply Chain Program?

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Many blogs in 2017 are going to start with some play on this obvious theme: We are living in uncertain times. For supply chains, you could argue that this is nothing new, as the complexities of global supply chains have always incorporated a high degree of uncertainty. BSR member companies know they need to manage this uncertainty, and having a supply chain sustainability program is, in essence, a program to do just that. Whether a company calls its program “supply chain sustainability,” “responsible sourcing,” “responsible supply,” “sustainable procurement,” or another name, our members know that these programs help them reduce uncertainty, identify and manage risk, and generate business value. According to the 2016 BSR/GlobeScan State of Sustainable Business Survey, 84 percent of respondents reported having a supplier code of conduct, and 61 percent reported considering sustainability in sourcing strategies.

While the principle of having a sustainable supply chain program is clear and widely accepted, there is still a lack of consensus on the practice. Notwithstanding the forthcoming launch of the ISO 20400 standard on sustainable procurement, there exists no globally accepted framework for what constitutes good practice, although there are frameworks for labor rights through the ILO fundamental principles and core conventions, human rights through the UN Guiding Principles on Business and Human Rights, and, now, climate change through the Paris Agreement.

BSR has nearly 25 years of experience working with companies to drive sustainability through supply chains, and our membership network offers a breadth of good practice. BSR has seen, and continues to see, the evolution of sustainable supply chain management toward greater and deeper impact. In our experience, even if it’s not codified in international frameworks or national laws, a universally accepted framework for sustainable supply chain management has emerged. This framework is applicable across industries, geographies, and cultures—and even across differences in size and levels of ambition among companies.

The Supply Chain Leadership Ladder

BSR’s Supply Chain Leadership Ladder sets out this framework. The ladder allows companies to benchmark their supply chain sustainability program and assess where they are in their maturity, based on the internal and external dimensions of their program.

• Internal dimensions are the scope and structure of the supply chain sustainability program and how the program is governed and managed.
• External dimensions are the company’s approach to supplier engagement and how it is collaborating and reporting.

Each rung of the impact ladder has a defining statement and a set of common elements that helps identify how far up the ladder a company’s supply chain sustainability program sits—is it at level 1, building awareness, or is it all the way up to level 4, driving impact? 

Moving Up the Ladder

In the last year, we’ve seen a continued shift upward among leading companies, moving up the ladder from assuring compliance to managing priorities, across both internal and external dimensions.

For a few years now, we’ve seen companies shift their program scope to incorporate specific priority issues or supply chain categories and now really pushing toward driving impact. For example, companies are identifying the biggest impact categories in their supply chains—see Kering’s focus on sustainable raw materials and H&M’s sustainable cotton efforts. Companies are also addressing the issues that are most material for their business and aligned with action on global priorities such as the Paris Agreement and the Sustainable Development Goals. For instance, Walmart’s efforts at defining science-based climate targets for its supply chain, ANN INC.’s women’s empowerment program, and the Global Impact Sourcing Coalition, facilitated by BSR.

This trend is also playing out in the way companies are engaging their suppliers and reporting. The concerted effort by some companies to publicly disclose their supply chains, such as Marks & Spencer’s Interactive Supplier Map, in some ways draws a line under the compliance movement to allow a new way forward—through transparency. If everyone can see a company’s supply chain, there is arguably less incentive to continue the auditing processes of the past.

Even collaborative industry efforts are part of this trend. For example, the Electronic Industry Citizenship Coalition’s (EICC) initiatives on key supply chain risks show a move up the ladder from general compliance to identifying the areas where the 110-plus EICC members can collectively have the most impact. Even newer initiatives such as Railsponsible, a sustainable procurement initiative for the rail industry that BSR facilitates, is collectively identifying the key priorities in the industry’s supply chain for 2017.

BSR would argue that all companies, across all industries, in all geographies, and of all sizes should at least be on the ladder. How high you climb is up to your appetite for leadership, your ability to actualize value from your supply chain sustainability program, and the kind of legacy and impact you want to leave in the world.

We’re going to be hearing a lot about uncertainty in 2017. For supply chains, this is nothing new, and we offer the ladder as a framework for responsive, resilient supply chain management.