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Blog | Tuesday December 17, 2019

Our Top Sustainability Insights of 2019

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As 2019 comes to a close, we are taking a moment to look back at the news and initiatives that shaped the year. The most popular blog posts and reports BSR published this year show reader interest in a variety of topics, from collaboration to climate change, that are sure to impact sustainability strategies for the decade to come.

Some common themes we saw across our most read content of the year were:

• Understanding the business landscape: We kicked off the year sharing our take on BlackRock CEO Larry Fink’s annual letter and its emphasis on ‘purpose’ and came full circle in November, publishing our President and CEO Aron Cramer’s first annual letter on the New Climate for Business, which presents an agenda for business leaders to take on in the decisive decade to come.
• Seeking a clearer picture of the future: The popularity of future-oriented content, from our report analyzing how the ‘future of work’ will affect gender disparities to a blog post on developing a 2030 strategy, demonstrates that our readers are thinking ahead.
• Staying on top of trends: Much of our top 2019 content looks at the latest trends—in sustainability reporting, stakeholder engagement, supply chain visibility, and private equity to name a few.

What insights will be the most valuable to take from 2019 and bring into 2020? See the list below of our most read publications from the past year and decide for yourself.

Most Read BSR Blog Posts of 2019

1. The New Climate for Business: In his first annual letter, BSR President and CEO Aron Cramer addresses the new climate for business and presented the urgency agenda for the 2020s—the decisive decade, now only days away.
2. Global Tech Companies, Partners Identify Tools to Fight Human Trafficking: This article provides a progress report on the Tech Against Trafficking initiative and their ambitious project to understand and map the landscape of existing tech tools being used in the anti-trafficking sector.
3. Supply Chain Visibility: Traceability, Transparency, and Mapping Explained: BSR experts explain three concepts for gaining and demonstrating visibility in multi-tier supply chains: traceability, mapping, and transparency. What are these concepts, how do they differ, and what do they offer?
4. How Private Equity Can Address TCFD and Climate Change: BSR suggests two types of approach for how private equity firms can address climate risks and opportunities in an actionable, meaningful way.
5. Three Questions to Think About for Your 2030 Strategy: With many sustainability strategies and goals expiring in 2020, companies should reflect on three questions as they begin to shape their 2030 strategies.
6. What Larry Fink's 2019 Letter Means for the Future of Business: Our four main takeaways from the 2019 letter of BlackRock's Larry Fink to CEOs, which mentioned the word ‘purpose’ 21 times.

Most Read BSR Reports of 2019

1. Five-Step Approach to Stakeholder Engagement: This year, we released an update to our extremely popular 2011 report, providing a comprehensive stakeholder engagement approach and toolkit to help companies build and retain stakeholder trust as it becomes more important than ever.
2. ESG in Private Equity: How to Write a Responsible Investment Policy: Over the past 10 years, the private equity sector has seen responsible investment approaches move from exception to expectation. Formalized integration of environmental, social, and governance (ESG) considerations is becoming the norm. For all firms, a meaningful policy is fundamental to responsible investment and ESG integration.
3. Five Reporting Trends for 2019: Insights on the Future of Reporting: BSR's Future of Reporting collaborative initiative seeks to help members create sustainability reports that result in improved sustainability performance at companies and informed decision-making by stakeholders. In this report, it outlines the five innovations it was seeking to improve reporting and disclosure in 2019.
4. The State of Sustainable Business in 2019: The 11th annual BSR/GlobeScan State of Sustainable Business survey found the rise of climate change as the most significant issue and investor interest as a key driver in sustainability, among other insights into the world of sustainable business. 
5. How Business Can Build a 'Future of Work' That Works for Women: Businesses have a responsibility not only to help workers prepare and transition for the ‘future of work,’ but also enact strategies that create positive change and economic advances for women. This report outlines how to do so.
6. Making Women Workers Count: A Framework for Conducting Gender Responsive Due Diligence in Supply Chains: How can companies conduct more gender-responsive due diligence approaches, and what role does gender-disaggregated data play in this? This report, funded by the C&A Foundation, sets out to address this question.  

We published a lot of other great content this year on critical issues of the moment, from blogs on employee and CEO activism to reports on topics in supply chains, such as gender equality and leadership through maturity models. We also continued our Sustainability Short Takes video series, which highlighted the many major issues discussed at our BSR Conference 2019.

All of us here at BSR wish you and your colleagues a happy and safe new year, and as the new decade dawns, we look forward to working together to build a just and sustainable world.

Blog | Friday December 13, 2019

BSR19 Summary for Japanese Market

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Blog | Thursday December 12, 2019

A Human Rights Review of the Facebook Oversight Board

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Facebook makes decisions to take down, leave up, or restore content every day, and some of these decisions can be very challenging, with strong arguments for either removing or leaving up the content. Many users can disagree with these decisions, and millions are appealed each year.

In November 2018, Mark Zuckerberg announced plans to “create a new way for people to appeal content decisions to an independent body, whose decisions would be transparent and binding.” This idea has since become known as the Facebook Oversight Board, with the Governance Charter for the Oversight Board released in September.

The Oversight Board is intended to assess difficult content decisions and provide policy opinions, particularly where there is tension between the freedom of expression rights of users with other values, such as safety, privacy, and dignity. In this sense, the Oversight Board represents a new opportunity to provide enhanced access to remedy for individual users while also informing actions by Facebook to mitigate potential future harms.

Today, we are releasing a human rights review conducted by BSR to inform how the Oversight Board will work in practice.

The purpose of our human rights review is to inform the governance and operations of the Oversight Board such that it is consistent with human rights-based approaches, principles, standards, and methodologies. To achieve this outcome, we used an assessment methodology based on the UN Guiding Principles on Business and Human Rights (UNGPs), combined with a review of the various human rights principles, standards, and methodologies upon which the UNGPs are based.

One important challenge was immediately obvious to BSR upon commencing our work: Efforts to provide access to remedy in other industries typically meet the needs of a limited number of rightsholders, based in clearly defined geographical areas, and speaking a limited number of languages. By sharp contrast, the Facebook Oversight Board needs to meet the needs of billions of rightsholders, who could be anywhere in the world, and who may speak any language.

Combine this issue with the Oversight Board’s independent decision-making authority, and Facebook is creating an institution unlike anything ever previously created by a company. It’s a real leap into the unknown—to our knowledge, no company in any industry has ever established an oversight mechanism with binding decision-making power—and a leap that should be made in a manner consistent with human rights.

With this context, BSR’s review explored seven key human rights themes for the Oversight Board:

• Harms and Impacts: Addressing a wide variety of human rights issues and prioritizing the most severe cases
• Vulnerable Groups: Addressing the rights and needs of individuals from groups or populations at heightened risk of becoming vulnerable or marginalized
• Remedy: Providing pathways to effective remedy (i.e., efforts to restore the victim to the same or equivalent position before the harm) and adhering to the access to remedy and operational-level grievance mechanism expectations of the UNGPs
• Decision-Making: Ensuring that Oversight Board members are fully aware of the international human rights standards and that Oversight Board decisions are effectively integrated into Facebook
• Informed Consent: Ensuring that relevant users (e.g., those posting or featured in content) provide consent for each case and understand both their risks and their rights when consenting
• Safety and Integrity: Addressing new human rights risks arising from the existence of the Oversight Board
• Transparency: Accounting for how human rights impacts are addressed through external communications

In our report, BSR provided recommendations for Facebook and the board itself in each theme. In addition, three high-level insights emerged:

1. We determined that all human rights—not only freedom of expression and personal safety and security—can be impacted by content decisions. This implies that it will be important for the Oversight Board to understand the various human rights impacts at stake in each case.
2. The Oversight Board can help prevent and mitigate future human rights harms through both policy recommendations to Facebook and through the action Facebook takes to implement Oversight Board decisions. Policy recommendations could include new or modified language in the Facebook Community Standards, revisions to guidance on how content moderators interpret and enforce the Community Standards, and potential expansions to the scope of the Board’s mandate itself.
3. We believe it will be important for the Oversight Board to have a mechanism to identify novel cases, emerging trends, and cases that may become more prevalent or severe alongside upcoming social, political, or economic developments. This will enable the Oversight Board to proactively address areas of risk and anticipate future harms.

BSR undertook the human rights review at the same time that Facebook created the Oversight Board, thus enabling Facebook to integrate many of our recommendations into the governance and operations of the Oversight Board. The result is an Oversight Board more consistent with human rights-based approaches, principles, standards, and methodologies. We welcome the following steps already taken by Facebook:

• The charter requires the board to pay particular attention to the impact of removing content in light of human rights norms protecting free expression. In his letter on the Oversight Board Charter, Mark Zuckerberg sets out how the values accompanying Facebook’s Community Standards—authenticity, safety, privacy, and dignity—are guided by international human rights standards.
• When prioritizing cases to refer to the Oversight Board, Facebook will consider factors consistent with the UNGPs, such as the severity of impact on someone’s voice, safety, privacy, or dignity, as well as the number of people affected.
• The board will be composed of a diverse set of members, including those who have familiarity with free expression, civic discourse, safety, privacy and technology.
• Facebook will provide resources to enable the board to hear cases in multiple languages.
• Facebook has designed the tooling and submission process with accessibility to vulnerable groups in mind, including prompts to assist users in submitting their cases and allow individuals to submit their case using a mobile device.
• The board will be empowered to instruct Facebook to allow or remove content, which is a form of remedy for users.
• Facebook commits to implementing decisions in a timely manner and communicating the implementation of the decision to the user, in line with some of the effectiveness criteria contained in the UNGPs.

Facebook is by no means the only social media platform facing the challenges of content moderation, and we hope that the BSR human rights review provides considerable value to other social media platforms, stakeholders, and policymakers addressing similar challenges.

While many companies have created advisory committees to provide guidance on human rights topics, to our knowledge, no company has ever established an independent body in this way. We are hopeful that this report will have lasting impact on the Oversight Board. It will be important for dialogue with the international human rights community to continue, especially as the board starts in earnest to formalize and implement its procedures for deliberation and decision-making.

This board represents a significant innovation in the field of business and human rights, and we look forward to learning how such a novel idea proceeds in practice.

Blog | Wednesday December 11, 2019

The New Climate for Ever-Evolving Technology: Q&A with Patrick Browne, Director, Sustainability, UPS

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Artificial intelligence. Autonomous vehicles. Sustainable fuel technologies. New and disruptive technologies are being adopted across all industries, making nearly every company—from agriculture to logistics—a tech company. This development is just one factor contributing to ‘the New Climate for Business,’ the theme of the BSR Conference 2019, which took place in San Jose, California last month. At the conference, UPS Director of Sustainability Patrick Browne joined us to share how UPS, as a logistics company, is adapting to the new climate of ever-evolving technology.

I had a chance to connect with Patrick to dive deeper into the types of new technologies UPS has deployed, the impact they have had so far, and plans to further integrate tech into their sustainability strategy for 2020 and beyond.

How is new technology playing a role in UPS sustainability efforts?

UPS is using innovative approaches to leverage new and disruptive technologies for an environmental benefit. Skyrocketing e-commerce is increasing demand for logistics and delivery services. The challenge for UPS is to meet this need and grow our business without significantly growing our carbon footprint.

We use a range of technologies to help improve the efficiency of our operations. For example, investments in ORION, our groundbreaking route optimization software, helps UPS determine the most efficient delivery route each day. ORION is essential to reducing emissions by minimizing UPS’s total miles driven. In the United States alone, ORION enables us to avoid 100 million miles and 10 million gallons of fuel each year—translating into 100,000 tons of emissions.

Why is it important to leverage new technology in addressing UPS’ energy use?

Our business sits at the intersection of disruptive trends, such as rapid urbanization and e-commerce growth, and associated challenges, such as congestion and climate change. At UPS, we’re embracing these trends and innovating to shape a future in which more people prosper, enterprises run more efficiently, and resources are conserved for future generations.

New technology allows UPS to stay on the cutting edge of sustainability. We’re investing in a range of technologies that could help reduce the environmental impact of last mile delivery, address urban congestion, and optimize daily routes. These shared value initiatives are good for the environment, our customers, and our bottom line.

What new, upcoming technologies is UPS looking into to achieve sustainability goals?

UPS is committed to developing and deploying technologies that improve service and enable more efficient operations of our global logistics network. In August, we announced a minority investment in autonomous driving company TuSimple, which is testing self-driving tractor trailers on a route in Arizona to determine whether the vehicles can improve service and efficiency in the UPS network.

We have long believed autonomous technologies would play an important role in the UPS Global Smart Logistics Network and the company’s transformation. We estimate that autonomous trucks will reduce fuel consumption and carbon emissions by 15 percent. The reduction of fuel consumption leads to a reduction in millions of metric tons of greenhouse gases (GHG). We are eager to determine how new technologies like this will help us increase efficiencies and reduce emissions.

What sustainability challenges require collaboration across industries/systemic responses? How is UPS engaging with partners on these issues?

Addressing global threats like climate change requires UPS—and all actors—to collaborate within the value chain and across industries. At UPS, collaboration is within our DNA. One great example is our Rolling Lab—our fleet of more than 10,000 alternative fuel and advanced technology vehicles. Our involvement with BSR’s Future of Fuels working group has helped accelerate our work in this area.

Another example is related to sustainable e-commerce solutions and final-mile deliveries, especially in dense urban areas. Cities are growing more crowded every day, and people are becoming more reliant on deliveries of everyday goods directly to their doorstep. This convenience creates impacts people may not think about—more miles, more fuel, more emissions. So we’re working with customers, cities, vehicle manufacturers, and other partners to create innovative last-mile delivery solutions. We now have around 30 projects underway in cities around the world. To stay up to date on UPS’s sustainability initiatives, you can subscribe to the UPS Horizons newsletter.

Blog | Tuesday December 10, 2019

Human Rights Day 2019: BSR Reflections on the UN Forum on Business and Human Rights

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Under the theme "Time to Act: Governments as Catalysts for Business Respect for Human Rights," the eighth annual UN Forum on Business and Human Rights brought together over 2,000 representatives of companies, civil society, and states in Geneva in the final week of November to discuss best practices and emerging issues in business and human rights. BSR attended the event both to share our learnings from working with leading companies on business and human rights over the course of the year and to keep our finger on the pulse of the latest trends.

As we look ahead to 2020—and to the dawn of this decisive decade when the decisions we make as a society on how to address economic inequality, climate change, technological innovation, and political polarization will shape our shared future for generations to come—what are the pivotal human rights issues that businesses should be paying attention to? Here’s what we heard at the Forum:

States and regulators are responding to the call to action to protect human rights through mandatory due diligence and increased regulation.

A crucial discussion throughout the Forum highlighted the role of states and regional regulators to take on their duty to protect human rights and close the gap in implementing the UN Guiding Principles on Business and Human Rights (UNGPs), as Pillar One, the state duty to protect human rights, remains the true catalyst to realize corporate respect beyond voluntary measures.

Mandatory due diligence in national legislation is gaining ground, with the latest laws being enacted in France, the Netherlands, and Australia and with more legislation proposed. What’s more, mandatory frameworks are only expected to increase. Comments by the European Union, the Council of Europe, and the OECD all stressed the importance of policy coherence at the state and regional levels. Regional bodies such as the EU and the African Union—which will soon be publishing its first human rights and business policy—are playing a growing role in creating a level playing field and strong systems for human rights protection and business accountability. Similarly, trade investments, public procurement practices, and state involvement in investments such as mega-sporting events must integrate human rights due diligence in project screening as well as regulatory measures to ensure law and trade agreements include respect for human rights. With interventions by states from all over the globe, notable leadership was taken by northern European countries Norway, Sweden, the Netherlands, and Finland, reflecting the region’s long-standing commitment to sustainable development and human rights.

Translating businesses’ numerous commitments to gender equality will require practical action.

Equality and inclusion must be prominent enablers in realizing the UNGPs.

The world is facing a profound inequality crisis as the divide between low- and high-income groups continues to deepen and discrimination remains a burden to the realization of human rights, especially for vulnerable groups. Creating and fostering equal and inclusive societies was the theme of many sessions, with emphasis on equal workplaces and supply chains.

BSR was represented on two panels, the first on the role of the private sector in protecting LGBTI rights and the second on applying a gender lens to the UNGPs in practice. According to the panel facilitated by Dan Bross, Executive Director of the Partnership for Global LGBTI Equality (PGLE), commitment to implementing the UN Standards of Business Conduct must be a priority of business, and joint action to decriminalize sexual orientation will be central to creating inclusive workplaces and enabling regulatory environments.

Similarly, we are at a point where translating businesses’ numerous commitments to gender equality will require practical action. BSR Manager Francesca Manta’s contribution to the panel on gender and the UNGPs stressed the importance of ensuring gender-specific impacts and issues are made visible and taken into account by using a new framework for context analysis and data collection in global supply chains. Diversity and Inclusion policies and commitments to the Women’s Empowerment Principles (WEPs) as well as to the UNGPs may remain a paper exercise if differentiated impacts are not identified, monitored, and acted upon, using operational tools such as the Gender Impact and Data tool (GDI), which BSR developed for supply chain due diligence. It is time for due diligence to stop being gender-blind and make women visible and counted.

In an increasingly fragile world characterized by rising violence, closing civic space, and more authoritarian governance, business has a critical role to play in preventing corrupt practices and human rights violations. 

Addressing corruption and conflict must become a priority of business and states if we are to realize a future of peace and stability.

In line with this year’s theme, the Forum had numerous sessions on the linkages between corruption, conflict, and human rights and the role both states and companies must play to eradicate unethical practices and resolve regional and global conflicts.

Whispered already as the theme of next year’s Forum, corruption took center stage with discussions ranging from the integration of compliance and human rights due diligence processes to holistic approaches to context analysis such as the one at the session facilitated by the UN Global Compact networks. Corruption is often seen as a ‘victimless crime,’ and the panels urged participants to recognize corruption as a strong contributor to human rights abuses. In an increasingly fragile world characterized by rising violence, closing civic space, and more authoritarian governance, business has a critical role to play in preventing corrupt practices and human rights violations. The UN Working Group on Business and Human Rights is currently working on the connection between anti-corruption efforts and implementation of the UNGPs to inform its 2020 report to the UN Human Rights Council. In conflict-affected and high-risk areas, part of business’s responsibility to respect human rights involves actively combating corruption by integrating their anti-corruption and human rights efforts. Companies cannot successfully respect human rights without also addressing issues of corruption in the environment where they operate and that impact their supply chain.

The digital sphere is now indivisible from human rights impacts.

In a world where nearly every company can be considered a technology company, another important theme at the Forum was how human rights are affected by digital activities and what due diligence will mean in this sphere regardless of industry. Discussions spanned from the use of AI and biometrics in high-risk sectors such as defense and surveillance, to what accountability, attribution, and remedy look like in case of adverse impacts from digital activities, to how even digital marketing has far-reaching impacts on organized crime and online and offline hate crimes, and also explored how due diligence is key to ensuring ethical advertising by any brand. Every company should seek to understand the nature of its digital activities—data collection and processing, content management, advertising—and prioritize due diligence to understand human rights impacts from both intended and unintended misuse of their technology or digital activity. States, particularly those in Europe thanks to GDPR, are more and more involved in corporate dialogue and regulations in this sphere, including interesting initiatives such as the Tech Ambassador, which was instituted by Denmark to promote diplomatic activities with technology companies.

Climate is the biggest business and human rights issue of our time, and aggressive emission reductions by both states and businesses should be a core human rights demand.

Climate is our biggest challenge and will have profound human rights implications.

Another theme throughout the three days, the Forum stressed how the climate crisis is now inextricably linked to the current and upcoming human rights impacts—on human life, inequality, health, access to livelihoods, migration. The Forum concluded with a powerful final session on the theme where a unanimous panel agreed that climate is the biggest business and human rights issue of our time and aggressive emission reductions by both states and businesses should be a core human rights demand. There are indeed positive developments and companies that are truly transitioning to fossil-free business models, such as the panelist Scania, but the pace is still too slow to keep emissions under control, particularly in light of the newly published UNEP Emission Gap Report 2019 which predicts increase in temperatures by 3 degrees Celsius. Again, policy coherence was called upon to urge states and businesses to be true to their commitment to the Paris Agreement and act immediately to address climate change in how they operate and our growth models.

We believe these key themes will take even more prominence as we enter the decisive decade next year, and we look forward to working with our members and partners to accelerate change and contribute to a just and sustainable future. To learn more about our work on human rights, please don’t hesitate to reach out and connect with our team.

Blog | Monday December 9, 2019

If Corruption Is a Cancer, How Do We Cure It? Lessons for International Anti-Corruption Day

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Twenty years ago, researchers and experts were relatively oblivious to issues of bad governance and corruption, but today, the link between the quality of government institutions that implement policies controlling corruption and economic development is clear. However, in many parts of the world, corruption is still one of the biggest obstacles to social and economic development. As the international community’s focus on corruption has increased, the following question has been increasingly asked: Are we winning or losing the battle?

First, fighting corruption may mean different things to different people and is unquestionably driven by different factors. In a company, the focus for a compliance officer or the head of the legal department is on legal risks; i.e., if a company engages in corrupt behavior, this may lead to massive investigations, potential prosecution, high fines, and senior management liability. For others, tackling corruption leads to a better and safer work environment, reduces operational costs, and avoids delays.

In the long-term perspective, being a clean company makes it easier to do business.

However, regardless of what the argument is internally, questions from front-line employees working in locations prone to corruption will be: “What are our competitors doing about it? If we say no and everyone else says yes, how can we eliminate it? What are governments doing about it? We can’t change the world alone!” As a compliance officer, you may have heard this input during compliance training sessions.  

Arguments like these are hard to answer and are one of the reasons why the Maritime Anti-Corruption Network (MACN) was created in 2011.

MACN now has 128 members, and our collective voice is strong when engaging in dialogue with governments. Within the network, members can discuss challenges and solutions to tackle corruption at the front line with one another. MACN’s in-country collective action programs mean that companies are not alone when saying ‘no’ to corrupt demands. In our case, the ship before you, and after, will have said ‘no’ to illegal demands. Captains and crew will be better protected by tested processes and procedures and by weight of numbers.

In answering the above questions, MACN members can say:

• We are working with peers and partners to address these challenges with global governments.
• We are stronger together.
• We may not change the world today but working together is a great place to start.

A few lessons from MACN that can be replicated in any industry are:

• Multi-stakeholder dialogue works. Blaming someone who is not in the room gets us nowhere. We need to create and foster dialogues and forums where the public and private sector can come together, where issues can be addressed, and where we move away from general statements about corruption and work on realistic outcomes.
• A sector-specific approach. Addressing issues unique to the sector helps with internal arguments so that front-line staff do not feel alone. They feel supported by a wider external argument of building a strong industry voice in combination with governments and other stakeholders.
• Identify drivers to improve the operating environment. When approaching governments, MACN’s argument is not to address corruption, but to support governments with experience and insights from our member base to reduce trade obstacles. This links the challenges to the government’s own priorities, which, in our case, focus on international seaborne trade.
• It is not a blame game. One of MACN’s key pillars is to support efforts and raise the bar within our own industry. This approach helps governments understand that it is not only about them. It is important we articulate that there is both a supply and demand side to this issue that need to be addressed, and it requires efforts on both sides to fight corruption.

In order to cure the cancer that is corruption, we must identify the challenges and discuss practical solutions that can implemented now—and not tomorrow. We must find ways to bring different stakeholders to the table, engage with industry peers to create a level playing field, and implement solutions on the ground.

Blog | Thursday December 5, 2019

Blockchain through the Whole Supply Chain: Traceability at the Source Depends on Trust

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This blog is the second in a series where BSR and Envisible document their project to support a global brand and its supply chain partners to establish a blockchain-enabled traceable supply chain that delivers sustainability benefits to all the actors in the supply chain. It follows up on this blog, originally published in July 2019. 

In the green hills of a small village, a group of about 300 farmers and members of a smallholder co-op are gathered around a converted schoolhouse, waiting.

Inside the building, a team from the cooperative is managing a well-organized crop sale as farmers file in one by one to participate in the sale process: presenting their product, having it graded and sorted, weighing it, and agreeing to the price. Finally, they are issued a paper bill to show what they are owed, and then they watch as the cooperative team enter the details on an Excel spreadsheet.

Our team (BSR and Envisible) was there to digitize and simplify this last step—collecting data electronically—with the hope of building upon the trust-based relationship that already exists between the co-op and the farmers and then enabling this data to be shared downstream to the rest of the supply chain, ultimately a global corporation and its consumers.

“Card,” Léon said to the farmer standing before him. Léon is a member of the co-op team responsible for ensuring that the weight, quality, and price data are correct and accurately recorded at the last step of the process before the farmers are paid.

The farmer reached into his bag and pulled out a newly issued membership card that identified him as a card-carrying member of the cooperative. Léon scanned the QR code on the card with his mobile phone, prepopulating a Wholechain digital record with key information about the farmer, coop, and location, and then added the agreed weight of the product sold. Finally, he clicked “send” to electronically send the record to the trader. Léon looked up, pleased.

“We’ve done 200.”

Léon was amazed that the app worked on the limited connectivity of the mobile network in the village (just above 2G) in the jungle. And he liked it significantly better than the manual data entry that he was used to.

At the end of a long day, 227 records of farmer transactions were saved on the blockchain, all reinforcing the facts: 227 farmers had shown up that day in that village and had sold hundreds of kilos of a critical agricultural commodity to their cooperative. These transactions, now immutable records on the blockchain, would form the foundation of a traceable chain of custody, forever linking these farmers to the global supply chain and ultimately the products sold far away from the quiet villages.

The foundation of this traceable supply chain is now in place, and the next steps over the coming months will be critical to completing the picture. Digitization and blockchain alone do not improve farmers’ lives; traceability is not equal to sustainability. What they do is provide a gateway—an immutable view into the specific community providing the raw material, altering how we think about raw material supply chains. Involving smallholder farmers directly in a traceability system is a powerful way to lay the groundwork to ensure that sustainability requirements are aligned to the needs of this key community since every transaction ultimately links back to them as the source.

The traceability system needs to make sense for and provide value to the farmers at the source. We left the village and the sale not only with digitized records on the blockchain, but with the following lessons that are critical for success when digital tools are introduced into supply chains such as this one:

1. Simplicity is critical. During the sale, the team members were doing multiple tasks at once that demanded their attention. The system needs to be simple, easy to use, and work in challenging network environments.
2. Digital tools must fit into existing systems. Rather than creating new processes, applications must enhance and reinforce existing ones. In the case of this sale, Wholechain only served to simplify an existing system.
3. Digitization can enhance trust, but certainly not replace it. What we saw that day in the village was a great reminder that blockchain does not create trust. Blockchain is not “trustless” either. Blockchain enhances and builds on trust that is already there.

There is no denying that digitization can provide value to players way upstream: the farmers and cooperative appreciated the enhancements and are looking forward to more. Technology and digitization was seen as a reward for good practice and hard work between the farmers and the buyer. The connection has been established between the brand and the farmers at the source of a critical raw material. Let’s see what we can build from here.

Blog | Tuesday December 3, 2019

Challenges and Opportunities for Gender Equality in a European Luxury Supply Chain

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What is the significance of the prized “Made in Italy” label that is well known in the luxury world?

Many fashionistas will associate it with glamorous designers creating sophisticated and high-quality products, from ready-to-wear apparel, fashion accessories, textiles and fabrics, and shoes to leather goods and eyewear.

Many experts of the luxury sector will know that many of these products are manufactured by a great number of small- and medium-sized enterprises (SMEs). These are generally highly specialized, yet still predominantly artisanal companies, and they are usually family owned and employ less than 50 employees on average. These companies are considered a fundamental asset to the luxury industry and to Italy in general. For example, Italy represents 87.8 percent of the global supply chain of the Kering Group, one of the major global players in the luxury sector. According to a recent study, a third of the global luxury goods market is Italian, and in 2018, it represented four percent of the Italian GDP.

But with these data, we are just scraping the surface: WHO is really behind your “made in Italy” bag, scarf, your glamorous glasses?

The short answer is: most of the time, women.

The long answer can be found in the report Supporting Women in the Luxury Supply Chain: A Focus on Italy, which found that while women are vital to the luxury sector, gender inequality throughout the supply chain still impacts them in the short- and long-term. However, both brands and suppliers are well placed to lead efforts towards improved gender equality in Italy, in both supply chains and in the country’s overall sociocultural context.

The study presents the results of a year-long research study commissioned by Kering and its family of Italian brands, Bottega Veneta, Gucci, Kering Eyewear and Pomellato. This study was conducted in partnership with local organizations Camera Nazionale della Moda and Valore D. With this project, BSR and a local partner Wise Growth engaged 189 suppliers of the Italian luxury supply chain to gather insights related to gender equality policies and practices as well as perceptions and experiences of 880 workers, including 620 women workers.

Women are key to the luxury sector. As outlined in a report published in 2018 by BSR’s Responsible Luxury Initiative, in 2015, women accounted for 85 percent of luxury sales, representing about four percent of designers and the majority of people entering the industry across the value chain. This gender ratio was also apparent in the research study—across the 189 suppliers involved in the research, women represented 63 percent of the workforce.

Although the “Made in Italy” label is well regarded, Italy itself, like many other countries, still faces difficulties with gender inequality. According to the World Economic Forum Global Gender Gap Report 2018, gender inequality in Italy is particularly evident when it comes to women’s active participation in the labor market as they face more limited access to job opportunities and career progression and greater exposure to vertical segregation and harassment, among other obstacles.

Despite these facts, little was known to date about gender inequalities that may be faced by women working in the luxury supply chain, their status, and the predominant challenges they face. This research intends to contribute to closing this gap of knowledge as well as outlining potential next steps to address the issue. The report draws four conclusions:

1. Women do not have access to the same working conditions and economic opportunities as men: Women represent 63 percent of the workforce, but only 25 percent of management positions, remaining predominantly in traditional roles as blue collar workers within the factories. Lower positions lead to lower salaries and the perception among women of discrimination in remuneration and that they cannot earn a living wage.
2. Women rarely hold leadership positions and have limited opportunities of professional career advancement: Breaking the glass ceiling is particularly challenging, and 59 percent of women feel discriminated against across the employment cycle. Overall, and not surprisingly in the context of SMEs, there is overall limited investment in career advancement and professional training opportunities. Women also tend to accept the lack of career growth prospects as a precondition tied to their interest in having more flexible working hours, and they also stigmatize female colleagues in leadership positions.
3. The impacts of familial responsibilities are seen as obstacles to gender equality: Motherhood in particular is perceived as a burden by 39 percent of women, who fear its consequences on their job upon returning to work and its overall impact on getting and sustaining a job and on professional growth. In addition to that, shared parental responsibilities are still rare: for 69 percent of women, domestic and family care responsibilities still predominantly fall on their shoulders and impact their work-life balance.
4. Women have a harder time voicing challenges and concerns: This study did not uncover highly concerning results in terms of the number of cases of sexual harassment that women may have experienced or heard of in their lives. At the same time, there is relatively low awareness of what constitutes harassment and inappropriate behaviors. Much more would need to be done to educate workers on this issue as well as creating an enabling environment for voicing concerns through grievance mechanisms and speak-up channels and ensuring that women feel empowered and confident enough to voice their concerns.  

In terms of potential next steps, there are clear opportunities for the luxury sector to lead efforts towards more gender-inclusive supply chains in Italy and more generally contribute to breaking down barriers and gender stereotypes in and out of the workplace. To achieve this and to build a potential path forward for future programming in support of gender equality, the report outlines a set of recommendations structured under BSR’s “Act, Enable, Influence” framework.

Following the research and the recommendations outlined in the report, Kering and its family of four brands have committed to take action to help advance gender equality through supplier engagement and in cooperation with relevant stakeholders. We look forward to seeing how this will contribute to driving impact and positive outcomes for women in the Italian luxury supply chain.

If you are interested in learning about how BSR can support you in promoting gender equality in your supply chains, please contact us.

Reports | Tuesday December 3, 2019

Supporting Women in the Luxury Supply Chain: A Focus on Italy

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Luxury brands have committed to supporting women’s empowerment across their value chains. Women not only represent a significant share of luxury brands’ customers and employees—they are also a critical part of luxury companies’ supply chains. Italy, in particular, is well known for being a primary sourcing country for the sector, yet the status of women in the supply chain and opportunities to support women’s economic and social empowerment remain largely unknown and unaddressed.

Across many different countries, women face multiple barriers to achieving gender equality. These include:

• Economic barriers such as overall low labor force participation, high proportion in the informal sector, prevalence in part-time roles, challenges advancing in their careers and into leadership and decision-making roles, unequal compensation levels, and a disproportionate amount of unpaid care work.
• Social barriers such as high rates of gender-based violence and harassment, challenges accessing sexual and reproductive health services, migration and human trafficking risks, weak implementation of anti-discrimination laws, traditional roles of women in society and in the workplace, and hidden gender biases and social norms that are difficult to eradicate.

Italy is no exception. Working women in the country face numerous challenges in the labor market, and little is known about gender equality efforts and the gender gaps impacting women working in the Italian luxury supply chain. With this context in mind, Kering and its family of Italian brands, Bottega Veneta, Gucci, Kering Eyewear, and Pomellato, have engaged BSR to better understand the challenges, ambitions, and opportunities of women workers in today’s luxury supply chain in Italy and identify ways to support their success.

This paper aims to:

• Shed light on the status and challenges faced by women workers in Italy, particularly those working in the luxury sector.
• Identify areas of intervention and provide practical recommendations on actionable next steps, programs, and initiatives that luxury brands could pursue, in cooperation with their suppliers and relevant stakeholders, to address gaps and concerns raised by women workers and work toward the realization of gender equality in the workplace.

This paper summarizes the insights gained from a variety of activities conducted by BSR and Wise Growth between February and September 2019.

Blog | Thursday November 21, 2019

Can Corruption in Your Value Chain Lead to Complicity in Gross Human Rights Abuses?

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This blog forms part of a series on conducting enhanced human rights due diligence in conflict-affected and high-risk areas.

The jury may still be out on whether freedom from corruption should be a human right, but in the business and human rights community, there is increasing momentum for articulating the relationship between corrupt business practices and their associated negative human rights impacts. These impacts are amplified in likelihood and severity when they happen in conflict-affected and high-risk areas, such as Myanmar, Colombia, or Palestine. Should businesses fail to conduct conflict-sensitive human rights due diligence and integrate their anti-corruption and human rights efforts, both upstream and downstream of their business operations, they may find themselves directly or indirectly linked to and complicit in gross human rights abuses that are conducted by a third party. These include human trafficking, child labor, and even crimes under international humanitarian and criminal law like genocide and crimes against humanity.

In situations like these, traditional human rights due diligence is often insufficient. BSR recommends enhanced human rights due diligence that is both conflict-sensitive and that integrates corruption risk. Tying these two narratives more closely together will reveal far more insight about the nexus of power relationships that companies need to navigate to do business with integrity.

Should businesses fail to conduct conflict-sensitive human rights due diligence and integrate their anti-corruption and human rights efforts, both up- and down-stream of their business operations, they may find themselves directly or indirectly linked to and complicit in gross human rights abuses that are conducted by a third party.

Corruption can lead to negative impacts on human rights; as such, part of business’s responsibility to address human rights impacts involves actively combating corruption. In some cases, the link between corruption and negative human rights impacts is clear: corrupt practices and illegal building extensions were contributing factors in the tragic collapse of Rana Plaza in Bangladesh in 2013, which led to more than 1,100 deaths.

In other cases, the link between corruption and human rights is more indirect, but the consequences are no less severe. Businesses may find themselves engaging with partners, suppliers, customers, or end-users who deal with military-associated entities or politically exposed persons. Sometimes, a national government may be the perpetrator of gross human rights abuses. Many businesses have little choice but to enter partnerships with government bodies, particularly in industries such as oil, mining, telecommunications, and infrastructure. This can leave them directly linked to human rights impacts driven by the government in question.

One example of exposure to human rights risks as a result of corruption is through corporate philanthropy. In some cases, there is a fine line between philanthropic donations and facilitation payments for “getting things done” and securing permission to operate from authorities in challenging legal environments without effective rule of law. These donations could be provided by the in-country business unit, by business partners, by landowners from which your company leases land or the land management business. In these situations, the link between corruption and complicity becomes clear when the donations are directly or indirectly funding military operations or authoritarian regimes linked to gross human rights abuses. This link was made explicit by the UN Fact-Finding Mission to Myanmar in an August 2019 report.

Another example of corruption-related human rights risks can be found deep within the supply chain: the OECD recently published a report on the role that corruption plays in amplifying and perpetuating human rights abuses associated with armed conflict in copper and cobalt supply chains in the Democratic Republic of the Congo. Related activities include illegal payments to government officials and business relationships with entities that are partly or wholly owned by criminal or military enterprises. These suppliers are often several times removed from the multinational company that is sourcing the raw materials, which makes building leverage and oversight challenging. In this case—and as BSR wrote earlier this year—collective action could incentivize suppliers throughout the supply chain to support an anti-corruption environment.

BSR recommends enhanced human rights due diligence that is both conflict-sensitive and that integrates corruption risk. Tying these two narratives more closely together will reveal far more insight about the nexus of power relationships that companies need to navigate to do business with integrity.

At BSR, we help companies to integrate corruption risk into their human rights due diligence. Our enhanced human rights due diligence toolkit was developed for use in conflict-affected and high-risk areas. This toolkit includes support for integrating the compliance and corporate responsibility/human rights teams to coordinate on assessing the risk of business partnerships in high-risk contexts, as well as recommendations for enhanced know-your-customer, beneficial ownership, and political/military-associated entity background checks.

If you would like more information on how BSR can support you to address conflict- and corruption-related human rights risks in your business value chain, please don’t hesitate to get in touch with our team.