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Sustainability FAQs | Friday July 21, 2023

Laws and Regulations for Just and Sustainable Business

Preview

This FAQ sets out the BSR perspective on new laws and regulations relevant for our work. The field of just and sustainable business is entering a new era where actions that have previously been voluntary are becoming mandatory. We believe it is essential that the spirit of the law is achieved as well as its letter, that compliance supports ambitious human rights policies and sustainability goals, and that regulatory requirements are used to help create a world in which all people can thrive on a healthy planet. 

This FAQ does not set out the detailed requirements of laws and regulations since many of them are evolving at the time of writing. 

Recent Developments

What new laws and regulations are impacting the field of just and sustainable business? 

Many of the most significant laws and regulations originate from the EU and do or will apply to all qualifying companies doing business in the EU, not just European companies. However, relevant laws and regulations exist in other jurisdictions too. The following non-exhaustive examples illustrate the range and breadth of these regulations: 

• US SEC Climate Disclosure Rule will require public companies to disclose climate-related information, such as Scope 1, 2, and 3 emissions, climate-related risks and opportunities, and governance practices. 

• EU Corporate Sustainability Due Diligence Directive (CSDDD) will require large companies to conduct due diligence to identify, prevent, or mitigate adverse impacts on the environment and human rights. 

• EU Corporate Sustainability Reporting Directive (CSRD) requires companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment. 

• EU Digital Service Act (DSA) is a form of mandatory human rights due diligence for social media companies and other large online platforms. 

• EU AI Act will require due diligence by companies providing and deploying artificial intelligence. 

• EU Sustainable Finance Disclosure Regulation (SFDR) requires financial market participants to disclose environmental and social risks, including how they impact people and the planet.  

• EU Taxonomy Regulation sets out a framework to classify economic activities carried out in the EU as “green” or “sustainable”, including both environmental objectives and human rights safeguards. 

• The German Supply Chain Due Diligence Act, Norwegian Transparency Act, and French Corporate Duty of Vigilance Law all require forms of human rights due diligence. 

• The UK Climate-related Financial Disclosure Regulations (CFDR) requires large companies to disclose climate-related financial information. 

• Japan Exchange Group is introducing new listing rules that will require companies to disclose information about their ESG performance, including their policies, targets, and progress in addressing ESG issues. 

• Financial Market Commission of Chile requires companies to disclose a range of ESG issues, including on human rights and climate change. 

A key theme underpinning these changes is the expectation that companies identify, address, and report their “impacts outwards” on society and the environment, not simply the “impacts inwards” of society and the environment on the company. 

Are these new “hard laws” consistent with existing “soft laws”? 

Most new laws and regulations do a good job of adopting existing well accepted “soft law” standards and converting them into “hard law” requirements. For example: 

• Concepts core to the UN Guiding Principles on Business and Human Rights (UNGPs)—such as how to assess, address, and report on adverse impacts on people—provide the foundation for due diligence requirements in the CSDDD and the DSA. 

• The four-part framework of governance, strategy, risk management, and metrics used by the Taskforce on Climate Related Financial Disclosures (TCFD) has been adopted by the European Sustainability Reporting Standards (ESRS) that implement the CSRD. 

• The reporting standards previously developed by the Global Reporting Initiative (GRI) and the International Sustainability Standards Board (ISSB) are the starting point for most disclosure requirements. 

This means that companies already implementing approaches founded upon the UNGPs, TCFD, GRI, and ISSB are best placed to achieve compliance with new laws and regulations. 

Are the new laws and regulations consistent with each other? 

Some of the new laws and regulations have adapted standards created for one field (such as human rights or climate change) and applied them to other parts of the field. This has significantly enhanced consistency between them. For example, the CSRD adopts prioritization severity criteria drawn from the UNGPs (i.e., scope1, scale2, and remediability3) and applies them to its materiality assessment requirement across all sustainability issues (thereby enhancing consistency with the CSDDD), while the TCFD framework has been adopted by the CSRD for all issues, not just climate change.  

While the new laws and regulations are not perfectly harmonized (e.g., they don’t use precisely the same terminology and definitions) they are very well aligned (e.g., they do not contradict each other) and are very complementary (e.g., companies can achieve more by complying with them in combination). 

Impact on Sustainability Strategies

Will compliance with these laws and regulations mean accepting the “lowest common denominator” of responsible business conduct? 

No. By requiring business practices based upon existing “soft law” standards, we believe these new laws and regulations do or will significantly raise the bar for responsible business conduct and bring changes that advance the overall field of just and sustainable business. Companies who already follow the “soft law” standards are in a strong position to comply, and the long tail of companies who don’t will need to improve.  

Will compliance with these laws and regulations lead to a “check box approach”? 

If a “check box approach” means taking a disciplined and methodological approach to the deployment of just and sustainable business practices then yes, we do believe that elements of a “check box approach” will emerge, and this disciplined and methodological approach will bring some benefits. However, we believe that it will be important for companies to seek compliance with both “the spirit of the law” and “the letter of the law”.  

What is the difference between “the spirit of the law” and “the letter of the law”? 

The “spirit of the law” is the intent or purpose behind the law, while the “letter of the law” is the actual wording of the law. In other words, the spirit of the law is what the law is trying to achieve, while the letter of the law is what the law actually says. 

While the “letter of the law” provides certainty and predictability, we believe that the “spirit of the law”—focusing on the outcomes the law is seeking to achieve—is more important in the case of regulations impacting just and sustainable business. We welcome the fact that many of the new laws and regulations are articulated as outcomes-oriented, which encourages such an approach.  

How can compliance with laws and regulations be combined with ambitious approaches to just and sustainable business? 

There is a risk that the growth of new laws and regulations will result in a narrow focus on compliance, risk-averse actions, and overly cautious public communications. 

However, we believe that companies should seek to connect compliance with the law (e.g., mandatory due diligence; regulated disclosure) with broader commitments that the company has already made (e.g., human rights policy, transparency commitments, climate goals). These objectives are mutually re-enforcing. 

For example, we believe that companies should implement an approach to human rights due diligence that (1) achieves the aspirations of their human rights policy and the responsibility to respect human rights under the UNGPs and then (2) extracts the subset of information, data, and actions needed to demonstrate compliance with mandatory human rights due diligence and reporting requirements.  

In other words, the steps and evidence needed to achieve compliance with the letter of the law should be built into the company’s human rights due diligence as a design requirement, but they should not serve as its final objective, which should instead be to meet the company’s responsibility to respect human rights. 

We frame it this way because the “spirit of the law” means respecting human rights, while the “letter of the law” means demonstrating that certain process steps have been taken. 

Impact on the Field of Just and Sustainable Business

Will the focus on compliance reduce the relevance and impact of the just and sustainable business profession? 

No, we believe the focus on compliance will increase the impact and significance of those working in just and sustainable business functions.  

There is an understandable concern that laws and regulations will make important global priorities (e.g., achieving climate goals, respecting human rights) the mandate of finance, legal, and compliance teams, taking influence away from the sustainability, human rights, and social impact teams whose ambitions may be more transformational. 

However, those in the just and sustainable business profession have an essential role to play in understanding how regulations should be interpreted and working alongside finance, legal, and compliance teams to shape how regulatory requirements are met in practice. We should not be “passive actors” watching from the sidelines. 

The impact of the just and sustainable business profession will be enhanced for three main reasons: (1) our subject matter expertise and practical experience is essential for achieving compliance; (2) the greater level of attention, review, and scrutiny of compliance (e.g., from senior executive and board review) will significantly increase the visibility of our work; (3) there will be even more opportunity for collaboration across professions (e.g., risk management, compliance, strategy, sustainable business working together) to improve the quality of all our work. 

Will the focus on compliance reduce the quality of human rights and other forms of due diligence? 

There are two scenarios that could emerge for company approaches to due diligence—one pessimistic, and one optimistic: 

• Pessimistic scenario: “The emphasis on regulated transparency and discoverability means we need to be careful about anything we record. It is in our best interests to only know and show risks where we have a good history of addressing them.” 

• Optimistic scenario: “We need to demonstrate to regulators that our due diligence processes are thorough, credible, and defensible. It is in our best interests to know and show all our risks and what we are doing to address them.” 

It is our job in the just and sustainable business field to pursue the optimistic scenario. This means applying the same approach to due diligence globally (e.g., not one version for the EU and one for the rest of the world) and undertaking meaningful due diligence in good faith, not as narrowly as possible. 

What might influence the outcome? 

A key variable will be company culture, where we should seek a company culture of achieving both compliance with the “spirit of the law” and ambitious policy commitments over time. The new wave of regulation raises the profile and importance of just and sustainable business which requires an all-company approach.  

For example, if a company’s Board and management must verify its actions and results on climate and human rights in the supply chain, then product design, procurement, transport and logistics, and other functions must be fully bought in, and results measured. It will be important to promote and enable culture change to ensure that performance matches requirements and that both compliance and ambition are sustained over the long term. 

What will the impact be on company participation in multi-stakeholder efforts that seek transformative change? Is there a risk that companies will pull back on participation? 

We believe that the underlying reason for the growth in multi-company and multi-stakeholder efforts that existed in the voluntary era also apply in the regulated era—specifically, that major challenges can only by successfully addressed by companies and stakeholders working together, rather than alone.  

Further, there is a distinction between the “subject matter agnostic” nature of many emerging laws and regulations and the largely “subject matter specific” nature of today’s multi-company and multi-stakeholder efforts. 

Finally, it is worth nothing that participation in multi-stakeholder efforts is one way that companies can demonstrate requirements for meaningful stakeholder engagement that are included in several upcoming laws and regulations (e.g., EU DSA, EU CSDDD). 

Will strategy become constrained by compliance? 

Business strategies are never driven by legal requirements, and the same should be true of just and sustainable business strategies. Senior management and Boards are now mandated by law to focus on multiple aspects of sustainability-related compliance, but this mandate should be considered necessary rather than sufficient for effective leadership.  

It is more important to develop innovative strategies for just and sustainable business (e.g., that address climate risks and opportunities and both respect and promote human rights and social justice) from which compliance with laws and regulations can be demonstrated. Legal requirements as the baseline, and not constrain innovation and ambition. 

Will these changes require higher standards for data? 

Yes. Data verification, as well as the processes that generate data, will become more important. This raises the stakes for everyone: teams need to be more confident in their data; auditors need to have the right skills for assurance; Directors need to sign off with confidence.  

One specific characteristic of note is the distinction between quantitative and qualitative data. For quantitative information (such as pay equity, water use, and climate information) there are well recognized methods for assurance, but for qualitative information (e.g., prioritization of human rights risk or approach to climate justice) there are fewer guideposts available. 

There is an assumption that the laws and regulations listed above are largely “good”. What if “bad” laws and regulations emerge? 

The laws and regulations listed above are generally positive for the growth of just and sustainable business practices.  

However, we do see three important risks. First, there is a risk that the governments also introduce laws that conflict with international human rights law or widely accepted standards of business conduct. Second, there is a risk that governments introduce laws and regulations that “look and feel” like this positive examples above, but in reality, are “cover” for laws with nefarious purpose, such as imposing surveillance requirements or limits on company collaboration with civil society. Third, there is also a risk that laws and regulations will be vaguely worded with ample room for interpretation. 

In these scenarios business has a responsibility to use its leverage, alone and in collaboration with others, to either oppose or improve such laws. 

Blog | Thursday June 15, 2023

The US Supreme Court Ruling on Affirmative Action: A Business Response

Preview

It is expected that the US Supreme Court may issue a landmark decision that ends the practice of affirmative action this month. The ruling would effectively ban US colleges and universities from considering race as a factor in admissions decisions which, as illustrated by existing state-level bans of the practice, can reshape the demographics and diversity of campuses for generations.

More broadly, as research has shown, the consequences of a national ban on affirmative action are likely to ripple throughout the US economy as decades of efforts to increase social and economic participation by historically excluded populations are upended and schools, businesses, communities, and governments become more racially, and even ideologically, homogeneous.

For business leaders that care about hiring and retaining diverse and exceptional talent, developing and delivering innovative products and services, and attracting a diversified consumer base, the end of affirmative action should be seen as more than another philosophical or policy debate in the so-called “culture wars.” Indeed, business leaders should understand and respond to the end of affirmative action for what it is: a significant and material risk to long-term corporate economic success.

As such, bold and committed action is needed in the months and years ahead to ensure that progress toward a more diverse, equitable, and inclusive economy is not lost, nor business value diminished. Even as we wait to see the final ruling, there are seven key actions businesses can take:

Underscore Your Company’s Long-Term Commitment to Diversity
 

• Reiterate your company’s commitment to building and maintaining a diverse workforce and organization. According to recent public opinion polling, 69 percent of adults agree that a company should respond to issues surrounding race, including supporting schools and communities teaching about the impacts of slavery and racism. Raise awareness of your company’s commitment to operationalizing DEI initiatives, developing products and service offerings that meet the needs of diverse communities, and supporting broader racial equity and social justice efforts.
• Commit to corporate accountability initiatives that focus on racial equity and DEI in the workplace. Business leaders need to be regularly exposed to and equipped with educational resources and practical tools and can seek out opportunities to participate in current and emerging civil society and philanthropically supported efforts. Among others, these might include:
   
  • Pilot new corporate standards tackling inequality from the Corporate Racial Equity Alliance, a partnership between PolicyLink, FSG, and JUST Capital. The standards will provide business leaders with clear goals to strive for, milestones along the path, and metrics to track in order to communicate progress in this work and earn greater trust. Piloting companies will receive individualized support from the Alliance and provide essential input to help shape the standards for the field.
  • Join the Expanding Equity network supported by the W.K. Kellogg Foundation, which offers resources, as well as learning and networking opportunities, for business leaders focused on advancing racial equity, diversity, and inclusion (REDI) strategies in their organizations. Several resources are available now, and a robust learning platform with courses on REDI strategy development and related topics will roll out later this year. 
• Assess your company’s hiring data to identify barriers to diverse talent acquisition and surface factors that may support the long-term hiring of diverse workers. This may include collaboration between human resources, communications, and legal teams to review job listings and ensure barriers and biases are eliminated. Companies may also evaluate their onboarding, performance review, and employee benefits policies and practices to understand where there may be opportunities to increase the retention of diverse workers.
   

Demystify Affirmative Action Impacts among Company Stakeholders and Bolster Good-Faith, Fact-Based Public, Policy, and Legal Discourse
 

• Support campaigns by industry groups and peers that inform how colleges and universities utilize affirmative action to enroll a diverse student body and highlight the direct and indirect impacts of the practice on your business. In the coming months, the broader narrative in the public around affirmative action is likely to be fueled by polarizing inaccuracies, misperceptions, and hyperbole. Business leaders should look to leverage their communications, policy, and other media infrastructure to elevate the discussion of affirmative action so that it is based on facts and the real, tangible ways in which the court’s ruling impacts your company and the broader economy. 
• Establish guidelines for your state- and federal-based political giving that minimizes donating to candidates who spread misinformation about affirmative action practices and impacts. As we head into what is likely to be a divisive and controversial election cycle, corporations can play a direct role in minimizing the extent to which bad-faith actors negatively influence public and policy discourse around affirmative action practice and impacts and the long-term benefits of a diverse, inclusive, and equitable economy, more broadly. Whether individually or in alignment with industry peers and other valued stakeholders, business leaders should consider how their political giving can be tailored toward political candidates and leadership that champion good-faith ideas based on fact and the economy’s long-term interest in mind.  
• Leverage philanthropic, community engagement, and corporate responsibility resources to foster the development of student admission approaches and strategies that support and safeguard diverse enrollment in higher education and at trade schools. Here, companies can collaborate with school leadership and educational associations to conduct regular engagement sessions or support research that informs admission officials’ understanding of potential admissions approaches and practices that can further support diverse talent development pipelines.
• Prepare for ongoing state- and federal-level engagement. Companies can ensure that their teams are equipped to monitor and support with amicus briefs to safeguard human resources initiatives, DEI programs, and other corporate diversity efforts at lower-level federal and state courts before they bubble up to the higher courts. Furthermore, given state-level policy already targeting DEI programs with an intent to send a chilling message, companies should expect copycat efforts in future legislative sessions.  

As we saw with the fall of Roe v. Wade last year, the end of affirmative action is likely to encourage partisans and extremists to seek out a myriad of legal, policy, and media levers to create unrest across jurisdictions. The business community cannot afford to watch from the sidelines or be caught off-guard because of a lack of action or infrastructure to reinforce and protect long-term business strategy.

BSR’s Center for Business and Social Justice works with a network of civil society partners and experts in reproductive health to provide tangible guidance to business. All BSR members can contact the Center for specific inquiries.

Blog | Tuesday October 16, 2018

The Future Is on the Agenda at BSR18—Will You Join Us?

Preview

This year’s BSR Conference comes at a time of profound change. Market conditions are turbulent. Around the world, poverty rates continue to fall—at the same time, inequality continues to grow.

Technology is sparking both utopian and dystopian views of the future. Culture is also changing fast, not least through the #MeToo movement. And just last week, the latest report from the Intergovernmental Panel on Climate Change reveals that despite many important initiatives, the world is not taking sufficient action to avoid seriously damaging climate change.

It is almost certainly the case that these changes, many of which are intertwined, will only grow in pace and intensity in the years ahead. What is a business to make of all these changes, and how can companies navigate our era of intense, inter-connected, non-linear change?

What is a business to make of all these changes, and how can companies navigate our era of intense, inter-connected, non-linear change?

At the BSR Conference 2018, we will be unveiling scenarios that can help you and your company make sense of the evolving world over the coming years and decades. These are not predictions of what the world will be like in 2019 or 2028. Rather, they aim to illuminate the underlying forces that are creating the market and social framework in which business will be operating.

Specifically, the scenarios revolve around two fundamental questions:

1. What forces of centralization and decentralization will define our culture, economy, and political context?
2. Will the world continue to rely on familiar, consumption-led economic models or shift to a new economic model that defines value in a more holistic way?

There is no single answer to these questions. Instead, we will present four scenarios that anticipate how these crucial questions could play out by 2030.

These scenarios tell stories of how our world might evolve, with important implications for business.

This is no academic exercise. Each of our four scenarios explores core elements of the sustainable business agenda: the shape of supply chains, availability of natural resources, and nature of employment, as well as product and service development, health, and energy and climate. In this way, the scenarios will enable planning and decision-making central to the achievement of the social, economic, and environmental outcomes crucial to business and embedded in the Sustainable Development Goals and the Paris Agreement.

These scenarios will be unveiled on the opening night of the Conference. But they are intended to live well beyond that: We hope that these scenarios will be widely used throughout the BSR network to consider how business can shape strategies that will thrive, regardless of which scenario, or hybrid of these scenarios, ultimately defines the coming decade.

As we continue in our effort (launched at last year’s BSR Conference) to redefine sustainable business, we aspire to drive the agenda forward with this year’s event. As ever, the Conference will facilitate new partnerships and collaborations through networking opportunities with participants from around the globe. It will present insights and inspiration from a diverse array of speakers from the private sector, civil society, government, academia, and elsewhere.

We will explore the ways that leadership is practiced in our fast-changing world. Our sessions will offer both provocative thinking to change how you think about sustainability in the long term and practical insights you can use the following week.

If a truly just and sustainable world is our desired endpoint—and it must be—then the scenarios we will introduce can help companies and business leaders across sectors understand the changing conditions on the journey toward that goal.

We look forward to welcoming you to New York and to joining with you to make the most positive possible future our new reality.

Blog | Friday July 24, 2020

When It Comes to Racial Justice, the Business and Human Rights Community Can Do More

Preview

It has been almost two months since the tragic killing of George Floyd at the hands of four police officers in the United States. The public outcry has sparked an unprecedented wave of support for Black Lives Matter (BLM) from all facets of society, including business. A movement still touted as an organization of domestic terrorism by some voices from the political right in the United States is now gaining momentum globally as people coalesce around the call for an end to racial injustice.     

This is not just a domestic issue confined to the United States. This is a global human rights imperative.         

I am a Jamaican woman who is painfully aware of history and the connection between business and human rights. Businesses profited from the transatlantic slave trade and over 400 years of slavery that stole lives and decimated Black families and communities in the Americas. It is one of the sentinel business and human rights cases, and the enduring legacy of slavery sheds light on the racism and prejudice that existed then and now, albeit in more subtle forms.  

Representation in the Business and Human Rights (BHR) Movement 

As a Black professional in the business and human rights community who has worked in the US, UK, Kenya and now in Hong Kong, I take this moment to reflect on the role of the business and human rights community in tackling racism and discrimination. Why have we not engaged on these issues in a more robust and meaningful way? I ask this question particularly of BHR organizations based in countries in the Americas and Europe still dealing with the legacy of Atlantic slavery. 

Are we doing enough to break down barriers, raise voices of the most vulnerable and marginalized, and tackle diversity and inclusion issues, not just in our work with business but in our own organizations?

In a field that works very hard to hold businesses accountable for their most pressing human rights violations, I’ve noted some hesitation in addressing racial injustice as a BHR issue. The response has often been: "Race is a sensitive issue," "There are more important issues in the world to focus on," or "These issues are only confined to the United States." My colleagues have been predominantly white and middle class, and this becomes deeply personal for people of colour, who should be heard and have their experiences validated. This leads me to ask: Are we doing enough to break down barriers, raise voices of the most vulnerable and marginalized, and tackle diversity and inclusion issues, not just in our work with business but in our own organizations?

Are we doing enough as a field to be self-reflective and have those uncomfortable conversations about race and privilege that are often avoided? 

Tackling Racism Head-on in Our Work

Take the example of the progress that the BHR community has made over the past few years on taking action to highlight and address human rights issues in mega-sporting events. The plight of migrant workers in the Gulf who often risk their lives and live in deplorable conditions to construct stadiums has rightly brought many stakeholders to the table to tackle this and many other serious issues. But there is a noticeable absence within the BHR community when it comes to addressing the issue of racism in football and in sports writ large. Sport is after all a big business in which Black people are well represented but often lack any real power or influence. There are very few Black football managers, and the boardrooms of most national football leagues and even UEFA itself are almost exclusively white men. In the wake of George Floyd’s murder, the NFL reversed its controversial ban on players “taking the knee” during the national anthem—a stance first popularized by Colin Kaepernick in protest to the conditions Black Americans experience across the US—issuing a public apology and offering public support. Yet it seems to be all too convenient as the world faces its reckoning with race relations. 

We rightly focus on the labor practices of people in the developing world who make the clothes for people in the developed markets, but there is limited focus on Black people working in essential services and on the frontline who also need advocates making strong calls to action. 

Another cogent example would be the disproportionate impacts of the COVID-19 pandemic on Black people in the US and UK. The pandemic is exposing the systemic racial inequalities and disparities in health, education, and employment. Many Black people are dying in shockingly high numbers as they occupy a high proportion of frontline and essential worker positions increasing the risk of exposure to the disease and job losses. This is exacerbated by co-morbidity factors including obesity, hypertension, and diabetes, further creating complications and leading to poorer health outcomes.  

Why is the BHR community largely silent on these issues? 

We rightly focus on the labor practices of people in the developing world who make the clothes for people in the developed markets, but there is limited focus on Black people working in essential services and on the frontline who also need advocates making strong calls to action. Acknowledging that these too are BHR issues while working with business to address the unique circumstances and needs of vulnerable communities disproportionally impacted by COVID-19 will help to address the ingrained disparities that prevent many from realizing their basic human rights. 

Tackling Racism Head-on in Our Organizations

While it is positive to see some organizations within this space issue public statements and show support for Black Lives Matter, this cannot be reduced to a hashtag or public relations opportunity. I know that there are no overnight solutions but not being racist is not enough. The real work starts with being anti-racist—a conscious lifelong dedication to fight and dismantle oppressive systems. 

Proof will be in the actions, so what should be done? 

Taking action can be reflected in not only embedding diversity and inclusion in our own organizations but also diversifying our own perspectives, research, and thought leadership. The BHR community should work harder to tackle the systems and structures that reinforce racism—which is as much an issue of governance as it is of ownership and power.

Here are a few ways in which we can help in our own work where possible: 

1. Look beyond the obvious to acknowledge "the unspoken," such as unconscious bias, implicit bias, and microaggressions in the workplace.
2. Call for more board and leadership diversity in our own organizations and within the business community.
3. Apply more scrutiny to lobbying efforts made in businesses that are antithetical to diversity. 
4. Call attention to products and services that reinforce racial stereotypes and bias, including the development and use of artificial intelligence.
5. Scrutinize investment decisions made by companies and shareholders in systems that disproportionately impact vulnerable groups such as investments in private prisons that contribute to the problem of the mass incarceration of Black people, for example. 
6. Work towards incorporating diversity, equity, and inclusion in corporate benchmarks to assess and improve company performance on how they are tackling racial injustice by integrating the voices of rightsholders.

The BHR community should work harder to tackle the systems and structures that reinforce racism—which is as much an issue of governance as it is of ownership and power.

It is the responsibility of the business and human rights community to listen, learn, reflect, and act. As we begin to think of ways we can tackle racial injustice, spark dialogue, and ensure that we are not being complicit and part of the problem, I’d like to see a BHR field with less silence and apathy and more anti-racist action. Standing against racism starts with acknowledging the problem and working together to correct historical injustices as a first step. Stating unequivocally that Black Lives Matter while creating spaces for uncomfortable conversations and amplifying voices of the most vulnerable will be another critical step in the right direction.

We do not want more performance activism and tokenism—fostering authentic dialogue is the key to creating real change.

Originally appeared on IHRB. 

Blog | Tuesday October 24, 2017

New BSR Report: The Future of Sustainable Business

Preview

On the occasion of BSR’s 25th anniversary, we have taken the opportunity to consider our accomplishments. With our member companies and other partners, we are proud to have imagined and worked toward a new vision of business that creates prosperity and fairness for all and preserves the natural environment on which we all depend.

Looking back is important; there is much to learn. But it is even more essential to look ahead: BSR, and the sustainable business movement more broadly, have always been about the future, and we must maintain that focus. This focus on what’s next is even more urgent today, when so many aspects of business, the economy, and culture are changing in profound ways.

And as we look ahead, it is clear that the time is here for a new approach to sustainable business. Many of the conditions that inspired the creation of BSR—a growing sense of resource scarcity and climate change, an increasingly interconnected world, and the rise of the purpose-driven business—have only accelerated over the past 25 years.

The need to reinvent, however, is shaped by three big developments that are creating a new context. First, business is undergoing systematic change—disruption—that is challenging every enterprise to reorient its strategy and approach. Second, we have a clear and universal roadmap for sustainable development, best expressed through the Paris Agreement on climate change and the UN Sustainable Development Goals (SDGs). Third, governance gaps—and failures—create the need for business to lead the way, often in partnership with others, if we are to achieve our shared goals.

Business as usual won’t get the job done—and sustainability as usual won’t suffice. If we are to avoid catastrophic climate change, build truly fair and inclusive economic growth, and navigate a radically reshaped world, it is time for change. Put more positively, we have within our grasp the ability to reorient business and turn the tide on climate change, deliver economic opportunity for all, and build connected societies in which all people can live in dignity and with respect.

For the companies that are addressing these challenges head on, there is the promise of remarkable innovation—not only in technology, but also in business models, partnerships, products and services, and ways of engaging consumers. What’s more, many of the new strategic imperatives for companies have the potential to bring massive improvements in sustainability. The changes that are emerging could deliver great leaps forward—through both direct and indirect means. For example, progress on climate is coming through ambitious targets and through technological innovation that is enabling a clean energy revolution, and digital payment systems have the potential for greater transparency and financial literacy for people in all corners of the world.

With these changes in mind, we believe it is time for a new agenda, new approach, and new advocacy. In other words, it is time for business and other partners to embrace new issues, new ways of pursuing sustainability, and a new—and more assertive—voice. Sustainable business leadership will increasingly be defined by how well companies approach climate resilience; inclusive growth in an era of automation; and technology, human rights, and ethics.

BSR was founded on the belief that a just and sustainable world is within our grasp, and that business is central to realizing that vision. We are as just as motivated today by this belief as BSR’s founders were a quarter-century ago. Never in BSR’s history has there been a time when the opportunity for impact has been so great, and the broad imperative for change so clear. That is a potent combination, and one that we aim to make the most of by working with you.

Today, we are excited to launch a paper that offers our thinking on where to go next. We hope this paper prompts new thinking, identifies new opportunities, and encourages you to join with us in redefining sustainable business.

It serves as an invitation to collaborate with us in the coming year to shape a new agenda, new approach, and a new voice for business that will meet our unique moment. Together, we can set a course for sustainable business, for business more broadly, and for the world.

Blog | Wednesday March 6, 2024

Demystifying Social KPIs under CSRD: Six Recommendations for Business

Preview

With the introduction of the Corporate Sustainability Reporting Directive (CSRD) and the expected Corporate Sustainability Due Diligence Directive (CSDDD), companies in the European Union and beyond are required to report on their social and environmental impacts within a broad range of sustainability topics, creating a growing focus on what can be quantified and verified. The directives will make it mandatory for companies to mitigate and report on impacts throughout their entire global value chain, which many find challenging as there is less visibility and control over sustainability issues upstream and downstream.

In the case of environmental issues, this is fairly straightforward both in terms of what the regulators are asking companies to disclose, and already well-established metrics and tools to measure GHG emissions reductions. When it comes to the social part of a company’s ESG agenda, however, setting targets and measuring impact is not as simple. 

Challenges of working with the social impact agenda have been expressed by several BSR members, who are less certain about the right way of setting social targets and KPIs, precisely: what to measure and how to measure it. Through several projects with members, we have been able to develop a roadmap on how to identify meaningful social KPIs and targets covering the entire value chain.

Key recommendations include: 

• Benchmark against regulation and best practice: Start with researching existing and upcoming regulations, industry frameworks, and guidelines on social sustainability; this will give an overview of what is already in the market and help prioritize. Benchmark yourself against best-in-class peers, to identify priority topics and leadership practices from companies that have already gone down this road.

• Prioritize: While the CSRD requirements help set the right direction, it is a daunting task to try to cover everything in one go. Start focusing on the areas where you are mature, and pilot identified social KPIs here.

• Build on what already works: A crucial step is a mapping exercise to capture what metrics are already in use within the organization, to avoid coming up with ‘on-top-of measuring.’ This gap analysis will not only help to build on what you already have, but also make it easier to see how new social KPIs can be embedded into existing set-ups. 

• Engage internal stakeholders from the start: Make sure to involve the right internal stakeholders; soliciting expert input serves to reality-check the value of the proposition, but also to make sure there is buy-in, letting people contribute to the agenda. As one of our members put it—“to make the project successful, people need to be able to relate to it internally.” 

• Dig where you stand and align with materiality: Social initiatives tend to be more successful when aligned with existing corporate strategies, as they can take advantage of operating capabilities and capitalize on existing knowledge. At an early stage, test and make sure that your social KPIs and targets support and reflect the strategic and operational focus of your organization, and are anchored in your materiality assessment.

• Involve the digital team: They play a crucial role in collecting relevant data and making sure it is valid; involve them in the pilot phase and work closely together to ensure the data collection is rigorous and realistic. To operationalize your social KPIs, you need to ensure accuracy and security in how the data is gathered.

Identification and measurement of social impacts provides a great opportunity for businesses to explore what truly matters to their affected stakeholders and the organization. We recommend embracing this process as a discovery, with CSRD as a reference for what to comply with, best practice examples from peers, and a thorough consultation process within the organization. The outcome ought to be tailored to your overall impact and role in society, bringing people together, and creating a shared understanding of the journey to come once the social KPIs are set.

For more information on setting Social KPIs under the CSRD, contact BSR’s Sustainability Management team.

Blog | Wednesday June 28, 2017

BSR Collaborates with Indian Business Association to Address Sexual Harassment in Garment Industry

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Violence against women is one of the world’s most prevalent human rights violations. In India alone, almost 330,000 cases of violence against women were registered in 2015, equal to a reported crime every two minutes.

Violence against women does not stay within communities and homes; it also happens within businesses. Recent reports show that sexual harassment against women workers, including different forms of verbal and physical abuse, is common in the garment industry in India. Not only does this affect women, it also holds back the Indian economy and businesses. According to the Asia-Pacific Economic Corporation (APEC) Healthy Women, Healthy Economies initiative, workplace sexual harassment programs and policies can increase female workers’ productivity, resulting in gains of up to US$186 million in developed APEC economies and US$57 million in developing APEC economies.

Addressing violence against women will require everyone to take action. BSR recently launched HERrespect—an evidence-based workplace program that builds the capacity of management and workers to challenge social norms and identify, prevent, and address violence—in India. HERrespect represents an important stepping stone toward transforming gender norms in an industry that directly employs 8 millon workers. Support from global brands and donors has been fundamental for getting the movement started, however, strategic partnerships with local business and industry associations are essential to achieve a systemic-level shift to end violence against women in the garment industry.

The government of India has called on Indian business to take action by adopting the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act in 2013. The act makes it mandatory for all companies with 10 or more employees to set up an internal complaints committee and improve employee awareness about what constitutes sexual harassment at work. Research shows, however, that almost half of the Indian companies surveyed have yet to train employees and committee members on topics related to sexual harassment at work.

We are proud to announce a new collaboration with the Confederation of Indian Industry’s Centre of Excellence for Sustainable Development (CII-ITC CESD). The aim of the collaboration is to mobilize commitment from Indian business leaders to ensure a safe working environment for female workers in the garment industry. As an industry-led business association with a wide membership across the textile and apparel sector, CII-ITC CESD plays a unique role in engaging with textile and apparel factories to strengthen the role of business leadership in preventing violence against women.

In recent conversations with garment factory managers in Tamil Nadu, we found that local business leaders need practical resources on how to ensure a safe work environment for women. In response to this need, BSR has developed “Women’s Safety in the Workplace,” a HERproject toolkit supporting managers in the garment industry to take action against sexual harassment in the workplace. The toolkit, which we developed in collaboration with CII-ITC CESD and with support from C&A Foundation, includes ready-to-use training materials and step-by-step guides on how to strengthen workplace systems to prevent and address sexual harassment.

Over the next months, BSR and CII-ITC CESD will co-host a series of events across India for business leaders in the garment industry to discuss how to address sexual harassment in the workplace.

We invite you to join the initiative and partner with us to scale HERrespect in India and beyond. Take action today by sharing the toolkit with suppliers in India and support them to promote a safe working environment for women in the supply chain.

Audio | Thursday February 1, 2024

What’s at Stake for Sustainable Business in 2024

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Aron Cramer, BSR President and CEO, chats with David Stearns following his recent blog on the pivotal questions shaping sustainable business in 2024 to explore questions such as:

• What can and should business be doing to uphold the rule of law in light of elections that will impact nearly two-thirds of the world’s population in 2024?
• Are businesses aware of what’s at-risk with these elections and are they taking steps to prepare?
• For fast-evolving technologies such as AI, what role can governance play in ensuring its responsible use and development?
• What gives you hope that we can emerge from 2024 in a better place?

Blog | Thursday June 13, 2019

#DontBanEquality: CEOs Step Up to Say Abortion Bans are Bad for Business

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“We’re in a time of pushback against women’s rights all over the world. But we stand up and we stand strong. We have the power of many and of justice, and we will not go backwards.”

Last week, more than 8,000 women and men from around the globe convened in Vancouver for Women Deliver, the world’s largest international women’s health and rights conference. For those of us in the United States, these words from Women Deliver’s president, Katja Iversen, are especially resonant, as women’s fundamental right to health care faces an unprecedented level of attack.

Over the past few months, nine state legislatures—from Georgia to Ohio—have passed bills to place sharp limits on access to reproductive health care, including abortion services, or to ban abortion almost entirely, as seen in Alabama. In this time of pushback against women’s reproductive rights, the public is standing up and standing strong.

The business community is also taking a stance.

On Monday, CEOs from more than 180 companies, representing over 100,000 workers, united under the banner #DontBanEquality to publish a full-page ad in The New York Times that stated:

“Restricting access to comprehensive reproductive care, including abortion, threatens the health, independence and economic stability of our employees and customers. Simply put, it goes against our values and is bad for business.”

The number of signers has since grown to more than 300, including CEOs of companies ranging from Bloomberg LP and H&M to Ben & Jerry’s and Square. In the statement, they made clear the business case on why restricting women’s access to reproductive care harms their businesses: “It impairs our ability to build diverse and inclusive workforce pipelines, recruit top talent across the states, and protect the well-being of all the people who keep our businesses thriving day in and out.”

Given the deeply polarized debate over this issue in the United States, it may seem safer for companies to stay silent on abortion legislation. Several hundred companies have concluded that they need to speak out to stay consistent on their commitments to gender equality and support for women’s health. In fact, women’s workplace participation has come about, in large part, because of their ability to decide for themselves when to have children.

We believe that the best way to achieve true equality is to have autonomy over our own bodies. Today, we are proud to join 175+ companies in the @nytimes to support reproductive freedom & abortion access. #DontBanEquality pic.twitter.com/EmwqTVtLHt

— The Wing (@the_wing) June 10, 2019

Monday’s letter was not the only move from business on the recent abortion bans. In response to a law signed by the Georgia governor that could ban abortions as early as six weeks, entertainment companies, including Netflix, Disney, and WarnerMedia, threatened to abandon operations in the state. “We have many women working on productions in Georgia, whose rights, along with millions of others, will be severely restricted by this law,” said Ted Sarandos, Netflix’s chief content officer. The film industry, which contributed US$9.5 billion to Georgia’s economy last year, is not alone in using its economic leverage in an attempt to sway policymakers.

This is the latest example of CEOs and companies taking a stand and leveraging their public platform to advance an issue important to them, their employees, and customers. In recent years, CEO activism has become the norm—with business leaders speaking up on previously controversial topics such as immigration, LGBTQI+ rights, and gun control. However, until recently it seemed that being vocal on women’s rights was off-limits.

At BSR, we are proud to work with member companies of all industries to promote women’s empowerment—in the workplace and beyond. Without access to reproductive health services, including abortion, women’s economic empowerment can only go so far. The business leaders who have joined #DontBanEquality understand this—and we need more leadership to step up and do the same.

Blog | Wednesday February 23, 2022

Luxury’s Move to E-Commerce and Its Implications for Sustainability

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Post-pandemic estimates project that revenues in the e-commerce market will grow by 46 percent, from US$3.53 trillion in 2019 to US$6.54 trillion in 2022. This expansion brings with it an increase in greenhouse gas (GHG) emissions, resources, and social risks. As e-commerce continues to grow, brands and retailers face a series of sustainability risks as well as opportunities to shape consumers’ purchasing habits in the years to come. 

The luxury industry is no different. The global COVID-19 pandemic accelerated the adoption of e-commerce by luxury brands and consumers. In 2019, e-commerce made up between 10 and 15 percent of global luxury sales across Europe, the United States, and China. By 2020, this figure had increased by at least 50 percent. Bain & Company projects that as much as one-third of all personal luxury purchases will take place digitally by 2025, with revenues reaching an estimated US$136 billion. 

The expansion of luxury brands’ e-commerce footprint—whether via their own channels or multi-brand marketplaces—carries with it social and environmental risks and opportunities. Luxury brands will have to address these potential issues as they implement their sustainable business commitments and make decisions regarding their online distribution and marketing strategies. 

In 2021, BSR’s Responsible Luxury Initiative (ReLI) took a closer look at the environmental and social risks and opportunities related to e-commerce in the luxury industry. The group developed an Action Guide detailing actions that luxury brands can take in their e-commerce value chains (transport, fulfillment, e-store, distribution, and returns), both individually and with their partners, focusing specifically on climate, resources, and people topics.

While efforts to reduce the impact of e-commerce are emerging, such as the French responsible e-commerce charter, luxury brands can demonstrate leadership by driving exemplary practices within their eco-systems. They can both seek to mitigate specific risks (i.e., reliance on same-day or next-day delivery and GHG-intensive air freight) and leverage their power to drive cultural change, such as luxury consumer acceptance of reusable mailers and slower shipping speeds. 

Below, we share the research’s key findings and ReLI’s perspective on opportunities specific to the luxury sector. In 2022, ReLI invites luxury brands to join the initiative and explore a key focus: how to decrease delivery speeds, which are a significant driver of GhG emissions, while maintaining high levels of consumer satisfaction and service. 

Climate

E-commerce drives up the GHG emissions of a luxury brand, especially in the transport and delivery of goods (last mile and rushed deliveries), including returns. Certain data indicate that the average emissions per item from e-commerce operations can be lower with large and highly efficient US retailers compared to traditional brick and mortar (1700 grams of CO2 eq. versus 2050 grams of CO2 eq.,). However, accelerating delivery can lead to the opposite scenario—rushed online deliveries emit more carbon than in-store shopping (about 300 grams of CO2 eq. more in an urban area, with delivery and packaging contributing the most to the overall carbon footprint).  

An expanding online footprint means that luxury brands must tackle increased complexity—in terms of data tracking and measurement and managing programs with business partners—to achieve significant reductions in GHG emissions required by many luxury brands’ commitments to a decarbonized future. Luxury brands should include their e-commerce footprint in their emissions tracking and reduction plans—encompassing those of transport and logistics partners—and collaborate to reduce emissions, including via relevant green freight initiatives and programs.

Luxury brands can demonstrate leadership by focusing attention on some of the root causes of growing emissions. They can reduce the movement of goods via strong demand management and inventory visibility systems. In this aspect, the luxury industry has an edge on traditional retail, given greater sophistication when it comes to inventory tracking, related to higher product value. Luxury brands can also dramatically reduce reliance on air freight while investing in sustainable aviation and greener modes of transport (air freight emits 20-30 times more carbon than ocean shipping). 

As cultural influencers and standard-setters, luxury brands have a compelling opportunity to inspire new consumer preferences and behaviors related to shipping speed and over-ordering. Over half of consumers are unaware that express delivery services produce more emissions. However, ​85 percent of consumers in a recent survey indicated that they would opt for slower delivery if they were made aware  that it meant a reduction in emissions.

Emissions related to packaging represent a significant share of GHG emissions, which is further addressed in the “Resources” section. 

Resources

E-commerce intensifies the use of natural and other resources via its reliance on transport and packaging materials. This can be especially acute in the luxury industry, where valuable products need to be protected (e.g., bubble wrap, foam, airbags) and consumers expect a rich “unboxing experience.” According to DHL, in some e-commerce categories, there is up to a 40-percent void in packaging.

Luxury brands have two significant opportunities related to resources in the e-commerce value chain. First, they can rethink both B2B and B2C packaging systems, pioneering the luxury experience with responsible and reusable packaging options that go beyond resource-intensive recycling. A compelling example comes from the champagne brand “Ruinart,” which launched a minimalist “second skin” packaging that is nine times lighter than existing boxes and is fully recyclable. 

In a similar method to incentivizing slower shipping delivery, luxury brands can drive new behaviors by educating and potentially incentivizing consumers to return their mailers, rather than tossing their box. Brands are starting to experiment with these emerging reusable mailing systems, such as Hipli, Living Packets, or Olive. Hipli operates a returnable packaging service for brands and consumers, with packages that can be reused at least 100 times. LCA results show that Hipli has a lighter footprint than a cardboard box and is designed to be recycled at end of life.

Luxury brands can also influence sustainable resources via their products. They can increase communication to consumers on their e-stores related to environmental and social product offerings (using easily understandable and comparable data) and support increased desirability and purchase of better options, including preowned products. Several luxury marketplaces now feature sustainability edits, such as Net-a-Porter’s NET SUSTAIN, and re-sale options, such as Farfetch’s Second Life or Reflaunt via Yoox Net-a-Porter. In another example, Gucci clients can browse through a set of icons on its website to discover the sustainability features of around 400 products.

People

Luxury brands are faced with a multitude of social considerations to monitor across the e-commerce value chain, given the involvement of many transport, logistics, and service partners globally. The transport and logistics industry relies on low skilled labor, often from vulnerable groups (e.g., migrants, contractors, women, and youth) particularly during peak periods. Low wages and limited social security can prevail for dockers and truckers as well as gig workers at fulfillment centers. Given these risks, brands should pay particular attention to increasing visibility of the labor practices of their transportation partners and enabling change. Ikea, for example, carried out a study on wage practices and working conditions in its transportation supply chain specifically.  

Luxury brands should also drive exemplary practices on persistent and emerging issues in the digital world. They can lead on strong digital privacy and trust approaches for their consumers. Secondly, they can lend their influence and pave the way for more inclusive digital marketing, including leveraging the power of their influencers on societal topics.

If you would like to learn more about these topics, or get involved in ReLI’s 2022 workstream, please consult our new case study and reach out to us for further information.