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Blog | Thursday May 30, 2024

1.5°C Targets: The Business Case for a Climate Transition Plan

Preview

The future of corporate climate targets has been a theme of fierce debate recently, especially in relation to announcements and steps taken by the main corporate climate target-setting framework, the Science Based Targets Initiative (SBTi), which generated uncertainty in the market, and some signs of companies watering down ambition in an uncertain environment. But don’t be fooled—in 2024, 1.5°C aligned corporate targets are here to stay, and for most companies, different drivers such as regulations and customers have moved the conversation beyond targets, and toward developing 1.5°C aligned climate transition plans.

SBTi momentum has steadily grown over the past three years, while recent announcements generated uncertainty and put its governance into question. 

In 2015, when the SBTi was first created, there were no science-aligned climate target methodologies, or externally validated near-term or long-term climate targets aligned with the Paris Agreement. In 2024, SBTi is the common reference initiative in the space and currently the only framework for third party-validated, climate science-aligned targets for businesses: its growth is therefore an important sign of the momentum behind climate targets. SBTi-validated targets have grown 100 percent annually over the past three years, to over 5000 approved targets worldwide to date.

Recently, a small group of companies (around 10) withdrew from SBTi, mostly due to methodological misalignment. 

SBTi got into the spotlight for the recent statement from its Board of Trustees on changing rules regarding the use of environmental attribute certificates (EACs) within Scope 3. The initiative has since put forward a clearer process and timeline to establish any changes to its guidance. But this issue puts the initiatives’ governance mechanisms into question, and trust will need to be rebuilt. 

A small group of corporate commitments were for the first time removed from the SBTi website, as part of an effort for corporate accountability.

In 2024, for the first time SBTi removed 284 expired corporate commitments that were set in 2021 as part of the Business Ambition for 1.5°C campaign, in which companies did not submit for validation in time. There are several reasons why companies were not able to submit their target in time, from internal staff changes delaying the process, to confusion about SBTi evolving methodologies, to changes in companies structures making the initial commitment irrelevant. The three most common reasons revolve around the SBTi Net-Zero Guidance being published after the time of commitment, concerns about the feasibility of targets, and challenges with Scope 3. While many reasons are valid, removing expired commitments is crucial for holding companies accountable.

What’s more, most of the removed commitments are related to long-term targets, with the same companies having already validated near-term SBT. This points to the fact that long-term targets require the ability to navigate complexity and uncertainty, fundamental shifts well beyond incremental change, and pulling systemic levers that are critical for transformation. 

1.5°C targets, and how to achieve them, are clearly embedded in regulations.

Setting and delivering 1.5°C targets continues to be a top priority for companies worldwide. While cases exist of companies pulling back their climate targets, the overall trend is in the opposite direction, pushed by regulations as well as customers. The regulatory landscape points toward a doubling down in climate action and ambition, driven by EU’s Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). 

• Under CSRD, climate is de facto a material issue unless a company can prove otherwise. The CSRD’s European Sustainability Reporting Standards (ESRS) requires disclosure of Scope 1, 2, and 3 GHG emissions in line with GHG Protocol; absolute emissions reduction targets; and reporting and disclosure of a transition plan to a 1.5°C future. Companies with SBTs are well placed for the CSRD target requirement, as this WWF analysis shows.
• CSDDD requires companies to develop a climate transition plan, including a 1.5°C aligned time-bound target “for 2030 and in 5-years steps up to 2050.” 

Companies should stay focused on setting and implementing 1.5°C targets, build 1.5°C climate transition plans, and collaborate to unlock the net-zero transformation.

BSR encourages its members not to lose focus on the end goal outlined in the Paris Agreement, so staying focused on setting and implementing 1.5°C targets. This should include both near-term and long-term (2050) goals, as well as a plan to reach them. Today, SBTs are the only externally certifiable science-based climate target companies can use. External validation and transparency on methodology are key for accountability, so we encourage BSR members to continue on their SBT journey. 

High-quality carbon credits are critical for quickly scaling the desperately needed investments in the nature-based solutions necessary for addressing the twin climate and nature crisis. BSR encourages an approach to credits that is differentiated from Scope 3, and stands ready to support its members navigate the volatile space with integrity.

Finally, transformative business action is critical to address the climate crisis: developing 1.5°C-aligned climate transition plans is the way to do so. BSR stands ready to work alongside our members to understand climate transition plan requirements, build climate transition strategies, and collaborate to unlock systemic barriers to net zero. If you still aren’t sure how to move forward with your climate targets, or would like to learn more about BSR’s work on Climate Transition plans, please don’t hesitate to reach out to the Climate team.

Reports | Thursday May 23, 2024

Effective Engagement with Technology Companies

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Civil society has long sought to influence the policies and practices of technology companies in order to address adverse impacts on people and society and advocate for user rights. Technology companies, on the other hand, should engage with affected stakeholders as part of their responsibilities under the UN Guiding Principles on Business and Human Rights (UNGPs, PDF). Stakeholder engagement is also increasingly required as part of compliance with emerging regulation, such as the EU Digital Services Act (DSA).

Achieving meaningful stakeholder engagement in the technology industry benefits both civil society and companies. However, both civil society and technology companies face challenges in engaging effectively.

BSR’s new guide, funded by the Omidyar Network, is a practical resource for anyone seeking to engage with global technology companies on digital rights issues related to the development, deployment, and use of their products and services. The guide includes the following sections:

• Key terms, including the definition of “effective engagement” 
• How technology companies conduct stakeholder engagement
• Common characteristics of effective civil society-company engagement, as well as the barriers to achieving it
• Practical tips and best practices

Blog | Tuesday May 21, 2024

The EU AI Act: 11 Recommendations for Business

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This is the second of a two-part series from BSR’s Technology and Human Rights team on the latest developments around the European Union Artificial Intelligence Act and its implications for business.

With the EU’s Artificial Intelligence Act (the AI Act) soon to come into force, leaders around the world are asking themselves what it will mean for their business. The Act is broad in its scope, applying to a wide range of AI systems and companies at all parts of the AI value chain, from development to use. Therefore, it is crucial for any company that develops or uses AI to understand which requirements of the Act will be applicable. This is an exercise that many legal and compliance teams are already undertaking.

Where prioritization is needed, companies might want to look at the order in which provisions will come into force, focusing initially on ensuring there are no prohibited AI practices (since these rules will be in six months), then looking at requirements around general purpose AI models (twelve months), next AI systems that interact with people (two years), and finally high-risk AI systems (three years). 

How a human rights-based approach to AI can help 

As with other pieces of tech-related regulation stemming from the EU (such as the Digital Services Act), the protection of human rights (termed “fundamental rights” within the EU’s legal system) weaves its way throughout many of the AI Act’s provisions.

While there has been criticism from civil society that the legislation does not go far enough in, for example, prohibiting mass surveillance and facial recognition technologies, for companies developing and deploying AI systems in the future, an understanding of the potential adverse impacts on human rights of those systems is essential.

The most relevant provisions, which are particularly important for “high-risk” AI systems, are: 

1. Risk management systems: Companies will need to develop and implement risk management systems when high-risk AI systems are being developed, and these systems will need to include the identification and analysis of potential risks to human rights.
2. Data and data governance: When developing high-risk AI systems that involve training models with data, companies will need to ensure that those models are validated and tested in line with appropriate data governance and management practices, which must include an examination of possible biases that are likely to adversely impact human rights. 
3. Transparency and provision of information to deployers: Companies that deploy high-risk AI systems must design them in such a way as to ensure that their operation is “sufficiently transparent to enable deployers to interpret the system’s output and use it appropriately”. This involves providing instructions for use that include, among other things, details of any potential adverse impacts on human rights.
4. Human oversight: Companies will need to design and develop high-risk AI systems in such a way that they can be effectively overseen by a human. Such human oversight must aim at preventing or minimizing any risks to human rights that may emerge when the system is used as intended, or where it is “misused” in ways that are reasonably foreseeable (i.e. where it might be used in ways which weren’t intended). 
5. Human rights impact assessments: Before certain high-risk AI systems are deployed (primarily when systems are to be used by the public sector), deployers must undertake an assessment of the impact on human rights that the use of the system may produce. This assessment must include details of the individuals and groups likely to be affected, the specific risks of harm, and what measures are to be taken to mitigate those risks. 
6. Reporting serious incidents: Providers of high-risk AI systems placed on the EU market must report any “serious incident” to the market surveillance authorities of the member states where that incident occurred, and “serious incidents” include breaches of obligations under EU law intended to protect human rights. 

The definition of “high-risk” means that some sectors are likely to be more impacted by these requirements of the AI Act than others, such as companies involved in the provision of key public services and infrastructure, or those in the financial services sector using AI to assess a person’s creditworthiness. But some “high-risk” AI systems may be relevant for companies’ internal uses of AI, regardless of sector, such as the use of AI-based emotion recognition technologies to determine an employee’s emotions (such as whether they are bored or unhappy), or the use of AI for recruitment purposes. 

These different provisions all require companies to develop a strong understanding of the potential impacts that their development or use of AI may have on human rights, as well as to take steps to mitigate those impacts. As such, the AI Act has overlaps with other existing and upcoming regulations which require human rights due diligence. Companies will be well placed to meet these emerging regulatory requirements by taking a harmonized approach, grounded in human rights, and specifically the UN Guiding Principles on Business and Human Rights (UNGPs), across their business.

In addition to BSR’s support for companies to apply to the UNGPs, we’re developing a range of resources specially on the human rights impacts of AI, including guidance on responsible AI in the financial services, consumer, healthcare and retail sectors, as well as our upcoming sector-wide human rights assessment of generative AI.

Our key recommendations on what companies can do now are: 

1. Put together an inventory of the existing and planned AI use cases within your company. 
2. Undertake human rights due diligence of those existing and planned uses of AI to identify high risk areas. 
3. Ensure you have a clearly defined purpose for each use of AI and consider establishing use limitations.
4. Establish a governance mechanism for the responsible use of AI within the company, such as internal cross-functional oversight committees, and/or an external advisory councils. 
5. Given many of AI’s risks, connected to privacy and data protection, ensure a high level of data protection within the company reviewing existing measures, policies and processes to ensure they meet the additional risks created by AI 
6. Test AI models for bias and externalities, to mitigate potential discriminatory impacts. 
7. Undertake adversarial testing and red teaming (exercises where the AI system is stress tested to discover how the system might be misused or lead to harmful outcomes). 
8. Provide transparency to users, internally and externally, about how the AI models and systems work. 
9. Integrate feedback through a reporting channel where potential misuse and abuse of AI systems can be reported.
10. Engage in dialogue with other industry players in your sector. 
11. Engage with external stakeholders throughout the AI life cycle to help inform decisions around the development, sale and use of AI. External stakeholders could also be part of an external advisory council (see recommendation 4). 

For more information on the AI Act or to discuss its implications for your business, members can contact our Tech and Human Rights team.

Audio | Wednesday May 15, 2024

Is the U.S. Ceding its Position as a Leader in Sustainability?

Preview

Aron Cramer, BSR President and CEO, chats with David Stearns about why the United States is at risk of marginalizing itself and its influence over the pace and trajectory of progress on sustainability, and what this means for business.

Case Studies | Wednesday May 15, 2024

Conducting a Double Materiality Assessment

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Introduction

BSR worked with Assurant, a global business services company that supports, protects, and connects major consumer purchases, to conduct a global double materiality assessment aligned with leading reporting standards and frameworks. Assurant and BSR used the materiality assessment as an opportunity to improve the company's understanding of the double materiality process and facilitate discussions with senior business leaders around stakeholder priorities and strategic implications at a regional and global level. This project enabled Assurant to confirm its strategic priorities ahead of its sustainability strategy refresh and prepare for upcoming regulatory reporting requirements like the EU Corporate Sustainability Reporting Directive ("CSRD"), given the company's presence in Europe.

Background

Assurant is a leading global business services company that supports, protects, and connects major consumer purchases through two operating segments: Global Lifestyle and Global Housing. A Fortune 500 company with approximately 13,600 employees in 21 countries, Assurant partners with the world's leading brands to deliver innovative solutions through mobile device offerings, extended service contracts, vehicle protection services, renters’ insurance, lender-placed insurance products, and other specialty products.

The Challenge

Assurant recognized the need to refresh its materiality assessment using a double materiality approach, which considers how sustainability topics influence a company's enterprise value (“financial materiality") and how the company's activities related to sustainability topics affect the environment and society (“impact materiality"). In recent years, the sustainability field has been moving away from methods that are based on stakeholder perceptions and adopting methods based on impacts. CSRD's double materiality requirement has dramatically accelerated that shift. What was once considered a nice-to-have is now non-negotiable for many companies. Adopting the concept of double materiality clarifies that many sustainability topics may not impact enterprise value, but companies still need to address them because these topics impact the environment and society, including affected stakeholders. Assurant understood the strategic value of this opportunity and wanted a partner to work closely with them on a robust assessment aligned with best practices.

With over 30 years of experience in the sustainability and human rights field, and as an early adopter of double materiality, BSR has worked with 250 companies on materiality assessments. BSR's methodology pulls from best practices in the materiality and human rights fields to systematically identify, define, and prioritize a company's positive and negative impacts on enterprise value and the environment and society, by assessing the likelihood and severity of the impacts to occur. BSR's approach to double materiality and emphasis on authentic stakeholder engagement resonated with Assurant's desire for a strategic and thoughtful process instead of a solely compliance-focused exercise.

BSR’s Response

As a company headquartered in the US with operations in the EU that are subject to CSRD, Assurant wanted to ensure that its materiality assessment incorporated a European lens as well as focused European stakeholder engagement. BSR worked with Assurant to define an efficient approach that would result in a global view, while also providing sufficient regional nuance. At the beginning of the project, BSR developed a long list of relevant sustainability topics and descriptions of impacts on business and impacts on environment and society at global and regional levels using European Sustainability Reporting Standards (ESRS) guidance, other reporting frameworks, peer reviews, strategic documents, and prior materiality results. While a high-level materiality assessment based on stakeholder perceptions can uncover impacts to enterprise value, BSR's work with Assurant and other organizations has revealed that more in-depth research using various data sources is needed to meaningfully capture impacts on environment and society by the company or its industry.

As part of our process, we engaged 45 internal and external stakeholders to analyze perspectives and emerging expectations on key sustainability topics and actual or potential impacts, risks, and opportunities (IROs). For materiality assessments, it is critical that companies involve a wide range of stakeholders in the process of identifying and assessing IROs. Internal stakeholders should include leaders and employees across the organization, covering the regions in scope, and a company's various business lines. External stakeholders commonly include clients, partners, suppliers, industry groups, rights-holders, thought leaders, NGOs, and trade unions. Based on findings from the stakeholder interviews, we refined our definitions of the key impacts associated with each topic on enterprise value, environment, and society.

The topics were ranked based on impacts to enterprise value and impacts on environment and society following CSRD requirements and using a framework that was aligned with Assurant's ERM system. The results were plotted on global and European matrices, to call out the regional nuances. The matrices were accompanied by rationale for the topic placements and the key differences between the global and European results. BSR conducted two virtual interactive workshops with Assurant's European and global executive leadership teams to validate results and discuss strategic and reporting implications.

Impact

BSR conducted a robust double materiality assessment to prepare Assurant for its upcoming strategy refresh and mandatory disclosure obligations. The finalized materiality results clarified Assurant's highest priority topics and brought consistency between global and regional sustainability strategy and reporting. This process helped to broaden the organization's knowledge of sustainability topics, related impacts, risks, and opportunities, and led to an improved understanding of and alignment with the double materiality process, as defined by CSRD. The meaningful conversations with various stakeholder groups allowed Assurant to strengthen its relationships with key partners and identify future opportunities for collaboration. As a next step to this work, Assurant is translating the findings from its materiality assessment to develop goals, targets, and action plans for its highest priority topics.

We recognized the value of extensive stakeholder engagement as a key input for the assessment, offering meaningful dialogue with our senior leadership on priority matters and amongst several key clients on common sustainability focus areas. The BSR team effectively facilitated much of the key discussion throughout the assessment's stakeholder engagement and felt like an extension of our Sustainability Team.

- Michael Bellantis, VP of Sustainability, Assurant

Conclusion

A double materiality assessment should not be viewed as a mere tick-box exercise, but a valuable strategic endeavor that will serve as the foundation for a company's sustainability strategy and reporting. Not only does it position companies to adapt to upcoming and future disclosure regulations, it also leads to stronger internal and external stakeholder relationships and more resilient business strategies that focus on long-term value.  

Get in Touch

Interested in learning more about BSR's approach to double materiality assessments? Please contact BSR's Transformation Team.

This case study was written by Megan Coffey and Beth Richmond.

Blog | Wednesday May 8, 2024

The United States Is At Risk of Marginalizing Itself on Sustainability: What Business Can Do

Preview

This is the second of a two-part series on how developments in the United States are marginalizing its global leadership role, and creating unnecessary barriers to the achievement of a more just and sustainable global economy. 

The lack of consistent American engagement and leadership on just and sustainable business is having far-reaching consequences. The picture we painted in the first installment of this two-part series includes inconsistent and changing regulations, opposing approaches in different US states, a decline in global cooperation, and increased geopolitical conflict that interferes with global trade. These developments are bad not only for sustainable business, but also bad for business in general. 

With this in mind, what can business do? While many companies have gone quiet in the face of backlash and skepticism—mostly while maintaining commitments—that may not be the right influence strategy at a time when many forces are pulling the United States away from a more consistent and ambitious approach.  American poet Robert Frost famously wrote that when facing a problem, “the best way out is always through,” and that applies here.  To avoid further slippage of American leadership, it’s essential that companies go directly to one of the main sources of this erosion of ambition: the unfounded backlash against addressing important issues like climate action and the need for greater equity.     

While many business leaders would prefer to avoid the political risk they see in calling for more decisive direction from the US, standing aside is riskier than engaging. A failure of American leadership and constancy will only magnify and deepen the many uncertainties facing companies due to multiple disruptions.

Put more positively, companies benefit from sustained American engagement in many ways: consistent and predictable rules to enable more stable planning; global cooperation to address shared challenges; ideally, respect for rule of law; support for financial support for the energy transition, and policies that promote the innovations and investments needed to shift the economy to a fairer and more sustainable pathway.

There is a strong business case for companies to call for American engagement in support of a more sustainable world. To be credible messengers, business also needs to look in the mirror: one of the reasons that support for sustainability in the US is waning is the fact that the public has lost faith in the global economy as a driver of shared prosperity. For the private sector to exert influence in a way society embraces, it has to go further in terms of action, credible communication, and willingness to engage in advocacy.

Action: One of the reasons why much of the general public, and many policymakers, are wary of the sustainable business agenda is the insufficient evidence of progress. It is high time to close the gap between commitment and delivery. Whether on Scope 3 climate goals, diversity objectives, labor conditions in global supply chains, or designing technologies with society’s best interests in mind, there are legitimate reasons why “ESG” has become a juicy target for political opponents. What’s more, there has been little effort to make economic equity and opportunity a strong enough part of the sustainability agenda. Closing the delivery gap is easier said than done, and is a prize in itself. Doing so is a predicate for the private sector to use its voice credibly and effectively. 

Communication: Public officials’ commitment to sustainability is driven in part by tepid public support. And weak public support is due in large part to the disconnect between what sustainability advocates say and what the general public understands and feels to be true. We all know that business has not communicated effectively on sustainability, in some cases conveying grand messages on “corporate purpose” which are not sufficiently matched by actions at best, or which were never “real” to begin with at worst. Objectives also are often disconnected from the reality of peoples’ lives. The exciting innovation stories behind many sustainability initiatives is something that is either underplayed, or may not resonate with the average person. As a result, sustainability seems to be suffering from its own “vibecession,” with the progress taking place lost on people who feel vulnerable economically and nervous about the overall pace of change they are experiencing. Blaming the audience never works, however, so it is essential to make sustainability more real, and more compelling. This will have the echo effect of strengthening political support and pushing back on the backlash. 

Advocacy: Business’ influence as an advocate for supportive public policy has been stilled over the past two years, as companies have faced blowback from some elected officials, and skepticism from the media, stakeholders, and even employees. While it may be true that new commitments were trumpeted too loudly in 2020-21, it also seems true that greenhushing has gone too far now. The business voice needs to be heard. What’s more the voice that needs to be heard is in sync with business interests as well as sustainability objectives. Companies have an interest in the rules-based global trade system, consistent regulatory frameworks, and a commitment to global cooperation to address shared global challenges. Business—if it shores up its credibility based on delivering against goals—can be a powerful voice that helps to ensure that the US remains committed to these objectives and actions. Without this, the private sector could see further slippage into a combative and volatile environment that furthers neither economic vitality nor sustainability progress. 

Building an economy that works for all people is, by definition, a matter of universal concern. And while “Sustainability Americana” is not fit for purpose in today’s world, a coherent global approach to sustainability requires that America stay in the game. American leadership matters—and it won’t happen without businesses calling for ambition, cooperation, and engagement.

Reports | Monday May 6, 2024

The Elephant in the Sustainability Room

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After a decade of setting environmental commitments, the company's focus has shifted to delivery.

This implementation phase is proving challenging for many. Despite some progress, many companies find they are progressing at a slower pace than expected. While the lack of a supporting policy environment certainly contributes to these challenges, in many cases, they are also a result of business objectives that remain at odds with sustainability targets.

This foundational working paper builds on BSR’s Beyond Growth event series, and is the first in BSR’s ongoing contribution to critical business discussions to address this tension. It explores:

• The fundamental issues and barriers creating this tension
• How alternative economic models are an underexplored solution
• How can business address the tension between growth and sustainability targets, including through business model transformation

BSR is committed to exploring all paths to effectively deliver long-term sustainability goals, and will continue to contribute to this critical discussion with members.

Blog | Thursday May 2, 2024

Human Rights in Transport & Logistics

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Most companies have focused initial human rights due diligence efforts on their own operations and supply chains feeding directly into their products and/or services. Transport & logistics (T&L) services, despite being critical to company operations and inherently risky for human rights, have been overlooked as part of companies’ ‘indirect’ or ‘operational’ supply chain. However, the changing regulatory context is increasingly requiring that companies look beyond these traditional areas of risk to consider, and prioritize, high-risk segments of their broader value chains. As they do, T&L services are expected to rise to their attention as an inherently high-risk sector for human rights, in every part of the world.   

To help companies begin to understand these risks, BSR is pleased to release its updated primer on human rights in the transport and logistics sector. This primer draws on extensive work conducted by BSR with T&L companies and customers of such services. This work has confirmed the importance of conducting due diligence on these activities and emphasized the urgent need for collective action by customers and suppliers of T&L services to raise human rights standards across the value chain.  

What Human Rights Risks?  

Transport & logistics includes a wide range of activities, covering the actual transport of goods by various modes (air, rail, road, sea) and physical sites where goods are transferred (ports) or stored (warehouses), as well as many intermediary and ancillary services. T&L is a crucial link in the operation of the modern economy and global trade. Almost every company relies on T&L services in some manner, with a trend toward outsourcing of these activities to specialized third parties. Outsourcing has the unintended consequence of raising challenges to ensuring respect of human rights for workers, by both increasing the risks of exploitation and reducing the visibility and control over these risks. Indeed, many workers in T&L value chains—including seafarers, delivery drivers, and warehouse workers—face a serious lack of standards and protections. 

A recent convergence of factors serves to exacerbate the human rights risks within transport & logistics:  

• Fragmented supply chains reduce company leverage, put downward pressure on wages and make due diligence more difficult 
• Cross-border operations means variable wages and other labor protections, and challenges to enforcing consistent standards; 
• Labor shortages, which are forecasted to continue, increase the risks of labor exploitation; 
• A mobile, and sometimes informal, workforce creates challenges for monitoring working conditions; and 
• Ever growing consumer demand and delivery speeds pressure companies to maximize productivity at the expense of workers and labor standards. 

Growing Scrutiny of Transport & Logistics Value Chains 

The COVID-19 pandemic shone a spotlight on the difficult working conditions of many essential workers, including those keeping global trade and supply chains running. Reports about hundreds of thousands of seafarers being abandoned and unable to return home, delivery drivers lacking basic protections while struggling to meet surging demand, and warehouse workers facing widespread COVID outbreaks were all too common.  

Emerging due diligence laws that require companies to conduct risk-based due diligence of their supply chains (such as the French Duty of Vigilance Law and German Supply Chain Act) are bringing to the attention of companies, as well as their investors and customers, that T&L activities present high risks of human rights violations and should be prioritized for prevention and mitigation measures.  

• The first decision under the French Duty of Vigilance Law implicated a transport company – La Poste, France’s national parcel delivery provider. The decision found that La Poste had failed to comply with its duty of vigilance by not adequately identifying and addressing the human rights risks linked to their subcontractors. La Poste was ordered to improve its risk mapping and establish procedures to assess its subcontractors against the risks identified.  
• The EU Corporate Sustainability Due Diligence Directive also explicitly extends due diligence obligations to “the activities of a company’s downstream business partners related to the distribution, transport and storage of the product, where the business partners carry out those activities for the company or on behalf of the company”.  

There is little doubt that human rights risks linked to T&L are now on the radar of stakeholders and regulators and companies must begin to understand and address these risks more closely.  

Recommended Actions  

Key steps to begin to address human rights in your T&L value chain include:  

1. Map your T&L activities, including to what extent these activities are outsourced and subcontracted and where they take place.  
2. Review the fitness of your supplier risk management policies and processes are fit to detect human rights risks linked to T&L services.  
3. Review whether your contracts with T&L providers 1) set the right expectations on respecting human rights and 2) enable you to verify their workforce’s working conditions. 
4. Engage with workers in your T&L value chain directly or through trade unions and other organizations representing the interests of T&L workers.  
5. Identify opportunities to engage in collective or multi-stakeholder efforts to drive improved human rights conditions in this sector, acknowledging the limited leverage many single companies have over their T&L service providers.   

BSR’s human rights team advises business from across sectors on due diligence, assessment, and management of risks. We are particularly interested in bringing together interested companies to further explore the potential for collective action on the risks and impacts in the T&L sector. Please get in touch with any questions or if you are interested in joining such a collective conversation.  

Primers | Thursday May 2, 2024

10 Human Rights Priorities for the Transport and Logistics Sector

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Human rights are inherent to all people, regardless of nationality, sex, national or ethnic origin, color, religion, language, or any other status. They are globally agreed upon standards of achievement for all people, covering a wide range of independent yet interconnected civil, political, economic, social, cultural, and environmental rights that serve as a ‘code of conduct’ for all human beings.

All companies can impact human rights either positively or negatively through their action or inactions. The key document speaking to these impacts is the UN Guiding Principles on Business and Human Rights (UNGPs), the authoritative global standard on business and human rights. Though technically "soft law," the UNGPs have been incorporated into the OECD Guidelines for Multinational Enterprises, ISO 26000, IFC Performance Standards, GRI, UN Sustainable Development Goals, and many other frameworks. They have also been endorsed by business and industry organizations representing thousands of companies, civil society organizations, NGOs, and member states of the United Nations.

As part of the corporate responsibility to respect human rights, the UNGPs require companies to actively identify and manage the negative human rights impacts that they may cause or to which they may contribute or are linked through their business relationships.

This primer identifies the 10 most relevant, urgent, and probable human rights impacts for businesses operating in the Transport & Logistics (T&L) sector. It is intended as a starting point and should be supplemented by robust internal human rights due diligence processes. The information here is gathered from BSR’s direct engagement with T&L companies and the companies that rely on them, as well as our 30 years of experience helping companies in all sectors manage their human rights risks.

T&L activities provide the backbone to the modern economy and global trade. Almost every company relies on T&L services to deliver its goods or services, and the trend has been toward the outsourcing of these activities to specialized transport actors. This reliance on outsourcing has given rise to challenges to ensure the respect for human rights for workers throughout the extended supply chain.

The T&L sector comprises a wide range of activities, along a value chain that includes various modes of transport of goods (by road, rail, air, and water); the physical transfer points (e.g., terminals, airports, rail stations) and warehouses where goods are stored, packaged, and sorted for ultimate delivery to end-customers; and the intermediaries (e.g. freight forwarders) that connect these different services. These activities rely on workers such as truck drivers and last-mile delivery workers, pilots, and seafarers, as well as logistics staff such as warehouse workers, ground crews, and dockworkers. They can also impact wider communities, particularly those located near ports, warehouses, or other transportation hubs or routes.

While each of the activities undertaken by T&L companies present unique human rights risks and challenges, this primer highlights the most common and significant risks across the T&L sector as a whole. The primer also offers opportunities for T&L, as a sector that is both global and local and employs tens of millions of workers around the world, to advance the realization of human rights.

Blog | Tuesday April 30, 2024

The United States is at Risk of Marginalizing Itself on Sustainability

Preview

This is the first of a two-part series on how developments in the United States are marginalizing the American leadership globally and creating unnecessary barriers to the achievement of a more just and sustainable global economy. Read the second blog here.

Over the first quarter of 2024, it is clear that the United States is at risk of marginalizing itself and its influence over the direction of the global economy, the urgent challenge of the energy transition, and the competitiveness of American enterprise. This presents an unnecessary risk not only to our collective well-being, but also to the effectiveness of American leadership.

While the Biden Administration and states like California and New York have continued to raise ambition and make smart public investments, several crosswinds threaten to interfere with the trajectory and consistency of these significant federal government actions.

America’s federal system is at the core of the issue. First, as is well known by now, many states and cities have pushed back—vigorously—on the rise of “ESG,” taking aim not only at the terminology, but also on the very concept that investors and businesses should consider the impact of topics like climate or DEI, even when they are plainly relevant to their businesses. The pushback of a loose coalition of state attorneys general has resulted in legal and political challenges to action on climate and diversity in particular. This so-called backlash has begun to have an impact not only on what companies say, but also what they do.

Second, the uber-litigious nature of American political culture means that rules like the SEC’s recent climate disclosure rule, as well as California’s rules, are being challenged in the courts, which could change or delay implementation. Indeed, the SEC’s climate disclosure rule was delayed and watered down in anticipation of significant legal challenge, and has now been paused by the SEC itself due to legal challenges. The end result is uncertainty, delay, and misalignment of US rules with the rest of the world. 

Finally, and has been the case for nearly a decade, the continued presence of Donald Trump on the American political scene, enabled by a fractured media environment in which some outlets traffic in mis- and disinformation, is also having an effect. Project 2025, considered the stalking horse for a second Trump presidency’s policy initiatives, takes direct aim at sustainable business and investing through multiple means, from politicizing the civil service to reversing many Biden administration regulations, and pension funds’ right to consider ESG factors. (The Inflation Reduction Act, however, which is enshrined in law, would likely be spared).

All this threatens to put the United States out of step with the direction of travel in most of the rest of the world, not least its usual allies and partners. Trade, global cooperation, consistent global rules, and political stability are all at risk. 

• Trade: During my recent visit to Singapore and Japan, the focus on a trade-based agenda stood in sharp contrast to the focus on domestic manufacturing in the US, and protectionist sentiments that are, for example, putting Nippon Steel’s acquisition of US Steel at risk. The feeling in much of Asia is that the US has abandoned the open trading system that has generated rising living standards across Asia, ever since it disavowed the Trans-Pacific Partnership in 2016. This is not to say that there are not legitimate reasons why the US has soured on the Washington Consensus, despite its provenance. But the fact that is too often lost on Americans is that the world is ready, willing, and able to get on with the trade agenda, whether or not the US is an eager participant, let alone a leader, and certainly diminishes its role as a central actor on the world stage. Even more, a Trump return to power, especially if it is accompanied by major tariffs, would not only see the US pull back further from open trade, it also would threaten to create a massive disruption and possible trade war. This is deeply concerning to most of the world. All is not lost, however, as witnessed by the announcement this month of a Climate and Trade Task Force by the Biden Administration. 
• Global cooperation: The growing strains of isolation in the US may undermine the US role in negotiating international agreements well beyond trade, including on climate, nature and human rights. There is little doubt that a second Trump term would again turn the US away from multilateralism, this time potentially with even greater impacts. Given the immense significance of COP30 in 2025, where the next round of national climate commitments are due, progress will be hindered by a lack of American engagement. If the world’s largest economy is not working to build international cooperation, the world will find other ways to muddle forward, with the US lamentably lagging behind, forfeiting its leadership status.
• Consistent sustainability regulations: Every business is counting on the slow but steady march towards more harmonized sustainability regulations, with reporting and disclosure being especially important. As we noted in our commentary on the SEC rule released last month, the US now looks out of step with an otherwise growing global consensus. The reasons are understandable, and linked to the backlash and federal system noted above. The unfortunate result, however, is inconsistency that hinders a smoothly running financial system. The US is now playing catch up—most global companies will end up following the rules being adopted in most other markets—and losing the ability to shape how markets operate.
• Emboldening populists: The last point is more about the direction of global politics. The US risks reinforcing the drive towards a populist nationalism that fosters protectionist economics and xenophobic, authoritarian politics. The US is at risk of landing on the side of those who wish to build walls when cooperation is needed; who turn their eyes away from the climate crisis instead of embracing an ambitious national project to fight it, and build the American economy of the future, and who promote raw power politics instead of respect for rule of law and transparency, which history tells us is necessary for genuine and shared human progress. This is an historic shift away from the US’s posture for most of the 80 years since the end of World War II. 

This is of obvious and crucial importance to the entire world. But what is equally true is that this is also of central importance to the well-being, position, and prosperity of the United States and its citizens.

Business wants to make sure the system of global trade continues, for obvious reasons. Business can make the case, but currently it is seen as a flawed messenger by much of the American public. It can make the case for an American public that has lost faith that US leadership globally is worthwhile. The path forward? Business can be effective, though only if it fully embraces a version of global trade that rests on decisive action on climate and nature, respect for all peoples, and rule of law and human rights. 

We will turn our attention to how business can and should respond in our next installment.