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Blog | Thursday March 2, 2017

Three Ways to Embed Sustainability in Public-Private Partnerships for U.S. Infrastructure

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Since the U.S. election, there has been a lot of discussion about rebuilding America’s infrastructure—namely, its electricity, transportation, and water and sewage systems. Elected officials of both parties, academics, industry associations, and other experts agree that the United States has underspent on infrastructure for decades, leading to a slow deterioration.

According to the U.S. Congressional Budget Office, transport and water infrastructure spending has been fairly consistent in the past 50 years, at around 2.4 percent of GDP (for comparison, China spends about three times more). In a recent Gallup poll, 75 percent of Americans said that the country should spend more on infrastructure. According to the American Society of Civil Engineers, in addition to “business as usual” investment, as much as US$1.4 trillion in additional investment will be needed in the next decade to improve U.S. infrastructure.

BSR sees investing in U.S. infrastructure as a major opportunity to create employment, upgrade to climate-friendly systems, and build a transportation system fit for a low-carbon economy.

While much of the future infrastructure development will be financed by government, a key expectation is that additional new money would also come from the private sector via public-private partnership (PPP) models, where the private sector assumes major risks, costs, and management responsibilities for infrastructure development and operations. The reason for a likely increase in privately developed and financed infrastructure is multifaceted:

• More than 80 percent of U.S. infrastructure funding comes at the state and local level, and about two-thirds of states have PPP legislation and/or demonstration projects in place. A Harvard review cited approximately US$61 billion in new PPP investment in the United States in the past 10 years.
• Some elected officials prefer to limit further government debt financing of infrastructure.
• For some infrastructure, the private sector can more quickly and innovatively develop projects.
• PPPs allow for risk sharing by developers, operators, financiers, and government.
• Long-term private sector operational and maintenance responsibilities are built into projects from the beginning. 

Before BSR, I was an infrastructure PPP economist for almost a decade at the World Bank and taught about PPPs at Harvard Kennedy School. In general, the PPP model has been applied widely and successfully in some countries, less successfully in others, and—as per the above—still in its infancy in the United States. Global experience has shown a valuable lesson for the United States: Both governments and corporate leaders must work together to ensure environmental and social risks are properly managed and societal costs and benefits are fairly spread out. Otherwise, infrastructure PPPs are doomed to fail.

Sustainability considerations should be prominent in all three PPP project phases: the design phase, the development phase, and the operational phase.

The biggest sustainability impacts are determined in the design phase. This may be obvious when we’re discussing solar farms versus coal power plants in the power generation industry. In other industries, such as transportation infrastructure, sustainability priorities are less easy to set. The key question should be whether the United States wants to spend US$1 trillion on today’s sustainable practices (such as high-speed electric rail, which has existed in Europe and Japan for decades) or whether it wants to focus on the next generation of sustainable transportation infrastructure (such as the Hyperloop or driverless cars), which could bring a quantum leap in sustainability benefits. I am hoping for the latter.

In the development phase, the United States already has high standards on environmental impact assessments and mitigation. But there still are many opportunities to go beyond “doing maximally allowed harm” and improve environmental sustainability impacts. For example, Atlanta, Boston, and San Francisco have LEED-certified airport terminals, which has reduced operational costs. In addition, developers often face challenges with social and stakeholder issues, and engagement of a broad base of sustainability stakeholders is critical for success in this phase.

During the operational phase, a big social challenge is that PPPs are for-profit businesses. Often, users consider public infrastructure to be “free,” although they are paying for it through taxes. When direct user fees enter the picture, there is always a tradeoff between the investors’ desire for financial return and fair pricing of a monopoly service. The US$3.8 billion Indiana Toll Road PPP is a good example of a PPP that did not find that balance—and went bankrupt. Infrastructure projects require a certain type of investor mentality, such as pension funds, which often prefer long-term, lower-risk, and predictable returns.

The United States prides itself on its innovators and entrepreneurs, who often look beyond the status quo. I hope that this mindset carries over into the design of and planning for our anticipated infrastructure boom. And as always, BSR hopes that the business benefits of sustainability will be front and center in the minds of our member companies that lead this anticipated infrastructure effort.  

Blog | Tuesday February 28, 2017

Clean Power Generates American Jobs and Business Competitiveness

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Transformations in the U.S. energy sector toward renewable sources have led to increased employment, more efficient energy use and procurement, and greater investments in technical innovation. Withdrawing federal support from the Clean Air Act, including the Clean Power Plan, will slow this progress but will not undermine it. 

Clean Power Creates American Jobs

Renewable energy and energy efficiency are now top employers in the United States and remain on a growth trajectory. The solar and wind industries are both creating jobs 12 times faster than the rest of the U.S. economy. Renewable energy employment in the United States increased by 6 percent in 2015, reaching 769,000 jobs. Within the sector, the solar industry saw a 25 percent growth in employment in 2016, taking total employment to 260,000. This significantly exceeds U.S jobs in oil and gas extraction (177,000) and coal mining (50,000). In addition to renewables, employment in energy efficiency is also booming, with 2.2 million Americans employed in the design, installation, or manufacturing of energy efficiency products or services today.

Clean Power Is a Growing Part of American Energy Use

Last year, renewables became the largest source of new electric capacity for the first time in the United States. A recent article on Bloomberg Markets made waves this February when it announced that “U.S. solar [had] surged 95 percent to become the largest source of new energy.” New photovoltaic panel installations in 2016 more than doubled from 2015. Bloomberg New Energy Finance projects that total installed capacity in the United States will reach 105 gigawatts by 2021—a 276 percent increase from the 38 gigawatts installed today. What is more, renewables (including large hydroelectric projects) and natural gas now meet half of U.S. power demand, up from only 38 percent in 2011.

Companies Want, and Are Buying, Clean Power

Many companies are clear on the business case for renewable energy use and are shifting corporate procurement approaches. There are now 87 companies in RE100, a global collaborative initiative of the world’s most influential companies committed to 100 percent renewable power. Together, these businesses have created demand for around 107 terawatt hours (TWh) of renewable electricity—around the same amount of power consumed by the United Arab Emirates or The Netherlands per year. Goldman Sachs jumped from 14 percent renewable electricity in 2014 to 86 percent in 2015, H&M jumped from 27 percent to 78 percent in that same period, and Google—the largest corporate buyer of renewable energy—will power all of its data centers and offices with renewable energy in 2017. The figures translate into savings: General Motors has reported savings of US$5 million annually from using renewable energy, and this figure is likely to increase significantly as the supply of renewable energy increases.

Investors Are Betting on Clean Power

When it comes to investments, low-carbon technologies and renewables have shown strong growth trends toward becoming cost-competitive. Per a 2015 New Climate Economy report, the cost of solar power systems has fallen by 75 percent globally since 2000, and the cost of energy storage has decreased 60 percent. According to UNEP, global investment in renewable power capacity in 2015, worth US$265.8 billion, was more than double the dollar allocations for new coal and gas generation (estimated at US$130 billion in 2015). Lazard concluded that in 2016, solar energy beat coal in terms of cost: A kilowatt-hour of solar cost a median figure of 6 cents, versus 11 cents for coal.

These trends show no signs of bucking, and their strength relies in part on the continued stimulus provided by city, state, and federal support. Many U.S. cities are implementing plans to cut emissions, including the largest two: New York aims to reduce emissions 80 percent by 2050, and Los Angeles is developing a plan for 100 percent renewable power. And states, such as California and Massachusetts, are considering bills to go 100 percent renewable no later than 2050. Therefore, regulatory support will further strengthen the business case outlined above.

The energy industry in the United States, and all related industries, has undergone a significant shift rife with opportunities and in step with global trends: The Paris Agreement, which the United States along with 195 other countries adopted in 2015, will result in US$13.5 trillion investment in the new energy economy. The federal government has the power to ensure that these opportunities continue to thrive and that the economy remains on its prosperous path. 

Blog | Monday February 27, 2017

Three Steps for Healthy Business Product and Program Design

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As traditional business models continue to experience disruption, companies are looking for any direction on where and how to innovate. And health has emerged as one of the biggest and clearest opportunities. According to a recent study, 81 percent of consumers are unsatisfied with their healthcare experience, leading many to seek added health benefits in the everyday goods and products they purchase. In a separate study, the same percentage of consumers are factoring a product’s health attributes when weighing purchasing decisions. There is a clear opportunity to innovate for health as we increasingly demand that our technology, food, and workplaces all support better health outcomes.

The new Healthy Business Coalition Innovation Playbook serves as an entry point for internal company advocates to innovate for health and well-being. The playbook plots an innovation process to help companies integrate their healthy business strategy into the design of new products, services, and programs.

Innovating for health is not merely bolting on health criteria to existing practices. Companies may already have established innovation practices for developing new products and services—but health innovation requires companies to bring in new perspectives from the beginning. The playbook provides a foundation for healthy business innovation and sheds light on how to accurately assess a company’s opportunity to launch a new program.

Innovation for innovation’s sake is a common pitfall when companies look to tackle a new problem. Our approach is designed to ensure that companies accurately assess their opportunities and situate themselves to drive impacts. As we outline in the playbook, there are three steps companies can take to ensure they seize the right opportunities to innovate for health:

1. Framing (and Re-Framing) the Problem

Innovation can be a lengthy and costly process. Fortunately, healthy businesses often have existing programs and even products on the market that improve health outcomes. Therefore, companies should take stock of current activities, performance, and capacity, as well as assess the broader health landscape. Then, healthy businesses can determine when to innovate and when to pursue partnerships instead.

Healthy businesses identify their priority health issues and set a vision to make an impact. But turning that vision into a challenge ready for innovation requires work. The playbook provides several exercises to frame the problem statement and then refine that statement by challenging assumptions. One exercise helps companies dig into the causes of a health issue, ensuring they address the underlying problem, rather than its symptoms. Another exercise uses a human-centered design approach to help companies empathize with the employees, consumers, and communities they want to benefit. Healthy businesses can develop a working version of their healthy business challenge by bringing all these perspectives into two simple sentences:

2. Thinking up Solutions

The innovation playbook provides tools to facilitate a workshop that allows for flexible brainstorming within an established framework. By turning the healthy business challenge into prompts, facilitators can lead groups to think through how to address specific challenges while providing enough freedom to allow new ideas to emerge. 

3. Partnering for Action

Traditionally, business innovation is confidential and internal, but there’s a growing trend toward openness and partnerships. Health is a systems challenge that requires a coordinated effort among likeminded organizations, particularly those with the resources and competencies to help a company deliver on its innovation. Companies should ensure the broader health ecosystem is engaged in prototyping, piloting, and scaling. The playbook provides greater detail on the selection criteria and the processes for launching partnerships.

The innovation process does not end with a partnership agreement—innovation never ends. The opportunity to improve and scale solutions doesn’t go away, which means that companies can always refine their programs and products to better serve their communities. This requires close collaboration with stakeholders. The next tool in the Healthy Business Toolkit will build on this process, plotting a path to ensure companies are effectively listening and collaborating with their stakeholders.

Blog | Thursday February 23, 2017

Collaborating to Eliminate Modern Slavery: Global Business Coalition Against Human Trafficking

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Slavery is illegal in almost every country on earth. Yet modern slavery in all its forms—from confiscation of worker identification documents to bonded labor and forced overtime—is tragically widespread. A 2012 survey by the International Labour Organization (ILO) estimated that around 21 million globally were victims of human trafficking, the trade of humans for commercial sexual exploitation or forced labor. Human trafficking is estimated to be the third-largest international crime industry, ranking only behind illegal drugs and arms trade, and with profits in excess of US$150 billion.

Global value chains, which involve layers of contractors, subcontractors, recruiters, and labor brokers, put businesses at risk when a third party knowingly or unknowingly employs victims of human trafficking. Oversight is difficult to establish and maintain, and industries such as agriculture, construction, and manufacturing frequently struggle to guarantee supply chains that are free of trafficked workers.

The U.K. Modern Slavery Act and other regulations now require companies around the world to disclose steps they are taking to eradicate modern slavery. It is no longer enough to respond reactively or only to isolated reports: Businesses have a responsibility to ensure that their entire value chains are free of modern slavery and to empower their suppliers to do so, too. Companies are now expected to adopt a proactive approach to eliminating modern slavery, rather than merely responding to the problem.

What’s less clear is exactly how businesses can help eradicate modern slavery in meaningful ways. Adopting a policy, developing training, and engaging with suppliers are necessary steps in the right direction. But the scale and complexity of modern slavery is too large for companies to tackle alone.

To address this challenge, BSR is pleased to announce its appointment as secretariat of the Global Business Coalition Against Human Trafficking (gBCAT), which provides a collaborative space for companies to advance the fight against modern slavery. A group of companies passionate about finding solutions to human trafficking founded gBCAT in 2010 and tasked BSR with expanding the group’s scope and capacity for impact.

Building on gBCAT’s foundations, the group has three objectives. First, gBCAT will provide a space for companies to share best practices on internal management needs—responding to the U.K. Modern Slavery Act, adopting corporate policies, and developing internal training programs. We envision working closely with other organizations to ensure that we are disseminating the latest best practices in the field and not reinventing the wheel.

Second, the group will generate cross-industry case studies on what’s actually working in the field to protect people from trafficking and modern slavery. To achieve this, we will conduct in-field pilot projects, share in-field experiences from participating companies, and build collaboration with other groups and companies working on the ground in high-risk markets. The group aims to publicize its findings and will encourage companies to advance solutions that provide the highest positive impact for victims.

Finally, the group will provide a platform for public engagement and awareness-raising. The group encourages engagement with others developing solutions and seeking to collaborate with businesses.

We invite companies from all industries to join gBCAT as we begin the journey of developing a powerful collaboration to tackle the most complex labor issue of our time. 

Blog | Wednesday February 22, 2017

Building Responsibly: Turning Challenges to Opportunities in Engineering and Construction

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The engineering and construction industry, which represents US$8.4 trillion of economic activity, relies on large numbers of low-skilled workers and, as such, is a major provider of formal employment opportunities around the world. In many parts of the world, large real estate and infrastructure projects have fueled a construction boom, attracting millions of migrant workers, especially when there are not enough local workers or the local workforce doesn’t have the skills required.

This rapid growth has given rise to challenges around the rights and welfare of workers, which the media and civil society organizations have highlighted publicly. Other external stakeholders, including clients and governments, have started to increase scrutiny of and define expectations for the actors involved in building infrastructure.

Many companies in the engineering and construction industry have longstanding commitments to the health, safety, and welfare of workers. These companies are keen to expand on their existing programs, policies, and standards to further promote the rights and welfare of workers in their operations and subcontracting chains, even in contexts where the rule of law is limited. Working in isolation, however, means that companies’ impact is limited: Competitors can undermine their efforts to implement commitments and a lack of a forum or other coordinated working environment can hamper their attempts to align on standards and approaches.

For six companies in the engineering and construction industry, this construction boom and associated challenges present an opportunity to incubate and implement a new collaboration on the rights and welfare of workers in the industry. Building Responsibly—an industry-led collaborative initiative facilitated by BSR with support from Humanity United—will enable construction and engineering companies to collaborate around their shared values, advance their programs by sharing best practices, agree on common approaches and standards, develop tools, and engage clients, civil society, and international organizations. Through this initiative, companies can more effectively align with regulations and stakeholder expectations, while increasing productivity and fostering a better environment for workers. As a pre-competitive initiative, Building Responsibly will ensure that companies can engage on mutually beneficial measures and policies in a safe space.

Building Responsibly will focus on three key areas of work relevant to companies in the engineering and construction sector, as highlighted in a recent BSR report.

• Recruitment practices. Recruitment agencies or intermediaries on location continue to lure workers with false promises of high-paid jobs, while charging them high fees to cover the cost of their recruitment. Debts incurred during this process might leave workers in situations of debt bondage, a form of forced labor associated with low or no pay, physical violence, or detention in the country or at work.
• Working and living conditions. While progress has been made on health and safety in larger infrastructure sites, construction remains one of the most hazardous industries in the world. In addition, these workers may experience heat, delays in paying wages, long hours, and lack of workers’ representation, and living conditions in purpose-built accommodations near construction sites sometimes fail to meet international standards.
• Subcontractor and supply chain practices. While large construction companies have the resources and knowledge to implement best practices, subcontractors, a vital component of the engineering and construction industry, might face pressure to cut costs and, therefore, minimize social responsibility efforts.

Companies recognize that these kinds of issues cannot be tackled alone. The six companies at the heart of Building Responsibly are choosing to act on these issues in part because it is sound business practice: Ensuring the fulfilment of human rights in operations and subcontracting chains will become a minimum requirement to win work in the future. However, these businesses are also concerned with what’s morally sound: Millions of workers around the world deserve the opportunity to work in a safe environment where they are respected and where their basic human rights are guaranteed. As businesses are increasingly—and rightly—positioned as moral agents in our societies, anything less is simply unacceptable.

Engineering and construction companies that are committed to respecting the rights and welfare of workers are warmly invited to join this collaborative initiative. One thing is clear: As a global society, we’re not going to stop building. But from now on, we’re going to be building responsibly.

For more information or for membership enquiries, please contact JBAndrieu@bsr.org. 

This blog is part of our February spotlight on collaboration. To find out more about BSR’s Collaborative Initiatives, read our overview blog or visit the Collaboration page.

Blog | Tuesday February 21, 2017

Are You Measuring Your Company’s Full Value Creation?

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Corporate return on investment (ROI) is the most fundamental business measure. It’s so basic that few people question its exclusive focus on financial metrics. However, a growing set of business leaders have noted that the current ROI frame fails to capture the full kaleidoscope of value that companies are creating.

Consider, for example, the CEO of Unilever, Paul Polman, who asserts:

“The more our products meet social needs and help people live sustainably, the more popular our brands become, and the more we grow. And the more efficient we are at managing resources, such as energy and raw materials, the more we lower our costs and reduce the risks to our business, and the more we are able to invest in sustainable innovation and brands."

The bottom line is that it matters to business success whether products and companies offer community, societal, and environmental benefits. And these benefits create value—to natural systems and human societies—that can be measured.

Dow, Interface, Patagonia, SwissRe, and many other leading companies now actively consider multiple dimensions in business decision-making processes and take a more holistic approach to assessing risk and opportunity. These businesses go beyond measuring financial ROI to track and assess how their facilities, actions, or products contribute to the functioning of natural systems or to community and human well-being.

These business leaders are pointing the way toward corporate management that measures multidimensional return on investment—combined financial, social, and environmental ROI. This is not only beneficial in theory but, increasingly, also achievable in practice.  

In the past decade, a suite of tools has emerged to measure distinct types of ROI, such as social return on investment, enhancements to natural capital value, and maintenance of ecosystem services. Because they focus on one issue at a time, none of these approaches can easily assess broader impacts: for example, whether and how a company’s investments in environmental benefits may also offer local community or social benefits. Yet, since we all breathe air, drink and rely upon water, eat food, and live in natural environments, there are linkages between local corporate environmental benefits and community benefits from these natural system improvements.

Within this context, BSR’s Value Creation through Natural Capital working group offers a pathway for companies focused on how to measure not just improvements in environmental terms, but how these benefits also offer local community, human health, economic, and other societal benefits.

Specifically, in 2017, BSR and group members will launch a facilitated process through which cross-industry thought and practice leaders will work with NGO, academic, and private-sector value measurement specialists to document, synthesize, and peer review a set of metrics and best practices for measuring community and societal returns that stem from natural-capital-related decisions and investments. This work will include:

• Common terminology and a lexicon of definitions related to corporate measurement of societal (including local community) and natural capital, as well as ecosystem services value generation
• Specific metrics for measuring and assessing risks and opportunities across societal, community, and natural capital issues, as well as ecosystem services
• Transparent, open-source, and credible data sources and analytical tools
• A common dashboard for presenting information on corporate value generation that includes natural capital and social impact measures

All of these aspects will be vetted and peer reviewed. This initiative will result in an integrated approach to examining financial, community, societal, and ecological impacts—bringing together traditional financial measures of ROI, leading societal and community returns work, and approaches to measuring positive impact on natural systems.

The opportunity is clear. Thought and practice leaders are already acting. Now is the time to jump in and engage in the new era of value creation.

For more information on the Value Creation through Natural Capital Working Group, please contact Sissel Waage at swaage@bsr.org.

This blog is part of our February spotlight on collaboration. To find out more about BSR’s Collaborative Initiatives, read our overview blog or visit the Collaboration page.

Blog | Monday February 20, 2017

Building a Culture of Integrity to Transform the Maritime Industry

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The Maritime Anti-Corruption Network (MACN) is a global business network working toward the vision of a maritime industry free of corruption that enables fair trade to the benefit of society at large. In the last five years, MACN has developed and shared practical tools and best practices on anticorruption and has initiated and implemented collective actions. Designed in collaboration with external stakeholders, such as port authorities and local governments, these collective actions have resulted in reductions in demands for facilitation payments in the Suez Canal, new regulations in Argentina that make it more difficult for officials to demand bribes, and improved ease of operations in Lagos, Nigeria, with the implementation of standardized operating procedures and grievance mechanisms. Thanks to the impacts of its capability-building and collective action programs, MACN has become a preeminent example of collaboration for tackling bribery and corruption.

The network’s rapid growth in the last five years has required MACN to adapt quickly and react to input from its members to determine its focus on collective action and capability-building. This agility will remain a key feature of the network. However, MACN is also launching a revised strategy to provide a clear framework for increasing its impact and global reach. The strategy expands and solidifies the work MACN has undertaken to date and is divided into three pillars, the “three Cs”: collective action, capability-building, and culture of integrity.

With its new “culture of integrity” pillar, MACN is setting out to completely transform the maritime industry. Rather than resolving issues as they arise or worsen, MACN now aims to shift the integrity culture of the maritime sector to a point where corruption is no longer entertained as a possibility in any port.

Why is MACN focusing on culture? It’s useful to consider a parallel with the maritime industry’s approach to operational safety—an area of direct relevance to the network. MACN captains and crews continue to face direct threats to their personal safety from corrupt officials when bringing ships into port, as the following testimony from one of our members indicates:

“This call during berthing, the [tug boat] pilot boarded the vessel after making the usual request for cigarettes. The request was declined by the vessel … [Later] I noticed that the stern was moving out … I knew something was wrong, and I asked the second mate to check the tug, only to be told that the aft tug had cast off the ship’s line and had left … It was totally unprofessional both for the pilot to leave and for the tug boat to cast off the line and leave without informing the vessel. Holding the ships to ransom and endangering the crew and vessel for what—a carton of cigarettes.”

As MACN members know—many through direct involvement in safety implementation—the maritime industry has spent a great deal of time and resources on safety measures and policies, with the aim of ensuring that our seafarers and offshore colleagues return home safely.

However, the industry has also long recognized that while providing personal protective equipment (PPE) and safety management systems (trainings, processes, toolbox talks, and forms) is a vital first step, it is not enough. Maritime companies clearly understand that to eliminate incidents, the organization must develop a culture of safety that governs every aspect of working life for all employees, whether they are based in an office, on an oil rig, or onboard a vessel. The mindset of the company and of its entire value chain governs the strength of its approach to safety.

This holds true for efforts to eliminate corruption. MACN members have led the charge and played a pioneering role in developing tools, trainings, and procedures to build capabilities internally and to drive the change externally. However, these will only take us so far. MACN members recognize that, as with safety, it is the culture that governs deep-seated change. By working explicitly on integrity culture programs, MACN will ensure a long-term, sustainable change of mindset across the industry, laying the groundwork to realize its vision: a maritime industry free of corruption. 

More than 80 shippers and carriers, including many of the biggest players in the maritime industry, are a part of MACN. The power of MACN—its ability to influence legislation or drive change in ports—comes from the breadth and depth of its member base. These companies are creating a simpler, more efficient, and safer environment in which to operate; at the same time, they are helping themselves and each other by sharing their learnings. If you would like to join the movement for a maritime industry free of corruption, don’t hesitate to get in touch.   

This blog is part of our February spotlight on collaboration. To find out more about BSR’s Collaborative Initiatives, read our overview blog or visit the Collaboration page.

Blog | Friday February 17, 2017

Human Rights by Design

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When considering how business can fulfill its responsibility to respect human rights, I’m increasingly struck by two very stark contrasts: between stability and upheaval and between risk and opportunity.

We have stability in the well-established norms for how business enterprises should respect human rights. These norms, set out in the UN Guiding Principles for Business and Human Rights, have built upon decades of learning about the impact of companies on human rights and strategies to mitigate adverse human rights impacts.

We have upheaval in the wide range of disruptive technologies and trends—such as artificial intelligence, big data analytics, blockchain, drones, and the internet of things—that are profoundly altering the nature and profile of human rights impacts and risks at global companies.

This upheaval results in the second contrast, between opportunity and risk.

On the one hand, we have a once-in-a-generation chance to harness massive advances in technology for the public good. From smart cities to medical diagnostics to access to public services, there is a huge range of opportunities to significantly increase the worldwide realization of human rights.

On the other hand, we risk unleashing into the world new technologies, capabilities, and business models that might cause significant harm to the rights to which all human beings are inherently entitled. Risks, such as algorithms that discriminate against vulnerable populations or connected devices that threaten privacy, are increasingly well known, but new and unknown scenarios are almost certain to emerge.

It is easy to say that we all have a shared responsibility—governments, companies, and citizens—to pursue the opportunities while mitigating the risks. However, in the arena of business and human rights, I keep returning to the same burning question: Will the speed, complexity, and extensive reach of these disruptive technologies transform the human rights approaches that companies need to deploy, and are our current tools up to the job? Are our well-established business and human rights norms capable of dealing with the impending disruption?

While a significant body of knowledge and best practices has emerged for the integration of human rights into business operations (such as mining sites, manufacturing facilities, and law enforcement relationships), I fear that we are lacking an equivalent body of knowledge and best practices for the integration of human rights into the product design and development process. I wonder whether the business and human rights discipline, as currently configured, can address the sheer speed of change, business uncertainty, and unforeseen possibilities that accompany disruptive technologies.

These questions have been the topic of discussion at BSR over recent months. Based on lessons learned from our recent human rights work—including dozens of human rights impact assessments across all industries and engagement both deep inside companies and with rights holders—we have begun exploring the concept of “human rights by design,” which we believe could be essential for the long-term success of the business and human rights discipline.

A “human rights by design” approach would depend on the capability of three professional communities—business and human rights teams, research and design teams, and sales and marketing teams—to fully integrate human rights considerations into the development of products, services, and technologies. It would need to ensure respect for human rights while at the same time supporting business needs, such as rapid product development and release cycles.

A “human rights by design” approach needs to be capable of addressing human rights issues with short-, medium-, and long-term implications. These might include:

• How do we interpret key human rights concepts, such as informed consent or remedy, in the context of big data analytics, the internet of things, and artificial intelligence?
• How do we involve rights holders in the innovation process for products or services that might have millions or billions of users?
• What are the most effective ways to address the known human rights risks of disruptive technologies, such as the risk that algorithm-based decision-making can result in discriminatory outcomes (such as in the areas of housing, credit, employment, health, and public services)?
• How do we address novel human rights risks that emerge from the use of disruptive technologies, such as land rights and airspace in the age of drones?
• What use cases for disruptive technologies in different industries—such as agriculture, financial services, healthcare, or mining—will present the most salient human rights risks and opportunities?

We believe that the stark contrasts—between stability and upheaval and between risk and opportunity—can be addressed best through collaboration across professional disciplines. For this reason, we are eager to identify opportunities for product, service, and technology design teams and business and human rights professionals to work more closely together in the service of human rights by design. 

Blog | Thursday February 16, 2017

Three Reasons Why Collaboration Is Key to Green Freight

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Freight movement is the lifeblood of global supply chains and economic development in many regions. It is also at the heart of many 21st-century challenges to global business: Markets want shipping to be faster, more flexible, and more sustainable. Yet freight is a distributed, global system, in which no single entity controls central decision-making—and, likewise, green freight efforts are dispersed and interconnected in unexpected ways.

These conditions require collaboration to make progress. For example, last year, governments around the globe ratified an agreement to drastically cut greenhouse gas emissions that contribute to climate change by midcentury. Freight is responsible for 7 percent of these emissions and is one of the fastest growing emissions sources—but who along the value chain, specifically, should be accountable? And how does the responsible party work with business partners, governments, and logistics suppliers to be more sustainable?

BSR’s Clean Cargo Working Group (CCWG) has been addressing these questions within the shipping industry for nearly 15 years. It offers a prime example of successful green freight collaboration: a business-to-business leadership initiative involving major brands, cargo carriers, and freight forwarders dedicated to reducing the environmental impacts of global goods transportation and promoting responsible shipping.

In our work, which now represents 85 percent of ocean container shipping volume, we have seen the value to companies in addressing these challenges collaboratively. We have learned there are several reasons why globally dispersed green freight challenges like a greener shipping industry require collaboration:

• Alignment and standardization is impossible for any single company. Freight carriers cannot track their own improvements, and shippers cannot compare the environmental performance of their carriers, unless all parties use the same standards. Therefore, we facilitated collaboration among carriers and shippers to develop a standardized methodology for reporting environmental performance. This has allowed CCWG to track emissions reductions in the group: Our member carriers have reduced their emissions by more than 34 percent per container, per kilometer since 2009. Members work together annually to refine the methodology and improve their performance management tools, including, most recently, by updating our verification protocol. This protocol, which ensures data quality with third-party assurance, now covers 100 percent of our carrier members. And we shape alignment across the entire logistics value chain through our influence in the Global Logistics Emissions Council (GLEC) framework and with BSR’s partnerships with the U.S. Environmental Protection Agency’s SmartWay, Green Freight Europe, Green Freight Asia, and other initiatives.
• Integration stalls without discussion and best-practice sharing. Companies encounter many of the same issues when integrating environmental performance into their business decisions. Through CCWG, we created a forum for discussion and sharing best practices, which we complement with members-only reports, case studies, meetings, and webinars. Our members consistently rate our in-person member meetings, held in different regions twice each year, as one of the top values of the group. We bring together representatives from our 45 member companies and select industry experts for two-and-a-half days of presentations and discussion on green freight trends, to make progress on our own work plan, and to enable members to share best practices. Members return from these meetings and then disseminate this information to colleagues, start new projects with their business partners and other stakeholders, and apply lessons to accelerate progress on their own goals. 
• The best solutions come from across the value chain. Freight shipping involves a range of stakeholders, and profitable progress on sustainability depends on many contingencies among them. In CCWG, we create a space where industry and other experts can tackle challenges, such as performance measurement, and where we can build a collective voice to catalyze change in other areas. In October 2016, our members jointly released a climate statement and call to action to announce the industry’s intent to continue making progress on climate action, while calling on innovators and policymakers to double down on finding solutions. We are just now finalizing research that will define an emissions reductions pathway for the container shipping industry that will match the ambition of the global climate goals, as well as a commitment to progress that each of our member companies can make and track publicly.

Through our work with and support of the GLEC, one global framework for logistics emissions accounting now exists across all freight modes. Yet we will need to expand standardized data collection efforts into other geographies—Africa, Asia, Latin America—and in other modes, such as air and rail. Once this challenge is overcome, collaborations like CCWG will be able to consolidate and harmonize data on emissions, providing clear guidance for carriers and clear metrics for buyers. CCWG will continue to support and drive these efforts collaboratively and globally.

At BSR, we are excited about the future for CCWG—and we continue to extend these lessons to other green freight challenges through our Future of Fuels initiative, as well as to other challenges on the 21st-century sustainable business agenda through our more than 20 other industry collaborations.

For more information on CCWG or to speak with the team, please email ccwg@bsr.org. 

This blog is part of our February spotlight on collaboration. To find out more about BSR’s Collaborative Initiatives, read our overview blog or visit the Collaboration page.

Blog | Wednesday February 15, 2017

Calling All Sustainability Reporting Practitioners

Preview

We’ve been thinking a lot recently about the role of company sustainability practitioners in the future of sustainability reporting. By holding the pen while reports are written, practitioners occupy a very special position in shaping this future.

Not only do practitioners form the contents of reports, but they also possess unique insights into the successes and shortcomings of sustainability reporting that others in the field simply don’t have.

In theory, sustainability reporting achieves two main objectives: It improves company sustainability performance, and it enables informed decision-making by stakeholders. We’ve reached the conclusion that it is the practitioner who usually knows more than most about how, why, and when sustainability reports achieve these objectives—or don’t.

It is for this reason that BSR is launching a new “Future of Sustainability Reporting” collaborative initiative.

At its most basic, the collaborative initiative will provide a space for practitioners to share learning, insights, and perspectives on how, why, and when sustainability reporting supports improved company performance and informed decision-making.

However, we would like the collaborative initiative to be much more ambitious than that.

Specifically, we believe there is an important and timely opportunity for practitioners to influence the future of sustainability reporting. We would like the collaborative initiative to address important questions, such as:

• Which sustainability reporting strategies and approaches actually improve sustainability performance at companies—and which do not?
• What approaches to sustainability reporting allow a diverse range of audiences (investors, civil society, policymakers, etc.) to make informed decisions?
• How should the various reporting frameworks and standards evolve to better support these desired outcomes in reporting?
• How can consistency among the various reporting frameworks improve, while still allowing them to fulfill their different objectives?
• What practical approaches to reporting—such as different report structures, or use of key performance indicators (KPIs) accompanied by key performance narratives (KPNs)—are most effective?

The Future of Sustainability Reporting will initially seek to achieve these objectives in three ways: shared learning among members of the group, dialogue with reporting organizations, and publishing a point of view in the form of a white paper. During 2017, it is our hope that the group will meet monthly by phone and twice in person.

To avoid confusion, it is important to emphasize three further points about the new collaborative initiative.

First, when we say “sustainability reporting,” we’re referring to all company sustainability disclosures, be that in the Form-10K, traditional sustainability reports, or in-depth reports focused on a single topic, such as climate change or human rights.

Second, BSR is frameworks-agnostic. We believe that all the various reporting frameworks (GRI, IIRC, SASB, and all the many issue-specific frameworks) have vital roles to play, but that the consistency among them and their user-friendliness can be substantially improved. 

Third, when we say “practitioner led,” we mean it. We are very interested in evolving the activities and outputs of the group based on what you, the practitioner, would find most valuable.

Late last year, BSR’s Triangles, Numbers, and Narratives paper set out the main features of reporting that we believe improve performance and enable informed decision-making and proposed a conceptual model for the future of sustainability reporting based on a triangular structure and a KPI-KPN table.

While the ideas presented in the paper were an imperfect work in progress, we hoped that they point in a direction that would both simplify the reporting process and increase its impact.

The ideas shared in the report resulted from many informal discussions among practitioners, and the report concluded with a call to action for companies to join BSR in developing these solutions further. We have established the Future of Reporting to do just that—come and join us.