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Sustainability FAQs | Tuesday April 18, 2023

Governance and Oversight of Just and Sustainable Business

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This FAQ sets out BSR’s perspective on the governance and oversight of just and sustainable business at companies. We believe that engaged boards, empowered executive leadership, and clear roles and responsibilities throughout companies are essential for the creation of long-term value for investors and society.

Defining Governance and Oversight

Why is governance and oversight important?

A clear system of governance and oversight ensures that strategies relating to just and sustainable business will be created, implemented, and actioned. 

What is the difference between governance and management?

Governance is the system by which business operations are directed and controlled. The governance structure of a company specifies the distribution responsibilities among different participants, such as the board, managers, and shareholders, and spells out the rules and procedures for making corporate decisions.

Management is the deployment of resources to achieve business goals. The management of a company includes running the day-to-day operations of a company, coordinating the efforts of staff to achieve strategic objectives, and ensuring that the company’s resources are used effectively and efficiently.

Governance is about direction, accountability, and oversight, whereas management is about execution, implementation, and operations. It is important to distinguish between these two different concepts when defining how to advance sustainability and social justice goals with companies by not (for example) assigning “management” expectations to boards.

Who leads governance and management, and who are they accountable to?

The company board is accountable to the company’s shareholders. The company’s board chair leads the board in keeping with the organization’s vision, mission, and strategic planning goals. Duties of boards include choosing the CEO, reviewing / approving company strategy, approving major policies, making major decisions, and overseeing performance.

The company management is accountable to the company’s board. The CEO leads the company in keeping with the board’s direction. The duties of management include making operational decisions, making operational policies, keeping the board educated and informed, creating the company strategy for Board review / approval, implementing the strategy, and bringing well-documented recommendations and information to the board.

What are the key elements of governance and oversight for just and sustainable business?

Governance and oversight for just and sustainable business is the formal integration of social and environmental goals into a company’s corporate governance and operating mode and ensures that material social and environmental issues are effectively managed at all levels of the company. Governance and oversight can be complex because social and environmental issues cut across many different components of a business.

BSR believes that a governance and oversight system should include the following five elements: (1) board level oversight, accountability, and sign-off; (2) executive leadership; (3) a core sustainability team (or similar); (4) clear roles and responsibilities for employees integral to the success of just and sustainable business; and (5) a system for understanding external perspectives via meaningful stakeholder engagement.

Structures for Governance

How should a company board engage on the topic of just and sustainable business?

Best practices include incorporating just and sustainable business into the board mandate, designating a board committee (or committees) for relevant social and environmental issues, training board members on material social and environmental topics, and hiring experts to the Board.

BSR believes there are four critical areas for boards to address:

• Stucture: Formalizing the board’s mandate for just and sustainable business via inclusion in relevant board committee charters and / or creating a new board committee to oversee just and sustainable business.
• Competencies: Recruiting board members with the right knowledge, competencies, and expertise in relevant topics, and with diverse backgrounds.
• Strategy: Developing a strategy with clear consideration for how material topics, emerging issues, and stakeholder impacts shape business success over the short, medium, and long-term.
• Oversight: Establishing goals, incentives, and accountability for management. Meaningful disclosure (e.g., formal approval of annual disclosures on social and environmental topics) is a key aspect of achieving oversight.

How are regulations changing board oversight of just and sustainable business?

Regulations and other emerging global standards are substantially increasing expectations and requirements for board oversight of just and sustainable business. The main implications include: (1) board oversight (e.g., of specific topics); (2) responsibilities outlined in board mandates; (3) board expertise and knowledge; (4) how risks and opportunities are considered in strategy; (5) incentive and remuneration considerations; (6) the board’s role setting up and overseeing due diligence processes; and (7) signing off sustainability reports and disclosures.

For example, the proposed EU Corporate Sustainability Due Diligence Directive (CSDDD) is expected to establish a “duty to act” on the consequence of their board decisions relating to sustainability, climate change, and human rights impacts, while the EU Corporate Sustainability Reporting Directive (CSRD) will require boards to be a part of the company’s due diligence process and sign off sustainability information within a company’s management report. Further, the International Sustainability Standards Board (ISSB) will require climate disclosure and an explanation of board governance and oversight.

These regulations and standards redefine the role of the board implicitly (by creating new corporate standards) and explicitly (by specifically obliging boards to oversee sustainability and human rights at their companies).

What are the best practices for establishing and maintaining board competency on just and sustainable business?

There is increasing awareness of the need to fill the gap in expertise and skills at board and management levels on social and environmental topics, such as climate change, human rights due diligence, and social justice. Best practices include training board members on material topics and emerging trends through formal means (such as executive education) or informal means (such as regular briefings and inviting the participation of external speakers).

It is important to ensure diversity of skills and experience at board level, including consideration of diversity or race / ethnicity, gender, and age. Ideally at least one board member has expertise on material social and environmental topics.

Should there be a separate board committee dedicated to just and sustainable business, or should matters of just and sustainable business be integrated into other board committees?

Assigning social and environmental issues to a board committee (or committees) allows for key issues to be considered systematically and in greater depth. However, there is no “one size fits all” approach to how this is achieved—every company board is uniquely structured, and different issues may be suited to different committees.

For example: an audit committee may oversee human rights due diligence overall or specific topics (such as privacy); a compensation committee may oversee diversity, equity, and inclusion; a nominating and governance committee may ensure that appropriate sustainability skills and experience are present on the board; a public policy committee may consider matters relating to government relations or social impact; a dedicated sustainability or corporate responsibility committee may oversee a company’s materiality assessment process and ensure that social and environmental risks are being appropriately identified, tracked, and addressed.

As a matter of principle, the entire board should have the opportunity to engage with matters of just and sustainable business that impact company strategy and have the right level of understanding required for informed decision making. The audit committee can play an important role in assigning issues to board committees and clarifying when the responsibility extends to the full board.

Structures for Management

What are best practices for executive oversight and leadership?

The “tone from the top” and good executive leadership helps build a culture of just and sustainable business throughout a company; if just and sustainable business is on the leadership agenda, it will be prioritized.

Clear roles and responsibilities provide clarity, alignment, and expectations to those executing the work on just and sustainable business, and enable effective communication between different functions, business units, and teams.

Rewarding performance and creating consequences for non-performance on a set of clearly defined goals helps ensure that just and sustainable business is placed on the same level as other aspects of business. For example, social and environmental performance can be linked to executive compensation and employee bonuses more broadly via key performance indicators linked to issues such as health and safety, CO2 emissions, or diversity.

How should just and sustainable business be organized inside companies?

The most effective organizational structure for just and sustainable business will be different across companies and industries, though most can be categorized as “centralized”, “embedded”, or “distributed” structures:

• Centralized: A larger team (e.g., 15+ staff) acts as the center of expertise and implementation at the company. This team will implement key aspects of just and sustainable business, such as strategy, reporting, and stakeholder engagement, while relying on other functions to implement the strategy and improve performance. Centralized structures are often associated with joined up approaches to just and sustainable business, such as leadership for climate change, human rights, and labor issues being jointly assigned to a single chief sustainability officer.
• Embedded: A smaller team (e.g., 5 or fewer staff) implements core elements of just and sustainable business (such as reporting and disclosure) but relies more on other functions to lead strategy development and implementation.
• Disitributed: A variety of different teams (e.g., sustainability, human rights, civil rights, DEI, product responsibility) lead different elements of just and sustainable business, often in different functions of the company. In this model there are often multiple rather than single executive leads—for example, there may be a chief sustainability officer for climate change, a VP for human rights, and a VP for supplier responsibility all leading different programs.

BSR believes that a dedicated “head” of just and sustainable business can be a best practice for some companies but not others; more important is the existence of a joined-up and cohesive approach that is accountable to the company board. We note that terms such as “sustainability”, “ESG”, and “social impact” have taken on different meanings in different industries and can be associated with very different team and individual mandates.

Which department or function should just and sustainable business be part of?

The most effective function for just and sustainable business will vary across companies and industries. BSR has seen both successful and unsuccessful teams located in departments as diverse as strategy, commununications, risk, government affairs, legal, product, and procurement; for this reason, we have concluded that department or function on its own this is not an important variable determining success. Far more important is that the team (or teams) reside in a part of the company where they can make, shape, and influence the decisions, actions, and implementation priorities most relevant for the company’s material social and environmental issues and have a direct line to CEO / executive leadership decision making.

Should there be a chief sustainability officer, and what should their brief be?

For many companies a chief sustainability officer can be a very effective role, provided the chief sustainability officer is resourced, empowered, and supported effectively. The precise role will vary depending on the company’s material issues—for example, it may focus on value creation where the company is in the business of providing sustainability solitions, or it may focus on risk mitigation where the company is faced with material risks; in both cases, being a change agent and coalition builder are common themes. For some companies a chief sustainability officer may be focussed on a constrained set of issues (e.g., climate change and nature), while in other companies a chief sustainability officer may have a broader brief that also encompasses human rights, labor issues, and ethics. There may be other leaders inside companies (e.g., a VP human rights) with chief sustainability officer-like roles. In all cases, direct access to the CEO and Board is essential.

How should other functions and teams be engaged?

A core sustainability team (even a large one) cannot fulfill a company’s just and sustainable business strategy alone, and a broader group of employees should take on roles and responsibilities to help implement the strategy, achieve goals, and improve performance. This is particularly true for companies with “embedded” and “distributed” approaches.

Many companies create cross functional working groups (or similar, such as councils and networks) to provide a platform for validating programs and initiatives, implement and support strategic initiatives, and engage a broader base of employees. These cross functional working groups can be composed of multiple functions, operations, and geographies, and it is important to establish clear meeting frequencies, agendas, and communications channels.

These cross functional working groups can be formal (e.g., defined membership, formal charter, regular meeting cadence) or informal (e.g., shifting membersip, flexible charter, and meeting “as needed”), with different approaches suiting different company cultures. In all cases an effective support staff or “secretariat” is needed for success.

How should external stakeholders be engaged?

Effective approaches to just and sustainable business require a deliberate, strategic, and structured approach to securing the insights, perspectives, and involvement of affected stakeholders (such as customers, civil society organizations, and local communities) and other experts (such as academics) and to embedding them into company decision making. This is the subject of a different BSR FAQ on meaningful stakeholder engagement.

Should companies establish external stakeholder advisory councils?

An external advisory council can help bring diverse thinking, improved rigor, and greater determination into programming and strategy. When doing so it is important to develop clear terms of reference, including: 

• Objective: Determine the objective of the group (e.g., review policies; input into strategy; provide emerging issue knowledge; guide industry best practice etc.).
• Composition: Determine the makeup of the group, roles and responsibilities, and term limits.
• Meeting frequency and agenda: Set clear meeting frequency, agendas for each meeting, and communication channels.
• Transparency: Establish clarity on whether / where the external advisory council is publicly known and / or whether the external advisory council can issue its own communications.

Reports | Wednesday January 17, 2024

Co-creating Climate Justice Interventions between Business and Communities

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While businesses are starting to consider the ways in which climate change and climate solutions disproportionately affect people and communities, there are few examples of how the private sector is working with affected stakeholders and little guidance on how to co-create climate justice interventions with affected communities. Co-creation, in the context of climate justice, centers affected communities in identifying challenges and developing solutions to address systemic injustices and advance equitable social, environmental, and climate outcomes.  

The issue brief shows business practitioners how to implement climate justice interventions by using a process of co-creation with affected stakeholders. By incorporating a co-creation process in business activities related to climate action, businesses can enable more effective and efficient climate solutions that holistically address interconnected, systemic issues. ​​This issue brief builds a foundational understanding of co-creation with communities in the context of climate justice, specifically what it is, why it is important, and how companies can integrate co-creation into their approach to address climate change. Insights and discussions fostered during BSR-facilitated workshops and collaborative initiatives informed this report. BSR acknowledges 7-Eleven International for their generous support to create this issue brief.

Blog | Wednesday September 11, 2024

The Impact of Mandatory Sustainability Reporting on Corporate Functions

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As businesses worldwide adapt to new sustainability reporting requirements, the landscape of corporate governance is shifting. The introduction of the EU Corporate Sustainability Reporting Directive (CSRD), European Sustainability Reporting Standards (ESRS), the International Financial Reporting Standards (IFRS) Foundation’s inaugural Sustainability Disclosure Standards, and the US Securities and Exchange Commission (SEC) climate disclosure rule represents a significant evolution in how companies are expected to report on their sustainability efforts. 

This BSR policy brief explores the implications of these regulatory changes on various corporate functions. By synthesizing insights from companies from a range of sectors navigating this new terrain, the brief provides a comprehensive overview of how these requirements affect different functions and offers actionable recommendations for adaptation. 

Below is a high-level glimpse into the impact on key corporate functions, with many more insights detailed in the full brief: 

• Sustainability: Sustainability teams need to establish cross-functional committees and work closely with other departments to advise executive leadership and integrate financial and sustainability reporting. 
• C-suite: Senior executives must build accountability for sustainability by aligning executive compensation with sustainability metrics, upskilling themselves on material sustainability issues, and staying informed on ongoing efforts. 
• Board of Directors: Boards of Directors are required to sign-off on materiality and reporting, which requires enhanced oversight, updated governance structures, and expanded knowledge of sustainability topics.
• Finance: Finance departments must hold sustainability data to the same level of rigor as financial data, align reporting timelines and ensure data accuracy. 
• Audit: Audit functions need to establish robust controls for sustainability data collection and verification, ensuring consistency and reliability. 
• Risk: Risk management teams must incorporate ESG risks into their frameworks, in order to provide a comprehensive view that includes emerging sustainability issues. 
• Legal/Compliance: Legal teams must stay abreast of new obligations, assess the scope of reporting requirements, and ensure compliance with various regulations. 
• Procurement/Supply Chain: Procurement must assess and disclose impacts across the value chain, requiring increased transparency from vendors and improved supply chain due diligence. 
• Human Resources/Diversity, Equity, and Inclusion: These teams must align regional and global reporting requirements, especially concerning employee data and diversity metrics. 
• Marketing/Communications: Marketing and communications need to align sustainability narratives with those of regulated filings, ensuring consistency across all public communications and reports. 
• IT/Cyber: IT departments must support both finance and sustainability teams, as well as other functions, by improving systems to collect data and disclosures.

How to use the brief:

• Use the recommendations provided as a starting point for navigating the complex landscape of mandatory sustainability reporting. Consider the extent to which the current state that we outline for each function applies to you and your company. 
• Get familiar with the concept of cross-functional collaboration to address new reporting requirements. The brief is organized by function to ensure that each department has visibility into a critical role it plays in achieving compliance and advancing the company’s sustainability goals. However, we also advise looking across the sections to understand where and how joint efforts can ensure efficiency while reinforcing each other. 
• Share these insights with colleagues across different functions and engage in discussions to explore how you can support one another in preparing for the upcoming reporting requirements. 
• Use it to help us help you! If you have follow-up questions or require tailored support in a particular area, BSR has developed a range of service offerings that support companies on their sustainability and compliance journeys. 

Companies interested in discussing the topic further are welcome and encouraged to join the Future of Reporting initiative, which has been closely tracking regulatory developments.

Blog | Thursday September 17, 2020

Ensuring Circular Fashion is Good for People—as well as the Environment

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The COVID-19 pandemic has thrown the fashion industry into disarray, leaving supply chain workers without wages and causing major global brands to file for bankruptcy. In the U.S. alone, 2.1 million retail workers lost their jobs due to the crisis. In Bangladesh, the garment sector is expected to lose over a million jobs by December 2020, with over 70,000 workers already laid off. While many of the underlying issues are not new to the industry, the unprecedented situation has made us acutely aware of the fragilities of our current economic system and of just how vulnerable people —especially workers and their communities—are to significant business disruption.

As our society looks to build back better by emerging from the crisis with a more resilient and sustainable system, many industries are planning to integrate circularity into their recovery plans. Indeed, even before the COVID-19 outbreak, circular economic models had been sprouting up at increasing speed in the fashion industry, both to counter its enormous environmental impact and to respond to economic opportunities. The textile industry alone produces 1.2 billion tons of CO₂ per year and accounts for around 20 percent of global industrial water pollution. Companies, brands, and designers are increasingly looking to circular fashion models, including resale, rental, and repair, to mitigate these impacts. A strong signal of the circular fashion opportunity: resale grew 25 times faster than the overall retail apparel market in 2019.

This current period of complex disruption presents a unique opportunity to leverage the shift to circularity to address some of the global fashion industry’s persistent and pervasive environmental and social issues.

While the potential positive environmental impact of a shift to circularity is enormous, few organizations are considering the social implications for the more than 60 million people in its value chain. Given the sheer size of the industry and the many ways people intersect throughout production and consumption, social implications, whether positive or negative, are unavoidable. Women, who comprise between 60 to 90 percent of total apparel workers, of whom an estimated 80 percent are women of color, will likely take the brunt of the impact due to their precarious working conditions and existing gender-based discrimination.

BSR’s new brief, Taking a People-Centered Approach to a Circular Fashion Economy, explores the potential social impacts that may emerge from a mainstream shift to circular fashion.

Informed by BSR’s research and stakeholder engagement supported by Laudes Foundation, an independent foundation tackling the dual crises of climate change and inequality, the brief proposes opportunities for businesses, policymakers, and advisors to design circular fashion business models to be inclusive and fair from the outset. In addition, we provide a set of guiding questions for companies and organizations to practically think through the social impacts of their shifts to circular fashion models, aiming to avoid and mitigate negative social impacts and more consciously target positive social impacts.

“The vision of ‘circular economy’ presents an economy that is compatible with nature, but we cannot take for granted that it will be inclusive,” says Megan McGill, Senior Programme Manager at Laudes Foundation. “BSR’s work is enabling us to ensure that in our pursuit for a regenerative and restorative economy, we are actively managing and promoting the rights and equity of people touched by the fashion sector.”

By taking a people-centered approach, we can build a more resilient industry and respond to the calls from stakeholders.

This current period of complex disruption presents a unique opportunity to leverage the shift to circularity to address some of the global fashion industry’s persistent and pervasive environmental and social issues. By taking a people-centered approach, we can build a more resilient industry and respond to the calls from stakeholders—through safer inputs that increase the health and safety of workers and production communities, enabling creative and dignified employment, and building inclusive models adapted to the needs of a diverse consumer base.

Supported by Laudes Foundation, BSR is continuing to explore the impacts of the shift to circular fashion on job opportunities and quality—a topic largely ignored in the circular transition to date and which we begin to delve into in this brief. Our current work aims to explore and develop responses to these impacts in collaboration with fashion companies and broader industry stakeholders. In addition, we will leverage strategic foresight in developing and testing practical recommendations with special focus on the U.S., Europe, and India.

This brief was developed by Cliodhnagh Conlon and Annelise Thim, with input from Laura Macias and Magali Barraja and with the support of Laudes Foundation. As we delve deeper into this topic, we are keen to hear feedback and learn from others who are working to ensure that the circular fashion transition delivers benefits for people.  If you are currently working on circular fashion or would like to learn more about our work, please reach out to connect with the team.

Reports | Thursday September 17, 2020

Taking a People-Centered Approach to a Circular Fashion Economy

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The fashion industry has long been called out for its major negative environmental and social impacts. In 2020, the COVID-19 pandemic underscored the instability of global fashion supply chains and the vulnerability of its supply chains workers, adding urgency to the calls for a more sustainable and ethical fashion industry. Even before the pandemic, many fashion companies were looking to circular economy models to reduce risks of business disruption and mitigate negative environmental impacts. However, few circular economy models have considered the potential impacts—both positive and negative—on the 60+ million workers in fashion supply chains or the billions of consumers worldwide.

In partnership with Laudes Foundation, BSR has developed a brief on the potential social impacts of a shift to circular fashion based on BSR’s research and stakeholder engagement. We introduce issues that may arise during the shift to a circular fashion for consumers and workers as well as wider societal concerns. In the brief, we explore the likely differentiated impacts of a transition circular fashion models—first, in the dynamics between production and consumption communities and second, for women and marginalized groups.

The complex disruption by the COVID-19 pandemic presents a unique opportunity to leverage the shift to circularity and address many of the global fashion industry’s persistent and pervasive environmental and social issues. Seizing this opportunity requires us to first understand the impacts of innovation by identifying what those impacts are and who will be impacted. To that end, we propose a set of guiding questions for companies and organizations to think through the social impacts of their shifts to circular economy models on diverse groups and how projects might influence such impacts. We also provide several actions for companies and organizations to inform the design and implementation of circular business models, aiming to avoid and mitigate negative social impacts and more consciously target positive social impacts.

This brief represents an initial exploration of this topic. However, we are keen to receive feedback and learn from others who are working to ensure a shift to circular fashion that delivers benefits across production and consumption communities, aims to redress existing inequalities in the fashion industry, and contributes to a just transition for all to a low-carbon economy. For questions, comments, or to learn more, please reach out to our team at connect@bsr.org.

Reports | Thursday July 15, 2021

Human Rights Due Diligence of Products and Services

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Overview

Human rights due diligence (HRDD) of products and services—also known as “downstream HRDD” or “end use HRDD”—has been a requirement of the UN Guiding Principles on Business and Human Rights (UNGPs) since their endorsement by the UN Human Rights Council in 2011. However, its relevance has skyrocketed in the past few years due to the rise of technology products like social media and artificial intelligence.

As the field of supply chain due diligence has matured, the downstream value chain is increasingly becoming a focal point for more traditional sectors like pharmaceuticals and heavy industry. Now more than ever, we can see and feel the human rights impacts of business products and services, which in turn has elevated the need for businesses to take a serious look at how their products and services are designed and developed, who they are sold to, how they are used, and how they may be misused.

What Is Downstream Human Rights Due Diligence?

Downstream human rights due diligence is the assessment and prioritization of human rights impacts that occur as a result of company actions or omissions during the design, development, promotion, deployment, sale, licensing, or use of products or services. It differs from other types of business human rights due diligence because it focuses entirely on the downstream value chain, rather than the upstream supply chain or direct business operations.

Blog | Tuesday June 22, 2021

UNGPs' 10th Anniversary: The Next Decade of Business and Human Rights

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This June 2021, we mark the 10th anniversary of the UN Guiding Principles for Business and Human Rights (UNGPs). Unanimously endorsed by the UN Human Rights Commission in 2011, the UNGPs have become the universal standard guiding business responsibility to respect human rights.

At BSR, we have seen tremendous progress over the past decade as we have worked with businesses to align their policies and practices with the UNGPs. The broad consensus around the UNGPs has given companies across sectors—and their partners in government and civil society—a shared roadmap for respecting human rights and has driven the development of corporate commitments, policies, and procedures to better prevent and mitigate harm due to business activity.

Our work is far from over, however.

Corporate commitment and process has not always translated into impact in real life, and we continue to see headlines associating companies with human rights abuses through their operations, sourcing, and sales.

Why is this? In part, this is due to the gap between commitment and implementation—the ongoing need to better resource and more meaningfully embed efforts to avoid, prevent, mitigate, and remedy human rights violations across corporate functions.

But this is also due to the scale and complexity of the great challenges of our time—climate change, rising inequality, persistent marginalization of women and people of color, and growing geopolitical tensions, to name just a few. These challenges exacerbate the risk that business activity will be involved with harm.

How can we close the gap between aspiration and impact? Throughout 2021, to mark the 10th anniversary of the UNGPs, BSR is reflecting on what additional action business and other actors can take to shape a future where human rights are realized in law and in practice. In the coming months, we will publish deep dives into emerging issues and evolving approaches that will shape the next decade of business and human rights, including:

1. The Shared Opportunity to Promote Human Rights: Based on the premise that the absence of action to promote human rights presents severe risks to their fulfillment, our first paper draws upon BSR experience over the past decade to propose a framework for the shared promotion of human rights.
2. Downstream Human Rights Due Diligence: This primer provides a practical overview of human rights due diligence of products and services.
3. Climate Change and Human Rights: This paper explores the anticipated linkages between climate change and adverse human rights impacts, as well as mitigating measures that companies can take to prevent harm.
4. Business in High-Risk Contexts: Building on the UN report on business, human rights, and conflict, this issue brief lays out practical steps companies can take to conduct enhanced human rights due diligence in conflict-affected and high-risk areas.
5. Access to Remedy: Delving into the oft-neglected third pillar of the UNGPs, this issue brief explores challenges as well as best practices in providing remedy for human rights harms.
6. Human Rights Assessment: Drawing on over 25 years of experience, this paper lays out BSR’s synthesized learning and refreshed approach to conducting decision-useful human rights assessments for companies.

In a world facing increased climate impacts, rapidly changing technologies, and shifting geopolitics, resilient business strategies are critical to business success. By embedding human rights approaches across business, sales, and supply chain operations, companies can not only build resilience but help to create a more just, sustainable world. Join us as we explore what this means for business in this decisive decade.

Blog | Thursday July 14, 2022

Delaying Climate Action: The Challenges of Moderating Climate Misinformation on Social Media

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Misinformation about climate change has been around for decades, mostly in the form of climate denialism. Today, climate misinformation is focused on seeding doubt about climate science and the measures that are taken to mitigate climate change. Examples include: suggesting that the consequences of global warming may not be as bad as scientists claim, arguing that climate change policies are bad for the economy or national security, describing clean energy as unreliable, or claiming that no action will be able to halt climate change.

These varying manifestations of climate misinformation all have the same outcome: delaying climate action.

Earlier this year, the IPCC drew attention to the impacts of climate misinformation for the first time:

Vested interests have generated rhetoric and misinformation that undermines climate science and disregards risk and urgency. Resultant public misperception of climate risks and polarized public support for climate action is delaying urgent adaptation planning and implementation.

Social media brings both opportunities and risks to the climate science dialogue. Scientific information related to climate change is accessible to larger populations through social media platforms—including real-life experiences of affected populations. On the other hand, social media can significantly undermine climate science by allowing for the rapid and widespread sharing of misinformation through user-generated content and online advertising. Social media platforms are also just one part of the information ecosystem, which also includes news media and professionally created entertainment.

At a point when delays in climate action may lead to catastrophic and irreversible harm, companies must address climate misinformation urgently and decisively. 

In 2021, Ford Foundation, the Ariadne Network, and Mozilla Foundation commissioned a research project to explore grantmaking strategies that can address issues at the intersection of environmental justice and digital rights. As part of this project, BSR wrote an issue brief on the role of social media companies in creating, shaping, and maintaining a high-quality climate science information environment.

The brief explores the specific challenges of moderating climate misinformation. We describe some of these challenges below:

• Climate Misinformation Is Happening in “Subtler” Ways and Is Increasingly Intersectional.
  While outright climate denialism is easy to refute, it is more difficult to identify subtle ways of spreading climate misinformation—such as claims that green policies are too costly. The response to climate change is a topic of political debate, making climate misinformation closely tied to politics, elections, and the larger civic space. These intersectional ties help grow the reach of misinformation and take it to different levels that can be difficult to anticipate.

• Existing Content Moderation Frameworks Are Not Sufficient in Addressing Climate Misinformation.
  Most of the content moderation principles and frameworks used by social media platforms today were written to address immediate harms related to hate speech, incitement to violence, and other objectionable content, and they are not as applicable for scientific misinformation that may be associated with broader, longer-term harms.

• Content Removals May Not Be Adequately Effective in Fighting Scientific Misinformation.
  While the removal of content is effective in fighting harmful content such as hate speech, scientific misinformation may require different approaches. Platforms should not only rely on content removal but also focus on tactics to reduce the visibility of misinformation and display high-quality information to inform users.

• Climate Misinformation Is Political and Is Backed by Institutions.
  Since the 1980s, climate disinformation campaigns have been largely driven by the fossil fuel industry’s intentional efforts to undermine climate science. Today, climate misinformation can still typically be traced to fossil fuel interests. In addressing climate misinformation, it is important to consider the material incentives of the producers of such content.

In our brief, we make recommendations to social media companies, as well as civil society actors, and funders. These include the addition of climate misinformation under content policies, applying content moderation frameworks to climate misinformation, strengthening fact-checking capabilities, investing in user resiliency, and increasing scrutiny on advertising by oil and gas companies. We envision a high-quality climate science information environment that supports informed public debate, ambitious business action, and science-based policy making.

Social media companies have made significant commitments to reduce the climate impacts of their businesses (i.e., reducing GHG emissions), but they also have a responsibility to address the potential harms that they may be connected to through climate misinformation on their platforms. 

Civil society groups and funders have an essential role to play in holding companies accountable for their actions or omissions to address climate misinformation and keep this topic on the agenda. Among these actors, it is our observation that environmental groups are less familiar about the practical challenges, complexities, and nuance of misinformation, and the content governance community is less familiar with how climate information can adversely impact our collective efforts to address the climate crisis. These communities would benefit from increased collaboration and knowledge sharing.

Fostering a deeper understanding of this topic across sectors will not only help remove one of the biggest barriers in the way of climate action, but it will also broaden our understanding of scientific information, and how human rights may be impacted online. 

BSR will continue to work with social media companies, civil society groups, and funders on this topic. Please reach out if you’re interested in connecting with us.

Blog | Thursday April 13, 2023

Why Every Business Needs to Think about Responsible AI

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AI technologies are transforming the way we engage with the world and the way companies conduct business. From generative AI technologies like ChatGPT, to facial recognition, to AI solutions for hiring, distribution, or research and development, evolutions in AI are transforming business operations at a startling pace.

This transformation presents complex, system-wide human rights opportunities and risks.

Tech companies are taking steps to integrate responsible AI practices to address these issues for some time. However, the risks and opportunities associated with AI are related to both the design and development of technologies, as well as how technologies are deployed and used by companies outside of the tech sector.

It’s time for all companies utilizing AI in their products, services, and operations to take a human rights-based approach to the deployment and use of AI.

BSR has worked with member companies to explore the potential human rights impacts of AI in four key industries: retail, extractives, financial services, and healthcare. We focused on identifying the current use cases of AI in these industries, assessing the potential human rights impacts, and recommended initial steps to address adverse impacts.

The findings are summarized in four industry briefs that we hope will serve as a starting place for companies.

The Use of AI in Different Industries

Retail, extractives, healthcare, and financial services companies are deploying and using AI systems in ways that may be connected to significant human rights risks. A few examples of AI use cases include:

• Retail: Personalization of customer experience, improved product search, in-store assistance, demand forecasting, and inventory management in the retail sector.
• Financial Services: Facial and voice recognition for account access, fraud detection, and credit risk assessment in the financial services sector.
• Healthcare: Patient care personalization, care delivery, and research and development in the healthcare sector.
• Extractives: Data collection and analysis, exploration, workplace management, and advanced monitoring in the extractives sector.

The use of AI technologies can alleviate or exacerbate human rights impacts, including but not limited to:

• Violations of the right to privacy through the collection, storage, and use of customer personal data;
• Discrimination by race, gender, age, disability, or other protected categories. This can manifest due to biases present in training data or using AI-generated insights in discriminatory ways.
• A positive impact on labor rights, via improved labor planning and better health and safety measures. However, the use of AI technologies may also result in loss of employee autonomy or privacy.

Regulatory Landscape

To date, there’s been limited focus on the responsibility of non-tech companies to address human rights impacts of their AI technologies. However, this is changing, in part due to upcoming regulations such as the EU Artificial Intelligence Act, which sets out a risk-based approach to assessing the potential risks AI solutions may pose to people’s rights, and the Corporate Sustainability Due Diligence Directive, which will require companies to take appropriate measures to identify the actual and potential human rights impacts arising from their operations.

To help companies outside the tech sector respond to upcoming regulations and act in accordance with their responsibilities under the UN Guiding Principles on Business and Human Rights, BSR is working with members across different industries to help them identify their human rights impacts related to AI.

BSR’s Industry Briefs on AI and Human Rights

Over the next few months, we will publish briefs for specific industries setting out potential human rights impacts of AI solutions and recommendations to mitigate them. These briefs are intended to help companies bring a human rights-based approach to the way they design, develop, and deploy AI technologies.  

• AI and Human Rights in Retail
• AI and Human Rights in Extractives
• AI and Human Rights in Financial Services
• AI and Human Rights in Healthcare

For further information, including how BSR can support you with the responsible deployment of AI technologies, please contact the team.

Blog | Thursday October 12, 2017

Q&A: The Future of Inclusive Economy

Preview

As part of our Q&A series with our experts on the past, present, and future of sustainable business, we sat down with Inclusive Economy lead Susan Winterberg to discuss innovations, opportunities, and challenges in the field.

Elisabeth Best: What has been the single most important innovation in inclusive economy in the last 25 years? 

Susan Winterberg: The greatest advances in the inclusive economy field have been in the area of diversity and inclusion. Looking back just 50 years, it is astounding to see how much attitudes have changed regarding women and minorities in the workplace. Similarly, business leaders have been increasingly using their voices to stand up for diversity, which became evident when the U.S. business community came out in full force earlier this year: More than 100 companies signed an amicus brief on the U.S. Executive Order on Immigration.

It continues with new business commitments to advance the rights of women, refugees, the LGBTIQ+ community, and others announced almost every week. Nonetheless, much work still needs to be done on diversity. In particular, we will need to innovate and build a better evidence base on what works to retain and promote more women and minorities in key industries and occupations, close pay gaps, and increase representation in C-suites and boards.

Best: What does sustainable business, specifically as it relates to inclusive economy, look like in 2030? 

Winterberg: The 2020s will see major disruptions in social order, to governments, and perhaps even to capitalism itself. We’ve already seen the beginnings of this: first with Occupy Wall Street and Fight for $15, and more recently with the outcomes of the Brexit vote, the U.S. election, and a surge of interest in nationalist movements around the world. There are three major issues that business leaders will have to grapple with in the coming decade if we are going to have an inclusive, safe, and sustainable world in 2030: good jobs, taxes, and lobbying.   

A strong and secure middle class; a healthy government with fiscal capacity to fund education, infrastructure, and safety nets; and functioning democratic institutions are requirements for a peaceful and prosperous society. Many of the companies I have spoken to about the need to address these issues—particularly as they relate to their operations in the U.S. and other advanced economies—seem to see them as outside the purview of the sustainability department. However, these issues will become more critical—and sustainability professionals will be increasingly asked to address them—in the coming years.

Best: What’s the biggest challenge or opportunity you see looking forward?

Winterberg: Automation will be by far the biggest opportunity and challenge to an inclusive economy in the next decade. Technologies like artificial intelligence, big data, sensors, and autonomous vehicles will bring so many benefits to society—from enhanced health and safety to consumer convenience. Yet these technologies will also pose some hard questions on issues of privacy and discrimination. They will displace large numbers of people who will need to be retrained, and they will likely result in pockets of high unemployment in those communities most strongly affected by these changes. Companies need to begin preparing now to ensure a sustainable transition toward automation.

Best: What are leading companies doing today to make a sustainable future a reality? 

Winterberg: Companies are taking action on promoting a more inclusive economy through three main mechanisms: creating good jobs, expanding access to products, and engaging with society.  

Leading companies are thinking about good jobs by treating contingent workers more fairly, investing in training and career paths, creating predictable scheduling, increasing benefits coverage, and developing profit-sharing programs. They are also starting to develop ways to expand their diversity and inclusion efforts to include more groups who face challenges in employment. We have seen pioneering efforts to promote other types of diversity, like neurodiversity, and to create enhanced opportunities through their global supply chains through impact sourcing. Companies have also been increasingly vocal on key public policy issues affecting inclusion, from immigration to health care access.

Best: What aspect of this year’s BSR Conference are you most excited about?  

Winterberg: BSR is launching a new Sustainable Futures Lab—and we have a great line-up of sessions this year looking at sustainability challenges that will arise from new technologies: The 21st Century Social Contract, Ethics of Artificial Intelligence, Inclusive by Design, Human Rights by Design, The Just Transition, and Transportation of Tomorrow. I’m most excited to hear how companies are getting ahead of the curve and integrating concerns for ethics, inclusion, and human rights into their R&D processes to make a sustainable future a reality.