Blog | Friday June 24, 2022

Key Ways for Business to Respond to the Fall of Roe v. Wade

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The sweep of the ruling on abortion is staggering and destabilizing for business in America.

Abortion is now illegal in at least 13 states, and more will certainly follow. New restrictions in other states would make the procedure even more difficult to actually obtain, even in many places where it might technically remain legal. Chaos lies ahead, as some states race to the bottom with criminal abortion bans, forcing people to travel across multiple state lines and, for those without means to travel, carry their pregnancies to term—dictating their health, lives, and futures. Today’s decision will ignite a public health emergency.

This Supreme Court ruling will unleash months of intense pressure on business to mitigate harm and meet rising worker, consumer, and investor expectations. More importantly, women in some parts of the country, particularly the South, will have to travel hundreds of miles to reach an abortion provider. This ruling disproportionately impacts lower-income women and women of color given existing structural inequities. In addition, women who don’t have access to abortion care are three times more likely to leave the workforce.

One in four working women will have an abortion at some point; this could be an unplanned pregnancy, a planned pregnancy where something goes tragically wrong or as part of fertility treatments. Americans broadly support the Supreme Court upholding Roe v Wade. A recent Washington Post-ABC poll finds 75 percent agree that such decisions should be left to the woman and her doctor. 

Recent research by Morning Consult also underscores this broad support by a 2:1 margin: employed adults, across all demographics, would prefer to live in a state where abortion is legal and accessible.

There is a business case that connects how access to comprehensive reproductive healthcare impacts a company’s bottom line and the corporate workforce. One study found existing abortion restrictions already cause $105 billion in economic losses annually. We can expect additional impacts to the ability of business to attract, retain and support their workforce in a labor market that is already quite challenging. We also anticipate increased expectations for companies to respond to employee and consumer demands to take a public stand on this topic. 

Top talent wants reproductive healthcare–including abortion access, to be part of corporate gender equity efforts. Roughly 7 in 10 respondents say access to reproductive healthcare should be an issue companies address when it comes to gender equity in the workplace. Further, companies in more restrictive states may be at a competitive disadvantage. The same Morning Consult research showed that adults want to understand the social policies in a state before deciding to move there, with 71% agreeing social policies should be considered in a decision to move.

There also is a tie-in with the childcare crisis: companies are already struggling to attract and retain workers due to a lack of affordable childcare and the COVID-19 pandemic; taking away women’s ability to decide when they can have children will only exacerbate this situation. An investment in accessible reproductive healthcare allows women to fully engage and advance in the workplace. 

Furthermore, 7 in 10 consumers believe it is important for companies to take a stand on social issues, 86% of which want them to take a stand on reproductive health. This puts reproductive health in line with the demand for action on other social issues, such as gender equity (92%), racial justice (94%) and voting rights (92%).

While the situation continues to unfold rapidly, there are six key points for business to consider. Some point to immediate actions, and some relate to longer-term impact. 

Mitigate Harm

Companies can ensure equitable and inclusive benefits are available to support the spectrum of workers’ reproductive health needs. A self-audit can identify, and redress obstacles faced by employees who need to obtain abortion and other reproductive healthcare. The Society for Human Resource Managers recently provided a recommendation for employers along these lines. Beyond covering travel costs, companies can address gaps in their paid sick leave programs and provide support for time-sensitive care in a confidential way. Companies can also consider practices to support pregnant workers who travel to states where abortion is illegal and may need to access care in emergency situations. For workers who may not be eligible for benefits and therefore lack access to programs or policies that would support them in accessing abortion care, companies should increase or enhance programs centering the needs of non-benefits-eligible workers who need timely access, while protecting privacy. 

Business also can create a supportive culture around reproductive health benefits by sharing clear information about coverage and finding ways to reduce stigma around comprehensive reproductive health in conversations about benefits. A previous BSR blog offers more in-depth advice on how companies can be prepared for workforce impact.

Companies can also highlight relevant and accurate information on healthcare services that continue to provide abortion access. Comprehensive directories such as I need an A, Abortion Finder, and the National Abortion Federation Hotline provide visitors with trusted individual, private, and non-profit clinics. Plan C also offers updated information on at-home abortion and medicine access based on location. The Pro Repro Playbook offers employers—especially small and medium sized businesses and non-profits—with strategies to protect the reproductive health of their workers who can become pregnant.

Engage in Relevant Public Policy at the State and Federal Level 

Many large companies are members of business associations that could play a significant role when it comes to supporting federal policy priorities to protect abortion access. At the federal level, the Women’s Health Protection Act would codify Roe yet remains stalled. At the state level, where a historic number of abortion restrictions have already been passed, companies still have the opportunity to weigh in with elected officials. Companies have an opportunity and a powerful platform to make their voices heard with policy makers, local business associations, and other influential organizations about the workforce impact and economic costs of harmful abortion restrictions.  

Align Political Contributions with Workforce Values, Equity, and ESG Commitments

It’s time for companies to align—once and for all—their public positions, their operational / workforce policies, and their political influence. They have to all be pointing in the same direction. In a world where Roe v Wade was settled law, companies could avoid taking a public position. We now expect that this issue will be legislated in every state, which means company’s public and internal commitments to women’s empowerment may directly contradict with how they spend their lobbying dollars; and that contradiction will be untenable. 65% of American adults agree that companies should cut back on political donations to elected officials who are working to limit access to abortion, according to the Morning Consult research.  

Protect Voting Rights

The Court’s diminishing of the Voting Rights Act’s preclearance powers means lawmakers can impose burdens on voting to narrow the electorate. It will be crucial for companies to use their voice and influence to address both restrictive social policies and efforts to limit voting, so that avenues for countering extreme social policies through normal democratic channels are protected. Morning Consult data indicates that 67% of adults agree with companies speaking out against efforts to limit access to voting for eligible voters.

Speak Out

While most Americans support access to abortion, ending gun violence, and protections for LGBTIQ+ people, among other issues, public policy solutions are stalled. Business has been increasingly expected to take a public position—to show how support for these issues is important to the business community, to their workers, to their customers, and to the communities in which they operate.

This involves not only public statements of support, but aligned action such as decisions to reconsider locations of events, meetings, and future operations given a state's reputation, and climate on social issues. Recent prominent examples include Salesforce’s actions in protest of Indiana’s proposed anti-LGBTIQ+ religious freedom bill, Major League Baseball pulling the All-Star game out of Atlanta to protest Georgia’s restrictive new voting law. 

Support Relief Efforts

Business can provide financial, logistical, and other support that can mitigate the current and anticipated harm incurred by workers navigating new burdens to access care. Support abortion funds directly and support advocacy organizations through awareness raising and other efforts unique to your business and expertise. Coalitions such as the Brigid Alliance and Midwest Access Coalition help with travel coordination and costs.

Grant Access to Remote Work

Companies can consider how overturning Roe informs their stance on remote work policies. For businesses with operations in states with trigger laws or that have old laws on the books, employees who would otherwise be expected to work in the office can leverage remote work policies to be based in states where their healthcare access is protected. However, for workers where remote work is not possible, additional support as mentioned above (i.e., travel, paid sick leave) needs to be made accessible.

At BSR, we are committed to working with member companies of all industries to promote women’s empowerment as well as diversity, equity, and inclusion—in the workplace and beyond. Without access to reproductive healthcare, women’s economic empowerment can only go so far. Business can meet this moment to address the workforce and economic impact and demonstrate commitments to equity and social justice. 

Additional Resources: 

Navigating the SCOTUS Rulings: Recommendations for Business Advancing Social Equity and Justice | Upcoming Events | BSR

SCOTUS Overrules Roe v. Wade: Part I: Potentially Wide-Ranging Impact on Companies Navigating Employee Benefits, Privacy Protections, and Law Enforcement Demands | Jenner.com

Employers: Checklist for a Post-Roe Workplace | Workforce Bulletin

Blog | Wednesday June 22, 2022

Inside BSR: Q&A with Olivia Li

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Tell us a bit about your background. Where are you from, and where are you based? What is your favorite hobby?

I was born and raised in Shanghai, China and currently work as manager in Sustainability Management at BSR.

In my spare time, I enjoy dancing—jazz and hip hop—as well as jogging and swimming. I’m also a fan of Chinese contemporary arts. I visit art galleries on a regular basis and would love to introduce these talented artists to the world.

How did you first get involved in sustainable business? How long have you been at BSR? What is your current role, and what does that entail?

My career has been driven by a passion for advancing diversity and inclusion, and a practical approach to social entrepreneurship. 

I was exposed to real-life social issues in my undergraduate years, and directly interacted with the first generation of social entrepreneurs and CSR (Corporate Social Responsibility) practitioners through my work at student associations and volunteer groups. With their support, I organized on-campus events to spread knowledge on social inclusion and combat discrimination against people living with HIV and AIDS.

In subsequent years, I visited slums in Nairobi and Delhi, where I witnessed real-life challenges facing c women and children in poverty. I worked at a well-established NGO in Toronto that benefited from one of the best social support systems in the world. I connected with a community of colleagues, friends and mentors who were passionate about bringing positive impact through different professions and methods.

My experiences abroad inspired me to come back to China and work in sustainable business, with the aim of mobilizing corporate resources to help build a more sustainable and equitable world.

I joined BSR’s Beijing office as an intern, and then moved to the newly established Shanghai office as a coordinator. Since then, I have done extensive work in supporting companies to implement their sustainability strategies, plans and programs, including in-depth research on the most cutting-edge sustainability issues affecting China and Asia.

What are some interesting projects that you get to work on as part of your role at BSR? What do you enjoy about them?

A project that I am proud of—and that I currently manage—involves working with a technology company to design a socially inclusive project using wireless technology. The mobile application offers audio and visual support as well as volunteer accompanying services to assist blind and visually impaired people to overcome their daily challenges.

Before launching the service to users, the project team conducted various pilots to ensure that the mobile application could smoothly link the blind user and our partner volunteer organizations.

Xiao Wang was our first pilot user of this service. He needed to travel from Yantai, Shandong alone to Beijing for his summer internship at a blind massage center. Our mobile application helped him find a volunteer to pick him up at a Beijing Railway Station and accompany him to his home in the suburbs.

One year later, Xiao Wang informed me that he had left his massage job, and was about to take the National Bar Exam to practice law. He would very possibly be the first blind law practitioner of his province. He is continually giving back to his local community to support the disabled, and mentioned that our work has been a source of inspiration.

I was deeply inspired by his inner strength, kindness and resilience. There have been challenging times throughout my career; either responding to a complex client requests, or living as an entrepreneur to create and execute innovative solutions. Xiao Wang’s story reminds me of my original goals, which has helped to reinforce my passion and resilience toward my work.

What issues are you passionate about and why? How does your work at BSR reflect that?

I have a natural passion for writing. I write in the Wechat Blog platform in Chinese to share my knowledge on sustainability consumption and green lifestyles. At BSR, I have co-written the China blog series to unpack the sustainability and business impacts of China’s 14th Five Year Plan toward the western sustainability community.

At BSR, I am a member of the Diversity, Equity and Inclusion (DEI) taskforce, a voluntary group that assesses organization culture, policies and procedures related to DEI, and provides recommendations.

I also actively engage in diversity and inclusion related projects at work, including leading the mobile App project that supports blind people in China, conducting women’s empowerment research in Asia-Pacific, implementing women’s economic empowerment programs in Vietnam, and executing women’s health programs in the global supply chain.

What were the things that brought you joy amid the uncertainty and challenges of the past two years? What are you looking forward to in 2022?

The past 2-3 months were extremely difficult for us in Shanghai due to the city lockdown, especially in early April, when delivery and logistics were cut off and we had issues with accessing food and other essential products.

I appreciated the companionship of colleagues and friends at the Shanghai office, who helped turn the frustrating moments into trivia and jokes, as well as the support and positive messages from colleagues and clients across the globe. 

The constant reminder of the impact of my ongoing and past projects is a great source of energy for me and helps me navigate through difficult moments knowing that I am giving back to my community.

Blog | Thursday June 16, 2022

Turning Ambition into Action: Principles That Guide BSR’s Work

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Our Mission and Core Principles

Sustainability is now embraced as a core part of business. It is widely understood both inside and outside the private sector that truly resilient business strategies, and human and societal progress, depend on sustainable business action.

As we celebrate BSR’s 30th anniversary we are heartened to see the rush of business and investor interest in advancing action on ESG, and energized by the increased attention from citizens, consumers, employees, and governments.

We are also pleased by a growing recognition that meaningful action requires greater clarity about what ESG means in practice and how credible it is. If we are to meet the promise and expectations of our moment, it is more important than ever to deliver the goods. A just and sustainable world isn’t a marketing campaign or prestige project or a fad or a get-rich-quick scheme.  It’s not about incremental change slapped with an ESG label. It’s about the difficult and imperative task of ensuring that all people can thrive on a healthy planet.

We remain as sharply focused on our mission–to work with business to build a just and sustainable world–as ever. Our mission animates our work as an organization and our passion as individuals, and we are dedicated to it in all that we do. We do this with a seriousness of purpose, and an understanding that lofty ambition that is not translated into action is not what the world needs.  

BSR has always believed in engagement, and our Principles are true to that spirit. We know that many organizations express their commitment through negative screens, requiring commitments on certain topics, or scoring performance. While we respect such models, we deliberately have chosen a different path: emphasizing how we work to achieve impact. For BSR, we believe that this positive view of what we are trying to achieve is preferable to an approach focused on exclusion.

We believe that our mission must be put into action in our work with business and other partners, with a unique perspective based on three Core Principles:

• We focus on impact in everything we do​
• ​We make connections between issues, and between business and the wider world/stakeholders ​
• ​We provide honest advice and insight that translates ambition into credible action​

BSR’s Project Principles

To ensure that we live up to these Core Principles, we have developed guidance for BSR teams on how to apply the Core Principles in our work with companies, in the insights we deliver, and in the recommendations that we make.  We have therefore established 16 Project Principles, which we share in their entirety here. The Project Principles are organized into three groups:

Achieving Impact

The first four Project Principles lay out how we focus on impact. They highlight the importance of building real business solutions that offer the biggest opportunities for meaningful change (thereby avoiding incrementalism). They guide us to look holistically at the ways a company might act to create change, not just on its own but also by working with value chain partners, markets, policymakers, and systems.

Understanding Business and Social Context

The next five Project Principles are based on our recommendations for a company’s particular business imperatives and opportunities, as well as relevant societal and sustainability context. We aim to ensure that companies consider not only business value, but also a full understanding of their impacts on diverse stakeholders and rightsholders, and how they can promote equity and social justice.

Taking Credible Action

The remaining seven Project Principles emphasize the need to focus on credible action.  We always seek to articulate the business value of sustainability, but we also don’t delude ourselves that everything can be a “win-win”—many cases involve difficult choices that demand leaders make tradeoffs, and take decisions based on ethics and values. However, we don’t have all the answers, so we listen to our member companies, connect them with other experts, engage with credible and ambitious standards, and support collaborative efforts and public policy solutions. Finally, we encourage transparency and accountability so that companies and their stakeholders can learn and monitor progress.

Putting the Principles into Action

After 30 years of advocating and advancing just and sustainable business, we celebrate its mainstreaming. We also believe that the essential meaning of this approach to business, and its role in society, risks getting interpreted, marketed, and implemented in ways that dilute its power and impact.  

If we do our jobs right, then many companies may think, “BSR gets our business and is an invaluable strategic partner; we value the way BSR points us to what’s needed, not just what’s comfortable.” In turn, many in civil society may think, “BSR pushes for the right impact, even though sometimes they are too focused on the private sector.”

We know that our focus on credibility, impact, and business action may make some potential partners reluctant to work with us, and we understand that. But for those willing to ask the right questions, and seek bold, meaningful answers, we look forward to partnering with you for real impact, business value, and a resilient global economy based on progress, equity and sustainability.

We invite you to join us, and explore the Principles that guide our work.

Blog | Wednesday June 15, 2022

How Business Can Advance Climate Justice

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Climate change affects each of us differently, and its impact will be exacerbated for communities that already face underlying socioeconomic inequalities or injustices. For the private sector, climate injustice can be experienced across the value chain—from suppliers to employees and consumers. To advance climate justice, it is essential that the voices of those who are the most impacted are put at the forefront. 

Below are several ways in which climate change can disproportionately and unjustly impact communities and where private-sector-solutions can be focused:

Building Resilience to Physical Climate Impacts

Individuals and communities are less able to prepare, respond, and recover from extreme weather events and the spread of disease if they lack access to financing, insurance, or healthcare, or if their rights are not protected. Consequently, women, people of color, Indigenous peoples, people with disabilities, children, and the elderly in under-resourced communities are often less able to adapt to climate impacts. 

Business can ensure that all communities across the value chain are prepared, protected, and able to rebound, defined as building resilience. Conducting climate risk assessments is useful in identifying and understanding how climate change is affecting not only operations but also communities across the value chain. Companies can also use this as an opportunity to identify ways to increase access to their products and services—for example, medicines and technologies—to help build resilience equitably.

Ensuring a Just Energy Transition

Transitioning to a net-zero economy risks leaving behind workers and communities traditionally dependent on fossil fuel industries for jobs and livelihoods, including women who are underrepresented in the green jobs movement. Planning, dialogue, and engagement with workers and stakeholders is essential for a just transition—which aims to ensure social and economic opportunities of climate action are maximized and that fundamental labor principles and rights are upheld. 

Several energy, utilities, and other related companies—that are deeply committed to achieving net-zero emissions in a manner that mitigates the potential adverse impacts on workers and communities—are coming together along with other stakeholders to collectively develop practical guidance on how companies can plan for, operationalize, and integrate just transition principles into their sustainability strategies and practices. 

Upholding Human Rights in the Transition to Net Zero

In the transition to a net-zero economy, the development and procurement of decarbonization technology and renewable energy requires the mining of metals and minerals—for example, solar panels and ion batteries for electric vehicles. The extraction of many of these materials, as well as some of the practices used by companies, are associated with armed conflict, land and water grabs, violation of the rights of Indigenous peoples, the denial of workers’ rights to decent work and a living wage, and other human rights abuses.

As we transition our economies to reduce the impact of climate change, we can ensure business practices are just and uphold human rights. Business, therefore, has a responsibility to ensure that climate and net-zero strategies consider the social impacts of these transitions. An integrated climate change and human rights impact assessment can serve as a critical step in preventing and mitigating harm to people due to business activity.

Ensuring Equitable Access to Clean Energy

As we transition to a greener economy, we want to ensure all communities have access to clean energy technologies and solutions. For example, as companies set ambitious net-zero targets across their value chains, suppliers will need access to renewables to act on climate change and meet buyers’ expectations.

Not all markets have access to clean technologies or renewables in the electrical grid. Under-resourced communities are more likely to experience energy insecurity and lack access to affordable, efficient, secure, and reliable clean energy. Identifying where there are gaps in access across the value chain is an important first step to assessing what proactive actions companies can take—such as policy advocacy, financing, and coalition building—to counter inequities in access to clean energy. Adjustments to sourcing and procurement strategies and policies are also essential.

While many companies are just starting to explore issues connected to climate justice, others are taking different approaches to integrate a social lens into their climate action. Most recently, a cross-sector collaborative initiative, “Transform to Net Zero”, launched a transformation guide in which three companies shared their values and initial approaches to climate justice engagement. 

Any transition to a more climate-resilient society will require deliberate engagement with a diverse array of stakeholders and affected communities, understanding the complexities and intersectionality of challenges and opportunities, as well as local capabilities, knowledge, and identified solutions.

Essentially, the communities that are least responsible for climate change, and least able to adapt and recover from its impacts, are the most affected. Business can acknowledge its role in contributing to climate change, and seek to counter past harm by supporting communities in building resilience as well as transitioning to net zero in a just and equitable manner. As such, climate justice goes beyond value chain resilience to acknowledge and leverage privilege, address injustices in society related to climate change impacts, and help under-resourced and underserved communities deal with climate change and climate-related transitions.

As companies increasingly commit to net-zero targets and invest in climate action, it is essential to emphasize the needs of the people and communities that are disproportionately affected in their ecosystems. Climate justice must be central to any corporate climate commitment or action plan, and listening, co-creating solutions, and elevating the voices of those most affected are paramount in advancing climate justice.

Blog | Thursday June 9, 2022

Beyond Audits: Six Ways to Manage Human Rights Risks in Supply Chains

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According to the UN Guiding Principles on Business and Human Rights (UNGPs), companies are responsible for conducting human rights due diligence to manage the most salient human rights risks across their operations and supply chains. To assess workplace conditions like forced labor, child labor, low wages, discrimination, and harassment, for example, companies have historically relied on social audits from their Tier 1 suppliers. However, since the Tazreen Garment Factory and Rana Plaza tragedies in Bangladesh, social audits are increasingly scrutinized. Companies are now expected to go “beyond” auditing by adopting more robust approaches to address human rights violations in their supply chain.

Often treated as a “pass/fail” compliance exercise, traditional social audits aim to capture information within a limited timeframe and involve little effort to understand systemic issues or plans for ongoing supplier engagement. “Beyond audit” approaches, on the other hand, seek to engage suppliers through training and capacity building, integrating worker voices, strengthening management and governance systems, and driving greater transparency.

While many recognize the need for a systemic shift away from audits, there is no easy alternative. Below are six points for companies to consider when addressing human rights risks through a holistic approach: 

1. Investment in Governance Structure

Audits are typically managed by third parties, whereas “beyond” audits call for companies to invest in internal governance models to oversee human rights due diligence. An effective “beyond” audit governance structure involves coordination with the procurement team and the implementation of a Supplier Code of Conduct, which requires suppliers to execute their own human rights-related policies. It is essential to develop a strategy that is based on the company’s specific industry context and operations. One example of this is hiring regionally placed, in-market employees, who have a better understanding of local contexts, to oversee supplier relationships.

2. Collaborative Stakeholder Engagement

Partnering with suppliers to understand their challenges, identify solutions, and develop shared commitments has a longer-lasting impact than standalone audits. Forums and stakeholder engagement tools, such as mobile technologies that allow anonymous feedback from workers, can connect buyer companies, suppliers, workers, communities, and governments to increase visibility into supply chains. On-the-ground, direct engagement with suppliers through on-site visits helps companies identify risks and develop culturally and context-relevant programs in collaboration with suppliers. For example, companies can facilitate greater communication between supplier sites and proximal communities to help to foster trust and ongoing engagement.

3. Inclusion and Enforcement of Standards

Aligning human rights policies with international standards, integrating them into supply chain management, and holding suppliers accountable is critical. International human rights standards, such as freedom from slavery or servitude, the right to effective remedy, and the right to freedom of opinion and expression, should be fully embedded into procurement processes. Adherence to these standards should be incorporated into the evaluation of supplier performance and purchasing decisions. Concurrently, buying teams should be trained in responsible buying practices to mitigate the risks often caused from unrealistic deadlines and squeezed prices. Companies should determine the appropriate strategy for termination or remediation of suppliers based on their supplier base. For example, some companies may avoid terminating contracts when violations occur because of limited access to more suppliers, while others may focus instead on remediation and improvement programs.

4. Capacity Building and Incentives

Companies are increasingly investing in capacity building and supplier incentives. These initiatives facilitate knowledge exchange, provide access to tools, and empower suppliers to take ownership of systemic issues and challenges. 

Leading companies also recognize that the most effective remediation strategy includes in-person trainings and hands-on support to strengthen management systems. This approach, unfortunately, has not been possible of late due to the COVID-19 pandemic, driving companies to turn to online engagement and multilingual e-learning programs. The uptake of online trainings has been a hurdle, which is why targeted trainings and incentives, such as preferred contracting terms, are essential. 

5. Supplier Portals and Grievance Mechanisms

Supplier portals are online platforms that serve as a one-stop shop for suppliers to access codes of conduct, supplier documentation, grievance mechanisms, capacity building tools and trainings. Requiring business partners to register their supply sites on such a platform can improve adherence to human rights principles and streamline monitoring. 

These portals have also been where grievance mechanisms are offered to suppliers and their employees. Ensuring that workers in the supply chain have access to a confidential and anonymous grievance mechanism is essential to a “beyond” audit approach. However, many companies have shared that their grievance mechanisms are ineffective and not widely used. New models are being developed to address this gap, including on-site and supplier-led grievance mechanisms, as well as whistleblower technologies. 

6. Change Management and Methodology

New technologies are emerging to replace and augment traditional auditing mechanisms. These technologies can increase information flow to consumers, investors, and other stakeholders by employing tools to map supply chains, assess risks, trace products, and act as grievance mechanisms. Some examples include near field communication (NFC) devices, which enable peer-to-peer communication through secure forms of data exchange. Another is blockchain, which operates as a shared ledger to record transactions and track assets in a business network with a decentralized database. Testing these solutions in-house before expanding across the supply chain is best practice. These tools are promising, yet technology cannot address the root of human rights risks without change management at the leadership, buyer, and supplier levels.  

Managing human rights across supply chains continues to be an ongoing challenge for companies across all industries. While social audits are one way to gain insights into working conditions in supply chains; there is mounting evidence of their limitations. To ensure that social audits are effective and meaningful, companies must go beyond the traditional audit approach by embracing these best practices to achieve positive outcomes for workers and communities.

Blog | Wednesday June 8, 2022

How the SEC Can Mandate Climate-Related Disclosures and Drive Corporate Action

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The SEC's proposed rule on the Enhancement and Standardization of Climate-Related Disclosures for Investors is part of a global movement to improve and harmonize climate-related financial disclosures, which support informed investment decisions and incent ambitious action.

The European Union (EU) and other jurisdictions outside the United States (US) are mandating climate disclosure. Over 2600 companies have already committed to similar disclosures, and the world's largest asset managers are demanding them. By codifying a climate-related disclosure rule, the SEC joins a broad network of institutions formalizing the production and publication of the information investors need to make decisions.

This leadership from the world’s largest economy is significant and can help prevent a fractured disclosure landscape for US companies since many will be required to comply with climate reporting mandates in other jurisdictions.

BSR welcomes the proposed rule as a necessary (but not sufficient) feature of regulatory efforts to ensure urgent action by companies and investors to address the climate crisis.

In support of the SEC’s current efforts to react to market demand for comprehensive climate-related financial disclosures, BSR responded to the latest public consultation on climate-related disclosure and encouraged the Commission to publish a final rule that includes the following:

1. Disclosure requirements that are fundamental for effective climate-related decision-making

The final rule should be just as comprehensive as the proposed draft and require disclosure of key climate-related information in financial filings, including companies’ scope 1, 2, and 3 emissions, assurance for scope 1 and 2 emissions, and governance metrics, particularly those that show board-level involvement.

2. Balances prescriptiveness and flexibility that provides clear guidance to report preparers

Greater clarity in a final rule on elements that are currently open to interpretation—and relevant resources that may aid disclosure—will enable companies to comply more easily.

3. Provides additional accommodations for preparers

BSR supports accommodations for preparers included in the proposed rule. The Commission can also consider additional methods of flexibility, such as allowing an extended period of acceptable estimates for scope 3 emissions and clarifying expectations related to re-baselining of goals and targets in line with globally accepted methodologies.

4. Supports ambitious voluntary commitments

Certain provisions of the proposed rule may disincentivize new climate action and target-setting by requiring disclosure only if the company has a plan or target in place. Accordingly, the SEC should consider adopting a “comply or explain” approach for conditional disclosures (e.g., scope 3 emissions, climate-related goals, targets and transition plans, and the use of climate scenario analysis) where companies would either disclose their approach or explain why they do not have one.

We also emphasize the importance of providing companies with a strong liability shield or “safe harbor” for certain disclosures (e.g., climate scenarios analysis) where uncertainty is inherent in the information being reported and where the absence of these protections may have a chilling effect on disclosure.

5. Is harmonized with relevant global reporting standards and requirements from other jurisdictions

BSR supports the important step that the SEC has taken in building its proposed rule upon broadly accepted reporting frameworks. Accordingly, the SEC should allow the use of alternative reporting provisions that are harmonized with criteria developed by the International Sustainability Standards Board (ISSB) to ease the reporting burden on companies that will also be required to report against these provisions in other jurisdictions.

BSR strongly supports the SEC’s decision to require climate-related financial disclosure, acknowledges the merit behind the Commission’s efforts to create a comprehensive yet accommodating proposed rule, and encourages the SEC to issue a final rule that continues to drive alignment in the reporting landscape, leads to improved climate-related risk management and governance, and incentivizes credible climate action.

BSR will continue to engage on this issue, and in ESG reporting more broadly, through our Future of Reporting collaborative initiative. We encourage companies to get involved in the consultation process by showing support for the proposed rule and the SEC’s efforts to harmonize the reporting landscape and highlighting ways the Commission can strengthen the rule for the benefit of all stakeholders.

Blog | Thursday June 2, 2022

Human Rights in the Healthcare Sector: Current State of Play

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The COVID-19 pandemic has placed a spotlight on the pharmaceutical (pharma) industry and its ability to deliver global solutions at speed and in an equitable manner. Regulatory and stakeholder expectations on the corporate duty to respect and manage human rights impacts are rising—and scrutiny on the performance of the healthcare sector is likely to continue.

Healthcare companies have a huge opportunity to improve the health and well-being of individuals and entire societies. However, their activities can also cause harm to the human rights of patients, employees, supply chain workers, and local communities.

Under the UN Guiding Principles on Business and Human Rights (UNGPs), companies have a responsibility to prevent, mitigate, and remedy adverse impacts on people due to their business activities. As explored in previous BSR publications, salient human rights issues in the healthcare sector include ethical standards in research and development (R&D) and clinical trials, affordability, and accessibility of medicines and pharmaceuticals in the environment.

In the past 18 months, BSR has worked with leading healthcare companies to assess the state of play in human rights practices. Based on our analysis, we have developed a maturity curve to chart healthcare companies’ approach to human rights. We have identified four levels of maturity, from reactive compliance to public leadership on the business and human rights agenda.

From our research on the state of play of human rights due diligence in the pharma sector, we have concluded the following:

Healthcare Companies Are Making Progress

Leading pharma companies have made strides in recent years to meet human rights due diligence expectations in line with the UNGPs. Most companies assessed have a defined approach to human rights, with a basic due diligence process in place and dedicated functions working on human rights. Furthermore, it has become common practice for pharma companies to have made commitments to human rights, identify salient human rights issues, and report on their human rights due diligence.

Leading Pharma Companies Have Embedded Human Rights into Business Operations

Leaders in the field are demonstrating a strong level of integration of human rights into their business operations. Industry best practice includes conducting human rights assessments not just at a corporate level, but also a country level (either internally or with support from external consultants), by training internal auditors on human rights requirements to ensure they can support diligence processes and increased transparency on key challenges.

Insufficient Focus on Vulnerable Groups

A common challenge for healthcare companies is the integration of a vulnerable groups lens in their human rights due diligence. Most companies in the healthcare sector fail to identify vulnerable groups—including women, children, and people with disabilities—along with issues that may impact them more significantly. They also fail to identify or provide grievance mechanisms that are adapted to diverse groups.

Healthcare companies can go further to push the boundaries toward the business and human rights agenda. While a handful of companies are strongly aligned with the expectations of the UNGPs, there is scope for pharma companies to set the bar even higher on business and human rights. This includes through public leadership and proactive engagement on salient issues and increased transparency on human rights due diligence. Current and emerging issues for the pharma industry—including access to health, the nexus between climate and health, and bioethics challenges—demand robust human rights practices and industry collaboration.

Blog | Tuesday May 31, 2022

Inequality Has Become an Investor Priority—How Human Rights Advocates Can Respond

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When the European Union embraced the concept of double materiality in the Corporate Sustainability Reporting Directive, mandating that investors consider risks corporations externalize onto people, the business and human rights movement notched a significant win. Now the notion of double materiality is also taking shape in a different guise beyond Europe: in rising investor concerns around systemic risks, including inequality.

Systemic risks are risks that affect the economic system as a whole, creating “systematic portfolio risk” to an investor’s entire portfolio. Large institutional asset owners and asset managers, due to their size, own hundreds, even thousands of different assets. Their portfolios mimic the market and give rise to their status as “universal owners.” These financial players, who collectively own over 40 percent of the market, are less concerned with risks to individual companies than they are with systemic risks to the totality of their holdings. Extreme inequality is a systemic risk, along with climate change and the spread of authoritarianism.

Systems-level investing therefore means that for those who invest across the entire range of the global economic system, considering the impacts of climate or inequality only to the profits of a single company is insufficient to address total portfolio risk. More important are the risks the company poses to people and the planet that affect economic, social, and environmental (ESG) sustainability.

If a company’s operations promote global inequality—for example, by paying poverty wages, denying paid medical leave benefits, relying on zero-hour contracts, and avoiding taxes - they take away from the company’s ability to create value itself and for its investors.

To help investors and regulators address the problem of systemic inequality and its destabilizing economic impacts, a Task Force on Inequality-related Financial Disclosures (TIFD) is being developed , which builds upon existing standard-setting efforts. Inspired by the successful uptake of the Task Force on Climate-related Financial Disclosures (TCFD), TIFD is a systemic risk management framework created through a collaboration among investors, civil society, business, financial regulators, policy makers, and academics to help all market actors know how to reduce inequality created by the private sector. With an eye towards alignment with the Sustainable Development Goals (SDGs), TIFD aims to launch in 2025 with guidance targets, metrics and thresholds for companies and investors to measure and manage their impacts on inequality, as well as inequality’s impacts on company and investor performance. Stakeholders can use TIFD to evaluate the private sector’s performance and hold corporations to account.

While some types of investors may seek quick profits, their ultimate clients are often institutions with longer time horizons and broader goals. Universal owners like large pension funds and sovereign wealth funds, which collectively represent a whopping $33 trillion, tend to have a better eye on systemic risks than their asset managers do. TIFD is well-positioned to engage these ultimate investors at the top of the “capital markets value chain” – the asset owners and allocators – in assessing their long-term investment goals and evaluating how inequality impacts them.

When an asset manager contributes to inequality, or a universal owner like BlackRock or Vanguard is slow to recognize its self-interest in reducing inequality, the trustees of pension and sovereign wealth funds have an interest as fiduciaries for workers and citizens in holding them accountable. Asset owners can influence the behavior of asset managers and companies through engagement, asset allocation, investment structuring, negotiating terms, shareholder resolutions, and votes for board directors. With TIFD in place, asset owners will have the tools to integrate inequality into their goals, incentive structures, and KPIs for asset managers and companies.

Where does human rights fit in? Just as the human rights framework is an essential element to achieving the SDGs, international human rights sits at the core of the TIFD project. TIFD uses the UN Guiding Principles on Business and Human Rights (UNGPs) to define the normative thresholds of the targets and metrics that will be reported by companies so investors will know whether the business is operating within these limits. For example, a living wage indicator could serve as a threshold for inequality when measured over a period of years and paired with other indicators such as income inequality within the firm and union density and collective bargaining coverage.

The judges of whether or not company impacts have exceeded human rights thresholds are rightsholders themselves. When human rights are upheld and businesses operate with respect for social foundations and ecological boundaries, they create value for society and ultimately for investors.

This is why the TIFD process must engage with rightsholders. Most disclosure frameworks are devised by a select group of technocrats in the Global North, but technocrats are not well positioned to fully grasp inequality and its root causes. To be effective and legitimate, it is those who experience inequality who need to be at the table to define it. TIFD will convene thematic working groups in which this diverse coalition of stakeholders will synthesize empirical evidence about the root causes of inequality with existing corporate and investor disclosure and risk management frameworks, fill gaps, and draw upon that work to define metrics, targets, and thresholds.

“Inside-out” risks – the risks that companies pose to socio-economic equality and human rights—are a matter of investor interest. Even when looked at from the point of view of investor interest, therefore, double materiality is a no-brainer.

Written by Joanne Bauer and Paul Rissman, CoFounders of Rights CoLab. Rights CoLab is a member of the Interim Secretariat of TIFD, along with RACI (Argentina), Predistribution Initiative, and Southern Center for Inequality Studies (SCIS) at University of Witwatersrand. Originally published on the Business & Human Rights Resource Centre website.

Primers | Thursday May 26, 2022

10 Human Rights Priorities for the Industrial Manufacturing 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 UNGPs 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 UNGPs 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 a human rights policy to communicate expectations to stakeholders and business partners
• Ensure there is a robust stakeholder engagement process in place to support ongoing monitoring of potential or actual impacts and drive proactive action or remedy

The actions of businesses can affect people's enjoyment of their human rights both positively and negatively. However, it is important that the priority for any business is to avoid, mitigate, and remedy its contribution to potential negative impacts.

Blog | Wednesday May 25, 2022

Addressing Human Rights Risks in Renewable Energy Supply Chains

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The renewable energy sector faces a monumental task: power the transition to clean energy economies needed to stem the tide of climate change, while ensuring the move is just, inclusive, and protective of both people and planet.

Investment in renewable energy is rapidly accelerating, as companies compete to produce the technology needed to support the energy transition. There is a growing demand for the minerals that are needed to produce green energy technologies (EVs, solar panels, wind turbines, etc.). According to the World Bank, the production of minerals such as graphite, lithium, cobalt, and others, could increase by nearly 500 percent by 2050 to meet global demand.

The extraction of these minerals, however, is often associated with adverse human rights impacts, including land grabs, dangerous working conditions, and harm to Indigenous Peoples. In addition, public scrutiny of company social and environmental practices is growing, and stakeholders are increasingly holding companies accountable for adverse consequences of renewable energy projects. These impacts are likely to get worse given the rapid deployment of these projects to meet climate targets.

It is crucial for companies along the mineral supply chain to identify, prevent, and mitigate human rights risks. However, complex renewable energy supply chains mean companies have limited visibility into the impacts of mining, undermining their ability to prevent and mitigate harm and exposing them to operational, financial, and legal risks.

BSR’s work with energy and extractive companies—including a recent assessment of the human rights risks associated with minerals used in wind, solar, battery, and electrolyzer technology—has surfaced two key strategies for strengthening the management of human rights risks in transition mineral supply chains.

Adopt Comprehensive Human Rights Due Diligence (HRDD) Practices

Context-specific information around the human rights risks of specific minerals may be unavailable, hard to verify, and inconsistent. Further, a lack of data on some minerals poses significant challenges for human rights assessments. While research reports often surface critical information around certain issues (e.g. child labor in cobalt mining in the Democratic Republic of the Congo), they can also skew industry attention toward certain minerals and geographies when there may be other impacts that are just as severe but are simply less well known.

With this backdrop, the renewable energy sector can adopt comprehensive HRDD practices to further understand risks, and shape the human rights risk profile of each raw material and sourcing location, and advance research into less understood materials (e.g. vanadium and indium).

• Strengthening HRDD practices: Companies can carry out HRDD along their value chain, collaborating with business partners and local stakeholders to align expectations and to develop, implement, and verify proactive measures to prevent and mitigate human rights impacts.
• Partnering with mining companies: Companies can partner with their suppliers to drive respect for human rights. Mineral end-users are entering into supply agreements directly with mining companies, which not only serve a commercial benefit, but also increases the visibility and engagement with companies throughout the value chain to uphold sustainability expectations (e.g. Tesla entered nickel supply agreements with Talon Metals, BHP, and others to secure key metal sourcing, while promoting environmentally friendly sourcing).
• Engaging suppliers: End users can work closely with suppliers to strengthen due diligence efforts and improve capabilities to trace materials down the value chain by raising supplier awareness of social and environmental expectations, integrating sustainability metrics into supplier contracts, and asking mining companies to undertake sustainability audits to verify their practices (e.g. aligning with IRMA).
• Disclosing progress: End users can disclose information around who their suppliers are, material sourcing locations, and actions taken to mitigate risks.
• Understanding local contexts: No longer reliant on publicly available reporting, companies are taking more proactive approaches to understand impacts at the local level across their supply chains. Efforts include partnering with peers, civil society, and NGOs to implement independent studies to assess issues and impacts at key sourcing locations.
• Increasing traceability of mineral sourcing: Companies can increase the traceability of mineral sourcing across the value chain by using blockchain technology.

Invest in Circular Economy Solutions

Many companies are looking to invest in circular economy solutions to address the growing dependency on key minerals and alleviate the adverse impacts associated with their extraction, including:

• Promoting recycling: Companies are integrating circular thinking into their business strategies and encouraging mineral recycling to reduce primary sourcing and promote environmental stewardship and respect for human rights in the supply chain. Companies that decrease primary sourcing today will be better placed to meet future regulations that require the use of secondary sourced metals (e.g. emerging EU regulation around battery production).
• Exploring alternatives in sourcing: Companies are exploring alternative sourcing locations, including local and closed-loop supply chains, and innovative technology solutions when making sourcing decisions for their renewable energy technologies. Alternatives can decrease the need for primary sourced minerals and increase a company’s control over the supply chain. One example is the allocation of US$18 million by the US Department of Energy for projects to develop ways to extract rare earths and other minerals from coal waste and coal ash sites. This would bring job opportunities for struggling coal communities, while incentivizing circular initiatives for key minerals.

While recycling and circular production can reduce primary sourcing and alleviate the adverse impacts of mining, it is unlikely to be enough to sustain demand. Efforts to ensure safe and respectful mining practices should always form part of a company’s approach to preventing and mitigating human rights harm.

Addressing human rights risks requires systemic change, both in corporate practice and business operations. By strengthening a company’s human rights due diligence processes, widening the scope of engagement on human rights issues, and implementing innovative approaches to responsible sourcing, companies can gain greater insights into their human rights impacts, make informed decisions about how to prevent and mitigate harm, and effect real change to ensure that their participation in the energy transition is respectful of human rights. 

Special thanks to Roberta Pinamonti for her valuable feedback and dialogue on this blog.