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Case Studies | Thursday December 17, 2015

Sharing Sustainability Best Practices Through Executive Workshops

Preview

BSR’s executive workshops help companies share best practices, work together to solve problems, and build camaraderie across global sustainability teams.

The Challenge

Staff at global companies’ local offices are working on the front lines to produce and deliver products and services, manage employees, and interact with external stakeholders. The intensity and diversity of their work can be overwhelming. Given the demands of their daily jobs, there is not often time to reflect on, share, and learn from other offices that are implementing the same corporate standards.

To help global companies’ sustainability teams—including community and government relations, health and safety, environment, and security—share knowledge, identify and implement best practices, and solve common challenges, BSR developed an executive workshop focused on improving the impact of sustainability practitioners.

Our Strategy

BSR has facilitated biannual global executive sustainability workshops for a variety of companies, and we work with each team to prepare the workshop agenda, pre-reading and workshop materials, and exercises.

With one mining company, BSR facilitated a two-and-a-half-day workshop with more than 50 global participants, including corporate and local office managers, the executive team, and the board of directors. The workshop included presentations by 24 speakers from eight countries. During the workshop, participants prepared tools such as a set of best practices for stakeholder engagement, a “clinic” to solve problems related to the design and implementation of culturally appropriate grievance mechanisms, a shared vision describing what it means to close a mine in a responsible manner, and key performance indicators to measure the impact of the company’s various community investments.

After the workshop, BSR wrote a summary report that captured next steps for all participants, as well as recommendations for future workshops and ongoing internal collaboration.

Our Impact

While global sustainability workshops require a significant investment of time and money, they provide many returns. As a result of the workshops BSR has led, the companies were able to enhance their awareness of global sustainability practices, challenges, and opportunities; identify key performance indicators and additional tools to support local implementation of corporate standards; increase dialogue between in-country managers and the executive team and board; and contribute to a more collaborative corporate culture.

These workshops have the potential to benefit workers and communities as well, as companies are able to engage more deeply across the organization on sustainability issues and work to improve their global sustainability practices and decision-making.

Lessons Learned

• Global workshops give participants opportunities to learn best practices, build and expand relationships and networks of experts within the company, align on priorities, and work together to solve problems.
• We have found that when the workshops are more participatory—with more people and offices presenting information—they can boost the feeling of inclusion and collaboration. However, this shouldn’t come at the expense of a clear, streamlined workshop.
• Other aspects of inclusion to consider include language and translation needs, as well as the development of culturally appropriate content, which can be enhanced, for instance, if employees from indigenous groups review the materials in advance.
• Content is extremely important, but there is also value in devoting time for team-building and the development of new relationships that will support the ongoing sharing of information. 

Case Studies | Tuesday December 15, 2015

A Tool for Companies to Make Strategic, Inclusive Community Investments

Preview

BSR developed a tool to help leading companies shift from ad hoc philanthropic donations to strategic investments that make sense for both the business and the community.

The Challenge

To increase positive impacts on society, many companies are focusing on improving access to products and services, creating high-quality employment opportunities, providing skills development and training, and investing in communities located near their offices or operations. Leading companies also see the value of working with other stakeholders to improve community well-being. Related to this trend, some companies recognize the need to shift from ad hoc philanthropic donations to strategic, community-identified investments. These projects focus on building skills and capacity, creating positive long-term impacts, and avoiding programs that make the community dependent on the company for progress.

However, companies face a number of challenges in making this shift. They must stop investing in previous philanthropic projects, and often, there is a greater demand for projects than there are funds available. Typically, companies have few staff members with experience in community investment and development, making it difficult to conduct meaningful dialogue with diverse stakeholders to identify the most sustainable and impactful projects. And it can be particularly difficult to build relationships with vulnerable groups who have not directly benefited from jobs created by the company’s presence. Additionally, it is challenging to consistently implement corporate community investment policies and standards at the local level, given the diversity from one local context to another, as well as limited access to baseline data and outcomes from previous investments.

BSR developed a new tool to address these challenges and help companies make strategic investments that benefit community members and support business goals.

Our Strategy

In 2010, BSR developed a customizable tool for companies to develop community-driven approaches to investments. This tool is one step companies can take to ensure that they meet strategic business goals as well as community priorities.

To begin, companies should conduct socioeconomic baseline and impact assessments to understand the current priorities, assets, needs, and positive and negative impacts from the companies’ presence. Companies can also map stakeholders and develop a corporate community investment strategy (BSR has tools for these two steps as well).

Using the impact assessments and stakeholder engagement efforts as inputs, the community investment tool helps companies develop a participatory approach to identify community investment projects that are aligned with the companies’ and communities’ priorities. A complementary tool helps identify and assess potential project partners. These tools enable analysis, including communities’ input, which provides key information for local community development plans. (For one example of how this tool works, please read a case study on our work with Freeport-McMoRan to develop a multi-year community/social investment plan and stakeholder-engagement process.)

Our Impact

We have customized this tool for a number of companies, and our work has reached more than more than 20,000 individuals within at least 50 communities.

For communities, these projects have helped improve access to necessary services like health, education, and water; they have given community members a chance to receive technical and entrepreneurial skills training, which has enhanced their ability to earn a higher wage; and they have supported environmental conservation, as well as community-based organizations and indigenous cultures.

These projects have also helped companies by giving them new, community-driven development strategies and tools, and by helping them build relationships with external stakeholders; improve their understanding of communities’ assets, needs, and priorities; and identify strategic, sustainable projects.

Lessons Learned

Developing this tool has helped us improve our understanding of how companies can make effective community investments. Here are some important rules for companies to keep in mind:

• Listen closely to understand employees’ and communities’ assets, needs, priorities, and visions for the future, and recognize your role as only one actor in work involving many.
• Develop comprehensive strategies to ensure that resources are used effectively to achieve desired impacts.
• Before making investments in communities, focus on addressing the impacts created by your company operations. Ongoing dialogue with communities about your company’s impacts is essential, regardless of whether or not you are partnering on community investment projects.
• Work with corporate managers to align with your company's global community-investment approach, and work directly with local and regional managers responsible for selecting projects to ensure your company’s approach reflects their daily reality and challenges. This will help ensure that the tools are actually used.
• Understand the cumulative impact of your industry’s presence, particularly if the industry is highly concentrated in specific geographic areas, such as extractives operations near mine deposits, technology companies in communities surrounding the Silicon Valley, agriculture companies in fertile valleys, or factories in trade zones. Collaborate with other industry actors to maximize the effectiveness of your investments and avoid duplicating efforts.

Case Studies | Wednesday December 9, 2015

Telenor: Responsible Decision-Making in Myanmar

Preview

BSR helped the telecommunications company Telenor understand the sustainability risks and opportunities before entering a new market in Myanmar. By integrating sustainability into its strategy from the beginning, Telenor will grow Myanmar’s mobile market from 6 percent of the population to 90 percent of the population—in a responsible way.

The Challenge

In 2012, it was estimated that less than 6 percent of Myanmar’s population owned a mobile phone, and less than 1 percent had broadband internet access.

To address this challenge and accelerate the country’s political and economic reform, the government of Myanmar announced a significant liberalization of its telecommunications market, through which it created two new operating licenses for international telecommunications companies.

With successful business units in Bangladesh, India, Malaysia, Pakistan, and Thailand, Norway-based telecommunications company Telenor was well-positioned to win one of the licenses. However, given that Myanmar had only recently opened up for international business, Telenor wanted to become fully aware of the sustainability risks and opportunities of pursuing this opportunity. The company also wanted to ensure that it could make informed decisions about how to operate in Myanmar if its bid was successful.

In order to understand the potential sustainability risks and opportunities of operating in Myanmar, Telenor commissioned BSR to undertake pre-investment due diligence, covering human rights, labor rights, corruption, and environmental sustainability.

Our Strategy

We began our due diligence in late 2012, using an approach based on our human rights impact assessment (HRIA) framework, with additional considerations, including bribery, anticorruption, and environmental issues, as well as opportunities to support social and economic development.

A key part of our approach was interviewing a diverse cross-section of stakeholders, including international, regional, and local leaders in civil society, government, business, and relevant industry associations. We also spoke directly with rights-holders in Myanmar to gather their insights on the important political, regulatory, and social context, such as privacy, land rights, and labor conditions.

We then mapped the key risks and opportunities, identified potential mitigation measures, and provided recommendations. These recommendations were refined during a series of workshops with Telenor, which drew upon the company’s extensive experience working in other emerging markets.

Throughout, it was important that our analysis was based upon the UN Guiding Principles on Business and Human Rights, and upon an understanding of what leverage would be available for Telenor. For example, our recommendations included the importance of collaborating with other local, regional, and international organizations to build capacity in areas such as labor rights, health and safety, and privacy.

Our Impact

Telenor submitted—and won—a license to operate in Myanmar. The company launched its service in 2014 and intends to provide coverage for 90 percent of the Myanmar population within five years.

Telenor launched its service in the Myanmar market with sustainability integrated into its approach from the beginning—using the focus areas and key recommendations made during BSR’s due diligence process. These focus areas include anticorruption, responsible supply chain management, safety and security, environment, and human rights—particularly related to privacy and freedom of expression, land rights, children’s rights, and conflict areas. In addition, the company is delivering significantly increased and more affordable connectivity to the Myanmar population, which has the potential for significant social and economic impact.

Lessons Learned

Telenor’s systematic management of sustainability risks and opportunities in Myanmar reinforces the importance of due diligence and the informed identification of sustainability risks and opportunities before business decisions are made.

The due diligence process also underscored the importance of engaging with a diverse range of stakeholders. We learned, for instance, that some stakeholders were more focused on the risks arising from investment, while others were more focused on the opportunities. All types of stakeholder perspectives are legitimate and should be sought, and the result is smarter and more informed decision-making.

Finally, it is important that due diligence includes a consideration of opportunities, as well as risks. In this case, the telecom industry has the power to transform society by providing increased access to information and services such as healthcare, finance, and education.

Case Studies | Thursday December 3, 2015

Working with Tech Leaders to Power the Internet with 100 Percent Renewable Energy

Preview

The technology industry’s use of data centers represents two percent of all U.S. electricity use—a percentage that is likely to grow with our reliance on internet communications. The Future of Internet Power was founded in 2012 with a vision to power the internet by 100 percent renewable energy. 

The Challenge

While the thriving technology sector provides countless business and societal benefits, the industry is concerned about reducing the climate impacts of its energy-intensive data centers. In 2010, data centers represented 2 percent of all U.S. electricity use, and that percentage is likely to grow with our increasing reliance on mobile and internet communications.

Today, internet companies and data center operators are addressing their impacts by considering the source of electricity that powers data centers, which is often a mix of renewables, natural gas, and coal. But to scale up the use of sustainable, low-carbon electricity, it’s important for companies to collaborate across the industry and work with local utilities and policymakers to develop the infrastructure and promote the regulations and policies that will support the procurement of renewables for internet power.

Our Strategy

In 2012, BSR launched the Future of Internet Power, a collaborative group comprising the world’s most influential internet companies—now including Adobe, Akamai, Autodesk, eBay, Etsy, Facebook, HP, LinkedIn, Salesforce, and Symantec—that aims to power the internet with 100 percent renewable energy.

For internet companies, making these commitments reality involves overcoming a number of potential hurdles: navigating regional environmental policies and incentives, paying cost premiums for renewable versus coal power, and addressing challenging infrastructure requirements for offsite power generation. These and other factors make the sourcing of low-carbon power difficult for individual companies to manage alone. Through the Future of Internet Power, companies can collaborate with peers, suppliers, and power developers to create smarter business practices and opportunities for shared investments.

Our Impact

The Future of Internet Power has played a foundational role in helping the technology sector make aggressive and achievable commitments to renewable energy. As of November 2015, four Future of Internet Power members had committed to 100 percent renewable energy: Adobe, Autodesk, Facebook, and Salesforce.

One example of BSR’s efforts to support the sustainable deployment of renewable energy is demonstrated in our work with HP, a cofounder of the Future of Internet Power. HP had ambitious plans to power its internal IT operations globally with renewable energy and wanted to do so with a power infrastructure that was developed with sustainability in mind. BSR developed a plan to help HP evaluate proposals from power developers and ensure that the company’s new 112-megawatt wind energy project was constructed, implemented, and maintained in a sustainable way. This switch to renewables, which reduces HP’s carbon-dioxide-equivalent emissions by 340,000 tons, is akin to taking 65,000 passenger vehicles off the road.

In 2016, the Future of Internet Power’s focus will be on creating new tools for companies choosing renewables when making data-center siting decisions, encouraging industrial data center service providers (also known as “co-los”) to procure renewables, and creating new models for shared investment in renewables among internet companies and their suppliers.

Lessons Learned

In addition to sharing best practices and collaborating on solutions through the Future of Internet Power, BSR’s one-on-one work with companies like HP creates a model that we can customize for other companies to sustainably develop and manage renewable-energy infrastructure projects.

Building on the collaborative approach of the Future of Internet Power, we have been able to expand the group’s mission by joining the Corporate Renewables Partnership, a collaboration with WRI and WWF Buyers' Principles initiative, and the RMI's Business Renewables Center. These partnerships allow us to scale our impact even more, while making it easier and more efficient for businesses to leverage their influence.

Case Studies | Sunday November 15, 2015

HERfinance: Increasing Financial Inclusion Among Women Workers in Global Supply Chains

Preview

Between 2012 and 2014, BSR piloted the HERfinance program with 10,000 garment factory workers in India. As a result, 38 percent more workers began using a formal bank account for savings, and 91 percent of workers increased their rates of savings. 

The Challenge

The garment industry is a critical source of formal employment for millions of the world’s poor, and particularly for women who comprise the majority of this sector’s workforce. For these women, garment factory work provides an opportunity to earn a salaried wage and contribute to their household’s financial well-being.

However, many low-income, wage-earning women lack financial literacy and access to formal financial services. As a result, they often rely on informal mechanisms such as saving cash at home, investing in riskier assets like jewelry or livestock, or relying on informal group-savings mechanisms. Women are also far less likely than men to make decisions about how their wages should be allocated. According to a BSR survey of 500 garment workers in Bangalore and Delhi, India, only 48 percent of female garment workers decide what to do with their monthly wages, compared to 90 percent of their male peers.

Given that women tend to invest 90 percent of their earnings back into the health, nutrition, and education of their families, increasing women’s financial capabilities can lead to long-term prosperity for households, families, and communities. BSR’s HERfinance program is working to increase the financial awareness and access to financial services among this population of women.

Our Strategy

In 2012, BSR expanded our successful HERproject initiative—which primarily focused on helping women in global supply chains access health information and services—to address the need for greater financial literacy and improved access to formal financial products and services among the same population of women. With a grant from The Walt Disney Company, BSR partnered with leading companies such as ANN INC., Levi Strauss & Co., Nordstrom, Primark, and Timberland to pilot the HERfinance program with some of their suppliers in India.

From 2012 to 2014, we piloted HERfinance at 11 garment factories, reaching more than 10,000 low-income workers, the majority of whom were women. Working with local NGOs, BSR helped teach workers about the benefits of using formal financial products and services, and we helped them improve their financial habits generally—teaching women how to use an ATM, encouraging them to set financial goals and discuss financial matters with their families, helping them increase their savings through budgeting and planning, and more.

Our Impact

The results of the HERfinance pilot revealed significant improvements in workers’ financial knowledge, confidence, and behaviors, and also improvements in the workplace environment.

Based on BSR surveys of 500 workers who had completed the HERfinance program, we found that there was a 39 percent decrease in women saying they couldn’t use an ATM, and a 23 percent increase in women saying they, not someone else, made decisions about what to do with their salaries. Of the men and women surveyed, 38 percent were more likely to save their salaries in a formal bank account, and 91 percent said their rates of saving increased through better financial planning and budgeting.

Among both men and women, there was a threefold increase in workers who said they felt they could meet their families’ needs with their existing salaries. This may have contributed to their job satisfaction, as 97 percent of workers said their perception of their employer improved because of the HERfinance program at their factory.

After the pilot, BSR received a significant grant from the Bill & Melinda Gates Foundation to scale our work across South Asia and to introduce workers to the formal financial system by switching their employers’ payroll from a cash-based to an electronic system. We plan to hold a series of global roundtables to encourage more companies to partner with us, with a goal to empower 300,000 low-income workers over the next few years.

Lessons Learned

The HERfinance success indicates that the workplace is an efficient intervention point for programs that improve the lives of low-income workers. Not only can financial-education programs be delivered to large numbers of women workers cost effectively, the workplace can become a location to introduce women workers to critical products and services.

Commitments to worker well-being from large global buyers are critical to scaling programs such as HERfinance, since these companies hold the business relationships with employers of large numbers of low-income women. These global buyers also can encourage their suppliers to better understand workers’ needs, and to make investments that improve both worker livelihoods and the factory business. 

Case Studies | Wednesday July 29, 2015

Freeport-McMoRan: Localizing Global Social Investment Strategies

Preview

BSR helped Freeport-McMoRan develop a new approach to engaging local communities, shifting from an emphasis on philanthropy to a participatory approach to investments that satisfies both the company’s and the community's needs.

The Challenge

For mining companies, job creation and access to income provide important contributions to economic development, but stakeholders also expect companies to contribute to equitable and sustainable social, economic, environmental, and cultural development.

Freeport-McMoRan Inc.—a U.S.-based company with mining operations in Africa, Indonesia, North America, and South America, and oil and natural gas assets in the United States—has a global approach to social investment and community engagement, including principles ensuring that community projects meet both company and stakeholder priorities.

Nonetheless, implementation of these principles at the local level can be challenging given the limited number of local staff and a lack of alignment on community and company visions for investments. Freeport enlisted BSR to work with its corporate and site teams to customize its global stakeholder engagement and social investment approach for company operations in Chile.

Our Strategy

First, BSR worked with Freeport Chile’s community relations team to understand stakeholders’ expectations and perceptions around mining, and to identify their vision for the future. After interviewing and conducting focus groups with dozens of stakeholders, we prioritized potential projects based on their importance to external stakeholders and alignment with Freeport’s approach.

Next, we helped the company respond to community needs by training Freeport’s site-based community-relations staff. This was closely followed by workshops with a cross-functional sustainable development leadership team to build appropriate localized engagement and investment strategies that considered not only community priorities, but also local social and political dynamics.

Through this work, we identified a number of activities for implementation, such as ensuring local staff have ongoing support in creating social investment projects, selecting partners, monitoring community dialogue, tracking stakeholder dialogue and commitments, monitoring and evaluating impact, and guiding activities that help stakeholders participate in the development of their communities.

Our Impact

As a result of this work, Freeport has shifted from a philanthropic to a participatory approach that satisfies both the company’s and the communities’ needs, and ensures a stakeholder voice in investments and operational impacts and opportunities that shape their future.

This has resulted in more dialogue with external stakeholders, including indigenous communities. The company also has hosted community meetings to develop social investment projects that Freeport will support. Further, Freeport established a Chile-based foundation that focuses on long-term investments and follows a process to select projects generated by the communities that support sustainable development.

While the programs are new, and progress is hard to assess at this early stage, the desired outcomes include building greater trust between Freeport and the communities, improving the well-being and quality of life for community members, and promoting partnerships among the different stakeholders within the territory. The project also seeks to empower community members to manage their needs and use their assets and strengths, as well as to enhance Freeport’s understanding of and acceptance by the local communities.

Lessons Learned

Some of the lessons from this four-year, ongoing project include:

• Building relationships and shifting approaches to be more inclusive takes time, and these are fundamental steps in implementing the strategies BSR created with Freeport.
• Internal, senior-level, and cross-functional support is critical in elevating the importance of this work, securing resources, and ensuring internal alignment.
• While engagement with community or indigenous leaders is very important, it’s also critical to engage a broad representation of community members to ensure all perspectives and voices are heard.
• Capacity-building and education related to projects that contribute to sustainability are also important components of a successful approach.

Case Studies | Thursday July 9, 2015

Bayer: Collaborating with Key Partners to Improve Supplier Engagement

Preview

The Challenge

The Center for Sustainable Procurement developed the following case study to support our mission of promoting leading practices in sustainable procurement.

Bayer, with core competencies in areas of health care, agriculture, and high-tech polymer materials, has a significant influence on society and the environment in many regions around the world through its global procurement volume.

In 2014, the company procured goods and services from 112,000 suppliers in 147 countries for approximately €20.3 billion. Procurement volume in Germany, the United States, and Japan accounted for nearly 66 percent of the expenditures in OECD countries and about 52 percent of the Bayer’s total procurement spend. Brazil, India, and China together accounted for about 70 percent of the expenditures in non-OECD countries and about 14 percent of the total spend.

With its vast procurement volume and many different suppliers around the world, Bayer had to ensure that global goods and services are manufactured and delivered in accordance with the company’s ethical, environmental, and social standards. To achieve this objective, Bayer needed to streamline its processes and tools to assess whether its suppliers were meeting the company’s social and environmental standards and expectations. Bayer also needed to enhance understanding by both procurement staffs and suppliers of these processes and tools, and to implement the resulting procedural changes throughout the company.

Our Strategy

Bayer views adherence to sustainability standards within its supply chain as an important strategic lever to safeguard global competitiveness and the supply of materials and services. Bayer’s Supplier Code of Conduct builds the basis of its supplier engagement, which describes the company’s sustainability principles and requirements in transactions with suppliers.

The Bayer Sustainability Program was established in 2009, and Bayer started to systematically assess the supply chain in order to identify potential high-risk suppliers. These assessments resulted in a crucial base for the Group’s category and sourcing strategies. To further streamline the process, Bayer in 2012 established a partnership with EcoVadis, a leading supplier of collaboration platforms with which companies can assess the sustainability performance of their suppliers. By using EcoVadis’ web-supported modular questionnaire platform, the supplier sustainability data could reach Bayer’s procurement teams more reliably and efficiently, supporting them to make better sourcing decisions.

Bayer concurrently rolled out sustainability training programs for its procurement employees and its suppliers. Key business units organized training courses and workshops for selected procurement employees on sustainability audits. Bayer HealthCare also conducted sustainability roadshows that focused on specific procurement categories for local procurement organizations across the company. In 2014, the Bayer Group invited its strategic key suppliers to the company-wide Bayer Supplier Day in Leverkusen, Germany, to foster open dialogue and take partnerships to the next level.

To minimize risks and create long-term business relationships with its partners, Bayer also engaged in several new collaborative efforts. In 2011, Bayer co-founded Together for Sustainability (TfS) to lead in the development and introduction of new sustainability standards for suppliers. Also in 2011, Bayer joined the Pharmaceutical Supply Chain Initiative (PSCI).

Our Impact

By partnering with EcoVadis and improving employee and supplier engagement on sustainability, Bayer has evolved its sustainable procurement program from a pilot initiative to what is now an integral aspect of the company’s overall sourcing program. Collaborating with EcoVadis specifically helped Bayer HealthCare improve its data collection and assessment of suppliers’ sustainability performance, nearly doubling its supplier questionnaire response rate to 81 percent in 2014 from 45 percent in 2013. Bayer also continued to expand sustainability trainings on its new supplier assessment process involving EcoVadis. Since the initial rollout in 2012, Bayer has trained more than 800 buyers across the Bayer organization.

Engagement with key suppliers on sustainability also has improved, thanks to the success of Bayer’s Supplier Day in 2014, which was attended by more than 300 participants, including representatives from 90 strategic key suppliers. During this event, Bayer awarded its high-performing suppliers for the successful partnership in areas such as sustainability and contractor safety, and subsequently inspired the creation of numerous other local Supplier Days at Bayer subgroups and country units around the world, including places such as Turkey, China, and India.

By engaging in collaborative initiatives such as PSCI and TfS Bayer addresses the diverse sustainability challenges of a complex global supply chain. In addition, Bayer assumes leadership by helping to create principles and standards that would benefit the entire industry. The PSCI’s Pharmaceutical Industry Principles for Responsible Supply Chain Management is one example. Within the TfS initiative, a total of 2,605 suppliers were assessed (using EcoVadis) and 93 audits were conducted in 2014 throughout China, India, and Brazil. In 2014, Bayer was not prompted to end a supplier relationship due solely to sustainability performance.

Lessons Learned

One of the lessons, which Bayer learned from this endeavor, was the importance of obtaining management ownership and internal support early on in the process. Advice for making it happen: Plan ahead and communicate both the broader business case for sustainable procurement and supplier management, as well as the specific objectives and key benefits of a more comprehensive sustainable procurement program.

Also, it became quite clear that sustainable procurement does not only help mitigate risk, but that it also opens the door to new opportunities that may not have otherwise been explored. For instance, conducting supplier days around the world with strategic suppliers has led to new discussions about how Bayer and its suppliers can work together to use sustainability as a leverage point to increase business value.

Looking forward, Bayer has set several targets to drive and measure the impacts of the company’s sustainable procurement and supplier management efforts. By 2017, Bayer plans to evaluate all of its strategic suppliers with respect to sustainability-relevant aspects. By 2020, Bayer aims to evaluate all suppliers with significant Bayer spend that are regarded as potential high-risk suppliers. So far, Bayer has evaluated the sustainability performance of 66 percent of the company’s strategic suppliers and 61 percent of potential high-risk suppliers with significant spend.

Case Studies | Monday March 9, 2015

Anheuser-Busch InBev: Empowering Procurement Professionals toward Sustainable Procurement

Preview

The Challenge

With a vast spread of teams and projects conducted around the world, AB InBev saw the opportunity to understand how category procurement teams could enhance their everyday purchasing decisions by aligning more closely with the company's broader social responsibility environmental objectives, known as "Better World."

AB InBev partnered with BSR's Center for Sustainable Procurement (CSP) to explore how to improve the way sustainability is integrated into procurement activities. The term "sustainability" has a broad meaning and can often be misunderstood. Therefore, AB InBev decided to enhance awareness around how its procurement teams can contribute to the company's Better World actions by providing direct value—in particular, by lowering environmental and social risks across the value chain.

The Strategy

In 2013, led by AB InBev’s Responsible Sourcing function, the company began creating awareness training to improve the level of understanding of sustainability among procurement professionals around the world. The training sought to link the procurement team’s daily activities and responsibilities with:

• Efforts conducted by AB InBev’s Better World department, which manages the company’s social responsibility programs
• AB InBev’s external-facing Better World goals and how they are relevant to specific procurement categories
• The relevance of AB InBev’s social and environmental compliance efforts across key procurement categories

During the training, procurement teams learned about key sustainability issues, as well as local laws and regulations relevant to their areas of responsibility. Procurement teams were also taken through facilitated dialogues and brainstorming exercises to think through how they could apply a sustainability lens on different procurement categories and still have an impact on traditional business drivers (e.g., cost, efficiency, compliance).

A key goal of the training was not only to inform procurement teams about relevant issues and regulations, but also to spur ideas on potential alternatives to bringing business value through the procurement function and, ultimately, complement the financial business case.

The Impact

During 2014, more than 150 procurement professionals were successfully trained worldwide, creating greater awareness of the value of sustainability to procurement. The training also helped improve cross-functional relationships and communication between the sustainability teams and procurement teams, which, for example, has led to a project that studied the potential impacts and value of more sustainable packaging. In addition, AB InBev’s global environmental goal owners for barley water management, packaging reductions, eco-fridges, and logistics conducted focused awareness and training activities to support goal achievement.

Procurement teams are now using the concepts and ideas learned in the training to regularly challenge procurement categories, recommend new opportunities and procurement alternatives that simultaneously deliver business value, and contribute to the company’s Better World goals.

Lessons Learned

While it may be too soon to understand the full impacts of the training and the increased awareness of sustainability among procurement teams, the guidance, resources, and partnership with the CSP has opened new discussions internally about the value of sustainability, which will serve the company well in the months and years to come.

Ultimately, AB InBev aims to change category strategies by incorporating sustainability criteria more explicitly into procurement processes. Doing so will link internal policies and practices to the potential actions of suppliers, and will empower category managers with more evidence and avenues to enhance their procurement decisions. This will be especially meaningful to millennial procurement professionals, who have shown an increasing awareness for corporate social responsibility issues and transparency. 

AB InBev will also continue to explore ways to improve its sustainable procurement practices by joining CSP’s Procurement Leadership Group, a collaborative initiative that will enable companies to share common challenges and successes, as well as develop and advance industry standards and best practices.

Case Studies | Monday February 9, 2015

Cathay Pacific: Enabling Procurement Teams to Choose More Sustainable Plastics

Preview

The Challenge

Cathay Pacific’s 20/20 sustainability commitments include reducing waste by 25 percent and sourcing all Cathay Pacific-branded products from more sustainable materials. Both of these goals link closely to the disposable plastic used for in-flight services, and present a challenge for Cathay Pacific’s environment and procurement teams. The second target in particular raised key questions around what constitutes a “more sustainable” material; the question is particularly difficult to answer for plastics. The environmental footprint of plastics is spread across the production, transport, use, and disposal phases, and across multiple impact dimensions such as carbon, water, energy, and volume of waste generated. This complexity makes it difficult for procurement teams to readily identify and select which material is most sustainable.

Cathay Pacific partnered with the Center for Sustainable Procurement (CSP) to define what “more sustainable” means in the context of single-use plastic items, and to create tools and procedures that can steer procurement decisions toward plastics with lower environmental impact.

The Strategy

First, CSP representatives met with four key Cathay Pacific teams: Procurement, Product Design, Inflight Services, and Environmental Affairs. These teams cooperate closely to formulate Requests for Proposals (RFPs) for potential suppliers and score the responses. Together, Cathay Pacific and CSP identified a specific case to tackle: salad bowl covers of economy class meal trays.

CSP worked with Cathay Pacific to modify the supplier RFP to include the following:

• More explicit inclusion of sustainability language throughout the RFP document, clearly stating Cathay Pacific’s environmental targets and expectations.
• Requests for quantitative data on plastics production, such as polymer type, weight, recycled content, energy and water used, and carbon emitted during production.
• Calls for qualitative data on supplier initiatives and suggestions for how to reduce the environmental footprint of transport and packaging.

CSP then developed a tool for procurement teams to compare the relative sustainability merits of different plastic types proposed by suppliers based on the information those suppliers provided. While not performing a full Life Cycle Analysis–which would be ideal, but requires extremely costly and technical software–the CSP tool introduces elements of lifecycle thinking that enable a more analytical and consistent scoring of supplier proposals. The tool produces a user-friendly, numerical, and graphical output that aggregates data from the following three inputs.

• Weight of the item as a proxy for the amount of waste generated. Reducing the volume of waste has a direct environmental impact, and aligns with Cathay Pacific’s goal of 25 percent waste reduction. Moreover, it is likely to have a progressively significant cost implication, as the Hong Kong government is scheduled to introduce a waste-charging scheme soon.
• Energy and water used, and CO2 emitted as proxies for the upstream impacts of plastics production. CSP included a preference for recycled content as a factor that reduces the impact of production.
• Recyclability and “compostability” to represent the “option value” of choosing materials that have the potential to be taken out of landfill waste streams in the future, if and when operational constraints change.

The plastics comparison tool can be used to rank the relative sustainability merits of materials proposed by suppliers, thus enabling a more informed supplier selection by Cathay Pacific’s Procurement Department.

The Impact

Procurement teams are using the strengthened RFP language and data requests to spark engagement with suppliers about Cathay Pacific’s expectations. In response, more than 60 percent of invited suppliers disclosed environmental footprint data as requested, and about 30 percent provided complete data sets, as well as commentary on how to further improve the sustainability characteristics of Cathay Pacific’s in-flight products.

The plastics comparison tool is being used in the assessment of different plastics materials options, and allowing Cathay Pacific to evaluate environmental impacts against more traditional procurement criteria of cost and quality. Subsequently, procurement teams have gone one step further, taking the initiative to request environmental footprint data on all plastic items in the RFP, not only the single-use ones. This demonstrates how the CSP’s frameworks, templates, and tools for the integration of sustainability criteria into purchasing can be extended effectively to other items in a company’s supply chain.

In addition, the CSP project enabled Cathay Pacific’s Environmental Affairs Department to gain a better understanding of the needs and constraints faced by various teams involved in procurement decisions. It also helped Cathay Pacific leaders get a better sense of how the company can incorporate these considerations into sustainability efforts overall. 

Through its analytical and practical approach, CSP also supported Cathay Pacific’s Environmental Affairs Department to demonstrate to procurement professionals the value of integrating sustainability criteria into purchasing processes. For example, by monetizing the plastic items’ landfill waste footprint with the HK$500/per ton charge proposed by the Hong Kong government in 2016, CSP showed how procurement decisions that result in lower waste production can also lead to reductions in waste charges.

Finally, the CSP project at Cathay Pacific provided the company with an entry point for measuring and tracking performance against its sustainability goals on waste and “more sustainable” materials.

Lessons Learned

While plastics have complex environmental footprints that cannot be compared easily, requesting data from suppliers yielded valuable information and sparked a dialogue about ways for Cathay Pacific to reduce its environmental impact.

In general, suppliers were willing to cooperate with data requests and interested to engage about the sustainability implications of the material selection. A large share of suppliers already are proficient in measuring and disclosing environmental footprint data, with some even offering the customers technical advice on the sustainability merits of different polymers.

Life Cycle Analysis software may not be practical for procurement teams with capacity constraints, but these teams still can integrate life-cycle thinking approaches progressively into their policies, tools, and scorecards. The CSP’s plastic comparison tool is an example of how this can be done.

Case Studies | Tuesday November 4, 2014

Microsoft: Embedding Human Rights Across a Global Technology Company

Preview

The Challenge

For Microsoft, implementing the UN Guiding Principles on Business and Human Rights posed three main challenges:

First, the technology sector can affect a number of human rights positively or negatively, from privacy and data security considerations in cloud computing, to how human rights might be portrayed in video games.

Second, while company leaders believe the information and communications technology industry plays an important role in advancing free expression and human rights, the public narrative often is focused much more on the risks to freedom of expression and privacy than on the industry’s positive contributions.

And third, there was a need to clarify which human rights issues are most salient for Microsoft.

To address these challenges, the company asked for BSR’s support in creating one cohesive, global strategy for Microsoft’s human rights management—a partnership that began three years ago and continues today.

Our Strategy

First, we reviewed Microsoft’s operations and identified potential risks and opportunities based on the full universe of human rights so that we could identify the most significant risks, impacts, and opportunities for the company.

With this short list of relevant issues, we interviewed key experts and more than 40 employees working directly with Microsoft’s business groups to understand how Microsoft considers human rights in its product development and operations.

After analyzing these interviews, we developed a new global human rights framework that outlines Microsoft’s commitments. The framework is focused on proactive due diligence to avoid risks, maximizing the benefits of technology and responsible engagement, and clearly articulates the company’s point of view on human rights.

Through this process, we also identified areas that needed further review. To address these areas, we have begun the next step of human rights impact assessments on specific aspects of Microsoft’s business.

Our Impact

Based on our in-depth assessment, Microsoft has been able to embed human rights considerations throughout the company. Major business decisions, such as entry into a new market or selection of a new joint-venture partner, include human rights due diligence and are guided by the company’s global human rights statement.

This has helped employees across business groups develop a common understanding of Microsoft’s approach to human rights. The new Microsoft Technology and Human Rights Center provides a platform to further advance research and debate on human rights and technology. The center has hosted several events, including roundtables on privacy, data security, and freedom of expression and government surveillance at the World Economic Forum in 2013 and 2014. The center also has commissioned research to advance the field.

Lessons learned

The early success of this project reinforced our belief that meaningful consultation of internal stakeholders generates buy-in and helps employees across companies understand their role in protecting human rights when making critical decisions.

We also learned that approaches to human rights assessment are most successful when tailored to the company’s culture. For instance, at Microsoft, an assessment with broad-based internal engagement fit with the company’s culture of collaboration across disciplines.

Finally, we were reminded of the importance of executive leadership, which is instrumental in the success of this long-term work.