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Blog | Monday May 4, 2020

Sustainability Reporting and Early Lessons from COVID-19

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Public scrutiny of how businesses are responding to the COVID-19 pandemic is bringing renewed attention to the importance of corporate transparency on sustainability issues. Effectively meeting these expectations starts with understanding two key dimensions of sustainability reporting: how companies are responding now and defining how companies should respond in the future.

We have observed several trends emerging from the pandemic and compared them with best practices on reporting. We are sharing these insights here to assist company sustainability teams as they strive to keep stakeholders informed—despite, in many cases, the reality of limited time and diminished resources.

What We’re Seeing Now

1. Companies adjusting their reports. COVID-19 has shaken all businesses, causing some to delay or scale back their formal sustainability reporting. Companies that recently released a 2019 report or are in the final approval stages are primarily acknowledging COVID-19 in one of three places: the CEO letter, as a call-out box or case study within the report itself, or in the report’s corresponding press release. Companies are also linking to informal and regularly updated webpages that provide specifics on their immediate COVID-19 responses.
2. Investors watching closely. Investors remain eager for the latest performance data and have reiterated the importance of engagement on long-term environment, social, and governance (ESG) issues despite the havoc wreaked on businesses’ day-to-day operations. BlackRock notes this proxy season will focus on board composition and quality, environmental risks and opportunities, corporate strategy and capital allocation, compensation that promotes long-termism, and human capital management. JUST Capital is tracking how employers are treating stakeholders amid the current crisis, and Truvalue Labs has introduced a free Coronavirus ESG Monitor that captures impact using the Sustainability Accounting Standards Board's (SASB) material issue categories. The ESG issues that investors were looking at prior to COVID-19 still hold—indeed, the current crisis has amplified their importance to investors’ decision-making. 
3. An emphasis on social criteria. The COVID-19 crisis is placing heightened importance and increased scrutiny on how companies are addressing the “S” in ESG. News outlets and investors alike are focusing on companies’ treatment of employees, suppliers, and the communities in which they operate, naming and shaming (or faming) good and bad actors along the way. Reputation is an important driver of this focus, but business continuity, economic inclusion, and public safety considerations are also critical. Given mounting investor, civil society, and media attention, companies are increasing their focus on social issues to demonstrate responsiveness to the top priorities of the day.

What We’d Like to See in the Near Future

1. Consistency and completeness. Investors still want comparable year-on-year data and will be especially interested this year in gauging companies’ resilience to shocks. Although managing COVID-19’s immediate impacts remains top priority for many public companies, reporting historical ESG data and performance remains essential. While a slight delay of this year’s reporting is understandable, companies should still strive for the same level of coverage as previous years and continue to improve their disclosures moving forward, with the expectation that their performance on key social issues will be even more thoroughly examined than usual.
2. Accountability during the new reality. Reports should provide an enduring account of how companies are responding to the COVID-19 crisis. The extent to which companies do this now or in the future depends on where they are in their reporting cycle: reports near completion today (e.g. by companies that operate on a calendar-year basis) will provide less insight than those with more time available (e.g. by companies with a fiscal year that doesn’t match the calendar year and report later in the year). Regardless of reporting calendar, companies will need to explain decisions made during this time and make forward-looking statements about how they intend to help "build back better" in the future. Sustainability reports will become an essential venue for accountability when looking back at company actions during COVID-19.
3. Numbers backed by narrative. Stark reductions in business operations and travel as a result of COVID-19 will likely reduce companies’ greenhouse gas emissions and other environmental impacts, in many cases accelerating progress towards sustainability goals. Similarly, COVID-19 will impact many other metrics, such as diversity, employee engagement, and supply chain labor compliance. Going forward, it will be essential for companies to provide a narrative that identifies what change in historical performance relates to COVID-19 factors and what change results from previously existing plans—numbers on their own will be impossible for readers to interpret. It will also be important to provide a forward-looking narrative explaining their potential trajectory once COVID-19 is behind us.
4. Meeting stakeholders’ information needs outside the annual reporting cycle. Honest and timely communications are more important now than ever. Reporting is about meeting the information needs of external stakeholders, and in the current crisis, that may entail disclosure outside the boundaries of the formal sustainability/annual report, such as dedicated COVID-19 webpages. While not a substitute for formal reporting, well-designed websites and other responsive communications can be a powerful tool to distill the most material information to stakeholders, enabling them to make informed decisions and provide feedback to companies in the near term.

Sustainability reporting exists so that stakeholders can make informed judgments about how companies impact the world around them and understand how the changing world impacts the sustainability performance of companies. In this sense, sustainability reporting is more important now than it has ever been, and looking forward, it will be critical to understand how COVID-19 may impact sustainability reporting over the long term. Stay tuned for a follow-up blog post on how to “build the future” of post-COVID sustainability reporting.

Blog | Wednesday April 29, 2020

Understanding Connections Between Climate and Public Health

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Climate change threatens the planet, our communities, and business. The global COVID-19 pandemic is also highlighting the connection between climate and public health.

As part of Earth Day, and in light of the current worldwide health crisis, BSR member company Levi Strauss & Co. interviewed experts at the intersection of climate and public health, including BSR Director Cécile Oger. To better understand connections between these two critical issues and the next steps to take, we invite you to read this article. 

Blog | Wednesday April 22, 2020

ESG Isn’t Going Anywhere: Investor Expectations in the Age of COVID-19

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One of the most important topics in corporate sustainability is the dramatic increase in attention by investors on the integration of environmental, social, and governance (ESG) considerations.   

The COVID-19 pandemic has created a global health crisis, upended the economy, and led to major stock market declines. As a result, many investors are reevaluating both short-term and long-term portfolio strategies, and companies are reevaluating their sustainability priorities. This raises an important question for corporate sustainability professionals: how will the rise of COVID-19 affect ESG investing strategies both in the short term and the long term, and what does it mean for companies?  

Preliminary indications are that the COVID-19 pandemic has—if anything—increased investor attention on corporate ESG management. In particular, investors have been even more vocal about their expectations on issues such as employee health and safety, workforce policies, job security, and business operational and strategic resilience. Front and center are investor concerns about responsible corporate governance, specifically related to COVID-19 response.   

Preliminary Indications Are That Investors Are Full Steam Ahead on ESG 

Leading asset owners and institutional investors are renewing their ESG investing commitments. The Government Pension Investment Fund (GPIF) of Japan, the world’s largest asset owner, and other major asset owners remain steadfast in their expectations of ESG and long-term investing. Even as the virus and market turmoil spread in mid-March, a new round of major asset owners joined GPIF’s letter.   

Larry Fink, the CEO of BlackRock, the world’s largest asset manager, also released a letter at the end of the first quarter in which he emphasized that “the pandemic we’re experiencing now highlights the fragility of the globalized world and the value of sustainable portfolios. We’ve seen sustainable portfolios deliver stronger performance than traditional portfolios during this period.” Blackrock is also continuing to take ESG action as a shareholder even during the crisis, notably voting against a board member at a natural gas distributor based on the company’s inadequate climate-related risk disclosure. 

Early data seems to show that ESG funds are performing better and proving more resilient during this turbulent moment in time. S&P Dow Jones' analysis notes that ESG portfolios have delivered better returns during the COVID-19 crisis and over the longer-term as well.  

BSR has partnered with Polecat since 2017 to deliver real-time corporate reputation and ESG intelligence from global online and social media discourse. Our review of data from Polecat indicates that many ESG topics (e.g., climate change, indigenous rights, etc.) are being reframed in relation to COVID-19, increasing their urgency and reach.   

The Wall Street Journal also envisions that the pandemic could elevate ESG factors in investment decisions, characterizing remarks from the head of research at the British investment bank Barclays: “Companies should expect more investors to ask questions about resilience and contingency planning, viewing the issues in light of the pandemic as relevant to a company’s long-term performance. Down the line, those conversations could evolve to broader ESG discussions…” 

More broadly, COVID-19 has also highlighted enormous disparities in society and corporate performance on the “S” in ESG. As the world assesses the challenges and rebuilds—and invests the capital to do so—it is likely to be guided by the imperative to “build back better” with a more just and sustainable economy. Companies will be evaluated by how they address those challenges in their businesses and being part of global solutions will be both a competitive differentiator and an ESG differentiator. 

COVID-19 Will Demand Emphasis on Different Areas of ESG

Many, if not most, corporate sustainability materiality matrixes will need some updating. The pandemic has demonstrated that many companies might generally have identified the right set of issues but may not be prioritizing them correctly or setting the right agendas to address them. For example, many service companies have not thought that employee health and safety was a high risk for their business. This thinking is obviously now changing.  

In this regard, BSR has seen a variety of material issues emerge as areas of particular interest to ESG investors. These include employee health and safety outside as well as inside the workplace, supply chain and resource risk and resilience, and employer-employee social contracts. It will be noteworthy to see how companies begin to report on COVID-19 in relation to these material issues, especially with the impending release of many corporate sustainability reports.  

COVID-19 has also put a spotlight on building resilient business strategies through scenario planning and considering second or even third-order effects. Issues that may have been deprioritized because they seem attenuated have—by the nature of the virus and its related effects on labor, supply chains, etc.—highlighted that a one-dimensional view of risk is not sufficient in designing resilient business strategies. Using scenario analysis in materiality and integrating the process with enterprise risk management are examples of ways that companies can better identify emerging ESG issues, some of which could manifest as quickly as COVID-19—and manage those risks accordingly. 

COVID-19 Is a Reason to Accelerate Efforts on ESG, Not to Pause Them 

Companies that are more strategically and operationally resilient and that treat their workforces better will likely be more attractive to all investors. In the short term, that means companies should increase efforts to integrate ESG investor expectations, ratings, and perspectives as part of sustainability initiatives, stakeholder engagement, and resilient business strategies.  Corporate leadership should also be conversant in ESG topics that relate to the COVID-19 response as investors ask tough questions and stakeholders evaluate companies on their effectiveness, credibility, and leadership on those material topics. 

Longer-term, COVID-19’s effects and the responses may also become a testbed for ESG analysis that helps create a new understanding of ESG impacts on business. For example, many investors have struggled with how to model and quantify the “social” aspects of ESG (whereas “environmental” are quantitative and more understood), and this may improve understanding of the financial impacts of major social disruptions. If this happens, companies should expect to see an increase in the quality of ESG investor expectations for corporate reporting. 

As we look ahead to the day when COVID-19 is no longer front-page news every day, it will be imperative for companies to learn and apply the lessons of this crisis. We believe investors will in turn hold them to higher ESG expectations. It will only become more important for companies to turn corporate sustainability principles into action, placing robust approaches to ESG at the center of resilient business strategies. 

Blog | Monday April 20, 2020

Women in Supply Chains: On the Frontlines of COVID-19’s Impact

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The COVID-19 pandemic has quickly transformed from a global health crisis into a financial crisis, particularly for low-income female workers in global supply chains. However, companies can effectively deploy preventative measures to support workers and workplaces to protect their health and strengthen their financial resilience.  

Developing countries—where many supply chain production sites are located—are not equipped with the economic resources and medical facilities and commodities required to mount an effective public health response. Compounding this issue, businesses faced with the mass cancellation of orders from global brands or government lockdowns are closing their business doors and laying off low-income workers.

In the context of a health emergency, the implications of gender inequality are stark. COVID-19 is no exception and will affect women and girls disproportionately. With approximately 190 million women working in global supply chains, the outbreak is especially concerning for low-income female workers, resulting in:

• Added economic hardship on a population whose financial status is already stretched too thin and put at risk of being unable to pay for bare survival necessities;
• Exacerbated risk of violence against women, increasing the level of stress and the disruption of social and protective networks and decreasing access to protective services;
• Being relegated to traditional gendered roles as primary caretakers by both solely looking after children during school closures as well as the sick and elders;
• Increased exposure to COVID-19 as those most in contact with sick family members and elders (who are most at risk of the virus) and also likely nexus of transmission by being primary caretakers.

Women already have limited financial means and struggle to meet expenses under normal circumstances. With many of them paid in cash wages, sudden workplace closures or layoffs can also mean pay delays or reductions or worse. In Cambodia, workers in garment factories suspended due to COVID-19 will only receive $70 a month (about 37 percent of their monthly minimum wage), a shock which could have a dramatic and long-lasting impact on their lives. In Bangladesh, the Bangladesh Garment Manufacturers Association has reported that over $2.4 billion of ready-made garment orders have been cancelled or suspended by global buyers, describing it as a "catastrophic" move which will directly affect almost 2 million workers, mostly women. This drastic slowdown in commerce, combined with the preexisting financial inclusion gender gap, makes female workers even more vulnerable and less likely to have access to remittances, savings, or insurance that could help them in emergencies.   

Not going back to work is not an option.  Workers are more concerned about getting paid—regardless of the health risks. "We have not been paid for two months. We are starving," a female garment worker, Brishti, recently told AFP during a protest in Dhaka. "If we don't have food in our stomach, what's the use of observing this lockdown?"

But how can workers reintegrate into factory work in a safe and sustainable way? Workplaces need to implement preventative measures, upholding social distancing and improving hygiene practices. Workplaces, which gather people from different and densely populated communities into a confined space and have them handling the same objects, are an obvious vector for communicable disease transmission. Garment factories, which are staffed by approximately 60-80 percent women workers globally, are exceptionally at risk because the production process requires workers to operate in close proximity while passing products from one to another. It’s been documented that the coronavirus can be transmitted through handling cardboard boxes passed between workers. As the material of choice for packhouses, this puts packhouse workers at higher risk of picking up traces from carton to hand.

So how should businesses consider the needs of female workers when reopening their doors?

Reproductive Health to Ensure the Sustainable Return of Women at Work

Health resources normally dedicated to reproductive health go towards emergency response in times of crisis. At the same time, past pandemics have showcased a rise in domestic violence which lead to additional unwanted pregnancies. Ensuring continued access to family planning resources and preferred contraceptive methods during COVID-19 will be key to ensure that low-income women who are already facing financial hardship from this pandemic are not faced with the added economic hardship of having a child. Furthermore, it ensures that they are able to return to work and not forced to drop out to care for a newborn. Access to contraceptives may be hampered, however, by potential supply shortages during lockdown which reduce the stockpile of available commodities. Furthermore, low-income women suddenly out of work may find it difficult to make out-of-pocket payments while navigating insurance practices that often limit reimbursement to just one month of prescription drugs at a time. COVID-19 is an exemplary reason why employers should ensure their workforce’s modern family planning needs are provided for at the workplace clinic or through referral mechanisms.

Physical Health and Safety in the Community and at Work

HERhealth baseline data in 2019 showcased that personal hygiene practices are weak and conducive to spreading germs like the coronavirus both at work and at home. For example, across eight factories in Bangladesh, 55 percent of 363 women workers could name only one benefit of hand washing. And yet, 13 years after we first launched a personal hygiene model, some donors ask us whether it is still relevant. Of course, the topic is now back on the map as a central public health concern, crossing both personal and professional spaces in order to survive the pandemic. Imparting a culture of handwashing, however, relies both on behavior and access to clean water and soap. HERhealth is reaching workers—both at work and in their communities—via digital means to improve hygiene best practices.

Production Pressure and Stress

It is commonly reported that poverty-related stress and economic insecurity can lead to an increase in intimate partner violence. When unemployment rates skyrocket and economies slow to a halt, intimate partner violence is likely to increase at home as a result of related stress. Similarly, following the reopening of factories, orders that were on hold will lead to increased production pressures. We know from experience that in times of stress, managers sometimes resort to abusive behaviors, such as shouting, insulting, and cursing, in an effort to motivate increased production. Such practices are unacceptable, and they give rise to conflicts, confrontations, and grievances that require negotiation and mediation. Support for managers and workers, especially female workers, while navigating the pressure of making up for lost profit and time while the factory was closed and its implications on management stress repercussions on women workers will be key to reopening factory doors.

Building Financial Health and Resilience

Although the protocol for wage payments during factory closures is determined by government, brands, and factories, we know that wage digitization is a more convenient, efficient way for factories to pay workers remotely, which also supports social distancing. For example, the Government of Bangladesh's $590m bailout package stipulates that workers must have financial accounts to receive wages.  This enables workers to be paid, even if it’s through family members' financial accounts. More support will be required to ensure that workers, especially women, are able to control and benefit from their digital wages. Participants in the HERfinance Digital Wages program have been able to manage their finances better and increase their savings, helping to make them more resilient. The program found a 21-percent increase in both male and female workers reporting that they save regularly, and women were 17 percent likelier to report feeling confident that they can meet such unexpected costs as an emergency or family problem in the next two years.

Collaboration and good communications across brands and their suppliers, garment associations, governments, and development organizations will be key to helping garment workers recover from the COVID-19 shutdowns and build their resilience for future health and economic crises. Looking ahead, it will be crucial to consider how additional partnership efforts can support and prioritize workers’ health and financial resilience as businesses reopen. Early, bold, and effective action will reduce short-term risks to employees and long-term costs to businesses and the economy.

Blog | Tuesday April 14, 2020

Wings of Change: A Scenario Realized

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“Wings of Change” was the title of a pandemic-based future scenario that I coauthored in 2008 when working for a strategic consultancy firm. Scenario planning is a disciplined method for imagining plausible future states in which companies envision what it will take to "future-proof" their business model, remain relevant, and ensure sustainability amidst a range of alternative environments. It is a tool for strategic thinking.

I recently reread the scenario narrative with some trepidation. Even though the imaginary killer virus was a bird flu of the H1N1 type (not a coronavirus), the scenario was eerily comparable to our current state of the SARS-CoV-2 pandemic. “Wings of Change” was an imaginative future state that came to life—and came into our lives.  

As dramatic and honestly—scary—as that scenario was to research and write, the resulting national health care system that rose up from the fictional pandemic was forever changed for the better. The virus was a catalyst for reformation of a health care ecosystem that vigorously focused on health promotion, health prevention, and the reframing of community health. Local and public health care was reimagined. Health—not sickness—was prioritized, and accountability for a healthy society was shared widely. Health and health care were "socialized." Not through a single-payer model, but literally through the mobilization and collaborations of citizens, businesses, public and private health care providers and through a lightning-speed step change in health analytics, artificial intelligence, and technologies. In "Wings of Change," the fictional pandemic was a catalyst for sustained improvements in health and health outcomes.

As we move through and beyond this real-world, global—and human—experience, we will be left with heartbreaking stories of untimely and widespread deaths, massively disrupted lives and economies, and selfless heroic acts of humanity. Coming out of the fog of disruption and renewal will also come gifts. Yes, gifts.

As a health care strategist, business executive, and advocate for well-being, I’d like to share my views of three consequential gifts that will materialize from this pandemic and the role that companies can play in amplifying the value of those gifts to society.

Gift #1: A Vital Appreciation of Mental Health 

People will have experienced physical and social isolation in ways that were unimaginable just weeks prior to the pandemic. Anxiety, depression, loneliness, and sustained worry over the virus and the personal and economic consequences to families and businesses may linger for some time. For those with underlying mental health conditions, fragile emotional health, or individuals who struggle to cope with change, the recovery period will be especially difficult. Since everyone will be impacted by this shared experience, the stigma of mental health will be muted.  

This vulnerable period presents an opportunity for employers to establish greater parity between physical health and mental health for employees. Companies can implement policies and practices that support healthy bodies and minds. Organizations can create a culture that leverages our shared experience to reduce the stigma associated with mental health by providing and promoting resources, tools, and programs.

When studying which illnesses impact productivity and performance the most, mental illness is at or near the top for most employers. At Merck, mental and emotional health are strategic priorities in support of our workforce. By sharing personal stories of how people—especially leaders—were affected by the pandemic, others will be comforted to come forward for help. Companies can embrace a holistic "total worker" view and acknowledge that there is no health without mental health. Leaders and grassroots efforts can hasten the elevation of mental health as a key component of well-being. The aftermath of the pandemic will mandate heightened awareness of, attention to, and action on employee mental and emotional wellness. Mental health can come out of the corporate closet for good, and businesses can lead the way.

Mental health can come out of the corporate closet for good, and businesses can lead the way.

Gift #2: The Value of Vaccination 

The SARS-CoV-2 pandemic is a harsh reminder that immunity through vaccination is one of the most effective measures we can take to protect our societies and economies from disease outbreaks. We are seeing a public outcry for new treatments and new vaccines effective against the novel coronavirus. Companies are coming together in unprecedented ways to research and test vaccines and treatments against COVID-19. Decades of evidence indisputably demonstrate that vaccines serve a critical public health need. We know that vaccines save countless lives. It can be argued that on a population health scale, vaccines are the greatest achievement of medical science. Belief in the power of immunization will be renewed.

Employers are uniquely positioned to encourage and promote appropriate vaccination of their workforce. Through health education and promotion, health fairs, vaccine clinics, benefits coverage and by leadership example, companies can boost understanding of, access to, and confidence in vaccination. With over 100 million workers in the U.S., employers have the capacity to increase immunization by supporting vaccination and protecting employees, dependents, and communities from preventable diseases.

Employers that have invested in building a culture of well-being through integrated policies, programs, and environmental cues reap the benefits of a healthier workforce.

Gift #3: The Benefits of Health and Well-Being 

A person’s baseline health is an important determinant of their clinical outcome with COVID-19. For example, we know that smoking can impact pulmonary function. Smoking increases the risk of chronic diseases that place COVID-19 patients at higher risk. Individuals with high cholesterol, uncontrolled hypertension, poorly controlled diabetes, and certain immunocompromised conditions have increased risk of poor outcomes. Staying healthy is a good starting point for fighting the virus.

Employers that have invested in building a culture of well-being through integrated policies, programs, and environmental cues reap the benefits of a healthier workforce. Merck is committed to this by making the healthy choice the easy choice and by ensuring that health and safety is considered in every aspect of daily life at work. Evidence shows that employers with a benchmark culture of health can reduce health care spending, improve employee engagement, boost productivity, prevent injuries, and improve overall corporate performance. Employers are well-positioned to help stem the tide of chronic conditions that cripple our societies by advocating and creating health within their workforce. After all, good health is smart business.  

It is hard to envision the silver lining of a pandemic. As we turn the corner and look to the future, employers can incorporate health into their return-to-work efforts. Companies have retooled manufacturing processes from cars to respirators, from evening gowns to masks, and from beer to hand sanitizer. They, too, can retool their employee health efforts. Businesses can carry forward the gifts that improve mental health support and services. Businesses can fuel the broader use of vaccines to protect workers, families, and society. Businesses can drive improvements in the health and well-being of their workforce. These are just a few of the gifts that will arise out of this public health crisis.  

This real-world version of “Wings of Change” presents an opportunity for a step-change in how the private sector supports health promotion, health prevention, and health protection. Companies have the power to catalyze enduring change towards health and wellness, create a competitive advantage, and amplify their social responsibility.   

This is part of a series of guest blogs by BSR member companies, offering their insights as they continue their work in sustainability while managing the immediate economic and social impacts of the COVID-19 pandemic.

Blog | Friday April 10, 2020

COVID-19 and Our Future World

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BSR has partnered with Polecat since 2017 to deliver real-time corporate reputation and ESG intelligence from global online and social media discourse.

Yasmin Crowther, Polecat's VP of Strategic Insight, collaborated with Charlotte Bancilhon, Associate Director, BSR, to analyze the top ESG Issues and Sectors arising in global discourse about COVID-19 over the last fortnight. This blog post draws on the key findings:

1. Procurement of medical supplies is the top online media topic, followed by concern for impacted workforces and labor practices. Public opinion on social media indicates high expectations of businesses to play a positive role in the COVID-19 response, including to protect employees, provide fair benefits, and pay taxes.
2. Social media is also focused on potential healthcare solutions, but pays acute attention to issues of diversity and inclusion, with strong responses to the stigmatization of ethnic minorities and characterization of COVID-19 as "the Chinese virus."
3. The industrial sector receives most online scrutiny for the economic impacts of COVID-19 as well as for the ways in which business models are pivoting to provide solutions. Firms across sectors are making investments to support communities—from access to IT to ensuring food security and emergency relief.
4. Conversations about climate change have not been hampered by COVID-19 but reframed. The depth and scale of the current pandemic is being compared to the climate crisis, with a renewed focus on building resilient communities and businesses.
5. There is a new focus on biodiversity with growing attention to how wildlife carries infectious diseases and the risks of destroying natural habitats which force animals into ever closer proximity with humans.

Coronavirus coverage across leading ESG Topics and Sectors for the two weeks to 8 March 2020

The main headline in the Financial Times this weekend read: "Global economy set for sharpest reversal since Great Depression." Although businesses are not all equal in face of the crisis, it is clear from our review of online and social media discourse that businesses are being scrutinized for how they are considering the welfare of their employees, communities, and partners before profits. A recent survey found that 90 percent of respondents expect businesses to partner with governments and relief agencies to address challenges, while long-standing debates on climate and stakeholder capitalism are being powerfully reframed. There is an unprecedented opportunity for businesses to show leadership and purpose:

Response to Medical Imperatives

We are glimpsing what is possible when urgent social need comes first—when the imperatives are the procurement of ventilators, face masks, vaccines, and testing kits. Around the world, auto manufacturers like Ford, GM, Fiat, and Nissan are collaborating with healthcare specialists to deliver tens of thousands of medical ventilators in a matter of months. The pharma sector is investing billions to co-fund vaccine research and clinical testing, and some of the world’s best-known beauty brands and beverage companies, like Estee Lauder, LVMH, L’Oréal, and Pernod Ricard, are turning their facilities to the production of hand sanitizer for frontline medical staff. Meanwhile, the fashion industry, from luxury brands to small- and medium-sized enterprises (SMEs), are making facemasks, and household names like Unilever are donating hundreds of millions of dollars of soap, sanitizer, bleach, and food to support health organizations globally.

Support for Communities

After the medical imperatives, come the community concerns of ensuring care for vulnerable people in their homes; that we all have enough food and that we have the digital infrastructure – the networks, connectivity and data—vital to working from home and maintaining contact with family and friends whom we may not see for months. Food companies like Mondelez are donating tens of millions in financial aid and in-kind support to community partners advancing critical food stability and emergency relief. Retailers are setting aside dedicated time every day for the elderly to shop and providing free home deliveries for the most vulnerable. Tech companies are lifting data caps and promising not to cut off supplies if payments are overdue or missed.

Flexible work forces

At the same time as businesses strive to pivot to the realities of a world in lockdown, the longer-term consequences will reshape work life within many sectors. Employees around the world are being asked to adapt to working from home or being furloughed. A recent ILO report found that more than 4 out of 5 people (81 percent) in the global workforce of 3.3 billion are currently affected by full or partial workplace closures. But while some sectors, such as airlines, are registering massive layoffs, others, such as retail, are hiring. Around 40 percent of the world’s passenger jet fleet is now in storage, with firms like Air New Zealand reporting an expected contraction of at least 30 percent over the next year, as its revenue falls from just under US$6bn to US$500m. In the U.K., laid-off airline cabin crew with first aid training are being pursued by the NHS to work in support of nurses and doctors in hospitals across the country. It is hard not to wonder if the experience will compel a permanent change in career as the perceived value of frontline workers is set to soar, with UK political conversation on the need for better pay already igniting. Meanwhile in the U.S., the reduction in emergency departments and routine hospital programs to cope with COVID-19 means some frontline staff are actually getting pay cuts.

Science at the Center

Perhaps most powerfully, coronavirus has put expert opinion and scientific fact center stage. We do not want or need the opinion of literati—we care mainly for the epidemiologists, virologists, and medics who tell it as it is. Twitter has redefined its definition of harm to address content that "goes directly against guidance from authoritative sources of global and local public health information" and is removing tweets that spread dangerous misinformation about COVID-19. Facebook is investing an additional US$100 million in local journalism to support reporting on the pandemic.

Climate Change at the Fore

There is much that is positive, but what does it all bode for how we think about the future more widely? Many articles use the lens of climate change to consider future possibilities—balancing the immediate enforced environmental benefits of cleaner air and birdsong with longer-term choices. As The New York Times writes:

The efforts to revive economic activity — the stimulus plans, bailouts and back-to-work programs being developed now — will help determine the shape of our economies and our lives for the foreseeable future, and they will have effects on carbon emissions that reverberate across the planet for thousands of years.

In an interview with New Scientist, Greta Thunberg said:

If one virus can wipe out the entire economy in a matter of weeks and shut down societies, then that is proof that our societies are not very resilient. It also shows that once we are in an emergency, we can act and we can change our behaviour very quickly.

Reframing of Biodiversity and Disease

Conversations about climate change and biodiversity haven’t been killed by COVID-19, but they are being reframed. Tigers with COVID-19 make the front page, along with wide-ranging discourse about potential threats to and from other animals. Inger Andersen, head of the UN Environment Programme, has cautioned on the proximity of wild animals to humans as a cause of disease—with 75 percent of all emerging infectious diseases coming from wildlife. Her message is that failing to look after the planet is a failure to look after ourselves: global warming and the destruction of habitats for farming, mining and housing all drive wildlife into contact with people in ways that increase risk of cross-infection. Aaron Bernstein of the Harvard School of Public Health has said:

The separation of health and environmental policy is a dangerous delusion. Our health entirely depends on the climate and the other organisms we share the planet with.

The emerging imperative is for more joined-up thinking and fewer artificial silos, for business strategies to go beyond just cutting greenhouse gas (GHG) emissions to the delivery of resilience in the face of a global crisis.

The Battle for Hearts and Minds

The political message to societies in lockdown is that we are "all in it together"—that our individual sacrifices are essential for the greater good and to safeguard the vulnerable. On social media, there are strong reactions to behaviors that undermine diversity and inclusion, particularly when it comes to stigmatizing minorities and characterising COVID-19 as "the Chinese virus." Online, the emphasis is largely that "we are all in it together." We are, but there is also an abyss being observed between the experiences of haves and have-nots. Social isolation in a roomy home with a garden is very different from lockdown in a high-rise block, let alone the difference between established and emerging economies. COVID-19 is shining an unforgiving light on how we are all the same and also how lives are so different and that we turn our backs on one another at our collective peril.

Our Post-COVID-19 World

The tension that seems to be strongly in play when it comes to imagining a world after COVID-19 is whether the impetus to collaborate and put science and society first endures or whether more protectionist and nationalist policies assert themselves. Conversations to build back better are emerging, as demonstrated by the group of French parliamentarians who have launched a national consultation to prepare “the day and the world after” COVID-19 under the hashtag #LeJourdAprès, in reference to the Hollywood hit The Day After Tomorrow. BSR is inviting member companies to engage in thinking ahead to build a different future.

Already, multiple corporate conversations are trying to scope the future landscape, with speculation that flexible working and reliance on digitization will not spring back to the status quo—that the future has somehow been rapidly accelerated—and that new priority and investment will need to go towards ensuring more inclusive and resilient economic strategies if we are not to bear the cost of more damaged societies.

As Arundhati Roy wrote in the Financial Times over the weekend:

The Pandemic is a portal. We can choose to walk through it with our dead ideas. Or we can walk lightly, ready to imagine another world.

This blog was written and produced in collaboration between Polecat and BSR.

Blog | Thursday April 9, 2020

Three Ways Businesses Can Protect LGBTIQ+ Rights in the Face of COVID-19

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• The coronavirus will hit marginalized groups, including LGBTIQ+ people, hardest.

• The private sector must take collective action to cushion the blow.

• Businesses can consider three strategies when trying to ensure inclusion.

The COVID-19 pandemic has disrupted life as we know it on a scale never seen before. One inescapable point in this crisis is that it will take an increased toll on those groups who were marginalized, vulnerable, and excluded before the pandemic hit, including lesbian, gay, bisexual, transgender, intersex, and queer (LGBTIQ+) people. For LGBTIQ+ people who have experienced a lifetime of discrimination, especially in places with deep poverty, tenuous healthcare delivery systems, and fragile government infrastructure, the sober truth is that this global emergency presents immediate unimaginable challenges.

For example, as highlighted in a recent Openly article, in India transgender people are at heightened risk of poverty and ill health because they already exist on the margins of society. The UN Independent Expert on Sexual Orientation and Gender Identity recently wrote in an open letter about the impact of COVID-19:

“Homeless persons, among whom LGBTIQ+ persons are many, face exacerbated exposure to contagion.…Many LGBTIQ+ youth will now be forced to [isolate] within hostile environments with unsupportive family members or co-habitants.”

Ultimately, as OutRight Action International notes, in too many places—simply because of who they are and who they love—LGBTIQ+ people will have less access to healthcare, will be hard hit by unemployment and food scarcity, will see their already-thin margins disappear, and without life-saving interventions will fall sick and die.

For these reasons, OutRight has launched a COVID-19 Global LGBTIQ+ Emergency Fund to support queer organizations on the frontlines of the pandemic in all regions outside of North America and western Europe. The fund will distribute grants to grassroots LGBTIQ+ organizations that are addressing a range of community needs, including provision of emergency food and/or shelter, access to safe and competent healthcare, safety and security, financial stability, and other unforeseen negative impacts brought about by the pandemic. Fund participants benefit from our coordination, vetting, and distribution of money to capable local organizations in markets where they do business. This is but one example of how the private sector can link up with civil society to respond to the pandemic when systems and government fail or are insufficient.

As COVID-19 strengthens its indiscriminate grip, those of us in the business and social sectors are being asked hourly what more the private sector can do to effectively ensure that those most at risk are not left behind. Our answer: take collective action to address the immediate needs of those affected by COVID-19, while staying focused on and committed to long-held values that prioritize inclusion and equity.

In this regard, purpose-driven leadership has never been more critical. As each company and civil society organization addresses urgent needs in unique and important ways—from building hospitals and tech platforms to manufacturing medical equipment and delivering food to homebound older people—important trends are emerging with regard to the need for, and power of, collective action. Never before has the old adage “there is power in numbers” rung truer.

When the Partnership for Global LGBTIQ+ Equality (PGLE), a global leadership platform to accelerate LGBTIQ+ inclusion in collaboration with the World Economic Forum and BSR, was launched in January 2019 at the Forum's Annual Meeting, we could not have predicted that in only one year its raison d'etre—tackling discrimination in all its forms to ensure that the universal basic human rights of LGBTIQ+ people are acknowledged and upheld—would be a matter of life and death for hundreds of thousands that comprise our global community.

Today more than ever, the business community has an opportunity, in fact a responsibility, to demonstrate leadership. But it can’t do it alone. While the past decade has seen important progress in LGBTIQ+ inclusion in some parts of the world, in most countries, protection against discrimination based on sexual orientation and gender identity is inadequate at best.

Unless we act, discrimination, unequal access, and the denial of universal human rights will only compound the poverty and dislocation that LGBTIQ+ people face around the world and render long-term social and economic progress out of reach.

Three years ago, the Office of the United Nations High Commissioner for Human Rights, in collaboration with the Institute for Human Rights and Business, developed the UN Standards of Conduct for Business to support the business community in tackling discrimination against lesbian, gay, bi, trans, intersex, and queer people. These standards provide five concrete steps that companies can take to align their policies and practices with international standards on human rights of LGBTIQ+ people.

To date, nearly 300 companies have stood up in support of human rights and equality for LGBTIQ+ individuals by expressing support for the UN Standards. If your company has not stood up for the universal human rights of LGBTIQ+ people, now is the time to do so by adding your name to the list of companies supporting the UN Standards.

The pandemic will undoubtedly present a range of new challenges to democracy and human rights. It is undeniable that repressive regimes will use the pandemic in ways that serve their own myopic political interests at the expense of basic freedoms and people’s lives. Unless we act, discrimination, unequal access, and the denial of universal human rights will only compound the poverty and dislocation that LGBTIQ+ people face around the world and render long-term social and economic progress out of reach.

Our community and its allies cannot afford to stand idle, and we must not allow backsliding on hard-won LGBTIQ+ rights. We must accelerate our quest for inclusion, together. In addition to expressing public support for the UN standards, here are three strategies to guide our collective response:

1. Apply a human rights lens to decision-making. Source accurate information when making data-informed decisions, ensure that those decisions are guided by application of a human rights lens and the UN Standards of Conduct for Business, and make sure responses prioritize the immediate and long-term recovery needs of the most vulnerable. In developing individual, sector-wide, and cross-sectoral actions, ensure that all affected stakeholders inform a coordinated, global strategy. Identify local stakeholders and global organizations with deep roots in local communities where you operate to understand their vulnerabilities and how your decisions impact them.
2. Amplify your core values. Content is key in times of emergency. Now more than ever, people will need constant reminders that fear of the Other is the enemy and that inclusion remains the highest priority. Leverage all communications platforms to remind stakeholders that inclusion is a value that should underpin our response—and that inclusion means everyone. Dispel stigmatizing messages that harm vulnerable communities by countering them publicly.
3. Prioritize collective action and share what you learn. It is critical that those in positions of authority around the world understand that none of us are too distracted to uphold basic universal human rights for all or that we are not too preoccupied to hold violators accountable. Through joint public statements or silent diplomacy, make your position known. Help others avoid mistakes and scale successful approaches, including innovative ones. Raise awareness of best practices and assist others in applying them. Now is the time for a big tent approach.

Months and years from now, when we look back on this time, we will be measured by our capacity to lead with purpose, kindness and compassion, and our ability to mobilize together to respond to the needs of our most vulnerable members of society. The time for bold action is now. Let us not fall short or fail to do absolutely everything we can.

First published on the World Economic Forum website.

The Partnership for Global LGBTIQ+ Equality (PGLE) is a collaboration between the World Economic Forum, the UN Office of the High Commissioner for Human Rights, and BSR.

Blog | Wednesday April 8, 2020

Resilient Business Strategies: The Road to Recovery Based on Sustainability Principles

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Resilience is having its moment, as the world reels from the massive health and economic impact of the coronavirus. The concept has suddenly gone from overlooked buzzword to urgent objective.

In fact, the importance of resilience was understood even before this pandemic. Speaking at Wharton earlier this year, before the impact of the coronavirus was widely felt, Mohammed el-Erian, chief economic advisor at Allianz and former CEO of PIMCO, said: “The world in which you’re living in is fluid, unpredictable, less stable. The dramatic shift...is part of a bigger reality that speaks to continuing fluidity, more unthinkables becoming reality, and trickier decision-making challenges.”

Resilience, he said, was the objective to aim for in such an environment.

In early 2018, we wrote that “integrating sustainability into business” was no longer fit for purpose. Instead, we advised that resilient business strategies should be the objective for every business and that topics and processes traditionally understood as being part of the sustainability agenda were a central part of that vision.

The era of stand-alone sustainability strategies, with subsequent integration of sustainability into company strategy, needs to end; the creation of resilient business strategies that take sustainability as their foundation needs to begin.

In the wake of the pandemic, we are calling for business to “meet the moment and build the future.” In doing so, resilient business strategies will be fundamentally important to business success as well as economic and social recovery.

The road to resilience relies heavily on sustainability principles, and the following will be even more important coming out of this crisis than they were coming in:

• Apply Futures Thinking: It is impossible to create a resilient business without understanding the range of possible futures a company might face. The contrast in outcomes between South Korea (which conducted a pandemic scenario exercise last fall) and the U.S. vividly illustrates how acting quickly and decisively can mean the difference between manageable disruption on one hand and a health and economic cataclysm on the other. BSR created its Sustainable Futures Lab to strengthen our efforts and help our member companies understand the intersection of various possible futures and fundamentally important sustainability challenges, from climate to circular economy. Organizations that take seriously and develop plans anticipating a variety of potential scenarios are far better prepared to act quickly and decisively when “normal” shifts overnight. This principle has been enshrined in the Task Force on Climate-Related Financial Disclosures (TCFD), and its value extends far beyond climate. Understanding and preparing for a range of scenarios has value on multiple topics and provides an essential “stress test” for business strategy.
• Rethink Economic Value and Optimization:  Our measures of economic value do both business and society a disservice. We will produce more resilient companies and economies through three main steps. First, it is time to relegate the concept of “externalities” to the dustbin of history and embrace measurement of so-called intangible assets—social capital, natural capital, human capital, reputation—more fully. Second, we need to abandon optimization as the default approach to decision-making. We have removed slack in everything, from supply chains to public health systems to airline schedules; and we are now living with the harsh reality of why that can be self-defeating. Strategic efficiency is a core value of business; relentless optimization of everything is not. Finally, this crisis should lead to changes in capital markets that sound the death knell for short-term shareholder value in favor of long-term value creation for all stakeholders. 

Business cannot thrive in a society that is failing....The pandemic is an extreme test for the social safety net, but we know that there were significant stresses before it hit. 

• Embrace Diverse Perspectives: Groupthink is no way to achieve resilience. Resilience starts in the boardroom, and that will happen only if diversity—including of experience and perspective—is present to deliver the lateral thinking which strengthens an organization’s ability to identify and prepare for shocks to the business. External advisory boards, which are often freer to forecast and consider the unexpected, are another tool that can help ensure that companies identify and prepare for change. Decision-making is also strengthened by more systematic listening to stakeholders, employees, and customers, who will challenge inflexible mindsets to the benefit of the decision makers.
• Redefine the Social Contract: Many have said—correctly—that business cannot thrive in a society that is failing. Today, the social contract has proven inadequate in many countries in no small part because public services have not been resourced properly: the social and work arrangements present when our current social contract were developed are no longer in place, and new challenges—namely the transition to a digital, net-zero carbon economy—need to be tackled. The pandemic is an extreme test for the social safety net, but we know that there were significant stresses before it hit. We were already well aware of the need to redefine the future of work, address the needs of contingent and other workers previously seen as “disposable,” improve skill development, and to address educational needs in a modern context. Business, as we articulated in this discussion paper BSR developed last year, has both key assets and responsibilities to bring to this essential challenge, working in partnership with government, civil society, and others.

There is little doubt that business and other sectors will make significant changes to their objectives, processes, thinking, and measurement of value as the economy—and public health—recover. The core of business, including strategy, capital allocation, public policies and market rules, and employee relations will be remade in the wake of the crisis. Investors will want to know whether a company can prove to be resilient. No business strategy can possibly succeed if it doesn’t take account of the impacts of the climate crisis, supply chains subject to rapid disruption, and fast-changing political environments. The year 2020 has proved that resilience will be how every business strategy, CEO, and Board will be judged.

The world is learning a painful lesson about the damage that can come from a lack of resilience. Epochal events on the scale of the pandemic always bring structural changes in their wake. If we prioritize resilience, we can not only meet the moment, but also build a better future.

Blog | Monday April 6, 2020

How Sustainability Teams Can Meet the Moment

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It’s still too early to know the full human and economic impact of the COVID-19 pandemic, and our attention today is rightfully on caring for the sick, protecting the vulnerable, and preventing the disease’s continued spread.

The global business community is responding to the pandemic in real time, providing support for their staff, their suppliers, their contractors, their customers, and their communities. As an example, Just Capital is tracking responses from U.S. businesses.  

But eventually, we will need to begin to ponder the question: how will we rebuild once the crisis has passed? And how can we rebuild in a way that enables our systems to be more resilient, and just, in the future? We have learned not only that change is necessary, but that it is possible, and this will have an impact on every aspect of society: from global supply chains to community health programs to the very nature of work, policy, education, and everything in between.

The questions that I’m getting from BSR member companies today fall in between what’s the best immediate response and how do we drive systemic change. What do I do right now? How do I maintain my company’s commitment to our sustainability priorities? Will I lose executive attention or budget? How do I maintain momentum in such a volatile environment?

There is certainly no one-size-fits-all answer to these questions. That said, I have found that times of crises don’t change as much as they reveal the state of sustainability inside a business. For companies in which sustainability was already sidelined or was created mainly for public relations purposes without much real business integration, we can expect to see those commitments waver.

But for companies which are focused on material sustainability issues—those issues are only going to be more relevant moving forward. This is the time to pull out that materiality matrix—remember the specific ways that certain issues directly impact your business success and focus your efforts there. If you have integrated sustainability well, the case for a resilient strategy is being made for you. Today’s crisis is the pandemic, but tomorrow’s may be due to climate change, and sustainability teams can drive that connection and the strategies needed to prepare companies to succeed.

Stakeholder expectations for businesses don’t disappear when things get hard—and stakeholders will remember which companies step up in times of crises and which don’t. 

Crises also breed innovation and emphasize the need for collaboration. Sustainability teams benefit from both. So, if you were struggling to get your company to pursue an industry solution or to completely change how a certain process is done, now is your time. Sustainability professionals will be leading experts inside their businesses to help navigate unexpected challenges and to drive the important changes needed in our global systems.

Our 2018 report Redefining Sustainable Business: Management for a Rapidly Changing World stated that the sustainability function should reimagine its role in four key ways that seem even more true today.

 

• Value Creators: Identify opportunities to create business value and play a catalytic role in generating such opportunities.
• Change Agents: Enhance and leverage organizational change and influence skills
• Coalition Builders: Seek traction in the areas where the company has the most advanced and innovative thinking and adopt a more structured way of thinking about sustainability’s place in the organization.
• Futurists: Identify long-term sustainability factors that drive risk and generate value; engage with the uncertainty, complexity, and volatility of how consumers, policy makers, and other key stakeholders respond to these long-term sustainability factors.

Sustainability functions would be well-served to think about these four roles and to more formally and informally embed them inside their organizational structures.

Finally, stakeholder expectations for businesses don’t disappear when things get hard—and stakeholders will remember which companies step up in times of crises and which don’t. 

And the parallels to a previous crisis are also becoming all too clear. I still have investors or NGOs bring up examples of which banks handled the 2008 financial crisis in a way that reinforced their ethics and integrity and which did not. We’ve already seen NGOs call for companies to be responsible for the impacts in their extended value chains, such as for displaced garment workers.  Employees at Amazon and GE have already walked out, either to protest how employees are treated or to demand that their company become part of the solution by making ventilators.

The year 2020 began with increasing expectations from investors about sustainability and long-term value, and in a time of general market volatility, it will be even more obvious to investors, customers, and employees which companies are well-positioned for the long-term. This is the role of the sustainability team, and this is your moment.

Reports | Thursday April 2, 2020

Climate Action in the Value Chain: Reducing Scope 3 Emissions and Achieving Science-Based Targets

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Business has a vital role to play in the effort to limit global warming to 1.5°C in line with the Paris Agreement targets—and ambition is rising. To date, over 800 companies have committed to setting science-based targets (SBTs) to reduce their greenhouse gas (GHG) emissions in line with climate science.

Achieving such goals requires companies to identify their most significant emissions reduction leverages, including those found throughout their value chains. Most companies pursuing science-based targets have a good understanding of their Scope 1 emissions, generated by their own operations, as well as their Scope 2 emissions, generated from the energy sources that power their operations. Yet according to CDP, a company’s supply chain emissions are on average 5.5 times larger than its Scope 1 and 2 emissions. While some companies have begun piloting projects to reduce Scope 3 emissions, action in this area remains fragmented and limited. 

A new approach for tackling Scope 3 emissions is needed. In this paper, BSR presents our three-step approach that can serve as a roadmap for business, providing a way into the topic for companies at the beginning of their journey and guidance for companies already taking action to scale their efforts. We recommend business to take the following approach:

• Map the value chain to locate the greatest GHG reduction potential. To do so, companies can adopt a “reverse sourcing” approach—rather than moving down the value chain by first engaging Tier 1 Suppliers, companies need to assess their entire value chain to identify where the most potential for emissions reductions lies.
• Demonstrate emission reductions through pilot projects. Pilot projects allow companies to determine the best structure for a project and to demonstrate the opportunity to achieve GHG reductions at scale in the value chain. Pilots will provide learnings that set the company up for large scale deployment and greater industry collaboration.
• Scale up and engage value chain partners and peers. To effectively achieve their Scope 3 targets, businesses will need to widen the scope of collaboration with value chain players and peers and ensure that the right internal processes, such as procurement and marketing, are in place to shift the value chain.