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Blog | Thursday July 5, 2018

Making Data Work for Women

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As Melinda Gates put it in a speech at the 2016 Women Deliver conference: “We can’t close the gender gap without first closing the data gap.” Throughout history, women have often been uncounted and therefore invisible, and increasingly, the international community is taking notice. Organizations, including the Bill & Melinda Gates Foundation, the OECD, UN Women, Women Deliver, and the World Bank, have publicly committed to accurate, gender-disaggregated data as a priority.   

To help business do its part to promote stronger collection and use of gender data, BSR is proud to lead a major new initiative to develop a gender data framework for global supply chains. This framework will serve as a practical, credible guide, defining which gender indicators are needed to monitor corporate progress toward gender equality in supply chains and to guide future investments. BSR will partner with ISEAL Alliance, with inputs from the UN Global Compact and UN Women and support from the C&A Foundation, to develop the framework. Fair Wear Foundation will test the framework as a pro-bono partner.

Data is key to progress. It is an essential tool, both for decision-makers to design and measure impactful programs and for citizens to hold them accountable. More and better data makes issues count; it helps inform the policies, programming, and practices that drive impact.

For years, though, there has been a gap in gender data, which is data disaggregated by sex and specifically relevant to women and girls. Women and girls are sometimes missing from datasets, or their contributions and priorities, as well as the challenges they face, are not visible there. At a global level, only 21 percent of the data needed to monitor the 54 gender-specific indicators in the UN Sustainable Development Goals is up to date.

The gender data gap is similarly wide within businesses. The Workforce Disclosure Initiative—a coalition of 100 major investors promoting transparency from companies on how they manage workers—asked 35 leading companies to disclose data on working conditions across their businesses. Of these leading companies, only two disclosed demographic data on the women and men in their critical supply chains.

This absence of the most basic data has led to the development and implementation of policies and programs that do not account for the various barriers women face or the number of women who face them. These policies and programs therefore fail to deliver equally beneficial outcomes for men and women—or may at times deliver outcomes that are actively harmful to women.  

With approximately 190 million women employed in global supply chain-related jobs, business has  unique access to an enormous pool of data that can help shape and strengthen efforts to improve women’s lives.

Specifically, the private sector can leverage its influence and reach to highlight the ongoing unmet needs for women across supply chains, from modern contraception to equitable career opportunities. In this way, companies can put themselves at the heart of the drive for equal societies.

However, the proliferation of databases and guidelines can be complicated to navigate. For businesses in particular, there is no clear guidance on what data to gather and how to gather it. While this is bad for business today, it is also a huge opportunity to develop a clearer, fuller picture of the realities women face.

That is exactly what our new gender data framework will seek to do. We will develop and test it with our partners over the next two years.

We are looking for leading companies and experts to engage with us on the development of this framework and to pilot it in global supply chains. If you are interested in joining this ground-breaking initiative, please contact us to learn more.

Blog | Tuesday July 3, 2018

How to Prevent Your Sustainability Collaboration from Failing

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More than ever before, companies are collaborating with stakeholders across their value chains, and even across entire regional or global governance systems, to learn about the systemic issues that curb long-term business growth—such as keystone species extinction, talent shortages, and climate-threatened supply chains—and agree on joint actions to address them.

There are numerous examples of successful and impactful multistakeholder collaborations for sustainable development: For instance, half a billion children have been vaccinated and more than nine million lives have been saved in the world’s poorest countries since the founding of Gavi, the Vaccine Alliance, in 2000. And the Maritime Anti-Corruption Network (MACN) is successfully driving progress to eliminate corruption across the maritime industry’s value chain, including influencing country regulatory frameworks to increase the efficiency, integrity, and transparency of vessel inspections.

But it is also important to acknowledge the numerous collaborations that never get off the ground, are bogged down in governance negotiations, or struggle to drive meaningful action from participants to meet their impact goals. Learning from both the failures and successes helps to ensure that future collaborations do not repeat the mistakes of the past.

In our recent report, Private-Sector Collaboration for Sustainable Development, we reviewed 21 current and previous collaborations and interviewed more than 40 experts about collaborating for sustainability. From this research, we identified risk factors across the lifecycle of collaborations, from start-up to early implementation to scaling. These include launching prematurely (before participants have had the opportunity to build trust and buy into the proposed solutions), insufficient resources to meet the ambitions of the collaboration, breaches of trust between participants, lack of leadership succession planning, and mission creep.

If you are thinking of starting or joining a collaboration or are currently involved in one, you may encounter some of these red flags. Below are our recommendations for how to address or mitigate them. Some of these steps will require collective action from your collaboration, but you and your partners can improve the odds of success by raising issues as they arise, demonstrating commitment, and taking actions to reduce the risk of failure.   

In the Start-Up Phase

• Spend the time to prepare and engage critical participants. Multistakeholder initiatives take an average of 18 months to move from early discussions to launch. This is a longer time frame than most participants expect, but the time is well spent on attaining buy-in and refining the initiative’s value proposition. Organizations that launch more rapidly are more likely to face challenges early in their growth because they don’t have sufficient participant support or an initial strategy for impact
• Diversify funding. Seeking seed funding from foundations or governments can help initiatives build their value proposition for companies to eventually back the effort themselves. This diverse funding can also make a collaboration better plan for the long term and can help to avoid the “free rider” problem, where competing companies avoid being the sole contributors to an effort that they see as beneficial to their peers.

During Early Implementation

• Prioritize personal relationships and trust-building. Trust is the glue that holds organizations together when the going gets rough. Scheduling meetings in person–while time-intensive and expensive–can be an important investment in building relationships between participants, increasing their commitment to each other and the effort.
• Build a database of participant contacts. Relying too heavily on one point of contact for a participating organization can lead to burnout or loss of the relationship with his or her firm if that person leaves. Collaborations do well to identify several participant contacts and keep them informed about the collaboration’s progress, in case they need to step in.

When Scaling

• Rotate leaders. Some initiatives expose more people to leadership roles by instituting terms for key positions, such as the steering committee. This allows more organizations to participate in governance and creates natural periods for an initiative to refresh its strategic vision under new leadership. To maintain some consistency, it can be helpful to stagger terms. For example, a vice-chair could remain in office when a new chair is elected.
• Agree up front on milestones for scaling or sunsetting. When designing the initiative, members can agree on indicators or milestones to review during each strategy cycle to determine when it may be time to consider different growth paths, including scaling to new geographies or sectors, spinning off, merging, pivoting, or sunsetting the initiative. Some initiatives may determine from the beginning that they will be time-bound, lasting only a few years to accomplish their objective.

Private-sector collaboration for sustainability has enormous potential—but it is challenging to do well. Rushing into a collaboration without the necessary structures and planning can be a recipe for failure.

At BSR, we have 20 years of experience in designing, implementing, and scaling collaborative initiatives. Some have run for decades with ever-growing impact; some have sunset with relative satisfaction; and some have failed to take off. These successes and the failures help us build our expertise in managing collaborative initiatives.

If you are planning to collaborate for sustainability, let us help you do it right. Contact us for more information.

Blog | Monday July 2, 2018

Building Responsibly Announces Worker Welfare Principles

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The rapid growth of the construction sector has attracted large engineering and construction firms, a broad range of multinational and local subcontractors, and millions of low-skilled migrant workers to regions that often have weak local regulation on human rights issues. Workers in these regions are vulnerable to a host of labor and human rights violations, including forced labor, poor working and living conditions, debt bondage, and restrictions on worker representation and association—issues that are not easily solved.

Additionally, this sector faces unique challenges in its efforts to address these human rights concerns, including the decentralized nature of companies’ operations; the short-term nature of projects; industry interconnections (companies are clients of each other); multi-tiered supply chains; and the complexity of relationships with public-sector clients, who are also legislators and regulators where they do business.

For these reasons, Building Responsibly—a business coalition of leading engineering and construction companies working together to raise the bar in promoting the rights and welfare of workers across the industry—has developed a set of Worker Welfare Principles that establish a common, global baseline for the treatment of workers in the engineering and construction industry.  

On June 21, Building Responsibly launched these Principles with its founding members, who include Bechtel, Fluor, Multiplex, Vinci, and Wood. Together, Building Responsibly members employ more than 400,000 people and operate in more than 100 countries. The Principles were developed in consultation with a diverse set of public, private, and civil society stakeholders.

James Walker, group head of ethics and compliance, Wood, and vice-chair of Building Responsibly, told us, “These Principles represent the first major output of our collaboration through Building Responsibly and establish a model others may adopt as they seek to engage with these challenges and issues. Authored by businesses in consultation with external stakeholders, the Principles are rooted in international human rights standards and responsive to diverse global business contexts, ensuring that they are both ambitious and achievable.” He added, “We look forward to ongoing collaboration with workers, clients, business partners, civil society, and others to encourage widespread adoption of these Principles and good practices across the industry.”

Through the 10 Principles, companies commit to ensuring that:

1. Workers are treated with dignity, respect, and fairness.
2. Workers are free from forced, trafficked, and child labor.
3. Recruitment practices are ethical, legal, voluntary, and free from discrimination.
4. Freedom to change employment is respected.
5. Working conditions are safe and healthy.
6. Living conditions are safe, clean, and habitable.
7. Access to documentation and mobility is unrestricted.
8. Wage and benefit agreements are respected.
9. Worker representation is respected.
10. Grievance mechanisms and access to remedy are readily available.

Companies will work to implement the Principles by:

1. Ensuring commitment from leadership;
2. Managing oversight of contractors and supply chains;
3. Providing training to leadership, employees, and workers;
4. Enabling transparent reporting of incidents and concerns; and
5. Engaging with other industry members and all affected stakeholders.

While Building Responsibly is proud to achieve this milestone, the initiative intends to use the Principles to further shape industry practices by developing detailed guidance notes and tools to support companies’ implementation of the Principles. It also plans to, in collaboration with stakeholders, create a roadmap for solutions that improve the rights and welfare of workers in the industry.

For more information about how to get involved, please contact us or visit the Building Responsibly website.

Blog | Thursday June 28, 2018

Announcing a New Collaboration Using Tech to Combat Human Trafficking

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A growing number of organizations and initiatives are working to tackle forced labor and human trafficking, which affects 40 million or more people around the globe. Given the widespread nature of this crime and the complexity of tackling it—further described in the 2018 U.S. State Department’s Trafficking in Persons Report published today—increased engagement from all stakeholders, including and especially the private sector, is vital.

A coalition of global technology companies, civil society organizations, and the UN have come together to launch “Tech Against Trafficking,” a collaborative effort to further support the eradication of forced labor and human trafficking.

Founding members BT, Microsoft, and Nokia have been advancing the dialogue sparked at a Wilton Park event in June 2017 on “The Role of Digital Technology in Tackling Modern Slavery” to formally explore how technology could be better utilized in finding solutions to stop human trafficking and modern slavery.

Today, the conversation has officially turned into action.  

“The Wilton Park event felt like the start of something powerful,” reflected Eric Anderson, head of Modern Slavery Programme at BT. “Everyone had their sleeves rolled up and quickly got into the details. It was unique to bring together these different expert perspectives from tech companies, civil society groups, and law enforcement from across the world. Those three days revealed real opportunities to make an impact and a strong willingness to collaborate to make it happen. We had to find a way to keep this going.”

“We need to collaborate more closely as an industry and together join forces with experts in the fight to stop human trafficking,” says Laura Okkonen, head of human rights at Nokia. “That way, we will maximize the positive impact of technology while also continuing to foster an open and transparent dialogue within the coalition, as well as with our other stakeholders.”

Digital information and communications technology companies offer opportunities to create a step change in the effort to eradicate trafficking. In one recent example, a tech company was able to share and coordinate disparate satellite readings to track a rogue ship off the coast of Papua New Guinea carrying victims of forced labor, which, through collaboration with investigative journalists at the Associated Press, resulted in the liberation of 2,000 people.

Tech Against Trafficking will build on and amplify the potential of some of these technologies.

“Human trafficking is a massive problem, and our efforts to eradicate it must be coordinated and collaborative," says Mike McCarter, a director in Microsoft’s Protection Services unit. "We’ve already seen positive results when working across the industry, and this new program will soon be a force multiplier.”

In 2018, Tech Against Trafficking will focus on mapping and analyzing the landscape of existing tech-focused initiatives to tackle modern slavery. The key findings will be shared publicly by the end of the year and will help the group develop a three-year strategy.

The potential focus areas coming out of the Wilton Park discussion include the following (to be further refined in the strategy development process):

• Cloud and mobile apps to allow first-line responders, the public, and vulnerable workers to raise awareness, access resources, and report concerns, among many other solutions.
• Basic hardware, such as laptops and smartphones, to be made more easily available by technology providers to NGOs supporting vulnerable groups and victims.
• National helplines that raise awareness, support victims, and serve as hubs of data collection; analysis of existing information; and sharing to advance our understanding of and response to slavery.
• Data tools to deal with the problem of data overload that can disable effective responses and to identify connections in the data that would otherwise be missed (e.g. using AI and big data).
• Supply chain transparency tools to improve traceability and transparency of supply chain labor standards.

BSR has been appointed secretariat of Tech Against Trafficking and will be supported by an advisory group of civil society organizations. The RESPECT Initiative, which is composed of Babson College’s Initiative on Human Trafficking and Modern Slavery, Global Initiative Against Transnational Organized Crime, and the International Organization for Migration, has been appointed as the research lead of Tech Against Trafficking.

“Business engagement is essential in the global fight against modern slavery, and it’s great to see these organizations leading the way in their commitment to the issue,” said Andrew Wallis, OBE, CEO of anti-slavery charity Unseen. “They bring a fantastic amount of technical expertise, in addition to huge clout. Technology offers transformational potential not just to disrupt and reduce modern slavery, but to support care and remedy mechanisms for survivors.  We look forward to working together in partnership in the fight to end slavery for good.”

With leading technology companies combining their experience and expertise to focus on this issue, it’s an exciting time for the technology and human rights space. The more companies get involved in the initiative, the stronger its impact will be.

We invite all interested technology companies to contact us now to find out how to get involved.  

Blog | Friday June 22, 2018

Sustainability Standards Driving Impact for Women in Global Supply Chains

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Sustainability standards and multistakeholder initiatives (MSIs) like Fairtrade International, Better Cotton Initiative, Rainforest Alliance, and the Fair Labor Association provide a set of tools and approaches to improve social, environmental, and economic conditions in global supply chains. These organizations and standards have played a powerful role in promoting good practice in certain industries, such as apparel and agriculture, where women make up 60-90 percent of the workforce in labor-intensive stages of production.

Gender is one key area where these groups have the opportunity to do more to drive systemic improvement for women working in factories and farms. In particular, there is potential to scale up the impact that sustainability standards and MSIs bring to women in global supply chains.

At an international level, the Sustainable Development Goals (SDGs), and SDG 5 in particular, have galvanized interest on gender equality and empowerment. The standards community is innovating around core technical issues like assurance, standard-setting, and monitoring and evaluation. Moreover, using data to drive change, working collaboratively, and breaking down silos between technical functions will further scale up the impact of these innovations on important issues, including gender.

During a recent session in São Paulo with ISEAL, an alliance of credible and innovative sustainability standards, we discussed several entry points for standards groups and MSIs to further invest in progress on gender.

• Standards: Standards cannot be gender blind, and ISEAL members are assessing the gender component of their standards in their periodic revisions. It is important to ensure a strong gender perspective in the language—for example, including guidance on how principles such as discrimination, harassment, wages, and working hours could impact women specifically.
• Gender-sensitive assurance: Sustainability standards can strengthen assurance processes—for instance, auditing teams should be equipped with training and facilitation skills to identify and address gender specific issues. SAN (Sustainable Agriculture Network) and Rainforest Alliance recently published an updated additional social auditing methods for sexual and psychological violence against women, which is one example of what this can look like.
• Systematic, robust, and transparent monitoring and evaluation: Data matters, and there is interest from sustainability standards groups to include more robust and meaningful indicators to track progress on gender equality in performance monitoring efforts, as well as to conduct in-depth evaluations. The Global Coffee Platform released a common measurement framework to guide collection of data relevant to promoting gender equality in coffee value chains.
• Capacity-building and awareness-raising: Sustainability standards can support capacity-building with suppliers to improve practices in factories and on farms, either directly or via local implementing partners that are part of existing systems. The Fair Labor Association is using its influence to raise the issue of pregnancy discrimination through its recent report.
• Gender mainstreaming: Some organizations are showing leadership by mainstreaming gender into their own organizations, creating gender task forces to help integrate gender components across projects and departments, and investing in gender experts.

These initiatives are a great start, but there is a need to go deeper and ensure that a substantial number of sustainability standards and MSIs take a comprehensive approach to gender. That’s why ISEAL and BSR have teamed up to organize a pioneering Gender Working Group for Sustainability Standards.

The Gender Working Group, which launched in May with support from the C&A Foundation, will convene standards organizations and MSIs to share their experiences addressing gender, learn best practices, and address frontier issues like women workers’ voice and gender data.  

Our ambition through this collaboration is to drive systemic change to improve conditions for women workers in global supply chains—but we need a broad base of organizations to optimise our impact.

We will give special attention to the apparel and textile sector and facilitate cross-sectoral learning, but other perspectives are welcome. If your organization is a sustainability standard or an MSI interested in working on the topic of gender, we’d love for you to join the conversation.

For more information, please get in touch.

Blog | Tuesday June 19, 2018

What the Right to Own Property Means for a Land-Based Sustainable Business

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This is the second in a series of blog posts where we and a BSR member company review how business respects individual articles in the Universal Declaration of Human Rights (UDHR), 70 years after its adoption in 1948. This series has the support of the Office of the High Commissioner on Human Rights (OHCHR), but any views expressed here should not be attributed to OHCHR. This particular post, co-authored with Enel, explores what the right to own property and land rights mean for business.

Article 17 of the Universal Declaration of Human Rights: Everyone has the right to own property alone as well as in association with others. No one shall be arbitrarily deprived of his property.

As reported by USAID, in 2016, an estimated 70 percent of land in developing countries was unregistered or perceived to be insecure. Tenure rights in particular are regulated by customary laws or informal systems that often remain undocumented, even when they are recognized as legitimate by local populations.

Land-based commercial investments, which are the basis for many businesses—such as agriculture, forestry, extractives, infrastructure, real estate, and travel and leisure—often fall within these unclear land regimes, which can leave companies facing challenges to understand who has legitimate land and resource rights. Notably, the development of extractives and infrastructure projects, including renewable energy projects (such as greenfield electricity generation assets) and the transmission and distribution infrastructures that go with them, can have a significant land impact.

Yet, respect for land rights is essential for many communities around the world, as land represents a key living factor for food production and sustainable livelihoods. Land means access to resources, an adequate standard of living, equality, inclusiveness, and social development. Ultimately, the human right to own property also protects the human rights to adequate food, freedom from hunger, and better living. However, of the threats facing local communities, in particular indigenous communities, one of the most significant, as described by UNESCO, is the risk of being driven away from land and natural resources.  

As outlined by the FAO Voluntary Guidelines, the corporate responsibility to respect human rights also includes legitimate tenure rights. Due diligence over and recognition of customary law and tenure rights should be baseline practice for companies acquiring or looking at acquiring long-term use or ownership rights for land and forests. In the development of a greenfield project, first and foremost the choice of the potential site should be driven by the minimization of all potential impacts, including land rights.

The Interlaken Group suggests that due diligence should be “focused on identifying—and where possible helping to legally secure—the tenure rights of local communities and households.” If due diligence is not performed correctly and comprehensively, the impacts of business operations on the human rights of local communities, in particular the most vulnerable, might be overlooked. For companies, this could mean facing increased costs, unforeseen delays, and potentially reputational and legal challenges related to alleged land grabs and land rights abuse.

Throughout the lifecycle of an infrastructure project, compensation for the loss of land and property is often a pivotal issue. For instance, in the case of resettlement, most countries have land acquisition laws that require prompt and adequate monetary compensation; however, monetary compensation may not be considered sufficient, adequate, or culturally appropriate. According to Cultural Survival, “Cash compensation disproportionately benefits some interest groups (for example landlords) and not so much poor and small-scale farmers, the landless, and women.” Depending on the local laws and culture, companies could apply other models, such as adopting a land-for-land strategy that provides new land that is ideally better or at least equivalent to the lost site in terms of productivity, availability of water, and location.

An effective consultation process backed by appropriate assessments can also help businesses define and set up initiatives that effectively respond to the local development needs and enhance the social and economic benefits for local communities. Free, prior, and informed consent (FPIC) should be a cornerstone of engagement and consultation with local communities, in particular for investments involving land acquisition. Duly engaging through FPIC can help a company identify and address women’s rights to land and forests.

While the recognition of land rights is primarily a state responsibility, clear land rights and their respect are not only beneficial for landowners and local communities’ livelihoods, but also essential to an inclusive land-based sustainable business. Respecting human rights of local communities, including land rights, can help a company effectively engage with stakeholders, establish trustworthy relationships, reduce the risk of social conflicts, and ultimately secure the social license to operate infrastructure projects.

Enel recognizes the importance of engagement with local communities and, for this reason, has included in its sustainability plan a specific pillar dedicated to this issue; you can also read more about Enel’s approach to project development through creating shared value in its 2017 Sustainability Report. Enel’s approach is notable for its structured methodology of local stakeholder engagement and consultation, which is applied widely with particular attention to identifying and protecting ancestral communities and engaging in dialogue and consultation throughout the phases of project planning and development of new assets.

Blog | Friday June 15, 2018

The Digital Payments Opportunity: A Conversation

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We recently sat down with UN-based Better Than Cash Alliance's Private Sector Digital Innovation Lead Marjolaine Chaintreau and BSR's HERproject Associate Director Chhavi Ghuliani to discuss the new report, The Future of Supply Chains: Why Companies Are Digitizing Payments, which features a case study on BSR’s HERfinance work in Bangladesh.

Jorgette Mariñez: Why are cash transactions a problem for companies?

Marjolaine Chaintreau: Cash is expensive to store, transport or insure—and it is also inefficient. For example, many consumer goods companies operating in cash-based countries need to hire security guards to accompany drivers delivering products to shops, as distributors are often targeted for robbery. Cash payments are also more easily subject to fraud and leakages.

Chhavi Ghuliani: In a country like Bangladesh, for example, where we are partnering with the Bill & Melinda Gates Foundation to digitize garment worker wages, cash has to be transported to factories in armored vehicles, then sorted, counted, and distributed to thousands of people. This is a risky and time-consuming process that can span several days in a larger factory. In addition, for global companies sourcing from these factories, cash means less transparency and traceability of wage payments to workers in their supply chains.

Mariñez: What are digital payments, and what are the business benefits they can bring?

Chaintreau: Digital payments are transfers of value made through any kind of digital channel. They include payments made with traditional electronic bank transfers, mobile money accounts (i.e. using phones), and payment cards (credit, debit, or prepaid cards).

Companies that have shifted to responsible digital payments have experienced business benefits, including increased revenues and stronger relationships with supply chain partners. In Kenya, small retailers that are a part of Unilever’s Jaza Duka (“fill up your store”) program were able to access digital working capital loans based on retailers’ purchasing history with Unilever. These shops expanded product inventory and variety, increasing foot traffic to stores and growing sales by 20 percent within the first six months of implementation.

Ghuliani: Our analysis from Bangladesh shows a 53 percent reduction in admin time and effort spent on payroll when a factory switches from cash to digital payments. Additionally, we estimate that a factory can save about 25 minutes of production time per worker by switching to digital wages because workers do not need to be taken off the production line to collect cash. Many of the global companies we partner with also benefit, because they see digitization as a way to support the financial inclusion of women in their supply chains while also ensuring workers are getting paid correctly and on time. The greater transparency that digital wages provide is critically important.

Mariñez: Why is this so valuable for the workers in the supply chain?

Chaintreau: Workers that are paid in cash are often excluded from the formal financial sector; being paid digitally can be the first step toward opening an account. This can provide the ability to save money, which can potentially increase workers’ formal participation in the economy and access to other financial services, such as credit and insurance. Digital payments can also help workers save time, and they can reduce personal security risks, as workers do not need to travel with pockets full of cash.

Ghuliani: The majority of workers in global supply chains, particularly in light manufacturing and agriculture, are women, for whom the benefits of digitizing wages are even greater. Their financial inclusion is linked with greater control and decision-making over financial matters and can reduce the risk they disproportionately face from transporting large amounts of cash. After having their wages digitized, the percentage of women in Bangladesh who reported they were handing their salaries over to their spouses on a monthly basis dropped from 43 percent to 25 percent.

Mariñez: What industries or markets have the most compelling case for considering digital payments?

Chaintreau: In this report, we focused on three main sectors—agribusiness, fast-moving consumer goods, and the apparel industry—to show the breadth and diversity of opportunities that digital payments can bring to workers, smallholder farmers, and small businesses/shops. However, companies of all sizes and sectors can benefit from implementing the necessary building blocks of digitizing payments in their supply chains.

Ghuliani: Any industry that still relies on cash for salary payments can benefit from digitizing. We chose to focus on the garment industry in Bangladesh in our HERfinance work because it still relies on cash, it employs mostly women, and it is a consolidated industry. This meant we could reach tens of thousands of low-income, underbanked women by focusing on a small number of garment clusters in the country.

Mariñez: What are the biggest challenges to digitizing payments? 

Chaintreau: It takes time to build trust and drive usage of digital payments. For companies, the main challenge is ensuring that all actors in the supply chain see a positive value proposition to move away from cash into digital payments. This means having appropriate accounts and financial products addressing the needs and capabilities of workers or farmers, especially women. It is also critical to build incentives beyond payments, like access to savings, remittances, or working capital.

Mariñez: For those companies that are interested in doing this, what is the first step?

Chaintreau: Ask the question! How are payments made in our supply chain, and what are our costs associated with using cash? In our experience, the key to successful digital payments solutions is having buy-in from senior leadership and alignment across the departments that will be affected, such as sales, procurement, distribution, and finance.

Ghuliani: My recommendation is for companies that are thinking about this issue, particularly in the supply chain context, to collaborate. To maximize the benefits of digitization to workers, we must shift entire industries away from cash and also build a supporting ecosystem so workers can not only be paid digitally, but also spend digitally. This can only happen when we reach significant scale. Our HERfinance Digital Wages program has reached more than 160,000 low-income workers so far, and while that is significant, there are still millions of workers in Bangladesh still paid in cash. More action and commitment from buyers and their suppliers is needed.

Chaintreau: I agree! Collaboration will be required to successfully make this transition. While some leading companies, financial institutions, and governments are already working together to build inclusive and responsible digital payments ecosystems, there is an opportunity for more companies to join this movement and realize the full benefits of digitization for their business and stakeholders.

Blog | Tuesday June 12, 2018

The US$660 Billion Sustainable Supply Chain Finance Opportunity

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Today, businesses have an opportunity to shift how they are implementing their sustainability commitments in their supply chains. Global buyers—major international companies—are increasingly looking for ways to not just to enforce compliance and punish poor performers, but to reward and incentivize their suppliers to adopt sustainable and responsible behaviors.

Our new report, Win-Win-Win: The Sustainable Supply Chain Finance Opportunity, shows how supply chain and trade finance mechanisms can be leveraged to create tangible cash incentives for suppliers, drive sustainable behaviors, and transform global supply chains. This is a significant opportunity for buyers, suppliers, and financial service providers.

There are currently only a handful of public examples of global buyers and finance providers that have implemented sustainable supply chain finance programs; see the description of efforts by Puma and Levi Strauss & Co. in our report to learn more about these. Our research and interviews, however, demonstrate that there is a strong will to do more and show that some key trends, such as the digitalization of trade and the growing availability of supplier sustainability performance data, are converging to create an environment where sustainable supply chain finance can thrive.

We invite leading companies across sectors to explore this untapped opportunity to scale and advance successful models. In particular, we have identified three promising mechanisms to do so:

• Through a sustainable payables finance program, buyers can provide fair payment terms to suppliers while rewarding and providing tangible benefits, such as better discount rates, to suppliers who demonstrate strong environmental, social, and governance (ESG) performance or commit to improve.
• Sustainable trade loans can be used to support and incentivize the trade of goods that have clear environmental and social benefits, for example Rainforest Alliance or Fairtrade certified crops.
• Applying smart contract solutions, based on blockchain technology, can make transactions traceable, transparent, and irreversible—key tenets of a sustainable supply chain.

With US$2 trillion in financeable highly secure payables globally, supply chain finance is a US$20 billion revenue opportunity for banks according to McKinsey, offering an unrealized opportunity to improve supply chains while also achieving sustainability goals. Specifically, incorporating sustainability into supply chain finance can provide both business and sustainability benefits to buyers, suppliers, and banks.

• For buyers, sustainable supply chain finance offers a unique solution to achieve sustainable sourcing goals, increase security of supply, and improve relationships with suppliers by rewarding and incentivizing sustainable behaviors in the supply chain, at reasonable direct cost to the company, if any.
• For suppliers, sustainable supply chain finance can provide access to working capital, stronger relationships with customers, and the ability to quantify the value of sustainability efforts.
• For banks, BSR estimates that, in time, the sustainable supply finance market will reach one third of the market, or US$660 billion, representing a US$6 billion revenue opportunity for financial service providers.

At BSR, we want companies and their finance partners to leverage supply chain finance in support of responsible and sustainable supply chains, and we’re excited to launch a conversation and action in this direction.

Join us on June 21 in New York City at our report launch event, where we will demystify supply chain finance mechanisms, explore sustainable supply chain finance solutions, and catalyze action together with global buyers, trade finance providers, and other relevant actors.

The report Win-Win-Win: The Sustainable Supply Chain Finance Opportunity was funded by Humanity United.

Reports | Tuesday June 12, 2018

Win-Win-Win: The Sustainable Supply Chain Finance Opportunity

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Why Read This?

Leveraging supply chain finance mechanisms to incentivize sustainable behaviors in global supply chains is an opportunity for businesses and for sustainability. Embedding sustainability factors into the widespread and growing practice of supply chain finance assigns value to supply chain sustainability programs, provides tangible incentives to suppliers and their buyers, and has the potential to open new markets to banks and transform supply chains.

Companies around the world have recognized that the sustainability challenges within their supply chains are a risk and an opportunity to be managed. As such, it has become normal practice for companies to have programs in place to manage the environmental, social, and governance (ESG) risks in their supply chains. Most reputable global companies have supply chain sustainability programs in place to assess and manage the human rights, labor, governance, environmental, and other risks of their suppliers. These programs are largely based on risk management activities such as supplier assessments and audits.

However, after more than 25 years of corporate supply chain sustainability programs in action, environmental, human rights, and governance issues are still pervasive in global supply chains. There is an opportunity to do more to drive better performance among suppliers, not only at the first tier, but also at tiers deeper in the supply chain.

Why Now?

Sustainable supply chain finance is defined as supply chain finance practices and techniques that support trade transactions, in a manner that minimizes negative impacts and creates environmental, social, and economic benefits for all stakeholders involved in bringing products and services to markets.

There are five main reasons why sustainable supply chain finance is a strong opportunity today:

1. Supply chain finance is a fast-growing market, with about 20 percent expansion annually.
2. Supply chain finance is becoming digital; moving away from a traditionally paper-based process offers potential for innovation.
3. Companies need working capital, and cash optimization is a tangible incentive for both buyers and suppliers.
4. While supplier sustainability performance data is still not perfect, it is getting more and more quantifiable and readily available.
5. Financial service providers offer solutions that can integrate sustainability data.

The Opportunity

Most companies are not yet putting in place sustainable supply chain finance programs, and banks are not yet readily offering these services. However, buying companies, supplying companies, and financial services can explore and maximize this opportunity in different ways.

Blog | Monday June 11, 2018

A New Tool to Assess the Impact of Your Healthy Business Journey

Preview

What do flu vaccination rates, greenhouse gas emissions, and crime and homicide statistics have in common? These are but a few examples of the metrics that companies are monitoring to assess the health of their employees, their customers, and the communities where they live.

The Healthy Business Coalition is a collaborative initiative among BSR, the Robert Wood Johnson Foundation, and leading companies that are dedicated to realizing the promise of the private sector’s ability to improve population health. The Coalition was founded on the principle that health is not just for healthcare companies; all companies, regardless of industry, have the potential to become healthy businesses. Today, we are excited to announce that we have created a new addition to our suite of tools to help companies transform their organizations into healthy businesses: the Healthy Business Metrics Guide.

For us, a “healthy business” is one with a management approach that seeks to create value and optimize performance by improving the health of consumers, employees, and communities. Our current set of tools helps companies chart the path for their healthy business journeys. Specifically, these tools help business leaders:

• Make the business case for establishing healthy business programs and initiatives;
• Prioritize the health issues that their companies should address;
• Design innovative solutions, including products and services, that support health outcomes; and
• Engage internal and external stakeholders who may be able to positively influence and enhance the success of their companies’ healthy business missions.

In the immortal words of Peter Drucker, “What gets measured gets managed.” Our new addition to the Healthy Business Toolkit is designed to help companies measure the impact of their healthy business programs. Our Healthy Business Metrics Guide can be leveraged by business leaders to pick and choose relevant outcome and impact metrics (and associated key performance indicators) that will help them assess how effectively their company is executing on its healthy business strategy.

When it comes to healthy business programs, trying to measure both business-related and public-health-related outcomes can be a challenge. We sought to harmonize prominent public health measurement frameworks, sustainability reporting frameworks, and other corporate reporting frameworks.

After reviewing 14 frameworks and more than 850 metrics and engaging several business and public health experts, we have developed a user-friendly measurement framework that seeks to help corporate practitioners monitor not only the direct health impacts of healthy business initiatives, but also the upstream social determinants of health that have indirect impacts on employees, customers, and communities. The framework takes a broad and holistic approach to health, while also attempting to focus on a core set of metrics that are relevant to the widest swath of industries and geographies in the U.S.

This is only the beginning. As a coalition of business leaders, we understand the power of iterative innovation and collaboration. We invite you to join us on the next BSR Sustainability Matters webinar on June 13, where we will present the Guide and facilitate a discussion on how it can be used and implemented within a company.

We would also love for you to join us in the Healthy Business Coalition, where we grapple with these issues as a group of practitioners and internal champions who endeavor to make our companies healthier and more sustainable. Thanks to the generosity of the Robert Wood Johnson Foundation, membership to the Coalition is free of charge, as is access to the downloadable toolkit.

Once you download the tool, please reach out to us to tell us about your experience and share your thoughts about how it can be enhanced. It is our sincere hope that this expanded toolkit will be your map, compass, and pedometer on your way to achieving your healthy business vision.

We are excited to hear from you and join you on your healthy business journey.