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Blog | Thursday February 16, 2017

Three Reasons Why Collaboration Is Key to Green Freight

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Freight movement is the lifeblood of global supply chains and economic development in many regions. It is also at the heart of many 21st-century challenges to global business: Markets want shipping to be faster, more flexible, and more sustainable. Yet freight is a distributed, global system, in which no single entity controls central decision-making—and, likewise, green freight efforts are dispersed and interconnected in unexpected ways.

These conditions require collaboration to make progress. For example, last year, governments around the globe ratified an agreement to drastically cut greenhouse gas emissions that contribute to climate change by midcentury. Freight is responsible for 7 percent of these emissions and is one of the fastest growing emissions sources—but who along the value chain, specifically, should be accountable? And how does the responsible party work with business partners, governments, and logistics suppliers to be more sustainable?

BSR’s Clean Cargo Working Group (CCWG) has been addressing these questions within the shipping industry for nearly 15 years. It offers a prime example of successful green freight collaboration: a business-to-business leadership initiative involving major brands, cargo carriers, and freight forwarders dedicated to reducing the environmental impacts of global goods transportation and promoting responsible shipping.

In our work, which now represents 85 percent of ocean container shipping volume, we have seen the value to companies in addressing these challenges collaboratively. We have learned there are several reasons why globally dispersed green freight challenges like a greener shipping industry require collaboration:

• Alignment and standardization is impossible for any single company. Freight carriers cannot track their own improvements, and shippers cannot compare the environmental performance of their carriers, unless all parties use the same standards. Therefore, we facilitated collaboration among carriers and shippers to develop a standardized methodology for reporting environmental performance. This has allowed CCWG to track emissions reductions in the group: Our member carriers have reduced their emissions by more than 34 percent per container, per kilometer since 2009. Members work together annually to refine the methodology and improve their performance management tools, including, most recently, by updating our verification protocol. This protocol, which ensures data quality with third-party assurance, now covers 100 percent of our carrier members. And we shape alignment across the entire logistics value chain through our influence in the Global Logistics Emissions Council (GLEC) framework and with BSR’s partnerships with the U.S. Environmental Protection Agency’s SmartWay, Green Freight Europe, Green Freight Asia, and other initiatives.
• Integration stalls without discussion and best-practice sharing. Companies encounter many of the same issues when integrating environmental performance into their business decisions. Through CCWG, we created a forum for discussion and sharing best practices, which we complement with members-only reports, case studies, meetings, and webinars. Our members consistently rate our in-person member meetings, held in different regions twice each year, as one of the top values of the group. We bring together representatives from our 45 member companies and select industry experts for two-and-a-half days of presentations and discussion on green freight trends, to make progress on our own work plan, and to enable members to share best practices. Members return from these meetings and then disseminate this information to colleagues, start new projects with their business partners and other stakeholders, and apply lessons to accelerate progress on their own goals. 
• The best solutions come from across the value chain. Freight shipping involves a range of stakeholders, and profitable progress on sustainability depends on many contingencies among them. In CCWG, we create a space where industry and other experts can tackle challenges, such as performance measurement, and where we can build a collective voice to catalyze change in other areas. In October 2016, our members jointly released a climate statement and call to action to announce the industry’s intent to continue making progress on climate action, while calling on innovators and policymakers to double down on finding solutions. We are just now finalizing research that will define an emissions reductions pathway for the container shipping industry that will match the ambition of the global climate goals, as well as a commitment to progress that each of our member companies can make and track publicly.

Through our work with and support of the GLEC, one global framework for logistics emissions accounting now exists across all freight modes. Yet we will need to expand standardized data collection efforts into other geographies—Africa, Asia, Latin America—and in other modes, such as air and rail. Once this challenge is overcome, collaborations like CCWG will be able to consolidate and harmonize data on emissions, providing clear guidance for carriers and clear metrics for buyers. CCWG will continue to support and drive these efforts collaboratively and globally.

At BSR, we are excited about the future for CCWG—and we continue to extend these lessons to other green freight challenges through our Future of Fuels initiative, as well as to other challenges on the 21st-century sustainable business agenda through our more than 20 other industry collaborations.

For more information on CCWG or to speak with the team, please email ccwg@bsr.org. 

This blog is part of our February spotlight on collaboration. To find out more about BSR’s Collaborative Initiatives, read our overview blog or visit the Collaboration page.

Blog | Wednesday March 21, 2018

Culture, Behavior, and Corporate Integrity 2.0

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At the Organisation for Economic Co-operation and Development (OECD) Integrity Forum in March of last year, the OECD concluded that a narrow focus on anti-corruption and fraud prevention has proven insufficient, and companies must broaden their approach to building “cultures of integrity.” Since then, social and political dynamics have further sharpened the need for companies to rethink corporate purpose, values, and ethics beyond compliance. In other words, it is time to launch Corporate Integrity 2.0.

Corporate Integrity 2.0 means considering ethics and integrity across the organization, not simply delegating ownership to the compliance team or responsible business functions, and managing this as much more than a response to regulatory risk. It involves using the latest behavioral research to shape decisions on governance, incentives, and oversight and working collaboratively with other organizations in the public and private sectors to tackle systemic social challenges. It entails considering the meaning of corporate values and understanding that these are determined in practice by strategic decisions, reward structures, and political and commercial relationships.

As BlackRock’s 2018 letter illustrates, the mainstream investment community is becoming increasingly vocal in its demands for companies to demonstrate social value. Businesses are also being called to step up and take action on a range of societal concerns, such as tax transparency, lobbying, inequality, immigration, women’s rights, and climate change—all areas that traditionally sit more squarely in the realm of public policy.

In response to these dynamics, there has been a notable growth in willingness of companies to take public positions on key issues, and several commentators have noted the rise of “CEO activism” as part of a new effort to engage with society in a more impactful way. Questions of corporate values and purpose are front and center in the minds of senior leadership teams, and this trend is only set to accelerate.

One question that has received far less media attention is what this means for how companies structure, manage, and organize themselves internally. Shifts are occurring here, too, but progress is far more incremental, and many companies tell us that they lack concrete direction on their next steps. As we have argued elsewhere, how to build and sustain an organization whose employees are happy, motivated, and ethical is one of the most complex, elusive questions confronting business leaders today.

As the OECD’s upcoming paper on behavioral insights for public integrity argues, creating cultures of integrity is a complex and multilayered effort. Employees need support and guidance on the ethical aspects of their daily decisions, but the cues an organization gives via its structures and management decisions are equally important.

Most compliance programs assume that individuals are rational actors making cost-benefit calculations, deciding to avoid misconduct if they perceive that the likelihood of detection or punishment outweighs the benefit of the wrongdoing. However, a compelling body of academic research suggests that this is not the best way to understand unethical behavior. Humans have a propensity to rationalize and justify their own decisions, and the organizational and group context is of overwhelming importance in this regard. Risk is increased via a range of factors, including role stress, poorly designed incentives, time pressure, diffuse accountability, and overly draconian preventative regimes. Companies have a huge opportunity to incorporate these findings into their programs today, and in the process can reduce the enormous cost and compliance burdens of approaches whose effectiveness is questionable at best.

We think there is a bigger opportunity to more cohesively align the ethics and compliance and sustainability agendas within organizations. Given what we know about how humans are motivated, how they respond to situational cues, and how fear of punishment may have negative unintended consequences, the compliance team needs more tools in its arsenal to inspire, drive pride in the organization, and demonstrate a commitment to values that are about more than competitive advantage and growth. The work of sustainability teams to use business’s energy and innovation to drive positive change is invaluable in this context.

Many—if not most—of the pressing strategic questions facing corporate leaders today do not fit squarely into the remit of a single department. To drive coherence and alignment around values and integrity, we are working with companies to create advisory groups, board committees, or cross-functional management teams with representatives from various functions. This process challenges companies to pay more attention to the relationships, resources, and power available to different groups and teams. If rhetoric and resources are out of sync, that will be highly visible across the organization, and employees will draw their own conclusions about what is truly important. But when these governance approaches are designed using behavioral best practice, they provide the possibility of an entirely new approach to managing integrity.

Companies are re-examining their core values, stakeholder concerns, and the way they make decisions across diverse areas, such as policy engagement, lobbying, marketing, and risk. This has created the possibility of transformational change in tomorrow’s organizations, which is why I believe it’s time to launch the era of Corporate Integrity 2.0.

Join me at the 2018 OECD Global Anti-Corruption and Integrity Forum in Paris next week to discuss what this might look like for you.

Case Studies | Wednesday June 7, 2023

Phoenix’s Human Rights Journey: Designing a Human Rights Roadmap

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Introduction

BSR worked with Phoenix Group to provide a clearer understanding of its impacts on human rights, publish its first human rights policy, and develop a roadmap to deliver an approach to respecting human rights.

Background on the Phoenix Group 

Phoenix Group is the UK’s largest long-term savings and retirement business, serving 12 million customers with a broad range of pensions, savings, and life insurance products across its consumer brands.

Phoenix’s work in supporting people during their journey to and through retirement relies on making responsible, sustainable investment decisions and driving positive change for customers, colleagues, and Phoenix’s wider community of stakeholders, including rightsholders that may be affected by Phoenix’s business activities.

In striving to be sustainability leaders, Phoenix’s strategy focuses on key issues impacting the planet, including by transitioning the business to net zero and nature positive, and people, by helping society live better, longer lives; tackling the pension savings gap; and supporting more people to have better financial futures.

The Opportunity to Act on Human Rights

Financial services companies like Phoenix invest across a wide range of asset classes, sectors, and geographies. This global and multi-sector reach means that it’s important to have a clear view on the impacts of its products, services, and business relationships on people. As a large asset owner, Phoenix is also at the top of the investment ecosystem and has an opportunity to drive change through the full investment value chain and lifecycle.  

Given that Phoenix was at a relatively early stage in its human rights journey, the group identified an opportunity to enhance its efforts on human rights. In working with BSR, Phoenix looked to leverage a combination of human rights and financial services expertise to challenge conventional thinking in the sector on human rights and gain a clearer understanding of its risk and opportunity profile against current and emerging expectations. Phoenix sought to use this as a foundation to build a strategic approach to embed human rights across the organization, including through the publication of its first human rights policy, which sets out its ambition and commitments.

BSR’s Approach

BSR worked closely with Phoenix for nine months, bringing deep human rights and financial services expertise to develop a strategic vision for Phoenix to align with the UN Guiding Principles on Business and Human Rights (UNGPs) and advance respect for human rights across its operations and value chain. This vision was informed by a global industry benchmark that assessed Phoenix and several peer institutions against the UNGPs and a landscape analysis of current drivers on human rights within financial services. BSR also conducted an in-depth assessment of Phoenix’s current practices and a saliency scan of its human rights issues. Through this process, BSR interviewed and engaged with numerous internal and external stakeholders on human rights issues associated with Phoenix’s operations and value chain and developed fit-for-purpose workshops at the highest levels of the business to raise awareness and build capacity around human rights.

BSR’s tailored approach led to a new human rights policy and a tailored roadmap with recommendations and timelines for implementation across Phoenix’s roles as an employer, procurer, investor, and customer service provider. The roadmap provides concrete steps for Phoenix to align more holistically and comprehensively with the UNGPs and meet growing regulatory and stakeholder expectations today and in the future.

Impact

Following completion of the project, Phoenix published its first human rights policy, raising the bar for other organizations in the financial sector. With BSR’s support, Phoenix has increased its capacity within the organization, both at operational and senior leadership levels, to understand its role in respecting human rights. This was achieved through collaboration with a range of stakeholders within the organization—from colleagues working in sustainable investment and risk to the legal, public policy, and data protection teams.

BSR’s support included the delivery of 11 education sessions and workshops for various Phoenix team members, executives, and board members. In addition, the project provided Phoenix with a roadmap of the activities needed to deliver a holistic approach to human rights across its roles as an employer, procurer, investor, and customer service provider.

“We are delighted by the progress we’ve made in advancing our work on human rights within Phoenix. The support provided by BSR has been invaluable and has set Phoenix up for success to deliver real change on this vital issue.”

James Wilde, Chief Sustainability Officer, Phoenix

Conclusion

Against a backdrop of increasing stakeholder expectations and rapidly emerging regulations, such as the Sustainable Finance Disclosure Regulation, Corporate Sustainability Due Diligence Directive, and proposals to strengthen the UK Modern Slavery Act, it is increasingly important for financial services companies to understand and address their human rights risks and impacts. Organizations like Phoenix that have taken critical steps on their human rights journey will be better prepared to navigate this shifting landscape—with the tools in place to manage risks and identify opportunities while putting people at the center of the business. While advancing respect for human rights does not happen overnight, BSR believes that these steps lay the foundation for progress, leadership, and innovation on best practices in the financial services sector, and ultimately advance and scale respect for human rights across the economy.   

This case study was written by Kindra Mohr. If your team is also interested in human rights support—from policy development to a step-by-step human rights roadmap—please reach out to us to learn more.

Blog | Thursday April 27, 2017

How Newmont Ghana Empowers Women in the Workforce, Workplace, and Community

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If women are to succeed and advance economically, businesses need to think beyond providing employment opportunities. Companies can support women in a variety of ways: by helping them gain the skills and resources they need to compete, helping them get fair and equal access to economic institutions, and helping them achieve the power and agency to benefit from these opportunities. Only then can women have the chance to control their own destiny.

With the support of a Hewlett Foundation grant, BSR recently completed a yearlong research project on how business—including the mining sector—can support women’s economic empowerment in sub-Saharan Africa. As part of this research, we developed 25 recommendations for mining companies to advance women’s economic empowerment based on BSR’s “Act, Enable, Influence” framework. This approach organizes company activities based on how they can act directly to support their employees, and what they can do indirectly to enable key stakeholders and influence the wider environment.

To understand what a successful approach looks like in practice, we sat down with a team from Newmont Mining. Beatrice Opoku-Asare, Newmont’s global director of inclusion and diversity, Adiki Ayitevie, senior director of communications and external relations in Ghana, and Boakyewaa Glover, senior manager of site human resources and operations in Ghana talked to us about how to combine corporate strategy, direct action, and a culture of inclusion to deliver tangible benefits that reach women who work at Newmont, as well as women in the supply chain and the communities around Newmont’s Ghanaian operations.

Opoku-Asare explained that the first step for any company should be a conscious strategy from head office that builds a culture of inclusion. This culture helps employees feel comfortable bringing their full self and unique skills to work, increasing motivation and driving business success. This focus on inclusion is also critical to engaging the whole organization, not just female employees. “We want to make sure that we get to a point where inclusion does not become a stand-alone item, but really is integrated into all of the work we are doing from a supply chain perspective, from a safety perspective, and just woven into the organization as a whole,” Opoku-Asare said.

Glover and Ayitevie added that this focus on inclusion can happen very deliberately at the local level. Newmont Ghana formed the Ahafo Women’s Consultative Committee (WCC) to enhance women’s participation in community decision-making. This strategy relates directly to the “Act” pillar of BSR’s framework. “Building inclusion and diversity does not happen by accident,” Glover explained. “It must be deliberate and proactive. Our formal strategy in the region is set in three-year blocks so we can be concise and concrete about what we want to achieve.”

Creating this supportive culture and strategy has encouraged ongoing dialogue about challenges and solutions at Newmont, and the company has used these discussions to focus on programs organized according to three pillars: workforce, workplace, and community.

For the workforce pillar, Newmont focuses on goals and metrics that include gender targets as well as targets for hiring Ghanaian nationals and “local-local” women—women from the communities close to its mining sites. The company has found that its three-year targets help set direction and give the company a better understanding of progress. Since 2013, board diversity has improved, as has national representation on the leadership teams in both Ghana and Peru.

When it began to focus on inclusion and diversity, Newmont leaders quickly understood that setting goals and metrics in a vacuum would not create success over the longer term. “You can have a diverse team, but if you don’t leverage your team appropriately, or if team members don’t feel enabled and supported, you are not really getting what you need to get, so the effort is to create a more inclusive culture,” Glover explained.

To address culture change, Newmont’s workplace pillar focuses on employee engagement and programs to train leaders to understand and address unconscious biases. Newmont also created Women and Allies Business Resource Groups, which work to empower women and advocate for more inclusive workplaces. These efforts have resulted in a number of initiatives that bring direct, visible benefits to women. For example, Newmont has established breastfeeding facilities at its Ahafo mine site in Ghana, and the company has plans to provide similar facilities at other sites.

Newmont’s community pillar focuses on women in the wider community. For instance, Newmont works with the Ghana Institute of Engineers to mentor girls in the Ashanti region, and the company supports a career-development program with the University of Mines and Technology for female engineering students. Newmont’s Ghanaian team also volunteers to teach reading in local schools.

Newmont’s work shows that a successful women’s empowerment strategy for business requires a meaningful commitment from the top, clear goals and metrics, and direct action that delivers substantive benefits to women. Taking a holistic approach requires thought, planning, and integration across the organization, but each effort reinforces the other and generates momentum over time, ultimately resulting in transformative culture change.

To begin a conversation in your company about inclusion and women’s empowerment, read our Mining Industry Brief on how this sector can support women’s economic empowerment in sub-Saharan Africa.

Blog | Wednesday April 18, 2018

An Exciting New Era for ESG and Socially Responsible Investing in Japan

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While the proportion of socially responsible investment (SRI) relative to total assets managed in Japan was only 3.4 percent in 2016, compared to 52.6 percent in the EU and 21.8 percent in the U.S., the growth of SRI in Japan has been significant—242 percent from 2016 to 2017 to approximately US$1.13 trillion, according to the 2017 Japan Sustainable Investment Forum Report. Why has this happened?

In recent years, Japan has made a massive shift to begin to integrate environment, social, and governance (ESG) factors into its investment strategies. For Japanese companies, this creates an environment of support for sustainability efforts, and we are likely to see these practices increasingly become the norm. Companies headquartered outside Japan, too, would be wise to take note, as this shift by the world’s third-largest economy is likely to have implications for not only their Japanese operations but across their value chains abroad.

In short, the pro-business Japanese government has made the nation’s expectations for sustainable business practices clear, helping investors understand a broad set of ESG issues that are material for their investment strategies and providing structure and support to enable social dialogue.

Japan’s changes to date and roadmap for the future are well-summarized in the Ministry of Economy Trade and Industry (METI) report commonly known as the Ito Review 2.0. The initial Ito Review, published in 2014, showed the challenges created by the lack of long-term asset management culture, combined with a lack of dialogue on investor expectations. In response, the Japanese government has taken a systematic approach to address this issue. 

The next year (2015), the Tokyo Stock Exchange, with support from the Financial Service Agency (FSA), issued the Japanese Corporate Governance Code, which established fundamental principles for effective corporate governance at listed companies in Japan, with the intention of encouraging sustainable corporate growth and increased corporate value over the mid- to long-term.

And when the Japanese Government Pension Investment Fund (GPIF), the world’s largest pension fund, with approximately US$1.3 trillion in assets under management today, signed the UN Principles for Responsible Investment (UNPRI) in 2015, the impact had on not only Japan’s investment landscape, but also globally, was catalytic. It demonstrated how an asset owner with an ESG champion at its helm can swiftly translate its conviction into change in the marketplace.

GPIF has emphasized the relationship between ESG and long-term value, explaining that for long-term investors, material ESG factors have implications for investment performance by definition. By extension, this means that taking these factors into account in investment analysis and decision-making is consistent with fiduciary duty.

Pressure for both investors and companies to change toward responsible investments and sustainability has come not only from the Japanese government but also from civil society. In the past few years, both international and local NGOs in Japan have started voicing concern on topics including climate change, investment in coal/fossil fuels, and the sourcing of paper/pulp and palm oil.  

This year’s Responsible Investor conference, RI Asia Japan, was held in Tokyo on April 10-11. The event attracted both local and international audiences, and reflected the changing focus of Japan’s investment landscape. Discussions have moved beyond whether investors should integrate ESG or not, and instead focused on the “how,” including addressing the more nascent areas of ESG integration into fixed income and passive strategies. This shift alone represents significant progress from where Japan sat in its closed ecosystem just a few years ago.

The framing of the opportunity to connect an ESG investment strategy to the UN Sustainable Development Goals (SDGs) has been rapidly accepted by Japanese investors and businesses alike. As Hiromichi Mizuno, Executive Managing Director and Chief Investment Officer of GPIF, explained at the event, the number of articles talking about ESG in Japan has quadrupled over the past two years.

Yet at both at RI Asia and two BSR side events around the conference, it was clear that Japanese investors seek deeper guidance on how to properly integrate ESG considerations into their investment strategies. A few key learnings from the event for the investor community included the following:

• Mainstream Japanese investors new to ESG can learn a great deal from international players who have long integrated ESG in the core of their investment strategies, such as AXA, Clearbridge, Wellington, BNP Paribas, UBS, and others.
• ESG reviews of companies commonly use information from major ESG date/rating providers; investors should leverage this data as a starting point. In-house analysts can use it to inform their own deeper research and analysis, but they should also engage in dialogue with companies directly.
• Socially responsible investments are not only about integration and engagement, but can also take the form of innovative products. There could be a new market opportunity to attract various investors by developing innovative financial products, including fixed income and impact investments, unique to the communities addressing ESG challenges in line with SDG goals.

The next few years are likely to tell the story of how SRI takes hold, proliferates into the Japanese investor and business communities, and, hopefully, helps define ESG leadership in Asia and around the world. At BSR, we’ll continue to watch this space and and work with our member companies, including our banking and investment members, to assist with their responsible investing needs.

Insights+ | Thursday January 12, 2023

Amidst ESG Backlash, Companies Should (and Are) Staying the Course on Sustainability

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Blog | Thursday February 1, 2018

Four Sustainability Management Trends and Opportunities in the Banking Sector

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According to a 2016 study by the Brunswick Group, only 27 percent of Americans trust banks. It has been almost a decade since the financial crisis of 2008, and while the financial services sector has made progress, it is still in many ways working to earn back stakeholder trust. Sustainability efforts offer a major opportunity for banks to demonstrate their commitment to operating responsibly and making a positive impact.

Banks in particular play a major role in our economy, as they provide vast amounts of capital and have the ability to influence other companies and customers across sectors through their products and services. Yet the industry continues to be in the headlines for various environmental, social, and governance (ESG) issues, such as ethics violations or potential human rights implications of project finance decisions.

How has sustainability, or corporate responsibility, in banks changed since the crisis, especially in the context of the Paris Agreement, the Sustainable Development Goals (SDGs), and investor-focused and sustainability disclosure initiatives? What more could be done?

To explore these questions, BSR completed a short research study, assessing leading banks across the U.S. and Europe across a few key areas. Here are four of our key findings.

1. Materiality assessments are being conducted to prioritize corporate responsibility issues but could be leveraged to play a greater role in internal engagement and sustainability strategy development. Banks can also more closely align their efforts with the SDGs.
   
   While it is commonplace for banks to spend the time and resources to go through a formal materiality process and publish the results online, in many cases the process seems to be more of a ‘check-the-box’ exercise for reporting than a determinant of strategy and business activities.
   
   The materiality process can be a powerful mechanism to engage and educate senior leaders and get valuable input from external stakeholders. There is a risk that the feedback it provides will be lost if it is not integrated into company strategy.
   
   The SDGs haven’t yet played a major role in informing corporate responsibility priorities, although banks understand that the sector will play a critical role in achieving them. While all of the SDGs can be inspirational for organizations, focusing on those that align best with the business strategy and existing corporate responsibility priorities will likely be most impactful for the industry. As a first step, banks are mapping business activities to key SDGs. BNP Paribas has created a formal SDG metric, which measures the share of the bank’s loans to companies that contribute exclusively to the SDGs.
    
2. Increasingly, banks are communicating major long-term sustainable financing commitments, which provide an opportunity to link products and services to corporate responsibility; however, they will increasingly need to be transparent about these initiatives.
   
   Bank of America and Citigroup both have 10-year sustainable financing commitments of US$100 billion or more. While these big commitments create internal momentum and demonstrate both business and ESG value, the definitions of what qualifies for this type of funding and how impacts are measured likely varies across banks. Transparency about the methodology and criteria for funding and calculating impacts will help banks add credibility to these initiatives.
   
   Additionally, creating a corporate strategy and mission linked to sustainability, such as ING’s purpose-driven Think Forward corporate strategy and Bank of America’s Responsible Growth strategy, is key in integrating efforts across the business. Our recent report, Redefining Sustainable Business: Management for a Rapidly Changing World, explores this and many other aspects of how to create a resilient business strategy.
    
3. Banks can better establish and communicate focused ESG metrics and targets aligned to their identified material issues.
   
   While banks are providing detailed ESG information in multiple reports and using the GRI standard, the key strategic metric and associated target that is often integrated with company performance results so far has been sustainable financing performance. Hopefully we will continue to see more, new ESG metrics integrated in standard company results, internally and externally.
   
   Some banks, such as Barclays, have moved toward publishing an integrated annual report that includes ESG data. While doing this would seem to imply more streamlined reporting, these banks have still been producing supplemental reports to provide the additional detailed ESG disclosures that some stakeholders require.
    
4. Governance structures continue to play a key role in engaging employees and driving corporate responsibility and business integration—executive ownership and engagement with the environmental and social risk management teams remain critical.  
   
   It is now common for banks to have board oversight over ESG issues, i.e. via a committee. Additionally, cross-functional senior executive committees and other internal councils (for example on sustainable products, human rights, etc.) are critical in integrating ESG across the business and engaging subject matter experts. While it requires more internal coordination, core sustainability teams at banks are seeing positive outcomes from these internal working groups and networks of ‘ESG champions’ dedicated to achieving ESG goals.
   
   One area that needs more consideration is compensation tied to ESG performance. It is encouraging to see BNP Paribas link nine of its 13 corporate responsibility indicators to its variable incentive plan for its 5,000 top managers. More banks should embrace this type of approach.

While banks have clearly made progress in better integrating corporate responsibility, studies show that the industry reputation continues to suffer. There is an opportunity for the sector to do more to engage its leadership, employees, customers, and investors on the powerful role it can play in creating a more sustainable world. Doing so could go a long way toward rebuilding trust. 

Blog | Tuesday May 12, 2020

COVID-19: External Resources for Business

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As part of our efforts to support businesses and stakeholders during the COVID-19 crisis, we at BSR are compiling and sharing a list of relevant external resources in addition to the thought leadership from BSR experts, members, and partners provided on our COVID-19 Content Hub. Below is a selection of external blogs, articles, and other materials providing useful perspectives for companies looking to meet the moment and build the future. We will update this selection on an ongoing basis.

Climate Change

• Ceres: Business Disruption and a Just Transition (Video)
• Levi Strauss & Co.: Employee Hardship Fund Playbook (Playbook) 
• Morrison & Foerster: Public Charity Side Car (Article)
• UN Global Compact: Uniting Business and Governments to Recover Better (Statement)
• UNEP: COVID-19 Is Not a Silver Lining for the Climate, says UN Environment Chief (Article)
• WBCSD: The Consequences of COVID-19 for the Decade Ahead (Brief)

Human Rights

• Business Fights Poverty: Business and COVID-19: Supporting the Most Vulnerable (Guide)
• Human Rights Watch: COVID-19 Puts Millions of Global Supply Chain Workers at Risk (Article)
• IHRB: Impact of COVID-19 on Migrant Workers in South East Asia (Brief)
• IHRB: Respecting Human Rights in the Time of the COVID-19 Pandemic: Examining Companies’ Responsibilities for Workers and Affected Communities (Paper)
• ILO: COVID-19 and the World of Work: Global Impact and Policy Recommendations (Primer)
• Investor Alliance for Human Rights: Investor Toolkit on Human Rights (Toolkit)
• IRIS: COVID-19: Guidance for Employers and Business to Enhance Migrant Worker Protection during the Current Health Crisis (Guide) 
• ISS Governance: Workers' Rights and COVID-19: Testing the Resolve of Corporate Labor Policies (Report)
• Levi Strauss & Co.: Employee Hardship Fund Playbook (Playbook) 
• Morrison & Foerster: Public Charity Side Car (Article)
• OAS: OAS Launches Practical Guide to Inclusive Rights-Focused Responses to COVID-19 in the Americas (Press Release)
• Pillar Two: Managing Business-related Human Rights Risks During and After C-19 (Hub)
• UNDP: Human Rights Due Diligence and COVID-19: Rapid Self-Assessment for Business (Tool)
• UNICEF/ILO/UN Women: Family-Friendly Policies and Other Good Workplace Practices in the Context of COVID-19 (Document)
• WBCSD: The Consequences of COVID-19 for the Decade Ahead (Brief)

Inclusive Economy and Worker Wellbeing

• AIHA: Back to Work Safely (Hub)
• ILO: Almost 25 Million Jobs Could Be Lost Worldwide as a Result of COVID-19 (Article)
• ISS Governance: Workers' Rights and COVID-19: Testing the Resolve of Corporate Labor Policies (Report)
• Fast Company: In Coronavirus’s Wake, Gig Workers Are Demanding Paid Sick Leave (Article)
• Levi Strauss & Co.: Employee Hardship Fund Playbook (Playbook) 
• Morrison & Foerster: Public Charity Side Car (Article)
• Sodexo: Reopening with Resilience: Webinar Takeaways (Summary)
• The Life I Want: How Will the Future of Work Affect Our Mental Health? (Blog)
• Triple Pundit: EdTech Companies Easing the Transition to Distance Learning in Wake of COVID-19 (Article)
• UN Global Compact: Uniting Business and Governments to Recover Better (Statement)
• UNICEF/ILO/UN Women: Family-Friendly Policies and Other Good Workplace Practices in the Context of COVID-19: Key Steps Employers Can Take (Document)
• WBCSD: The Consequences of COVID-19 for the Decade Ahead (Brief)

Supply Chain Sustainability

• Better Buying: Guidelines for “Better” Purchasing Practices Amidst the Coronavirus Crisis and Recovery (Guide)
• Fair Wear: Garment Industry Coalition Lays out Joint Priorities for the Garment Sector (Statement)
• Flexe: Supply Chain Disruption Q&A: From Redundancy Comes Resilience (Blog)
• ISS Governance: Workers' Rights and COVID-19: Testing the Resolve of Corporate Labor Policies (Report)
• Levi Strauss & Co.: Employee Hardship Fund Playbook (Playbook) 
• Morrison & Foerster: Public Charity Side Car (Article)
• Novartis: COVID-19 Good Practice Guidance for Third Parties (Guide)
• WBCSD: The Consequences of COVID-19 for the Decade Ahead (Brief)
• Worker Rights Consortium: Which Brands Are Acting Responsibly toward Suppliers and Workers? (Tracker)
• Worker Rights Consortium: Who Will Bail Out the Workers that Make Our Clothes? (White Paper)

Sustainability Management

• BlackRock: BlackRock Investment Stewardship: Engagement Priorities for 2020 (Guide)
• Bloomberg: Older ESG Funds Outperform Their Newer Rivals in Market Tumult (Article)
• Just Capital: The COVID-19 Corporate Response Tracker (Tracker)
• Levi Strauss & Co.: Employee Hardship Fund Playbook (Playbook) 
• Morrison & Foerster: Public Charity Side Car (Article)
• Public Private Strategies: Employer Resource Round Up (Hub)
• RI: Pandemic Could Be Tipping Point for ESG (Survey)
• Target: Considerations for Retail Operations Post COVID-19 (Guide)
• WBCSD: The Consequences of COVID-19 for the Decade Ahead (Brief)

Women's Empowerment

• CARE/IRC: Global Rapid Gender Analysis for COVID-19 (Tool)
• Data2X: COVID-19 Resources: Gender Data, Gender, and Data (Hub)
• Levi Strauss & Co.: Employee Hardship Fund Playbook (Playbook) 
• Morrison & Foerster: Public Charity Side Car (Article)
• UK Government: Employers Do Not Have to Report Gender Pay Gaps in 2020 (News)
• UN Women: COVID-19 and Gender Rapid Self-Assessment Tool (Tool)
• UN Women: Gender-Sensitive Private Sector Response to COVID-19 for Accelerated and Inclusive Economic Recovery (Primer)
• UN Women/BSR/WeEmpowerAsia: The Business Case for Integrating a Gender Lens into Private Sector COVID-19 Recovery Plans (Webinar)
• WBCSD: The Consequences of COVID-19 for the Decade Ahead (Brief)
• World Bank: Gender and COVID-19 (Brief)

Blog | Friday July 29, 2022

BSR Response: How the EU’s Sustainability Reporting Standards Will Be a Game Changer

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In April, the European Financial Reporting Advisory Group (EFRAG) released a set of sector-agnostic exposure drafts that form the first set of European Sustainability Reporting Standards (ESRS). These standards will become mandatory under the Corporate Sustainability Reporting Directive (CSRD) and will have a significant impact on companies doing business in the EU.

This is one of several major milestones toward the standardization of sustainability reporting on a global scale. This spring, the US Securities and Exchange Commission (SEC) and the International Financial Reporting Standards Foundation (IFRS) individually released exposure drafts for sustainability-related disclosures. 

These public consultations are a unique opportunity to influence the future of mandatory sustainability reporting standards and build a sustainability reporting system designed to enhance both business and sustainability performance.

BSR commends EFRAG for its leadership and efforts in creating the sector-agnostic standards. 

Below, we summarize our response to EFRAG’s public consultation which is informed by 30 years of hands-on experience implementing best practices with member companies. BSR’s comments are made in the service of reporting standards, designed to support improved sustainability performance by companies and the achievement of EU sustainability policy objectives. 

Granularity of Disclosure Requirements

The disclosure requirements outlined in the exposure drafts demand a level of detail and specificity that goes beyond standard reporting practices—even those of the most advanced reporters. While BSR believes that comparable disclosures require ambitious, specific, and prescriptive reporting standards, we question whether all the elements of each disclosure are decision-useful for stakeholders. We support the disclosure requirements to the extent that compliance with them does not (1) overshadow the most decision-useful information and (2) divert resources away from sustainability performance improvement.

Alignment with Other Standards 

We encourage EFRAG to further align disclosure requirements with established standards (such as the Global Reporting Initiative, or GRI) and emerging reporting standards (such as the SEC’s draft climate rule and IFRS Standards). We believe that harmonization is fundamentally important to creating a system that maximizes impact and achieves efficiency and comparability. Even minor differences in language between different reporting standards present the risk that companies will spend time and resources developing separate disclosures concerning the same topics but for different jurisdictions, which would make reports less useful for readers. BSR proposes that EFRAG map the final standards against GRI and International Sustainability Standards Board (ISSB) Standards and cross-label or explicitly reference them as appropriate.

Double Materiality

BSR fully endorses the concept of double materiality. However, we believe that the proposed definition of impact materiality is too broad and lacks the concept of prioritization. Similarly, we encourage EFRAG, the ISSB, and the SEC to align their definitions of financial materiality. Multiple definitions will make it difficult for companies to report across jurisdictions. BSR supports a definition of financial materiality that is consistent, interoperable, and substitutable.

Rebuttable Presumption

BSR does not support EFRAG’s proposal for the rebuttable presumption. We believe it will be difficult and resource-intensive for companies to prove a topic is not material based on “reasonable and supportable evidence,” adding an unnecessary layer of complexity and leading to less concise, less focused, and less decision-useful reporting.

Architecture and Presentation

The standards can be streamlined to avoid duplication and make them easier to understand and navigate for report preparers and users.

Boundaries, Restatements, and Value Chain

BSR agrees that the boundary for the sustainability statement should mirror that of financial reporting and extend to the company's upstream and downstream value chain. While the draft standards request estimates when the full boundary cannot be measured, we believe overusing estimates could be misleading and unhelpful.

Estimates

BSR believes that the current exposure drafts rely too heavily on the use of estimates when data are not available or difficult to collect. We believe that EFRAG should propose a “comply or explain approach” via omissions for disclosures beyond a core set, in line with the approach of the GRI Standards.

Targets

According to ESRS 1, if there are no targets in place, the company needs to provide valid reasons. We believe this sets an unreasonable expectation that companies should be setting measurable outcome-based targets across all risks, opportunities, and impacts. There is a possibility that this will result in companies establishing targets across several topics where targets may not be relevant, meaningful, or useful.

Format of Statements

BSR believes that the standards should allow more flexibility in referencing disclosures inside the management report. This would improve overall usability and avoid duplication within the management report when information is provided in other sections.

Feasibility

BSR recommends identifying additional disclosures as optional or considering phasing in certain topic-specific standards or disclosure requirements (e.g., biodiversity disclosures). In many cases, protocols for reporting on such topics are immature, which risks mandating the disclosure of information that may be less than fully accurate.

Use of Entity-Specific Disclosures

It is unclear whether the ESRS suggests completely phasing out entity-specific disclosures over time as sector-specific standards are created. BSR feels that companies should be allowed to continue to disclose entity-specific information as they deem it relevant and appropriate.

We believe that these exposure drafts are an important first step toward achieving our common goal of improved company disclosure and sustainable outcomes for all. BSR will continue to engage in the development of reporting standards, and in ESG reporting more broadly, through our Future of Reporting collaborative initiative. 

We encourage companies to participate in the consultation process and share their perspective on how to maximize the efficiency, effectiveness, and impact of reporting in support of resilient business and a more just and sustainable world.

Insights+ | Thursday June 1, 2023

How New Regulations Are a Game-Changer in Just and Sustainable Business

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