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Blog | Thursday September 7, 2017

Innovative Finance for Sustainability at Scale

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The 72nd Session of the UN General Assembly will commence next week, marking the second anniversary of the launch of the Sustainable Development Goals (SDGs). Financing is one of the pivotal challenges for the SDGs: The annual SDG financing gap in developing countries is estimated at approximately US$2.5 trillion.

Innovative finance is now recognized by international agencies and national governments as a central solution to this challenge, a view that is increasingly shared by civil society and the private sector. Using blended finance and impact investing, governments, companies, investors, and philanthropists are mobilizing larger amounts of capital than any of them would be able to manage alone. Responding to these signals, the size of the private impact investing market has continued to grow dramatically, from US$10.6 billion in 2013 to US$22.1 billion in 2016. Similar increases have been observed in public-sector innovative finance flows.

At a time when corporations are both integrating impact ever more deeply into commercial operations and raising their strategic philanthropy ambitions, innovative financing represents a significant opportunity. Leading companies across many sectors are deploying strategies and partnerships to tackle critical social and environmental challenges at various stages of their value chains. For example, Apple and Starbucks have issued green bonds and sustainability bonds worth US$3 billion combined; Syngenta has innovated agricultural insurance products for BOP farmers; and many companies, including Barclays, Centrica, Danone, Mars, and Pearson have increased impact investment funds.

Despite these exciting developments, senior decision-makers in many large corporations lack an awareness of innovative finance and the practical opportunities it presents. That is why BSR has pioneered the first sectoral guide to the these activities and opportunities at each stage of the healthcare value chain.

In healthcare, innovative finance mechanisms such as Gavi, the Global Fund, and the Affordable Medicines Facility for Malaria have played a longstanding role in leveraging diverse funding sources to overcome barriers to healthcare access. However, the current scale and diversity of mechanisms and partnerships do not meet healthcare financing needs, and many philanthropic and commercial financing opportunities remain untapped. This is largely because healthcare companies are unaware of the opportunities or uncertain as to how to engage in an increasingly complex investor landscape. They may also lack the tools, knowledge, and expertise to be able to capitalize on the opportunities presented by innovative finance. At the same time, the investor and donor communities are not always aware of specific health investment needs or how to engage companies.  

In 2013, a group of private and government funders, led by the Bill & Melinda Gates Foundation, offered Merck & Co., Inc. and Bayer a sales volume guarantee to dramatically improve the availability and affordability of contraceptive implants, which provide long-lasting, effective contraception particularly suited for low-resource settings. This volume guarantee was secured by US$340 million in legally binding agreements aimed at de-risking expanded manufacturing and supply of contraceptives in 69 developing countries. If the demand for contraceptives did not reach a pre-agreed threshold level, the donors and investors would bear the responsibility of paying for the increased production.

Four years later, the results of the volume guarantee have surpassed expectations. Demand for the contraceptive products greatly exceeded the threshold amount specified in the guarantee, transforming these countries into viable markets. As of July 2015, 24.4 million more women and girls were using modern contraceptives than in 2012. The guarantee has also saved US$240 million for global public health donors; the savings could reach US$500 million by 2018. Because the threshold demand level was exceeded, the guarantee never had to be paid out.

This is one of a growing number of powerful examples of how innovative finance is transforming the healthcare sector by unlocking new sources of funding to scale business solutions to our most pressing global health challenges. To realize the potential of opportunities like these, increased corporate engagement is needed, combined with greater collaboration across sectors to address the mismatch between available capital and the unmet needs of consumers and communities.

Our new paper offers practical recommendations to achieve this in healthcare, and we believe similar analyses in other sectors would help to unlock more funding for sustainable, scalable business solutions to some the world’s greatest societal challenges.

Join me at the BSR Conference in Huntington Beach, California, this October for a panel on Financing Change, where we will discuss the exciting new ways companies are increasing social impact and business value to meet the SDGs.

Blog | Tuesday September 5, 2017

Business Leadership: Continuing to Build the Momentum

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The world is increasingly looking to businesses—and business leaders—to chart a path forward on a range of topics, from diversity, to climate action, to the changing nature of work as automation reshapes our world and our economy. One of the more inspiring stories so far in 2017 has been the large number of CEOs who have stood up publicly to support progress on these topics, which are central both to the business agenda and the public’s priorities. Advocacy for a just and sustainable world is more important now than ever.

As many of us prepare to gather in New York this month for Climate Week and the UN General Assembly, we are also focused on how to translate this important talk into action. That’s why we are excited to continue the momentum of these efforts and work with you to define the future of sustainable business during our 25th annual BSR Conference in Huntington Beach, California.  

This milestone arrives at a time when looking ahead in a rapidly changing world is essential. While we will be taking stock at the Conference of where we have come from—not just BSR, but the wider sustainability community—we will be focusing even more attention on redefining business in a world where it is said that the pace of change will never again be as slow as it is today. As we know, it is already mind-bendingly fast.

In our times of change, it is no longer enough to look to “integrate” sustainability into business strategy. Our changing demographics, disruptive technologies, economic dislocation, shifting culture, and natural resource scarcity are not just sustainability issues; they are business issues. The best companies we work with are the ones who know that women’s empowerment, climate resilience, the changing nature of work, and new production and consumption models aren’t topics only for the sustainability report: They are crucial conversations for the board room.

In our view, this means a new agenda for business, new tools for sustainability leaders, and, in a world of political volatility, a new approach to business leadership.

At the Conference next month, we will be highlighting changemakers who are embracing the need to redefine business for an era of change.  We will be featuring a special track, “FastForward 25,” that will feature conversations on topics like “Harnessing New Technologies for Supply Chain Sustainability,” “The Ethics of Artificial Intelligence,” and “Redefining Sustainable Business.”

We will explore how leading businesses are embracing new technologies; helping to reshape the social contract, navigating the intersection of technology and human rights, and many other cutting-edge topics. We will also be introducing BSR’s Sustainable Futures Lab, which we are launching this year as a new way for us to integrate futures thinking and methodologies into our collaborative and one-on-one work with our members.

We will hear from prominent voices who are looking ahead with a keen understanding of where we have come from. Al Gore will kick us off on Tuesday. He has focused on the future throughout his career. He has the perspective of someone who was involved in the earliest U.S. Congressional hearings on climate and was a powerful representative for the U.S. at the first Earth Summit in 1992, the same year BSR was launched. 

BSR’s earliest leaders, including my predecessor Bob Dunn and BSR’s longtime Chairman Mats Lederhausen, both of whom possess a clear vision of what it takes to make business truly sustainable, will join us. We are also delighted to showcase some great BSR alumni: Kara Hurst of Amazon, Michael Kobori of Levi Strauss & Co., and Wei Dong Zhou of The Sustainability Consortium, great leaders of whom we are immensely proud.

The 25th BSR Conference will be a fun and stimulating opportunity to encounter old friends and new ideas. We are excited to redefine sustainable business, recharge our wonderful community of leaders, and recommit to building a just and sustainable world.

I hope you will join us by the ocean in Huntington Beach as we meet our moment with passion, creativity, and commitment.

Blog | Thursday August 31, 2017

Sustainability on the Move: Transportation Innovation

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In a recent blog post, I described how the design phase often determines the biggest sustainability impacts of infrastructure projects. With transportation infrastructure in particular—whether for air, rail, road, or sea—about to be radically transformed through technological advances, I foresee tremendous opportunity for sustainability.

If you think about it, the basic experience of transportation infrastructure has remained the same for the past 50 years. While other industries have undergone revolutionary technological advancements, cars, planes, and trains (at least in the U.S.) move at roughly the same speeds today as they did 50 years ago. There have been advances in safety and fuel efficiency: for example, planes now have about twice the fuel efficiency they had in the 1960s. But a passenger’s experience has not changed much in recent history, with only a few visible technological improvements and exceptions.

Many people believe the most significant impending infrastructure shift is to a system of electric and autonomous vehicles. France, India, and the United Kingdom are just some countries which have come out with plans to eliminate gasoline and diesel vehicles in the coming decades. Many major transport fleet owners—such as UPS, PepsiCo, and Walmart—have agreed to the Sustainable Fuel Buyers’ Principles and started making efforts to move to vehicle electrification. 

Autonomous vehicles are expected to bring tremendous safety benefits by eliminating the approximately 30,000 annual traffic deaths in the U.S. alone. They are also anticipated to have significant environmental impact, with as many as 80 percent fewer cars needed in urban areas and greater fuel efficiency achieved. Given that transportation currently accounts for about 27 percent of greenhouse gas emissions in the U.S. and a very large portion of air pollutants and petrochemical smog, the environmental benefits of a shift to autonomous vehicles could be planet-changing.     

This autonomous future will not be limited to automobiles. Two large Norwegian companies are preparing to launch the world's first autonomous container ship, which is also a zero-emissions, electric-powered vessel, in the next few years. These advancements could make a new container ship as much as 90 percent less expensive to operate. And with about 40 percent of all maritime container traffic being used to transport coal and oil, there could be a significant reduction in environmental impact through reductions in the demand for these commodities, too.

While maritime transport today only accounts for about 2 percent of global greenhouse emissions, it is one of the fastest growing areas of emissions and is expected to double its share by 2050. BSR’s Clean Cargo Working Group, which now represents 87 percent of ocean container shipping by volume, was established with several leading carriers and shippers more than a decade ago to measure, evaluate, and report environmental performance. In the group’s new report, published today, it shares that from 2015 to 2016 alone, CCWG members have reduced average CO2 emissions per container per kilometer for global ocean transportation routes by 2.4 percent.

Of course, there are also opportunities for more radical infrastructure transformation, some of which could be categorized as completely new modes of transportation. Hyperloop rail systems are one such emerging innovation with potentially significant sustainability benefits. A study funded by the U.S. Department of Transportation estimates that this could be approximately six times more energy efficient than air travel on short routes and completely powered by solar energy. Not to mention that it is multiple times faster than current high-speed rail, which can provide economic and social benefits for employers and commuters.

Uncertainty about the social impact of these systematic shifts remains. For example, an estimated 3 percent of the U.S. population works as drivers, an occupation that may likely be in low demand in the near future. Furthermore, while there will be a trend toward more public-private partnerships to bring these transportation innovations to life, it will be important for governments and the private sector to work together to ensure low-income inclusion and access to transportation.

And while we are seeing exciting developments for transportation by land and sea, more investment and innovation will be needed for the future of long-haul air travel. One area of focus is more efficient supersonic, high-altitude planes. A main concern associated with supersonic travel is its high fuel consumption, and while it is true that the Concorde used significantly more fuel per passenger mile in the 20th century than today’s planes, there are many supersonic designs under development that are more fuel efficient.

Other ideas for aviation, like circular runways, have potential sustainability benefits like reducing congestion and plane taxi times. Regardless of which technologies are ultimately adopted at scale, it is a good sign that some infrastructure operators, such as Heathrow Airport, are now developing bold and forward-looking sustainability strategies.

At BSR’s 25th anniversary Conference later this year, we will explore these exciting transformations and how some companies are leading the sustainable transportation revolution. Join me in Huntington Beach on October 25 for a panel on the Transportation of Tomorrow.

Blog | Tuesday August 22, 2017

Turning the Internet Green: A Progress Update from BSR’s Future of Internet Power

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Data centers—the large facilities housing networked computer server systems that keep the internet running—accounted for nearly two percent of all energy use in the United States in 2014. With more and more business being conducted in the cloud, and with the internet playing an ever-more-prominent role in societies around the world, energy demands for these centers are only expected to grow.  

Increasing the use of renewable energy to power data centers can therefore have a strong positive impact on corporate, regional, and national sustainability efforts. That’s why some of the world’s most influential internet companies—including Adobe, eBay, Facebook, HPE, Salesforce, and Symantec—are working through BSR’s Future of Internet Power initiative toward a bold vision: an internet powered by 100 percent renewable energy. Following completion of the initiative's fourth year of work, we’re taking a moment to look at what we have achieved recently and to highlight our ongoing efforts.

Corporate Colocation and Cloud Buyers’ Principles

Last July we successfully developed and launched the Corporate Colocation and Cloud Buyers’ Principles. Through these Principles, customers of data center colocation and cloud services set out six criteria that they expect their data center service providers to meet to help achieve sustainability goals. What’s more, signatories to the Principles intend to give preference to providers engaging in these Principles, which include delivering monthly data on energy consumption and engaging in advocacy efforts around renewable energy.

Thanks to a strong collaborative effort, 21 companies, including several data center service providers, have signed the Principles. This sends a strong collective message for the future of the industry that data center sustainability is good business. As signatories, such as Bank of America, Etsy, and Intuit, are making clear, addressing the carbon footprint of their data is not just important to the technology sector: Any company that has an online presence or relies on data center and cloud services can benefit—and can play a role in creating a more sustainable internet—by signing the Principles.

To build on this success, Future of Internet Power will be developing a toolkit to accompany the Principles. This toolkit will offer a practical, step-by-step guide for putting the Principles into practice, using examples and case studies to show how partnerships between a data center or cloud user and service provider can ensure that both parties have incentives and resources to reduce energy consumption and increase renewable energy use.  

White Paper: Greenhouse Gas Emissions Accounting, Renewable Energy Purchases, and Zero-Carbon Reporting

More recently, we have worked closely with the World Resources Institute (WRI) to produce a white paper addressing the issue of greenhouse gas (GHG) emissions accounting, renewable energy procurement, and reporting in the data center sector. Research for this paper highlights the issue of double-counting scope emissions and subsequent zero-carbon claims, specifically when both data center service providers and their customers classify the same GHG emissions related to the data center as their own scope 2 emissions. Given the current accounting and reporting standards of WRI's GHG Protocol, this double-counting becomes problematic when both the data center provider and the customer want to make a zero-carbon claim related to a renewable energy purchase and scope 2 emissions at a particular facility. We will continue to work with WRI and other industry stakeholders to establish clear GHG accounting and zero-carbon reporting guidance for all parties.

Renewable Energy Buyers’ Alliance

Lastly, to strengthen our public advocacy for renewable energy more generally, we will continue to work closely with our co-founders of the Renewable Energy Buyers’ Alliance (REBA): Rocky Mountain Institute’s Business Renewables Center, the World Wildlife Fund, and WRI. Through this partnership, we can work with a network of larger companies to help scale renewable energy and reach REBA’s collective goal to help corporations purchase 60GW of additional renewable energy in the US by 2025. Earlier this year, REBA was awarded the Corporate Eco Forum’s C.K. Prahalad Award for demonstrating how collaboration is critical to widespread adoption of renewable energy.

On September 17-19, we will co-host the 2017 REBA Summit, which will gather 400 energy buyers, service providers, developers, financiers, nonprofit organizations, and utilities in Santa Clara, California, ahead of GreenBiz’s VERGE17 conference and expo, to identify opportunities to accelerate corporate procurement of renewable energy. We look forward to continuing the conversation with our Future of Internet Power members and the greater REBA network at the summit.

Submit registration requests for the 2017 REBA Summit on the GreenBiz website.

Primers | Monday August 21, 2017

10 Human Rights Priorities for the Power and Utilities Sector

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Human rights are inherent to all human beings. They are defined and established in more than 80 international legal instruments¹ and include fundamental protections of human dignity, needs, and freedoms, such as food, housing, privacy, personal security, and democratic participation. Since the adoption of the Universal Declaration of Human Rights (UDHR) in 1948, the responsibility to protect human rights has primarily fallen on governments. Beginning in the early 2000s, however, it became increasingly clear that the freedoms enshrined in the human rights framework could also be violated—and promoted—by the private sector.

In 2011, the UN Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights (Guiding Principles), the first international instrument to assign companies the responsibility to respect human rights. The Guiding Principles state that governments must put in place good policies, laws, and enforcement measures to prevent companies from violating rights; companies must refrain from negatively impacting rights even when governments are failing to create or enforce necessary laws; and victims of corporate abuses must have access to effective remedy. As part of this responsibility, the Guiding Principles require companies to undertake due diligence to identify and manage their negative human rights impacts.

This issue brief identifies the 10 most relevant, urgent, and probable human rights impacts for businesses operating in the power and utilities sector. The information here is gathered from BSR’s direct engagement with power and utilities companies, as well as our 25 years of experience helping companies in all sectors manage their human rights risks.

The power and utilities sector comprises a wide range of businesses and activities, from electricity and heat, gas, waste, and water utilities to different actors in the energy markets, like power producers and energy developers. While each of these sub-sectors will have its own human rights profile and challenges, this brief highlights universal risks to the sector as a whole.

Blog | Monday August 21, 2017

The Human Rights Implications of the Renewable Energy Transition

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In 2015, Amnesty International and Greenpeace released a joint statement calling on governments at the UNFCCC meetings to urgently shift to phase out fossil fuels through a transition to 100 percent renewable energy worldwide by 2050. What I find noteworthy and special about this announcement around the global climate negotiations is the fact that it frames the energy transition as a necessary step for the protection of human rights.

We have already started to experience the negative effects of climate change, which disproportionally affect vulnerable communities. For people around the globe, but these groups in particular, climate change can impact a broad range of human rights, including health, access to clean water, food, sanitation, and other basic human needs. From a human rights perspective, the renewable energy movement could not be more welcome–or more urgent.

The renewable-led transformation that the International Energy Agency describes in the last release of the World Energy Outlook gives us cautious hope that we are on track to shift to cleaner energy options. Specifically, it suggests that the renewable energy transition is underway, as evidenced by a projected increase in the share of renewables in the global electricity generation mix from over 23 percent in 2015 to almost 28 percent in 2021. Moreover, investments in onshore wind and solar, which represent rapid short-term deployable renewable energy technologies, seem consistent with the global goal of limiting temperature rise to 2°C.

This “renewables rush” is also exemplified by bold pledges and announcements from nations in both the developed and developing world:

• Germany has been able to meet as much as 78 percent of a day's electricity demand from renewables.
• Denmark got 42 percent of its electricity from wind turbines in 2015 and aims to be 100 percent fossil-fuel-free by 2050.
• Renewables provided 99 percent of Costa Rica’s electricity in 2015.
• Nicaragua is aiming for 90 percent renewable energy by 2020.
• China announced its intention to spend more than US$360 billion through 2020 on renewable power sources like solar and wind.
• Nigeria is targeting 30 percent renewable energy by 2030.

However, while we keep the pace of this clean transition, have we appropriately considered the human rights and social implications?

For instance, dispossessions of indigenous peoples' lands remain a significant issue for renewable energy projects in territories with indigenous communities, no matter the scale of the project. For example, if a wind farm were placed on indigenous lands without appropriate consent, it could harm livelihoods, including, for example, by blocking access to food, if the land was previously used for local farming.

If the recent scenarios from the World Energy Outlook are to be believed, we can expect the intersection between human rights and renewable energy needs to become increasingly relevant in our near future. As former UN High Commissioner for Human Rights Mary Robinson pointed out, “It is important to remain cognizant that not all action which is good for the planet is automatically good for people. We require a just transition where human rights inform all climate action.”

This means that, at a macro level, energy policies need to be conceived in a way that trade-offs, co-benefits, and competing priorities are considered in the context of energy security, climate objectives, and the human rights of stakeholders, including local communities and workers.

At a micro level, renewable energy projects need to be designed, financed, constructed, and integrated into energy systems with special consideration of human rights in fragile contexts where vulnerable communities are present.

Thankfully, renewable project developers, which tend to be small and dynamic company outfits, provide us with some positive examples of effective community engagement and consultation and community investment programs, including community ownership of projects. Global energy players investing in renewables are also increasingly paying attention to human rights, for example through establishing human rights policies and increasingly integrating social and environmental considerations into energy investment decisions.

If we look beyond that, for instance at the engineering and construction sector, we can find examples of company action on human rights that shows that the infrastructure sector is looking at addressing its human rights challenges in a collaborative way. These trends—and a call for the inclusion of human rights in the renewable energy agenda—are well captured in a recent study by the Business and Human Rights Resource Centre.  

We would like to invite you, the companies involved in this welcome “renewables rush,” to be a part of this trend by integrating the human rights agenda into your business practices.

To help you determine which human rights are particularly relevant to you and your company, we have produced a business and human rights primer for the power and utilities industry that addresses the sector’s ten key human rights challenges, as well as ideas for positive human rights impacts and emerging risks that you should be aware of. We encourage you to read it, and we would love to hear your thoughts on what incorporating human rights into the transition to renewable energy will look like.

Blog | Friday August 18, 2017

Reflections from a BSR Summer Intern: How to Create Maximum Impact

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When I began my internship at BSR, I had one overarching question: Which organization in the business and human rights space is best positioned to have the greatest impact?

Unfortunately I still cannot answer that question with certainty. However, I leave BSR much less convinced that that is the right question to ask. In my previous blog post for the Kenan Institute for Ethics at Duke University this summer, I touched on the necessity of all the players across the business and human rights space: businesses, nonprofits, and organizations like BSR that negotiate the space between the two.

Now, I find myself asking what is perhaps a much more critical question: What strategies can BSR and all other organizations working on business and human rights employ to accelerate change and maximize impact?

My experience at BSR has exposed me to a few of these strategies. They can be just as applicable to other organizations as they are to BSR.

1. Stakeholder Engagement: Internal and External

At BSR, I worked as part of the human rights team to conduct human rights impact assessments for companies in the extractives and information and communications technology industries. Stakeholder engagement in these projects entailed interviews with international experts on certain human rights issues, members of local communities affected by companies, and employees within the companies conducting the assessments.

These interviews allowed BSR to holistically view both the impacts of the issue at hand and the potential implementation challenges a company might face in addressing them. BSR could then cater its strategy to address the concerns raised throughout the process. This information, only accessible through these conversations, guides further research and informs BSR’s recommendations to the company so that it can maximize its positive impacts and mitigate any potential negative impacts.

2. Careful Choice of Language

Using the language of international human rights, often full of legal jargon, can make it more challenging for businesses to understand why they should take human rights considerations into account. It is important to translate language into terms that will resonate with the intended audience. Employees working at an apparel company, for example, may not realize the relevance of human rights in their company’s operations until they understand that human trafficking could be widespread in its supply chain. To maximize impact and accelerate change, people and organizations must cater their language to resonate with those that would need to take action to affect the desired outcome. Even those within the human rights departments of companies must make human rights language understandable and relevant to their colleagues across departments for a more integrated approach to respecting human rights.

3. Continued Consultation

For one of the human rights impact assessments that I participated in, BSR met regularly with human rights and sustainability leads in the company. This consultation not only allowed those within the company to stay informed of the project’s progress, but also influenced BSR’s research and overall strategy. The human rights and sustainability leads, who are inherently more familiar with the internal workings of their company, contributed insights into the most relevant language to use and the people within the company whose approval would be critical for the project’s implementation and success. This regular exchange will be key in helping maximize the potential impact of the project inside the company.

Each player in the business and human rights space plays a necessary role. What I learned at BSR is that discussions should focus less on comparisons of importance among players and more on ways for each to maximize impact and accelerate change. Stakeholder engagement, careful choice of language, and continued consultation are three possible strategies to achieve meaningful results. 

Blog | Thursday August 17, 2017

Next Steps for the (Former) Members of the Business Advisory Councils

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In the wake of yesterday’s collapse of the advisory councils assembled by Donald Trump, the question of which CEOs will stay and which will go is now moot. The core issues, however, remain, and the need for business leadership is stronger now than ever.

While the impact of these councils was questionable even before they imploded in the aftermath of the President’s response to the tragic events in Charlottesville, their members have perspectives—and voices—that are sorely needed to shape an economy that works for everyone.  

Specifically, here are five key principles that the business leaders who were on the councils can rally around to make good on their original intent in joining the councils—that is, to help define and promote a thriving economy, both here in the United States and abroad.

Prioritize Climate Action: The business community has overwhelmingly expressed its desire to see the U.S. stay actively engaged in the Paris Agreement. Despite the Trump Administration’s wrong-headed decision to withdraw from the agreement, international momentum toward long-term decarbonization is strong. American businesses, like their peers globally, are making commitments and generating innovation to make the vision of Paris a reality. It remains crucial for business leaders to focus the public, as well as policymakers, on the imperative need—and the economic benefit—of remaining committed to decisive climate action.

Ensure Support for Diversity and Inclusion: The majority of the American public was appalled by the hate expressed last week on the streets of Charlottesville, Virginia, and this sentiment has spread beyond the borders of the U.S., with the Prime Minister of Great Britain, amongst others, expressing her revulsion at the events and the response from the White House. Businesses know that our economy—and our societies—thrive when diversity is respected. The time is right for business leaders to reinforce their commitments to diversity and respect for everyone, to reassure a nation that is uncertain whether these core principles are being upheld.

Provide Good Jobs in an Era of Automation: It is widely understood that profound technological and demographic changes are reshaping manufacturing, the nature of work, and the social contract. Businesses are driving many of these innovations, some of which are decoupling productivity from employment. Business leaders should be promoting this kind of progress; they should also be playing a key role in ensuring that people who are displaced by these changes are able to participate fully in the economy and secure stable livelihoods. The former members of the councils are uniquely well placed to catalyze and shape a national dialogue on what the future of employment will look like: Washington is hardly driving that debate today.

Promote Human Rights in Global Trade: While this issue has not gotten as much attention as some others, such as the U-turn on climate change, support for human rights in global trade is clearly being de-prioritized, if not undermined, by the administration. Business leaders understand that global trade—and yes, global trade agreements—that integrates respect for human rights and rule of law not only protects individuals, but provides a more stable basis for a thriving economy. Businesses that have embraced the UN Guiding Principles on Business and Human Rights should remind Washington that trade based on human rights rewards companies that do things the right way and enhances American competitiveness.

Support Multilateral Solutions: Finally, it is essential the business community raise its voice in support of collaborative, multilateral solutions to our shared challenges. The history of the 21st century will depend on how well we all join together to shape our future. Business thrives on competition, but companies also know that their success depends on stable frameworks founded upon respect. We all have a stake in ensuring that a retreat into xenophobic mindsets does not throw the global economy into reverse. And business leaders can be a powerful voice promoting the notion that interdependence and collaboration are key to unlocking human progress and prosperity.

The ending of the two councils established in January was the latest chapter in the tragicomedy that is our current reality. Nonetheless, it remains possible for this shambolic and unfortunate process to lead to something positive. The CEOs that were on the councils (and others) have an opportunity to demonstrate leadership at a time when it is sorely needed. These five steps would go a long way to restoring faith in the direction of the American economy—and our institutions.

Blog | Wednesday August 16, 2017

Now Is the Time to Examine (and Re-Examine) Your Commitment to Diversity and Inclusion

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From weekend events in Charlottesville, Virginia, to a leaked internal memo at Google just a couple of weeks ago, the conversation around diversity, particularly in the United States, has dominated the news in America.

While the scenarios are entirely different—and take place in very different settings—they are both a reminder that harmful narratives, stereotypes, and, in the case of Charlottesville, violence and hate, continue to exist in our society and in our workplaces.

These recent events remind us of the importance of corporate action on diversity and inclusion, as well as the need to defend equality and fairness. These events raise important questions about the true meaning of these terms today.

In this context, all companies would do well to ensure they are clear on their commitment to diversity and walking their talk when it comes to their values.

This means that any workplace across the world, in any sector, of any size—a Fortune 500 technology company in Silicon Valley, a manufacturing company headquartered in the southern United States, or a factory operating in India—needs to examine, and reexamine (and then examine again), its approach to and voice on issues of diversity and inclusion.

This also means that reinforcing corporate values is critical. While this might not please everyone, doing so is the best way to make clear for your employees, your community, and your customers know where you stand on equal rights, diversity, and inclusion.

For some companies, this means holding town halls to provide a space for employees to share their thoughts and reactions to recent events; for others, this means looking at their products and services and how they are being used to promote discriminatory actions.

For others still, it means responding to actions by public officials. Just this week, we saw the CEOs of Intel, Merck, and Under Armour resign from the President’s American Manufacturing Council following his response to the violence in Charlottesville. The CEOs of Walmart and GE expressed their support for diversity in direct response to the White House’s reaction to the events in Virginia.

Earlier this year, CEOs from a range of companies voiced their concerns about recent immigration bans and transgender bans. Airbnb cancelled user accounts linked to the White Nationalist Rally, as these violated the Airbnb Community Commitment to “accept people regardless of their race, religion, national origin, ethnicity, disability, sex, gender identity, sexual orientation, or age.”

All companies will have to continue to ask themselves tough questions and find their voices on issues that are impacting their communities. Increasingly, your employees and your customers will demand it of you: a recent survey from Povaddo shows that more than half of employees working in America’s largest companies believe their employers should be more vocal on social issues.

As Martin Luther King, Jr. once said, "The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy."

If ever there were a time for companies to double down on their commitments to equality and diversity and show the world what values-based leadership can look like, that time is now.

Blog | Tuesday August 15, 2017

Climate Risk and Resilience: South African Companies Paving the Way

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South Africa is the 30th driest country in the world, and it is currently experiencing the worst drought in more than 100 years. This was apparent to us in Cape Town as soon as we walked through the airport, which has beautifully artistic but sobering signage displaying the reality of drought in the Cape. The message was further reinforced at local hotels that used creative displays to educate guests on water conservation techniques to endure the prolonged drought. Climate change is expected to further intensify this water shortage, increasing climate risk to businesses.

Aside from drought, the country is exposed and vulnerable to climate change from flooding, extreme weather events, and wildfires. Moreover, climate change will worsen additional underlying social, political, and economic vulnerabilities, including the years of political instability and lack of rights for marginalized populations, making it difficult for organizations to operate as usual.

To discuss what these issues mean for business, BSR worked with our South African partners National Business Initiative (NBI) and KudosAfrica to convene South African companies and other stakeholders in June. We presented our private-sector climate risk and resilience framework, and we sought to learn more about climate risk in the region and specifically how companies are building climate resilience strategies in an effort to cope.

Climate risk can span all aspects of business, from operations, human resources, finances, and raw materials procurement to marketing, sales, and legal. The good news is that many companies in South Africa are already assessing their climate risk and developing associated strategies to enhance the resilience of their own operations, supply chains, and local communities.

Incorporating climate risks in standard business practices is essential to adequately manage risk and build resilience across a company. A starting point is the enterprise risk management (ERM) assessment; however, integration with corporate strategic planning and specifically broadening the planning time horizon are critical to actively managing unavoidable climate risks that may have severe implications.

Overlooking these risks can impact business. Failure to manage and build resilience to climate risks impacting local communities could result in a depleted workforce. Similarly, failure to identify and build resilience against climate risks and extreme weather events can result in supply chain disruptions that can hinder or halt a company’s ability to produce its products and result in significant loss of revenue, decreased stock prices, and reputational damage.

Emerging best practice is to place a climate lens on the existing ERM frameworks companies already complete so that these potential impacts are captured. When it comes to taking this comprehensive approach to risk management, South African companies across industries are leading the way:

• Chemicals and Energy: Sasol, in an effort to not re-invent the wheel, integrates potential climate risks into its already well-developed ERM. This allows them to be addressed at business unit, functional, and process portfolio levels within the company. The resulting insights have allowed Sasol to align climate risk and financial implications, and in turn begin developing a resilience strategy.
• Extractives: Exxaro considers operational, economic, social, and environmental risks in its ERM, which allows it to use a more holistic approach to addressing climate risk and resilience. This approach addresses underlying vulnerabilities, which climate change could further exacerbate.
• Consumer Sectors: Woolworths South Africa has identified its suppliers as the source of most of its climate risk. It has therefore designed initiatives that boost suppliers’ resilience through the Farming for the Future initiative and Ceres Water Stewardship project.
• Financial Services: Santam, an insurance company, decided that instead of increasing the price of insurance, it would invest in community resilience projects after noticing an increase in insurance claims due to climate-related events. Addressing the underlying vulnerabilities has additional benefits, such as building community resilience to climate change and strengthening public and private organization engagement with local communities.

These companies have business-forward climate risk and resilience strategies that reach beyond infrastructure to vulnerable communities. While these methodologies may seem hyper-local, in practice, companies—from SMEs to multinationals—can learn valuable lessons from the work being done in South Africa.

BSR’s multisector climate risk and resilience framework includes assessing climate risks across a business, through its supply chain and within vulnerable communities in which companies operate. Building upon existing risk management systems and programs, BSR works with companies to integrate climate risk and resilience strategies.

Are you looking to better understand the impacts of climate change across your value chain? We’d be thrilled to discuss opportunities to help you identify and manage climate risks and opportunities.