Search Results

Blog | Tuesday May 7, 2019

Making Supply Chains Safe for Women Workers

Preview

The Guardian reported on a recent study of Vietnamese clothing, footwear, and outdoor wear manufacturers, which found that “workers in Vietnamese factories have been harassed, groped, and even raped.” This was both sadly shocking and sadly predictable.  

Though compliance programs are in place, they have not guaranteed harassment-free work environments. The prevalence of harassment is sadly shocking: nearly half of the women interviewed reported having faced abuse in the past year. The abuse “ranged from groping and slapping to rape and threats of contract termination.” What’s more, this took place in a Vietnamese factory that has been under the global corporate compliance microscope since the mid-1990s. 

The story is also sadly predictable in several ways. First, it is well-known in the compliance industry that corporate compliance auditing has difficulty picking up on harassment issues. This article underlines that harassment and gender-based violence is a reality in the (garment) supply chain, no matter what your social compliance data tells you. This new study should drive us to revisit questions of auditing purpose and to ensure that the safeguarding of workers—and not just of buyers’ reputations—is at the heart of our efforts.   

A second sadly predictable finding was “a high correlation between overtime and workplace abuse.” Stress, pressure, and exhaustion rarely lead to good outcomes, as this study makes clear: “Violence and harassment was 3.8 times more likely during the high season than the rest of the year, 2.4 times more likely when workers reported working overtime of 30 hours or more a month, and 1.6 times more likely when workers could not refuse to work overtime.” 

Complying with Vietnamese legal requirements—that overtime cannot exceed 30 hours per month and 200 hours per year—could significantly reduce harassment and abuse. And yet overtime has been one of the most difficult and challenging issues for supply chain compliance programs to really impact. Solutions, as outlined in the article, must be built through supplier relationships.  

The overriding message is that when it comes to tackling harassment and abuse, compliance programs alone are inadequate. They need to be rethought with the worker at the center, and they should measure and bolster the programs put in place to address root causes and build real change.  

How can buyers and suppliers contribute to real, lasting change?   

Buyer-supplier relationships matter in everyday situations as well as in exceptional circumstances. Corporate values stand as the baseline for decision-making. The starting point for buyers should be their own corporate values—which should be the values they expect their supply chain to mirror. These corporate values must be not just listed in a Code of Conduct, but integrated into business processes, trade terms and conditions, internal action, and corporate leadership. 

One clear area for action that can directly benefit buyers and suppliers while contributing to tackling the harassment issues identified in this study is women’s empowerment. Ensuring that women workers have the tools, skills, support, and confidence they need will drive business benefits and address underlying norms and the all-too-prevalent acceptance of violence from both men and women.    

Putting this value into action requires both buyer and supplier action. On the buyer side, “walking the talk” is fundamental, as well as providing incentives and recognition to suppliers which embrace and implement the value. Actions might include signing the Women’s Empowerment Principles (WEPs) and conducting a Gap Analysis to pinpoint areas for improvement. Buyers can also ensure that gender equality is adequately reflected in social auditing practices. When it comes to incentivizing suppliers, Lindex’s WE Women provides one instance of suppliers’ performance on gender equality being incorporated into overall sustainability performance scorecards.

Suppliers also need to “walk the talk.” This might mean evaluating and improving their own workplace attitudes, policies, and standards.  Suppliers can also proliferate and promote knowledge and skills to their workforces and communities through workplace-based interventions while ensuring that management leads with appropriate policies, attitudes, and behavior, and that support is offered to workers to both understand what is right and wrong, how they can set boundaries for themselves, and/or report issues they encounter.

If we put the welfare of workers, particularly women, at the center of purpose, business benefits follow.

BSR’s HERrespect brings together buyers and suppliers to implement such programs and has seen significant impacts in changing attitudes to harassment and gender-based violence. It also supports suppliers in building or improving grievance systems. As the article notes: “Encouragingly, the study found that women working in factories with clear complaints procedures recorded far lower levels of abuse than those without such procedures.” 

The least shocking finding from The Guardian's article is that if we put the welfare of workers, particularly women, at the center of purpose, business benefits follow.   

By acknowledging the challenges and aligning values with supply chain partners, buyers and suppliers can make change. Harassment and violence is a reality for many women workers. You can do something—now—to improve it.   

Join us. 

Blog | Thursday September 23, 2021

Human Rights Are Not Just an “ESG Factor”

Preview

The notion that investors should use environmental, social, and governance (ESG) considerations to inform their decision-making is having a moment. This is undoubtedly a good thing for those who believe that just and sustainable business has an essential role to play in the creation of a more equitable future. However, there is a risk of fundamental concepts getting lost in the process. One of these concepts is the responsibility of business—including institutional investors—to respect human rights.

The profile received by ESG today may seem sudden, but is happening for good reason: The physical impacts of climate change are becoming more apparent with each season, the global pandemic has forced a renewed examination of human capital across company value chains, and the decline of democracy and trend towards political polarization has significantly increased legal, operational, and reputational risks for companies everywhere. In this context, it is not hard to convince investors of the material significance of ESG to enterprise value creation.

However, this lens—of viewing ESG considerations solely as a series of factors that impact enterprise value creation and financial returns—may jeopardize the very outcomes we are seeking to achieve. 

Put simply, respect for human rights is not just an ESG factor, but a global standard of expected conduct for all companies, including institutional investors. Human rights are not a subset of discreet social topics to be addressed, but a globally agreed upon standard of achievement for all people, covering a wide range of interdependent civil, political, economic, social, cultural, and environmental rights.

...enterprise value creation should only happen when business can meet its responsibility to respect human rights.

In the business context, this is manifested in a responsibility to adopt a human rights policy, embed respect for human rights throughout the business, and undertake human rights due diligence—in other words, a fundamental methodology and mindset, not simply an issue to address. And crucially, taking action to address human rights risks should not be contingent on their relevance to enterprise value creation; enterprise value creation should only happen when business can meet its responsibility to respect human rights.

However, too often the opposite is the case. When investors position risks and opportunities for the business as the core metric for evaluating ESG performance, companies will respond by focusing too much on what shareholders have to say, and not enough on the voices of those whose rights are impacted. And by aggregating ratings across E, S, and G factors, companies may be labeled as strong ESG performers by investors due to their high ranking on financially material environmental criteria, despite contributing to human rights harms on social criteria. 

This is a problem. Many investors misinterpret fiduciary duties as limiting their ability to act on anything that does not demonstrably increase the financial standing of beneficiaries or customers in the short-term. While severe risks to people often converge with risks to business, measuring the returns of paying a living wage (for example) may not be apparent in the short-term. 

Public debates on the merits of ESG too often ignore the growth of business and human rights, such as the incorporation of the UN Guiding Principles on Business and Human Rights (UNGPs) into the OECD Guidelines on Multinational Enterprises and the subsequent creation of responsible business conduct guidance for institutional investors by the OCED. Emphasizing this shortcoming, a recent United Nations report found that “knowledge of human rights, including how human rights are defined, how they are relevant across ESG factors, and what meaningful human rights due diligence looks like remain limited in the investor community.” 

We believe that the business and human rights framework tackles many weaknesses in today’s ESG landscape, and important organizations are moving in this direction too. The EU has taken on a leadership role in re-defining responsible business and ESG investing by codifying the human rights expectations of business actors—for example, the Sustainable Finance Disclosure Regulation requires investors to disclose the adverse impacts of ESG-branded investments on people and planet regardless of financial materiality, while the proposed EU “social taxonomy” is also grounded on human rights standards and frameworks.

The notion of “double materiality,” which features prominently in proposals for a new EU Corporate Sustainability Reporting Directive, is especially promising. Building upon two decades of standards development, double materiality makes clear that business is accountable in two different ways—to investors, for the creation of enterprise value, and to society at large, for impacts on people and the environment. We need standards for both.

The two dimensions of double materiality are connected because impacts on people and the environment increasingly interact with the creation of enterprise value creation. This has become known as “dynamic materiality,” and wise companies will seek to convey to investors how they address this relationship. However, the two dimensions of double materiality—to investors, for the creation of enterprise value, and to society, for impacts on people and the environment—are distinct and exist entirely on their own merits.

Ten years ago, the unanimous endorsement of the UNGPs by the UN Human Rights Council brought new clarity to the notion that all companies, including investors, have a responsibility to respect human rights, regardless of its significance to financial returns. By all means, let’s seize the moment of increased investor interest in ESG to advance more responsible forms of business; but let’s not forget the conceptual foundations that make for truly just and sustainable business, and make sure that the ESG movement meets its own responsibility to respect human rights.

Blog | Monday January 29, 2024

Ten Guiding Principles for Co-creating Climate Justice Interventions

Preview

While business leaders are starting to consider how climate change disproportionately affects people and communities, there are few examples of how the private sector is working with affected stakeholders. In fact, at a BSR hosted “Roundtable Discussion on Climate Justice and Authentic Collaboration”, 70 percent of business participants indicated that they need support in understanding how to approach climate justice.  

By incorporating a co-creation process, business leaders can center communities most affected by climate change in ongoing discussions as they experience the injustice firsthand and can identify solutions that best fit their needs. Thoughtful and intentional co-creation facilitates conscious inclusion of those who historically were or are excluded from both policy and business decision-making processes​; presents an opportunity to address disparities and systemic inequities​; and enhances institutions and climate solutions through diversity of experience, thought, and expectations. ​  

Co-creation can also offer a level of innovation and creativity in climate solutions that far exceeds what could be achieved if done alone. To deliver benefits to both affected communities and businesses, it is essential to work directly with affected communities and local community-based organizations at the onset—not separately or at later stages after decisions and investments have been made. 

The following 10 principles can guide businesses in co-creating climate justice interventions with affected communities.  

1. Listen First and Listen to Learn 

When engaging communities, companies should come prepared to listen to learn and foster understanding of the affected stakeholders’ experiences, perspectives, needs, resources, and capacities.  

2. Move at the Speed of Trust 

Budget time and resources appropriately for thoughtful decision-making and manage expectations on the amount of time necessary to build mutual respect and trust. A timeline for the specific intervention should be agreed on, and regular checkpoints to reassess progress and comfortability will allow all parties to understand when timelines should be adjusted. While progress may be slower, outcomes are more likely to be just and sustainable for all parties.  

3. Cultivate an Inclusive Environment 

Inclusive representation and culturally sensitive, respectful language to cultivate an inclusive environment will promote trust-building. A culture of inclusivity will give stakeholders agency and a platform to voice their opinions and perspectives from lived experience, enhancing the business-community relationship.  

4. Communicate Transparently 

Stakeholders—from investors to consumers to workers—are calling on companies to provide increased transparency on climate action. To foster and maintain trust, ensure communication and feedback between the company and affected communities are open, honest, and timely and objectives are transparently shared.  

5. Ensure Mutual Benefit  

Affected communities have the most to lose from climate change but are often excluded from an equitable share of the benefits of climate solutions. Benefits should come from what the communities themselves are asking for, not what the business may imagine communities need or want.  

6. Contend with Systemic, Historic, and Contemporary Injustices 

Recognize, take responsibility for, and remedy past and current community harms for which businesses have caused or contributed, and use leverage to address harms to which the company is linked. Understand how existing structures, societal norms, and frameworks exclude the needs of disproportionately affected communities and consider how leadership, resources, and decision-making be redirected to those most affected and historically excluded.     

7. Welcome Discomfort 

Real and meaningful engagement on climate justice requires learning and reflection. By embracing dialogue and acknowledging feedback, businesses demonstrate that they are undertaking the necessary work, introspection, and accountability.  

8. Include Last-mile Communities 

Seek to involve last-mile communities—communities in rural, peri-urban, and urban areas that lack access to basic services such as water, sanitation, electricity, cellular devices, and transportation. Last-mile communities are often left out of stakeholder engagement and are isolated due to limitations like language barriers or inaccessible internet and communication tools.  

9. Engage for the Long Term 

Similar to other social justice efforts, climate justice requires companies to make a long-term commitment to the communities with whom they engage. From learning and listening to acting and fostering equitable partnerships, companies need to approach climate justice with the understanding that it requires sustained and deep engagement over time to enable trust-building and lasting change.  

10. Continuously Evaluate and Adapt 

Continuously monitor and evaluate interventions to ensure they are achieving desired outcomes and responding to shifting priorities and circumstances as well as the recommendations and needs of communities most affected by climate change. Adapt interventions as needed based on key learnings throughout the process and evolving pressures and challenges associated with addressing climate change.  

The principles, while ambitious, are meant to inform and steer co-creation between businesses and affected communities. Business actions aligned with these principles can better forge relationships with affected communities, build trust, and make collective progress toward climate justice. 

The 10 principles are summarized from a more in-depth BSR issue brief that provides additional context for co-creation as well as an approach that outlines recommended phases of activity for co-creating climate justice interventions between business and communities. 

Blog | Tuesday August 31, 2021

Creating Opportunities for Action: Advancing Children’s Rights in the Palm Oil Industry

Preview

In January of this year, we published a blog highlighting practical steps that palm oil companies can take to respect child rights and address child labor in their operations and supply chains. In June 2021, the ILO and UNICEF reported that the number of children in child labor had increased from 152 to 160 million globally—and these numbers are expected to rise as the COVID-19 pandemic continues to affect Southeast Asia. COVID-19 is expected to further obstruct efforts to eliminate child labor as more children are expected to drop out of school and fall into hazardous work.

We can see these impacts playing out in the palm oil industries in Indonesia and Malaysia. Companies wishing to eradicate child labor from their supply chains may be best served by looking beyond their own value chains to the wider context in which they source and manufacture products and by partnering with other actors to address structural drivers and systemic issues which require an industry-wide approach.

Why Industry Collaboration Is Critical

Companies cannot tackle child labor in isolation, given its entrenched nature and complexity. While greater progress is needed on engagement and collaboration with governments and civil society, forming partnerships across the palm oil industry can be an impactful way to systemically address the issue. Here’s why:

• Industry partnerships can be integral to the success of strategies needed to leverage companies and their suppliers to prevent or mitigate child rights violations through promoting awareness and understanding of complex issues, encouraging others to act, and developing solutions together.
• Greater collaboration between businesses can identify and scale effective solutions and facilitate shared learnings while avoiding potential duplicated efforts. Individual company responses may not be as effective in tackling an issue rooted in poverty, for example.
• Increased collaboration can enable companies to share the risk and create a more level playing field.

A wide range of voluntary, business-led, industry-wide, and cross-industry initiatives has emerged in recognition of this need for greater collaboration.

How Palm Oil Companies Can Act on Child Labor

While the UN Guiding Principles on Business and Human Rights acknowledge the complexity of addressing human rights issues, they encourage companies to engage with a wide range of stakeholders. In addition to conducting human rights due diligence in their own operations and supply chains, as well as adhering to national and international laws and standards, companies can address complex issues such as child labor in several ways:

• Raise standards through the creation of industry guidance on due diligence, remediation, and monitoring to define corporate behavior regarding child rights violations.
• Work with relevant, local stakeholders to understand risks, look at potential solutions, or address a specific impact. For example, companies could partner with peers and local civil society organization (CSO) networks to lobby the government to make legislative changes. They could also advocate for a national action plan on child labor.
• Use leverage to engage with less resourced companies within supply chains and build capacity, raise awareness, and share best practices and lessons learned through training. Companies could work in partnership with leading organizations to develop training and/or guidance for suppliers on child rights, challenges, and practical solutions.  
• They could also join a leadership platform on child labor to build on and strengthen existing efforts for collective action and practical solutions.

At BSR, we work with key players in the palm oil industry, including producers and buyers, to tackle child labor by integrating children’s rights into plantation policies and practices. Last year, we supported the development of agribusiness group Wilmar’s Child Protection Implementation Manual, in collaboration with global buyers. This year, we’re continuing our work with Wilmar—in collaboration with The Centre for Child Rights and Business and the Earthworm Foundation and with the support of global palm oil buyers— to pilot and test the manual’s practical applicability with a participating supplier and share lessons learned with Wilmar’s supplier base and the wider industry. A key deliverable of this project will include a manual, which will be adapted for the Malaysia context aimed at addressing complex issues related to foreign workers.

The manuals will not only be used as a guideline for the industry to respect and promote child rights, but more importantly, the pilot also demonstrates proactive steps toward risk management, accountability, collective action and building a shared understanding of how to address child labor in different geographical contexts. This is an important opportunity to share lessons learned within the Indonesian and Malaysian palm oil industries with a view to expand learnings across other sectors. As we move into the next phase of work, we will continue to engage palm oil industry players to leverage collaborative efforts to invest in sustainable change for children.

For more information on BSR’s work on business and human rights, including children’s rights, please reach out to connect with our team.

Primers | Thursday October 5, 2017

Future of Supply Chains 2025

Preview

This primer provides a new way of thinking about the future of supply chains—bringing together the top procurement priorities of leading global businesses and the key forces of change reshaping the very business models that have given rise to global supply chains—to enable supply chain leaders to envision and manage future-fit supply chains.

Deepening our understanding of both sets of drivers and their potential implications for supply chains creates a powerful lens through which to reimagine the ways that all parties to global supply chains create value and contribute to a more just and sustainable world. Supply chain leaders, and the organizations with which they work, should seize this moment of significant change to design and implement new supply chain management models. This primer sets out five specific recommendations to help supply chain leaders build future-fit supply chains that both drive progress on top procurement priorities and advance the sustainable business agenda.

The information here is gathered from a series of interviews and leadership dialogues with companies in our membership on the front lines of these changes; review of thought leadership from think tanks, academics, and practitioner surveys; as well as BSR’s experience helping companies in all industries evolve their approaches to supply chain sustainability.

In the months ahead, BSR will convene a series of targeted dialogues, experiential futures workshops, and a collaborative initiative that will incubate and expand on these solutions in real time, sharing and elaborating on new models that leading companies are already putting in place. We invite you to be a part of shaping the future of supply chains that we would all like to see—one in which supply chains enable human rights, climate resilience, women’s empowerment, and inclusive economies on a global scale.

Blog | Monday September 20, 2021

Only Transformative Net-Zero Implementation Will Meet Our Climate Crisis

Preview

The world’s leading authority on climate science, the Intergovernmental Panel on Climate Change, had not delivered a major report in 7 years. But the installment released last month paints a dire picture of our future. 

On our current path, we will likely breach the Paris Agreement’s stretch target of limiting global warming to 1.5°C above pre-industrial levels in the next two decades, and may breach the fallback target of well below 2°C around mid-century.¹ For these goals set just a few years ago, the 2020s will truly be the decisive decade. This year’s scourge of wildfires in California and Siberia, floods in Germany, and deadly storms like Hurricane Ida remind us of what is to come.

The IPCC report tells us that climate change isn’t a problem we should solve for the next generation; it is a problem we must solve immediately, for ourselves. The impacts of a 1.5°C and 2°C world – extreme heat and weather, species loss, crop yield reductions, fishery decline, disrupted supply chains, public health crises and displaced communities – would arrive during our own working lives. We, not our children, would see how the dice are loaded. The heatwave that happened once every 50 years before industrialization would happen 9 times at 1.5°C and 14 times at 2°C.²

So, the staggering rise of corporate net-zero commitments comes at an auspicious time. Over the past three years more than 3,000 businesses, large and small, have made net-zero commitments now aggregated under the UN’s Race to Zero campaign.³ All of these meet a set of criteria in force as of this June.⁴ This momentum from businesses to build net-zero value chains can change our global trajectory. But net-zero commitments are also increasingly subject to five criticisms which implementation must address to be truly credible and transformative.

1. The first criticism is that net-zero commitments divert attention from immediate abatement, effectively licensing short-term emissions. That is why companies with net-zero targets must also set and deliver an interim emissions reductions target following a 1.5°C trajectory, for example under the Science-Based Targets initiative, or as part of the Race to Zero campaign.⁵
2. A second criticism is that net-zero commitments, which are typically based on a company’s fair share of global net zero carbon dioxide by 2050, should not be inequitable as between developed and developing countries. That is why, companies whose emissions footprint sits largely in developed countries who have high historical emissions, should aim to achieve net zero ahead of 2050.
3. A third criticism is that net-zero commitments, by focusing attention on removals which net out emissions in the target year, divert attention from immediate climate investments outside the value chain needed to keep 1.5°C within reach. Companies can dramatically increase their impact on the climate crisis by not merely abating emissions in the value chain en route to net zero, but also compensating for emissions outside the value chain, for example by investing in climate solutions and methane reductions.
4. A fourth criticism is that net-zero commitments may greenwash business-as-usual action. Building a net-zero value chain requires genuine business transformation across functions, from supply chain engagement and procurement, to finance, and research and development and product design. Net zero implementation then must demonstrate business transformation across these functions, including integration into the company’s business strategy with a clear climate action plan which has been vetted and approved by shareholders.
5. Finally, a fifth criticism is that net-zero commitments perpetuate climate and environmental injustice, for example in BIPOC and low wealth communities. Here a company can support these communities through its net zero implementation. Renewable electricity can be purchased from companies with a proven track record of increasing energy access. Carbon credits can be selected which benefit these communities. Low-carbon products and services can be procured in a manner which improves the equitable distribution of benefits of the net zero economy. This is where net-zero implementation strategies intersect with equity in the sustainability agenda.

These criticisms point towards what climate leadership will look like in future. This includes: 

1. Selecting a net-zero target year earlier than 2050 if your footprint is largely in developed countries;
2. Setting and delivering an interim emission reduction target consistent with a 1.5°C trajectory;
3. Compensating for emissions outside the value chain enroute to your target year;
4. Implementing business transformation across functions; 
5. Supporting communities which have suffered from climate injustice through net zero implementation;
6. Using your company’s influence to advocate for policy which advances climate justice and which supports a just transition for all.

This can be a lot to ask of a company formulating its next climate target and implementation plan. But debate over net-zero commitments is heating up as COP26 approaches and will not slow down anytime soon. Listening to these concerns from the climate community helps companies to make their net-zero implementation commensurate to the crisis at hand.

¹ IPCC AR6 WGI SPM, table SPM.1.
² IPCC AR6 WGI SPM, p. SPM-23.
³ https://unfccc.int/climate-action/race-to-zero-campaign
⁴ https://racetozero.unfccc.int/wp-content/uploads/2021/04/Race-to-Zero-Criteria-2.0.pdf
⁵ The Race to Zero criteria require that companies “[s]et an interim target to achieve in the next decade, which reflects maximum effort toward or beyond a fair share of the 50% global reduction in CO2 by 2030 identified in the IPCC Special Report on Global Warming of 1.5C”.

Blog | Friday March 3, 2017

A New Era for Chinese Industry: Automation, Optimization, and Global Supply Chains

Preview

When you think about industry in China, what images come to mind?

Most imagine gigantic factories, with lines of workers churning out low-cost goods bound for markets abroad. This China pulls from the ground with disregard for environmental implications. It pushes workers to the limit, knowing a steady supply of replacements wait just outside the factory gates.

This may have been the case in the past, but not so anymore.

Chinese industry is entering a new era in which optimization of resources, labor, and cost is critical. A slowing economy, as well as an uncertain geopolitical environment, means the government must find new ways to stay globally competitive.

To do this, China is positioning itself to become more domestically self-sufficient, service-oriented, and competitive than ever before. BSR’s latest working paper, “Optimizing Chinese Industry in the Age of Automation” explores the impact these shifts will have on global businesses and their supply chains. To stay on top of these changes and ensure sustainable business practices, businesses should begin to rethink their supplier relationships and support economic inclusion.

China’s economic shift is being accelerated by rising labor costs, changing policy, and the ever-present specter of automation. For instance, labor costs for the average Chinese worker have increased 15 percent year on year since 2000. When factoring in productivity, Chinese wages are only 4 percent lower than those in the United States. This means that businesses should no longer think of China as a market for cheap production of goods.

Beyond that, policy responses, like the Made in China 2025 plan, aim to bolster productivity, developing domestic manufacturing sophistication that can overtake Germany, Japan, and the United States. And President Xi Jinping’s proclamation of a “robot revolution” will free up billions of renminbi for technology upgrades and industrial robotics. It also starts to address labor costs and shortages. In one startling example, the manufacturing hub of Guangdong aims to automate 80 percent of its factories by 2020.

These shifts will require major changes to the way global businesses operate in China. To that end, the paper also provides recommendations to prepare the workforce of today for the workplace of tomorrow through new approaches to supplier relationships and a focus on an inclusive economy.

Supporting Supplier Relationships

As China moves away from low-end manufacturing, business can play a positive role in shaping the country’s future supply chain. This will be mutually beneficial for both the government and a company. Accomplishing such goals will require investment, engagement, and preparation.

• Invest: Companies should not assume that internal leadership or supply chain partners know about the changing landscape. They should invest in knowledge-sharing that builds management capacity to handle present-day shifts.
• Engage: Companies should have an open dialogue with supply chain partners to get on the same page about what the future holds. They should start by asking: What will it take to stay competitive over the next decade?
• Prepare: The changes happening today will affect different industries in different ways. Those well on their automation journey, such as automotive companies, can share learnings with industries yet to experience change. As they onboard machines, leaders at companies in heavy manufacturing and the information and communications technology sector should consider the risks and labor impacts that automation brings.

Supporting Economic Inclusion

It’s not only the supply chain landscape that is changing. Optimization of the labor force will mean fewer low-skill jobs, higher competition, and a shift in job knowledge requirements. By preparing well today, business can fulfill a moral imperative in supporting economic inclusion among the Chinese workforce. This preparation is twofold.

• Upgrade skills: Companies should assess whether workers have what it takes to be competitive in the workplace of tomorrow. Streamlined operations mean fewer workers accomplishing multiple tasks, so learning and development mechanisms should support a diversification of skills. These mechanisms should also make use of technology to create mobile, accessible, adaptable, and meaningful content.
• Reimagine mobility: Traditional mobility is often seen as a ladder. Reimagined mobility is like a roundabout, with many paths to choose. Some workers may choose to stay within a company. Others may choose to take newfound skills and create their own organization. Regardless, business should consider mobility as an investment in the future competitiveness of a worker, rather than a cost to the company that the worker must pay back through loyalty. With millions at risk of losing jobs in this changing landscape, business can help ensure a painless transition for displaced workers.

At the BSR Conference 2016, John L. Thornton, Executive Chairman of Barrick Gold Corporation, noted that “every person knows far, far less than they should about China.” Given dynamic changes in the country, now is the time to brush up. This isn’t an exercise in multicultural awareness, however. With China squarely at the center of global supply chains, any changes there resonate throughout the world. As shifts in policy, labor, and use of automation occur, is your business ready for an inevitable future where China is no longer simply the world’s factory, but an optimized market of its own?

Blog | Tuesday September 26, 2017

Introducing the Sustainable Business Playbook

Preview

Last week in New York, leaders from business, government, and civil society descended on New York City during the United Nations General Assembly (UNGA) for the whirlwind of meetings, briefings, and announcements that have become the sustainability world’s answer to Fashion Week.

What has been known as Climate Week for almost a decade is now also joined by a flurry of activity related to the UN Sustainable Development Goals (SDGs). This creates a platform for new commitments; new announcements, including that of the 2018 Global Climate Action Summit; and new dialogues like those hosted by the World Economic Forum and Bloomberg Philanthropies (both looking to fill the space left unoccupied by the end of the Clinton Global Initiative).

This is all to the good. Yet at the same time, each year these events inspire the nagging sensation that the sustainable business community excels at engaging with the already-committed, while the “outside world” continues on without regard for the vision articulated by the SDGs.

The aftermath of the 2016 election in the U.S. only places that view into sharp relief, as the White House is held by people who deny climate science, disregard human rights, and close borders, not to mention aim to slash funding of the very efforts that are needed to achieve the SDGs. The question on our minds last week was this: How do we break through these barriers to ensure that business continues to exert leadership when Washington appears to have ceded its role?

One of the great stories of 2017 is that business leaders have reinforced their commitment to climate action; stated their opposition to the travel ban, and expressed revulsion at the apparent tolerance of hate groups. Just this past weekend, the National Football League became the latest enterprise to express its opposition to divisive speech from the White House.

These steps have had impact, and they have reinforced support for what we would like to believe are universal values. However, what is also needed is a positive agenda that will guide business in the U.S.—one that takes a proactive, comprehensive approach to defining what our future should look like. BSR is therefore pleased to release a Playbook for Sustainable Business in the United States as a contribution to shape and support the actions that will ensure that the vision of a just and sustainable world becomes a reality.

We developed this Playbook as the outcome of a dialogue we have led with 15 U.S.-headquartered companies, mainly in heavy manufacturing, over the past several months. This group came together to exchange views on how to navigate a new political environment while remaining committed to keeping sustainability front and center for their organizations.

The Playbook aims to provide direction for business in the U.S. (whether headquartered or with significant operations in the country) to devise effective strategies that respond to the current context while also staying focused on the longer haul. It is based on the premise that advocating for sustainability in clear business terms is much more likely to build effective, broad, and cross-party coalitions.

During these discussions, participants surfaced five key perspectives about the role of sustainable business in the U.S. today:

• Sustainability enhances competitiveness: The connections between sustainability, business success, and economic growth in the U.S. are strengthening. The short-, medium-, and long-term competitiveness of the U.S. economy requires investment in sustainable business models, technologies, and products.
• Business should stay the course: Sustainable business leaders for the most part are “staying the course” on sustainability, and can continue to do that by reinforcing commitments to meaningful business action on climate change, human rights, and the SDGs.
• Business should demonstrate relevance and benefits to the public: It is essential that sustainable business leaders become more effective at connecting sustainability challenges with priorities that resonate with the general public, through innovation, employment, and competitiveness.
• Sustainable business leaders can shape effective public policy frameworks: Sustainable business leaders have a unique opportunity to shape the public policy and regulatory frameworks that will support the long-term success of sustainable business and the U.S. economy. By directly connecting sustainability to business success, sustainable business leaders can help bridge the political divide with a shared vision for U.S. economic prosperity. The business voice needs to be heard in policy fora, not only in Washington, but also in the states and cities where problem-solving remains very much on the agenda.
• Coalition development advances progress: Systemic change requires deep collaboration, and this is even more true when policy frameworks grow more fragmented. The need for companies to build coalitions, along the lines of the “We Are Still In” effort that responded forcefully to the stated decision to withdraw the U.S. from the Paris Agreement, is just one example of why and how this is important.

Today’s unique political landscape, while threatening to interfere with progress at the surface, presents a unique opportunity to redefine the future of sustainable business. We hope you find this Playbook useful, and we believe its elements not only respond to a particular moment in the U.S., but also provide a framework that can be applied in other contexts.

As we look forward to advancing the objectives of this effort in the coming months and years, we invite you to join us in collaborative efforts to shape an approach to sustainable business that is fit for purpose in turbulent times and charts a path that will serve companies and wider society well in the coming decades.

Blog | Tuesday December 17, 2019

Our Top Sustainability Insights of 2019

Preview

As 2019 comes to a close, we are taking a moment to look back at the news and initiatives that shaped the year. The most popular blog posts and reports BSR published this year show reader interest in a variety of topics, from collaboration to climate change, that are sure to impact sustainability strategies for the decade to come.

Some common themes we saw across our most read content of the year were:

• Understanding the business landscape: We kicked off the year sharing our take on BlackRock CEO Larry Fink’s annual letter and its emphasis on ‘purpose’ and came full circle in November, publishing our President and CEO Aron Cramer’s first annual letter on the New Climate for Business, which presents an agenda for business leaders to take on in the decisive decade to come.
• Seeking a clearer picture of the future: The popularity of future-oriented content, from our report analyzing how the ‘future of work’ will affect gender disparities to a blog post on developing a 2030 strategy, demonstrates that our readers are thinking ahead.
• Staying on top of trends: Much of our top 2019 content looks at the latest trends—in sustainability reporting, stakeholder engagement, supply chain visibility, and private equity to name a few.

What insights will be the most valuable to take from 2019 and bring into 2020? See the list below of our most read publications from the past year and decide for yourself.

Most Read BSR Blog Posts of 2019

1. The New Climate for Business: In his first annual letter, BSR President and CEO Aron Cramer addresses the new climate for business and presented the urgency agenda for the 2020s—the decisive decade, now only days away.
2. Global Tech Companies, Partners Identify Tools to Fight Human Trafficking: This article provides a progress report on the Tech Against Trafficking initiative and their ambitious project to understand and map the landscape of existing tech tools being used in the anti-trafficking sector.
3. Supply Chain Visibility: Traceability, Transparency, and Mapping Explained: BSR experts explain three concepts for gaining and demonstrating visibility in multi-tier supply chains: traceability, mapping, and transparency. What are these concepts, how do they differ, and what do they offer?
4. How Private Equity Can Address TCFD and Climate Change: BSR suggests two types of approach for how private equity firms can address climate risks and opportunities in an actionable, meaningful way.
5. Three Questions to Think About for Your 2030 Strategy: With many sustainability strategies and goals expiring in 2020, companies should reflect on three questions as they begin to shape their 2030 strategies.
6. What Larry Fink's 2019 Letter Means for the Future of Business: Our four main takeaways from the 2019 letter of BlackRock's Larry Fink to CEOs, which mentioned the word ‘purpose’ 21 times.

Most Read BSR Reports of 2019

1. Five-Step Approach to Stakeholder Engagement: This year, we released an update to our extremely popular 2011 report, providing a comprehensive stakeholder engagement approach and toolkit to help companies build and retain stakeholder trust as it becomes more important than ever.
2. ESG in Private Equity: How to Write a Responsible Investment Policy: Over the past 10 years, the private equity sector has seen responsible investment approaches move from exception to expectation. Formalized integration of environmental, social, and governance (ESG) considerations is becoming the norm. For all firms, a meaningful policy is fundamental to responsible investment and ESG integration.
3. Five Reporting Trends for 2019: Insights on the Future of Reporting: BSR's Future of Reporting collaborative initiative seeks to help members create sustainability reports that result in improved sustainability performance at companies and informed decision-making by stakeholders. In this report, it outlines the five innovations it was seeking to improve reporting and disclosure in 2019.
4. The State of Sustainable Business in 2019: The 11th annual BSR/GlobeScan State of Sustainable Business survey found the rise of climate change as the most significant issue and investor interest as a key driver in sustainability, among other insights into the world of sustainable business. 
5. How Business Can Build a 'Future of Work' That Works for Women: Businesses have a responsibility not only to help workers prepare and transition for the ‘future of work,’ but also enact strategies that create positive change and economic advances for women. This report outlines how to do so.
6. Making Women Workers Count: A Framework for Conducting Gender Responsive Due Diligence in Supply Chains: How can companies conduct more gender-responsive due diligence approaches, and what role does gender-disaggregated data play in this? This report, funded by the C&A Foundation, sets out to address this question.  

We published a lot of other great content this year on critical issues of the moment, from blogs on employee and CEO activism to reports on topics in supply chains, such as gender equality and leadership through maturity models. We also continued our Sustainability Short Takes video series, which highlighted the many major issues discussed at our BSR Conference 2019.

All of us here at BSR wish you and your colleagues a happy and safe new year, and as the new decade dawns, we look forward to working together to build a just and sustainable world.

Blog | Monday August 20, 2018

Is This the Beginning of the End for Impunity?

Preview

Wherever you live, and wherever you stand on the political spectrum, you probably believe that a significant share of the political elite in your country is irredeemably corrupt and unethical. And wherever you work, it is also likely that you know some senior leaders who do a poor job of conveying tone at the top and do not model or respect the organization’s stated values. There is plenty of evidence that once people attain power, they are more likely to engage in unethical behavior. The effects of power can even be compared to a form of brain damage: Power makes people less risk-averse, more impulsive, and less skilled at reading people and situations.

Nonetheless, impunity seems to be a fact of life. The human need for cognitive consistency goes a long way toward explaining why toxic organizational cultures and abuses of power can persist. A psychological mechanism known as the “just world” phenomenon inclines us to ascribe virtue to the powerful while assigning negative traits to the poor and powerless. 

Impunity is a daily issue in the lives of many who work in governance, risk, and compliance. Investigating your boss is usually a career-limiting move, but it is difficult, if not impossible, to sustain an ethical culture without the remit or tools to hold senior members of the organization accountable. This contradiction has been driving efforts to amplify the independence, seniority, and remit of chief compliance officers.

But today, something interesting is happening. The structures supporting impunity seem to be growing less reliable.

The structures supporting impunity seem to be growing less reliable.

In politics, corruption has become an issue of far greater concern to voters than it was 20 years ago. A recent report in Foreign Policy found that more than 10 percent of the world’s nations have undergone leadership change in the past five years as a direct result of corruption investigations. In 21 countries, leaders have either resigned or been removed from office before their terms were scheduled to conclude. In many additional countries, incumbents are facing electoral defeat amid the perception that they are corrupt. 

To be sure, this hopeful scenario is not playing everywhere.  Allegations of corruption, whether true or false, are frequently used by political candidates to gain advantage. But the increasing use of this technique in itself demonstrates that concern about the integrity of political officials may be at an all-time high.

The business world, too, shows signs that impunity is no longer predictable. The removal of chief executive officers for ethical lapses remains infrequent, but such instances increased by 36 percent from 2007-11 to 2012-16. This trend is most pronounced among North American and European companies with high market capitalization. Researchers believe this suggests an overall improvement in governance and accountability to the public. 

Company boards have also become more willing to state publicly that a CEO was fired for misconduct, rather than enabling him or her to slip into early retirement. The #MeToo movement has occasioned significant turnover at a growing number of media organizations and consumer-facing companies, and it seems to have positively influenced corporate culture in some cases. A growing number of companies has even made a point of proactively disclosing challenges, rather than responding only to media investigations or internal whistleblowers. Voluntary disclosure facilitates the rebuilding of reputation and trust.

The longer-term consequences of these trends are, as ever, uncertain. The ability to replace disreputable leaders does not necessarily mark a sustained power shift in organizations. Still, today’s corporate leaders are on notice that immunity from consequences is no longer the status quo.

All of this reflects deeper, more profound societal shifts. The most important is hyper-transparency, which makes it exponentially harder for companies to keep their inner workings confidential. Leaked revelations about offshore tax avoidance, soft lobbying, and other standard corporate practices have helped spur concern and distaste over self-serving corporate agendas. Data leaks and hacks have also been embraced by unhappy employees as powerful whistleblowing tools that can help them subvert or sidestep non-disclosure agreements. 

Employees in some companies, particularly in the tech industry, feel empowered to demand that the C-suite focus on better alignment between corporate principles and personal values, and companies are listening intently. Indeed, the new trend in corporate activism on social issues is, in large part, being driven by the voices and will of employees—to a surprisingly greater extent than by those of customers or investors.

As societies across the world call for leaders who can demonstrate that integrity is as important to them as personal advantage, the pendulum seems to be swinging away from venerating wealth and power for its own sake and toward valuing integrity and social conscience. This is great news for honest leaders—and for everyone who seeks to drive sustainable, ethical behavior in a public or private organization.