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Blog | Tuesday November 23, 2021
COP26 Made Climate Action Mainstream Business and Put 1.5°C on Life Support
What happened at COP26? BSR Managing Director David Wei and Director Giulio Berruti share their takeaways on international cooperation, climate action and business, and upcoming trends seen at the event.
Blog | Tuesday November 23, 2021
COP26 Made Climate Action Mainstream Business and Put 1.5°C on Life Support
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At COP26, the global community made meaningful progress. Unfortunately, it also is wholly insufficient to meet the Paris Agreement’s goals.
National 2030 targets announced in Glasgow take us to 2.4°C of warming by 2100, a noticeable improvement from our path six years ago in Paris, but these are still very far from the objectives of the Paris Agreement. The stretch target of 1.5°C, which the UK hosts aimed to keep alive, is now on life support.
That is why the Glasgow Climate Pact asks countries to strengthen commitments by the end of next year, in 2022, instead of waiting until 2025. It also calls on countries to accelerate “the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies.” The UN outcome also enabled countries to apply carbon credits to their national targets and to have credits flow across international borders.
International cooperation was not limited to the official negotiations.
- Over 100 countries joined the Global Methane Pledge to reduce global methane emissions by at least 30 percent below 2020 levels by 2030. Conspicuously absent, however, were the largest methane emitters: China, India, and Russia.
- In one of several nature-related announcements, 140 leaders whose countries account for 90 percent of global forests joined the Glasgow Leaders’ Declaration on Forests and Land Use to work collectively to “halt and reverse forest loss and land degradation by 2030.”
- A disappointing 40 Ministers supported the Global Coal to Clean Power Transition Statement to transition away from unabated coal power generation. This group did not include some of the major producers and consumers of coal.
- The US and China issued a joint declaration, making climate a rare issue of cooperation between the two largest emitters.
COP26 also clearly showed how climate action has become mainstream business. 100 pavilions inside the official site and many parallel conferences outside of it produced announcement after announcement. Future COPs will be more trade fair than international negotiation. Among the highlights:
- The formation of the International Sustainability Standards Board, which will consolidate the Value Reporting Foundation (VRF) and the Climate Disclosure Standards Board (CDSB), is a major breakthrough for unified ESG reporting.
- The First Movers Coalition will gather companies to use their purchasing power to create early markets for innovative clean energy technologies in industries whose emissions are hard to abate.
- The Glasgow Financial Alliance for Net Zero, an umbrella initiative grounded in the UN’s Race to Zero criteria, includes 450 financial services firms managing US$130 trillion of private capital.
- A multistakeholder COP26 declaration accelerated the transition to 100 percent zero-emission light vehicles.
At COP26, BSR launched or co-launched several collaborative efforts to build the net-zero economy, including:
- A free online training course for SMEs called “Climate Fit,” part of a set of tools that SMEs can freely access on the SME Climate Hub, which was developed with CISL.
- A 1.5°C Supplier Engagement Guide for the 1.5°C Supply Chain Leaders, a group of companies making climate a key procurement criterion. The guide is an open framework available to any company, with clear steps and an open/evolving repository of best practices shared by leading companies.
- The Business Alliance to Scale Climate Solutions, a group of corporate funders and partners dedicated to increasing the scale and impact of carbon credits and other forms of climate solutions funding. BASCS is now open for new members!
- The Sustainable Freight Buyers Alliance, which will be incubated over the coming six months and aims to achieve 100 million tonnes of reductions in freight and logistics emissions this decade and to contribute to 1.5°C-aligned net-zero logistics by no later than 2050.
Finally, COP26 evidenced several trends which will intensify in coming years.
Net-zero commitments are here to stay. The release of the Science-Based Targets initiative’s Net Zero Standard will help to make them more consistent and environmentally integral. But with activists protesting for climate justice and decrying the credibility of those commitments, the main question for business will be how to implement net-zero goals quickly and equitably while benefiting local communities. Businesses will have to get their arms around climate justice.
The connection between climate and nature will become more prominent. Companies will increasingly be asked not only to decarbonize energy, but to look upstream at their impacts on land and materials they source. And there is growing momentum to rapidly reduce methane emissions. For business, this means an expectation to consider not just CO2 but all greenhouse gases in their accounting and their decarbonization strategies, e.g., related to agriculture, waste, and land use.
F. Scott Fitzgerald wrote that the “the test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function. One should, for example, be able to see that things are hopeless yet be determined to make them otherwise.” So it was with COP26. The 1.5°C goal, with all the impacts that the IPCC documented in 2018, is slipping away, even as climate action mainstreams into the business community.
Reports | Tuesday November 16, 2021
Action for Sustainable Derivatives: Annual Update on Progress, 2021
The latest update from Action for Sustainable Derivatives (ASD), BSR’s collaborative initiative driven by palm oil derivatives users to transform their supply chains, shows that a centralized, collective approach to enhancing transparency, boosting engagement, and identifying risks is working.
Reports | Tuesday November 16, 2021
Action for Sustainable Derivatives: Annual Update on Progress, 2021
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The latest update from Action for Sustainable Derivatives (ASD), BSR's collaborative initiative driven by palm oil derivatives users to transform their supply chains, shows that a centralized, collective approach to enhancing transparency, boosting engagement, and identifying risks is working.
Highlights include collective transparency for 825,000 tons of palm-based materials—nearly double the volume covered during the first year of ASD. This represents around 1.1 percent of the global palm production and 20-25 percent of the palm kernel oil-based oleochemicals market.
Learn more about ASD's impact.
Blog | Wednesday November 10, 2021
Allbirds’ SPO Framework Is Step in the Right Direction for ESG Commitments by High-Growth Companies
As Allbirds prepared its initial public offering (IPO), this led to the creation of the Sustainability Principles and Objectives Framework. BSR CEO Aron Cramer shares more about the framework.
Blog | Wednesday November 10, 2021
Allbirds’ SPO Framework Is Step in the Right Direction for ESG Commitments by High-Growth Companies
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For the past quarter century, Silicon Valley has generated untold innovation and value from new business models that have transformed our world. For many of the original generation of disruptors, a formal look at environmental, social, and governance (ESG) questions would only come later, after they achieved the size and scale to merit scrutiny and, in some cases, after they made misjudgments of their impacts in the world.
This is why last week’s initial public offering (IPO) from Allbirds, an apparel and footwear company that has made sustainability an explicit part of its brand and value proposition, is so interesting. Indeed, Allbirds premised its entry to the public capital markets on an explicit set of 19 ESG criteria developed through partnership with an advisory council comprised of a mix of nonprofit and philanthropic organizations, investors, and corporate governance experts. (Full disclosure: I chaired the advisory council and therefore participated in the development of the criteria, which are currently hosted by BSR at https://spo.bsr.org/ and where the full list of advisory council members can be found).
The Sustainability Principles and Objectives Framework (SPO Framework) includes topics ranging from climate change to value chains, human rights, labor practices, and governance.
In preparing to go public, Allbirds, which had already achieved B Corp status, found that there was no existing framework specifically designed for a company at its stage of development. This led to the creation of the SPO Framework, which is intended for late-stage private companies, companies preparing to go public, and early-stage public companies.
In the development of the Framework, several key principles were applied:
- The framework needed to be appropriately comprehensive for companies that, in many cases, do not—yet—have the institutional structures to develop, implement, and verify policies and practices.
- It also aimed to be sufficiently ambitious to be meaningful, while not being limited to a tiny handful of companies.
- The Advisory Council also had a clear commitment to ensuring that the Framework was not seen as adding to the already quite crowded world of performance standards and reporting and disclosure frameworks. This is why the focus on companies at a specific stage of their development is so important.
- Finally, there is an intention on the part of all of us who developed the Framework to see the Framework grow and evolve, with plans for ongoing development yet to come.
This IPO may be the first of its kind, but it most certainly will not be the last. Since the SPO Framework was first released in August, we have seen considerable interest from investors, other companies at a similar stage of development, journalists, and the sustainability community more broadly. It seems highly likely that there will be more companies using this model to raise the level of their ESG commitments and to demonstrate to investors and stakeholders that they intend to make sustainability commitments right from the start.
And for Allbirds, a company whose initial product is athleisure shoes, it makes sense that they hope many companies will follow in their footsteps.
Blog | Thursday November 4, 2021
Companies Now Have a Powerful New Tool for Promoting and Protecting the Rights of LGBTIQ+ Employees
The world’s leading companies have a tremendous opportunity to stand up and promote rights and protections for their LGBTIQ+ employees. The UN LGBTIQ+ Standards Gap Analysis Tool—recently launched by a coalition of international organizations, including BSR and the Partnership for Global LGBTIQ+ Equality (PGLE)—is helping companies to do just that.
Blog | Thursday November 4, 2021
Companies Now Have a Powerful New Tool for Promoting and Protecting the Rights of LGBTIQ+ Employees
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A wave of anti-LGBTIQ+ policies, driven by populist movements, continues to rise around the world, threatening many of the rights-protecting victories achieved over the last several decades.
In May, the Human Rights Campaign declared that “2021 officially [became the] worst year in recent history for LGBTIQ+ state legislative attacks as [an] unprecedented number of states enact [a] record-shattering number of anti-LGBTQI measures into law.” And that is just in the United States.
2021 has witnessed similar backlashes to LGBTIQ+ communities claiming their universal human rights in places like Hungary, Poland, and other parts of Eastern Europe, a region once deemed to be “a world leader on gay rights.”
In the face of this, the world’s leading companies have a tremendous opportunity to stand up and promote rights and protections for their LGBTIQ+ employees. A new tool recently launched by a coalition of international organizations, including BSR and the Partnership for Global LGBTIQ+ Equality (PGLE), is helping companies to do just that.
While many companies have embedded protections and benefits for their LGBTIQ+ employees into their systems, the UN Standards present a framework for companies to go even further—by positioning LGBTIQ+ rights as universal human rights and building off the concepts embedded in the UN Guiding Principles on Business and Human Rights.
Through the implementation of the UN Standards, companies have a path forward, and indeed a responsibility, to promote these universal rights within their spheres of influence—including business partners, governments, and the communities in which they do business.
In September 2021, a coalition of organizations launched the UN LGBTIQ+ Standards Gap Analysis Tool (Tool). Partners in this effort include BSR, PGLE, the Office of the United Nations High Commissioner for Human Rights (OHCHR), the United Nations Global Compact (UNGC), and the World Economic Forum (WEF), with the generous support of BCG. The tool is a practical, step-by-step guide designed to help companies navigate the implementation of the UN Standards so it can be used across relevant departments and functions within your company. It is a complimentary and strictly confidential online platform that helps companies assess current policies and programs, highlight areas for improvement, and identify opportunities to set future corporate goals and targets when implementing the Standards.
Furthermore, the tool can provide companies with a roadmap to further align their practices, policies, and procedures in line with the UN Standards of Conduct.
We believe the UN Standards and our supportive tool are the authoritative frameworks for businesses to respect the human rights of LGBTIQ+ people across their value chains—including employees, those of their business partners, and LGBTIQ+ communities worldwide. It is also a catalyst for determining action and support for companies to use in house and provides an opportunity for DEI leaders to articulate the importance of providing enduring improvements for LGBTIQ+ community internally and within the communities in which they operate and provide services and products to.
We encourage BSR members and beyond to support the Standards and use this tool to guide them on this very important and worthwhile journey.
Blog | Wednesday November 3, 2021
The VRF and IFRS Foundation Join Forces: A New Day for ESG Reporting and Disclosure
The International Financial Reporting Standards Foundation (IFRS) intends to consolidate the Value Reporting Foundation (VRF) and the Climate Disclosure Standards Board (CDSB). As ESG gains momentum and urgency, it is time to embed sustainability considerations in the basic functioning of the capital markets, which will only happen with universal disclosures…
Blog | Wednesday November 3, 2021
The VRF and IFRS Foundation Join Forces: A New Day for ESG Reporting and Disclosure
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While it may lack of some of the drama of the net zero and deforestation pledges that have come already at COP26, today’s announcement by the International Financial Reporting Standards Foundation (IFRS) that it intends to consolidate the Value Reporting Foundation (VRF) and the Climate Disclosure Standards Board (CDSB) may well prove to be one of the most important developments in Glasgow.
For purposes of transparency: I serve on the Board of the Value Reporting Foundation, and prior to that, on the Board of the International Integrated Reporting Council. The steadfast focus from these organizations to prioritizing outcomes over institutional interests has been fantastic to see: their leaders deserve immense credit for that vision.
Since ESG reporting and disclosure began more than 20 years ago with the launch of the Global Reporting Initiative (GRI), all participants in the reporting “system” have quite justifiably decried the confusion, duplication, and inconsistencies in reporting standards and frameworks.
Some of this duplication is to be expected. We have been witnesses to and participants in the creation of a new form of measuring value and providing transparency. The significance of this is massive, important, and complicated.
Times have changed. Fragmentation serves no one’s interests. As ESG gains momentum and urgency, the era of “letting a thousand flowers bloom” is no longer fit for purpose. It is time to embed sustainability considerations in the basic functioning of the capital markets. That will only happen with universal disclosures that enable consistency.
The work of the nascent International Sustainability Standards Board (ISSB), which will be significantly strengthened by the consolidation announced today, will advance with the objective of achieving comparable, consistent, and reliable disclosures on climate and other sustainability issues.
Much remains to be done and demonstrated. It will be essential that a fast-evolving landscape be embraced in the new ISSB to ensure that reporting reflects society’s expectations. This is particularly true when it comes to the “S” in ESG, which is sometimes harder to quantify: equity is not as easy to measure as carbon emissions. The new ISSB would be wise to take heed of the “double materiality” model that embraces not only things that are financially material today, but also those matters that are material to society, and which often become financially material tomorrow. And other key actors—including the GRI, the Task Force on Climate-Related Financial Disclosures (TCFD), the World Economic Forum’s International Business Council, and others—can and should be part of the shaping and implementation of the ISSB.
The news today from Glasgow may well mark a real turning point in how markets operate. A harmonized, universal system will align incentives, promote wider uptake, and enable comparability. Consolidation should also do three other critical things:
- Unleash more business focus on creating long-term value for all stakeholders.
- Allocate capital by investors to companies who embrace a long-term approach.
- Enable the public, and policymakers, to understand which companies are truly delivering in pursuit of a just and sustainable world.
We all celebrate the new commitments coming from COP26. We also know that commitments alone won’t get the job done. The alignment announced today may well provide the foundation on which ambition can be turned into action.
Reports | Tuesday November 2, 2021
Business in Conflict-Affected and High-Risk Contexts
Complex interplay of social, political, environmental, and economic factors fosters an environment where violence, oppression, poverty, human rights abuses, and state failure are more likely to occur. Businesses that integrate human rights management into strategic decision-making and day-to-day operations will be more resilient to today’s global challenges while addressing some…
Reports | Tuesday November 2, 2021
Business in Conflict-Affected and High-Risk Contexts
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Overview
Businesses in conflict-affected and high-risk contexts (“high-risk contexts” in this brief) face heightened risks of involvement in serious human rights violations. This can lead to severe harm—including loss of life, liberty, and livelihoods—to community members, employees, suppliers, contractors, and customers, as well as reputational damage, operational interruptions, legal liability, and financial penalties for the business.
To prevent and mitigate human rights risks in high-risk contexts, companies should conduct “heightened” human rights due diligence. Heightened human rights due diligence goes beyond what is required by the UN Guiding Principles on Business and Human Rights (UNGPs) by accounting for context and the business’s impact on that context. It requires ongoing stakeholder engagement, forward-looking trend analysis, proactive mitigation measures, and localized decision-making.
One of the central concepts we're advancing here is that business does not operate in a vacuum—they are parachuting in to a preexisting context with preexisting power dynamics and tensions, and by virtue of entering that context, they are changing it. Businesses may think that they are "neutral" because they don't take a position on the political situation in that country, but because they bring financial resources and interacting with people, economic systems, and the environment, they are having an impact (either positive or negative) on that context.
Defining High-Risk Contexts
High-risk contexts include situations of armed conflict and mass violence as well as areas with weak governance or rule of law; extensive corruption or criminality; significant social, political, or economic instability; historical conflicts linked to ethnic, religious, or other identities; closure of civic space; and a record of previous violations of international human rights and humanitarian law.1
No one factor drives the conflict and instability seen in these contexts. Rather, a complex interplay of social, political, environmental, and economic factors fosters an environment where violence, oppression, poverty, human rights abuses, and state failure are more likely to occur. These factors include social divisions; governance grievances like political exclusion, weak state accountability, corruption, and inadequate service provision; economic grievances like limited economic opportunity and economic inequality between groups; and environmental factors, including climatic shocks and stresses as well as natural resource scarcity and degradation.2
Blog | Wednesday October 27, 2021
Transform to Net Zero: Five Key Steps to Setting Net Zero Goals
While more than 3,000 businesses have pledged to reach net-zero greenhouse gas (GHG) emissions by 2050, many companies face challenges in putting this guidance into practice. Transform to Net Zero member Wipro shares five steps for navigating the net-zero goal-setting process and committing to meaningful emission reduction targets.
Blog | Wednesday October 27, 2021
Transform to Net Zero: Five Key Steps to Setting Net Zero Goals
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While more than 3,000 businesses have joined the UNFCCC Race to Zero campaign and pledged to reach net-zero greenhouse gas (GHG) emissions by 2050, many companies face challenges in putting this guidance into practice.
Wipro is a founding member of Transform to Net Zero, a cross-sector industry initiative to accelerate the transition to an inclusive net-zero global economy. Our 2025 goal is for 1,000 Fortune Global companies to adopt targets backed up by transformation plans to achieve net-zero emissions no later than 2050.
To advance robust net-zero goal setting, Transform to Net Zero’s new Transformation Guide will share how three Transform to Net Zero members—Danone, Wipro, and Environmental Defense Fund (EDF)—approached a net-zero goal-setting process that translates into meaningful business transformation.
Below are five steps of how your organization can navigate the net-zero goal-setting process and commit to meaningful emission reduction targets.
Step 1: Understand Your Emissions
Every company’s decarbonization journey begins with a comprehensive value chain GHG baseline and footprint assessment. Knowing your footprint allows you to set net-zero targets, but it is often easier said than done, especially with regards to Scope 3 emissions, which are often the lion’s share of a company’s emissions.
Scope 1 and 2 emissions are relatively straightforward to account for because they are derived directly from company operations and therefore within the direct control of a company to remediate. Scope 3 requires accounting for your entire value chain, much of which is outside your control either upstream or downstream, which make Scope 3 emissions a tough nut to crack.
Measuring Scope 1, 2 and 3 emissions are nevertheless a crucial first step in developing an accurate net-zero roadmap that demonstrates credibility to investors, customers, civil society, and other stakeholders. Amidst increased scrutiny of corporate net-zero targets, it is imperative that this accounting of your carbon footprint is reliable and transparent.
Step 2: Set an Ambitious Net-Zero Goal with Clear Interim Milestones
Every company needs a north star commitment when it comes to emissions. For instance, Wipro has committed to net-zero GHG emissions by 2040, with a 55 percent reduction in GHG emissions by 2030. But making a commitment is not enough. Publishing a detailed plan explaining how you will get there is a major component as well. In an era where credibility is paramount, you must show your work. That means sharing key details regarding each phase of your GHG mitigations, including direct emissions (company facilities and vehicles), indirect emissions (purchased electricity, good and services), and yes, your value chain too (waste, transportation, business travel, employee commuting, and all downstream lifecycle activities related to your products and services). Creating and publishing a detailed roadmap accounting for every facet of your emissions with interim milestones will enable you to track and share your progress toward net zero with key internal and external stakeholders.
Step 3: Engage with Leaders to Create and Sustain Organizational Buy-In
Decarbonization doesn’t happen instantaneously. It’s a long process that requires the buy-in and support of many people over a period of many years. In the beginning, your leadership must be onboard because decarbonization requires major operational changes through your organization. Wipro has been working on decarbonizing its value chain for more than 15 years. Initially, the focus was on socializing with leadership the idea of developing a strong climate change program and obtaining consensus on commitments to the necessary investments and resources. Over time, this process matured into a common shared understanding throughout the company of the need to constantly improve our net-zero and sustainability work.
Step 4: Collaborate with Suppliers and Employees on Meeting the Scope 3 Challenge
Achieving net zero is not possible without tackling Scope 3 emissions, which by definition are not under the company’s direct operational control. For many companies, measuring and ultimately eliminating Scope 3 emissions offer the greatest potential GHG reductions, so it’s an incredibly worthwhile, albeit difficult, task. For example, 75 percent of Wipro’s emissions in FY21 are from Scope 3 sources, with business travel, employee commute, and purchased goods/services comprising a significant proportion.
To help reduce your Scope 3 emissions, consider adopting some of the following strategies:
- Work with local transport authorities to improve access to public transport for employees
- Increase carpooling by employees
- Develop robust processes to promote remote working and collaboration
- Reduce business travel, in particular air travel
- Increase the lifecycles of your products and their end-of-life treatments
- Reduce the waste generated by your organization as much as possible
In addition, work with suppliers directly through industry associations to decarbonize purchased goods, such as IT hardware, telecom, and other business services. Your suppliers must be a key part of your reduction strategy because they most likely contribute most of your value chain’s emissions.
Step 5: Partner with Customers
The GHG emissions of the IT services sector tend to be relatively lower than more carbon-intensive industry sectors. For B2B businesses, while reducing your own value chain emissions to net zero is a significant contribution, you can also play an equally important role in helping customers reduce their own GHG footprint with the help of the right technology solutions and expertise. Organizations around the world are all facing the net-zero imperative, and your organization’s experience planning and executing a net-zero commitment is valuable and important. Share it with your customers. While many of the world’s largest companies have net-zero commitments, even more do not. It is essential that more and more organizations join the drive to net zero, and by sharing your story with your customers, you make their own journey that much more palatable.
We will be sharing more in Transform to Net Zero’s Transformation Guide on Net Zero Goal Setting being published on November 8, 2021.
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Blog | Tuesday October 26, 2021
COP26 and the Real Economy: Climate Change Solutions at and beyond Glasgow
As many of us prepare to descend on Glasgow for the once-delayed, badly needed COP26, the urgency of action is blindingly clear. Here are four things we want to see emerge by the time this COP ends on November 14.
Blog | Tuesday October 26, 2021
COP26 and the Real Economy: Climate Change Solutions at and beyond Glasgow
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As many of us prepare to descend on Glasgow for the once-delayed, badly needed COP26, the world is facing serious questions. While it may be hyperbolic to say that these next two weeks represent the “last chance” to avert climate disaster, the urgency of action is blindingly clear, as the UN’s declaration of a Code Red for humanity makes clear.
At the core of this COP, and indeed all our collective efforts to maintain a stable climate that sustains humanity, is this dilemma: actions and commitments continue to increase, but the trajectory of the planet’s warming is headed in the wrong direction.
Breaking this dynamic is objective number one in Glasgow and is very much worth navigating the welter of COVID-19 precautions adding a layer of complication on top of what is a highly complex event to begin with.
Here are four things we want to see emerge by the time this COP ends on November 14.
Raise Ambition
First and foremost, it is essential that we continue to expand ambition: An explosion of net-zero commitments has been made since Paris, an idea that remained at the fringes in 2015. More than 3000 companies have now committed to net zero before mid-century, including one-fifth of the world’s largest companies. More than 130 governments—representing 61 percent of global emissions, 68 percent of global GDP, and 52 percent of the global population—have made comparable commitments. The Race to Zero is one of the centerpieces of voluntary action in Glasgow, which is assembling commitments in several hard-to-abate sectors. What’s more, there are nearly 2,000 companies that have expressed support for science-based targets. Many governments are coming to COP with strengthened nationally determined contributions (NDCs). Investors are making commitments through Climate Action 100+, adoption and use of the TCFD framework, and other means. The ambition loop must continue—and expand.
Translate Ambition to Action
All this is crucial, to be sure. But it is far from sufficient. The science tells us that we are not yet turning the corner. It is well past time to translate ambition into action. Doing this means setting not only 2050 targets, but also 2025 objectives, which are measured and reported transparently. As one article put it, a 2050 pledge is “six CEOs from now,” meaning that long-term commitments may not lead to necessary changes. Ensuring that commitments deliver tangible, meaningful results requires not only changing business models, products and services, and incentives, but also an urgent call for strong policy solutions. This continues to lag, not least on the part of many companies and trade associations in the US recently, with insufficient support (albeit with some exceptions) for the climate provisions of President Biden’s Build Back Better legislation.
Finance the Transition
It is also essential that governments keep their Paris promises on climate finance. Some governments—Germany, for example—have done exactly that. But far too many have failed to do so. This is a matter not only of justice, but also of generating the widespread support required for transformative global action. The need could not be clearer. We have learned the painful lessons of the financial costs—let alone the devastating human costs—of the global pandemic. In the wake of COVID’s destruction, it is therefore sobering to see The Lancet, one of the world’s foremost medical journals, call climate change “the defining narrative for human health.” The fact is that the human costs of climate change come along with financial costs, which also makes clear that climate finance is an investment that will pay off. Business has unique credibility in making the economic case for such investments; it should use its voice to make sure governments make good on their pledges—at long last.
Bring Climate Justice to the Fore
My strongest hope for COP26, however, is that it will be a turning point towards a more just and inclusive world as we go through the energy transition. Climate justice has too often been relegated to the sidelines at COPs—and beyond. We have seen such changes before. At Paris in 2015, very few companies or political entities had committed to net zero; today, it is rapidly becoming commonplace. Can the same dynamic be embraced on climate justice? Of the 3000+ companies setting net zero aspirations, how many have included commitments to climate justice? BSR’s estimation is that the numbers are closer to 1 percent than even 10 percent, let alone 100 percent. As the treatment of climate finance shows, there is insufficient public investment in investing in inclusive climate solutions. In a world that is brutalized by extreme weather with increasing frequency, it is indefensible not to make climate justice a priority.
The Challenge Ahead
The world is facing a serious test at a time when international cooperation and democratic institutions are under significant pressure. There is also great cynicism about whether the many commitments made by business and government are more than empty words. It has never been the case that any COP could turn the world in the right direction. Many of the exciting partnerships, investments, and innovations that we need happen far from the COP “Blue Zone” where the negotiators trade text.
The world outside COP relies on commitments inside COP, but the work to make good on those commitments happens in “the real economy” the rest of the year. With ongoing ambition, resolute pursuit of that ambition, the right level of investment, and a focus on climate justice, we can turn this into a catalyst that shifts the economy in the right direction.
Reports | Thursday October 21, 2021
Within Reach: How Digital Wages That Work for Women Can Support Bangladesh’s Economic Future
This report details HERproject’s progress towards wage digitization, three plausible alternative futures to what wage digitization may look like in 10 years, and recommendations for action to strengthening digital payment systems that empowers workers.
Reports | Thursday October 21, 2021
Within Reach: How Digital Wages That Work for Women Can Support Bangladesh’s Economic Future
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Wage digitization of low-income populations has the potential to be a win-win opportunity that can deliver both social and economic progress, helping countries meet the UN’s Sustainable Development Goals. For garment workers, it can mean transparency over pay, the chance to open a financial account, and greater economic empowerment. For the wider economy, it can mean improving efficiency for factories, a new market segment for financial service providers (FSPs), and citizens saving and remitting more money. This report sets out three possible future scenarios of how things might evolve for women workers. This exercise aims to assist policymakers developing Bangladesh’s digital road map—highlighting where the risks and opportunities are.
Blog | Friday October 8, 2021
The Stars Are Aligning
We are entering the next era of just and sustainable business with a much clearer pathway. BSR Vice President Dunstan Allison-Hope shares a framework around which the field seems to be coalescing.
Blog | Friday October 8, 2021
The Stars Are Aligning
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When I first entered the field of just and sustainable business in the mid-1990s, it was based on a vague notion that big business should “do the right thing” by addressing social and environmental concerns. We had few normative goals, and we certainly had no standards to which we could hold business accountable.
This void was filled over the following quarter century.
The Sustainable Development Goals (SDGs), the Paris Agreement, and continued evolution in international human rights instruments provided a clear destination—“the what” of just and sustainable business.
New global norms, such as the UN Guiding Principles on Business and Human Rights (UNGPs), the OECD Guidelines for Multinational Enterprises, and the plethora of multi-stakeholder initiative codes and principles provided clear guidance for the role of business in reaching the destination—“the how” of just and sustainable business.
New global standards, such as the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and Science-Based Targets (SBTs) all improved our methods for holding companies accountable—“the show and tell” of just and sustainable business.
And then suddenly, amid a global pandemic, the concept of “Environmental, Social, and Governance” (ESG) criteria came to dominate the discourse.
However, this quarter century of entrepreneurship also sowed the seeds of confusion. Questions such as “what is material,” “material to whom,” and “which standard shall we use” became mainstream. Our jobs in the just and sustainable business field became easier because we had norms and standards to work from. However, our jobs also became more difficult, because confusion, complexity, and inconsistency became a strike against them all.
But the stars are now aligning. We are entering the next era of just and sustainable business with a much clearer pathway, and we should take a moment as a field to reflect on this milestone. BSR has written extensively elsewhere about the details of standards alignment; here, our intention is to sketch out the framework around which the field seems to be coalescing.
- Double materiality: As the EU Corporate Sustainability Reporting Directive makes clear, business is accountable in two ways—to investors, for the creation of enterprise value, and to society at large, for impacts on people and the environment. We need, and now have, standards (e.g., SASB, GRI) for both.
- Dynamic materiality: The two dimensions of materiality are distinct and exist entirely on their own merits, but they are also connected—impacts on people and the environment interact with the creation of enterprise value creation and may become more material to business over time. The two dimensions of materiality are dynamic, and the trick is figuring out how and where they interact and how that should inform business action.
- Performance and reporting: The refrain that reporting alone is insufficient has always rankled because those creating reporting standards never claimed that disclosure alone would solve all ills. Today, we have a collective appreciation of the synergy between performance and reporting, as reflected in the deliberate integration of impacts and outcomes (such as the SDGs and SBTs) and normative process standards (such as the UNGPs) into disclosure standards (such as GRI and TCFD). While more progress is undoubtedly needed on measuring impacts and outcomes, performance and reporting are becoming more connected than ever before.
- The company and the system: Twenty-five years ago, it seemed obvious that by transforming big business, good things would happen in society; however, too often the just and sustainable business field lacked a complete grasp of how business interacted with the broader political, financial, social, environmental, and economic systems. Today, the field better appreciates that institutions, structures, and organizations are impacted by deep-rooted racial, gender, and political discrimination and that climate action is a collective endeavor. Systems need to be reformed if we are to sustain performance over the long term, and companies should understand their connection to the wider context if meaningful and positive change is to be achieved.
- The company and the government: I recall a heated debate, around fifteen years ago, about whether “corporate responsibility” should be defined as all the voluntary actions companies took beyond regulatory requirements. This felt unnecessarily constraining to me and not why I entered the field. Today, there is a stronger consensus that government regulation of business is critical to the achievement of social justice and sustainability goals, that business should challenge governments when they violate human rights, and that a company’s government affairs, social justice, and sustainability commitments must be aligned.
When asked about the state of just and sustainable business, I like to use a framing that our President and CEO Aron Cramer introduced a few years back, that “everything’s changed, and nothing’s changed”—in other words, that by one set of benchmarks, the business community has come a long way, but by another set of metrics, impacts of climate change are becoming all the more real and urgent, democracies are in decline, and economies are becoming less equitable.
We’ve created the infrastructure, but we still need to prove we can deploy it in ways that truly address the climate crisis, place equity at the center of our social, economic, and environmental systems, and ensure the universal fulfillment of human rights. These urgent priorities must dominate the next era of just and sustainable business.
It has taken a quarter of a century for the role of business to become as clearly defined as it is today. It had better have been worth it, because we now only have a decade left to finish the job.
I would like to thank Paloma Muñoz Quick for feedback and dialogue on this blog.