Blog | Monday April 29, 2019

Why 2019 Is the Year of Stakeholder Trust

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In 2019, the question of how to build and retain trust—among investors, regulators, customers, suppliers, civil society organizations, and the general public—is the most pressing challenge facing business.

The stakes have never been higher. The average tenure of a business on the S&P 500 shrank from 33 years in 1964 to 24 years in 2016 and is forecast to last a mere 12 years by 2027. Competition, innovation, and technological disruption, while important drivers, tell only part of the story. If a business is not trusted by its stakeholders, it will not be able to maintain revenue, let alone grow, and may soon find its very existence imperiled.

To make matters even more challenging, societies worldwide are experiencing a crisis of leadership and trust in institutions across government, business, and the media. Hyper-transparency, geopolitics, social inequalities, and the increasing fragility of global governance mechanisms are all contributing factors. Businesses must now navigate an increasingly fraught external environment via a combination of firm core principles and imaginative new approaches.

In 2011, BSR published a five-step guide to stakeholder engagement in response to requests from companies for practical guidance on how to navigate the tricky topic of identifying, interacting with, and responding to external voices. The appetite for this topic has been insatiable: the 2011 report has consistently ranked among BSR’s top five most-viewed reports since its publication. And as effective engagement with society continues to be a topic of enormous, ongoing interest, we have just released an updated version of our report to account for major developments over the last eight years that have made the stakes higher than ever.

Why is stakeholder trust so important today?

First, an exponential increase in transparency means that companies must behave as if everything they say or do might become public.

Information becomes available at an ever-accelerating pace. While it is still disseminated primarily on dominant technology platforms, our understanding of facts and truth is far more contested and diffuse. Public concern over social and environmental issues can escalate rapidly on social media (ocean plastics are a recent example) and hyper-local conflicts between business and communities can generate global reputational crises.

Employees are also emerging as one of a company’s most vocal, empowered stakeholder groups; they increasingly invite wider, deeper scrutiny of their employers via media interviews, data leaks, petitions, and even walkouts.

Contractual confidentiality clauses are no longer an effective way to manage this new dynamic: The boundary between the corporation and society has grown permeable. Companies need to embrace strategies that make transparency, timeliness, and accountability core operating principles while bearing in mind that workers may view their social responsibilities as more urgent and compelling than their employers’ short-term profit targets.

Evidence signals that consideration of environmental, social, and governance issues is highly correlated with corporate performance over the long term.

Second, even big investors are declaring that an exclusive focus on company interests has become counter-productive.

BlackRock CEO Larry Fink made a pressing case for strategic stakeholder engagement in his 2019 annual letter, noting: “Companies that fulfill their purpose and responsibilities to stakeholders reap rewards over the long-term. Companies that ignore them stumble and fail. This dynamic is becoming increasingly apparent as the public holds companies to more exacting standards. And it will continue to accelerate as millennials—who today represent 35 percent of the workforce—express new expectations of the companies they work for, buy from, and invest in.”

This quote reflects a broader shift in investor sentiment. Evidence signals that consideration of environmental, social, and governance issues is highly correlated with corporate performance over the long term. Companies that rely on one-way, PR-led approaches to manage these issues will not thrive. Fink’s challenge necessitates a robust engagement strategy in which companies determine how to weigh and balance a broadening array of overlapping and conflicting interests in a transparent and defensible way.

Finally, companies in 2011 primarily understood stakeholder engagement as a way to understand and manage reputational risk.

A key question in any mapping exercise was “Can we trust the stakeholder?” Today, it is usually more important to ask: “Can the stakeholder trust us?” The development of international frameworks that shape sustainability efforts, most notably the UN Guiding Principles on Human Rights, has driven a shift in emphasis toward corporate impacts on society and away from self-interested risk considerations.

We have substantively updated our framework to reflect these developments, emphasizing such new stakeholder mapping criteria as vulnerability, developing a new set of core engagement principles, and shifting the focus away from one-way information-gathering and toward building mutual trust and understanding. We have also considered stakeholder engagement in the context of new business models such as digital platforms, wherein companies face billions of stakeholders and can have an unprecedented impact on their lives.

Stakeholder engagement may seem more difficult and overwhelming than ever, but it needn’t be. Our updated report takes full account of how the world has changed while maintaining our original focus on practicality and clarity. BSR’s goal is to help companies build a deeper understanding of the social systems in which they operate—and to help them develop purposeful direction in pursuing their own goal of building sustainable trust.

Blog | Thursday November 9, 2017

The Sustainability Form 10-K: A Proposal

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I believe we need an equivalent of the Securities and Exchange Commission (SEC) Form 10-K for sustainability reporting. Allow me to explain why.

The Form 10-K and sustainability reports serve very similar purposes. The Form 10-K is required to contain the information necessary for informed decision-making by investors, while the sustainability report is expected to contain the information necessary for informed decision-making by a wider range of stakeholders.

However, the Form 10-K and the sustainability report have evolved to achieve these outcomes in very different ways.

Every company’s Form 10-K has an identical structure, and this makes it easy for analysts to know where to find the information they need. As someone said to me recently, “We all know our way around a Form 10-K.”

By contrast, sustainability reports come in many different shapes and sizes, and this makes the work of sustainability analysts assessing company performance on these issues much more difficult. We don’t all know our way around a sustainability report.

For example, every company’s Form 10-K contains a description of the business strategy, an analysis of the organization’s financial conditions and results of operations, material risk factors, financial statements, and executive compensation information. The information is numbered consistently, located in the same place, and presented the same way, which makes it relatively straightforward to compare companies across these metrics.

I believe that the usefulness of the sustainability report would be greatly enhanced by a similarly consistent structure. For example, every report could contain a list of sustainability risks and opportunities, a description of sustainability governance and management approach, an analysis of the company’s sustainability condition and performance, and a sustainability results statement. Comparability would be much easier if this information were always presented in the same way, with the same order and numbering.

There are four potential objections to my proposal.

1. It could be argued that sustainability reporting shouldn’t have its own version of the Form 10-K, and that instead sustainability information should be included in the “real” Form 10-K. I agree that sustainability information of material significance to investors should indeed be included in the “real” Form 10-K, ideally using the Sustainability Accounting Standards Board (SASB) standards. I also believe that business strategies should focus on long-term value creation with sustainability as a foundation. However, as SASB states, a lot of sustainability information sought by stakeholders is not of material interest to reasonable investors, and therefore it should not be included in the “real” Form 10-K.
2. Along similar lines, it could be argued that this proposal works against the trend toward the integrated thinking and integrated reporting promoted by the International Integrated Reporting Council (IIRC). I believe that an integrated narrative about how the company creates value is essential—however, the focus of the IIRC is on the creation of a concise narrative, not on the creation of a new report with the high level of detail found in a Form 10-K. As the IIRC conciseness principle states, “an integrated report is a concise communication about how an organization’s strategy, governance, performance, and prospects ... lead to the creation of value.”
3. It could be argued that the GRI content index already serves this purpose. To an extent this is true, as the GRI content index establishes a common numbering system and structure for sustainability information. The GRI standards also provide a highly credible list of content for inclusion in my proposed sustainability version of the Form 10-K. However, the reality is that most GRI content indexes are long lists of links, which do not provide the same level of usefulness or convenience as the Form 10-K. The GRI content index is a list, not a report.
4. Finally, it could be argued that my proposed “consistently structured form” approach is outdated in the age of the internet and social media. However, I believe the reverse is true—just as companies communicate their business strategies and performance in many ways outside the Form 10-K, so a sustainability version of the Form 10-K would store year-on-year comparable information in one formal location, freeing up space to communicate sustainability strategy and performance in other, more innovative ways. No longer would the sustainability report need to be all things to all people, and no longer would report writers feel the need to create catchy new report themes every year.

We live in the so-called “post-fact world,” an era of misinformation where public trust in business, government, and the media is at an all-time low. I believe this raises the stakes when it comes to the quality, robustness, and comparability of sustainability disclosures, as well as the importance of rigorous reporting processes.

A sustainability version of the Form 10-K can be part of the business response to this new era—and if reaction to this blog is positive, I’d be happy to propose a template.

Blog | Thursday September 9, 2021

Reimagining Investment: Human Rights in Venture Capital

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The increasingly widespread media coverage of surveillance and spyware technologies used to track ethnic and racial minorities and immigrants and surveil journalists, human rights activists, and other prominent figures has put a spotlight on the role of private equity firms, including venture capital (VC) investors, in financing human rights abuses in the United States and abroad.

By providing critical funding for technology start-ups, VC firms play a crucial gatekeeper role, deciding which companies make it onto the market, and ultimately, which technologies shape our lives. This has far-reaching consequences for human rights. While digital technologies present opportunities for economic growth, environmental protection, and the realization of human rights, such innovation can be associated with widespread infringements on privacy and free expression, enable the proliferation of hate speech fueling offline violence, and deepen inequalities, including through "algorithmic discrimination"—affecting people in the job market, accessing loans and public services, and in the criminal justice system.

Despite these societal harms, a July 2021 report released by Amnesty International found that “the vast majority of the world’s most influential venture capitalist firms operate with little to no consideration of the human rights impact of their decisions.” The report concludes that “the absence of human rights policies and due diligence processes amongst VC firms has significant consequences for human rights,” citing a range of examples, such as investments in companies that provide support for the repression of the Uyghur population in China.

These findings run contrary to the global expectation that businesses of all sectors and sizes, including VC firms, take the necessary steps to ensure that their business activities and value chains respect internationally recognized human rights. Unanimously endorsed by governments in the UN Human Rights Council in 2011, the UN Guiding Principles on Business and Human Rights (UNGPs) are the authoritative global framework outlining the responsibility of businesses to respect human rights.

Managing human rights risks is not only good for people—it is also good for business. 

Managing human rights risks is not only good for people—it is also good for business. Public equity investors have already recognized the relationship between human rights risks, including digital and labor rights, and the material costs on return (e.g., SASB standards, Investor Statement on Corporate Accountability for Digital Rights, and digital rights-related resolutions in 2019). A 2019 Harvard study on VC found a link between start-up technology companies that fail and poor performance in addressing environmental, social, and governance (ESG) risks. IPO valuations have also been threatened due to business models that undermine human rights. Firms may even be exposed to legal risks connected to their investments in companies that develop high-risk technologies, while reputational risks are increasing due to the growing focus of NGO advocacy on private capital and human rights.

Tech companies themselves are also realizing this. Growing pressure from regulators, civil society, employees, and shareholders over the human rights abuses connected to their business models, products, and services has led many publicly listed tech companies to adopt human rights policies and take due diligence measures to address risks.

VC firms can meet their human rights responsibilities, help shape a world where technology contributes to social progress, and increase their financial returns by deploying approaches based on the following three principles: 

• Adopt a policy commitment to respect internationally recognized human rights. The policy should set out the human rights expectations of start-up companies, which should be clearly communicated, including during pitching sessions and on the VCs website.
• Conduct human rights due diligence. VC firms should update their core business activities to manage human rights risks. Known as human rights due diligence, this means that VCs need to know the risks to people connected to their investment portfolios and show how they address these risks. This involves assessing how the firm invests and putting in place structures that identify and address risks to people as an inherent part of doing business. This includes processes and mechanisms for engaging stakeholders, including civil society with the relevant knowledge and expertise, to identify the risks and real-world impacts connected to investment portfolios. To show the constructive role they play in strengthening the human rights performance of start-ups, VC firms should also disclose their human rights risk management approach, including through formal reporting.
• Provide space and resources for entrepreneurs to do their due diligence: A core aspect of VC’s own due diligence involves using leverage to enable and support start-ups in their efforts to respect human rights. This may include offering start-ups trainings and tools that support their ability to manage human rights risks, connecting entrepreneurs with business and human rights experts, and encouraging them to assess business models, products, and services to identify human rights risks. Where a VC sits on the board of directors, they should also seek to shape and embed a rights-respecting culture within the company and ensure that the board provides appropriate oversight.

By supporting company founders in their mission to grow their businesses responsibly, VCs can play a transformative role in shaping the behavior and culture of emerging companies and the associated outcomes for society. The UNGPs provide a roadmap for VC firms to reimagine the way they conduct investment, helping to ensure that addressing risks to people is a fundamental part of their core business.

Blog | Thursday January 7, 2021

Business and the Renewal of American Democracy

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The horrific storming of the U.S. Capitol building this week is yet another “shocked but not surprised” event during the dwindling days of Donald Trump’s presidency. Historians will have much to assess from this tragic period but there are numerous lessons for business leaders to consider today.

There can be no doubt that all American institutions—including business—must engage in very serious soul-searching about the factors that enabled the behaviors that reached their apotheosis in mob violence against the Peoples’ House, the U.S. Capitol.

Let me start by saying that we all know that there are very good reasons why businesses, and business leaders, do not weigh in on all, or even most, political questions. We know that most CEOs, whatever their political views, long for a time when they can focus primarily on their businesses, and leave political questions to elected officials.

But this is not such a time.

It is time for business leaders to stand for rule of law in the United States.

It is time for business leaders to call for democratic reforms – not an ersatz commission to explore non-existent election fraud. It is urgent that we restore the smooth functioning of government, such that voter suppression ends and one person, one vote is more than a slogan.

It is time for business leaders to renew their call for equitable law enforcement. As so many have noted, the racial disparities in policing were—again—tragically clear when only scattered arrests occurred after the Capitol was stormed. The contrast with the brutal manner in which protestors for racial justice were treated outside of the White House last summer could not be starker. 

It is time for business leaders to forcefully push back on the many forms of denialism – election denial, vaccine denial, COVID-19 denial, and yes, climate denial, all of which have poisoned American politics and result in death.   

And yes, it is time for business leaders to call out Donald Trump, by name, to ensure that he can do no further damage.  The National Association of Manufacturers—which no one would place on the left of the political spectrum—has called for consideration of removing Donald Trump from office under the 25th Amendment to the U.S. Constitution. More should follow.

It is also time to stop supporting those who enabled the slow and steady rot we have seen the past four years. This means ceasing contributions to those officeholders who challenged the clear and legitimate result of the 2020 Presidential election. (The bankruptcy of America’s campaign finance system was laid bare yesterday as fundraising solicitations on the basis of election challenges were issued even as the hordes were defiling the halls of the U.S. Congress.) This also means not doing business with media outlets that have allowed outright lies and falsehoods to pollute the political discourse in the U.S.

And it is also time for business to think hard about its role in enabling the hijacking of the U.S. government over the past four years. To the degree the business community stood by to take tax cuts they knew would not generate job growth, but would exacerbate income inequality, that is a big problem. To the degree campaign contributions kept flowing to candidates and elected officials who were knowingly misleading the American public, that is a big problem. To the degree that business leaders did not demand further action to address systemic racism, that is a big problem.

As Andrew Ross Sorkin wrote in The New York Times the morning after the events at the U.S. Capitol, business is all about accountability—and we deserve more of it today than ever. When systems fail, a review is conducted to understand what went wrong and how to make fixes that are strong and lasting. That is what great business leaders do. Today, the story is an American one—but it applies to every global business we work with around the world as well.

The failings of the political system were on vivid, heart-wrenching display on January 6, 2021 in Washington, D.C. Change will not come if it is debated only in the halls of the U.S. Congress or on social media. Change must also be debated in every boardroom, so that business leaders rise to the occasion, not only to prevent further damage over the next 13 days, but also so that the necessary renewal of American democracy is a high priority for American business.

Blog | Monday October 23, 2017

All the Ways to Follow Us at #BSR17

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Tomorrow, we’re kicking off the BSR Conference 2017 in Huntington Beach, California. Over the next three days, we’ll hear compelling stories from changemakers at companies, foundations, governments, and other organizations who are taking the lead and embracing the need to redefine sustainable business for an era of profound change and political and economic volatility. 

It all starts tomorrow evening with opening remarks from BSR President and CEO Aron Cramer, followed by a keynote speech from Former U.S. Vice President Al Gore. On Wednesday, we’ll hear from National Geographic Photographer Annie Griffiths and Microsoft’s Brad Smith, among many others. And Thursday we’ll feature a panel on Corporations and the Challenge of the Global Refugee Crisis, featuring TripAdvisor’s Stephen Kaufer, Mercy Corps’ Neal Keny-Guyer, and Mastercard Center for Inclusive Growth’s Shamina Singh, as well as a presentation from Morgan Stanley’s Audrey Choi. We’ll close the Conference with a keynote address from Planned Parenthood’s Cecile Richards.

Whether you’re joining us in person or online, here are the best ways to follow along:

1. Catch the livestream.

We’ll broadcast our plenary sessions on Wednesday and Thursday in a live video feed. Visit the livestream registration page to sign up and join in.

2. Get social.

No matter your favorite social media platform, we’ll be there:

• Twitter: We’ll live tweet nearly the entire event from @BSRnews using the hashtag #BSR17. 
  
  
  
  
   
• Instagram: Follow our Instagram account, @bsrorg, for exclusive, behind-the-scenes looks at the Conference. Post your photos using #BSR17—and don’t forget to tag us!
  
  
   
• Find out more information and join in the conversation on Facebook, LinkedIn, and Flickr.

3. Ask questions. 

We’re opening up our plenary sessions for questions from Twitter—while you’re watching our livestream, ask our keynote speakers about their experiences using #BSR17.

4. Follow up.

We’ll have videos, wrap-ups, and other content available after the event, so be sure to visit the BSR blog, our YouTube channel, and the BSR Conference website.

Single-day passes are still available, so if you’re in the area, join us! Whether you’re with us in the plenary hall or participating virtually from your desk this week, we look forward to hearing your thoughts on #BSR17.

Blog | Wednesday March 2, 2022

Mastering a Purposeful Approach to ESG Due Diligence in Mergers and Acquisitions

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There’s no denying that 2021 was a year of significant growth in M&A, and global M&A activity is poised to climb even higher in the year ahead. M&A can be a tremendous tool for companies looking to adopt more resilient business strategies, but failing to account for the critical ESG elements can undermine success and lead to negative outcomes for business. Investors and regulators are placing more emphasis on corporate ESG performance and disclosure, including in M&A activity and financing terms. In addition, a lack of alignment around ESG topics (e.g., related to labor, governance, and corporate values) can substantially disrupt the post-merger integration process. As a result, interest among M&A teams in ESG is steadily growing, with requests to sustainability teams for guidance and frameworks on effectively integrating ESG considerations into standard due diligence.

To help our members meet this demand, BSR has built upon the guidance offered in our 2019 paper Key Considerations in Managing ESG Through a Merger and developed a set of simple steps that companies can follow to conduct effective ESG diligence in M&A. We hope that the guidance below will help our members to better evaluate the potential impact of ESG issues on business value while embracing purposeful sustainability leadership to better navigate these turbulent times.

Each company will need to develop its own approach to diligence that appropriately integrates ESG into each stage of the deal flow. The diligence process should help a company consider any potential impact of the merger or acquisition on their sustainability strategy and the long-term value of the combined entity. There are several basic elements to consider:

A red-flag check.

The objective of this step is to understand any major ESG-related opportunities or risks as part of the initial target identification process.

• Consider the “future fitness” of the core business and relevant assets. For example, do the target’s products and services appear to be compatible with the net-zero economy? Do they support or erode individual rights to privacy? Do they heavily rely on commodities with fragile supply chains (e.g., in conflict zones, reliant on current geopolitical conditions, or susceptible to extreme weather)? Does the business model present significant risks to human rights or a revised social contract (e.g., working hours, living wages and access to basic benefits, emerging legal requirements)?
• Conduct a media scan to understand any major ESG related risks. Searching for media coverage of human rights violations, serious privacy or data breaches, harassment, labor disputes, corruption, or environmental degradation can help to identify any major liabilities or cultural concerns that should be investigated upfront. Tools such as BSR’s partner Polecat perform big data analysis of online and social media, which are specifically focused on ESG.

A set of basic ESG governance questions.

The goal is to understand a target’s overall maturity related to ESG and ability to address current and emerging ESG issues:

• Does the company have a dedicated person or function responsible for management of ESG? What is their level of seniority? What type of oversight mechanisms govern ESG? Does the board play an active role? Is the CEO part of a regular ESG review cycle? What is the training program for the C-suite and board to understand ESG?
• Has the company conducted an assessment to determine its material ESG issues?
• Does the company have an ESG strategy or policy that addresses material sustainability topics and impacts from assessment results?
• Does the company have measurable timebound targets related to material ESG issues?
• Does the company publicly report performance on material ESG topics in line with relevant ESG reporting standards and regulatory requirements? Which regulatory frameworks for ESG disclosure is the company bound to according to jurisdiction?
• Does the company actively engage with external stakeholders, for example through an advisory group?

A shortlist of potentially material ESG topics based on industry, business model, and geography and evaluation of the inherent risk or opportunity level.

• As a starting point, review material issues identified for your own business. Complement this list of issues with information from tools like the SASB, MSCI, or GRI industry profiles in combination with a standard set of publicly available geographic indices (e.g., Transparency International’s Global Corruption Index), and industry- or topic-specific guidance from organizations like CDC.
• It may help to develop a standard list of topics reviewed in any deal (e.g., climate, human rights, and business ethics) alongside a list of possibly relevant additional topics (e.g., hazardous waste).
• Ask yourself how big the risk associated with each issue might be if it went unmanaged. Consider impacts across the full value chain, from raw material sourcing through product use and disposal across all relevant geographies.
• Be sure to take a double materiality approach that considers both possible impacts to business value and the environment, society, and economy associated with the target company.
• Consider dynamic issues that could be relevant in the next 5-10 years for the post-merger organization alongside issues for the individual business today. It may help to have a standard set of scenarios to evaluate performance across a range of possible future operating environments and to regularly monitor emerging issues.

Due diligence to understand risks and opportunities for each material topic.

Pull together an information request for the company based on material issues identified and tap experts as needed to help evaluate performance. Consider the following elements:

• Related policies and commitments: Do policies exist, and are they relevant to the new company?
• Governance: Is there clear ownership and accountability for performance?
• Performance management systems: Do management systems exist and are they certified to relevant external standards? Have goals been set, and are KPIs regularly tracked?
• Track record: Review performance data (e.g., GHG emissions), do a deeper dive on media coverage, consider litigation, and targeted stakeholder activism.

While it is ideal to have as much information as possible early in the process, in practice some of the components can come together after a deal is announced and before it is finalized. It’s worth noting that there are many reasons why M&A deals proceed even against significant ESG challenges. In fact, deficiencies in effective management can offer opportunities to create tremendous value and positive impact. Either way, it is essential to devote resources to defining sustainability strategy, governance, management, and disclosure protocols during and immediately following a merger. It is essential to have a clear and complete picture of the deal by both parties and a defined action plan to realize the potential of every business to maximize its long-term value and contribute to a more just and sustainable world.

Blog | Wednesday December 14, 2022

How Advances in Neurotech Will Impact Human Rights

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The emerging field of “neurorights” questions how neurotechnology could impact the human rights of people to freedom of thought, identity, privacy, and free will. Undoubtedly, technology is getting closer to influencing our behavior. This piece asks how this technology could impact our human rights, and it will be followed by a second part exploring the responsibility and role of business—from tech companies to tech-enabled products and services—to protect and respect users, both now and in the future. 

Technology can increasingly detect and influence what we think and how we behave. An expanding field of “neurotechnology” can record or interfere with human brain activity, from physical devices, like wearables and medical implants, to artificial intelligence (AI), designed to decode thought or spoken patterns. Then, there is technology that impacts how we experience the world and feel about ourselves, from algorithms to social media apps.

While many of these technologies offer benefits to health, wellness, and human capacities, it is important to understand how they impact human freedoms. Under international human rights law, business has a responsibility for protecting and respecting human rights, such as rights to privacy, freedom of expression, thought, and opinion. However, as technology accelerates into new and unknown territory, many believe that the current international human rights framework may not be adequate to meet emerging human rights risks.

What are Neurorights?

The NeuroRights Foundation, co-founded by Rafael Yuste of the Neuro Technology Center at Columbia University and Jared Genser of Perseus Strategies, aims to address gaps in existing human rights frameworks by outlining five distinct “neurorights” that could be forsaken by the misuse or abuse of technology.

The right to mental privacy highlights the vulnerability of neural data for sale, commercial transfer, and unauthorized use.

Today, wearable devices, like headbands, monitor and stimulate brain activity to help users increase their focus or improve their sleep patterns. Brain-to-text interfaces access brain activity in a way that allows you to write simply by thinking. Medical brain implants can help patients with severe paralysis gain a level of functional independence. Recent AI models aim to decode speech from recordings of brain activity, which could help patients with traumatic brain injuries communicate again, as well as voice biomarker technology that analyzes snippets of a person’s speech to identify mental health issues, like depression and anxiety.

While these technologies could vastly improve quality of life, complete access to deeply personal neural data also raises privacy concerns for users beyond the scope of current human rights protections. One concern is the vast area of uncertainty in how neural data might be used in the future: what potential applications are users consenting to? While there are limits on what can be deciphered from today’s data, technology will get smarter at processing, decoding, and leveraging it. Entities collecting neurodata—whether that’s from wearable devices and implants, or monitoring systems for workforce safety or productivity—could face increased scrutiny on data storage and management.

The right to personal identity calls out the power of technology to impact how we perceive and express ourselves.

Social media has already had a profound impact on freedom of expression and identity. While research suggests moderate use of screens and devices can support social and emotional well-being in children, significant screen time has been shown to impact circadian rhythms, disrupting sleep and hormonal rhythms, which may be a factor in early puberty. Overuse of TV and video games may impact how we develop, disrupting motor skill development and the ability to concentrate.

The right to personal identity may be among the least protected of the neurorights under current international frameworks, where there is currently no concrete language on how identity is formed and how to protect self-perception and self-expression.

What happens to our identity in a world where technology is interacting daily with our neural activity and hormones, and responding to data from vocal and facial expressions? And how might society and regulators respond to new research documenting unintended consequences?

The right to free will recognizes that decision-making is increasingly subject to technological manipulation.

Algorithmic amplification and recommender systems—common in social media and streaming services—also have tremendous potential to impact how we access information and form opinions. There are a wide variety of studies into the impact of algorithmic amplification on news, conflict, and commerce, with an equally diverse range of conclusions—everything from increasing the prominence of high- over low-quality information to the potential impact of algorithms on elections.

For a long time, we have accepted the role of advertising in influencing our decisions, and increasingly, we accept predictive text and corrective algorithms editing in real time how we express ourselves. However, the use of technology to discern and manipulate thoughts and behavior poses a very different level of risk to human rights.

While the NeuroRights Foundation doesn't specifically address risks to freedom of thought or freedom of opinion, as these are already established human rights, it does explore the impacts of neurotechnology on these freedoms.

The right to protection from algorithmic bias points to the widespread impacts on socioeconomic outcomes of bias in algorithms and neurotechnology.

Bias is widespread in the development and application of technology. Research has shown that algorithms used by healthcare companies, to support the detection of heart disease, for instance, source from data that is not diverse, which leads to unequal outcomes or inaccurate results for patients, particularly those of color. The UK’s Department of Health recently launched an investigation to explore the impact of potential bias in medical devices on patients from different ethnic groups, including data used in algorithms and AI tools.

Without proper controls, bias can influence neurotechnology, which may directly impact the quality and outcomes of user experiences. Diverse, cross-cutting teams and research methodologies need to be in place when designing, implementing, and monitoring technologies that interact with our minds to ensure challenges in access or adverse impacts from use are identified and mitigated. 

This brings us to the final right, fair access to mental augmentation, which raises the question of how far a "neurotech divide" could hinder equality and inclusion. While some new offerings aim to enable inclusion, by restoring or replicating brain functionality, access to these will not be equitable, while the application of neurotech geared towards augmenting human capacity could require scrutiny in classrooms, workplaces, and competitive arenas.

Blog | Wednesday July 13, 2022

What the ESG Critics Are Right About—And Where They’re Misguided

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Editor's Note:

It is obvious that we are living through a time of profound and accelerating change. Our world has been rocked by a series of disruptions: COVID-19, war and social conflict, rollback of rights and democracy, and now high inflation and the risk of recession. These developments have jolted society, and business.

These and other developments are also reshaping the world of just and sustainable business. After considerable momentum, there is now a backlash against elements of the sustainable business agenda. Claims of greenwashing are rising, including legal actions. The regulatory environment is changing, with heightened requirements for business on human rights, reporting and disclosure, and other matters. Generational change is reshaping public views about business. The rollback of human rights and democratic institutions is leading to calls for business to “take a stand.”

To help our 300+ member companies navigate this volatile environment, we are launching a series of blogs over the coming weeks to build insight into how to shape business approaches that address this unique moment.

We begin with this initial piece on the “backlash” against ESG. Future entries in the series will explore changing expectations of business in protecting rule of law, rights, and democracy; the emerging harmonization of reporting and disclosure standards; the implications of increased regulation of sustainability; the role of business in combating societal fragmentation.

 We’ll conclude with a deeper dive look into how BSR’s 2025 strategy can help your company to navigate these turbulent times—and how you can collaborate with our global network to push us further, faster, to achieve a more equitable, just world for all.

Like consumer prices, sustainable business has been on a rollercoaster since COVID-19 emerged over two years ago. Sustainability or ESG (environment, social, and governance) considerations were a business, investor, and media darling. Until recently.

Judging from 2022’s headlines, a casual observer might conclude that sustainable business has gone from hero to zero overnight. Regulators are looking to set rules to govern when investment funds earn the ESG label. Media, consumers, and now regulators are leveling claims of greenwashing on a frequent basis. The public asks: “If every company is doing what they say, and airing slick commercials to convince me how good they are, why is climate change and income inequality getting worse?” And “ESG insiders” have come out of the woodwork to assert that “the ESG emperor has no clothes.”

Some of these questions are not only legitimate, but hugely important.  Some questions, which reflect political backlash, are much less so. And for all of us focused on just and sustainable business, we ignore this backlash at our peril.

To start, the critics get three big things right.

First, there is undeniably a gap between aspiration and delivery. The rise of “net zero” carbon commitments is necessary, but clearly insufficient—so far—to put the world on a trajectory towards a stable climate that can sustain a healthy economy. The same is true with respect to companies seeking to protect biodiversity and oceans by being “nature positive” but not yet achieving the promised benefits. These big aspirations mark a leap in ambition from even five years ago. We need simultaneously to ensure accountability without creating incentives for business to retreat to incremental change.

Second, it also is true that there remains a disconnect between companies’ aspirations and what they—or more often their trade associations—do to oppose public policies needed to put our economies on a more sustainable path. For example, too many companies prioritize opposition to tax reform over full-throated support for climate action through efforts such as Build Back Better and other measures. It is critical that business close the “say-do” gap both with respect to their actions and their policy advocacy.

Third, there is widespread and legitimate confusion over what the terms “sustainability,” “ESG,” and "net zero” actually mean. The rise of consistent standards is welcome and overdue. The promise of global standards defining what companies can and cannot label “ESG,” through efforts like the International Sustainability Standards Board (ISSB), will help bring badly needed order to the current chaos. This will help reduce concerns about greenwashing for the public, and will provide the certainty business needs to make ambitious commitments.

These critiques are both valid and valuable. It is also the case that those fostering the backlash get some big things badly wrong.  

First, sustainable business is about long-term change; it is, by definition, complicated to gauge progress quarter to quarter or year to year. Climate is the best test of this principle, with most net-zero targets up to decades away from full delivery. Showing progress today is needed, but it is to be expected that full delivery will take time. There is a big difference between critiquing illusory commitments and embracing structural change that, by definition, takes time. There must be space for companies to make long-term, high-ambition commitments, even as they know that technological innovation, consumer behavior, and public policy are massive dependencies that will also play a role in whether change takes hold.

Second, some of the backlash seems to be designed to provide an “off-ramp” for businesspeople who have been skeptical about the value of sustainability to begin with. It is remarkable how much media attention has been lavished on Stuart Kirk, who has now left HSBC after his infamous jeremiad against climate alarmists, or Tariq Fancy, who now claims that ESG investing is largely useless.

The media seem to be applying the same “bothsidesism” that climate skeptics have used to their advantage, never mind the science. Basic facts suggest that their critiques are at best overstated.  Climate and the destruction of nature quite clearly threaten business, imposing costs, and disruption. The flip side is also true: increased investments in new technologies, from energy storage to plant-based foods to inclusive hiring, deliver clear benefits. There will be inevitable ups and downs as these new markets mature and take hold; dismissing them is short-termism at its worst.

The final and most corrosive element of the backlash has immense importance, especially in the United States. Many political figures, including several aspirants for the Republican nomination for president in 2024 have attacked so-called “woke capitalism.” This is nothing more than political opportunism, unfairly dragging ESG into toxic culture wars. “Green-baiting” in the 2020s is no more justified than the red-baiting that injected venom into the American political scene in the 1950s. It has been laudable to see business leaders including JP Morgan Chase’s Jamie Dimon and BlackRock’s Larry Fink push back on this narrative. One would think that Dimon and Fink’s bona fides as capitalists would put these specious arguments to rest, but the attacks continue nonetheless.

It is obvious that our world faces immense challenges. Business action can be a great asset in creating innovative solutions and new investments in a world that is safer, fairer, healthier, and more resilient. By all means, business should be held accountable, and greenwashing should be called out for what it is. If sustainable business is going to deliver the goods, and navigate a new level of scrutiny because of its importance and prominence, it’s time to get more serious. It is also time to push back on specious arguments that say more about critics’ self-interest than our mutual interest in human progress.

Blog | Wednesday December 7, 2022

Conflict-Sensitive Human Rights Due Diligence for Tech Companies

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The last decade has seen an increase in state fragility and the number of violent conflicts around the world and a decrease in rule of law. Conflict-affected and high-risk markets are often characterized by serious human rights violations and harm to individuals—including loss of life, basic freedoms, or livelihoods.

Companies operating in these contexts face heightened risks of involvement with human rights harms and could exacerbate conflict and instability through hiring and procurement decisions, partnerships with local entities, compliance with local laws, or the use of their products and services. This exposes companies to potential reputational damage, interruptions in business operations, legal liability, and financial penalties

The tech industry has a particularly complex connection with conflict and instability. Emerging digital technologies have become increasingly essential and ubiquitous factors in our lives, communities, and societies. At the same time, there is increasing evidence of the industry’s role in exacerbating conflict. Moreover, the malicious use or disruption of technology to undermine international peace and security is a growing concern among states and regulators.

Conflict, fragility, and human rights are closely linked: grievances over human rights violations can destabilize and drive conflict, while violent conflict creates additional fragility and heightens human rights risks. The UN Guiding Principles on Business and Human Rights (UNGPs) call on companies to conduct heightened—or more in-depth—due diligence in conflict settings due to the proportionately higher risk of adverse human rights impacts.

What is eHRDD?

Heightened “HRDD” or “eHRDD” is, in essence, HRDD plus conflict sensitivity. It requires identifying human rights impacts as well as conflict impacts.  For tech companies, conducting eHRDD in conflict-affected and high-risk areas (CAHRA) poses unique challenges and requires a rethinking of how technology can impact conflict and pose heightened risks of human rights harms.

CAHRA are “areas in a state of armed conflict or fragile post-conflict as well as areas witnessing weak or non-existent governance and security, such as failed states, and widespread and systematic violations of international law, including human rights abuses.”

They can include situations of mass violence as well as areas with weak governance or rule of law; extensive corruption or criminality; significant social, political, or economic instability; historical conflicts linked to ethnic, religious, or other identities; closure of civic space; and a record of previous violations of international human rights and humanitarian law.

Due to the vast diversity in business models, products, services, and technologies used in the tech industry—such as social media platforms, search engines, facial recognition, AI, machine learning, cloud computing, software companies, quantum computing, telecommunications, or network infrastructure—no two due diligence processes will be the same. However, there are clear phases to eHRDD and concrete steps all tech companies can take.

BSR’s Toolkit provides analytical and operational decision-making guidance for tech companies on navigating conflict-related issues. This practice-oriented guidance was written in close consultation with both the technology industry and other diverse stakeholders, including local civil society from high-risk markets.

We lay out nine steps for eHRDD, and each step has multiple components. By adapting these nine steps, we hope that tech companies can develop robust enhanced human rights due diligence processes that can help reduce the risk that technology contributes to conflict. These steps are:

1. Develop a Formal eHRDD Policy and an eHRDD Process
2. Build and Strengthen Cross-Functional Capacities
3. Scope eHRDD Application: Triggers and Thresholds For eHRDD
4. Conduct a Conflict Assessment
5. Analyze Actual and Potential Impacts
6. Address Impacts
7. Communicate Progress
8. Cross-Cutting Issue: Stakeholder Engagement
9. Cross-Cutting Issue: Leverage Industry-Led and Multi-Stakeholder Collaboration

The guidance is targeted to larger multinational technology companies, but it can also be scaled down and applied by small and medium-sized technology companies or startups. We’ve also developed a short accompanying primer that summarizes the steps above and can serve as a rapid reference framework for companies as they build out these processes. 

Next Steps

However, additional work remains to be done. This guidance is meant to be a starting point for further collaboration, research, and diligence. Specific areas of future focus should include a robust analysis of the impact of different types of technologies on conflict, additional guidance on how to conduct conflict-sensitivity analyses for diverse types of technology, such as artificial intelligence or machine learning, social media, telecommunications, etc., and deep dives or pilots of this methodology in diverse parts of the world.

We look forward to building on this guidance and invite tech companies to get in touch to find out how to get involved.

Blog | Wednesday March 18, 2020

An Update from BSR on COVID-19

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Dear BSR Members and Valued Partners,

The COVID-19 coronavirus pandemic is presenting the world with a fast-changing and unprecedented global health situation. 

We hope that you and your families and communities are staying safe and healthy, and applying the values that underlie our collective work on sustainability to see us through this challenging time.

In addition, as a global business network dedicated to advancing sustainable business, we remain focused on our work while also adapting to address the ever-shifting environment in our offices around the world.

We remain very much open for business, with our teams working remotely (though in Hong Kong, some have been able to return to the office safely), at as close to regular capacity as the situation permits, and in accordance with the guidelines provided by relevant national, regional, and local health authorities. You can find us online, with all meetings conducted remotely via video teleconferencing platforms. 

Our work with you, our member companies and many partners, matters now more than ever. At moments like this, we welcome and encourage more dialogue with you, and more collaboration amongst our network.  

This week we will be rolling out new platforms and opportunities for engagement with BSR issue and industry experts, and for networking with other BSR member companies, partners, and thought leaders.  

We’ll also be offering a series of perspectives from our industry and issue experts, with the latest thinking on how business can continue to advance the sustainability agenda while navigating the challenge of the coronavirus. Our new COVID-19 content hub already features insights from BSR staff, including business lessons from the first phase of the pandemic, how to protect human rights while protecting public health, and the pandemic’s impact on workers and supply chains in China. We will be adding content in the days and weeks to come.

Finally, we will be encouraging additional engagement from you, our members, as we navigate this crisis together. This includes:

1. Information sharing and problem solving: We want to hear from you if you have perspectives to share on how this pandemic is affecting your business and your sustainability efforts; or support in solving particular challenges you face throughout your business, whether arising from the impacts of the pandemic or the long-term objectives that remain crucially important. In addition, as part of your BSR membership, you have access to high-level insights on how the coronavirus is impacting your digital (online and social media) profile through BSR’s reputation intelligence partner, Polecat. Please reach out to your relationship manager to learn more.
2. Project support: We will continue to support and work with members on one-on-one projects, using all of the remote tools at our disposal.
3. Networking: We will be looking at additional ways to enable you to share your experiences with other BSR member company contacts through online webinars or examples of responses to the pandemic via contributions to the new content hub. Reach out to your BSR relationship manager if you have ideas for a webinar, or an idea for a blog that you think may be of interest to the broader BSR network.
4. Collaboration: Our collaborative initiatives continue to operate with an immediate shift to virtual gatherings. If the systemic failures made apparent during this pandemic have inspired you to think more long term about how you can collaborate to build a more resilient business and a more resilient system, our collaborations offer a powerful platform. BSR’s CoLab, our incubator and accelerator of private-sector collaboration, works with companies and other partners on a range of sustainability issues, including global health. And BSR’s Healthy Business Coalition is a great resource for collaboration with private-sector peers on public health issues that affect companies and workers. Please reach out to your BSR contact if you’re interested in more information about this.
5. BSR Conference 2020: The Decisive Decade: The BSR Conference 2020 is still set for October 27-29 in New York, and the program will be launched formally later this spring. We will of course be monitoring the situation and re-evaluating the feasibility of hosting an in-person event as the pandemic situation evolves. We will provide updates as we learn more.

We are all facing a monumental challenge, which will undoubtedly have both short- and long-term impacts on the economy, and on the health and well-being of businesses, workers, and communities around the world. Our movement for resilient, sustainable business has never been more relevant, or important.

Our collective ability to achieve a world in which everyone can live a prosperous and dignified life within the planet’s natural boundaries remains fundamentally important. It is up to all of us to redouble our commitments, with urgency and kindness, to unlock the capabilities, ingenuity, knowledge, and resources of the private sector to achieve that vision.

Please stay tuned for further updates and visit this website and our social media channels for the latest information.

All of us at BSR wish you, your colleagues, and your families good health and safety during this challenging moment.

With thanks,

Aron Cramer
President and CEO, BSR