Blog | Wednesday September 14, 2022

“And” May Be the Most Important Word

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Editor's Note: We are living through a time of profound and accelerating change. Our world has been rocked by a series of disruptions: COVID-19, war and social conflict, rollback of rights and democracy, and now high inflation and the risk of recession. These developments have jolted society and business.

To help our 300+ member companies navigate this volatile environment, we're releasing a series of blogs to build insight into how to shape business approaches that address this unique moment. Following last month’s piece on the role of business in combating societal fragmentation, today we focus on how new laws, regulations, and standards mark the beginning of a new era.

We’ll conclude with a deeper dive into how BSR’s 2025 strategy can help your company to navigate these turbulent times—and how you can collaborate with our global network to push us further, faster, to achieve a more equitable, just world for all.

The field of just and sustainable business stands at the threshold of a new era.

Governments are establishing new laws and regulations that will inevitably reshape the way companies address sustainability risks and opportunities, including how due diligence is conducted, how decisions are made, and how risks are disclosed. 

The twin EU directives on reporting and due diligence, the SEC’s proposed climate disclosure rule, and revisions to Japan’s Corporate Governance Code promise to be especially influential.

Standards-setting bodies are accelerating progress toward harmonized reporting frameworks. The International Sustainability Standards Board (ISSB) brings together standards for disclosing the impact of sustainability on enterprise value creation, while the Global Reporting Initiative (GRI) has integrated the UN Guiding Principles on Business and Human Rights (UNGPs) and continues to evolve sustainability standards. 

The GRI is also known for collaborating with the European Financial Reporting Advisory Group (EFRAG) and for co-creating the European Sustainability Reporting Standards (ESRS), which will become mandatory under the CSRD.

However, the dialogue about how companies can navigate this new era of decisive change often emphasizes binary choices.

Does today’s focus on “applying the standards” limit more entrepreneurial approaches to just and sustainable business? Will the emphasis on “ensuring compliance” overshadow more ambitious priorities and become a tick-box exercise? Does the instinct to cover everything listed in the new standards undermine the principle of materiality and the company’s ability to focus on what’s most important?

Rather than seeing these as “either-or” options, we believe that “and” is the most important word for this new era of just and sustainable business. 

While we recognize the obvious tensions inherent in these binary questions, we believe this can be creative rather than destructive. We encourage companies to see this new era of just and sustainable business as an opportunity to define new approaches. 

Entrepreneurship AND Standards

When BSR was founded in 1992, there were no sustainability standards, and everyone in the field needed to be an entrepreneur. We made everything up as we went along, trusting our instinct, using our values as a guide, and creating new approaches based on first principles. Thirty years later, we have standards left, right, and center, and everyone in the field has become hyper-focused on “how we apply the standard in practice.” In doing so, companies risk getting trapped in believing that there is only one “right” approach to just and sustainable business, with little innovation.

It is essential to find a final balance. We can be entrepreneurs and continue exploring ways of doing things better than before, and we need to apply standards so that we can adhere to collective expectations. Indeed, some of the best innovation happens in constrained conditions, so let’s view these new standards as helpful design constraints.

Ambition AND Compliance

Before this new era, compliance efforts made an important but somewhat limited contribution to the field, mainly showing up in labor standards, environmental management, and anti-corruption. By contrast, companies had a huge blank canvas upon which goals could be established, strategies launched, and sustainability reports written. Today, the tide of new standards and regulations raises the standard for everyone and ensures that all companies will undertake a certain amount of “just and sustainable business”—for example, the CSRD will push nearly 50,000 companies in the EU to consider sustainability as part of board discussions.

On the other hand, we fear that the focus on compliance risks is detracting from the original intention, purpose, and spirit of laws, regulations, and standards being implemented. We risk forgetting why we do what we do.

We need to have the discipline of compliance and stand up to the increased scrutiny that will accompany it, but we must also stay true to our transformative ambition and not shy away from the bold goals, innovation, and systemic change that are needed to achieve a just and sustainable world and build resilient businesses for long-term value.

Materiality AND Comparability

Over the past two decades, it has become abundantly clear that companies should focus resources on the most significant issues, no matter how materiality is defined by a company. But while the concept of materiality features prominently in the laws, regulations, and standards of the new era, we hear from BSR member companies a countervailing trend—the instinct to limit legal liability and not to be “caught out” leads to a quest for companies to cover every potential issue referenced in every law, regulation, and standard. Call it the “C.Y.A. approach” to just and sustainable business. 

We need to achieve both. BSR believes that a “comply or explain” approach to disclosure will give companies the time and space to put meaningful and rigorous policies and new systems in place for material issues.

We are struck by the sheer reach, ambition, and comprehensiveness of the laws, regulations, and standards that are a defining feature of this new era of just and sustainable business. We urge companies to pay close attention to them because they will surely transform the field of just and sustainable business, impact a company’s business strategy and day-to-day operations, and dramatically change how sustainability is governed within companies.

However, we believe that this important focus on standards, compliance, and comparability should not be accompanied by a rejection of the entrepreneurship and ambition that got us this far. We encourage companies to take creative approaches to the tensions that will undoubtedly arise and seek to achieve both the letter and the spirit of laws, regulations, and standards. 

At BSR, we are working with our member companies to map regulatory requirements and assess their preparedness. We also help our member companies develop the ambitious strategies, goals, and targets necessary for a just and sustainable future.

Blog | Thursday September 8, 2022

Human Rights Everywhere All at Once

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The technology industry is entering a new era of regulation, with several initiatives in the European Union (EU) shaping how the industry assesses risk, addresses adverse impacts, and discloses to the public.

Each of these regulatory initiatives stands in isolation to address a specific topic, be it freedom of expression, artificial intelligence (AI), or privacy. Some are tailored to the technology industry, while others apply to companies in all sectors.

However, while working with BSR member companies to prepare for these various regulations, it has become abundantly clear that human rights based-approaches—and especially the implementation of the UN Guiding Principles on Business and Human Rights (UNGPs)—provide a common thread that ties them all together.

There are certain key features that distinguish a human rights-based approach: reviewing and addressing impacts against all human rights; prioritizing risks to people based on severity—i.e., scope (the number of people impacted), scale (how grave the impact), and remediability (whether the impact can be made good); and paying particular attention to the rights of individuals from vulnerable groups or populations. 

It is striking how these key features of a human rights-based approach provide the conceptual foundation for each new EU regulation that technology companies will need to adhere to. 

• Digital Services Act (DSA): Will require a “systemic risk assessment” encompassing actual or foreseeable impacts on rights contained in the EU Charter of Fundamental Rights, including a consideration of the severity of impact. The DSA emphasizes vulnerable users and offers scope, scale, and remediability as potential prioritization criteria.
• Artificial Intelligence Act: Will require a “conformity assessment” for higher risk applications of AI and uses the EU Charter of Fundamental Rights as the basis for understanding and classifying risk.
• General Data Protection Regulation: Requires that companies undertake “Data Protection Impact Assessments” that consider not just privacy but impacts against all rights contained in the EU Charter of Fundamental Rights, prioritizing the most severe risk to “data subjects.”
• Corporate Sustainability Reporting Directive: Will require that companies take a“double materiality” approach to disclosure, where the prioritization of matters that affect the economy, environment, and people (“impact materiality”) will be based on concepts of scope, scale, and remediability drawn from the UNGPs.
• Corporate Sustainability Due Diligence Directive: Will establish a corporate due diligence duty, which will require identifying, preventing, mitigating, and accounting for adverse human rights and environmental impacts across company value chains, including from the use of products and services.

For companies, there are opportunities to consider the human rights-based synergy between these different requirements. This might include identifying connectivity through compliance processes, creating shared content across different assessments, or establishing an information architecture for reporting that positions these different disclosure requirements as an integrated whole. Companies with well-resourced central human rights functions are better placed to achieve these synergies.

For regulators, there is a need to maximize interoperability between these different requirements. This should include consistency in emphasizing the relevance of all human rights (rather than prioritizing some over others), harmonizing criteria by which adverse impacts on people should be prioritized, or creating more uniformity of disclosure requirements. There is a lot riding on the details of the regulations, where even slight differences in scope or definitions can be counterproductive.

Preparing for this new era will require significant, detailed, and tailored activity to meet the requirements of each regulation. However, it is our premise that taking a consistent human rights-based approach based on the UNGPs will ease this process, enhance compliance with both the spirit of and letter of each regulation, and increase the likelihood that human rights become more deeply embedded in the technology industry.

In the movie “Everything Everywhere All at Once” Michelle Yeoh draws upon distinct elements of her best self to succeed in different contexts; in the reality of “Human Rights Everywhere All at Once,” human rights functions will need to take a similar approach.

Blog | Wednesday September 7, 2022

Advancing Nature-Positive Solutions for Business

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The urgency to act on the intertwined crises of climate change and nature loss has never been higher.

The alarming rates of biodiversity loss, species extinction, peatland loss, and plastic pollution have led a leading group of bankers, financial supervisors, and academics to describe it as a “significant and under-appreciated threat to financial stability.”

While nature is critical to business, few companies fully understand, or proactively manage, their impact on nature, which exposes them to significant risk. Adopting a nature-positive lens to both one’s own operations and supply chains will help to reduce risks and drive long-term business resilience.

Investing in Nature Delivers Benefits for All

First, nature provides the ecosystem services—such as clean water and pollination services—that supply chains depend on. Frighteningly, these systems are rapidly deteriorating, threatening business’ access to necessary input materials and production locations. The World Bank estimates that simply protecting nature could avert global economic losses of US$2.7 trillion per year just by preventing the collapse of critical ecosystem services that business and others rely upon.

Second, nature and climate are highly interrelated. The most recent edition of the IPCC report found that virtually any action to preserve or restore nature also has positive benefits on the climate. Yet, certain efforts in the name of climate change can actually harm nature, such as the planting of non-native, monoculture trees in the name of carbon credits destroying an area’s biodiversity. Approaching decarbonization with a nature-positive lens is necessary for long-term success; for example, an estimated 90 percent of Food, Land, and Agricultural (FLAG) companies are at risk of missing their net-zero targets if they do not effectively address the issue of deforestation in their supply chain.

Finally, the regulatory space is developing quickly to align with a nature-positive approach. The European Union’s proposed Corporate Sustainability Reporting Directive, if passed, would require companies to report on targets, action plans, and progress toward becoming net nature positive by 2030, demonstrating that simply doing no harm is no longer the standard. New global frameworks largely mirroring climate—such as the Science Based Targets Network (SBTN) and the Taskforce on Nature-related Financial Disclosures (TNFD) for nature reporting—are quickly being established as the new modes through which companies signal their commitment and report progress. Business can ensure that they understand their risks, mitigate their impacts, and proactively contribute to protect our natural environment.

While many companies have science-based targets and well-developed action plans on climate, few companies are similarly mature on nature and biodiversity. BSR’s work in nature aims to change this. We focus on business’ relationship with land, freshwater, and marine systems in both their operations and value chains, and we support companies as they assess their impacts and dependencies on nature, identify and clarify nature-related risks, and understand how nature overlaps with human rights or climate change. We also work with companies to develop strategies and solutions which aim to achieve multiple sustainability objectives, along with detailed implementation plans to turn ambition into action. 

We have developed specialized tools and capabilities to help our members interpret their nature impacts and dependencies (risks) and develop ambitious strategies and solutions to address and mitigate impacts, both within their own operations and throughout their value chain. Our expanded range of offerings include:

• Nature Assessment and Prioritization 
• Nature Strategy Development
• Supplier Engagement Strategy
• External Framework Alignment and Stakeholder Engagement (e.g., TNFD, SBTN)

We are excited to work with business to help drive greater understanding, engagement, and action from the private sector. Nature is not just something to be protected—it can also provide many of the solutions we need to address other crisis areas. Long-term business success will require halting degradation and restoring nature, as well as harnessing the unique solutions that nature provides to address other sustainability issues, like climate and a just transition.  

Are you interested in learning more about how you can better understand and take action on your nature risks and impacts? Do you have a nature success story to share? Please reach out to schedule a conversation.

Blog | Friday September 2, 2022

Conflict and Modern Slavery: The Investment Perspective

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Why Are Conflict and Modern Slavery Important Issues for Investors?

The Ukraine war reminds us of the devastating consequences of war beyond the direct death toll, displacing populations and upending livelihoods. Since the Russian invasion began on 24 February, Ukraine has witnessed one of the fastest exoduses of people in recent history. To date, nearly 6.7 million refugees have been recorded in Europe.

Although there is now evidence of Ukrainians returning to their home country, the extreme relocation triggered by the conflict requires the integration of substantial numbers of refugees into receiving European populations. Sadly, the headlines from Ukraine are the tip of an iceberg; the UN estimates that some 100 million people around the world have been forcibly displaced from their homes, in most cases as a result of violence.

Modern slavery and human trafficking have been a consequence of 90 percent of modern wars. In some cases refugees are picked up by traffickers when crossing borders, while others may accept offers of unsafe or illegitimate accommodation or work. Refugees’ vulnerability is often compounded by demographic factors: women and children are over-represented among displaced populations. As a result, businesses operating in regions receiving refugees must be aware of the risks of labor exploitation in their operations and supply chains.

Following the Syrian civil war in 2011, Turkey experienced an influx of refugees. Today the country holds the largest population of refugees globally—3.6 million of whom are Syrians. Many refugees were integrated into Turkey’s garment manufacturing sector. Even before the Syrian refugee crisis, the garment industry relied heavily on a cheap and flexible workforce made up of migrant labor. Now there are reports of widespread exploitation of refugee workers, with evidence of 60+ hour weeks and the majority of Syrian workers earning below minimum wage. In Istanbul, an estimated 85 percent of Syrians are informally employed. Global apparel brands have been criticized for their lack of adequate action, with only a few brands gaining praise for good practice.

With tangible civil liability and monetary fines on the horizon, as well as basic business responsibility, the importance of examining and managing potential human rights risks has never been greater, both for companies’ management teams and their investors.

As a wave of mandatory due diligence laws come into effect across Europe, human rights abuses such as modern slavery are increasingly under scrutiny. With tangible civil liability and monetary fines on the horizon, as well as basic business responsibility, the importance of examining and managing potential human rights risks has never been greater, both for companies’ management teams and their investors.

How Should Investors Engage on This Issue?

In Schroders’ Engagement Blueprint we set out our request for companies to commit to respect human rights and establish and implement a human rights policy in line with the UN Guiding Principles on Business and Human Rights (UNGPs), International Labour Organization, and other international frameworks. We also ask companies to introduce robust due diligence processes and effective remedy for abuse.

However, due to the heightened risk associated with human rights in and around conflict-affected areas, we expect companies to go beyond this. That entails adapting existing policies to the specific needs of conflict-affected areas and performing enhanced due diligence in these contexts. Such action comprises:

• Assessing actual and potential human rights impacts;
• Integrating and acting upon the findings;
• Tracking responses;
• Communicating how impacts are addressed.

As a starting point, there are two simple questions investors seeking to engage on this issue should ask companies:

1. How have your supply chains been impacted by the influx of migrant labor, and how are you assessing the associated risks of modern slavery?
2. What enhanced due diligence processes are you undertaking given this heightened risk?

Investors, like companies, have a responsibility to undertake enhanced due diligence in their investment decisions and stewardship of companies in conflict-affected areas. The consequence of not doing so can not only increase legal and financial risk but exacerbate human suffering and exploitation. These questions represent a vital first step in this heightened due diligence approach.

Originally appeared on BHRRC.

Blog | Thursday September 1, 2022

Empowering Executives and Activating Boards: The New Nexus of Sustainability Governance

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In a world that is buffeted by disjunctive change, Boards of Directors face a new reality: their ability to provide effective stewardship and oversight depends on their capacity to act on a diverse array of sustainability questions that are reshaping business:

“How can the company address the risks of climate change and the energy transition? How will they respond to rising expectations to take public positions on questions that once would have been considered too ‘political?’ Can the business meet investor expectations on ESG while also delivering strong financial performance in the near term?”

Unless they take urgent and significant action, most boards will fail those tests.

From a governance perspective, boards are now both discharging long-established duties and being asked to address entirely new questions. As legendary corporate governance attorney Martin Lipton noted:

“The legal rules as to directors’ duties have not changed. What has changed are the expectations of investors and other stakeholders.”

Spotlight on ESG Disclosure Mandates 

In addition to existing duties, there is also a raft of new mandates that have put ESG at the front and center for boards. For example, the European Commission Proposal for a Corporate Sustainability Due Diligence Directive (CSDDD) explicitly establishes a “duty to act” on the consequence of their decisions relating to sustainability, climate, and human rights impacts on the company. 

The Corporate Sustainability Reporting Directive (CSRD) will also require boards to be a part of the company’s due diligence process and to sign off on sustainability information within a company’s management report.  

In the US, the Securities and Exchange Commission’s proposed climate rules would require companies to publish climate-related information in financial filings, including the governance of climate-related risks.  

Globally, the International Sustainability Standards Board published exposure drafts that will require climate disclosure in line with the Task Force on Climate-Related Financial Disclosures recommendations and an explanation on board governance and oversight.

This is only the beginning of the raft of new duties on boards addressing climate, social impact, human rights and corporate governance.

Building Future-Proof Business Strategies

Beyond stakeholder expectations and legal duties, it is increasingly apparent that board engagement on sustainability is essential to building resilient business strategies that help companies manage risk, compete in the market, and deliver value for business and society to thrive. 

Deeper understanding of sustainability can help a board understand and govern on critical issues, like how climate change is raising the costs of agricultural inputs and driving up insurance prices, or why the company is having difficulty hiring top talent in a region that fails to respect LGBTIQ+ rights, or the impact of potential new regulations on human rights in supply chains. 

Furthermore, board engagement on sustainability is valuable in creating a shared understanding and alignment between the board and management. Many CSOs and C-suite leaders have grappled with sustainability topics for years. As boards increasingly turn to sustainability executives for answers, there is an opportunity for collaboration: on the one hand, empowering executive leaders to engage at the board level, and on the other, activating boards of directors to provide effective oversight and strategic guidance.

Key Priorities That Support Strategic ESG Decision-Making

Management and boards have a vital opportunity to collaborate in building resilient business strategies that respond to these new expectations, protect against emerging risks, and pursue new frontiers. To seize the moment, BSR believes there are three critical areas for boards to address sustainability.  

• Competencies and Structure: Board members with the right knowledge, competencies, expertise in relevant sustainability topics, and diverse backgrounds are better positioned for effective leadership and resilience. 
• Strategy: A clear understanding of how material topics, emerging issues, and stakeholder impacts shape business strategy will be critical for board oversight and “future-proofing” the business for resilience.
• Oversight: Goals, incentives, and accountability are valuable in promoting effective board oversight and alignment with management.  Meaningful disclosure is a key aspect of delivering on that oversight.

BSR is proud to build on its 30-year history of working with companies to develop and deliver ambitious approaches to sustainable business, including advice to Boards on approaches that enable them to provide strong stewardship with a positive impact on society. That’s why we’re excited to launch a renewed focus on helping executives and boards align on shared understanding, effective action, and corporate leadership on sustainability.

Our objectives in this work are to empower executives and CSOs to engage, inform, and activate boards on sustainability. We also seek to activate Boards as partners to provide strategic direction that strengthens their company’s ability to deliver on ambitious sustainability strategies that enhance business success. 

BSR’s work with boards focuses on offering credible sustainability expertise tailored to each company’s unique context:

• Building competencies and enhancing structure through ESG/sustainability introductions, thematic training, addressing diversity, equity, and inclusion, and institution effective ESG governance throughout the board and organization
• Providing strategic guidance and identifying emerging risks through scenario analysis, stakeholder insights, and the work of our Futures Lab. We also support the development and facilitation of sustainability and stakeholder engagement approaches and advisory panels 
• Promoting ESG oversight and transparency by providing guidance on the evolution of regulations, frameworks, and expectations on corporate reporting and disclosure
• Delivering trusted on-going advisory to boards and executives, supporting ongoing efforts and responding to emergent issues

In 2022 alone, boardrooms have scrambled to deal with one ESG crisis after another: the fallout of Russia’s invasion of Ukraine, the rollback of reproductive rights, killer heatwaves, and labor disputes, among others. 

Companies are making strategic investments to ensure their businesses are prepared to meet the challenge of the climate crisis, advance equitable societies through their investments, ensure that new technologies and business models have the support of society, and address rising interest from investors, employees, customers and communities.

The question is no longer whether Boards have a role in sustainability; it is how well equipped they are to meet a changing world. The most sustainable—and most successful—businesses will be the ones that address changing needs, expectations, and opportunities. And the most successful Boards will be the ones that ensure these challenges are met. 

BSR looks forward to partnering further with Boards and executives from inside and outside the sustainability functions to advance this new era of leadership. If you would like to discuss this topic further, please reach out to our Business Transformation team.

Blog | Wednesday August 31, 2022

The Inflation Reduction Act (IRA) Creates Powerful Tailwinds for Net Zero Companies

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The Inflation Reduction Act (IRA) is historic legislation, projected to reduce US climate pollution by roughly 40 percent by 2030 compared with 2005, and it will enable investment and innovation en route to the current US Paris Agreement target.

Unleashing US$369 billion in climate and clean energy incentives, the legislation provides powerful tailwinds for companies already on a science-based trajectory toward net zero, and it removes excuses for those waiting for policy certainty before setting up their own net-zero goals. Through provisions on methane, environmental justice, and new technologies, the IRA also signals the future of corporate climate action.

All companies validate their net-zero and science-based climate goals without full certainty on how they will implement them. The IRA gives businesses more of the policy certainty that they need to make good on these goals. This ambitious legislation establishes:

• New tailwinds to reduce scope 1 emissions (in company operations), including a US$10 billion investment tax credit to build clean technology manufacturing facilities and US$6 billion for a new Advanced Industrial Facilities Deployment Program to tackle the hardest-to-abate industries like chemical, steel and cement plants. A tax credit will incentivize carbon capture in these industries beyond 2030.
• New tailwinds to reduce scope 2 emissions (e.g., procured electricity and heat), including long-term, full-value tax credits for the production of renewable electricity (e.g., solar, geothermal, wind, combined heat and power, waste energy recovery) through to 2025, converting to technology-neutral tax credits for electricity generation facilities placed in service in 2025 or later. Another 10-year tax credit applies to energy storage technologies. Grants will facilitate siting of interstate electricity and transmission lines. As a result, clean electricity is projected to be roughly three-quarters of US generation by 2030.
• New tailwinds to reduce scope 3 emissions, including tax credits for electric vehicle (EV) charging and the purchase of new and used light-duty EVs, and for commercial clean vehicles. US$1 billion goes to grants or rebates for zero-emission heavy-duty vehicles, and credits support the production of biodiesel, renewable diesel, sustainable aviation fuels, and other clean fuels. These will substantially reduce companies’ emissions in transportation and distribution (categories 4 and 9).
  • For food, beverage, and agriculture companies with substantial upstream footprints, US$20 billion goes to reducing methane from livestock, improving soil carbon and climate-smart agriculture, which will reduce scope 3 emissions from purchased goods and services (category 1).
  • To help resolve a pain point for most corporate practitioners, US$5 million enables the EPA to support standardization and transparency of corporate climate action commitments and plans.

The IRA also bolsters US efforts at climate diplomacy by undergirding its new Paris Agreement target of 50-52 percent reductions by 2030. Additional federal regulatory and state-level action over the coming years can bring this target within reach. Companies concerned about their upstream scope 3 emissions outside of the US, e.g., in manufacturing centers in Asia, should cheer the possibility that a credible US target will result in an upward spiral of national ambition.

Finally, the IRA signals the future of corporate climate action by establishing incentives around emerging issues and technologies.

• A methane emissions reduction program provides grants for methane monitoring and fees for methane emitters in the oil and gas industry starting at US$900/tonne in 2024. Immediate methane reductions are key to limiting warming in the short term and clearing a path for a longer-term energy transition needed to meet the Paris Agreement’s goals.
• Environmental justice provisions will target clean energy and emissions reductions toward low-income and disadvantaged communities. We at BSR are working to bring climate justice, long established in academia and in the development community, into the mainstream of corporate sustainability.
• Tax credits will reduce the green premium on new technologies like hydrogen and direct air capture, laying the groundwork for continued emissions reductions in later decades toward net zero and for the removals that will be necessary in net-zero target years.

The IRA is projected to reduce household energy bills and generate millions of jobs at a time of energy-driven inflation and potential economic recession. That said, we should not overlook the powerful tailwinds it gives sustainability professionals working to build net-zero value chains and how it leaves no excuses for companies yet to take science-based action.

People

Kayo Yamasaki

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As Office Coordinator, Kayo provides administrative support and cooperates with internal departments and external parties to ensure the smooth running of our Tokyo office. She undertakes several office tasks, including providing human resources, accounting processes, event coordination, and IT support. She also provides the necessary assistance for the start of projects.

Prior to joining BSR, Kayo worked as a project assistant at an international development consultancy supporting the overseas business development of Japanese small- and medium-sized enterprises. Before this, Kayo worked as a research assistant at the climate change group of a research consultancy. She also has expertise as a financial planner CFP at an accounting firm for seven years.

Kayo holds a BA in Law and finished two years of a Mandarin language program at East China Normal University in Shanghai.

Blog | Tuesday August 30, 2022

Best Practices for Human Rights Due Diligence in Tech Sales Channels

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Many of the human rights risks for hardware and software companies are related to the misuse of their products and services in ways that are connected to adverse human rights impacts. This includes, for example, the use of technology by a government entity to surveil political opponents, shut down internet access, facilitate censorship, or enable other human rights violations.

Technology vendor companies often rely heavily on sales partners—third parties who buy, distribute, integrate, and resell products and services to customers around the world. This means vendors often lack full insight into or control over who their products and services are sold to and how they are ultimately used.

The UN Guiding Principles on Business and Human Rights (UNGPs) require all companies to respect human rights and implement human rights due diligence processes to identify and address actual and potential human rights impacts across the entire value chain—including those related to the sale and use of products and services. Therefore, to fulfill their commitments to implementing the UNGPs, vendors need their sales partners to also address end-use human rights risks.

Considering this challenge, Hewlett Packard Enterprise (HPE) funded BSR to develop a brief outlining guidance and best practices related to the human rights expectations of sales channels in the technology sector. The brief explores the current state of human rights due diligence across sales channels and challenges to effective due diligence, and it enumerates best practices for all entities, from vendors to distributors to resellers.

It comes in the context of expanding scrutiny from the business and human rights field, as well as regulators on the human rights impacts of the downstream sale and use of products and services. Whereas human rights risks in supply chains, or upstream impacts, have received significant scrutiny over the past three decades, stakeholders are increasingly demanding that companies address adverse human rights impacts across their entire value chains. BSR’s primer on human rights due diligence of products and services outlines this development and provides guidance for companies across all industries on getting started.

Although this brief is relevant for companies across all industries who utilize sales partners, it is primarily geared toward technology companies in the hardware and software industry who develop and sell products and services for enterprise and government customers. Increased media coverage and external stakeholder focus on the misuse of technology products and services have put pressure on hardware and software companies to better address the human rights risks associated with the sale and use of their products and services.

BSR notes that developing effective human rights due diligence processes in tech sector sales channels will take time and coordination across the industry. This brief is intended to provide guidance and best practices to assist companies in this journey.

Primers | Tuesday August 23, 2022

Human Rights Priorities for the Beauty and Personal Care Sector

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Human rights are inherent to all human beings. They are defined and established in more than 80 international legal instruments and define the fundamental protections of human dignity, needs, and freedoms, such as food, housing, privacy, personal security, and democratic participation. Since the adoption of the Universal Declaration of Human Rights (UDHR) in 1948, the responsibility to protect human rights has primarily fallen on governments. Beginning in the early 2000s, however, it became increasingly clear that the freedoms enshrined in the framework could also be violated—and promoted—by the private sector. In 2011, the UN Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights (UNGPs), the first international instrument to assign companies the responsibility to respect human rights.

The Guiding Principles state that companies must refrain from negatively impacting rights even when governments are failing to create or enforce necessary laws; and that victims of corporate abuses must have access to effective remedy.

As part of this responsibility, the Guiding Principles require companies to actively identify and manage the negative human rights impacts that they may cause directly, and those to which they contribute through their business practices and relationships. There are several key actions a company can take as part of this due diligence cycle: conduct a human rights assessment to determine which potential human rights impacts are most salient to their business; develop and publish a human rights policy to clearly communicate expectations to stakeholders and business partners; ensure they have robust stakeholder engagement processes in place to support ongoing monitoring of potential or actual impacts and proactive action or remedy.

This issue brief identifies the most relevant, urgent, and probable human rights impacts for businesses operating in the beauty and personal care sector. The information here is gathered from BSR’s direct engagement with beauty and personal care sector companies, as well as our 30 years of experience helping companies in all sectors manage their human rights risks.

The beauty and personal care sector comprises a wide range of businesses and activities, from manufacturing, retailing, and distribution to marketing and advertising of beauty and cosmetic products (such as makeup, fragrances, skincare, haircare, and toiletries). The sector is spread across a wide range of different businesses including specialty stores, pharmacies, and supermarkets, among others. While each of these different business activities will have its own human rights profile and challenges, this brief highlights universal risks for companies operating in the beauty and personal care sector.

Primers | Tuesday August 23, 2022

10 Human Rights Priorities for the Food, Beverage, and Agriculture Sector

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Human rights are inherent to all human beings. They are defined and established in more than 80 international legal instruments and define the fundamental protections of human dignity, needs, and freedoms, such as food, housing, privacy, personal security, and democratic participation. Since the adoption of the Universal Declaration of Human Rights (UDHR) in 1948, the responsibility to protect human rights has primarily fallen on governments. Beginning in the early 2000s, however, it became increasingly clear that the freedoms enshrined in the framework could also be violated—and promoted—by the private sector.

In 2011, the UN Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights (UNGPs), the first international instrument to assign companies the responsibility to respect human rights.

The Guiding Principles state that companies must refrain from negatively impacting rights even when governments are failing to create or enforce necessary laws and that those victims of corporate abuses must have access to effective remedy.

As part of this responsibility, the Guiding Principles require companies to actively identify and manage the negative human rights impacts that they may cause directly and those to which they contribute through their business practices and relationships. There are several key actions a company can take as part of this due diligence cycle: conduct a human rights assessment to determine which potential human rights impacts are most salient to their business, develop and publish a human rights policy to communicate expectations to stakeholders and business partners, ensure they have robust stakeholder engagement processes in place to support ongoing monitoring of potential or actual impacts and proactive action or remedy.

This issue brief identifies the 10 most relevant, urgent, and probable human rights impacts for businesses operating in the food, beverage, and agriculture (FBA) sector. The information here is gathered from BSR’s direct engagement with FBA companies, as well as our 30 years of experience helping companies in all sectors manage their human rights risks. This sector spans all aspects of the global food system, from agriculture to transport, packaging, and retail. It nourishes the world’s population and connects economies in an expansive global value chain.

Yet, as with all complex industries and supply chains, the FBA sector has adverse impacts on people and the environment across the value chain—from farm level to retail and everything in between. While global food systems proved to be resilient during the COVID-19 pandemic, the economic effects exacerbated inequalities and acute food insecurity for the most vulnerable, demonstrating the structural nature of some of these adverse impacts.¹

The FBA supply chain is also responsible for 21–37 percent of GHG emissions every year, which means the sector is a key contributor to climate change.² As the world’s population is expected to grow to 10 billion by 2050, the demand for food will intensify, which may further strain the global food system and exacerbate existing inequalities, human rights risks, and environmental degradation. Understanding the human rights risks and impacts across this complex and necessary system will help those companies within the various industries that make up the FBA sector begin to unpack what contributions they can make to mitigating the negative impacts and seizing on opportunities to advance human rights for all.