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Blog | Wednesday June 7, 2017

Business Steps Up Leadership on Climate Action as U.S. Administration Withdraws

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In the midst of political opposition from the Trump administration, which announced its withdrawal from the Paris Agreement on climate change on June 1, a cohesive and powerful voice has emerged: Business favors climate ambition for a shift to a low-carbon economy.

While consensus on climate action has long been elusive, companies from diverse sectors of the economy have stepped up to protect the standards of the Paris Agreement, which they see as a vital pillar for future growth, employment, competitiveness, and innovation.

An Ongoing Trend Grows Bigger

In the months leading up to COP21, where the Paris Agreement was written, the private sector mobilized to demonstrate its leadership on climate. Through initiatives such as We Mean Business, the Science-Based Targets initiative, or the UN’s Nazca platform, companies have showcased their ambition and commitment to contributing to the decarbonizaton of the economy, and they have voiced their demand for strong and stable regulation on emissions reductions.

Since then, the momentum has grown, even as real threats to American leadership have risen from the executive branch. Indeed, the past few months have seen support from the highest levels of business:

• Full-page ads in the Wall Street Journal, New York Times, and New York Post organized by C2ES supporting the agreement, with signatures from Adobe, Apple, Blue Cross Blue Shield of Massachusetts, Danfoss, Dignity Health, Facebook, Gap, Google, Hewlett Packard Enterprise, Ingersoll Rand, Intel, Johnson Controls, Levi Strauss & Co., Mars, Microsoft, Morgan Stanley, National Grid, PG&E, Royal DSM, Salesforce, Schneider Electric, Tiffany & Co., Unilever, and VF Corporation.
• An ad in the Wall Street Journal urging the president to stay in the Paris Agreement, signed by the 30 CEOs: 3M, Allianz SE, Bank of America, BROAD Group, Campbell Soup Company, Cargill, Citigroup, Coca-Cola Company, Corning, Cummins, Dana Incorporated, Dow, DuPont, GE, Goldman Sachs, Harris Corporation, Johnson and Johnson, JP Morgan Chase, Kering, Morgan Stanley, Newell Brands, PG&E, Proctor and Gamble, Royal DSM, Salesforce, Solvay, Tesla, Unilever, Virgin Group, and Walt Disney Company.
• More than 1,000 companies signed the “Business Backs a Low-Carbon USA” letter, which supports U.S. participation in the Paris Agreement, including DuPont, Hewlett Packard Enterprise, Hilton, HP, Intel, Johnson & Johnson, NRG Energy, PG&E, Schneider Electric, The Hartford, and Unilever.
• CEOs and spokespersons from companies such as ConocoPhillips, BP, Cheniere Energy, Cloud Peak Energy, Exxon, GE, Peabody and Arch Coal, and Shell have all expressed strong support for remaining in the Paris Agreement.

These public announcements have presented the business case for climate action and have demonstrated the need for strong and stable policies in order to meet investor, consumer, employee, and business demands. Privately, many more executives and senior leaders have contacted the Trump administration, emphasizing that a low-carbon economy is the backbone of American prosperity.

Business Is Drawing the Line

Within minutes of the White House Paris statement, business leaders expressed their opposition using the president’s favorite medium. Goldman Sachs CEO Lloyd Blankfein dedicated his very first tweet to the issue: “Today's decision is a setback for the environment and for the U.S. leadership position in the world.” Tesla CEO Elon Musk and Walt Disney Company CEO Robert Iger used the social media platform to announce they would step down from the President’s Business Council.

GE CEO Jeff Immelt tweeted that climate was now in the hands of business and ruled out the current government as a partner. Google CEO Sundhar Pichar renewed the company’s commitment to working toward a more prosperous and cleaner future, as did Salesforce CEO Mark Benioff. Microsoft President and Chief Legal Officer Brad Smith and Apple CEO Tim Cook also strengthened their resolve to contribute to the fight against climate change. Twitter CEO Jack Dorsey announced his discontent on the platform. On his company’s platform, Facebook CEO Mark Zuckerberg made a public statement in favor of continuing to act in favor of climate in a way that makes business sense.  

Amazon, Dell, and Intel weighed in via Buzzfeed, insisting that not only is there is no contradiction between a low-carbon economy and a prosperous America, the opposite is true. HP issued a press release, saying the longevity of its business was at stake. IBM did the same.

The business voice is not only shaped by global tech companies: Ford and General Motors were also quick to respond to the president’s decision, stating that their commitments to emissions reductions would not change.

And just days after the withdrawal announcement from the White House, more than 900 businesses and investors have joined hundreds of cities, states, and universities in signing the We Are Still In statement to declare their continued support for climate action to meet the Paris Agreement, using the hashtag #WeAreStillIn.

How Business Leads

Leaders of some of the world’s most successful companies clearly see that remaining in the Paris Agreement and maintaining policies that favor emissions reductions is good for their bottom line as well as for the country. Companies have already seen significant cost savings, better supply chain management, and they have spurred innovation and employment by tackling climate change while responding to investor and consumer demands.

Business is leading opposing the federal government and marching on with its own climate commitments, which are consistent with business imperatives. And business can count on the support of local and global politics. Even though the United States withdrew from the Paris Agreement at the national level, 30 mayors, three governors, and 80 university presidents in U.S. cities and states have shored up climate action in line with the requirements of the international accord. And globally the 195 parties to the Paris Agreement remain staunch in their determination to make good on their goals. While the White House’s withdrawal from Paris is a major mistake, it has also served to underscore the broad and deep support for climate action in the United States. In our judgment, this will prove to be longer-lasting than the foolish, regressive approach taken by the president.

In this context, business can be assured that its ambition will be met and enabled at both the local and global levels—and we can be assured that the world’s business leaders will work to keep the global temperature rise under 2°C.

Blog | Tuesday June 6, 2017

Three Actions to Promote Women’s Economic Empowerment in the Apparel Sector

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To realize the ambitions of the Sustainable Development Goals (SDGs), the UN High-Level Panel on Women’s Economic Empowerment says there is a “pressing need to step up actions to close gender gaps and ensure the full economic empowerment of women.” The private sector has an important role to play in this ambition—particularly in sectors, like apparel, that employ large numbers of women all over the world.

Over the last decade, many apparel companies, industry coalitions, supplier groups, NGOs, unions, governments, and international coalitions have collaborated to create promising initiatives designed to improve working conditions, build skills, and promote the well-being of women workers in the supply chain. These efforts have built a collective understanding of what makes (and importantly, what doesn’t) for a decent employment opportunity. While these advances should be recognized, more needs to be done to remove barriers to women’s economic empowerment, which is the ability women have to access and control their economic resources, assets, and opportunities, including jobs.

Companies should continue investments and innovation, with the recognition that apparel supply chains, and the demographics and everyday realities of workers within them, are changing. While the apparel sector cannot act alone—government initiatives and international development work will remain important—business has both an opportunity and a responsibility to drive lasting, meaningful improvements that enable female workers to fulfill their potential and maximize the returns of their participation in the global apparel sector.

In a new BSR business brief, “Empowering Female Workers in the Apparel Industry: Three Areas for Business Action,” we highlight key findings from in-depth research conducted by the International Center for Research on Women (ICRW) and supported by C&A Foundation and the Levi Strauss Foundation. We propose three areas where apparel companies can take action to promote women workers’ well-being and economic empowerment:

• Address informality: For many women in the apparel sector, that job represents their first formal job and income—both of which are key ingredients to women’s economic empowerment. Unfortunately, the global apparel industry relies heavily on informal operations, and ICRW’s research affirmed the need for concerted action on informal work. Global companies should expand current initiatives into more informal parts of the supply chain where the needs are greater. It is also time to come together in constructive dialogue to support policies that favor and promote formality in the workplace.
• Go further to end violence: Economic empowerment is impossible in the face of gender-based violence at work and at home. A recent CARE report found that nearly one in three female garment factory workers in Cambodia said they experienced sexual harassment in the workplace in the past year, which cost companies US$89 million in lost productivity. Efforts to address violence should consider not only workplace interventions, but also ways to align with and strengthen public systems to address vulnerabilities and patterns of harassment and violence outside of the workplace.
• Recognize childcare needs: Around the world, women take on a disproportionate amount of unpaid care work. Given that apparel workers are predominantly women in their reproductive years, lack of access to affordable, quality childcare remains a barrier for effective, long-term participation at work. While business should support the wider intention of SDG 5 to provide women with equal access to and representation in all economic and political spheres, supporting access to high-quality, family-centered childcare is an important first step that apparel sector companies can take immediately.

These three interconnected opportunities represent meaningful actions apparel companies can take now to support women’s economic empowerment. Companies can adopt policies; make investments; and participate in partnerships with NGOs, community organizations, and others to promote women’s economic empowerment. Business can also exert positive influence by sharing data, conducting research, and engaging in advocacy to increase awareness of the factors that promote equity and gender equality.

Read our business brief, which is based on research by ICRW and supported by C&A Foundation and the Levi Strauss Foundation. 

Blog | Thursday June 1, 2017

BSR Statement on U.S. Withdrawal from the Paris Agreement

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BSR regrets that the United States has announced its intention to withdraw from the Paris Agreement on climate change. The Paris Agreement is supported by an unprecedented consensus of nations—only Syria and Nicaragua have not signed it. The overwhelming majority of businesses and investors believe that the Paris Agreement is essential to ensuring innovation, competitiveness, and job creation, in addition to the evident benefits with respect to combatting climate change. Furthermore, evidence suggests that a strong majority of the American public believes the same thing. 

In spite of counterproductive policies coming from the U.S. administration, we are confident that the business community will continue to lead on climate action. BSR will continue its work with businesses, nonprofit partners, and other stakeholders to accelerate the transition to the resilient low-carbon economy. We will work with companies to set and implement science-based emission reduction targets, to help remove emissions from their supply chains, to invest in a low-carbon future, and to become resilient to climate risks. We will maintain our sharing of best practices in climate leadership. Our BSR collaborative initiatives on climate change will continue to help companies collectively promote low-carbon shipping and trucking, renewable energy for data centers, climate resilience, and climate finance. Along with our partners in the We Mean Business coalition, we will keep uniting the business community in taking climate action.

The resilient, low-carbon economy that the Paris Agreement envisions offers the innovation, jobs, and security Americans need. We urge the United States to reconsider withdrawal from the agreement and from the policies which implement it.

“U.S. withdrawal from the Paris Agreement is a major mistake that will serve as a setback for climate action, global cooperation, and business, which overwhelmingly supports Paris. This decision not only damages the global consensus on how to address climate change, but also the innovation, competitiveness, and job creation that can flow from the steps outlined in Paris. Despite this deeply regrettable decision, I am confident that business—very much including American companies—will remain resolute in showing how the transition to low-carbon prosperity can be achieved and can improve livelihoods. BSR will continue to work with businesses that understand this and that are leading the way to 21st-century business models.” —Aron Cramer, President and CEO, BSR

Blog | Wednesday May 31, 2017

Can Marketers Change the World?

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We have reached a tipping point for sustainability marketing.

For years, consumers said they were interested in buying more sustainable products and services, but sales of green products remained a niche market. This indicated a “value-action gap,” with consumers saying they would make values-driven purchases in surveys but failing to follow through in reality. 

Today’s headlines tell a different story.

Tesla is now more valuable then Ford and GM, brands under Unilever’s Sustainable Living Plan are growing 50 percent faster than the rest of the portfolio, and Nike is making more than a billion from shoes that are radically more resource-efficient. These brands and others have put sustainability at the forefront of their marketing—and are reaping the rewards. That’s good news for their bottom lines and good news for the planet.

How have some companies cracked the code to convert consumer aspirations for a better world into sales?

A group of brands from BSR’s Sustainable Lifestyles Frontier Group—AT&T, eBay, Johnson & Johnson Consumer Inc. (JJCI), McDonald’s, and Walmart, with guidance from BSR, Futerra, and Stanford University—set out to explore this question. Following initial research, the group tested insights in the marketplace, moving beyond theory and into action. Each brand identified a sustainable behavior they could influence and a method to explore the effectiveness of their marketing efforts.

The Value of Sustainability

The results, along with lessons and advice, are captured in our latest study “Big Brands Big Impact: A Marketer’s Guide to Behavior Change,” including these highlights:

Sustainability is a value add, not the only value. When testing messages to promote a digital home security and energy automation system, AT&T found that the most effective messaging focused on benefits like security and control over one’s home, rather than carbon footprint reduction. However, in surveys, consumers said they were interested in energy conservation. This suggests that even if using a product delivers environmental benefits, those benefits should not necessarily be the primary focus of marketing efforts. When it comes to purchasing, these AT&T customers were influenced more by the perceived value of the product and its functionality. 

“Consumers are looking for companies to be more and more environmentally and socially conscious,” said AT&T Director of Sustainability Integration Roman Smith. “It’s important for companies to understand how to best tap into that trend as we market and communicate our offerings. Being a part of the Sustainable Lifestyles Frontier Group has helped us do that.”

Making sustainability fun can drive engagement. When testing out different recycling signage at a San Francisco restaurant, McDonald’s found that playful imagery with vibrant colors captured customers’ attention and provided an unexpected moment of joy. By getting their attention in a whimsical, engaging way, it was easier to get the customers to focus on the “task” of recycling. These signs were much more effective than the “control scenario” sign, which lacked color and provided basic instructions.

“Being part of the Sustainable Lifestyles Frontier Group gave us the opportunity to extend our promise to bring delicious feel good moments to everyone, even at the recycling bin. The partnership of sustainability and marketing influenced sustainable behavior change and 'scaled for good' both the customer experience and landfill diversion,”  said Victoria Zimmerman, Global Supply Chain and Sustainability Manager, McDonald's.

Helping people become more sustainable can improve brand reputation. Both eBay and JJCI found that when their communications helped consumers be more sustainable, these messages also improved consumers’ perception of the brands as environmentally responsible. JJCI tested social media posts that encouraged consumers to recycle by explaining how recycling can reduce landfill waste and by giving them do-it-yourself ideas such as using empty containers as planters. These posts improved participants’ perception of the brand as environmentally responsible, which could give the brand a competitive advantage when other factors such as price and performance are equal.

The bottom line?

It’s not about green marketing; it’s about great marketing.

Just as selling a drink isn’t all about selling the taste, selling sustainability isn’t all about saving the planet. For some brands, marketing sustainability might mean capturing attention by creating moments of joy; for others, it might mean using sustainability as an additional benefit to strengthen the value proposition; and for still others, sustainability can provide valuable storytelling opportunities.

As more and more mainstream consumers continue to shift toward buying sustainable products and experimenting with sustainable behaviors, marketers must believe that they can change the world—but they need to bring the same thorough, subtle approach to marketing sustainability as they would to marketing any product.

To learn more about marketing for sustainability, read the insights and case studies in “Big Brands, Big Impact,” and consider hosting a meeting with your marketing and sustainability colleagues to explore how your brand can use marketing to influence social or environmental behaviors. 

Blog | Tuesday May 30, 2017

Despite U.S. Uncertainty on Paris, Business Momentum for Climate Action Remains Strong

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At the G7 Summit concluded this past weekend, the United States was unable to join consensus on the Paris Agreement on climate change, with a decision postponed to this week. BSR urges the United States to remain in the Paris Agreement on climate change. In this we are joined by the CEOs of major American companies, by some of the largest companies operating in the United States, and by more than 1,000 companies that employ 1.85 million Americans who have reaffirmed their commitment to American participation in the Paris Agreement.

We are confident that the business community will continue to lead on climate action, following the vision of the Paris Agreement, informed by climate science, and driven by the business imperative for innovation, jobs, and growth. U.S. participation in and implementation of the Paris Agreement would speed our transition to a resilient, low-carbon economy, enable American and global businesses to face the future with confidence, and spark innovation that will create shared prosperity.

Although the U.S. administration is pulling back from its leadership at home and abroad, incredible momentum on climate action remains. The business community is increasingly reducing greenhouse gas emissions and building climate resilience in line with the Paris Agreement. We anticipate that this leadership will accelerate, as companies set and implement targets for their own operations and throughout the vast global footprint of their value chains, and protect workers in these value chains from inevitable climate impacts.

For example, Walmart’s Project Gigaton aims to remove one billion tons of emissions from its supply chain by 2030—equal to the annual emissions of Germany. And last week HPE launched a supply chain program based on climate science to remove 100 million tons of emissions—equal to the annual emissions of Greece. 266 companies have now committed to setting science-based targets which represent their share of keeping warming well below 2°C. General Mills has committed to a 28 percent reduction by 2025 across its value chain, from farm to fork to landfill.

The low-carbon economy will take the lion’s share of finance in coming years. Annual renewable energy investment has grown from US$45 billion to more than US$270 billion over the last decade—by a factor of six. Through 2040, US$7.8 trillion out of the US$11.4 trillion invested in power generation will go toward renewable energy.

The low-carbon economy will also generate innovation and jobs. For instance, Goldman Sachs predicts that electric vehicles will experience a compound annual growth rate of 32 percent in the next 10 years, and Tesla aims to produce battery cells by 2020 that are 30-35 percent cheaper than they are today. The solar and wind industries are both creating jobs 12 times faster than the rest of the U.S. economy. Smart policy incentives will accelerate this low-carbon innovation, bringing wide economic benefits.

Together, we’re building a resilient, low-carbon economy that enables growth, good jobs, security, strong communities, and a healthy planet. We believe the business community understands the inevitability of the low-carbon transition and recognizes the opportunity it represents. U.S. withdrawal from the Paris Agreement, and the withdrawal of domestic policies which implement the agreement, are major errors which would weaken our economy, our health, and our environment.  

Blog | Wednesday May 17, 2017

Registration Now Open for the BSR Conference 2017: How Business Leads

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BSR’s 25th annual Conference—taking place October 24-26 in Huntington Beach, California—is happening during a critical time in the field of sustainability, with disruptive change affecting every dimension of business.

Our 2017 theme of “How Business Leads” will set the stage for three days of vital conversation, collaboration, and action. We are excited to gather our community together to explore how business can take the lead during this crucial moment.

I’m pleased to announce that registration is now open, and our best rates are available through June 30.

As we finalize the Conference agenda over the next several months, we will look to our theme to explore business leadership in its many forms. We will present topical examples of business leading on climate change, human rights, inclusive economy, supply chain sustainability, sustainability management, and women’s empowerment. Our 30 breakout sessions will dive deep into today’s most important issues, from achieving the vision of the Sustainable Development Goals to using climate resilience to build strong and inclusive supply chains. In recognition of our anniversary, our “Fast Forward 25” sessions will look at the future of sustainable business, with vibrant conversations on topics such as generating quality livelihoods in the era of automation and the ethics of artificial intelligence. 

Our trailblazing plenary sessions are the most talked-about parts of the Conference, and the conversations this year promise to be more thought-provoking and motivating than ever. We are thrilled to share a quick preview of our plenary lineup to date: Cecile Richards, President of Planned Parenthood Federation of America and Planned Parenthood Action Fund, will highlight her work leading a movement to build a healthier and safer world for women and teens. And Google.org President Jaquelline Fuller, Mercy Corps CEO Neal Keny-Guyer, and TripAdvisor CEO Stephen Kaufer will engage in a candid discussion about the business response to the refugee crisis.

From our unrivaled content to our integrated networking events, #BSR17 will be the place to be this October. And did we mention our new location? On the beach? You can’t beat fresh air, conference rooms with natural sunlight, and immersive experiences taking advantage of the incredible Huntington Beach. We hope you will join us and our global community to take business leadership to the next level. We can’t wait to see you this October!

Register for BSR17 by June 30 to receive the best rates. Check the BSR Conference website often for more exciting announcements, including additional plenary speakers.

Blog | Monday May 15, 2017

How to Increase Your Company’s Renewables Portfolio

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Renewable energy is now one of the primary ways companies are making progress to meet their business and climate goals and decrease their dependency on fossil fuels. The RE100 program, through which companies commit to source 100 percent of their energy use from renewable sources, now includes 87 companies.

Not all companies may be ready for a 100 percent renewables commitment, but many firms have begun incorporating renewable energy procurement into their business and sustainability strategies. Here’s how to assess your options for procuring renewable energy and how to collaborate to increase your portfolio more quickly.

Assessing Your Options

The first step in procuring more renewables is understanding the menu of procurement options that will meet your company’s renewable energy needs. 

There are several different ways to procure renewable energy, and most companies opt to combine a few methods:  

• Onsite installation: Through this approach, your company invests in and builds renewable energy infrastructure on corporate property. This requires both capital and available space for installation. Costs for energy are typically higher than other options.
• Power purchase agreements (PPAs): PPAs are contracts with energy producers that allow your company, the energy consumer, to access an agreed upon portion of the renewable project’s future energy production at a favorable price. While some of these can be developed on corporate property, many of these projects are built off site and require up-front capital or contracts for 12 years or more.
• Renewable energy certificates (RECs) or guarantees of origin (GOs): RECs, used in the United States, and GOs, used in Europe, give companies certificates that represent the environmental attributes of the generation of one unit of renewable energy (typically megawatt-hours). Companies can purchase these certificates and use them to offset electricity emissions when local options are not available. While these are cost-effective and widely available, they do not generate as many strategic benefits for companies as other options.
• Renewable energy (green) tariffs: This approach is a service that allows utilities to supply businesses with renewable energy from their local grid, typically at a fixed rate, which can meet the full energy demand. Renewable energy can be supplied by projects owned by the utility. Though renewable energy tariffs are still an emerging procurement option, the number of options available to companies has increased in recent years. Increased use of this procurement option allows companies to demonstrate a robust market to utility companies and increase the amount of renewable energy available on local grids.

Companies can use any combination of these options and should consider the capital expense involved in the complete portfolio. For example, Microsoft and Google used PPAs and on-site investments for much of their renewable energy procurement, primarily because these options are available in the markets where the companies operate and they meet the companies’ large energy demands. Similarly, Iron Mountain uses onsite solar and a 15-year wind PPA to cover the full energy demand of its data center and portions of its office buildings. Equinix, on the other hand, has a renewables portfolio that includes certified green power, PPAs, RECs, and onsite generation from solar and fuel cells. 

To select the appropriate renewable energy portfolio, companies should consider their internal renewable energy target, the availability of procurement options, and the costs involved. When it is not possible to meet the renewable energy demand through these options, companies can use RECs or other carbon offset programs to cover the desired amount of the remaining energy demand.  

Collaborating to Create Markets and Reduce Costs

Companies can move further, faster—and create more benefit for themselves—by collaborating with others. Below are four groups that can help companies collectively address barriers to progress and establish a larger corporate market for renewable energy. Each collaboration provides excellent resources and should not be viewed as mutually exclusive. 

• BSR’s Future of Internet Power: Our group brings together companies with a large cloud and online footprint to address challenges and collaborate on solutions that will increase renewable energy to power data centers.
• Business Renewables Center (BRC): Run by Rocky Mountain Institute (RMI), the BRC helps its 187 member companies navigate the procurement landscape through tools, primers, guides, and semi-annual conferences.
• Corporate Renewable Energy Buyers’ Principles: The 65 signatories to the principles aim to showcase the demand for corporate renewables to utilities and outline six criteria that can help them meet their aspirations. World Resources Institute (WRI) and the World Wildlife Fund (WWF) manage this commitment.
• Renewable Energy Buyers Alliance (REBA): Run by BSR in partnership with RMI, WRI, and WWF, REBA works with its 80 corporate members to increase corporate demand and utility supply for renewable energy by creating new opportunities and recruiting more participants to purchase renewables. Companies participate by joining BSR’s Future of Internet Power, the BRC, or Buyers’ Principles.

RE100 and/or taking other actions through We Mean Business initiatives, such as setting a science-based target and improving energy productivity through EP100, which complements RE100. Individually or paired, these commitments put companies on track with the global transformation to a low-carbon economy.

Renewable energy should be on the near-term agenda for all companies so the global community can work toward a low-carbon future. Leading companies understand that their efforts can be used to enhance long-term business viability, develop or execute a robust sustainability strategy, and increase business competitiveness. At BSR, we hope to see more companies take a leading role in advancing their business by supporting a thriving, low-carbon economy.

Editor's note: This blog has been updated due to a factual error. It previously stated that companies commit to "procure" 100 percent of their energy use from renewable sources through RE100. It now reads that companies commit to "source" 100 percent of their energy use from renewable sources. The number of members of RE100 has also increased from 87 to 95 since publication.

Blog | Thursday May 11, 2017

How Ethiopia’s Nascent Apparel Industry Can Build a Strong, Empowered Workforce

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“In today’s global economy, brands must understand the industry needs in the new countries they source from. At The Children’s Place, our aim is to support the development of the new garment workforce in Ethiopia and do our part to bring sustainable business practices to the region.” —The Children’s Place

Today, Ethiopia is a small player in the apparel industry—representing less than half of 1 percent of global clothing exports. But with export earnings growing from US$60 million to US$160 million in the past five years, and the Ethiopian government setting a target to reach US$1 billion by 2020, the industry has the opportunity to drive job creation and inclusive growth. And early interest from large international buyers such as The Children’s Place signals the potential to attract more companies to increase their sourcing footprint in Ethiopia.

But in order to achieve sustainability over the long term, Ethiopia’s nascent apparel industry must embed good business practice from the beginning.

During the scoping study for our new report, “Ethiopia’s Emerging Apparel Industry: Options for Better Business and Women’s Empowerment in a Frontier Market,” BSR’s HERproject team interviewed buyers, foreign investor suppliers, government, donors, and female workers—who represent nearly 90 percent of the Ethiopian apparel workforce—to identify factors that will support inclusive growth. We learned that while Ethiopia is considered a frontier market with favorable demographics, low production costs, and promising long-term growth prospects, the industry needs to address a number of challenges. While interventions are needed in several areas, within the factory walls, three key challenges emerged:

1. Recruitment: Although Ethiopia’s 90 million citizens potentially represent an abundant labor pool for the apparel industry, recruiting workers has been a significant challenge. Efforts have been made to build and maintain a labor pipeline by investing in worker sourcing, screening, grading, and hiring. Making apparel jobs an attractive opportunity—particularly for the young women who comprise the majority of Ethiopia’s apparel labor force—will be critical to developing a stable recruitment pipeline.
2. Productivity: Many of the women in the labor force come from rural areas and are entering formal employment for the first time. Few employees have worked in the industry previously and thus lack the technical skills required. Adjusting to the factories’ regimented work environment has also proven to be difficult for these workers, who reported difficulty starting shifts on time and are frequently absent. Addressing skills, providing additional support during the induction period, and creating incentives for improved performance will be important to increase productivity.
3. Retention: The industry currently faces 8 percent monthly turnover rate, which amounts to a completely new workforce on an annual basis. In our worker focus groups, workers told us they sometimes have low motivation and low job satisfaction. One factor workers mentioned is poor relationships with management, posts which are filled by foreign nationals in industrial parks we visited. Some women we spoke to are turning their hopes to jobs in construction or domestic work in the Middle East that offer better pay. The industry will need to consider how to create a more positive and supportive work environment to keep these female workers in the job.

Stakeholders we met are keenly aware of the challenges—and opportunities—for the industry. In April, we facilitated a roundtable dialogue with 35 participants across sectors, some of whom have already begun programs to invest in a skilled and empowered workforce. Enterprise Partners, with support from the U.K.’s DFID, is establishing a program to recruit workers and give them training on soft skills such as teamwork and communication. The ILO, H&M, and Sida are collaborating on a program to increase productivity, improve social dialogue, and promote good working conditions and wages. BSR’s HERproject is partnering with The Children’s Place to create a supportive work environment for female workers. Our program, which focuses on increasing worker ability and empowerment, also aims to strengthen management skills and systems.

These initiatives are encouraging, but more collaboration is needed among business, donors, NGOs, and government to learn from challenges in other sourcing countries and ensure that Ethiopia’s burgeoning apparel industry can thrive over the long term. If that happens, the industry will provide a pathway for dignified jobs for an empowered female workforce and it will support the country’s much-needed economic growth.

Blog | Tuesday May 9, 2017

New BSR Report: Scaling Clean Energy through Financial Industry Collaboration

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BSR’s new report, “Scaling Finance for Clean Energy: Collaborative Solutions for a New Economy,” outlines how the financial services industry can collaborate to scale clean energy finance.

In 2015, the Paris Agreement established a universal framework for climate regulation, through which national governments are setting ambitious targets to reduce greenhouse gas emissions (GHGs) and working toward a global goal of net-zero impact in the second half of this century. For the first time, there is a clear policy signal for investors across all asset classes to make low-carbon investments, whether through financing projects or investing in new technologies. Investors are already responding: To date, more than 180 investors controlling more than US$20 trillion in assets have pledged to align their investments with climate-compatible growth through the We Mean Business coalition.

Today, investors have the opportunity to seize the extraordinary market shift to renewable energy supply. The International Energy Agency (IEA) projects that global investment from national climate plans will reach US$3.9 trillion by 2030, including US$1.3 trillion in wind, US$1.1 trillion in solar, and US$0.9 trillion in hydro.

Our research revealed that by collaborating within and beyond their industry, the financial services industry—including asset owners, asset managers, and commercial and investment banks—can address at least three market barriers to mobilizing funding at scale:

• Collaborate to assess and manage risk: According to Bank of England Governor Mark Carney, climate risk in the oil and gas industry is likely to result in stranded assets for up to one third of the world’s reserves, and current industry standards do not sufficiently support bank clients in addressing climate-related risks.
• Increase climate expertise to guide investments: The Task Force on Climate-Related Financial Disclosures (TCFD), chaired by businessman, philanthropist, and former New York Mayor Michael Bloomberg finds that companies need to develop organizational skills and capabilities for understanding and integrating climate-related risks and opportunities into investment decision-making.
• Develop common metrics and methods to identify climate-related investments: Economists predict massive structural changes in the next 10 to 15 years, especially for industries such as power generation, the built environment, and transportation, and banks do not yet have adequate metrics and methods to translate long-term climate trends into short-term investment opportunities.

To help the financial services sector capitalize on the unprecedented opportunities presented by the low-carbon economy, BSR plans to convene financial services industry players and others later this year to explore ways to collaborate and scale clean energy finance. In particular, we plan to examine how to develop common frameworks on risk-mitigation requirements, how to enable stakeholder engagement at the industry level, and how financial institutions and companies can collaborate to fund compelling clean energy projects.

BSR is collaborating with banks, corporations, and others to scale clean energy finance solutions. To learn more, contact Emilie Prattico and Ran Tao.

Blog | Sunday May 7, 2017

How Myanmar is Building a Labor Dispute Resolution System

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As Myanmar works to find its niche in global supply chains, helping workers and employers resolve their differences through conciliation and arbitration will be an important component of effective industrial relations. With much of the country’s basic physical, legal, and governmental infrastructure still in the rebuilding phase, how can a robust and transparent conciliation and arbitration process help to protect and enforce the rights and obligations of workers and employers?

With support from the C&A Foundation, BSR’s new report, “Labor Disputes in Myanmar: From the Workplace to the Arbitration Council,” looks at how Myanmar’s dispute resolution process is working five years after its adoption. Our report also presents different perspectives on how it can be strengthened. 

As global business becomes increasingly connected with Myanmar suppliers and markets, support for a consistently effective dispute resolution process is an important way to reduce risk and uncertainty, while upholding the rights and obligations of both workers and employers. Understanding and bolstering the evolving labor dispute process are important means for companies to work toward these ends.

Below are the four steps Myanmar is following to build a labor dispute resolution process:

Step 1: Look for Examples

Myanmar’s dispute resolution process is grounded in its 2012 Settlement of Labor Disputes Law, with a national-level Arbitration Council modeled in part after the one set up in Cambodia in 2003. Cambodia’s Arbitration Council has broken ground in its efforts to create a fair and independent arbitration body that supports industrial dialogue in a context where rule of law remains challenging.

Step 2: Create Opportunities for Resolution

If disputes arise, the resolution process begins with employer and worker representatives discussing and negotiating issues in the workplace coordinating committee (WCC). If unsuccessful, the dispute goes to a township conciliation body (TCB), where a tripartite panel of government, employer, and worker representatives attempts to help conciliate an agreement. If that is unsuccessful, they go on to a state or regional arbitration body (AB) for a hearing by a tripartite body. If either side is unsatisfied, the case can be brought to the national arbitration council (AC).

Step 3: Build in Transparency

Decisions at the AB and AC level are published online, creating an opportunity for labor organizations and other stakeholders to understand how the process works and what outcomes will likely occur, which can inform their own research and training. Although more can be done to help improve accessibility and understanding, current transparency efforts are contributing to accountability. For example, unions can use the case information to notify international buyers about issues with their suppliers.

Step 4: Learn and Evolve

Since 2012, there have been additional revisions and consultations with labor organizations, and employers need to understand how the labor dispute law can be improved. Many challenges remain, including the need for clear legal boundaries and scope, consistent and professional decision-making, fair selection of arbiters, effective enforcement, and more transparency efforts. Our report details all of these challenges, along with recommendations from diverse stakeholders on how to help. Addressing these challenges will not only strengthen Myanmar’s labor dispute system but can help enhance the rule of law more generally.

To learn more about Myanmar’s approach to dispute resolution, read our new report.