Blog | Monday March 1, 2021

Three Ways to Improve Supply Chain Sustainability in the Decisive Decade

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2020 began with companies making new commitments to sustainability, looking to do their part to achieve the SDGs and the goals of the Paris Agreement over the course of the Decisive Decade. Then, we found ourselves in the throes of the COVID-19 pandemic, government lockdowns, and the resulting economic downturn.

Over the past year, business learned the hard way how vulnerable it is to unexpected crisis, particularly with regard to global supply chains. COVID-19 provided a wake-up call to companies about how opaque the global supply chain is.

It is now clearer than ever that we need a global supply chain model that is more transparent, more resilient, more responsible, and more sustainable. This is no longer just a strategy for companies to consider—it has become a business imperative.

Unfortunately, there are no obvious and easy solutions available. The existing commodity market has been designed to provide high-quality goods, but it has the downside of price volatility and a lack of transparency. Companies will need to experiment with creative and innovative approaches in order to find an alternative way to maintain business growth while obtaining the necessary transparency and becoming more resilient. Here are three fundamental steps for improving supply chain sustainability:

1. Set Goals and Create an Operational Roadmap

Over the years, we have witnessed an increasing number of entities make ambitious commitments to sustainability. This includes commitments related to climate and the environment (such as Science Based Targets, Net Zero Targets, Zero Deforestation, 100% of Recycled Plastic, and Science Based Targets for Nature) as well as those related to human rights and worker well-being (such as no child labor, no forced labor, and living wage).

It is not only the big brands making such commitments: Entities across all tiers of the supply chain, including retailers and fast-moving consumer goods (FMCGs) to upstream producers as well as intermediary processors and traders, are making these commitments as well. And yet only a few organizations are providing clear operational roadmaps and implementation frameworks to achieve their specific commitments.

Achieving long-term targets requires deep understanding of the issues, needs, and constraints in specific supply chains and across multiple tiers, as well as the ability to translate this assessment into operational actions that companies can take individually and collectively.

An operational roadmap would demonstrate that commitments and policies are taken seriously, based on ambitious but achievable targets. The operational roadmap should include short-, mid-, and long-term milestones and targets, as well as a strong and transparent monitoring process and regular reporting.

Goal-setting and developing an operational roadmap will start a process of creating a sustainable supply chain strategy that will both lead to secure long-term economic value and ensuring positive outcomes for the environment and people. There is always potential for failure when experimenting with how to operationalize a plan to achieve your sustainability goals; however, it’s important to remember that this will help to obtain more clarity on what does not work at the current stage, why, and then figuring out what needs to be improved.

2. Drive Collective Action

The global supply chain is a complex network involving a lot of players, tiers, regions, and issues. All players involved have a role to play and a voice to raise, their own constraints to deal with, and potential to be part of the solution.

A single entity—company, supplier, or manufacturer—on its own cannot impose its vision on the overall network anymore. Approaches like supply chain risk assessments, materiality assessments, due diligence, and supplier ranking systems must be addressed collectively and not imposed by one single player—with its own vision and definitions—upon others in the value chain.

In the effort to create supply chain sustainability and transparency, companies should ensure a common understanding of the issues and constraints, as well as the potential solutions any player at any tier can bring. To address specific issues linked to specific, individual supply chains and to be efficient and successful, all players involved at all tiers need to speak a common language.

As an example, BSR’s supply chain collaboration Action for Sustainable Derivatives (ASD) is designed to bring together value chain actors facing similar challenges to collectively drive change across the palm derivative supply chain. As a collaborative effort, ASD members can use the combined leverage of their procurement influence and spend to create meaningful action. New collaboration models are one of the key success factors of supply chain sustainability and long-term business resilience.

3. Revamp the Business Model

For any company to successfully achieve its high-level sustainability commitments, be it Science Based Targets, no deforestation, or no forced labor, it must move away from the model of the traditional commodity market. This existing model allows for the trade of commodities globally at the most efficient price, but most of the time, it comes at the cost of resilience.

Indeed, this commodity market brings a lot of opacity to global supply chains. This trading approach, where companies are unable to see beyond Tier One suppliers, makes it nearly impossible to obtain transparency on all the players involved in the supply chain and all the sourcing regions and; as such, gain accurate understanding of the risks.

This is why a new business model for our global commodity market must be developed and promoted, one that remains market driven while being fair, more transparent, and can provide more resilience. We need a business model that will help to create progress to address the critical issues that global supply chains are exposed to. However, it’s important to note that this business model can only be proposed, developed, piloted, and scaled through a collaborative approach involving representatives from all tiers of the value chain, including upstream producers or extractors, intermediary processors, FMCGs, retailers, consumers, traders, and financial institutions.

BSR works with our member companies and stakeholders across all tiers of the supply chain to support the implementation of these three imperatives in order to achieve climate, environment, and social commitments as well as broader supply chain resilience. To learn more about our work on supply chain sustainability, transparency, and resilience, please reach out to connect with the team.

Blog | Wednesday September 7, 2022

Advancing Nature-Positive Solutions for Business

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The urgency to act on the intertwined crises of climate change and nature loss has never been higher.

The alarming rates of biodiversity loss, species extinction, peatland loss, and plastic pollution have led a leading group of bankers, financial supervisors, and academics to describe it as a “significant and under-appreciated threat to financial stability.”

While nature is critical to business, few companies fully understand, or proactively manage, their impact on nature, which exposes them to significant risk. Adopting a nature-positive lens to both one’s own operations and supply chains will help to reduce risks and drive long-term business resilience.

Investing in Nature Delivers Benefits for All

First, nature provides the ecosystem services—such as clean water and pollination services—that supply chains depend on. Frighteningly, these systems are rapidly deteriorating, threatening business’ access to necessary input materials and production locations. The World Bank estimates that simply protecting nature could avert global economic losses of US$2.7 trillion per year just by preventing the collapse of critical ecosystem services that business and others rely upon.

Second, nature and climate are highly interrelated. The most recent edition of the IPCC report found that virtually any action to preserve or restore nature also has positive benefits on the climate. Yet, certain efforts in the name of climate change can actually harm nature, such as the planting of non-native, monoculture trees in the name of carbon credits destroying an area’s biodiversity. Approaching decarbonization with a nature-positive lens is necessary for long-term success; for example, an estimated 90 percent of Food, Land, and Agricultural (FLAG) companies are at risk of missing their net-zero targets if they do not effectively address the issue of deforestation in their supply chain.

Finally, the regulatory space is developing quickly to align with a nature-positive approach. The European Union’s proposed Corporate Sustainability Reporting Directive, if passed, would require companies to report on targets, action plans, and progress toward becoming net nature positive by 2030, demonstrating that simply doing no harm is no longer the standard. New global frameworks largely mirroring climate—such as the Science Based Targets Network (SBTN) and the Taskforce on Nature-related Financial Disclosures (TNFD) for nature reporting—are quickly being established as the new modes through which companies signal their commitment and report progress. Business can ensure that they understand their risks, mitigate their impacts, and proactively contribute to protect our natural environment.

While many companies have science-based targets and well-developed action plans on climate, few companies are similarly mature on nature and biodiversity. BSR’s work in nature aims to change this. We focus on business’ relationship with land, freshwater, and marine systems in both their operations and value chains, and we support companies as they assess their impacts and dependencies on nature, identify and clarify nature-related risks, and understand how nature overlaps with human rights or climate change. We also work with companies to develop strategies and solutions which aim to achieve multiple sustainability objectives, along with detailed implementation plans to turn ambition into action. 

We have developed specialized tools and capabilities to help our members interpret their nature impacts and dependencies (risks) and develop ambitious strategies and solutions to address and mitigate impacts, both within their own operations and throughout their value chain. Our expanded range of offerings include:

• Nature Assessment and Prioritization 
• Nature Strategy Development
• Supplier Engagement Strategy
• External Framework Alignment and Stakeholder Engagement (e.g., TNFD, SBTN)

We are excited to work with business to help drive greater understanding, engagement, and action from the private sector. Nature is not just something to be protected—it can also provide many of the solutions we need to address other crisis areas. Long-term business success will require halting degradation and restoring nature, as well as harnessing the unique solutions that nature provides to address other sustainability issues, like climate and a just transition.  

Are you interested in learning more about how you can better understand and take action on your nature risks and impacts? Do you have a nature success story to share? Please reach out to schedule a conversation.

Case Studies | Tuesday June 1, 2010

HERproject: Investing in Women Workers for Health and Business Returns

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The Challenge

The global economy has brought millions of women between the ages of 16 and 25 into employment in export factories all across the developing world. Because many of these women are migrants working long hours, they are often isolated from traditional support networks that can help them with challenges such as working conditions, proper compensation, and access to education, health care, and other social services. At the same time, there is a great opportunity to leverage their presence in global supply chains to improve the welfare of these women, many of whom are entering the formal economy for the first time.

Our Strategy

Drawing on nearly two decades of supply chain expertise, we created HERproject, a factory-based program that links BSR member companies, their suppliers, and local NGOs in emerging economies to raise female workers’ awareness of general and reproductive health and to improve their access to basic health services.

In 2009, we expanded the initiative to include projects in China, Egypt, India, Mexico, Pakistan, and Vietnam, working with eight multinational companies and eight local NGOs. Through the project, local NGOs trained women in 30 factories to become peer educators on issues including nutrition, personal hygiene, reproductive health, family planning, and sexually transmitted diseases. This approach allows peer educators to share information not just through formal trainings and new worker orientations, but also during lunch and commute times.

In addition to the peer education, we launched efforts to improve factory-based clinics and create links between the factories and local hospitals or women’s clinics. So far, we have connected 12 clinics with local hospitals in China, India, Pakistan, and Vietnam.

Our Impact

To date, HERproject has benefited approximately 50,000 women globally. The two main areas of impact are: Improved health awareness: Following trainings in factories in Vietnam, 97.3 percent of women said they knew how to use condoms to prevent sexually transmitted infections, compared with 59.3 percent before the trainings. In Pakistan, safe pre- and post-natal care knowledge increased:

The number of women who knew to get tetanus toxoid immunization during pregnancy increased from 30 percent to 83 percent, and the number of women who learned the importance of post-natal checkups increased from 50 percent to 92 percent. In Mexico, one factory saw a 38 percent increase in the number of respondents who had heard about, seen, or read about how to prevent diabetes.

Increased worker productivity: In Pakistan, women who improved their menstrual hygiene as a result of factory trainings reported a 25 percent reduction in poor concentration at work, 28 percent lower absenteeism, and 33 percent less difficulty in meeting production targets. Initial return-on-investment (ROI) analysis has confirmed that women in the factory worked an average of two-and- a-half more hours per month during the project period, representing an additional 615 days of work per year.

Thanks to our partnership with the Swedish International Development Cooperation Agency (Sida), we will further expand HERproject in 2010, launching initiatives in several new countries, with a focus on East Africa. More information is available in our 2010 report on HERproject, “Investing in Women for a Better World,” at herproject.org.

Blog | Wednesday June 8, 2022

How the SEC Can Mandate Climate-Related Disclosures and Drive Corporate Action

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The SEC's proposed rule on the Enhancement and Standardization of Climate-Related Disclosures for Investors is part of a global movement to improve and harmonize climate-related financial disclosures, which support informed investment decisions and incent ambitious action.

The European Union (EU) and other jurisdictions outside the United States (US) are mandating climate disclosure. Over 2600 companies have already committed to similar disclosures, and the world's largest asset managers are demanding them. By codifying a climate-related disclosure rule, the SEC joins a broad network of institutions formalizing the production and publication of the information investors need to make decisions.

This leadership from the world’s largest economy is significant and can help prevent a fractured disclosure landscape for US companies since many will be required to comply with climate reporting mandates in other jurisdictions.

BSR welcomes the proposed rule as a necessary (but not sufficient) feature of regulatory efforts to ensure urgent action by companies and investors to address the climate crisis.

In support of the SEC’s current efforts to react to market demand for comprehensive climate-related financial disclosures, BSR responded to the latest public consultation on climate-related disclosure and encouraged the Commission to publish a final rule that includes the following:

1. Disclosure requirements that are fundamental for effective climate-related decision-making

The final rule should be just as comprehensive as the proposed draft and require disclosure of key climate-related information in financial filings, including companies’ scope 1, 2, and 3 emissions, assurance for scope 1 and 2 emissions, and governance metrics, particularly those that show board-level involvement.

2. Balances prescriptiveness and flexibility that provides clear guidance to report preparers

Greater clarity in a final rule on elements that are currently open to interpretation—and relevant resources that may aid disclosure—will enable companies to comply more easily.

3. Provides additional accommodations for preparers

BSR supports accommodations for preparers included in the proposed rule. The Commission can also consider additional methods of flexibility, such as allowing an extended period of acceptable estimates for scope 3 emissions and clarifying expectations related to re-baselining of goals and targets in line with globally accepted methodologies.

4. Supports ambitious voluntary commitments

Certain provisions of the proposed rule may disincentivize new climate action and target-setting by requiring disclosure only if the company has a plan or target in place. Accordingly, the SEC should consider adopting a “comply or explain” approach for conditional disclosures (e.g., scope 3 emissions, climate-related goals, targets and transition plans, and the use of climate scenario analysis) where companies would either disclose their approach or explain why they do not have one.

We also emphasize the importance of providing companies with a strong liability shield or “safe harbor” for certain disclosures (e.g., climate scenarios analysis) where uncertainty is inherent in the information being reported and where the absence of these protections may have a chilling effect on disclosure.

5. Is harmonized with relevant global reporting standards and requirements from other jurisdictions

BSR supports the important step that the SEC has taken in building its proposed rule upon broadly accepted reporting frameworks. Accordingly, the SEC should allow the use of alternative reporting provisions that are harmonized with criteria developed by the International Sustainability Standards Board (ISSB) to ease the reporting burden on companies that will also be required to report against these provisions in other jurisdictions.

BSR strongly supports the SEC’s decision to require climate-related financial disclosure, acknowledges the merit behind the Commission’s efforts to create a comprehensive yet accommodating proposed rule, and encourages the SEC to issue a final rule that continues to drive alignment in the reporting landscape, leads to improved climate-related risk management and governance, and incentivizes credible climate action.

BSR will continue to engage on this issue, and in ESG reporting more broadly, through our Future of Reporting collaborative initiative. We encourage companies to get involved in the consultation process by showing support for the proposed rule and the SEC’s efforts to harmonize the reporting landscape and highlighting ways the Commission can strengthen the rule for the benefit of all stakeholders.

Blog | Monday September 20, 2021

In Memoriam: John G. Ruggie (1944-2021)

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All of us at BSR are deeply saddened by the passing of John Ruggie, leader, colleague, and friend.

John is known to many of us at BSR and in our wider network as the dogged visionary who led the creation of the UN Guiding Principles on Business and Human Rights.  It is no accident that they are referred to as the “Ruggie Principles.” The significance of the Guiding Principles cannot be overstated. They created the de factor global standard on how business should safeguard and advance human rights.  They have been adopted and applied by companies in every corner of the world. John’s vision in steering the Principles to conclusion was matched only by the complexity of the task of achieving a consensus that all stakeholders and nations could embrace.

Aron Cramer, BSR’s President and CEO, recalls that when he spoke with John soon after he was named the Secretary General’s Special Rapporteur on Business and Human Rights, and asked John what he hoped to accomplish, John’s reply was “avoid a train wreck.”  That comment, and his subsequent, painstaking work, showed John at his best: bringing humility, insight, and a strong sense of purpose.  John knew that his task would bring criticism: he never let that deter him, not for one day.

While the UN Guiding Principles are what many of us remember him for—and are deeply grateful for—his professional achievements go well beyond that. John was a close partner with Secretary General Kofi Annan in reforming the United Nations, and he was, along with Mr. Annan and Georg Kell, the architect of the UN Global Compact, to name only two of his signal accomplishments.

Cramer said, “When the definitive history of responsible business in this era is written, John will be in every chapter. He was a master builder who constructed a framework enabling business to shape a better, fairer world, with dignity and respect for all. At a time when globalism is rejected in the name of division, John believed in the universal values of human rights, and was relentless in keeping all of us focused on the vision in the Universal Declaration of Human Rights. John also was an extremely kind person. I had the privilege of getting to know John, and travel to far-flung locations with him, getting to see his great sense of humor. I will miss him greatly.”

All of us hope to leave a lasting impact. John has shown us all what that looks like when it is more than an aspiration. His legacy and memory will continue to guide us, enable progress, and give us a model to which we should aspire.

At a time when human rights and democracy are under threat in all corners of the world, it is now up to all of us to take the tools and vision that John has now passed to us, and make the most of them.

Additional tributes to John Ruggie from our partners and friends throughout the Human Rights community.

• Business & Human Rights Resource Centre: “In Memory of John G. Ruggie: Tribute by Bennett Freeman”
• Institute for Human Rights and Business: “Salil Tripathi on John Ruggie’s Legacy”
• Arabesque: “In Memory of John G. Ruggie”
• Shift: “In Memory of John G. Ruggie”

Blog | Tuesday September 18, 2018

The State—and Future—of Sustainable Business in 2018

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The past 10 years have seen incredible progress in sustainable business. There are global multi-stakeholder commitments on climate action and the SDGs, collaborations driving systemic change across value chains, and tremendous improvements in corporate and investor practices towards a more sustainable world. The BSR and GlobeScan State of Sustainable Business 2018 Survey is a great testament to the progress of corporate action and provides insight into how companies are preparing for the next 10 years as they respond to a rapidly changing world.

The survey, released today, includes responses from business leaders representing 152 global companies—more than 60 percent of BSR’s global membership network. This is the perspective of the people who do sustainability and corporate social responsibility work every day, inside some of the largest and most influential companies in the world.

In recognition of our 10th year and the fact that BSR sees a changing global agenda, we updated the list of corporate sustainability priorities that we track. Interestingly, ethics/integrity and diversity/inclusion were on the list for the first time and jumped straight to the top two priorities for sustainability efforts over the next 12 months. While these are of course longstanding corporate issues, they are now increasingly viewed as part of the sustainability agenda—perhaps a reflection of global attention on these topics.

Blog | Tuesday September 15, 2020

Building Resilient Supply Chains to Meet the Moment—and the Future

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The COVID-19 crisis has exposed how efficiency in global supply chains came at the cost of resilience. A persistent push for efficiency and cost competitiveness has spawned increasingly complex and opaque supply chains. Already facing disruptions such as natural disasters, trade wars, and human rights issues, the COVID-19 crisis demonstrates that for many companies, inadequate visibility and understanding of the situation within their supply chains—and by their procurement operations—hamper an effective, coordinated response to external shocks.   

Companies rely on an ever-growing network of organizations to deliver their goods and services. Yet many businesses have an insufficient understanding of the players involved and the risks and opportunities these bring.

Based on its extended enterprise risk management survey, Deloitte suggests that ecosystems have been growing across organizations at a rate of ~15 percent a year. Recent research from Refinitiv found that 43 percent of third-party relationships are not subject to any form of due diligence. In short, more complexity and more opacity.

Clearly, it is time to build more robust and resilient supply chains—understanding, valuing, and incorporating resilience for the buyer, suppliers, and the workers across the value chain.

The Resilience Starting Point

Any resilience strategy starts with understanding the supply chain, the risks it faces, and the factors that affect the resilience of the nodes and connections throughout the value chain. Often, this starts with simple enterprise risk management. It is worth noting that companies with proactive management of extended enterprise risk record bottom line improvements of 2-3 percent. Such competitive advantage will then likely become the baseline, the norm, and the only way to proactively compete in the near future.

Facing up to Future Challenges

What issues will your supply chain face in the future? The list of potential issues is long, and it’s likely that your company will face one or more of the following: natural disasters, climate impacts, biodiversity loss, water scarcity, availability of input materials, health issues, trade tensions, a carbon tax, legislated due diligence requirements, seizure of product by customs due to forced labor-related conditions of production, lack of fossil resources, etc.

Each of these has the potential of significant impacts on your supply chain operations and thus on your general business. The impact could be on price (e.g. a carbon tax), legal risk (e.g. due diligence regulations), product availability (e.g. input scarcity), or just the continued growth and complexity of your supply chain as it morphs of its own accord to try to "get around" these issues instead of dealing with them appropriately.

Building a resilience strategy means understanding the full scope of risks to which you are exposed as well as those generated by current internal procurement practices. It will also require mapping company supply networks and improving visibility and traceability in order to identify and tackle the risks. Both sustainability and risk teams have long advocated for such practices because this knowledge better equips procurement teams for contingency planning. Each of these elements works together with the others to allow full understanding, risk integration, and the strategic sourcing choices facing a company: Should we move our sourcing to location X with supplier Y for costs Z?

As companies face major supply chain disruptions, it becomes necessary to look to build more flexible and dynamic supply chains. Investor, consumer, and external stakeholder expectations remain high, and growing resource constraints necessitate that sustainability remains a priority for company supply chains and is an imperative for long-term business prosperity.

BSR’s Supply Chain Resilience Assessment

Building on our experience and expertise working on supply chain sustainability, BSR’s newest offering, the Supply Chain Resilience Assessment, helps companies evaluate their current supply chain resilience status, incorporating current (and future) understanding, policies, risks, strategies, and imperatives. 

Based on internal engagement, external benchmarking, and a dynamic assessment, BSR helps companies identify their current strengths and weaknesses on key aspects of the procurement organization, understand industry practices and opportunities, and build a resilience enhancement roadmap for their supply chain.

Preparation today will enhance the resilience of supply chains for the future, helping to anticipate the unexpected next crisis and throughout this decisive decade. We look forward to connecting with you to work to build a stronger, more resilient supply chain—please contact us to learn more.

Blog | Wednesday December 7, 2022

Conflict-Sensitive Human Rights Due Diligence for Tech Companies

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The last decade has seen an increase in state fragility and the number of violent conflicts around the world and a decrease in rule of law. Conflict-affected and high-risk markets are often characterized by serious human rights violations and harm to individuals—including loss of life, basic freedoms, or livelihoods.

Companies operating in these contexts face heightened risks of involvement with human rights harms and could exacerbate conflict and instability through hiring and procurement decisions, partnerships with local entities, compliance with local laws, or the use of their products and services. This exposes companies to potential reputational damage, interruptions in business operations, legal liability, and financial penalties

The tech industry has a particularly complex connection with conflict and instability. Emerging digital technologies have become increasingly essential and ubiquitous factors in our lives, communities, and societies. At the same time, there is increasing evidence of the industry’s role in exacerbating conflict. Moreover, the malicious use or disruption of technology to undermine international peace and security is a growing concern among states and regulators.

Conflict, fragility, and human rights are closely linked: grievances over human rights violations can destabilize and drive conflict, while violent conflict creates additional fragility and heightens human rights risks. The UN Guiding Principles on Business and Human Rights (UNGPs) call on companies to conduct heightened—or more in-depth—due diligence in conflict settings due to the proportionately higher risk of adverse human rights impacts.

What is eHRDD?

Heightened “HRDD” or “eHRDD” is, in essence, HRDD plus conflict sensitivity. It requires identifying human rights impacts as well as conflict impacts.  For tech companies, conducting eHRDD in conflict-affected and high-risk areas (CAHRA) poses unique challenges and requires a rethinking of how technology can impact conflict and pose heightened risks of human rights harms.

CAHRA are “areas in a state of armed conflict or fragile post-conflict as well as areas witnessing weak or non-existent governance and security, such as failed states, and widespread and systematic violations of international law, including human rights abuses.”

They can include situations of mass violence as well as areas with weak governance or rule of law; extensive corruption or criminality; significant social, political, or economic instability; historical conflicts linked to ethnic, religious, or other identities; closure of civic space; and a record of previous violations of international human rights and humanitarian law.

Due to the vast diversity in business models, products, services, and technologies used in the tech industry—such as social media platforms, search engines, facial recognition, AI, machine learning, cloud computing, software companies, quantum computing, telecommunications, or network infrastructure—no two due diligence processes will be the same. However, there are clear phases to eHRDD and concrete steps all tech companies can take.

BSR’s Toolkit provides analytical and operational decision-making guidance for tech companies on navigating conflict-related issues. This practice-oriented guidance was written in close consultation with both the technology industry and other diverse stakeholders, including local civil society from high-risk markets.

We lay out nine steps for eHRDD, and each step has multiple components. By adapting these nine steps, we hope that tech companies can develop robust enhanced human rights due diligence processes that can help reduce the risk that technology contributes to conflict. These steps are:

1. Develop a Formal eHRDD Policy and an eHRDD Process
2. Build and Strengthen Cross-Functional Capacities
3. Scope eHRDD Application: Triggers and Thresholds For eHRDD
4. Conduct a Conflict Assessment
5. Analyze Actual and Potential Impacts
6. Address Impacts
7. Communicate Progress
8. Cross-Cutting Issue: Stakeholder Engagement
9. Cross-Cutting Issue: Leverage Industry-Led and Multi-Stakeholder Collaboration

The guidance is targeted to larger multinational technology companies, but it can also be scaled down and applied by small and medium-sized technology companies or startups. We’ve also developed a short accompanying primer that summarizes the steps above and can serve as a rapid reference framework for companies as they build out these processes. 

Next Steps

However, additional work remains to be done. This guidance is meant to be a starting point for further collaboration, research, and diligence. Specific areas of future focus should include a robust analysis of the impact of different types of technologies on conflict, additional guidance on how to conduct conflict-sensitivity analyses for diverse types of technology, such as artificial intelligence or machine learning, social media, telecommunications, etc., and deep dives or pilots of this methodology in diverse parts of the world.

We look forward to building on this guidance and invite tech companies to get in touch to find out how to get involved.

Case Studies | Friday June 3, 2011

Creating Business Opportunity by Tackling Sustainable Consumption

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The Challenge

In China, economic growth is perpetuating a multitude of challenges, including a lack of human rights protection for migrant workers, environmental degradation, and income disparity—and government is not fully able to address these issues. There is an opportunity for civil society to fill these gaps, but without business’ help in strengthening the country’s nascent nonprofit sector, that progress has dramatically less potential.

BSR founded CiYuan to address the biggest barriers to the development of China’s nonprofit sector: limited strategic partnerships and opportunities for dialogue between nonprofits and business; a foundation sector with limited experience in partnering with and supporting grassroots organizations; a restrictive environment for nonprofit registration and fundraising; and weak governance and transparency, which generates a lack of public trust in nonprofits.

By nearly any measure, the way we consume natural resources is unsustainable: Research suggests that we are currently using 50 percent more natural resources than the Earth can sustain.

As the global population continues to grow, from almost 7 billion today to 9 billion in 2050, it is imperative that we develop new ways to enable all of the world’s people to live a dignified life, with access to basic products and services, while also preserving healthy ecosystems.

That challenge is at the core of an initiative BSR began in 2010 to raise business awareness of this issue, and to recast it as an opportunity for innovation. To explore how business can lead the shift from “super” consumption to sustainable consumption, we launched a series of work that includes applied research, collaborative learning opportunities, and consulting pr

Defining the Issue, Identifying the Opportunity

We kicked off our sustainable consumption initiative with the release of “The New Frontier in Sustainability: The Business Opportunity in Tackling Sustainable Consumption,” which identified business pathways in three parts of the “value chain cycle” that often have been overlooked in sustainability efforts to date:

• Product design: using sustainability to guide design approaches to products from the earliest stages of conception and development
• Consumer engagement: influencing what and how people consume
• End-of-use: recapturing products at the end of their useful lives and converting them to serve as raw materials for other purposes

To test the ideas outlined in our research, we held two workshops with member companies and experts in the field of closed-loop systems and consumer insight. A number of key themes emerged:

• Sustainable product design is not just a matter of reducing the impact of existing products, but rather rethinking how to deliver the equivalent value in new ways.
• Sustainable consumption means that business models encouraging the quick disposal of products, or “rapid obsolescence,” will have to change.
• Influencing consumer behavior will require that we tap into social networks, peer groups, and communities. It also will demand that companies broaden their understanding of consumers—not just as “shoppers” but as citizens.

What’s Next

Feedback from the workshop and other discussions with members has sharpened our focus for 2011, when we plan to look at rapid obsolescence, its problems, and potential solutions. Also in 2011, we will conduct an interview series with design thought leaders to examine some of the emerging approaches to sustainable products. Ultimately, we hope this work will provide our members with practical guidance for designing more sustainable products, inspiring consumers to shift their purchasing habits, and developing end-of-use solutions.

Case Studies | Thursday July 13, 2023

Conducting a Climate Risk Assessment through Scenario Analysis

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Introduction

BSR worked with Mercer International Inc., a Nasdaq-listed global producer of market pulp and solid wood products, to conduct a climate scenario analysis. With a tailored set of three climate scenarios, BSR helped Mercer explore key climate-related risks and opportunities facing the company and identify strategic interventions to improve the overall resilience of the company’s strategy. With strong engagement from senior leaders throughout the process, this effort was not a “check-the-box” disclosure exercise—instead, it was a strong analysis of climate impacts to Mercer’s business strategy.

Background

Mercer is a global producer of market pulp and solid wood products. With mills and manufacturing facilities in North America and Germany, Mercer is strategically located next to strong softwood and hardwood suppliers. Softwood and hardwood pulp are utilized for tissue, specialty paper, packaging, and more. In addition to pulp, Mercer also produces dimensional lumber for construction as well as cross-laminated timber (CLT). CLT is an alternative building product used to replace steel and concrete, driving greenhouse gas (GHG) emissions reductions in building construction.  

The Challenge

Given Mercer’s dependence on sustainable forests for pulp and timber production, the company must have a clear understanding of climate impacts. At the current level of warming, forests from which Mercer sources have already experienced climate-related events like disease, insect infestation, and increased wildfires. These, in turn, impacted the company’s operations, supply, and logistics. In 2021, an atmospheric river event in Canada affected Mercer’s transport and logistics of supply and delivery of its products to key markets. With these existing impacts on supply and logistics, as well as forecasted rise in demand for pulp and timber products, focusing on resilience and strategic interventions to key climate impacts is critical for Mercer's business.

Our climate scenario analysis approach helped facilitate that strategic thinking. After conducting Mercer’s first climate scenario analysis in 2020, Mercer was familiar with BSR's deep expertise in futures thinking and engaged BSR to help refresh and assess climate-related impacts on various business units across the globe. Mercer also understands the need to periodically reevaluate ever-changing climate risks, and it considers climate scenario analysis based on the latest science to be a crucial solution for companies and sectors highly exposed to climate change.

BSR’s Response

Our first step for this work was to understand Mercer's business strategy and market positioning in order to augment and tailor our off-the-shelf climate scenario narratives, originally developed in partnership with Bloomberg Philanthropies. The scenario set was built using the Network for Greening the Financial System (NGFS) base scenarios and projections.

BSR built out three in-depth scenario narratives: Current Policies, Net Zero 2050, and Delayed Transitions. This involved researching emerging trends and signals of change as well as integrating data projections from the NGFS climate scenario dataset. To tailor the scenarios, in collaboration with the Mercer team, BSR identified four critical themes of uncertainty for the company and conducted desktop research and analysis to learn how these themes could plausibly play out in each scenario. We also identified six critical transition data projections from the NGFS database and three key physical climate impact projections from the Climate Analytics portal that were relevant for Mercer’s main regions of supply and operation in Canada and Germany. With the full set of tailored scenarios, we began the internal stakeholder engagement process.

Our initial engagement consisted of small workshop sessions across critical business functions to identify a long list of climate-related risks and opportunities that Mercer might face in each future scenario. Through these working sessions, we engaged with 16 senior leaders across six functional areas, including operations, finance, forest management, sales, and logistics.

BSR collated the key risks and opportunities by scenario and identified thematic hotspots and overarching future trends that may present significant risks or opportunities to Mercer's business across the entire set of scenarios.

Our final workshop, the last step in our approach, brought back the senior leaders from the initial interviews. During the workshop, we started by validating the identified key risks and opportunities and then shifted quickly into exploring the hotspots in more detail. For each hotspot, BSR facilitated small group discussions to explore clear actions and strategic interventions that Mercer can perform across the organization to mitigate risks and seize the opportunities related to each hotspot. This final session encompassed actions to increase and enhance strategic resilience to these climate impacts.

Impact

BSR conducted a robust scenarios-based climate risk assessment to prepare Mercer for a TCFD-aligned climate risk disclosure. More importantly, BSR helped facilitate critical strategic conversations on the resilience of the overall business and growth strategy to key climate risks, and we equipped Mercer with a near-term roadmap that outlined key next steps and governance-related responsibilities to ensure successful management and mitigation of these risks.

"This in-depth assessment of Mercer's future resilience under all three climate change scenarios has enabled our senior leadership, across all key functional areas, to better understand the risk and opportunities of climate change and develop a more robust strategy that will incorporate these key learnings."

Bill Adams, VP, Sustainability and Innovation

After our work with Mercer, the company was able to produce a robust TCFD report and integrate resilience into its business strategy and planning processes.

Conclusion

As part of a wider set of activities in the business toolkit, climate scenario analysis is a powerful method for uncovering and assessing a company’s strategy against uncertain climate risks and emerging opportunities. By testing how to best respond to these uncertainties using actions that build resilience, companies can explore pathways for delivering successful business outcomes in the face of climate change.

"Undertaking a climate scenarios analysis was a strategic necessity for Mercer to ensure resilient operations and achieve sustainable growth. Proactively assessing and preparing for the potential effects of climate change helps businesses navigate the uncertain future. Specifically, it enables informed decision-making, fosters innovation, and helps build operations that can adapt, thrive, and contribute to a more sustainable world.”

Shahed Tootoonian, Director, Finance and Sustainability

Get in Touch

Interested in enhancing your company’s strategic resilience to climate impacts through climate scenario analysis? Please contact BSR’s Climate Team.

This case study was written by Nina Hatch and Ameer Azim.