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Blog | Wednesday May 16, 2018

BSR18: A New Blueprint for Business

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The world is changing at a rapid pace.

The business agenda is changing, and the sustainability agenda needs to change with it. At the BSR Conference 2018 in New York City November 6-8, we will be presenting “A New Blueprint for Business,” defining a path that enables business to thrive in societies that prosper.

With you, we hope to design a vision of 21st-century prosperity. Over the next several months, we will continue to work with our member companies and many other partners to shape this new agenda.  At the Conference, we will share this thinking, inspire debate, and present leaders who are redefining what it takes to build a truly sustainable business that is resilient in the context of profound change.

Join us in New York to explore what this new agenda means for your company and your role. Issues that have long been part of the remit of sustainability professionals are changing and becoming more and more central to business strategy.

Since the last BSR Conference in Huntington Beach, we have seen new concerns over privacy, sexual harassment, and human rights make headlines and rock business models. This year’s Conference will illuminate the ways that familiar issues are taking on new importance and presenting new questions.  We will also explore solutions to emerging issues, like the future of work and climate resilience, that will come to define sustainability leadership in the years to come. BSR18 will present new approaches that are redefining the way sustainability is practiced inside companies—whether through the sustainability team or, as is increasingly the case, by other functions and business leaders.

We will also immerse ourselves in new ways of doing business. Business models are changing fast, and financial and reporting models are in the midst of what may be transformative change. Sustainability features more and more in product innovation, and new companies are emerging each week with sustainability at their core. And, of course, new technologies and communication tools are radically reshaping the ways companies can understand and engage with their ever-shifting array of stakeholders.

And we will help you answer the profoundly important question of what exactly business’s role is in a time of transformational change. What should the business voice be when issues surrounding race, gender, migration, and refugees roil the communities around us? What is the role of the CEO in expressing her voice on topics like climate change? How can business appropriately influence policy frameworks to ensure that the social contract adapts to 21st-century realities?

No business can stand aside while these crucial questions are being debated. We will identify ways that companies can make sense of this environment, contribute to prosperous and fair societies, and make their employees proud.

We are excited to be preparing an event that will show how the sustainability agenda is changing and adapting to our new reality. What’s more, we will present ideas about how you and your company can stay ahead of a shifting universe.

The values held by the sustainability community—respect for all people, stewardship of natural resources, and transparency—have never been more important. And in a changing environment, values are more essential than ever. By applying these core principles to a new reality, we will chart a course for business at BSR18 that enables forward-looking leadership.

Register for the BSR Conference 2018 by June 29 to receive our best rates.

Blog | Tuesday May 8, 2018

The Future of Work for Women in China: Lessons from HERproject

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For the past 30 years, China has in many ways been known for its manufacturing capabilities, with “Made in China” appearing on products around the globe. The manufacturing industry in China absorbed millions of people from the workforce, attracting them to live far away from their hometowns in exchange for incomes that exceeded what they could earn from farming and agriculture.

However, in the past five to 10 years, the manufacturing environment in China has greatly changed, as has the working population and its needs. This in turn has changed the issues that companies are focusing on in their supply chain sustainability efforts and the specific challenges that women face at work.

On one hand, the factories that have survived surging labor costs are finding it harder and harder to retain workers; on the other, with workers’ increasing awareness of their rights, strikes, labor unrest, and other grievances are more and more frequent in public and visible on social media. The younger generation is very different from their parents, and today, they make up a greater percentage of the workforce. As compared to their parents, these workers attach more importance to the factory environment and their working conditions, including their superiors’ management styles, the presence of a support network in the workplace, and recognition and acknowledgement. In light of these traits, in many cases the outdated management style of senior leaders and the diverse needs of young workers come into serious conflict.

While both young women workers and young men workers share these qualities, women are confronted with greater challenges than their male colleagues. Equal access to opportunity and development at work remain challenging for women to attain. At the factory, the common management perception that male workers are more capable and concentrated can lead to unequal training and promotion opportunities for women workers. In the era of automation, this is especially problematic, as women workers are sometimes considered less capable than men at operating machinery—a skill that will be critical for the future workforce in China.

Workplace programs to enable women workers to reach their potential presents an opportunity to improve quality of work and make factory jobs more attractive. Over the past 10 years, BSR has collaborated with more than 30 international brands to implement HERproject™ in China to improve the health awareness, well-being, and confidence of female workers. This workplace-based program was created 11 years ago to respond to the huge gap in reproductive health knowledge and behavior of vulnerable female workers working in supply chain factories; through these efforts, we have reached more than 180,000 female workers in 160+ factories in China.

While we are thrilled that HERproject has greatly improved the ability of women workers to take charge of their own health and demonstrated business impact, there is more we can do to contribute to stronger workplaces and enhanced worker well-being. Today, workers “vote by foot” by flowing to the better workplaces, and the benefits of an improved workplace can benefit both the workers and factory management. Here are a few recommendations for companies looking to promote gender equality and sustainability in their operations and supply chains in China:

• Strengthen worker agency: HERproject has demonstrated that building up the capacity of female workers through its peer-to-peer model resulted in numerous stories of improved confidence, better communication skills, and strengthened self-esteem. This will be increasingly important in the era of automation, where stronger “soft” skills will likely be expected of workers; it is an important area of focus for women’s empowerment efforts in China and around the globe.
• Apply a gender lens to factory policy: While workplace-based training can directly reach women workers, it is equally important to help factories review their existing policies with a gender lens. Only when women’s empowerment efforts are included in day-to-day operations can their impact be long lasting.
• Address social norms: Social norms and expectations about the work that women and men do could prevent women workers from realizing their potential. Women workers may not get the same promotion and training opportunities as men, and companies can do more to recognize and address the impact of social norms to create lasting change.
• Integrate technology: Almost all factory workers under 30 have smartphones. These workers have more access to the outside world through the internet, but there is still opportunity to better connect this to their welfare. BSR has developed an app for HERproject in China, in which the health curriculum and information of some health access service providers was digitized. Companies can explore this and other technology resources that support worker well-being.

HERproject will continue to explore how to create a brighter future of work for women in China. Please contact us if you’d like to explore opportunities to collaborate on these important issues.

Blog | Thursday May 3, 2018

Where BSR Will Be in May 2018

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This month, as we prepare to launch registration for the BSR Conference 2018 (stay tuned, and join our mailing list if you want to hear about it!), we’re also hosting, attending, and speaking at several other sustainability events around the world.

From the UN climate negotiations in Germany, to the Copenhagen Fashion Summit, to events about the Global Climate Action Summit, here’s where we’ll be in May.

What We’ll Host

• May 3: Senior Vice President Eric Olson, Consumer Sectors Director Jorgette Mariñez, and Manager Byron Austin will host a dinner with sustainability leaders to discuss a shared agenda for 21st-century business in Chicago.
• May 15: President and CEO Aron Cramer and Manager Kelly Gallo will host an event at the Salesforce Offices in San Francisco for businesses to learn more about the Global Climate Action Summit and opportunities to engage.
• May 16: Cramer and Gallo will host a webinar to share information about the Global Climate Action Summit. This webinar will be held at two times for our global audiences.
• May 16: We will celebrate our 10th anniversary in New York with a happy hour.
• May 24: Our Paris office will hold a BSR Connect event on the French due diligence law and the strategic importance of a human rights impact assessment for companies as part of their vigilance plans.

Where We’ll Be

• April 30-May 10: Climate Director David Wei, Manager Samantha Harris, and Associate Katie Abbott will attend the UN climate negotiations in Bonn, Germany.
• May 1: Sustainable Futures Lab Director Jacob Park and Manager Jonathan Morris will attend the Task Force on Climate-Related Financial Disclosures' U.S. Scenario Analysis Conference, hosted by Bloomberg LP in New York.
• May 4: Maritime Anti-Corruption Network Program Director Cecilia Müller Torbrand will speak at the 3rd Annual Global Anti-Corruption and Compliance Summit in Amsterdam.
• May 4: Manager Salah Husseini will speak on the 49th Symposium on International Relations panel entitled “Protecting Workers’ Rights: A Global Perspective on the Role of Business and Other Stakeholders” in New Haven, Connecticut.
• May 9: Harris will moderate a panel during the UN climate negotiations on “The Role of Women in Climate-Resilient Supply Chains” in Bonn.
• May 15-16: Senior Vice President Peder Michael Pruzan-Jorgensen will moderate the session on “Digitalization and the Future of Fashion” with Spencer Fung, CEO of the Li & Fung Group, at the Copenhagen Fashion Summit. Managing Director Elisa Niemtzow will attend the event.
• May 16-17: Managing Director Tara Norton will attend the World Procurement Congress 18 in London.
• May 16-17: Morris will attend the Luxe Pack New York creative/luxury packaging tradeshow in New York.
• May 16-18: Managing Director Dunstan Allison-Hope and Associate Michaela Lee will attend RightsCon in Toronto. Allison-Hope will moderate a panel on the new frontier for law enforcement relationship reporting.
• May 17: Associate Director Michael Rohwer will speak on conflict minerals reporting at the Silicon Valley Conflict Minerals and Human Trafficking Forum in Sunnyvale, California.
• May 17: Sustainability Management Managing Director Alison Taylor will speak at the Transparency International 8th Annual Day of Dialogue in Toronto.
• May 21-25: Manager Berkley Rothmeier will attend the Sustainable Apparel Coalition annual meeting in Vancouver.
• May 23-24: Manager Lauren Shields will speak in sessions on gender equality and workers’ voices at the 2018 Global Sustainability Standards Conference in Sao Paulo, Brazil.
• May 29-30: Taylor will attend the OECD Forum in Paris.
• May 31: Cramer will deliver a keynote speech at the Global Mining Human Resources Forum in Toronto.

Blog | Tuesday May 1, 2018

Accelerating the Adoption of Clean Fuels: Leading Road Fleets Share Data

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Massive growth in global energy consumption is placing increasing demands on fuels and energy sources; fossil fuel sources, however, are finite, decreasing, and must be phased out if we are to meet our global climate goals.

Sustainable fuels and technologies for road freight applications are a solution, and they’re at the cusp of an exciting transition. More sustainable fuels—those that reduce emissions and social impact—are already available to meet the needs of today’s fleets. Compressed natural gas, biodiesel, renewable diesel, electricity … all of these fuels are viable to power our road freight system. Today, they are being widely tested and deployed by members of BSR’s Future of Fuels, signatories to the Sustainable Fuel Buyers’ Principles, and other leading companies. “Advanced alternative fuels, like renewable diesel, are an important part of our strategy to reduce the greenhouse gas emissions impact of our fleet,” said Patrick Browne, director of global sustainability for UPS.

But we don’t want low-emission fuels to remain the privilege of a small group of well-informed insiders. They will not be successful if they do. The challenge that lies ahead is, therefore, how to scale the market and make these technologies more widely available.

As fleets test and deploy new technologies, they generate practical, real-world data on the technical and financial aspects of the various options, useable data that is often locked behind company doors. Meanwhile, many fleets struggle with information overload, do not understand how sustainable fuels perform in practice, and want to assess the level of infrastructure and investment required before piloting these technologies.

These uncertainties create high barriers to adoption. Companies are reluctant to apply the resources required to further investigate through their own individual testing, and suppliers feel stuck in “pilot purgatory,” performing the same tests over and over for a seemingly endless stream of buyers.

Solutions to accelerate the uptake of sustainable fuels and technologies must include not only innovative science and technology, but also effective knowledge management and collaboration. The data to alleviate these challenges exists—but we need to connect the dots.

Today, Future of Fuels is releasing a case study library that will, for the first time, allow fleet owners to compare clean fuel technologies independently tested and rated by peer companies. Leading fleets will now be able to share test data, evaluating clean fuels while protecting business-sensitive details, that meets the needs of their customers and peers.

To create this, BSR developed a case study template to help companies share their data in a standardized format. In order to do so, we narrowed 130 potential data points down to approximately 50 by benchmarking existing case studies and interviewing fleet owners and suppliers. We then finalized the template at Future of Fuels meetings with our member companies. Our members and Fuel Principles signatories hope that by providing this open-source data, they can help reduce the time and resources required to validate alternative fuels for wider adoption and scaling.

The initial set of five case studies contributed by IKEA, UPS, and PepsiCo covers fuel technologies including biodiesel, compressed natural gas, and electricity. These case studies—from pilots carried out in the U.S., China, and Sweden—suggest that there are fewer and fewer operational barriers to implementing new fuel technologies. According to Mike O’Connell, vice president of supply chain, fleet, and sustainability at PepsiCo, “Understanding both the environmental performance and the operational benefits and challenges of new technologies is vital for fleet owners. Concrete case studies further that understanding and ensure that we are not replicating work already conducted.”

The library we are launching today is still in its early stages and will continue to grow. Our members and Sustainable Fuel Buyers' Principles signatories already plan to submit more case studies in the coming months.

These case studies complement the Fuel Sustainability Tool (available for free), the world’s first apples-to-apples way to compare emissions reductions investments in efficiency and advanced fuel technologies, and build on the Sustainable Fuel Buyers’ Principles, through which companies demonstrate demand for sustainable fuels and catalyze the partnerships needed to drive a sustainable transition in the freight fuel system.

We invite all fleets interested in sustainable fuels and technologies to use the case studies in this library. We are currently accepting case study submissions from Future of Fuels members and Principles signatories, and we encourage other fleets that would be interested in participating in this effort to download the case study template and use it to guide their pilots. If you wish to submit a case study, please contact us.

We also invite fuel purchasers and shippers to sign on to the Sustainable Fuel Buyers' Principles. There is no cost to join; we simply ask that companies offer a sincere commitment to use these principles to proactively engage with their value chains around sustainable, low-emission fuels.

Blog | Thursday April 26, 2018

Sustainability Management for a Rapidly Changing World: Q&A with Erb Institute’s Terry Nelidov

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In the spring of 2017, we spoke with a number of our members and key stakeholders about sustainability management, including what is working and what isn’t. These conversations informed our report Redefining Sustainable Business: Management for a Rapidly Changing World, which presents our blueprint for creating resilient business strategies.

Terry Nelidov, managing director of the Erb Institute, shared his insights on how millennials in leadership roles will impact sustainability management, the importance of metrics and leadership support for sustainability, and the convergence of environmental and social issues.

Alison Taylor: First, please tell us about your work in sustainability at the Erb Institute.

Terry Nelidov: The Erb Institute is the University of Michigan’s business-sustainability partnership between the Ross School of Business and the School for Environment & Sustainability. We started as a dual-degree M.B.A./M.S. program back in 1996, and we have expanded over the years to be a full-fledged institute with sustainability research, teaching, and business engagement. This is all in support of our mission to create a sustainable world through the power of business—very akin to BSR’s mission, I might add!

The young professionals in our graduate M.B.A./M.S. program have traditionally been focused on key environmental issues, like climate, energy, water, and ecosystems. What we’ve seen over the past five years or so, however, has been a shift to the social side of sustainability, with growing interest in issues like supply-chain labor conditions, business and human rights, community development, and diversity and inclusion.

Taylor: What are the characteristics of the millennials you teach, and how are you translating their issue experience into practical management expertise?

Nelidov: Ross Business School just leapt into No. 7 on the list of Top 10 M.B.A. programs in the U.S.! You can imagine that Erb’s business-sustainability students are ambitious, well-prepared, and also a little impatient for change and impact (which I guess isn’t unique to ambitious young people anywhere). While some complain of a sense of entitlement in the emerging millennial workforce, we see it more as a fundamental shift in how this generation views personal passion, professional purpose, and profit more and more as a means rather than an end. Our students aren’t looking for “just a job;” they want a purpose. And they see business as the most effective way to do that.

As a university, we sit very early in the “sustainability professionals value chain,” and we’re getting a glimpse into what middle management in large companies will look like in five to 10 years. I see a definite shift coming in employees’ expectations for their companies’ social and environmental performance. Soon, these employees will start to take on leadership roles in their companies, with the responsibility and the resources to drive deep change.

The impatience we see today will over time manifest itself as an expectation for a fundamentally different role for business in society, and that change will happen not only because activists and stakeholders are pushing from the outside, but even more importantly because new leaders deep inside the company expect it of any company where they choose to work.

Taylor: What about Erb’s executive education? Are we still stuck on the business case for sustainability?

Nelidov: No, thankfully we are beyond “CSR 101” awareness raising and making the business case for “why environment and society matter.” Together with Ross Executive Education, Erb delivers executive education designed to respond to what we’re hearing from our business partners, namely “Don’t waste my time with why sustainability matters. We get it! But show us how to actually do it!” And that’s the hard part.

Taylor: That’s a huge focus for us at BSR, too. What do you see as the key success factors here?

Nelidov: First of all, this has to come from the top. There are ways to get around a lack of senior leadership commitment, but when leadership “gets” sustainability, you see rapid, deep, transformative change. Second, performance targets and measures are how ambitious goals and commitments at the top get translated to middle management. Simple targets for business units unleash innovation, even before you start to tackle building sustainability into individual performance targets.

It’s a cliché to say you “manage what you measure,” but I’ve seen over and over again that the very act of starting to measure sustainability impact is a huge motivator. We know how to measure environmental impacts, like water consumption or material waste, because we’ve been doing it for a while. We also have emerging experience in measuring impact on labor issues and employee engagement. But how do you begin to measure more social issues, like human development, economic inclusion, or business impact on water as a human right? That’s tough.

Taylor: Your point about human rights and water is so fascinating—are we seeing convergence between economic, environmental and social issues, or are we still suffering from siloed thinking here?

Nelidov: I have no doubt that economic, social, and environmental issues are converging. Water is a perfect example. It’s an operational issue, an environmental issue, a stakeholder issue, and now is being framed more and more as a basic human rights issue. Technology has enabled us to see systemic problems more clearly. We need systems thinking to develop more comprehensive responses to create a just and sustainable world through the power of business.

Blog | Wednesday April 25, 2018

We Need to Talk about Blockchain—Together.

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This is the second in a series of blog posts BSR will publish in 2018 exploring the intersection of disruptive technologies and sustainability. The first post was on artificial intelligence.

We need to talk about blockchain. Blockchain offers immense opportunities to achieve business and sustainability goals, but it is going to take serious collaboration to unleash its full potential.

Companies are experimenting with applications of blockchain to reach competitive objectives, and why wouldn’t they? But blockchain is not software as a service: The promise of the distributed ledger system is to radically change a system; it provides a unique opportunity to create accountability, transparency, and privacy all at the same time. This is appealing at a moment when trust in institutions is declining. Blockchain offers the very real possibility to truly transform supply chains—to create the transparent, traceable, equitable supply chains that many of us envision. And to do that, we need collaboration, not competition.

When to Consider Blockchain

Companies and global organizations are starting to apply blockchain to solve problems. Some companies are creating smart contracts that only execute when sustainability or other conditions are met. Others are using it to overcome “first mile” traceability challenges, where tracking a commodity in the first instance is difficult in the absence of formal markets or identities. There are burgeoning applications that create identities and payments for farmers or miners where formal markets are scarce—and applications that identify exactly how your tuna got into that can. There are even opportunities for companies to trace the origins of their electricity back to its source. 

We’ve identified four situations where a collaborative blockchain effort may be a particularly effective solution:

• When there is fraud or lack of trust in a system;
• When there are multiple parts to a transaction;
• When there is alleged inequity at key points in a system; and
• When there is a need to align disparate incentives in a system.

These are situations wherein a central authority is an impediment; where blockchain’s decentralized, distributed approach can create trust, transparency, and security. Some or all of these situations likely arise at some point in your supply chain. However, it misses the point of decentralization for individual companies to apply this technology independently in their own supply chains, particularly when companies’ supply chains overlap. Collective action will be more effective.

Consider this: If a blockchain solution for traceability in sustainably grown cotton is not trusted by the spinners and thus not used, the value of that cotton gets lost before it is even spun into thread. If apparel companies haven’t agreed on the kind of data they’d like to see or the underlying blockchain fabric to use before deploying a solution, they risk a duplication of systems, which would run fully counter to the blockchain promise.

The Weakest Links in the Blockchain

Another compelling reason for collaboration is that the world of blockchain is still the wild west. It’s easy to forget that there are currently a limited number of live projects, most still in pilot phase, many of which will never emerge beyond that phase.

There are risks of blockchain we don’t fully understand or even know about yet. There are also risks that we are aware of: First, blockchain is inherently virtual, which can heighten the likelihood of dealing with unsavory actors.

Second, the energy demand for certain blockchain systems can be astronomical. While new designs are coming into practice to mitigate that energy use, it remains a consideration.

Third, blockchain is not immune to the “garbage in—garbage out” challenge; much needs to be done to ensure the information entered into a blockchain is an accurate digital recording of what is happening in the real world.

Finally, information security is critical. A well-designed system should be secure and very difficult to access, but experts agree that it could be possible to hack a blockchain.

How to Realize Blockchain’s Potential

Critics may say that blockchain is overhyped, but it should not be underestimated. According to Joseph Lubin, one of the founders of Ethereum and now Consensys, “It took about 10 years from when the world wide web [started] … to when my mother started hearing about email.”

This is a critical moment for the sustainability profession—a moment to come together around big ideas, like accountability, transparency, and privacy, and be the change we want to see.

To use blockchain to radically change supply chains, we will need the right players around the table—from farmers to workers and factory owners; from financiers to global buyers and government officials. We are just at the beginning of this journey, and at BSR, we are optimistic about the prospects of collaborating to leverage this technology in service of a better world.

Blog | Monday April 23, 2018

Five Years after Rana Plaza, We Still Must Do More to Empower Women Workers in Bangladesh

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Five years ago, a building housing a garment factory in Dhaka, Bangladesh, collapsed, killing 1,134 people. The deadliest structural failure in modern human history, the Rana Plaza tragedy turned the eyes of the world to Bangladesh and sparked a conversation about compliance and building safety.

Since then, brands and the development community have come to acknowledge that the workplace presents an opportunity not just to strengthen safety norms, but to address the needs of workers more broadly. Workplaces today are so much more than physical structures: They are places of opportunity for an income, and they are spaces for change.

This recognition has led to an increased focus on women workers and the particular challenges they face—and addressing these challenges begins with listening to women. BSR’s HERproject has been working in Bangladesh since 2010. By bringing together brands, their suppliers, and local partners, HERproject has been able to drive significant progress through workplace-based training and guidance. In total, HERproject has reached 240,000 women workers in 165 Bangladeshi factories since 2010. As one example of the impact this has had, HERproject has measured a 49 percent increase in Bangladesh in the number of women using sanitary pads during menstruation, which reduces the possibility of infection, across 10 factories.   

However, major challenges remain. Almost 60 percent of female garment workers in Bangladesh have experienced some form of physical or verbal violence at work. Women workers also often lack basic health information and access to healthcare, which has a negative impact on their working and personal lives (only 45 percent of Bangladeshi women are using a modern contraceptive method). Occupational segregation and discriminatory social norms continue to ensure that women remain anchored in low-paying production jobs.  

The Rana Plaza tragedy stimulated progress, with organizations working to address building infrastructure and give workers a voice. Through the Accord on Fire and Building Safety in Bangladesh, brands have invested heavily in the modernization of supplier factories. As another example, the Alliance for Bangladesh Worker Safety has provided a helpline for workers to report issues anonymously.

We believe that brands, suppliers, and the development community can do four things to further the empowerment of women workers:

• Listen and respond to the voice of women workers. This means collecting quantitative and qualitative data on worker well-being to inform the design of programs, including on the knowledge and agency that women may possess and lack. It also means rigorously measuring the impact of programs and revising them based on the evolving needs of women.
• Make women’s empowerment part of business as usual. Both suppliers and brands can put women’s empowerment at the heart of business processes. Factories involved in HERproject, for instance, are working to revise healthcare systems to ensure that they work for women. Through its recent WE Women initiative, Lindex is incorporating gender equality into its supplier business scorecard, thereby according preference to suppliers that demonstrate commitment to women’s empowerment. The ascena Retail Group has also worked with BSR to revise its Code of Conduct for suppliers. These efforts suggest that resources should be allocated to ensure gender considerations are included in management systems.  
• Support suppliers to increase ownership. For gender equality to take hold, factory managers must understand and own the change process. Brands can accelerate this by acknowledging that a “one-size-fits-all” approach will not be sufficient. Rather than delivering one-off projects, brands and suppliers should work together to build the capacity of factory managers, support them in setting goals, and drive sustainable long-term progress.   
• Don’t go it alone—collaborate. Many challenges, such as sexual harassment or cash wage payments, stem from social norms and policies. Tackling these effectively will require forming alliances to create an enabling ecosystem. In Bangladesh, brands and suppliers can begin to tackle sexual harassment and gender-based violence by working together to operationalize the High Court Order to establish anti-harassment committees. They can also collaborate to advocate for and implement digital payrolls, which are particularly beneficial to women workers.

Women still make up the majority of the workforce in ready-made garment factories in Bangladesh. On the fifth anniversary of Rana Plaza, it is critical to ensure that the needs of women workers remain a key consideration for companies looking not just to ensure basic safety, but also to improve the welfare and well-being of their workers.  

Blog | Friday April 20, 2018

The Business Case for Empowering Women through Climate-Resilient Supply Chains

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For the past three years, the World Economic Forum’s annual Global Risk Report has ranked climate risks high priority in terms of likelihood and impact. For business, this includes both supply chain risks, like water scarcity, and general physical and operational risks that will require resilience and adaptation solutions.

In addition to the economic impacts on physical assets and infrastructure, climate change will have a profound effect on people in supply chains and the communities in which they operate. This human dimension is often overlooked but extremely important in addressing climate risk and ensuring business continuity.

Climate risk, climate resilience, and women

Mary Robinson, former President of Ireland and former UN Commissioner for Human Rights, said, “Climate change is the greatest threat to human rights in the 21st century,” and, “People who are marginalized or poor, women, and indigenous communities are being disproportionately affected by climate impacts.”

This is especially true for women. Women already face various underlying economic, social, cultural, and political barriers that limit their choices: barriers related to their access to income, education, and technology, as well as obstacles to exercising their public voice and decision-making. Climate change is only predicted to exacerbate these barriers.

For sectors that heavily depend on a female workforce, this presents a high material risk. Take, for example, the agriculture sector. Estimates show that in some developing countries, women make up over half of the agricultural workforce. Systemic barriers for women therefore prevent agricultural supply chains from reaching their full productive potential. These barriers can also limit the ability of a business to react, respond, and adapt to the unpredictable realities of a changing climate.  

The business case for intervention—to challenge risk as well as create opportunity—is clear. A truly climate-resilient agricultural supply chain should be able to anticipate and respond to climate risks and vulnerabilities across commodities, geographies, and communities.

The good thing is that increasingly, businesses understand the importance of climate resilience strategies. Furthermore, doing so in gender-friendly ways will be a critical element of this work, although to date it has been less commonly understood and thus overlooked. 

Effectively tackling climate risk will be impossible without involving women. Although they are disproportionately affected by its impacts, women bring unique skills and perspective toward climate-resilience efforts.

Applying a gender lens to resilience activities can help companies develop new solutions for anticipating, absorbing, accommodating, and rapidly recovering from climate events. Involving women in climate resilience planning and implementation fosters innovation. For example, women’s local knowledge of the land and of traditional and sustainable agricultural methods make them experts in natural resource management. And when women have information and access to tools and technology, they are more likely to adopt sustainable practices, which may include water management, terracing, composting, incorporating high-yield and stress-tolerant varieties of crops, and pasture management.

There are also many co-benefits that arise from empowering women across agricultural supply chains. Increasing women’s agency, enhancing the resilience of communities and livelihoods, and making progress toward closing the global gender gap are among them. Increasing agricultural productivity and stability of supply enables people, the economy, and natural systems to rebound quickly in the face of adversity.

Women spend 90 percent of their incomes on their families; therefore, when women make more money, more money is invested in school, health, and housing improvements. Efforts to empower women and close the gender gap in labor markets could add US$28 trillion to global, annual GDP within the next decade. It’s a clear win-win for companies to empower women through climate resilience activities.

What can companies do?

There are many actions companies can take, both within their own operations and supply chains as well as to enable and influence others, including:

• Ensuring internal policies and plans on climate change are gender-sensitive;
• Providing women with access to relevant and gender-sensitive trainings, inputs, financing, and technologies to strengthen stability in agricultural production and improve economic opportunities;
• Enabling women to effectively respond to climate-related events by linking them with local networks; and
• Advocating against underlying inequalities and removing systemic barriers that hinder the lives and livelihoods of women, such as the lack of decision-making power or land (and land inheritance rights), which exacerbate the disproportionately negative climate impacts for women.

To help business address this challenge, BSR’s Business Action for Women, “Empowering Women to Lead through Climate Resilience” cluster builds collaboration among companies with agricultural supply chains and leading women’s empowerment stakeholders. In the coming years, we will work to equip the private sector with a greater understanding of gender-sensitive climate resilience strategies and actionable methods to empower women through climate-resilient supply chains.

Companies can also engage on climate resilience and other nexus issues, including supply chains, women’s empowerment, and inclusive economy, at the Global Climate Action Summit from September 12-14 in San Francisco. Companies and other stakeholders will discuss the myriad ways to accelerate climate collaboration and action. To learn more about the Summit and how you can get involved, register for our webinar on May 16.

Blog | Wednesday April 18, 2018

An Exciting New Era for ESG and Socially Responsible Investing in Japan

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While the proportion of socially responsible investment (SRI) relative to total assets managed in Japan was only 3.4 percent in 2016, compared to 52.6 percent in the EU and 21.8 percent in the U.S., the growth of SRI in Japan has been significant—242 percent from 2016 to 2017 to approximately US$1.13 trillion, according to the 2017 Japan Sustainable Investment Forum Report. Why has this happened?

In recent years, Japan has made a massive shift to begin to integrate environment, social, and governance (ESG) factors into its investment strategies. For Japanese companies, this creates an environment of support for sustainability efforts, and we are likely to see these practices increasingly become the norm. Companies headquartered outside Japan, too, would be wise to take note, as this shift by the world’s third-largest economy is likely to have implications for not only their Japanese operations but across their value chains abroad.

In short, the pro-business Japanese government has made the nation’s expectations for sustainable business practices clear, helping investors understand a broad set of ESG issues that are material for their investment strategies and providing structure and support to enable social dialogue.

Japan’s changes to date and roadmap for the future are well-summarized in the Ministry of Economy Trade and Industry (METI) report commonly known as the Ito Review 2.0. The initial Ito Review, published in 2014, showed the challenges created by the lack of long-term asset management culture, combined with a lack of dialogue on investor expectations. In response, the Japanese government has taken a systematic approach to address this issue. 

The next year (2015), the Tokyo Stock Exchange, with support from the Financial Service Agency (FSA), issued the Japanese Corporate Governance Code, which established fundamental principles for effective corporate governance at listed companies in Japan, with the intention of encouraging sustainable corporate growth and increased corporate value over the mid- to long-term.

And when the Japanese Government Pension Investment Fund (GPIF), the world’s largest pension fund, with approximately US$1.3 trillion in assets under management today, signed the UN Principles for Responsible Investment (UNPRI) in 2015, the impact had on not only Japan’s investment landscape, but also globally, was catalytic. It demonstrated how an asset owner with an ESG champion at its helm can swiftly translate its conviction into change in the marketplace.

GPIF has emphasized the relationship between ESG and long-term value, explaining that for long-term investors, material ESG factors have implications for investment performance by definition. By extension, this means that taking these factors into account in investment analysis and decision-making is consistent with fiduciary duty.

Pressure for both investors and companies to change toward responsible investments and sustainability has come not only from the Japanese government but also from civil society. In the past few years, both international and local NGOs in Japan have started voicing concern on topics including climate change, investment in coal/fossil fuels, and the sourcing of paper/pulp and palm oil.  

This year’s Responsible Investor conference, RI Asia Japan, was held in Tokyo on April 10-11. The event attracted both local and international audiences, and reflected the changing focus of Japan’s investment landscape. Discussions have moved beyond whether investors should integrate ESG or not, and instead focused on the “how,” including addressing the more nascent areas of ESG integration into fixed income and passive strategies. This shift alone represents significant progress from where Japan sat in its closed ecosystem just a few years ago.

The framing of the opportunity to connect an ESG investment strategy to the UN Sustainable Development Goals (SDGs) has been rapidly accepted by Japanese investors and businesses alike. As Hiromichi Mizuno, Executive Managing Director and Chief Investment Officer of GPIF, explained at the event, the number of articles talking about ESG in Japan has quadrupled over the past two years.

Yet at both at RI Asia and two BSR side events around the conference, it was clear that Japanese investors seek deeper guidance on how to properly integrate ESG considerations into their investment strategies. A few key learnings from the event for the investor community included the following:

• Mainstream Japanese investors new to ESG can learn a great deal from international players who have long integrated ESG in the core of their investment strategies, such as AXA, Clearbridge, Wellington, BNP Paribas, UBS, and others.
• ESG reviews of companies commonly use information from major ESG date/rating providers; investors should leverage this data as a starting point. In-house analysts can use it to inform their own deeper research and analysis, but they should also engage in dialogue with companies directly.
• Socially responsible investments are not only about integration and engagement, but can also take the form of innovative products. There could be a new market opportunity to attract various investors by developing innovative financial products, including fixed income and impact investments, unique to the communities addressing ESG challenges in line with SDG goals.

The next few years are likely to tell the story of how SRI takes hold, proliferates into the Japanese investor and business communities, and, hopefully, helps define ESG leadership in Asia and around the world. At BSR, we’ll continue to watch this space and and work with our member companies, including our banking and investment members, to assist with their responsible investing needs.

Case Studies | Monday April 16, 2018

Creating an Internet Powered by 100 Percent Renewable Energy

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Data center operations account for two percent of all U.S. electricity use—and this proportion is unlikely to shrink. In 2012, BSR brought tech leaders together to form the Future of Internet Power, a collaborative initiative working toward a shared vision: an internet powered by 100 percent renewable energy.

The Challenge

While the thriving technology sector provides significant business and social benefits—many of which help to reduce negative environmental impacts—data centers are energy intensive. In 2010, data centers represented 2 percent of all U.S. electricity use, and that percentage is unlikely to decrease, given our increasing reliance on mobile and internet communications.

Today, internet companies and data center operators are addressing their impacts by considering the source of the electricity that powers their data centers, which is often a mix of renewables, natural gas, and coal. Moving beyond incremental improvements in the energy mix requires access to and use of sustainable, low-carbon electricity at scale. To make this a reality, companies will need to both collaborate across the industry and partner with local utilities and policymakers to develop the infrastructure and promote the regulations that will enable renewable energy procurement for internet power.

Our Strategy

In 2012, BSR launched the Future of Internet Power (FoIP), a collaborative initiative composed of some of the world’s most influential companies working to power the internet with 100 percent renewable energy. Today, FoIP members include Adobe, Akamai, Autodesk, Bank of America, eBay, Facebook, Hewlett Packard Enterprise, Salesforce, Symantec, TimeWarner, VMware, and Workday.

For internet companies, powering data centers with renewable energy can require clearing a number of hurdles: navigating regional environmental policies and incentives, in some cases paying cost premiums for renewable versus coal power, and addressing challenging infrastructure requirements for offsite power generation. These and other factors make sourcing low-carbon power difficult for individual companies to manage alone. Through FoIP, companies collaborate with peers, suppliers, and power developers to build smarter approaches and identify opportunities for shared or joint investment.

Our Outcomes and Impact

FoIP has played a foundational role in helping the technology sector set aggressive and achievable commitments to renewable energy. As of April 2018, nine FoIP members had committed to 100 percent renewable energy: Adobe, Autodesk, Bank of America, eBay, Hewlett Packard Enterprise, Facebook, Salesforce, VMware, and Workday.

FoIP also launched the Corporate Colocation and Cloud Buyers’ Principles, which outline six criteria that companies would like their data center service providers to meet. This includes providing data on customer energy consumption, disclosing facility energy sources, and supporting renewable energy advocacy. As of early 2018, 17 customers of industrial data center service providers (also known as “colos”) and cloud services became signatories, demonstrating their support for the six Principles, and four cloud and colo providers became Principles supporters, committing to work with their customers to put the Principles into practice.

In 2018, FoIP’s focus will be on finalizing and rolling out new tools for companies choosing renewables when making data-center siting decisions, encouraging colos to procure renewables, streamlining and standardizing the documentation required to make data-center-related renewable energy claims, and continuing to collaboratively tackle greenhouse gas accounting challenges in Scope 3 emissions.

Lessons Learned

In addition to sharing best practices and collaborating on solutions through FoIP, BSR’s one-on-one work with companies creates a model that we can customize for other businesses to develop and manage renewable energy infrastructure projects.

We have learned that big challenges like these require collaborative solutions. Building on the FoIP approach, we have been able to expand the group’s mission by working through other partnerships, including the Renewable Energy Buyers Alliance, a collaboration with the World Resources Institute and World Wildlife Fund Buyers' Principles initiative, and the Rocky Mountain Institute's Business Renewables Center. By working together, we can scale our impact even more, while making it easier and more efficient for businesses to help shift the energy mix powering the internet toward renewables.