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Blog | Tuesday November 12, 2019

The New Climate for Business

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We are at a hinge point in history.

The French refer to the 30 years after the end of World War II as “Les Trente Glorieuses,” or “The Glorious 30 Years,” when prosperity flowered, culture was dynamic, and peaceful conditions prevailed after two devastating wars.

For business, the three decades following the fall of the Berlin Wall in 1989 can be seen the same way. During that time, the market economy has been the world’s dominant organizing principle, business has largely thrived (notwithstanding the global financial crisis), innovation has flowered, and huge numbers of people have enjoyed improved living conditions, especially in the Global South.

As we enter the 2020s, we are at a new hinge point in history. Every business today is facing three strategic challenges:

• First, there is the need to redefine the role of business in society, in sync with changing expectations, and establish clear business purpose that goes beyond short-term profits.
• Second, we face the urgent objective to shift the economy to a path that delivers truly shared prosperity that respects the natural boundaries of our planet, not least the climate crisis.
• Third, every company must craft a strategy that navigates an unprecedented set of disruptions—and in some cases existential questions—that are rapidly reshaping the competitive environment.

These strategic challenges come as a result of major paradigm shifts that have taken place in recent years. Changes in policy, politics, public perception, and the natural world are creating profound impacts for business.

First and foremost, after decades when markets were seen as the ultimate, efficient vehicle to deliver broad societal benefits, the public today is increasingly skeptical about this model, and the light-touch regulation that has marked the past several decades is now distrusted by many.

Our natural resources are also under threat, with considerable impacts for public health and stable, thriving economies. Simply put, the commodities on which we rely for sustenance and enjoyment can no longer be taken for granted.

The rising tide of innovation has also had a fairly wide berth; today, there is more concern about the impacts of new technologies and business models, bringing about the “techlash.”

The accumulation of wealth in the hands of a few is being questioned at a time when the “precariat” is growing, with public anxiety about declining living standards leading to political and economic backlash. And for many interconnected reasons, the consumption-driven economy that has been an engine of growth can no longer be taken for granted as the dominant model. The “religion” of ever-increasing economic growth is losing adherents, and there are signs that many people are seeking satisfaction in new and different ways that do not involve consumption of products.

In this context, many are calling for more activist government. At the same time, nation-states are struggling to deal with global challenges, with many turning toward populism and nationalism and a crackdown on civil society. Political uncertainty and distrust have become endemic.

All of this adds up to a New Climate for Business. The framework conditions that have shaped our world, and the world of business, have changed.

The Decisive Decade Ahead

The fundamental changes reshaping our energy systems, our food supply, and water availability demand comprehensive systemic solutions. Sustainability disconnected from investors, policymakers, and communities will have no credibility.

These changes come as we enter the decisive decade of the 2020s. The next 10 years will be decisive for business, and for all of us. We will either deliver on the Sustainable Development Goals (SDGs) or we won’t. We will peak emissions in line with the Paris Agreement or we won’t. Business will regain public trust or it won’t. We will re-establish social mobility and reduce income inequality or we won’t.

Here is what we know for certain: The diverse and powerful assets of business are essential if we are to build a resilient, fair, and sustainable economy. It is impossible to imagine achieving the promise of the decade ahead without business. And it is equally impossible to imagine that outcome with business as usual. This is a time when the scale of change and challenge requires big vision, high levels of ambition, and a strong sense of urgency.

The inescapable implication of this is that sustainable business as we have known it is not enough. So, standalone sustainability projects will have their place, but incremental improvements won’t deliver the SDGs. The fundamental changes reshaping our energy systems, our food supply, and water availability demand comprehensive systemic solutions. Sustainability disconnected from investors, policymakers, and communities will have no credibility. Measurement and reporting that fails to embrace all forms of value misleads markets and leads to bad outcomes. And, in an era of profound change, risk averse leadership only creates more ... risk.

The New Climate for Business demands a radically new approach to business and markets. As Marc Benioff wrote recently in the New York Times, “Capitalism as we have known it is dead.” Business as we need it, however, is only getting started. As we enter the 2020s, businesses will be judged by their purpose, their ambition, their urgency, their openness, and their innovation. The only businesses that will thrive in the decade to come, and quite possibly the only businesses that will survive for the long-run, are the ones who will master these challenges.

The question then is how business will “meet the moment.”

How Will Business Meet the Moment?

At this critical time, when business leadership is so badly needed, how do we define it?

This starts with purpose. As the Financial Times wrote in September, “businesses that combine profit with a wider purpose will benefit from the reinforced commitment of employees and customers. Those that fail to do so will not survive to become the companies of the future.” For all the talk these days about purpose, this hits the right note: It is only those companies with a clear and motivating purpose that will make it through the fundamental changes reshaping our world and the world of business. And more and more, businesses are defining their purpose in terms that make important contributions to the achievement of the SDGs: through nutrition, clean transportation, financial independence, and healthcare, for example.

Business is traditionally reticent about expressing big goals without being sure that it can achieve them. This caution is as unsuited to today’s world as the rotary phone or an all-male board of directors.

The businesses that will thrive in the decade to come will be the ones with the most ambitious plans. Business is traditionally reticent about expressing big goals without being sure that it can achieve them. This caution is as unsuited to today’s world as the rotary phone or an all-male board of directors. Ambition is the best way to create truly resilient business strategies.

Ambition must start with climate, where the drive for net-zero carbon objectives has fast taken hold. What’s intriguing about this is that many of those embracing net zero—from nation-states like the United Kingdom to companies like Maersk—cannot be sure about the precise pathway to this achievement, but state the goal nonetheless. Big questions require big solutions, and it is exciting to see companies and business leaders shed their timidity about what is possible. There can be little doubt that this approach is not only the only way to achieve big goals, but also motivates and attracts staff and provides a north star during a time of change.

Business leadership will also be defined increasingly by a company’s commitment to and facility for collaboration. The vision of leadership as a solitary exercise by a singular visionary leader must be retired. The leaders we need today know the limits of what they can accomplish on their own, know how to partner effectively, and understand that achieving their goals with respect to sustainability can only happen through systemic change. We are facing systemic challenges: an economy that has exacerbated inequality, an energy system that must shift to net zero, food systems under threat, and a social contract that is failing to meet 21st-century realities. It is only with a commitment to large-scale collaboration that we can shift these systems in a more positive direction.

Today’s Priorities

And it is the Sustainable Development Goals that provide the north star for business and the world. To reach big long-term goals, we must act with urgency today. Here is an urgency agenda for 2020, built to deliver for 2030.

In Conclusion

Let us use every day to turn business to the task of innovating for social benefit, attacking climate change, and reversing inequality.

Les Trente Glorieuses (The Glorious 30 Years) is part of history—one of prosperous growth and peaceful society. So too is the period since 1989. Now we face another hinge point in history, and it is up to us to build the future, and to work toward a “Glorious 2030.”

Dean Acheson, the U.S. Secretary of State in the aftermath of World War II, was famously “present at the creation” of the postwar order that led to considerable human progress. We, who are present at the creation of our new era, would do well to remember his words: “Always remember that the future comes one day at a time.” As we grapple with this New Climate for Business, let us use every day to turn business to the task of innovating for social benefit, attacking climate change, and reversing inequality.

Blog | Wednesday January 15, 2025

A Year of Uncertainty: Ten Big Questions Facing Sustainable Business Leaders in 2025

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As we begin 2025, and the second half of the 2020s, their promise of being a “decisive” decade for achieving crucial goals has—so far—fallen short.

Instead, we find ourselves facing more questions than answers. How we respond to them, and their second and third-order effects, may not be decisive, but they will be defining.

The momentum for sustainable business that was so evident in 2020 has stalled. There are many reasons for this: economic volatility, technological change, political instability and backlash, prioritization of regulatory compliance over action, and a fractured information ecosystem prone to mis- and disinformation.

Underlying all this, many in society have lost faith that they will benefit from a more sustainable economy. They not only see little in the way of economic benefit, but also view many of the messengers of a just and sustainable world as talking down to them and ignoring their realities. As the Chief Sustainability Officer (CSO) of one of our member companies put it to us in December: “When middle-class families are struggling to keep up, our ideas sound like empty slogans.” We have to overcome this cynicism amongst many outside the sustainable business community and take renewed action that achieves tangible results.

Here are ten questions that are likely to define progress in 2025:

How will businesses respond to ongoing attacks on sustainable business?

Many businesses have trimmed their sails in the face of online activists and political figures challenging the very legitimacy of sustainable business. There are important debates over how to take action on climate and diversity. But the current effort to delegitimize the very concept of sustainable business, despite considerable evidence that it is essential to resilient and innovative business, and highly valuable for social and economic progress, is undermining important progress. Careful communication is one thing; failing to respond to misplaced and inaccurate attacks is another. With diversity and climate efforts under particular attack, and misrepresentations and misinformation about sustainability generally running rampant, when will business leaders decide that it is time to call out the inaccurate and damaging arguments that are based more on ideology than objective reality? 

Do businesses have a “red line” when it comes to rule of law?

2024 was a record-breaking year of elections. This year, businesses face an environment in which the rule of law is being questioned and undermined by elected officials, other political influencers, and amplified on social media. Observers like Rachel Kleinfeld have argued that when these trends advance, economies overall and individual businesses face more challenging conditions. After a burst of comments and commitments on such matters several years back, most business leaders have retreated, choosing not to call out attacks on the rule of law and the rise of populism. Will this continue? Or is there a point when companies and individual business leaders conclude that they need to contest the decline of rule of law?

Will sustainability regulations in the EU be scaled back?

With a new European Commission and Parliament, political uncertainty in many European member states, and concerns that the regulatory frameworks governing various aspects of sustainable business are too onerous, expensive, and complex. There are growing signs that the regulatory requirements may be changed, with options ranging from consolidation, to delayed implementation, to withdrawal. Should changes come to pass, the question then becomes whether they are viewed as a pullback or U-turn from the Green Deal, or a refinement designed to make the rules more effective and efficient. Europe is likely to remain an engine of progress in formalizing sustainable business, but the pace and scale of that leadership is unclear as we enter the year.

Will companies pay a price for missing or reducing their targets?

Many companies are missing their targets, on important issues ranging from Scope 3 emissions to nature to diversity. As a result, many businesses are rethinking whether and how to set new goals looking out to 2030 or beyond. Regardless, the question remains: will companies face meaningful criticism from customers, employees, investors, stakeholders, or even litigants bringing legal challenges for these shortfalls? The ways that companies make sense of the simultaneous need both for pragmatism and ambition has huge consequences. It is not an option to choose only one of these two directions.

Will the focus on regulation prove transitory, giving way in 2025 to greater innovation and ambition?

This is a question of massive importance. Companies have spent untold hours, dollars, and euros preparing for new regulatory compliance regimes. The net result has been more effort dedicated to measuring performance than achieving progress. This is not a formula that will produce the innovation or positive outcomes that are urgently needed. With the 2026 implementation date for the CSRD looming, one big question is whether this is the last year of compliance readiness, and we return to our regularly scheduled programming, or whether regulatory readiness continues to predominate.

Will COP30 herald the demise of COPs as we have known them?

The climate, biodiversity, and desertification COPs in 2024 were widely seen as failing to deliver. What does this suggest about the viability of COPs as they are currently constructed and organized? Cristiana Figueres and Ban Ki-Moon took the lead in suggesting reforms to deliver more decisive and effective outcomes, only to be largely dismissed by the UN system. It is nonetheless clear that the inherent difficulty in achieving consensus amongst nearly 200 countries with highly diverging interests and power is preventing clear outcomes. Are the COPs destined to be considered in the same light as Churchill’s famous comment about democracy, “the worst form of government…except for all the others that have been tried?” COP30 in Brazil will be yet another stress test, not only for climate action, but also for the very COP model itself. And if the current version of COPs is not working well, what alternatives exist?

Is it better for COP30 to have the Trump-led US in or out?

In 2017, President-elect Donald Trump withdrew the United States from the Paris Agreement, ignoring calls from business, civil society, and many others to have the world’s largest economy and historic emitter remain. It is widely expected that he will do the same in 2025. This time around, there is a real question about whether the global effort to fight climate change would be better off with the US in or out. Should a Trump Administration remain in the Paris Agreement, the US might be a net negative, interfering with ambitious action at COP, and joining forces with other major oil and gas producing countries to water down, if not prevent, a meaningful agreement in Belem. Might it instead be better for the countries that are genuinely committed to progress on climate to move boldly ahead without the US?

Who will emerge as the new wave of sustainable business leaders, and how will they be different?

The last wave of sustainability ambition was characterized by high-profile CEOs, mostly from Western companies, who proclaimed new commitments and weighed in on many social issues. This was immensely valuable in catalyzing action and raising awareness. Today, the profile of leadership is changing. There are innovators coming from all corners of the world, not only the global north. There is a recognition that the voice of the rising generation that will be wrestling with the greatest impacts of climate change and technological innovations needs to be heard. The nature of leadership is also changing. While broad proclamations are important, delivering the goods is even more so. It is never easy to predict when and where leaders will emerge. But the next wave of leaders will be younger than the last, more globally representative, and more focused on delivery.

How will the role of the CSO evolve: will they be playing defense or offense, preserving gains, or pushing forward?

We closed 2024 with a look at how the role of the CSO is evolving, focusing on three archetypes: the steady manager, the integrated strategist, and the transformative change agent. Following the US elections in November, we added the “defender-in-chief,” a CSO who focuses on, well, sustaining progress to date as various forces push back on existing activities.

In 2025, it is likely that every CSO will have to play some defense. But it is equally true that any CSO who is unable to or prevented from painting a picture of transformative change will not be serving their company well. The world is experiencing transformative change, some of it directly related to sustainability, some of it indirectly related to sustainability. This presents both a massive opportunity to shape and leverage this change for positive sustainability outcomes. It also opens the door to link these changes to outcomes that benefit people and communities. And at a minimum, it demands attention to the many ways that companies can be resilient in the face of profound change.

Finally, and perhaps most importantly, how can we talk about sustainability in a way that will resonate with the general public, and demonstrate convincingly that these efforts will improve their lives and well-being?

It is increasingly clear that in the US and Europe many citizens, public officials, consumers, and others find the sustainability narratives that have been used over the past 30 years tired, uninspiring, and sometimes rather off-putting. Many in the public feel that an agenda is being forced on them that disregards their needs or interests, and is cooked up by elites they hold in low regard. Some of this is the fault of those of us in the world of sustainable business: we use too much jargon, providing opponents with a golden opportunity to mischaracterize—cynically—topics such as DEI and ESG to advance their own agendas. Addressing this, however, demands far more than simply seeking a “script doctor” for sustainability, or doubling down on arcane facts. The answer lies instead in a renewed effort to put people at the center of sustainable business. If we do not find ways to generate economic security and opportunity amidst massive technological, environmental, and social change, we can expect ongoing opposition to an agenda that will remain irrelevant at best, and dangerous at worst for many in the public. This will further stoke political blowback.

The year ahead will no doubt deliver questions we are not anticipating now. Over the last few years, we have experienced unexpected developments that seemed to flip the script for business and the wider world overnight. The pandemic was not predicted, and very few observers thought that sustainability would flourish once it hit, but that’s exactly what happened. With the new year only just underway, we have seen devastating wildfires turbocharged by climate change, more companies retreating from diversity efforts and content moderation, and renewed questions about the march of AI. These remind us of the urgency of our task.

At the same time, we also start the year with a good deal of focus on headwinds that have led to the so-called “sustainability recession.” These headwinds may obscure, though they do not erase, the underlying reasons why a more equitable economy that addresses planetary boundaries is so fundamental for innovative, thriving, and resilient companies, and to improve the lives and livelihoods of people and communities around the world.

Inevitably, there will be events that—for better or worse—provide a sharp reminder of that reality, and will catalyze a new sense of urgency. Will this happen in 2025, and if so, what and when? 

Blog | Thursday December 27, 2018

ICYMI: Our Top Sustainability Insights from 2018

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2018 was a big year for many of the issues that BSR works on: We saw climate, human rights, and women’s empowerment make headlines around the world, from the release of the new IPCC reports and protests in France, to the removal of military officials from social media in Myanmar, to the #MeToo and #TimesUp movements in the United States.

We also spent this year thinking about the major forces that we see shaping our world for decades to come, from artificial intelligence (AI), automation, and blockchain to the increasing impacts of our changing climate on people and supply chains globally.

We know it can be easy to miss a blog post or a report launch in today’s news cycle, so we’ve rounded up some of your favorite pieces of content from this year.

Without further ado, here they are, for your end-of-year reading pleasure.

Blogs and Case Studies

• Seven Things Every Company Should Know about Artificial Intelligence and Sustainable Business explores—you guessed it—how your organization can start thinking about AI and sustainability.
• Announcing a New Collaboration Using Tech to Combat Human Trafficking introduces our Tech against Trafficking collaborative initiative.
• We Need to Talk about Blockchain—Together considers why collaboration will be essential to realizing the sustainability promise of blockchain.
• Our Human Rights Impact Assessment of Facebook in Myanmar summarizes our work with the company on its programs and policies in this space.
• How Luxury Can Lead the Future of Sustainable Business describes the opportunities the Responsible Luxury Initiative identified for the industry to increase its sustainability leadership.
• The Coca-Cola Company: Building a Climate-Resilient Value Chain is a case study of our work with the company to examine climate risk and resilience beyond its direct operations.
• Three Hot Debates in Sustainability Reporting Today addresses questions like whether companies should move to more real-time sustainability reporting or stop using “materiality” outside of investor relations.
• An Exciting New Era for ESG and Socially Responsible Investing in Japan shares an update on key developments in this space and the global implications.
• How Do We Solve the Plastic Waste Puzzle? provides an overview of our work on this topic with companies in the Asia-Pacific region.
• How Businesses are Collaborating for the SDGs gives five examples of private-sector collaboration toward the accomplishment of the Global Goals.

Reports

• Redefining Sustainable Business: Management for a Rapidly Changing World is a guide for sustainability practitioners in today’s dynamic environment.
• State of Sustainable Business 2018 details the results of our 10th annual BSR/GlobeScan survey of BSR member companies.
• Private-Sector Collaboration for Sustainable Development shares insights on how companies can contribute to the realization of the UN SDGs.
• Doing Business in 2030: Four Possible Futures leverages futures thinking to share four possible scenarios for 2030, which you can use to help your company develop a more resilient business strategy.
• Win-Win-Win: The Sustainable Supply Chain Finance Opportunity describes the massive opportunity for business to leverage supply chain finance to realize sustainability objectives.

We published a lot of great content on other cross-cutting issues, too, including a series of reports about the nexus between climate and other key sustainability topics, a set of papers on the human rights implications of artificial intelligence, a new video and guidance for more gender-sensitive supply chains, and the Sustainability Short Takes video campaign on hot topics in our space, which we will continue next year.

This is my last post as the editor-in-chief of the blog—while I’m staying here at BSR, I’ll be moving over to do more work directly with companies on sustainability management and strategy. Of course, you’ll be in great hands with my successor, Aimee Louise Bataclan, and we’ve got lots of exciting content lined up for you in 2019.

From me and my colleagues here at BSR, we wish you a safe and happy new year, and we look forward to working with you next year to create a more just and sustainable world.

Blog | Monday September 21, 2020

Transform to Net Zero and the Shift from Climate Ambition to Climate Action

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When the Paris Agreement was being completed in 2015, the watchword of the day was climate ambition. Ambitious national pledges are essential to reaching the Agreement’s goal to hold warming well below 2°C and pursue 1.5°C. And if we do not close the gap between pledged ambition and the Paris targets in this Decisive Decade, we will forego those goals and suffer the consequences.

Over the past five years, Paris-aligned ambition has become a de facto standard in sustainability. Not only do stakeholders expect companies to take climate action—as 1,350 companies with a market capitalization of US$25 trillion have done with the We Mean Business coalition—they expect companies to set Paris-aligned emissions reduction targets. The Science Based Targets initiative has commitments from nearly a thousand companies, and Business Ambition for 1.5°C counts nearly three hundred aligned with the Paris 1.5°C stretch goal. 

But if these ambitious climate targets do not feed a wider shift in the economy toward business success, better jobs, and shared prosperity, companies will not continue to implement them. And unless companies transform into net zero businesses, these targets alone will not persuade governments to make more ambitious national pledges. That is why we need—and we are beginning to see—a great shift from climate ambition to climate action. 

Collaborating across industries will also be essential to reduce emissions across the entire economy. Transform to Net Zero is a cross-sector group of leaders delivering an inclusive net zero economy through accelerated business transformation, innovation, and systems change.

This shift is exemplified by the corporate announcements made during the 2019 UN Climate Action Summit, including the Net-Zero Asset Owner Alliance, a group of institutional investors aligning their portfolios to net zero emissions, and the Getting to Zero Coalition, dedicated to deploying commercially viable deep sea zero emission shipping vessels by 2030. These multistakeholder initiatives are implementing net zero goals in specific industries. And to reach net zero emissions, we will need many more of them to overhaul value chains across the economy.

Collaborating across industries will also be essential to reduce emissions across the entire economy. Transform to Net Zero is a cross-sector group of leaders delivering an inclusive net zero economy through accelerated business transformation, innovation, and systems change. By leading by example, they will demonstrate the transformation of corporate strategy and other company functions, innovate to remove barriers to net zero value chains, scale capital investment, and support ambitious public policies. BSR is proud, as the initiative’s Secretariat, to foster impactful collaboration with them.

Transform to Net Zero does not ask companies to announce yet another climate commitment; indeed, many of the companies involved already have extraordinary ambitions: take, for example, Microsoft’s commitments to be carbon negative across the value chain in just 10 years, to remove its historical operational carbon emissions by 2050, and to establish a US$1 billion climate innovation fund. Or Unilever’s recent announcement to achieve net zero emissions from all its products in less than 20 years and establish a EUR€1 billion Climate & Nature Fund. Instead of seeking new commitments, Transform to Net Zero enables all companies with net zero targets to implement them and all companies without such targets to act. To scale impact as widely as possible, all of Transform to Net Zero’s outputs are intended for the public domain.

In the Decisive Decade, this is the kind of collaboration that must flower—focused on transforming businesses and deploying all corporate functions to build net zero value chains.

This spike in company action is big enough now to dent the global emissions trajectory. Equally striking, it has taken place during a weakening regulatory environment. The G20 economies are conspicuously absent from governments intending to strengthen national targets at next year’s UN Climate Conference. This gap in national leadership makes business action, not just ambition, even more urgent as people around the globe suffer from increasingly devastating climate impacts.

In the Decisive Decade, this is the kind of collaboration that must flower—focused on transforming businesses and deploying all corporate functions to build net zero value chains. The day that net zero is not a press release but a business model is the day the Paris goals become achievable. Making this a business norm as soon as possible is critical because we have no time left.

Blog | Wednesday September 11, 2024

The Impact of Mandatory Sustainability Reporting on Corporate Functions

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

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

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

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

How to use the brief:

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

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

Blog | Wednesday October 6, 2021

Inside BSR: Q&A with Paloma Muñoz Quick

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Inside BSR is our monthly series featuring BSR team members from around the world. This month, we connected with Paloma Muñoz Quick, an Associate Director in our NYC office.

Paloma chatted with us about how her life in Chile and Brazil fostered her interest in tackling systemic injustice, her work on investor action on human rights, and how working at BSR supports her commitment to protecting human rights.

 

Tell us a bit about your background. Where are you from, where are you based, and how have you been since COVID/work from home/etc.? 

I am half American and half Chilean, and I spent my formative teenage years living in Brazil. I’m now based in Brooklyn, where I worked from home throughout the pandemic.

How did you first get involved in sustainable business? How long have you been at BSR? What is your current role and what does that entail?

Born under the dictatorship of Augusto Pinochet and living in both Chile and Brazil—two countries affected by significant socioeconomic inequality—I was drawn to human rights and tackling systemic injustice from an early age. I eventually did a Master’s in International Affairs and Human Rights and landed my first job at the Danish Institute for Human Rights. I’ve now been working on business and human rights for over a decade, initially advising companies on human rights country risk, then building the capacity of civil society around the world to advocate for business respect for human rights, and later advising governments on adopting robust public policy to safeguard human rights from business activities.

Eventually, I realized financial actors—institutional investors in particular—were largely absent from the human rights and business conversation. As the source of capital for business, their involvement is critical for making progress. That’s when I decided to move to the Interfaith Center for Corporate Responsibility (ICCR) and launch the Investor Alliance for Human Rights, whose investor membership now represents over US$5 trillion in assets under management. I later worked for the UN Working Group on Business and Human Rights to develop a global report taking stock of investor action on human rights and a series of recommendations to help scale investor engagement in this area.

What are some interesting projects that you get to work on as part of your role at BSR? What do you enjoy about them? 

All this experience brought me to BSR, where I’ve been leading our work at the intersection of finance, investment, and human rights for the past four months. In this role, I am excited about developing insights on the interlinkages between environment, social, and governance (ESG) investing and the business and human rights framework, as well as practical tools to help further bridge action on human rights and ESG. I am also excited about supporting private equity and venture capital firms in their human rights journey.

What issues are you passionate about and why? How does your work at BSR reflect that?

No surprise here—I’m passionate about human rights. Governments came together to agree upon a standard of achievement for all people, covering a wide range of civil, political, economic, social, cultural, and environmental rights. The standards are clear, and so is the roadmap for business to uphold these standards—namely, the UN Guiding Principles on Business and Human Rights. Yet too often, we see business actors and data providers reinventing the wheel, defining the “S” of ESG in their own way, often missing the wide range of human rights impacts connected to business activities and the business processes needed to address these. My work at BSR enables me to work on this from various angles, including by directly advising financial actors and developing thought leadership.

2020 was undoubtedly a difficult year. What were the things that brought you joy amid lockdowns/quarantines? What are you most looking forward to for the rest of 2021 and looking into 2022?

My dog brought me joy! Together we walked our way around parts of Brooklyn I’d never ventured into. I even discovered a new neighborhood that I moved into halfway through the pandemic. What I look forward to is traveling—anywhere! But especially to Chile to see my family.

Blog | Friday October 20, 2017

Practical Guidance from the Frontlines of the Corporate Fight against Modern Slavery

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Having worked to combat human trafficking through my roles in the U.S. government, a global NGO, and, most recently, inside a Fortune 500 company, I see momentum building on this issue in the corporate world like never before. As practitioners, we are past the stage of asking what needs to be done; we are now asking how it should be done. Answering this question will require innovation, agility, and collaboration—all strengths found in successful businesses.

My colleagues across the globe in major corporations have tremendous reach on the frontlines of the fight against modern slavery. Many of them have seen abuses and the damage done to workers firsthand, and they also have pragmatic solutions to prevent trafficking in global supply chains. Working within a company, the challenges to taking effective action to address these issues are often both internal and external.

Here are my recommendations for building an effective program to address modern slavery:

Internally

• Seek Executive Support: In creating a program, it is critical to gain leadership buy-in from the outset, with budget and resources to take the necessary first steps. 
• Never Waste a Crisis: If and when your firm is spotlighted for alleged human rights abuses, act quickly and decisively, and use the opportunity to further embed good human rights practices deep in your established management systems. 
• Identify and Celebrate Your Allies: Leverage every ally you have within your company. It shouldn’t look like you are solving the problem alone—the most sustainable solutions come when actions flow from and into traditional business functions.
• Illustrate the Issue: Be creative in explaining the human rights challenge you are facing. For example, CH2M used an infographic to show how it addressed the conditions of construction workers on engineering projects. Clear, visual communication can go a long way to helping your colleagues understand why it is time to act.
• Embrace Transparency and Flexibility: Addressing modern slavery requires transparency and humility—characteristics that may be counterintuitive to the polished image that many corporate brands aspire to project. If your innovative pilot project goes off track or has unintended negative consequences, be candid about your experience and try another tactic.

Externally

• Be Open to Feedback (Positive and Negative): It can be difficult for companies to be taken seriously by NGO advocates, and it can be disheartening to hear criticism of an approach you are working hard to execute. Don’t react defensively—recognize that your civil society colleagues have a job to do, as you have yours, and we can learn from each other.
• Collaborate with Your Peers: Join or create a pre-competitive industry coalition, like Building Responsibly, which is a global initiative of the engineering and construction industries, supported by BSR and Humanity United, to promote the rights and welfare of construction workers. Learning from other sectors, Building Responsibly is modeled after the successful initiatives that the Electronic Industry Citizenship Coalition (EICC) champions. The Global Business Coalition Against Human Trafficking (gBCAT), which BSR supports, is another example of cross-industry collaboration on human rights.
• Share Your Experiences: I recently had the privilege of joining a BSR Human Rights Working Group meeting. With more than 20 companies around the table, we reviewed ideas and strategies on how to prevent slavery in supply chains. It was energizing to see so many empowered and talented corporate professionals candidly discussing their plans and challenges as they strive to embed human rights principles in their management systems.  

In my work to combat modern slavery over the years, I have seen that there are always new tools to develop, new solutions to propose, and new allies to be found. So, for those of us tackling this issue, let’s work together to use our collective talent, power, and reach to make global supply chains a source of empowerment and opportunity for workers across the globe.

I’m looking forward to candid conversations about solutions in this space at the BSR Conference in Huntington Beach, California, next week, during sessions like Human Trafficking and Modern Day Slavery and Protecting Workers on the Move. I hope to see you there.

Blog | Tuesday March 27, 2018

Corporations as Citizens: Have We Come Full Circle?

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From the business leadership that helped to deliver the Paris Climate agreement, through Larry Fink’s recent letter to CEOs about social purpose and long-term growth, to the even more recent examples of Citigroup, Walmart, and Dick’s Sporting Goods changing their approaches to gun sales, business is leading on a wide range of sustainability and social issues.

What this fundamental shift really calls out is the idea of a corporation as a person coming full circle. Whatever one may think about the implications of the Citizens United decision on campaign finance in the U.S.—and the impact of corporate money and influence in our democratic system has been widely criticized—it clearly expanded the definition of corporate “personhood.” In the case, the majority ruled that corporations, as associations of individuals, have free speech rights under the First Amendment.

As Wikipedia states, “a person is a being that has certain capacities or attributes such as reason, morality, consciousness or self-consciousness, and being a part of a culturally established form of social relations, such as kinship, ownership of property, or legal responsibility.” This is very different from the institutional concept of a corporation defined by Milton Friedman: specifically that a company's sole responsibility is to increase profits for its shareholders.

If companies are like people, it follows that they should act more like people, or at least members of a community. You don’t take care of your family members because you are legally required to; you do it out of love. You don’t shovel your elderly neighbor’s sidewalk because you have to; you do it out of companionship. Thousands don’t donate money, supplies, time, and even their own blood to victims of natural disasters because of a legal obligation; they do so because they have empathy for other people.

Yet until the past few years, our society has not expected corporations to act in the same way. We might look to governments, religious institutions, or nonprofit organizations to “take care” of society, but not our corporations. Despite great work in the corporate sustainability field, we have not expected, or even wanted, corporations to truly act like citizens.

In fact, with Citizens United, there have been legitimate concerns that the power of corporations to capture government to serve narrowly defined short-term shareholder interest has grown too strong.  But does it have to be this way?  Could Citizens United actually be a path for companies to leverage their influence for the good of society? We are seeing hopeful signs that this could be changing, as more companies behave as institutions that have the rights—and the responsibilities—of good citizens.

In the U.S., with our devotion to capitalism and the spirit of entrepreneurship, we’ve long held up the ideal of a company. And while a lot of societal challenges depend on cross-sector collaboration and a fair regulatory environment, perhaps it makes sense that we go back to that ideal of a corporate citizen. This entails acting with integrity, contributing positively to one’s community, and putting society above one’s self interest when the two are in conflict.

As Fink wrote recently, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

Those of us who work in corporate sustainability are familiar with a long-standing debate about what we call it—corporate responsibility, sustainability, corporate citizenship, shared value, etc. Many of us who moved away from “responsibility” language did so because it seemed to set the bar too low: Shouldn’t we aim for more than being responsible? What about the value creation opportunities and the need to drive positive change? On the other hand, a focus on the value creation side implies that it’s always a win-win; sometimes, companies have to make hard decisions where it may cost more in the near term to do the right thing.

Whatever we choose to call it, we can and should expect businesses to stand up for what they believe is right, to treat their workers and communities well, to act with integrity and as role models for society—not because the government requires it, but because that’s what it means to be an upstanding corporation. If a company is bestowed certain privileges from society, then they have inherent obligations to that society.

In many ways the shift we’ve been experiencing over the past year comes back to the idea of a company as defined by the Citizens United decision. If we believe in the promise of capitalism, then we should be looking to business to lead and to “take care” of society. We should hold all companies to the expectation that they be these ideal corporations—and in doing so, that they be exemplary citizens.  

Blog | Wednesday June 10, 2020

Today and Tomorrow: COVID-19 and the Increased Relevance of Corporate Sustainability

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With the spread of COVID-19 creating a crisis that is unprecedented in living memory, there is not an element of our lives that has remained unaffected. And this is especially true for business. 

At GlobeScan and BSR, we spend our time working with some of the largest businesses in the world. We wanted to understand both the immediate effect on the sustainability efforts of the companies we work with and also to begin to understand what long-term implications they are anticipating as a result of the pandemic. 

To that end, we surveyed 102 companies across our global networks. 

In the short term, sustainability teams have been involved in the response to COVID-19 in a myriad of different ways. When we asked what was the most important role that the sustainability function has played so far, respondents highlighted community engagement (19 percent), providing advice and support to the business (14 percent), stakeholder engagement (13 percent), health and safety activities (10 percent), and philanthropy (10 percent). 

The survey results show that one of the biggest longer-term outcomes of the COVID-19 pandemic may be a marked increase in the importance of corporate sustainability. Four in ten respondents (40 percent) say that the crisis will increase both the relevance and expectations for sustainable business. Moreover, over a third (36 percent) say that the agenda for sustainable business will change as existing priorities increase in prominence and new issues arise. 

Resilience is having its moment, as more leaders recognize the strategic value of sustainable business models which improve their company’s ability to anticipate and prepare for fast-moving, unexpected shocks. It will be worth watching the extent to which business leaders continue to see sustainability as a primary source of strategic advantage and as a driver for rebuilding the global economy. 

Resilience is having its moment, as more leaders recognize the strategic value of sustainable business models which improve their company’s ability to anticipate and prepare for fast-moving, unexpected shocks.

When asked which elements of their company’s sustainability strategy would be most affected, over four in ten highlighted supply chains (44 percent), with others mentioning inclusive growth (31 percent), climate action (29 percent), and philanthropy (28 percent). 

It is worth noting the reported impact on inclusive economic growth. In our 2019 annual State of Sustainable Business Survey, this area of the sustainability agenda has traditionally been a lower priority, behind climate, human rights, and workers’ rights. It will be interesting to see whether inclusive economic growth becomes a more important corporate priority given the monumental business and socioeconomic impact of the COVID-19 crisis. 

Given the significant impacts of the COVID-19 crisis, it is perhaps not surprising that almost half of respondents (47 percent) are anticipating budget cuts for their sustainability efforts within the next 12 months. By comparison, at the onset of the Great Recession in 2008, we asked a question to a similar cohort of businesses and just under a third (31 percent) said that they were expecting a budget cut. It will bear watching whether this downward pressure will be alleviated by the countervailing recognition of the increased relevance of sustainability to business longevity and success mentioned above. 

While many sustainability teams may be more challenged when it comes to resources, it comes at a time of great urgency for many of the sustainability issues that companies are facing. The crisis and its impacts will continue to create demands on companies to build more resilient businesses while also addressing systemic challenges facing society, including racial and income inequality, the transition to a net-zero greenhouse gas economy, the rise of automation and artificial intelligence (AI), human rights, and overall health and well-being.   

It is already becoming clear that going “back to normal” is neither likely nor desirable. The challenge for us continues to be meeting the moment while building for the future, and the work of sustainability teams remains essential. Sustainable business can be a catalyst for the change that is needed, and sustainability professionals will need to rise to the leadership challenge that is before them. We have seen it happen before. We hope it happens again. 

Blog | Wednesday November 30, 2022

Accelerating an Inclusive Energy Transition beyond COP27

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The substantial business presence at COP27 in Sharm el-Sheikh, Egypt, where governments focused on public finance to address loss and damage, showed how climate has become a mainstream business concern. Key outcomes suggest that an energy transition—from a fossil-based economy to a low-carbon or decarbonized world—is inevitable and that climate justice will mainstream into corporate sustainability.

COP27 continued the evolution of UN climate conferences into trade fairs. Momentum for business action was noticeably stronger than for strengthened national targets.

With nearly 150 pavilions in the official venue, a proliferation of events reduced the average value of any one stage. At COP27, they began to look like extensions of networking and dialogue in the climate community. This proliferation will likely continue at COP28 in Dubai next year with an announced attendance of 80,000 delegates. Climate COPs are now a key annual opportunity for the sustainability profession to meet in person and are certainly the most global opportunity to do so.

COP27 also made clear that the just transition and nature will be two major themes through to COP28 in Dubai. A new section on Energy in the Sharm el-Sheikh Implementation Plan speaks to “low-emission energy,” triggering a debate on the role of non-renewable energy, such as blue hydrogen, nuclear, and carbon capture and storage, in a just transition. A new work program and Ministerial table on just transition may well be where this debate is fought.

As for nature, COP27 recognized the “interlinked global crises of climate change and biodiversity loss” and the “importance of protecting, conserving and restoring nature and ecosystems to achieve the Paris Agreement goal,” encouraging countries to consider “nature-based solutions or ecosystem-based approaches.” Three strong tailwinds for nature will arrive in the coming year, including new global biodiversity goals at Biodiversity COP15 in Montreal, guidance for companies on science-based targets for nature in early 2023, and the recommendations of the Taskforce on Nature-related Financial Disclosures in Q3 2023. These tailwinds will reinforce that companies are uniquely positioned to protect the ecosystems on which their businesses depend.

The major UN outcome at COP27, a new “loss and damage” fund, will address harm from climate impacts that is neither prevented by emissions reductions, nor adapted to on the ground. The fund will support countries particularly vulnerable to climate impacts. This emphasis on loss and damage tells companies that climate justice will be a part of corporate sustainability in the years to come. Companies have an opportunity to work with civil society organizations to support communities affected both by climate impacts and by the just transition.

While 29 countries updated their national climate targets this year, this did not materially change the global emissions trajectory, which heads toward a median of 2.4°C of warming by the end of the century. Positive signals included the new Biden-Harris administration proposed rule requiring the US federal government’s largest 1,000 suppliers to disclose scopes 1, 2, and 3 emissions and undertake science-based targets; the announcement of the Indonesia Just Energy Transition Partnership (JET-P) with US$20 billion in public and private financing; and the restart of US-China bilateral cooperation on climate.

Intensifying climate impacts through the end of this decade are already baked into the atmosphere. Anti-greenwashing sentiment will grow, as evidenced by the Integrity Matters report from the UN High-Level Expert Group on non-state net-zero commitments. These will generate increasing stakeholder pressure on businesses, even as they expand climate action.

So in the future, typical company emissions reductions will be seen as increasingly insufficient. A science-based target will become a floor and not a sign of leadership. By preparing for this turbulence—working on climate justice, supporting local communities, seizing synergies with nature, and transforming business models—companies will build resilience for the long road to net zero.