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Case Studies | Monday June 1, 2009

Novartis Pays Social Dividends with Wages

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The Challenge

Novartis needed help meeting its commitment to pay competitive and fair wages—which clearly exceed what is needed to cover basic living needs—and to provide employees with time for family, social activities and leisure. To achieve this standard established in its Corporate Citizenship policy, Novartis must pay wages that cover the market price of a basket of goods and services representing the necessities for an average worker in the countries where Novartis operates. This basket should include reasonable housing, transportation, health care, clothing, nutrition, and education for dependent children in accordance with local standards.

Our Strategy

Since 2003, we have worked with Novartis to calculate the basic needs wages for every country where the company has significant operations. These wages are then used in Novartis' Corporate Citizenship reporting process. Beyond calculating wages, BSR has also researched and implemented improvements to the calculation methodology, reached out to Novartis personnel in many different countries to check the veracity and practicality of the wages, and interviewed academics and other organizations that work on these issues.

Our Impact

Novartis is one of a handful of companies that has committed to paying a living wage to all of its direct employees around the world and that has taken the next, more difficult step of actually establishing a system for assuring that it meets this commitment. Since 2004, Novartis has adjusted the salaries of employees in various countries in line with BSR's living wage figures, positively impacting the lives of many workers and their families. As the living wage program evolves, it will further engage external stakeholders and other companies to not only improve its methodology and implementation, but also to raise the bar for other companies' social policy efforts.

Case Studies | Monday June 1, 2009

Ghana Responsible Mining Alliance

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The Challenge

Ghana is the second largest gold producing country in Africa, and the majority of its population suffers from basic developmental needs. There is a history of conflict around the mining sector in the country and a perception that local communities receive fewer benefits than they should. Two major gold mining companies and USAID/Ghana collaborated to create a tri-partite Global Development Alliance (GDA) aimed at improving the lives of Ghanaians in mining communities. Together they sought the help of BSR professionals to assess the internal capacity of alliance partners and to define key focus areas for Alliance activities.

Our Strategy

A team of two BSR consultants traveled to Ghana to engage with more than 30 stakeholders, including development NGOs, government representatives, local community representatives, the Chamber of Mines, and the Wassa Association of Communities Affected by Mining (WACAM), as well as the three members of the Alliance. The BSR team gathered input, completed additional research, and then developed recommendations for the respective Alliance partner's roles and for three key activity areas:

• Capacity building for local government structures and civil society
• Local economic development through enhanced community livelihood programs
• Development of Ghanaian best practice guidelines for social engagement and management of social issues associated with the mining industry

Our Impact

BSR's input was critical in finalizing the strategy for the Alliance framework and in defining the scope of activities to be undertaken by the Alliance partners. A key outcome of our involvement was alignment of Alliance objectives with local development needs and priorities.

"There was a lot of enthusiasm from the local community," a former participant notes, "and the Ghana Responsible Mining Alliance will be seen as a leading example of innovative and large scale partnerships."

The GDA is currently planned to have a duration of four years and will direct US$10 million from the three partners toward economic development and capacity-building programs in the gold mining regions of Ghana.

Case Studies | Monday June 1, 2009

GE’s Citizenship Report Sets the Bar High

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The Challenge

GE decided to create a reporting strategy that would communicate a global, companywide approach while also encompassing its diverse business lines: GE Money, Commercial Finance, NBC Universal, Infrastructure, Industrial, and Healthcare.

Our Strategy

BSR partnered with GE to create three Citizenship reports (2005, 2006, and 2007) that present for stakeholders the areas in which GE could make the most significant contributions to sustainable development. Key aspects of this strategy included:

• Understanding that GE can make a contribution to sustainable development not just from managing its own operations but, more significantly, by understanding the way in which its products and services can address social and environmental needs such as healthcare, climate change, and the need for clean water
• Implementing materiality assessments for some GE businesses to understand which issues presented the greatest risks and opportunities, and where each business could make the greatest contribution through its products and services
• Identifying key areas for improvement (such as human rights policy) and establishing forward-looking commitments
• Identifying key performance indicators and highlighting new metrics (such as waste and water use) that needed to be tracked

Our Impact

GE is consistently ranked as one of the world's most admired companies. By taking a leadership approach to its reporting, GE is demonstrating how business models can be built so that they create value for both society and shareholders. The GE report is also frequently cited as a best practice benchmark by other companies eager to adopt leading approaches to CSR.

Case Studies | Monday June 1, 2009

IBM Supports Small Businesses in Emerging Economies

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The Challenge

IBM wanted to develop a virtual business incubator for small- and medium-sized enterprises (SMEs) and asked us to help evaluate target markets, assess gaps in current offerings and desired functionality, and identify potential partners. Such an understanding would prepare IBM to develop a solution that best meets the needs of SMEs and maximize the impact on economic development.

Our Strategy

BSR's initial analysis supported a competitive assessment of existing services and identified potential partners. We developed a framework for evaluating capacity-building organizations focused on small- and medium-sized businesses in emerging markets and provided a high-level assessment of SME needs in those markets. Once IBM used this analysis to help focus on the collaboration needs of such businesses, BSR created a framework IBM used to analyze the current offerings and collaboration needs of SMEs in India, Brazil and South Africa, and among women- and minority-owned businesses in the United States. We developed the strategy and tools based on our first-hand experience working with SMEs in emerging markets, our relationships with NGOs and multi-lateral institutions focused on supporting emerging market entrepreneurs or women- and minority-owned businesses, our knowledge and experience working with multi-national value chains and supplier diversity programs, and the specific content knowledge we have from past work in India, Brazil and South Africa.

Our Impact

IBM used BSR’s research to help evaluate potential collaboration partners and later formed a partnership with the International Finance Corporation and its SME Toolkit. IBM also leveraged the report findings and the company's increased understanding of SME needs in emerging markets to shape priorities for tool development. This project is contributing to economic development in communities that currently lack complete access to the market economy. It allowed IBM to leverage its technology strengths to develop tools that provide SMEs with access to peer support, mentoring, best practice sharing, and expertise of business partners. It also tied directly to IBM's business growth strategy: an increased focus on the small business segment as well as key emerging economies.

Case Studies | Monday June 1, 2009

Environmental Services, Tools, and Markets Initiative

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The Challenge

The landmark Millennium Ecosystem Assessment—the most far-reaching ecological study ever undertaken, conducted by over 1,300 scientists around the world—found that 60 to 70 percent of environmental functions, such as natural water purification and flood protection, are being degraded faster than they can be recovered. The private sector, its customers and its suppliers rely on many of these services for consistent supply, business continuity and consumer purchasing power. BSR took on the challenge of identifying and evaluating financial mechanisms that can be applied to these services in order to capture their value through new environmental markets.

Our Strategy

BSR's Research & Development team conducted a due diligence process with numerous stakeholders, nearly all of whom identified “reaching ecological limits” as a key megatrend that should frame our efforts. We then worked to identify cutting-edge approaches to environmental management, focusing on the emerging field of Payments for Ecosystem Services, also known as “Environmental Markets.” We shared our findings in BSR reports and external publications and formed the Environmental Markets Initiative Working Group with five oil and gas companies that provide both financial support and thought partnership. Through this working group, we researched the emerging landscape of new financial mechanisms and published a "Corporate Manager’s Resource Guide to Environmental Markets." In addition, the group will assess the utility and future design of new tools for environmental service identification and valuation. In 2008, the working group will expand its scope of work to include demonstration projects with individual companies, in-depth research into select environmental service markets, and dialogue with policy-makers to ensure a business voice in designing smarter regulation.

Our Impact

BSR's Environmental Markets Initiative has contributed key empirical research through interviews with hundreds of global experts, produced quantitative analyses of market growth, mapped the various initiatives from different sectors and geographies, and facilitated partnerships to align agendas and avoid duplicative work. This demonstrates BSR’s capability to develop highly innovative cross-sector collaborations that leverage the resources of corporations, academia, and governmental institutions.

Based on current trends, we predict that corporate investments in ecological infrastructure will become core strategies for leadership companies within the next five years. By becoming a leading organization in this space, BSR is able to help companies anticipate this new generation of corporate environmental strategy.

Case Studies | Monday June 1, 2009

Defining the Role of Responsible Business in Protecting International Labor Migrants

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The Challenge

An increasingly vital part of the global workforce, labor migrants now comprise approximately 190 million people, or about 3 percent of the world population. These migrants—many of whom are moving “South to South,” between emerging economies—often arrive in destination countries heavily indebted, with limited knowledge of local languages, laws, and culture, and with restricted access to protection. As a result, they are vulnerable to a number of human and labor rights violations, including passport withholding, bonded labor, broken contracts, and nonpayment of wages.

Despite attention to general working conditions in global value chains—and despite the fact that this issue can have a great impact on global businesses—there are no widely accepted and understood guidelines for how multinational companies can help manage the needs of migrant workers. The complex scope of the problem, and its potential solutions, lie beyond the abilities of individual businesses to address.

Our Strategy

With support from the John D. and Catherine T. MacArthur Foundation, BSR launched a two-year initiative to engage business in operational and policy efforts to protect the rights of international labor migrants in global supply chains in South and Southeast Asia, the Middle East, and North Africa.

We began this project by conducting comprehensive outreach to experts worldwide from business, government, civil society, and academia concerning key features of labor migration between emerging economies.

Through this research, BSR identified stakeholder interests and activities, key areas of vulnerabilities for workers, and broad trends in the current system of labor migration between emerging economies. For optimal impact, BSR pinpointed key risks and strategic opportunities for company engagement.

Our Impact

This initiative represented the first effort to engage companies in an analysis of the South-South labor movement and its impacts on global supply chains. In the fall of 2008, we published “International Labor Migration: A Responsible Role for Business” on the nexus of South-South migration and business challenges, such as:

Applying this knowledge, as well as our expertise from more than a decade of supply chain work, BSR built a three-step business engagement strategy that encourages companies to educate themselves, engage with suppliers, and expand their influence through partnerships with government, trade unions, NGOs, and others.

At the BSR Conference 2008, we conducted outreach with international companies through our Ethical Sourcing Working Group and a Conference panel session entitled Migrant Workers in Your Supply Chain: Risks and Opportunities.” More than 40 companies from apparel, electronics, food and agriculture, and media sectors, as well as 20 NGOs and government representatives, expressed interest in joining a Migration Focus Group launched in early 2009 to address the needs of migrant workers in global supply chains.

• Use of third-party recruiters and labor outsourcing companies increases the risk of abuse.
• Migrant workers are unprotected under many national laws.
• Few workers receive adequate predeparture skills training.
• Processes for dispute resolution are often ineffective.

Case Studies | Monday June 1, 2009

Cleaning Up Industrial Water Pollution in Southern China

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The Challenge

In industrial regions of southern China, water pollution is an increasingly serious problem. According to the Nanfang Daily, 12.62 billion tons of polluted materials and 8.3 billion tons of wastewater were discharged into the waters off Guangdong in 2007—up 60 percent from five years ago. Perhaps most distressing, according to Guangdong officials, more than 40 percent of the province’s rural people do not have access to safe drinking water.

In southern China, the apparel and textile industry’s discharge of wastewater containing reactive dyes is a serious environmental challenge contributing to the problem of polluted water. The load is characterized by high color content, with suspended solids, salts, nutrients, and toxic substances such as heavy metals and chlorinated organic compounds that pose significant risks to human health, including exposure to constituents such as chloride, nitrate, nitrite, and sulfate. In addition, the effluents discharged lead to serious pollution of surface water sources and groundwater, inhibiting biological processes and the productivity of rivers and streams.

Our Strategy

In January 2008, BSR launched the China Water Initiative to determine how the private sector can help reverse the degradation of southern China’s water resources. Our aim is to create a network of organizations working toward the same objective—to protect the region’s natural waterways.

To do this, BSR built partnerships with organizations like the Center for Water Research at Beijing University, the Institute for Public and Environmental Affairs, the China Environment Forum, and the Association for Sustainable and Responsible Investment in Asia, which already are tackling this challenge.

Our Impact

Based on a series of factory visits in southern China, BSR identified a range of pressures on factory managers that impact the management of water resources and wastewater discharge. These include low worker retention rates, international competition, and rising prices for their material inputs.

After we presented these findings at a forum in Guangzhou, BSR incorporated the information into a training curriculum designed for factory managers. BSR is applying its expertise as a partner with brands and suppliers to provide best practices, tools, and training to factory managers at textile mills, dyeing facilities, and other finishing mills. Ultimately, this will help factory managers improve their environmental performance related to wastewater management, water and energy use, and efficient use of materials and chemicals.

Case Studies | Monday June 1, 2009

China Mobile: Advancing Corporate Responsibility Reporting

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The Challenge

While sustainability reporting in Europe, Japan, and the United States has been common practice for years, businesses in China have begun embracing this practice recently. China Mobile issued its first corporate responsibility report in 2006, and it engaged BSR to assist with its 2007 report as a way of advancing its newest sustainability efforts.eams.

Our Strategy

BSR responded by putting together a global team composed of BSR staff with deep experience in the telecommunications industry, familiarity with international standards and approaches to reporting, and specific knowledge of Chinese culture and business practices.

Together, the team spent months interviewing China Mobile officials about how the company defined and implemented its approach to corporate responsibility—responsibility makes perfection”—across 19 different departments at its headquarters and 31 subsidiaries across China. Specifically, discussions focused on understanding the four distinct elements of its approach: improving access to technology in rural villages; offering care and support for society’s disadvantaged; sponsoring philanthropic support for education; and promoting new techniques to manage resource consumption, improve materials efficiency, and decrease environmental impact overall.

Our Impact

With input from the BSR team, China Mobile published its corporate responsibility report in early 2008. China Mobile was praised by the international corporate responsibility community for providing readers with a better understanding of its systematic and strategic approach to corporate responsibility management. In the latter part of 2008, China Mobile became the first mainland Chinese company recognized on the Dow Jones Sustainability Index. The company also has continued to expand and meet its commitment to absorb nonfinancial criteria into corporate decision-making and pursue its goal to “grow together harmoniously” with industry, society, and nature.

Case Studies | Monday June 1, 2009

Building Collaboration: The ILO/IFC’s Better Work Program

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The Challenge

A joint project of the International Labour Organization (ILO) and the International Finance Corporation (IFC), the Better Work program is designed to improve working conditions in global supply chains while boosting both countries' economic competitiveness and business for national industries. The ILO and IFC selected BSR to help increase the involvement of international buyers in order to create systemic improvements of the working conditions in their supply chains.

Our Strategy

BSR's work on this project grew out of our support for the ILO/IFC's Better Factories Cambodia project. In 2008, following the global expansion of the model, BSR worked with the ILO/IFC to expand the participation of international buyers in Better Work, to strengthen both that program and the companies' efforts to ensure responsible supply chains.

At the same time, BSR began running country-specific buyers' forums in countries to which Better Work was expanding, including Vietnam and Jordan. These events allow buyers to work directly with key local stakeholders—including government, unions, and enterprises—on shared solutions to improve working conditions. These country-level programs—which directly benefit nearly 800,000 workers—combine independent assessments of labor standards at the factory level with training and capacity building.

Our Impact

As a result of BSR's efforts, the number of international buyers in the project doubled, and we contributed to a significant reduction of duplicative factory monitoring in Cambodia. Our approach also led to verified improvements in working conditions across the apparel industry, the creation of tens of thousands of new jobs, and sustained increases in exports to the United States and the European Union.

In 2005, at the end of the Multi-Fibre Arrangement, the international system of national quotas for apparel production, many people were concerned that the industry in Cambodia would be decimated. Instead, the Better Work program helped increase jobs in Cambodia's garment export market by nearly 30 percent. In the first year after the lifting of quotas, international buyers involved in the program increased exports at twice the rate of the industry average.

While it's too early to quantify our impact in other Better Work countries, BSR has worked with many buyers sourcing in those regions to create a strong commitment to reducing the duplication of monitoring, continuously improving working conditions, and actively engaging in partnerships with local stakeholders.

The tripartite model of Better Work provides a basis for impact and credibility. Most importantly, Better Work's tools and country-specific programs enable international buyers to collaborate with government, employer, and workers' organizations on shared models that promote sustainable impact at the national level.

Case Studies | Monday June 1, 2009

Archer Daniels Midland: A Sustainable Supply Chain for Agribusiness

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The Challenge

As one of the largest agricultural processors in the world—producing food, feed, and bio-energy products—Archer Daniels Midland (ADM) addresses one of the world’s most pressing challenges: meeting the growing global demand for agricultural products, while balancing the need to use such resources for food, fuel, or animal feed, and minimizing environmental degradation. Seeking guidance as it navigated these interconnected issues, ADM engaged BSR, beginning in 2007, to help the company align its supply chain management with best practices in social and environmental stewardship.

Our Strategy

Over the course of nine months, BSR assessed key commodities in ADM’s supply chain, evaluated the impacts of related operations on the environment, helped the company understand stakeholder views, and recommended options for maximizing sustainability in the years to come.

BSR’s supply chain assessment included several steps. First, we analyzed the sustainability impacts for three commodities (corn, palm oil, and soy) in the key countries where they are grown: Brazil, Indonesia, Malaysia, and the United States.

Next, BSR sent teams to observe growing and harvesting practices at individual farms in these countries. To obtain a complete picture of the production, processing, and traceability of the three crops, BSR team members interviewed a variety of stakeholders at local and global levels, including farmers, production managers, key staff within ADM, and NGO leaders.

Finally, BSR used the information gathered in these steps, and our expertise in food and agriculture supply chain issues, to develop detailed recommendations for ADM. We provided executive-level guidance on the commitments and structural changes necessary to further integrate sustainable business practices into ADM’s culture and operations, as well as advice related to commodities production—such as how to increase stakeholder engagement and align with sustainable sourcing criteria.

Our Impact

With BSR’s guidance, ADM is taking several important steps: building capacity in its various sourcing regions by hiring local people with sustainability expertise; developing partnerships with local experts to reduce deforestation, prevent the loss of local land rights, advance sustainable growing practices, and improve working conditions; and working with supply chain partners in multi-stakeholder initiatives to establish certification schemes for palm and soy production. Finally, ADM has enhanced roles, responsibilities, and structures inside the company to anticipate sustainability risks and opportunities more effectively—and deliver value everywhere it does business.