Search Results

Blog | Friday October 25, 2019

Human Rights in a Global Supply Chain: Challenges and Approaches

Preview

Approaching global supply chains from a human rights management perspective can seem like a daunting challenge. Implementing a human rights program within the “four walls” of our own companies can be difficult enough, let alone extending such oversight programs beyond the first tier of suppliers—which may include tens of thousands of entities across the globe, affecting potentially hundreds of thousands of people and communities. While the UN Guiding Principles on Business and Human Rights (UNGPs) are clear that the duty to identify, prevent, mitigate, and account for adverse human rights impacts extends across a company’s value chains and business relationships (including suppliers), the UNGPs do not provide concrete guidance on how to apply such principles in practice. 

Like many challenges, the question of how business should address human rights in difficult and complex operating environments is one that benefits from a collaborative approach where companies can share best practices and learn from one another’s experiences—which is why BSR established the Human Rights Working Group (HRWG) in 2012. The collaborative initiative seeks to help companies implement the UNGPs by providing operational-level guidance and bringing together a global community of business and human rights professionals. The summer meetings of HRWG, held in St. Louis, Tokyo, and Stockholm, brought together representatives of 40 companies across sectors to connect on the field’s most pressing issues. 

Over the course of the summer meetings, HRWG’s discussion covered topics ranging from women’s empowerment in the business context to applying human rights considerations to artificial intelligence (AI) systems, as summarized in Human Rights Insights: Trends from the Human Rights Working Group’s Summer Meeting, which was published today. 

All companies, regardless of industry, should consider the human rights risks along their supply chains and take the steps above to ensure that their practices respect and protect the rights of workers and communities.

One topic that highlighted the challenge of implementing the UNGPs in complex operating environments is the question of supply chain oversight. Questions that are commonly raised when this topic is discussed include: How far down a supply chain must due diligence reach? How can a company have leverage over a supplier many tiers down the supply chain? How can a company possibly assess a supply chain that in many cases is comprised of tens of thousands of suppliers? 

The Working Group proposed the following approach to tackling these challenging questions:

• Map your key supply chains down to the commodity or raw material level where possible. Key supply chains are those that are important to the business and/or its product lines. For example, raw cocoa and dairy supply chains for a chocolate manufacturing company could be classified as key supply chains, whereas IT products for the company’s office workers would not. While the UNGPs expect companies to assess all potential risk and impacts eventually, including those in non-key supply chains, prioritization is essential, and beginning with key supply chains allows companies to capitalize on their leverage within these business relationships.
• Prioritize high-risk supply chains by analyzing factors such as country risk, commodity or product risk, supplier category risk, and more. Business considerations can also be included in this prioritization process, such as degree of spend or importance to the business; however, risk to the rightsholders in these supply chains is ultimately the most important determinant of risk. 
• Conduct a human rights impact assessment in those identified high-risk supply chains and provide remedy where there is sufficient connection via the UNGPs’ cause/contribute/directly linked framework. Given the complexity of supply chains, in many situations remedy may require a collaborative approach with other key stakeholders, such as peer companies, governments, non-governmental organizations, impacted communities, and more. 

All companies, regardless of industry, should consider the human rights risks along their supply chains and take the steps above to ensure that their practices respect and protect the rights of workers and communities. BSR has several tools that help companies work through the steps above—from mapping supply chains and gaining visibility and transparency to helping companies build leverage and improve remedy and mitigation. Many of these resources are shared in HRWG, along with lessons on implementation shared by member companies. 

BSR members interested in joining HRWG should not hesitate to reach out and connect with us.   

Reports | Friday October 25, 2019

Human Rights Insights: Trends from the Human Rights Working Group’s Summer Meeting

Preview

The second round of BSR’s Human Rights Working Group (HRWG) meetings for 2019 was held between July and September in St. Louis, Tokyo, and Stockholm. Established in 2012, HRWG is a collaborative initiative designed to help companies implement the UN Guiding Principles on Business and Human Rights (UNGPs), bringing together approximately 40 companies from across sectors. In addition to providing operational-level guidance and best practices in the business and human rights field, HRWG has established a global network of business and human rights professionals. The summer meetings covered a mix of substantive and methodological topics, including:

• Human rights methodologies, continued from the Spring round of meetings
• Human rights and supply chains
• Responsible use of technology and Artificial Intelligence (AI)
• Legal trends
• Human rights governance

BSR member companies interested in joining the Human Rights Working Group should connect with us to learn more.

Blog | Wednesday October 23, 2019

The Building Blocks of Integrating ESG into Private Infrastructure Investments

Preview

There is an estimated US$15 trillion global gap between current spending on infrastructure—energy, telecommunications, transportation, and water and sanitation—and what is needed between now and 2040. In many countries, including the United States, infrastructure has been aging and undermaintained for decades due to public funding constraints.

As a result, we have seen a surge of private equity (PE) firms investing in long-term infrastructure projects—often classified under alternative assets. In fact, private infrastructure funds raised over US$80 billion in 2018, double the amount raised just five years earlier. Major global PE firms, such as Ardian and EQT, recently closed multibillion-dollar funds. Some of the world’s largest infrastructure investors, such as Global Infrastructure Partners and Brookfield Infrastructure, are also working towards raising megafunds of US$20 billion or more in 2019.

Many PE firms have come to view environmental, social, and governance (ESG) issues as critical to understanding the long-term risks and unlocking value-creation opportunities with their portfolio companies. While PE firms have made significant progress in integrating ESG considerations into their company-focused equities investing models, infrastructure funds have not been as proactive in integrating ESG considerations into business decisions—and we think this is a missed opportunity.

With more and more PE firms formalizing approaches to responsible investment, we believe there are clear pathways to integrate ESG factors for private infrastructure investors and managers. For instance, the Equator Principles provides a recognized structure for banks to assess ESG risks with infrastructure financing. Given BSR’s experience working with both the world’s largest PE firms and the world’s largest infrastructure companies and our knowledge of ESG precedents and best practice, our recommendations for private infrastructure investment teams are:

1. Be Principled. Establish a corporate principle that ESG considerations for investing should apply to all asset classes. We often hear from private investors that “this fund is different from another.” While funds may be different in some ways, all types of funds should have ESG oversight.   
2. Be Consistent. Develop a separate or overarching responsible investment/ESG policy that addresses the diverse asset classes, including infrastructure, in which the firm invests. In March, BSR released a report with guidance and practical tips that firms can consider while developing an ESG policy. AMP Capital has issued an ESG Infrastructure policy and describes how it integrates these factors across the investment life cycle.
3. Be Aligned. Consider material ESG factors during diligence and align the processes with applicable standards such as the Equator Principles and the International Finance Corporation (IFC) ESG Performance Standards. BSR has been a leading part of the Equator Principles stakeholder engagement process and believes the guidance is applicable beyond just banks.
4. Be Long-term. Given the long-term nature of infrastructure investments, ESG diligence for infrastructure projects should cover the full lifecycle of projects, including monitoring, operating, and maintenance. Investment committees should identify and consider long-term (e.g. climate change) material ESG issues and potential impacts. Futures thinking and scenario analysis might be helpful tools in this regard. Lastly, use an ESG futures framework as an opportunity to highlight the long-term societal benefits that the infrastructure will bring.
5. Be Extensive. Infrastructure projects are often joint efforts, and ESG diligence should include joint-venture partners, third-party infrastructure operators, contractors, and suppliers. A good example of how this ESG partnership approach is being applied is BSR’s Building Responsibly collaboration on human rights and the construction industry.
6. Be Active. Private investors should also be active managers of infrastructure assets in the same way they manage private company investments (e.g. board participation, technical expertise, etc.). In particular, investment teams should be trained with the necessary expertise on ESG risks and opportunities. Partners Group, for example, has developed an ESG Dashboard to track relevant ESG metrics for its infrastructure assets over time, including highlighting the potential areas of improvement.
7. Be Engaged. Local communities, contractors, and other stakeholders are critical for project success. Investments often directly impact the communities in which they are located through employment, social services, and the environment. Engaged operators should be conducting internal and external stakeholder engagements with local stakeholders on a regular basis to broaden their knowledge and awareness of critical environmental and social issues over the life of the investment. GCM Grosvenor focuses its efforts on engagement in this way.
8. Be Transparent. All infrastructure has both positive and negative ESG impacts. Transparency in reporting activities and progress in a balanced way creates investor trust and accountability in the market. Some best practices include completing the annual PRI disclosures for Direct—Infrastructure, disclosing climate-related financial reporting in line with the TCFD recommendations, and engaging with GRESB’s infrastructure platform to improve performance across infrastructure and real assets.

ESG practices for infrastructure investing are still maturing, and many implementation challenges remain. These include: How can firms identify material risks and opportunities and integrate them into pre-investment decision making? How can firms ensure responsible investment principles are upheld across the multiple phases of project execution? How can firms demonstrate ESG business value to their investors and other stakeholders?

While the above guidance does not answer all of the implementation challenges, we believe that the basic building blocks we have recommended can provide the foundation for successful ESG integration and management for infrastructure investors. Our intention is to provide a good place to get started—and often getting started is the hardest part. 

Blog | Tuesday October 15, 2019

Answering the Call for Business Leadership on Climate Policy

Preview

Our recently released letter calling for business action on climate policy—which we were delighted to publish in partnership with 10 other leading environmental and sustainability organizations—is a sign of the times.

The creation of the letter was driven by a few fundamental things, some good and some bad: First, the bad. My colleagues Aron Cramer and David Wei recently summarized the current situation and outcomes from the recent UN General Assembly and Climate Week in NYC. The bottom line? Despite mounting scientific evidence for urgent action, a growing list of leadership initiatives by companies and other “non-state actors” (cities, states, regions), and increasingly urgent demands for action by investors, employees, students, etc., national governments have demonstrated that they cannot and/or will not deliver without a significant push from key constituents.

Now the good news: That’s us and we can do this.

Working with our friends and partners in the We Mean Business coalition and the Renewable Energy Buyers Alliance, we have seen steadily increasing engagement from more and more diverse companies in climate advocacy. On an international level, business engagement has grown dramatically over the past several years and arguably played a key role in achieving the Paris Agreement. More recently, here in the US, we have seen the emergence of business stepping up to fill a leadership vacuum left by our national political leadership. Earlier this year, for example, we supported a lobby day in Washington DC, that saw more than 75 companies talk to Senate and House members on both sides of the aisle about the need for a price on carbon to underpin our efforts to build a prosperous, low-carbon economy.

What Comes Next for Business’ Climate Action

At a high level, the solution is clear and reflected in the three pillars of our call to CEOs of corporate America to adopt a science-based climate policy agenda:

1. Advocate for policies at the national, subnational, and/or sectoral level that are consistent with achieving net-zero emissions by 2050;
2. Align their trade associations’ climate policy advocacy to be consistent with the goal of net-zero emissions by 2050; and
3. Allocate advocacy spending to advance climate policies, not obstruct them.

We understand that clear is not the same thing as easy. Putting these principles into action will require that business—in partnership with like-minded players in civil society and the public sector—play an active role in addressing a number of obstacles facing each of them. Specifically:

Business must define their advocate priorities. We can and must create a coherent policy action agenda that clarifies key ‘must-haves’ vs. ‘nice-to-haves’ or specific sectoral interest that we can refer to as a guide through the rough and tumble of electoral politics. What are must-haves that will set overall direction and who will join us?    

Business must assess whether trade associations’ priorities align with their values. How can we navigate opportunities to influence the bodies that represent us and when are we better served to pull out?

Business must review how they allocate advocacy spending, again to ensure alignment with values. How can we develop a more comprehensive understanding of overall net benefit and interest in the midst of a daunting set of apparently conflicting priorities? Is it really true that we need to restrict our advocacy to the near-term and urgent (taxes, trade, etc.) at the expense of longer-term self-interest?

In order to put these principles to work, we know that we must also enable the right kind of transparency in our collective efforts. We furthermore need to this without creating new, additional platforms for disclosure and reporting at a time when there is a need to reduce duplication and fragmentation in reporting and disclosure. How and where can we best enhance the platforms we already have to provide more transparency on corporate climate lobbying?

Climate action by corporate leaders is important, and it continues to gain momentum. Soon there will be more than 700 large corporates with formal, public, science-based climate targets, including net-zero emissions by no later than 2050 and significant milestones along the way. We need effective advocacy to match that ambition, doing all we can to ensure that those 700 can actually achieve these targets and that many thousands more can join them.

We look forward to working with our members and partners to make it so.

Our shared future depends on it.

Blog | Monday October 7, 2019

Q&A with BSR Senior Advisor Susan Morgan

Preview

A year ago, BSR’s Future of Sustainable Business report listed “technology, ethics, and human rights” as one of three issues—alongside climate resilience and automation—that will define the future of sustainable business. Since then, we’ve been making true on this belief by steadily increasing our capability to help our member companies and today, we move one step further by adding Susan Morgan as a senior advisor.

Susan has spent the past 20 years working at the cutting edge of technology across three different sectors. She spent 10 years at British Telecommunications, served as the first Executive Director of the multi-stakeholder Global Network Initiative, and as part of the Open Society Foundations, funded issues of disinformation and the health of the online public sphere.

I recently spoke with Susan to reflect on these experiences and to share the insights she has gained on how change happens in the world and how companies in all industries—not just technology—can work with other stakeholders to address disruptive technologies.

Dunstan: You’ve spent time in the private sector, at a multi-stakeholder initiative, and in a foundation. What have you learned about how to address issues arising from disruptive technology?

Susan: No one stakeholder group can singlehandedly address the challenges now facing the world. For example, in the technology sector, vital questions are posed by the rapid evolution in technology. Artificial intelligence (AI) can embed discrimination into decision-making systems, discriminating at speed and scale. Established democratic norms are vulnerable to nontransparent, poorly understood, and misleading information campaigns that are poorly regulated. And technologies such as facial recognition could fundamentally change the balance of power between citizens, governments, consumers, companies, challenging privacy, a fundamental human right.  These issues have profound societal implications, and everyone must be represented in the deliberations about them. All stakeholders need to recognize and embrace this as well as the need for public policy and regulatory frameworks that protect citizens and govern the use of these new technologies.

The sweet spot that produces progress is when all stakeholders are stretched and feeling uncomfortable. But being comfortable with being uncomfortable is not easy. It takes work.

Dunstan: You say that the balance of power between citizens, governments, and consumers may fundamentally change. How and why will this happen, and what does this imply for how we address disruptive technology?

Susan: In the last few years we have witnessed incredible consolidation of power by companies operating in the technology sector. These companies have access to huge financial resources that they can deploy to achieve their goals thanks in part to large quarterly earnings and tax regimes that are poorly adapted to the global nature of the Internet. The acquisition of AI talent leads to a concentration of technical knowledge and expertise within companies that could make it more difficult for effective oversight by regulators, governments, and others due to a scarcity of talent and human resources. This is happening at the very same time that the space within which civil society operates around the globe is under pressure due to restrictions being imposed on the funding of non-governmental organizations (NGOs), punitive registration requirements, and direct government pressure.

Although these power imbalances reflect the current reality, initiatives serious about bringing different stakeholders together to tackle a particular challenge must proactively address them to be successful. In practical terms, this means designing governance models with equal representation and power amongst different stakeholder groups, being innovative about how to address knowledge gaps, and building in mechanisms to ensure companies are accountable for commitments they make.

Dunstan: You say that cross-sector collaborations and partnerships are essential. What are the main challenges?

Susan: An important pre-condition for effective cross-sector working is an understanding that no one will get everything they want. Understanding this reality is vital. In my experience, the sweet spot that produces progress is when all stakeholders are stretched and feeling uncomfortable. But being comfortable with being uncomfortable is not easy. It takes work. It is something that people running initiatives bringing different stakeholders together need to focus on, just as participants in these initiatives need to embrace it.

Dunstan: What are the main sources of success?

Susan: Building trust between the parties, who will sometimes have started on opposing sides, is an essential component of successful cross-sector working. Leaving behind preconceived notions is essential to achieving this. NGOs need to acknowledge that companies often do the right thing or want to put something right when it goes wrong. Companies need to recognize and accept when criticism of their actions or decisions is justified or can be useful in creating momentum for internal change. Confidence and courage is needed to invest time building personal relationships with people from other stakeholders when there is often external pressure and public scrutiny. These personal qualities are insufficiently recognized as important ingredients in the success of any initiative.

Over time, the core business of companies will increasingly be driven by technology and data even if they are not classified as being companies in the tech sector.

Dunstan: What are some of the most valuable learnings from your work in the field of tech and human rights?

Susan: One of the important lessons I learned during my time as a funder was how difficult it was to predict what would gain traction or produce pressure for change. It’s far too simple to assume that those things with the most financial backing will be the successful things. Sometimes, it is something that unexpectedly captures people’s imagination, something where the timing happens to be right, or an experiment or gamble that pays off. When developing theories of change or strategy, it is essential that initiatives consider all of these options.

Dunstan: You and I have often spoken about the importance of “non-technology” companies being much more proactive in addressing technology and human rights issues. How can we accelerate that?

Susan: Over time, the core business of companies will increasingly be driven by technology and data even if they are not classified as being companies in the tech sector. But these have much less experience with the types of issues that technology companies have been facing for years, and they will have much to learn. BSR is at the intersection of many different forces, from companies where technology and data are already central and those moving in that direction to the connection between the protection of human rights and broader company sustainability strategies. It also plays an important role in bringing different stakeholders together to make progress on critical societal issues. I look forward to playing a part in that at BSR as a senior advisor.

Blog | Thursday October 3, 2019

Harnessing the Power of Data in Supply Chains: Making Women Workers Count and Be Counted

Preview

We know that we are still a long way from achieving gender parity in the workplace—in part, because the data tells us so. The G7 Gender Equality Advisory Council’s recent report reminds us that despite women’s advancement in many areas of higher education, women are still less likely to participate in the labor market (64 percent) than men (94 percent), continue to be paid less, and are less likely to be promoted to management and senior-level positions.

However, while some of the challenges women face in attaining parity are demonstrated by data-driven insights, many issues that disproportionately affect women remain inadequately captured, and the global gender data coverage is still largely insufficient. The absence of gender and outcome data has led to the development and implementation of both public and private policies and programs that fail to deliver equally beneficial outcomes for men and women—neglecting both the various barriers women face and the number of women who face them. A report from the UN Working Group on the Gender Dimensions of the Guiding Principles on Business and Human Rights reminds us that, too often, the human rights of women are overlooked by companies’ due diligence approaches, including impact assessments. Women count and need to be counted in. This is not only true when identifying, preventing, and addressing company-related human rights impacts in direct operations but also in their further-removed supply chains.

This begs the question: How can companies conduct more gender-responsive due diligence approaches, and what role does gender-disaggregated data play in this? This is the question that BSR’s new guidance Making Women Workers Count: Conducting Gender-Responsive Due Diligence in Supply Chains, funded by the C&A Foundation, sets out to address.

This practical report provides recommendations for both brands and suppliers on how to conduct deliberate gender-focused due diligence through a four-phase approach: 1) assess and analyze, 2) integrate and act, 3) track, and 4) communicate. The report also introduces a set of indicators that can be used to measure outcomes for women and men workers as well as methodologies for collecting and analyzing the data to unearth the root causes of the identified gender gaps.

In the report, we also introduce the Gender Data and Impact (GDI) tool that can be used to conduct a factory assessment to reveal gender gaps in worker outcomes. The GDI tool, publicly available online, allows brands and suppliers to shift the focus of their assessments: starting the analysis by highlighting what outcomes are achieved for women rather than which supplier commitments and practices are in place. While policies and processes do matter, their existence does not systematically guarantee positive outcomes for women and men workers. For example, the existence of reporting channels for sexual harassment, while an important first step, are only useful if workers know about them and are willing to use them, which is why the GDI measures workers’ awareness and trust in reporting mechanisms.

The GDI tool includes a mix of workforce and worker impact indicators that help capture systemic gender discrimination and support the detection of underlying drivers.

• Workforce indicators provide a general overview of the gender makeup of a specific workforce based on a set of criteria, such as contract and job types, wages, and other structural vulnerabilities. Some indicators also assess the gender dynamic of absenteeism and turnover which may be symptoms of complex and multi-faceted issues affecting women workers.
• Worker impact indicators support the evaluation of worker outcomes, perceptions, and behaviors as well as social norms that may influence and contribute to reproducing structural unequal outcomes for women. Assessing women’s empowerment holistically, these indicators spread across six categories representing key enabling dimensions deemed essential for women to thrive in the workplace, such as agency, health and safety, and freedom from violence and harassment.

These indicators, combined with country-level analysis of potential risks and barriers to gender-equal societies and workplaces, can help to illuminate the specific challenges faced by women in factories and farms.

For gender-transformative change to become a reality, we need brands and suppliers to take joint ownership of issues and drive dual accountability of meaningful factory-level improvements.

Beyond the evaluation of worker-specific data and outcomes, the report also acknowledges how important it is for companies to review and assess the impact of their own sourcing practices on workers and to understand how these may disproportionately affect women workers.

Providing a practical framework for conducting gender-responsive due diligence that focuses on outcomes rather than practices is the first step to spur real change for women workers. Implementing this framework will require setting up adequate systems and processes both at the brand and supplier level to collect, manage, analyze, and make use of the gender data for decision-making purposes. However, for gender-transformative change to become a reality, we need brands and suppliers to take joint ownership of issues and drive dual accountability of meaningful factory-level improvements. This can only be achieved through partnerships that are based on mutual trust and genuine commitment at the highest level of both organizations.

BSR is dedicated to helping companies empower women along value chains. Brands interested in learning more about gender-responsive due diligence and the Gender Data and Impact Framework should reach out for a conversation with our Women’s Empowerment team.

Reports | Thursday October 3, 2019

Making Women Workers Count

Preview

From the lack of gender-sensitive data indicators to gender-biased collection methodologies, there has been a noticeable absence of the most basic reliable data. This has led to the development and implementation of policies and programs that do not account for the various barriers women face and fail to deliver equally beneficial outcomes for men and women.

In its June report, the UN Working Group on the Gender Dimensions of the Guiding Principles on Business and Human Rights makes it clear that brands have the responsibility to require and encourage their suppliers to respect the human rights of women in their operations and track the effectiveness of their responses using gender-disaggregated data where relevant. However, most brands do not know what specific gender data to ask for or how to interpret it, and suppliers are unclear about the benefits to them of collecting additional data points, nor do they have the systems and processes in place to do it.

To help both brands and suppliers conduct better and more effective gender-responsive due diligence, BSR is launching the Making Women Workers Count: A Framework for Conducting Gender Responsive Due Diligence in Supply Chains report, funded by the C&A Foundation. This report:

• Provides recommendations along four phases of due diligence.  
• Identifies a set of indicators to be used to measure outcomes for women and men workers as well as methodologies for collecting and analyzing the gender data.
• Introduces the Gender Data and Impact (GDI) tool that suppliers can use to detect gendered gaps in outcomes for workers, design an effective action plan, and track improvements against worker outcomes that are truly gender transformative.

This guidance and the GDI tool are intended for both brands and suppliers who wish to work towards more gender-equal workplaces and would like to understands how gender and outcome data will help them on this journey.

Blog | Wednesday October 2, 2019

Three Takeaways from UNGA Week 2019

Preview

World leaders, CEOs, and NGOs large and small descended on New York last week for the UN General Assembly, UN Climate Action Summit, and Climate Week NYC. After several days of dashing from place to place, navigating streets blocked by the motorcades of presidents and prime ministers, and connecting with other members of the sustainable business tribe, there are reasons for both optimism and pessimism, but mainly greater resolve to act with heightened urgency. I have three big takeaways from the week.

Let’s start with what’s not going in the right direction. While the science on climate impacts continues to paint a grim picture, action from national governments did not match the level of urgency. This week saw the release of yet another report showing that our climate is deteriorating even faster than feared. The Intergovernmental Panel on Climate Change’s latest report tells us that sea levels are rising even faster than projected, potentially leading to “extreme sea level events” hitting once a year by 2050. This latest warning again tells us that we are beginning to experience feedback loops from warming already in the system, which is generating the wrong kind of momentum. We should need no further evidence that action is needed.

While the science on climate impacts continues to paint a grim picture, action from national governments did not match the level of urgency.

Unfortunately, the national governments gathered at the UN Climate Action Summit did not deliver the goods. Political weakness and just plain bad timing hampered commitments from the UK, EU, and others. The US and Brazil are actively hostile to climate action. And China, therefore, had the political space not to exercise more ambition for now and did not meet expectations that they might make significant new commitments.  

Second, the pressure on business to act is rising. We are living in a time when the basic principles of capitalism and markets are being questioned more seriously than they have been in a long time. There is a broad recognition that while markets have delivered better livelihoods for many, there are significant flaws that are decreasing social mobility in the mature economies of the Global North, exacerbating income inequality in all corners of the world, and reducing protections for workers subject to structural changes due to automation, the shift to a clean energy economy, and changing demographics.

The recent Business Roundtable statement on its purpose echoed across Manhattan all week, encapsulating a sense that the purpose of business needs an overhaul. Even more, the millions of students who took to the streets to demand and inspire climate action have most certainly gotten their message across. This is widely seen as a game changer, and no one believes the vision is only about Greta—it’s bigger than that. When our kids and our fellow employees are taking to the streets, something important is changing.

When our kids and our fellow employees are taking to the streets, something important is changing.

Third, the good news is that business action is rising. At the UN, Lise Kingo of the UN Global Compact proudly announced that 87 companies have embraced a 1.5°C degree target and that the numbers are growing quickly. This is a commitment that was unthinkable even at the start of 2019 for most companies. There are multiple new commitments to nature-based solutions. Investors—including some of the largest banks in the world—have committed to aligning their investments with a net zero target. Let us not forget that just four years ago, there was serious doubt whether the world would come together at Paris. Today, net zero at or before mid-century has become a baseline commitment—now including Amazon, which dove in with its first major climate commitment the weekend before UNGA kicked off.

What’s more, innovations emerging far from the carpeted hallways of the SDGs or the comfortable UNGA Week receptions high above Manhattan provided signals of even more exciting progress to come. I had the chance to learn about Terraton, a new company considered one of the few sustainability unicorns. Terraton has been making rapid progress to enable farmers to remove one trillion tons of carbon from the atmosphere. This audacious effort from Indigo Ag has the benefit of appearing to be remarkably plausible.

And while there are indeed many exciting efforts being launched, one note of caution. The proliferation of well-intentioned collaborations is also creating gridlock on the scale of UNGA Week traffic in midtown Manhattan. Without a concerted effort to align all these initiatives—and quite possibly see some fade away—we will see duplication and confusion that delivers wasted effort rather than impact. Over the past several days, I picked up a growing sense of frustration on the part of business that this swell of new initiatives is sapping energy, confusing the market, and generally not maximizing impact. There are some efforts—including some in which BSR is involved—to align initiatives, but all of us in the sustainability world should think twice before launching “yet another” effort to do what others may already be doing.

We are about to enter the Decisive Decade of the 2020s, when we will deliver on the SDGs and the promise of Paris…or not. We cannot be blind to the scope and scale of the challenge, and the reality that we are not—yet—on track to deliver on the vision of sustainable prosperity for all. Indeed, our only choice is to redouble efforts. Ambition and urgency are badly needed, and the community of leaders in New York this week sent powerful signals that they are up to the task. Now that we have all left Manhattan, it’s time to deliver the goods.

Blog | Monday September 30, 2019

2019 Climate Action Summit: Businesses Are Pulling Governments toward a Net Zero Economy

Preview

At the 2019 UN Climate Action Summit, the global community expected national leaders to announce new, more ambitious commitments to combat climate change. While the Summit included a handful of positive announcements—Indian Prime Minister Modi announced a new target of 450 gigawatts of non-fossil energy, German Chancellor Merkel launched a EUR 50 billion climate action plan, several countries increased their contributions to climate finance, and 66 countries committed to net zero emissions by 2050—the ambition of these announcements does not match the urgency that climate change demands.

This lack of ambition arrived as the world is demanding action: millions of students and supporters marched last Friday across the world in the Global Climate Strike, and report after report this year—on biodiversity, on land, on climate adaptation, on oceans—has underscored the urgency to act.

Our goals for the next, decisive decade will determine whether we succeed or fail. To fulfill the promise of the Paris Agreement, nations must deliver much stronger climate targets ahead of next year’s pivotal COP26. At the Summit, national leaders failed to change our path towards over 3°C of warming by the end of this century—and yet, climate action from the private sector accelerated.

The Summit underscored that business must forge ahead with building our net zero economy. From the stark gap between national announcements and business action, I heard three messages:

1. To national leaders and governments: Businesses are showing you how to build the net zero economy. Without improved short-term targets and policies, a promise to reach net zero by 2050 is not enough.
2. To businesses: The argument that governments must go first is truly dead. Companies must generate long-term value for their investors, win the war for talented millennials who demand purpose, and attract consumers who demand sustainable products.
3. To businesses: You may already work hard to reduce your operational emissions and manage climate risks. You may already engage your suppliers and make energy-efficient products for your customers. But if you do not actively influence governments to set more ambitious climate policies, it will not be enough.

Indeed, it is in the private sector where we see momentum for climate action growing with increasing urgency. Five years ago, the Science Based Targets initiative did not exist; today, 647 companies are committed to targets in line with the Paris Agreement. RE100 did not exist; today, over 190 companies are committed to sourcing 100 percent renewable electricity. The We Mean Business coalition, co-founded by BSR, did not exist; today, its Take Action platform features over a thousand companies taking climate action. All in the time of a single election cycle.

Just as building a net zero economy requires the whole of government, building a net zero value chain requires every company department.

At the Summit, business action broadened to more industries. Allianz CEO Oliver Bäte announced a Net Zero Asset Alliance, representing US$2.4 trillion in assets. The Getting to Zero Coalition, for which BSR’s Clean Cargo is a knowledge partner, aims to deploy commercially viable zero emission maritime shipping by 2030. Representatives of the steel, aluminum, and cement industries spoke to their contributions to a net zero pathway. Danone CEO Emmanuel Faber launched the One Planet Business for Biodiversity coalition at a time when one million species are under threat of extinction.

Climate action also deepened within companies: 87 companies with a combined market capitalization of US$2.3 trillion committed to setting climate targets across their operations and value chains aligned with limiting warming to 1.5°C and reaching net zero emissions by 2050.

At BSR, we see how deep climate action can go. Sustainability professionals are working with their operations counterparts to decarbonize production, with their procurement counterparts to decarbonize supply chains, with their risk management counterparts to manage climate risks, and with their finance counterparts to set up climate innovation funds. Just as building a net zero economy requires the whole of government, building a net zero value chain requires every company department.

These companies realize that climate mitigation and adaptation will bring tremendous opportunities to them or to their competitors. Today, it is unfortunate that businesses understand this more clearly than national governments do. But businesses can help to close this gap by calling for more ambitious climate policies by COP26 in November 2020.

Blog | Thursday September 26, 2019

How Companies Can Tackle Poverty Through Inclusive Employment Strategies

Preview

Poverty continues to be a global challenge: roughly 735 million people still live on less than US$1.90 per day, the World Bank’s threshold for extreme poverty. A much greater number of individuals and families subsist below national poverty levels. Ending poverty in all forms everywhere is the first goal of the United Nations’ 2030 Sustainable Development agenda, which provides a shared blueprint for peace and prosperity. This goal, however, is not solely for national governments—companies have an enormous opportunity to contribute to ending global poverty through their existing operations.

Quality employment is one of the most effective, lasting ways to reduce poverty. As the provider of nine in 10 jobs worldwide, the private sector can take the lead in the fight against poverty and inequality by actively creating employment and advancement opportunities for those living in poverty—across their direct operations and their supply chains. What’s more, this is an investment that can create business value and build competitive advantage amidst evolving labor markets and increasing customer and stakeholder expectations for the private sector to contribute to sustainable development. While implementing a strategy to employ people living in poverty demands an investment, companies are likely to benefit over the long term from access to a largely untapped talent pool, strong operational outcomes, an enhanced brand reputation, and their ability to demonstrate additional social value to investors.

Today BSR and the Global Impact Sourcing Coalition (GISC) are pleased to launch the Reducing Poverty through Employment Toolkit. The Toolkit serves as a guide for companies on how to get started or how to enhance existing efforts to employ, empower, and improve the advancement prospects of those living in poverty as a part of their direct and indirect workforces.

Employment Strategies to Reduce Poverty

Every company can and should strive to contribute to greater social and economic equality in the communities they operate in and source from. This Toolkit is designed for use by employers at all stages of this journey. Through literature review and drawing on the extensive knowledge and good practices of GISC member companies around the globe, we have identified four key areas in which companies can get started implementing best practices to provide employment opportunities with the potential to create pathways out of poverty:

• Setting the tone for inclusive employment through commitments, communication, and culture. This can include appointing leader from top management to champion efforts, defining and embedding inclusive employment goals and targets within operational plans, and communicating in a way that respects and empowers low-income job seekers.
• Making adaptations across the employee life cycle to better identify, integrate, and empower low-income job seekers. In hiring, this can include identifying roles that require in-demand skills that can be learned on the job and creating a simple job application form; in onboarding it can include front-loading training on corporate norms and expectations and introducing peer mentorship; and in the long-term it can include offering paid, on-the-job training and helping employees develop portable skills.
• Offering quality terms of employment that support sustainable livelihoods. This can include offering full-time, formal employment; enabling predictable scheduling with flexibility; offering stable, frequent pay periods; and paying a living wage.
• Developing employee offerings that enable employment and build resilience. This can include offering life skills training, partnering with local experts to provide wrap-around support services, helping employees manage transportation, and ensuring better access to financial safety nets.

For more information and guidance on all these points, we invite you to download the Toolkit here.

This Toolkit is a project of the GISC, a collaboration between leading companies to build more inclusive global supply chains by hiring impact workers—people who were previously long-term unemployed or living in poverty. Last year, GISC launched the Impact Sourcing Challenge, calling on its members to hire 100,000 impact workers by the end of 2020. Member companies have so far pledged to create opportunities for over 30,000 new impact workers. This Toolkit aims to share the experiences and good practices that GISC members and other socially responsible businesses have deployed so that all companies can take steps to create more inclusive work environments.

We challenge all companies to get involved and contribute to this major global effort both through your operations and your supply chains—please contact GISC for information on how to join.