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Blog | Tuesday May 7, 2019

Making Supply Chains Safe for Women Workers

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The Guardian reported on a recent study of Vietnamese clothing, footwear, and outdoor wear manufacturers, which found that “workers in Vietnamese factories have been harassed, groped, and even raped.” This was both sadly shocking and sadly predictable.  

Though compliance programs are in place, they have not guaranteed harassment-free work environments. The prevalence of harassment is sadly shocking: nearly half of the women interviewed reported having faced abuse in the past year. The abuse “ranged from groping and slapping to rape and threats of contract termination.” What’s more, this took place in a Vietnamese factory that has been under the global corporate compliance microscope since the mid-1990s. 

The story is also sadly predictable in several ways. First, it is well-known in the compliance industry that corporate compliance auditing has difficulty picking up on harassment issues. This article underlines that harassment and gender-based violence is a reality in the (garment) supply chain, no matter what your social compliance data tells you. This new study should drive us to revisit questions of auditing purpose and to ensure that the safeguarding of workers—and not just of buyers’ reputations—is at the heart of our efforts.   

A second sadly predictable finding was “a high correlation between overtime and workplace abuse.” Stress, pressure, and exhaustion rarely lead to good outcomes, as this study makes clear: “Violence and harassment was 3.8 times more likely during the high season than the rest of the year, 2.4 times more likely when workers reported working overtime of 30 hours or more a month, and 1.6 times more likely when workers could not refuse to work overtime.” 

Complying with Vietnamese legal requirements—that overtime cannot exceed 30 hours per month and 200 hours per year—could significantly reduce harassment and abuse. And yet overtime has been one of the most difficult and challenging issues for supply chain compliance programs to really impact. Solutions, as outlined in the article, must be built through supplier relationships.  

The overriding message is that when it comes to tackling harassment and abuse, compliance programs alone are inadequate. They need to be rethought with the worker at the center, and they should measure and bolster the programs put in place to address root causes and build real change.  

How can buyers and suppliers contribute to real, lasting change?   

Buyer-supplier relationships matter in everyday situations as well as in exceptional circumstances. Corporate values stand as the baseline for decision-making. The starting point for buyers should be their own corporate values—which should be the values they expect their supply chain to mirror. These corporate values must be not just listed in a Code of Conduct, but integrated into business processes, trade terms and conditions, internal action, and corporate leadership. 

One clear area for action that can directly benefit buyers and suppliers while contributing to tackling the harassment issues identified in this study is women’s empowerment. Ensuring that women workers have the tools, skills, support, and confidence they need will drive business benefits and address underlying norms and the all-too-prevalent acceptance of violence from both men and women.    

Putting this value into action requires both buyer and supplier action. On the buyer side, “walking the talk” is fundamental, as well as providing incentives and recognition to suppliers which embrace and implement the value. Actions might include signing the Women’s Empowerment Principles (WEPs) and conducting a Gap Analysis to pinpoint areas for improvement. Buyers can also ensure that gender equality is adequately reflected in social auditing practices. When it comes to incentivizing suppliers, Lindex’s WE Women provides one instance of suppliers’ performance on gender equality being incorporated into overall sustainability performance scorecards.

Suppliers also need to “walk the talk.” This might mean evaluating and improving their own workplace attitudes, policies, and standards.  Suppliers can also proliferate and promote knowledge and skills to their workforces and communities through workplace-based interventions while ensuring that management leads with appropriate policies, attitudes, and behavior, and that support is offered to workers to both understand what is right and wrong, how they can set boundaries for themselves, and/or report issues they encounter.

If we put the welfare of workers, particularly women, at the center of purpose, business benefits follow.

BSR’s HERrespect brings together buyers and suppliers to implement such programs and has seen significant impacts in changing attitudes to harassment and gender-based violence. It also supports suppliers in building or improving grievance systems. As the article notes: “Encouragingly, the study found that women working in factories with clear complaints procedures recorded far lower levels of abuse than those without such procedures.” 

The least shocking finding from The Guardian's article is that if we put the welfare of workers, particularly women, at the center of purpose, business benefits follow.   

By acknowledging the challenges and aligning values with supply chain partners, buyers and suppliers can make change. Harassment and violence is a reality for many women workers. You can do something—now—to improve it.   

Join us. 

Blog | Tuesday April 30, 2019

How Companies Should Respond to the Vedanta Ruling

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The UK Supreme Court’s recent decision in Vedanta v. Lungowe is an important read for corporate responsibility practitioners. Although it’s a jurisdictional ruling, for the first time, the UK Court held that a parent company sitting in London could be legally liable for harms allegedly caused to community members living near its subsidiary’s mining operation in Zambia. 

The decision has implications for how companies influence the operations of their subsidiaries through corporate responsibility policies, training, and management support. After Vedanta, many practitioners and legal counsel may, understandably, think about the benefits of retreating from creating or enforcing these types of policies on subsidiaries in fear that they too may be legally liable for harm.  

However, this is almost always going to be the wrong approach. Rather, we believe it is in the best interest of companies to double down on working with subsidiaries to ensure they properly understand and adequately manage environmental and social risk. Failure to do so will result in greater risk of harm occurring to communities and will expose the parent and subsidiary companies to increased legal risk. 

The Vedanta Decision  

Vedanta Resources PLC is an Indian mining company listed on the London stock exchange. They have since de-listed and now maintain a small office in London. Konkola Copper Mines (KCM) is a subsidiary of Vedanta that operates a mine in Zambia. The plaintiffs in the lawsuit, Zambian community members living near the mine, allege that KCM caused significant environmental damage to their farming communities and severely impacted their livelihood and ability to earn a living.  

The plaintiffs sued KCM and Vedanta in Zambia and the UK. They argued that Vedanta owed a “duty of care” to the communities, i.e. that the parent was also liable for the harm caused by the subsidiary, KCM, because it exercised enough influence over the way the corporate responsibility policies were implemented to be held legally responsible. The evidence is still being collected, but the allegations point to Vedanta’s corporate responsibility report showing that Vedanta adopted and enforced corporate policies governing environmental and human rights issues over its subsidiaries and that it provided training and monitoring over the implementation of those policies. This is similar to the way many companies implement corporate responsibility programs. 

Before the ruling, the law in the UK, and most other jurisdictions, treated parents and subsidiaries as separate companies when it came to holding them accountable for harm. This is one reason many companies establish a subsidiary relationship; each legal entity is accountable for their own profits, losses, operations, and legal liability. The plaintiffs sought to challenge this commonly held legal structure by arguing that Vedanta should also be accountable for the harm.  

In the procedural ruling, the Court agreed with the community members and found that they could pursue their claim against Vedanta as long as they could demonstrate that it exercised a sufficient level of “involvement and control” over the operations at KCM at trial. The court did not hold that Vedanta and KCM were at fault or liable for the harm but rather that legally they could be liable and the case may proceed.  

However, the court declined to establish a bright-line test for what a sufficient level of control over a subsidiary means. They simply stated that it all depends on the extent to which the parent “intervenes in, controls, supervises, or advises the management… of the subsidiary.”  

In fact, they refuted what had previously been thought of as the test, which was articulated in an earlier case, Chandler v. Cape. In order to free plaintiffs from the “straitjacket” of needing to gather evidence to meet the bright-line test, they simply found that as long as Vedanta, through its policies, training, and monitoring, exercised enough influence over KCM, Vedanta could be liable for KCM’s alleged harm.  

What does this mean for corporate responsibility practitioners?  

The immediate and understandable reaction to Vedanta may be to simply retreat from providing corporate-level policies, training, and management support to subsidiaries, and being a purely passive investor. This seems like the wrong response, and companies should instead continue to supporting their subsidiaries for several reasons. 

First, failing to understand and effectively manage environmental and human rights risks by subsidiaries leaves companies exposed to legal liability for negligent oversight. Several lawsuits currently pending in Canada are based, in part, on the theory that a parent owes a separate duty of care to local community members when it makes general company-wide statements that can apply to the subsidiary, such as a “commitment to respecting human rights.” The parent then can be liable, under the theory of those cases, when it fails to take adequate steps to protect against foreseeable harms. That can occur, for instance, when the parent understood that the local operating environment presented risks of security-related human rights violations, and it was foreseeable that a failure to properly select, train, supervise, and monitor security personnel employed by its subsidiary would cause harms. 

Second, taking a hands-off approach may not protect the company under Vedanta. When a company makes general statements or issues general policies applicable to its operating units, under the theory of Vedanta and other such cases, it undertakes a degree of responsibility. However, a failure to make such general statements, or issue general policies, also creates risks. While a company might choose to totally stand to the side and allow local operating units to manage its own affairs purely to avoid potential legal risks, the subsidiary may not operate as effectively, or suffer economic and local legal harms that vastly outweigh the potential legal exposures.  Indeed, even in the absence of any general proclamations or policies, certain legal responsibilities still can accrue, such as potential risks that arise when the company consolidates earnings from a passive subsidiary.  In other words, doing nothing to try to circumvent the Vedanta holding creates risks of its own. 

Third, the UK Supreme Court signaled that these cases are likely to be examined on a case-by-case basis. The circumstances surrounding each allegation of harm will be unique and the court will look at the content of corporate policies as well as how they were enforced. When the company’s policies, procedures, and implementation efforts are examined under the microscope of a lawsuit, the company will be in a much stronger position if it can demonstrate meaningful effort to develop and implement effective polices and procedures, rather than burying its head in the sand. 

It is in the best interest of companies to double down on working with subsidiaries to ensure they properly understand and adequately manage environmental and social risk.

At its core, the Vedanta court advises companies to actually do what they claim to do in their corporate responsibility reports or potentially face legal liability. If the parent adopts and enforces an environmental or human rights policy “shown to contain systemic errors” which later causes harm to third parties, it cannot hide behind a parent-subsidiary legal relationship to escape liability.  

Ultimately, the best legal defense – and the best outcome for communities – is to avoid a lawsuit in the first place. The best way to do this is by developing and implementing smart policies and programs in the right way so that harm does not occur.   

Blog | Monday April 29, 2019

Why 2019 Is the Year of Stakeholder Trust

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In 2019, the question of how to build and retain trust—among investors, regulators, customers, suppliers, civil society organizations, and the general public—is the most pressing challenge facing business.

The stakes have never been higher. The average tenure of a business on the S&P 500 shrank from 33 years in 1964 to 24 years in 2016 and is forecast to last a mere 12 years by 2027. Competition, innovation, and technological disruption, while important drivers, tell only part of the story. If a business is not trusted by its stakeholders, it will not be able to maintain revenue, let alone grow, and may soon find its very existence imperiled.

To make matters even more challenging, societies worldwide are experiencing a crisis of leadership and trust in institutions across government, business, and the media. Hyper-transparency, geopolitics, social inequalities, and the increasing fragility of global governance mechanisms are all contributing factors. Businesses must now navigate an increasingly fraught external environment via a combination of firm core principles and imaginative new approaches.

In 2011, BSR published a five-step guide to stakeholder engagement in response to requests from companies for practical guidance on how to navigate the tricky topic of identifying, interacting with, and responding to external voices. The appetite for this topic has been insatiable: the 2011 report has consistently ranked among BSR’s top five most-viewed reports since its publication. And as effective engagement with society continues to be a topic of enormous, ongoing interest, we have just released an updated version of our report to account for major developments over the last eight years that have made the stakes higher than ever.

Why is stakeholder trust so important today?

First, an exponential increase in transparency means that companies must behave as if everything they say or do might become public.

Information becomes available at an ever-accelerating pace. While it is still disseminated primarily on dominant technology platforms, our understanding of facts and truth is far more contested and diffuse. Public concern over social and environmental issues can escalate rapidly on social media (ocean plastics are a recent example) and hyper-local conflicts between business and communities can generate global reputational crises.

Employees are also emerging as one of a company’s most vocal, empowered stakeholder groups; they increasingly invite wider, deeper scrutiny of their employers via media interviews, data leaks, petitions, and even walkouts.

Contractual confidentiality clauses are no longer an effective way to manage this new dynamic: The boundary between the corporation and society has grown permeable. Companies need to embrace strategies that make transparency, timeliness, and accountability core operating principles while bearing in mind that workers may view their social responsibilities as more urgent and compelling than their employers’ short-term profit targets.

Evidence signals that consideration of environmental, social, and governance issues is highly correlated with corporate performance over the long term.

Second, even big investors are declaring that an exclusive focus on company interests has become counter-productive.

BlackRock CEO Larry Fink made a pressing case for strategic stakeholder engagement in his 2019 annual letter, noting: “Companies that fulfill their purpose and responsibilities to stakeholders reap rewards over the long-term. Companies that ignore them stumble and fail. This dynamic is becoming increasingly apparent as the public holds companies to more exacting standards. And it will continue to accelerate as millennials—who today represent 35 percent of the workforce—express new expectations of the companies they work for, buy from, and invest in.”

This quote reflects a broader shift in investor sentiment. Evidence signals that consideration of environmental, social, and governance issues is highly correlated with corporate performance over the long term. Companies that rely on one-way, PR-led approaches to manage these issues will not thrive. Fink’s challenge necessitates a robust engagement strategy in which companies determine how to weigh and balance a broadening array of overlapping and conflicting interests in a transparent and defensible way.

Finally, companies in 2011 primarily understood stakeholder engagement as a way to understand and manage reputational risk.

A key question in any mapping exercise was “Can we trust the stakeholder?” Today, it is usually more important to ask: “Can the stakeholder trust us?” The development of international frameworks that shape sustainability efforts, most notably the UN Guiding Principles on Human Rights, has driven a shift in emphasis toward corporate impacts on society and away from self-interested risk considerations.

We have substantively updated our framework to reflect these developments, emphasizing such new stakeholder mapping criteria as vulnerability, developing a new set of core engagement principles, and shifting the focus away from one-way information-gathering and toward building mutual trust and understanding. We have also considered stakeholder engagement in the context of new business models such as digital platforms, wherein companies face billions of stakeholders and can have an unprecedented impact on their lives.

Stakeholder engagement may seem more difficult and overwhelming than ever, but it needn’t be. Our updated report takes full account of how the world has changed while maintaining our original focus on practicality and clarity. BSR’s goal is to help companies build a deeper understanding of the social systems in which they operate—and to help them develop purposeful direction in pursuing their own goal of building sustainable trust.

Reports | Monday April 29, 2019

Five-Step Approach to Stakeholder Engagement

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Stakeholder engagement is—and will remain—a core element of the sustainability toolkit.

It is a fundamental component of materiality assessments, which are then used to inform sustainability strategy, reporting, and disclosure. Without input from key stakeholder groups, any approach to sustainability will be limited by an organization’s self-interest and inward focus.

In 2019, the landscape of digital communication, international agreements and investor expectations makes stakeholder engagement more important than ever: Digital and social media amplify voices of the public, including civil society organizations; international agreements such as the UN Guiding Principles and Sustainable Development Goals have been established and globally accepted; and investors are significantly more focused on company approaches to environmental, social, and governance (ESG) issues, which in turn necessitate consideration of all stakeholders, not just shareholders.

We first published this five-step guide to stakeholder engagement in 2011. We have updated the guide as a response to developments over the last seven years, all of which necessitate a far clearer focus on stakeholder trust by corporations. This report aims to provide a comprehensive toolkit that incorporates the latest thinking while maintaining the clarity and practicality of our five-step approach:

BSR’s Five-Step Approach

1. Engagement Strategy: Set vision and level of ambition for future engagement, and review past engagements.
2. Stakeholder Mapping: Define criteria for identitfying and prioritizing stakeholders, and select engagement mechanisms.
3. Preparation: Focus on long-term goals to drive the approach, determine logistics for the engagement, and set the rules.
4. Engagement: Conduct the engagement itself, ensuring equitable stakeholder contribution and mitigating tension while remaining focused on priorities.
5. Action Plan: Identify opportunities from feedback and determine actions, revisit goals, and plan next steps for follow-up and future engagement.

Blog | Thursday April 25, 2019

Three Questions to Think About for Your 2030 Strategy

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For years, 2020 was a distant concept, the end-point for business goals and timelines. With many sustainability strategies and goals expiring in 2020, it is now time for companies to think about their sustainability priorities for the next 10 years.

At Sustainable Brands Paris, we discussed the dynamics shaping post-2020 strategies with representatives from Avery Dennison, evian, Fortitude Partners, and Mastercard.

The landscape for sustainable business is rapidly changing, as evidenced by the accelerating energy transition, highly disruptive technologies such as artificial intelligence, new business models, increasing geopolitical volatility, nascent climate disruption, and new expectations from stakeholders.

At BSR, our view is that the next phase of work requires building resilient business strategies with sustainability at their core. Gone are the days of piecemeal, siloed approaches and ticking off the quick wins. Now is the time to reset the trajectory recognizing the interwoven reality of business, society, and the consumer.

"Most big businesses have been working on sustainability with reasonable success for the last 10 to 15 years, but we have been picking the low-hanging fruit,” a BSR member once told us. “The next phase will be much more difficult. It is about what you buy and what you sell; it goes into the heart of your commercial operations and investment decisions."

This brings a huge opportunity to reflect on lessons learned from the past decade of sustainability management: what has worked well, what we have achieved, and what we need to do to drive ambition for changing the way we meet consumer needs while creating long-term value for business and society. In this context, we need to reflect on the following three questions as we work with member companies to develop strategies for 2030.

What could our world look like in 10 years, and how do we ensure the relevance of our priorities in 2030?

Companies cannot plan for 2030 without considering how different the world will be 10 years from now. While we cannot anticipate all the disruptions and innovations that will unfold in the next decade, we can leverage futures thinking and scenario planning to prepare long-term sustainable business strategies.

Futures thinking and scenario planning offer structured methodologies to identify signals of change on the horizon, explore possible future scenarios, and ensure your 2030 strategy is fit for the changing world. Scenario planning is not a prediction of the future, but a way to expand our field of vision, challenge assumptions about the present and future, and improve our capacity to adapt to and steer change. Importantly, it helps to understand how your business would look in a plausible new environment.

Explore BSR’s research into the key drivers of change affecting sustainable business in the Doing Business in 2030 report and theorize the impact of four plausible scenarios on your business and consumers.

Sustainability teams will need to develop new competencies to be fully empowered to drive the design of meaningful 2030 sustainability strategies and goals.

How are consumer needs and wants evolving, and how do brands partner with consumers and others to enable more sustainable lifestyles?

One BSR member company told us the most important thing for sustainability is to ensure pathways to growth for businesses and finding business benefits: “Consumers will use words other than sustainability, such as wellbeing and technology obsolescence. You should not put out new sustainable products just to win nice awards, but because consumers need and want these products.”

Truly sustainable and resilient businesses are those that integrate their commitment to achieving the Sustainable Development Goals (SDGs) into core business strategy. BSR member companies understand the “need to focus primarily on how solving major sustainability challenges create new revenue opportunities for the company. This means integrating the SDGs and sustainability into business planning.” More and more, companies see the value sustainable efforts deliver to their consumers and, conversely, the demand from consumers for goods and services that reflect a contribution to solving major societal challenges.

In the past, sustainability strategies have focused on doing business as usual, with fewer negative impacts. But, as another BSR member company explains, “products, services, and technologies are more important than processes and procedures, but we in the sustainable business field are too focused on process. This misses the key strategic link with market-based needs.”

Which business approaches can work to drive deeper internal integration and business value to get the entire company on board with a 2030 strategy?

According to the State of Sustainable Business 2018, consumer and customer demand is the second most powerful driver for sustainability efforts after reputation. However, only 34 percent of companies state that their sustainability team works effectively with marketing, 29 percent with research and development (R&D), and 28 percent with product development.

Integrating sustainability into brand strategies and innovation requires new approaches for teams that may not have worked closely before. Sustainability teams can give marketing and product development the right tools to enable sustainability to drive brand purpose and innovation.

Our partner Fortitude Partners outlines some tangible ways to work with your marketing department, such as developing a toolkit to enable brand managers to turn what is often an abstract sustainability strategy into consumer-led brand strategies. One BSR member explains how they have “baked sustainability attributes into the product development stage-gate process. Innovation teams are part of our sustainability governance. We’ve also partnered with an accelerator to incubate entrepreneurs that will generate ideas that will benefit us.”

Concrete tools and methodologies exist that can help companies build sustainability strategies that create business and stakeholder value over the next decade. Sustainability teams will need to develop new competencies to be fully empowered to drive the design of meaningful 2030 sustainability strategies and goals, such as the ability to identify value creation opportunities, drive internal change, and identify future factors.

Blog | Tuesday April 23, 2019

Accelerating the Adoption of Clean Fuels: Building a Sustainable Fuel Assessment Framework

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Business, in addition to countries and multinational bodies, has a role to play in combating global climate change. The freight transportation sector represents a significant and growing share of global greenhouse gas (GHG) emissions. And as companies seek to reduce their environmental impact, meet climate goals, and reduce fuel costs, there is increasing demand for sustainable fuel technologies such as renewable natural gas, renewable diesel, electricity, and biodiesel.

Already, leading global companies are piloting and deploying many of these fuels and technologies, including members of BSR’s Future of Fuels initiative and signatories to the Sustainable Fuel Buyers’ Principles. Companies such as UPS and DHL are building their fleets of electric delivery vans in an attempt to meet their corporate sustainability goals, to reduce fuel costs, and to continue service in areas that have banned fossil-fuel-powered vehicles — such as some cities in Europe. Major retailers and consumer goods manufacturers are also making ambitious commitments to reduce the GHG emissions impact of their road freight fleets. For example, Amazon aims to have all of its shipments to customers become net zero carbon, with 50 percent of all shipments net zero by 2030.

In continued partnership with ACT Expo, Future of Fuels will host a Buyer-Supplier Roundtable on April 23 in Long Beach to discuss how companies are evaluating the sustainable fuel market for their commercial freight fleets. 

While some progress has been made, many companies encounter significant challenges when assessing sustainable fuels options for their fleets, specifically trying to integrate economic, operational, and sustainability criteria. Fleet and goods owners today are faced with a proliferating set of new sustainable fuel choices, however, they do not have a streamlined, comprehensive framework to evaluate these fuels for their economic, performance, and sustainability attributes. As a result, uptake is lagging the availability of new options.

To help alleviate this need, BSR’s Future of Fuels initiative is currently developing an assessment framework that will outline key financial and performance criteria for at-market and near-market sustainable fuels. Co-developed with Future of Fuels members, this tool will help companies evaluate fuel suitability, financial viability (ROI), and potential barriers to uptake/adoption. 

In continued partnership with ACT Expo, Future of Fuels will host a Buyer-Supplier Roundtable on April 23 in Long Beach, California, to discuss how companies are evaluating the sustainable fuel market for their commercial freight fleets. Insights collected during this session will serve as inputs for the development of an assessment framework that the group aims to complete later in 2019.

The Sustainable Fuel Roadmap will complement a series of tools co-developed by Future of Fuels over the past years: a case study library allowing fleet owners to compare clean fuel technologies independently tested and rated by peer companies, the Fuel Sustainability Tool (available for free), the world’s first apples-to-apples way to compare emissions reductions investments in efficiency and advanced fuel technologies, and the Sustainable Fuel Buyers’ Principles, through which companies demonstrate demand for sustainable fuels and catalyze the partnerships needed to drive a sustainable transition in the freight fuel system.

As described in the IPCC Special Report released last fall, we must limit global warming to 1.5°C by 2030 to avoid catastrophic impacts of climate change. Reducing GHG emissions from freight transportation is one effective tactic companies can deploy to mitigate their climate impact. Business looking to address the emissions of their freight transportation are welcome to connect with us, either at our event at ACT Expo or online.

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We invite fuel purchasers and shippers to sign on to the Sustainable Fuel Buyers' Principles. There is no cost to join; we simply ask that companies offer a sincere commitment to use these principles to proactively engage with their value chains around sustainable, low-emission fuels. View the full list of signatories and the Principles themselves here.

Blog | Monday April 22, 2019

Five Trends Defining the Future of Retail

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Chinese online retailer JD.com recently launched the first fully automated warehouse, where only four employees are needed to do work that previously required 400. Forty German supermarkets tested using facial recognition technology to serve personalized advertisements to customers waiting in checkout lines. Two hundred ninety companies have committed to ensure 100 percent of their plastic packaging can be reused, recycled, or composted by 2025.

As the signals of change above show, retail is changing in complex ways, and the future will look quite different from today. We need to prepare now for new challenges—such as job loss due to automation and ethical concerns related to artificial intelligence (AI)—but also for new opportunities to drive more sustainable consumption patterns, promote diversity and inclusion, and meet emerging consumer needs.

The future is not pre-determined. As we seek to shape a better future, it is important to both understand current trends and be attuned to signals of change that suggest new and emerging possibilities. Here are five constellations of trends and signals we’re monitoring that any retailer should consider as it thinks about the future.

The Workforce of Tomorrow

Automation, demographics, and wages are driving change in the retail worker landscape. While income inequality in Europe is generally lower than in non-European countries, focus remains on wage initiatives such as the U.K.’s Living Wage Foundation and IKEA’s living wage commitment. In contrast, in the United States, worker pay is stagnant and income inequality is at record high levels. National legal systems are also increasingly adopting gender pay laws, including the U.K., Iceland, and the Netherlands, to document and reduce the gender pay gap. In addition, automation is poised to significantly disrupt retail. McKinsey and PwC estimate that 62 million jobs in Europe’s five biggest economies can be automated, with retail being approximately 20-30 percent by 2030. Due to aging populations and declining birth rates, AI might, however, make up for productivity shortfalls mitigating technical unemployment.

Smart Everywhere

Virtual reality (VR) and augmented reality (AR) are enabling retail companies to immerse customers in highly personalized interactions and bring the retail experience closer to home or anywhere their consumers are connected. The majority of retailers are already implementing or planning to further invest in mixed reality. By 2021, nearly 79 percent of retailers will be able to customize the store visit for customers as a majority of them will know when a specific customer is in the store. AI is enabling companies to better anticipate consumer preferences and is already capable of improving demand forecasting up to 50 percent.

The Social Life of Business

Corporate activism is on the rise, with issues such as refugees and immigration, LGBTIQ+ rights, and the climate crisis drawing public commentary from thousands of executives, companies, and their employees. Brands from Primark to Starbucks are supporting various causes through their products, marketing, or commitments such as IKEA’s Refugee Employment Program. In Deloitte’s Millennial Survey 2018, three-quarters of the young workers interviewed see businesses around the world focusing on their own agendas rather than considering the wider society, and climate tops the list of issues where they expect business to take action. According to FleishmanHillard, two-thirds of consumers said they’ve already stopped using a company’s products or services because that company’s response to an issue didn’t comport with their own views.

Successful business—and the well-being of people and the planet—will depend on developing new strategies for the future that not only account for the profound changes underway but can also imagine transformative new opportunities to create a more just and sustainable world.

Over There Is Now Here

Western democracies are being challenged by the rise of populism, cultural nativism, and economic nationalism, and in response, international cooperation on global challenges is being undermined. On the other side, global grassroots movements for the climate and just capitalism are growing particularly among youth. In March, climate strikes around the world gathered hundreds of thousands of students. Disruption requires that companies constantly evaluate their short- and long-term sourcing options, both locally and globally. Climate change has the potential to critically disrupt the supply chains for important commodities like coffee and vanilla. Over 500 companies have committed to set science-based targets (SBTs), which require inclusion of Scope 2 and 3 emissions—increasing focus on supply chain climate impacts. Automation can provide significant costs savings on labor compared with offshoring to low-cost economies, and it is poised to lead to the reshoring of production and significant job losses in the supply chain.  

Race to Stay Within Planetary Boundaries

The urgency to act on climate change has significantly increased this year, following recent reports from the Intergovernmental Panel on Climate Change (IPCC) and the Stockholm Resilience Institute that warn that 1.5 degrees, not 2 degrees, is the upper limit for warming if we are to avoid catastrophic impacts. The European Union (EU) aims to achieve carbon neutrality by 2050. In 2018, it aligned its ambitious Circular Economy Plan in a Memorandum of Understanding with China. California, the world’s fifth largest economy, declared its ambition in late 2018 to achieve carbon neutrality by 2045. In the meantime, plastics has become a hot button issue, both single use plastics such as straws as well as microplastics, which have been found in everything from fish to bottled water to table salt.

The European Parliament has voted for a complete ban on a range of single-use plastics across the union in a bid to stop pollution of the oceans. Other waste bans, e.g. on microplastics, are likely imminent. At the same time, the EU is considering a law for the ‘right to repair,’ forcing manufacturers to make repair accessible for all their products, either at repair shops or in their own stores.

From automation to climate impacts to social values, a diverse set of powerful and complex interacting forces are changing the retail and consumption landscape. However, it’s not enough just to read about these changes. Successful business—and the well-being of people and the planet—will depend on developing new strategies for the future that not only account for the profound changes underway but can also imagine transformative new opportunities to create a more just and sustainable world.

The most effective way to do this is using strategic foresight—a structured approach to exploring multiple future possibilities, clarifying the better future we’d like to shape together, and creating a roadmap to get there. For more information about BSR’s new strategic foresight offerings, please contact the BSR Sustainable Futures Lab.

Blog | Tuesday April 16, 2019

Supply Chain Sustainability in a Rapidly Changing World

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Ten years ago, Norway-based Telenor Group transformed its approach to supply chain sustainability. To mark this anniversary, Telenor commissioned BSR to review lessons learned and consider what direction both Telenor and the broader telecoms industry should travel over the next 10 years. Telenor’s supply chains include thousands of suppliers around the world, which provide goods and services ranging from IT equipment and devices from global suppliers to a wide range of local services needed to build and run the network, including construction and maintenance. In addition, suppliers are needed in areas such as digital services, brand and marketing support, and outsourced customer services and business processes. 

Informed by this work, today we are sharing our thoughts on relevant global shifts transforming telecommunications supply chains and best practices for companies in the industry to improve supply chain sustainability in the future. 

Three Global Trends  

Three key trends are likely to influence the future of sustainable supply chains in the telecommunications industry—new technologies and digitization, climate resilience, and large-scale human migration.  

1. New technologies: Innovations and digital advances are revolutionizing supply chain management across industries, and more companies today are using technologies like automation, artificial intelligence and machine learning, blockchain, and augmented reality to supplement traditional approaches. There are opportunities to consider how new technologies can increase financial incentives for suppliers that are performing well on social and environmental indicators—for example, blockchain technology and financial technology solutions are making it easier for companies to gear their supply chain finance mechanisms more readily toward incentives for these high-performing suppliers. 
2. Climate resilience: While it’s impossible to predict the exact effects of climate change, it’s clear that supply chains are vulnerable to global warming, especially for those companies with operations and infrastructure in countries that are already experiencing more frequent and severe weather events. Over the past decade, the telecommunications industry has done an impressive job building climate resilience, and networks are increasingly able to withstand severe weather events. Looking to the future, telecommunications companies have an opportunity to expand their approach to climate resilience by focusing on opportunities to deploy telecommunications networks and digital services in ways that support the resilience of other industries.  
3. Large-scale human migration: Companies will also need to prepare for the burgeoning trend of human migration at a massive scale. More than 240 million people now live outside their country of birth, and a record number of people have become refugees. This is already affecting many companies. While local contexts vary significantly, migrant labor presents risks in both emerging economies as well as in developed markets. One of the biggest risks is that migrant workers represent a vulnerable group requiring special protection. Often, these people may not be aware of their rights, or they are willing to take jobs where rules and regulations are not followed. As a result, they might be paid under the table in cash, they might be paid below the legal minimum wage, or their employers may force them to work excessive hours or in unsafe conditions. It is important for companies to identify and eliminate these violations, and it’s also important for companies to invest in strategies to create decent jobs that integrate migrants into the workforce, develop their skills, and give them opportunities to make positive contributions to society. 

What Companies Can Do 

We recommend companies dig deeper on impact—encourage more local ownership, connect more deeply on key issues, and create change for rights-holders. 

A dedicated company’s efforts in an era of rapidly accelerated change has the potential to create value for its business, its stakeholders, and society at large. Our recent work with Telenor illustrates how companies can act within their own boundaries, enable relationships with stakeholders, and influence policy change to advance sustainable business goals, drawing from the “Act-Enable-Influence” framework articulated in Redefining Sustainable Business: Management for a Rapidly Changing World.

We recommend companies dig deeper on impact—encourage more local ownership, connect more deeply on key issues, and create change for rights-holders. We also suggest more proactive engagement with global peers and suppliers in collaborative efforts, such as advocacy for necessary policy changes.  

Our additional guidance for companies includes the following: 

• Companies can act by taking local context into account in risk assessments, audits, inspections, and capacity-building, as well as by prioritizing efforts based on risk to the rights-holder (i.e., supply chain employee), rather than risk to the business. This focus on risk to the rights-holder rather than risk to the business is consistent with the expectations in the UN Guiding Principles on Business and Human Rights. 
• Companies can enable change by creating and participating in local collaboration platforms among telecommunications companies and their suppliers, as well as with other industries and key stakeholders. This can also include making the case for more telecommunications operators, including local competitors, to join relevant industry associations and strengthen their ability to drive industrywide change.  
• The telecommunications industry can influence change by adopting an advocacy agenda that represents the complete company and industry value chain. This means promoting rule of law and good governance, especially effective enforcement of labor, health, safety, environment, and anticorruption regulations.  

If you’d like to connect with us to learn more about our work on the future of supply chain sustainability, please don’t hesitate to contact us. 

Blog | Monday April 1, 2019

Four Ways Companies Can Transform the Health of Communities

Preview

Health is not just for healthcare companies: All businesses have an important role to play in community health. In the United States, close to 80 percent of one’s health is determined by where you live and work. Leading companies both invest in employee health and well-being and go beyond their four walls to make an impact in local communities. By doing so, they are creating business value and a competitive advantage.

Already, a wide range of companies are taking action to improve health outcomes in their communities through various channels, such as expanding employee wellness programs to family members, partnering with local organizations like schools to reach community members, promoting healthier choices and/or behaviors to customers, leveraging technology to benefit vulnerable or underserved populations, and investing in affordable housing projects near corporate headquarters. Together, BSR’s Healthy Business Coalition and the Robert Wood Johnson Foundation have developed a collection of case studies to demonstrate how companies are taking action on community health and to assess the landscape of corporate healthy business program metrics. These case studies supplement a series of resources in the Healthy Business Toolkit that support companies in identifying opportunities and developing programs and partnerships to improve the health of employees, customers, and communities.

Beyond charitable donations, philanthropic giving, and employee volunteerism, businesses are making investments in community health by integrating health and well-being into core business practices across four scopes of action:

Create a workplace that values health 

Businesses have an opportunity to serve as a model for health by creating a workplace that values positive health outcomes for employees as well as exemplifying corporate environmental responsibility.

Johnson & Johnson’s HealthForce 2020 is an integrated initiative to empower at least 100,000 employees by 2020 toward a personal best in health and well-being at work, home, and in their communities by enhancing their core employee health and well-being programs and services. The program measures employee engagement and utilization, in addition to business metrics (like recruitment, retention, performance, and promotion) and health outcomes.

Differentiate products and services by taking a health lens

Businesses have an opportunity to not only mitigate negative health impacts but to also improve health outcomes of current products and services. In addition, they have the tools to develop accessible solutions for critical health and well-being needs.

Every year, around 3.6 million Americans miss doctor appointments due to lack of reliable transportation.  Uber Health, a HIPAA-compliant technology solution, helps to address this problem by helping patients and caregivers get to and from care. Providers also use Uber Health to transport crucial staff to work. The program aims to eliminate access to transportation as a barrier to receiving health care services.

Another great example is The Walt Disney Company’s Healthy Living program, which seeks to improve child nutrition and well-being by providing food options in parks, products in stores and online, recipes, and physical activity ideas that meet Disney’s nutrition guidelines. The program tracks the number of servings of fruits and vegetables provided to kids every year and the percentage of guests that make the healthier choice.

Partner with community organizations to have a bigger impact

Businesses have an opportunity to incubate more meaningful health programs and partner with community organizations to improve community health outcomes of a company’s key communities and focus populations. Partnerships with community organizations can enhance a business’s reputation and help achieve more than they could alone.

The One for Good Initiative is an exemplary collaboration among Consumer Goods Forum members, such as General Mills, PepsiCo, Walmart, and others, in partnership with a local public-private collaborative, Healthy Washington County. The collaboration supports community wellness by empowering consumers to make healthier choices, from food and exercise to smoking cessation and medication adherence.

Take a stand against health inequality through public policy engagement

Businesses have an opportunity to influence the cultural dialogue and policy debates by promoting health equity through public policy engagement as well as public communications that serve to promote health.

Few companies have engaged in policy and advocacy like Etsy has in its effort to increase economic security for the gig economy. Etsy is working to foster economic security for its sellers and other workers in the gig economy via targeted research on the future of work. Further, the company is supporting advocacy to U.S. policymakers to streamline employment benefits and to minimize the impacts of income variability.

We need more U.S. companies to see the strategic significance of healthy business programs and leverage their core business assets to make a positive impact.

Across these four scopes, it is encouraging to see companies across industries invest in improving the health and well-being of employees, consumers and communities. Still, we need more U.S. companies to see the strategic significance of healthy business programs and leverage their core business assets to make a positive impact. Our findings show that most companies have not yet gone beyond tracking outputs and/or are solely tracking metrics on outcomes or impacts for internal purposes. As such, there are limited outcome and impact metrics from companies’ community health programs. By measuring and publicly disclosing outcome metrics, companies can increase the rigor of the program, quantify how the company is making positive change, create opportunities for collaboration by sharing information, and encourage peers to do more. 

Blog | Thursday March 28, 2019

Getting to a Price on Carbon: Collaboration, Action, and Leadership

Preview

At GreenBiz 19 in February, BSR and Ceres convened business and civil society leaders to explore new collaborations in pursuit of public policy to support climate ambition in the U.S. The meeting was a prime example of the work of BSR’s CoLab, an incubator and accelerator of private-sector collaboration that mobilizes the collective power of business to solve the world’s biggest sustainability challenges. The conversation was framed around one big question: “How can businesses work together to support meaningful public policy to address the climate crisis?”

Our session at GreenBiz 19 left us more convinced than ever that the time is right for action guided by a thoughtful and inclusive long-term strategy and action plan—and we are committed to working with our many partners in the field to make it happen.

We had a rich discussion of the many barriers we will need to overcome—both within companies and across the broader political landscape. But for every barrier identified, we surfaced several great ideas for how to address it. Some of the key “design criteria” we took away from the meeting include the following: 

• Move from an ad hoc to a strategic approach. We need to create a framework and priorities for policy advocacy that enable companies to advocate with confidence. What do we want for the future, and what policies are necessary to get there?
• Organize around principles before policy details. Rather than overcommitting to a specific policy proposal, we need a set of “principles” to identify specific policies for which to advocate and to serve as the focal point around which to mobilize a broad and diverse coalition. Carbon pricing is important but not a silver bullet, and it will need to be accompanied by many other policies and practices—from new actuarial standards to building codes.
• Connect climate action to existing priorities. We can create a better foundation for consistent policy advocacy by linking climate change to issues that already obviously matter within our organizations (rather than trying to “add climate to the list”). Most companies have stated “values” or priority areas that drive programs and choices—and many of those elements link to aspects of the climate crisis. For example, building resilience may be a key piece in supporting local community development.
• Build a more powerful narrative. At the same time, we should balance the language of “business case” with the language of society and morality. It is always strategic to put the issues in terms and metrics people understand, to meet your audience where they are, and to encourage stakeholders to consider going further.
• Acknowledge and address the diverse needs and impacts of different sectors. Some industries will fare better than others in the transition to a zero-carbon economy, and we need to have a plan for addressing all of them.
• But above all, get started! Even as we work to build out a longer-term strategic approach to climate policy advocacy, we need to show up and engage with lawmakers, both on a local and national scale, to send a clear signal as well as to test and refine our approaches.

We see an opportunity for companies to highlight the need for a strong and meaningful price on carbon as part of the overall response to climate change.

What Comes Next?

On that last point, we are delighted to partner with more than 15 highly respected organizations to field a Lawmaker Education and Advocacy Day (LEAD) in Washington, D.C. on May 21-22, bringing together companies large and small from all over the country to drive forward three key messages:

1. Climate change is an urgent threat to the American economy.
2. Businesses are taking action to reduce emissions, but they cannot tackle the problem without strong leadership from Congress.
3. Congress must put forward a policy response equal to the severity of the challenge—and that should include a price on carbon.

Led by a core group of CEOs and organized by an unprecedented collaboration of NGOs, think tanks, trade associations, and other groups, this event will help to elevate and emphasize the private sector’s vision for lasting, predictable, and effective climate solutions. In particular, we see an opportunity for companies to highlight the need for a strong and meaningful price on carbon as part of the overall response to climate change.

If you would like to learn more, BSR and Ceres are hosting a webinar on April 3 at 2 p.m. EDT to provide more details on the LEAD event and the state of play of climate policy in Washington, D.C. and share our vision for how this event contributes to overall efforts to move climate policy forward at a national level. In addition to speakers from BSR and Ceres, the webinar will feature Joseph Majkut, director of climate policy at the Niskanen Center.

We will also use our time together in Washington to advance the conversation on a broader and longer-term strategic approach to public policy advocacy. Please join us and don’t hesitate to contact either BSR or Ceres with your thoughts and ideas in the meantime. For more information about the LEAD event, please reference this resource or connect with us via email.