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Blog | Thursday June 22, 2017

BSR’s Women in Factories China Program: Moving from Risk to Value in the Supply Chain

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“I was a machine operator and became the first female line manager for my factory. The training helped me understand how to manage a team. I have a new sense of my own career development and how to lead my team toward even better performance.” —Xiangli Lu, factory worker and Women in Factories participant

Over the past three years, BSR’s Women in Factories China Program has delivered more than a million hours of training to nearly 90,000 workers in more than 45 factories across seven different industries in China’s manufacturing supply chain—significantly exceeding program goals and helping empower women as agents of sustainable change.

The Women in Factories program—funded by and in partnership with the Walmart Foundation's Women’s Economic Empowerment Initiative—was designed to build the capability of human resources departments to provide work and life skills for workers, while demonstrating the value of investing in women workers who can become the next generation of leaders. Surveys of participants show that the program has given women workers the skills and knowledge they need to change their lives and how they work, creating value for factories and catalyzing change in manufacturing supply chains.

At a recent half-day event in Shenzhen, China, BSR and Walmart highlighted program outcomes and led discussions about how brands and factories can invest in workers to help China become a manufacturing leader as the industry evolves in the future.

How Investing in Workers Benefits Women and Factories

When BSR Asia-Pacific Vice President Jeremy Prepscius opened the event, he described how brands’ perceptions of factory workers is shifting from a focus on identifying and managing risks to finding ways to add value. Previously, many factory managers didn’t understand the value of investing resources in workers and considered these efforts a waste. As the Women in Factories program progressed, however, more factories and companies began to see that investing in people can transform supply chains by building an internal pipeline of women leaders.

The value of this investment was evident in the survey results and personal stories about the program:

• Communication: 51 percent of participants significantly improved how they respond to disagreements at work, and 90 percent of workers showed improved communication skills.
• Commitment: 40 percent of participants showed an increased willingness to recommend their factories to others, indicating a better sense of ownership and a higher level of commitment to their work. One speaker from Hayco said that after the first wave of training, the company’s factories experienced a sharp decline in trainee turnover rates, from around 14 percent to 1 percent. 
• Stress management: More than half of participants reported a significant improvement in their ability to manage stress, and 83 percent said they felt more capable at their jobs, which supports higher productivity. Lulu Zhu, a factory worker who received the program’s Role Model Women award, said she is now able to cope with conflicts. “Women in Factories enabled me to help my peers focus on the problem itself and find a solution rather than venting negative emotions,” she said.

Professor Li Xiaoping of China Eastern Normal University, who analyzed more than 800,000 data points, said targeted training procedures, strong and interactive content, and timing were keys to the program’s success.

How Training Can Support the Future of Chinese Industry

To close the event, BSR China Director Lin Wang moderated a panel on how industry trends are affecting factories and the labor force, and how investing in workers through the Made in China 2025 government initiative will help China become a manufacturing leader. Panelists included EY Sustainability Director Brian Ho, Harvard Center Shanghai Assistant Research Director Nancy Dai, Walmart Senior Sourcing Director Sophia Yu, and Foxconn Project Director Xuehu Xiong.

China’s prevalent production and export business model is becoming a thing of the past. Today, the industry is poised to become more domestically self-sufficient, service-oriented, and competitive. This poses new challenges and opportunities for workers as more and more factories move toward automation.

Panelists noted that while automation has the potential to threaten factory jobs, it also presents a massive opportunity for job creation. Future employers creating “smart factories” will need to teach new skills and nurture confidence because, even as production processes are streamlined, new jobs will require people to program and maintain machines and emerging technology. Yu said that the Women in Factories program has helped give thousands of women workers the confidence to learn new skills and pursue new opportunities in the workplace, which will support the transition for the jobs of the future.

Ultimately, the Women in Factories program will reach beyond just the 90,000 workers in China’s manufacturing sector. That’s because the program has engaged key actors throughout the supply chain, helping them understand that investing in workers is really about investing in the future. As Prespscius said in his closing remarks, factories are now going from asking, “Why should we invest in our workers?” to “Why not?”

A Women in Factories impact report will be published later this year. 

Blog | Wednesday June 21, 2017

Activist Investors and the Rise of Short-Termism 2.0

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There has long been a tension in the financial markets between long-term growth and short-term returns. In the past decade, short-term pressures have been exacerbated by executive compensation trends, quarterly earnings guidance, and increased shareholder turnover.  Several studies have highlighted executives who admit they would sacrifice a project that would create long-term value in order to meet quarterly earnings expectations.

In recent years, companies have found it even more challenging to focus on long-term value creation due to the rise of hedge fund activist investors. These activist investors are looking to maximize stock price before they sell their shares, and they have been very effective at influencing boards, changing CEOs and management, and driving mergers and acquisitions. There are around 550 activist investors globally, controlling more than US$180 billion in embedded capital—up from US$51 billion in 2011.

There are, of course, many institutional investors who have longer time horizons, and these investors have been instrumental in integrating environmental, social, and governance (ESG) factors as part of this approach. There is evidence that the revenue of long-term firms cumulatively grew an average of 47 percent more than the revenue of other firms from 2001 through 2014. In his annual letter to CEOs this past January, Larry Fink, the chief executive of BlackRock, the world’s largest investor, emphasized the need for long-term value creation:  “ESG factors relevant to a company’s business can provide essential insights into management effectiveness and thus a company’s long-term prospects.”

Despite this positive movement toward long-term thinking, some activist investors are pushing in the wrong direction and threatening to undermine progress. In recent months, we’ve seen significant activist-driven changes at companies that have been focused on sustainability and long-term growth. GE, for example, has a history of positioning itself for long-term growth. But facing pressures to cut costs and boost short-term profits, GE CEO Jeff Immelt announced that he will step down in August. Similarly, Whole Foods had been under intense pressure from activist investor Jana Partners since April, and last week’s surprising acquisition from Amazon is being described as saving the company from the activist investors.

This trend will likely worsen now that the U.S. House of Representatives has passed the Financial CHOICE Act, lifting many of the financial regulations enacted in the 2010 Dodd-Frank Act. This bill would require that investors own 1 percent of a company’s stock for three years in order to file a shareholder proposal. This would greatly limit the ability of most investors to even raise ESG issues.

“This raises the bar for entry to ordinary investors and would make shareholder proposals a billionaire investor’s privilege, when it should be a right for all investors,” said Anne Simpson, investment director, sustainability, at Calpers, the biggest U.S. public pension fund.

Interestingly, amid the debate about short-termism, the negative impacts of ignoring environmental and social issues have become more immediate. Climate impacts on business continuity are no longer 20 years out but affecting operations now. Human rights issues also impact business in near term: Just this year, concerns about the Dakota Access Pipeline have affected investments in Wells Fargo.

Still, the overall impacts of global social, demographic, political, and environmental trends are realized in years, not months. Investing to become a more sustainable business is inherently about understanding future trends and positioning the company for success over the long term. Here’s hoping the activist investor trend is short-lived, so that investors, companies, and society can all benefit in the long term. 

Blog | Friday June 16, 2017

The Digital, Sustainable Future of Supply Chains

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A few weeks ago, the Gartner Supply Chain Executive Conference, attended by more than 2,000 supply chain professionals, was buzzing with stories of companies that are digitally transforming their supply chains: augmented reality head-mounted devices in factories, machines making decisions to approve suppliers, Internet of Things buttons reducing inventory, and artificial intelligence enhancing supply chain planning.

Sustainability was mentioned. The methodology for Gartner’s Supply Chain Top 25 companies now incorporates CSR performance as 10 percent of the overall score. Featured panelists occasionally called out the environmental benefits of a new program. Some digital platforms came with claims of addressing a degree of sustainability risk.

All of which is to say, sustainability was a secondary consideration.

Which invites the question: How can we elevate it to a primary position?

This challenge is not limited to Gartner’s conference. Even as digital technologies are being applied to all aspects of supply chain management, sustainability is often still run on a parallel, Excel-based system or on a dedicated sustainability platform unconnected to other platforms. We aren’t digitalizing supply chain sustainability, and we should be.

The Reality of Supply Chain Digitalization Today

First we must understand that digital transformations are far from guaranteed. A recent Salesforce article estimates that digital transformation projects have an 84 percent chance of failure.

We must also be able to differentiate hype from reality. There has been a lot of recent optimism about blockchain, a decentralized database that keeps records of digital transactions. Blockchain is a technology with great potential, but there is a limited number of use cases for the supply chain today, and most experts agree that it is still years away from becoming mainstream.

We should also keep in mind that supply chains are not monolithic, and they cannot be managed as such. Some areas may digitalize faster—either because the benefits of going digital are more tangible, or because the right technology becomes available and cost-effective more quickly—while others may not keep pace.

The New Mandate

The new mandate for supply chain sustainability is to use this time of transition to embed sustainability firmly into the information, functionality, and end-use of digital technologies as they come into the mainstream. Sustainable supply chain practitioners are primely placed to help companies navigate their digital supply chain transformation. We are not strangers to applying technology in difficult circumstances. For years, we have been using limited technology tools to onboard unwilling traders and agents to share sustainability data, and adapting data capture tools to collect information from farms, plantations, and mines way upstream, where technology access has been limited.

We must apply this skillset now. There is a lot to do: Digitize sustainability indicators, harness digital tools to see further into opaque supply chains, make sustainability systems interoperable, apply machine learning to identify sustainability risks, use augmented reality to enable better worker engagement, examine the social and environmental impacts of these new technologies, and much more.

By increasing our digital sophistication, sustainable supply chain management can lead innovation during the digital transformation.

To discuss these issues with your peers, join the "Harnessing New Technologies for Supply Chain Sustainability" breakout session at the BSR Conference 2017 this October.

Blog | Wednesday June 14, 2017

Impact Sourcing and Inclusive Supply Chains: A Conversation with Microsoft’s Tim Hopper

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Recently, BSR’s Global Impact Sourcing Coalition (GISC)—which seeks to create more inclusive supply chains through procurement—published “The Autism Empowerment Kit,” which offers recommendations and resources for employers to provide workplace accommodations that empower employees with autism. Microsoft, one of the sponsors of this kit, recently shared this resource with its suppliers at an event on disability inclusion. We spoke with Tim Hopper, Microsoft’s manager of responsible sourcing initiatives, about this initiative and the company’s wider commitment to Impact Sourcing.

Sara Enright: Microsoft has been working with its suppliers on Impact Sourcing for several years. Why does this work matter to Microsoft?

Tim Hopper: We have been working on Impact Sourcing for several years together with our suppliers to encourage inclusive employment. For Microsoft, Impact Sourcing is about knocking down artificial barriers to employment and allowing high-potential individuals to bring their strengths to the marketplace. By partnering with our suppliers, we can bring people in who would not otherwise have an opportunity and support their success in the workplace. It’s a business model that strongly aligns with the company’s mission to empower every person and every organization to achieve more.

It’s important to note that the benefits of Impact Sourcing extend to the business as well. As we see in the case studies presented in the autism empowerment kit, together with other case studies on Impact Sourcing that have been developed over time, there are clear business drivers for inclusive employment, including less attrition in work that is at similar quality or higher than that done by traditional workers. This has been consistently demonstrated across all the different categories of Impact Sourcing.

Enright: For the past year, you’ve been leading a working group on disability inclusion in the workplace, leading to the development of this report and other engagement with Microsoft’s global suppliers. Tell us more about this initiative.

Hopper: Recently, we launched a special focus on inclusion of people with disabilities. The clear majority of these people are under- or unemployed.   

We encourage suppliers to partner with us in two ways. First, we include Impact Sourcing as an evaluation criteria in our strategic requests for proposals, offering providers that have inclusive employment programs higher points in the procurement evaluation. Second, we run an annual awards competition to recognize the good work of suppliers who are doing Impact Sourcing. This year’s competition focused on suppliers who empower people with disabilities.

It’s exciting to see how much this work has already caught on within the company and with our suppliers. At Microsoft, we see disability as a strength and encourage individuals to come as they are. 

Enright: The GISC is initially focused on Impact Sourcing in the business process outsourcing industry. What additional categories of supplier do you believe may be a good fit for Impact Sourcing?

Hopper: We believe that Impact Sourcing can work across all supplier categories, from call centers, to facilities management, all the way up to application development. If you think about the variety of people who are long-term unemployed or informally employed, there are opportunities for them to enter the workforce through all industries. Every industry can make an impact.

Enright: As a member of GISC, what opportunities do you see through a collaborative approach to advancing Impact Sourcing?

Hopper: The most challenging thing for Impact Sourcing has been getting to a common definition of what it is, and how to measure it consistently. I think GISC is delivering on that need with the development of an Impact Sourcing standard and measurement toolkit, which will help to ensure that our suppliers are doing impact souring in a way that is measurable, and that offers assurance that they are having a real impact. Coming to a common definition and agreement on a standard is key.

In the long run, we could see Impact Sourcing growing in many exciting directions. Can we create a certification that allows suppliers to register as certified Impact Sourcing providers, so that we can prioritize them in the same way that we do minority-owned, women-owned, and disability-owned businesses? That would be a big deal, allowing companies like ours to offer beneficial procurement contracts to companies that are committed to workforce inclusion. 

Blog | Tuesday June 13, 2017

What Are the 10 Most Urgent Human Rights Risks for Your Industry?

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Last year, we discovered that human rights is still the most urgent sustainability priority for companies. While the obligations of human rights due diligence are relevant across all companies, the approach varies based on the industry, sizes and types of business, locations, and varieties of operations. These include such things as providing decent working conditions, consulting affected communities, and establishing grievance mechanisms. 

To help all companies assume their mantle as responsible human rights actors, BSR’s global human rights team is developing a series of primers describing the key human rights issues in various industries. The first, released this month, is on the financial sector. Later this year, we will release primers on power and utilities, transport and logistics, information and communications technology (ICT), and extractives. In 2018, we will release primers on healthcare, heavy manufacturing, food and agriculture, and fashion and beauty.     

For every company, carrying out the responsibility to respect human rights must begin with mapping the characteristics, activities, and geographies that will give rise to the greatest negative impacts.

The universal responsibilities of companies to address human rights cannot be implemented without a robust understanding of the contexts in which they take place. For a mining company operating in Africa, for example, providing decent working conditions will require particular attention to personal protective equipment, noise levels, and the stresses of working in remote areas. For a pharmaceutical company operating in northern Europe, the priority issues may be family leave, racial discrimination, and the use of temporary employees.

This approach also applies to identifying vulnerable groups. Watching and safeguarding the people who will suffer the harm from private-sector activities is one of the basic tenets of a human rights approach. For an internet company, the group at greatest risk may be bloggers who are seen as politically threatening by the host government. In contrast, the typical vulnerable population for a manufacturing company might be local women whose personal security is threatened by the male security forces guarding the factory premises.

Companies in different sectors also must be aware of how they may be connected to human rights abuses through their business relationships. For example, a typical apparel company will need to watch the supply chain for things like exploitative labor conditions for a workforce consisting largely of underprivileged young women. While a bank can be connected to human rights abuses by financing a large dam that forcibly relocates populations without compensation or provision for future livelihoods. In contrast, a technology company could be connected to violations through a government buyer, which uses its products to violate the privacy of political opposition leaders. 

BSR’s primers identify the 10 most urgent negative human rights impacts in each industry, considering all the dimensions described above, including impacts of core operations, business relationships, and products and services. We produced these primers based on lessons from BSR's 200-plus human rights projects with a variety of sectors and organizations around the world.

But we don't just want to identify risks. Each primer also includes three ideas for positive human rights impacts for each sector. These, like due diligence obligations, are dependent on the companies carrying them out. For example, extractive companies with 30-year project spans for mines in remote regions have unique opportunities to promote economic, social, and cultural rights. ICT companies have opportunities to support civil and political rights like freedom of expression.

While companies must first and foremost ensure that they take all reasonable measures to avoid human rights harms, we also hope to provide information that will help companies champion and defend human rights. Human rights, after all, are not just an obligation, but also an opportunity. 

Read BSR’s first business and human rights primer, on financial services.  

Blog | Wednesday June 7, 2017

Business Steps Up Leadership on Climate Action as U.S. Administration Withdraws

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In the midst of political opposition from the Trump administration, which announced its withdrawal from the Paris Agreement on climate change on June 1, a cohesive and powerful voice has emerged: Business favors climate ambition for a shift to a low-carbon economy.

While consensus on climate action has long been elusive, companies from diverse sectors of the economy have stepped up to protect the standards of the Paris Agreement, which they see as a vital pillar for future growth, employment, competitiveness, and innovation.

An Ongoing Trend Grows Bigger

In the months leading up to COP21, where the Paris Agreement was written, the private sector mobilized to demonstrate its leadership on climate. Through initiatives such as We Mean Business, the Science-Based Targets initiative, or the UN’s Nazca platform, companies have showcased their ambition and commitment to contributing to the decarbonizaton of the economy, and they have voiced their demand for strong and stable regulation on emissions reductions.

Since then, the momentum has grown, even as real threats to American leadership have risen from the executive branch. Indeed, the past few months have seen support from the highest levels of business:

• Full-page ads in the Wall Street Journal, New York Times, and New York Post organized by C2ES supporting the agreement, with signatures from Adobe, Apple, Blue Cross Blue Shield of Massachusetts, Danfoss, Dignity Health, Facebook, Gap, Google, Hewlett Packard Enterprise, Ingersoll Rand, Intel, Johnson Controls, Levi Strauss & Co., Mars, Microsoft, Morgan Stanley, National Grid, PG&E, Royal DSM, Salesforce, Schneider Electric, Tiffany & Co., Unilever, and VF Corporation.
• An ad in the Wall Street Journal urging the president to stay in the Paris Agreement, signed by the 30 CEOs: 3M, Allianz SE, Bank of America, BROAD Group, Campbell Soup Company, Cargill, Citigroup, Coca-Cola Company, Corning, Cummins, Dana Incorporated, Dow, DuPont, GE, Goldman Sachs, Harris Corporation, Johnson and Johnson, JP Morgan Chase, Kering, Morgan Stanley, Newell Brands, PG&E, Proctor and Gamble, Royal DSM, Salesforce, Solvay, Tesla, Unilever, Virgin Group, and Walt Disney Company.
• More than 1,000 companies signed the “Business Backs a Low-Carbon USA” letter, which supports U.S. participation in the Paris Agreement, including DuPont, Hewlett Packard Enterprise, Hilton, HP, Intel, Johnson & Johnson, NRG Energy, PG&E, Schneider Electric, The Hartford, and Unilever.
• CEOs and spokespersons from companies such as ConocoPhillips, BP, Cheniere Energy, Cloud Peak Energy, Exxon, GE, Peabody and Arch Coal, and Shell have all expressed strong support for remaining in the Paris Agreement.

These public announcements have presented the business case for climate action and have demonstrated the need for strong and stable policies in order to meet investor, consumer, employee, and business demands. Privately, many more executives and senior leaders have contacted the Trump administration, emphasizing that a low-carbon economy is the backbone of American prosperity.

Business Is Drawing the Line

Within minutes of the White House Paris statement, business leaders expressed their opposition using the president’s favorite medium. Goldman Sachs CEO Lloyd Blankfein dedicated his very first tweet to the issue: “Today's decision is a setback for the environment and for the U.S. leadership position in the world.” Tesla CEO Elon Musk and Walt Disney Company CEO Robert Iger used the social media platform to announce they would step down from the President’s Business Council.

GE CEO Jeff Immelt tweeted that climate was now in the hands of business and ruled out the current government as a partner. Google CEO Sundhar Pichar renewed the company’s commitment to working toward a more prosperous and cleaner future, as did Salesforce CEO Mark Benioff. Microsoft President and Chief Legal Officer Brad Smith and Apple CEO Tim Cook also strengthened their resolve to contribute to the fight against climate change. Twitter CEO Jack Dorsey announced his discontent on the platform. On his company’s platform, Facebook CEO Mark Zuckerberg made a public statement in favor of continuing to act in favor of climate in a way that makes business sense.  

Amazon, Dell, and Intel weighed in via Buzzfeed, insisting that not only is there is no contradiction between a low-carbon economy and a prosperous America, the opposite is true. HP issued a press release, saying the longevity of its business was at stake. IBM did the same.

The business voice is not only shaped by global tech companies: Ford and General Motors were also quick to respond to the president’s decision, stating that their commitments to emissions reductions would not change.

And just days after the withdrawal announcement from the White House, more than 900 businesses and investors have joined hundreds of cities, states, and universities in signing the We Are Still In statement to declare their continued support for climate action to meet the Paris Agreement, using the hashtag #WeAreStillIn.

How Business Leads

Leaders of some of the world’s most successful companies clearly see that remaining in the Paris Agreement and maintaining policies that favor emissions reductions is good for their bottom line as well as for the country. Companies have already seen significant cost savings, better supply chain management, and they have spurred innovation and employment by tackling climate change while responding to investor and consumer demands.

Business is leading opposing the federal government and marching on with its own climate commitments, which are consistent with business imperatives. And business can count on the support of local and global politics. Even though the United States withdrew from the Paris Agreement at the national level, 30 mayors, three governors, and 80 university presidents in U.S. cities and states have shored up climate action in line with the requirements of the international accord. And globally the 195 parties to the Paris Agreement remain staunch in their determination to make good on their goals. While the White House’s withdrawal from Paris is a major mistake, it has also served to underscore the broad and deep support for climate action in the United States. In our judgment, this will prove to be longer-lasting than the foolish, regressive approach taken by the president.

In this context, business can be assured that its ambition will be met and enabled at both the local and global levels—and we can be assured that the world’s business leaders will work to keep the global temperature rise under 2°C.

Blog | Tuesday June 6, 2017

Three Actions to Promote Women’s Economic Empowerment in the Apparel Sector

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To realize the ambitions of the Sustainable Development Goals (SDGs), the UN High-Level Panel on Women’s Economic Empowerment says there is a “pressing need to step up actions to close gender gaps and ensure the full economic empowerment of women.” The private sector has an important role to play in this ambition—particularly in sectors, like apparel, that employ large numbers of women all over the world.

Over the last decade, many apparel companies, industry coalitions, supplier groups, NGOs, unions, governments, and international coalitions have collaborated to create promising initiatives designed to improve working conditions, build skills, and promote the well-being of women workers in the supply chain. These efforts have built a collective understanding of what makes (and importantly, what doesn’t) for a decent employment opportunity. While these advances should be recognized, more needs to be done to remove barriers to women’s economic empowerment, which is the ability women have to access and control their economic resources, assets, and opportunities, including jobs.

Companies should continue investments and innovation, with the recognition that apparel supply chains, and the demographics and everyday realities of workers within them, are changing. While the apparel sector cannot act alone—government initiatives and international development work will remain important—business has both an opportunity and a responsibility to drive lasting, meaningful improvements that enable female workers to fulfill their potential and maximize the returns of their participation in the global apparel sector.

In a new BSR business brief, “Empowering Female Workers in the Apparel Industry: Three Areas for Business Action,” we highlight key findings from in-depth research conducted by the International Center for Research on Women (ICRW) and supported by C&A Foundation and the Levi Strauss Foundation. We propose three areas where apparel companies can take action to promote women workers’ well-being and economic empowerment:

• Address informality: For many women in the apparel sector, that job represents their first formal job and income—both of which are key ingredients to women’s economic empowerment. Unfortunately, the global apparel industry relies heavily on informal operations, and ICRW’s research affirmed the need for concerted action on informal work. Global companies should expand current initiatives into more informal parts of the supply chain where the needs are greater. It is also time to come together in constructive dialogue to support policies that favor and promote formality in the workplace.
• Go further to end violence: Economic empowerment is impossible in the face of gender-based violence at work and at home. A recent CARE report found that nearly one in three female garment factory workers in Cambodia said they experienced sexual harassment in the workplace in the past year, which cost companies US$89 million in lost productivity. Efforts to address violence should consider not only workplace interventions, but also ways to align with and strengthen public systems to address vulnerabilities and patterns of harassment and violence outside of the workplace.
• Recognize childcare needs: Around the world, women take on a disproportionate amount of unpaid care work. Given that apparel workers are predominantly women in their reproductive years, lack of access to affordable, quality childcare remains a barrier for effective, long-term participation at work. While business should support the wider intention of SDG 5 to provide women with equal access to and representation in all economic and political spheres, supporting access to high-quality, family-centered childcare is an important first step that apparel sector companies can take immediately.

These three interconnected opportunities represent meaningful actions apparel companies can take now to support women’s economic empowerment. Companies can adopt policies; make investments; and participate in partnerships with NGOs, community organizations, and others to promote women’s economic empowerment. Business can also exert positive influence by sharing data, conducting research, and engaging in advocacy to increase awareness of the factors that promote equity and gender equality.

Read our business brief, which is based on research by ICRW and supported by C&A Foundation and the Levi Strauss Foundation. 

Blog | Thursday June 1, 2017

BSR Statement on U.S. Withdrawal from the Paris Agreement

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BSR regrets that the United States has announced its intention to withdraw from the Paris Agreement on climate change. The Paris Agreement is supported by an unprecedented consensus of nations—only Syria and Nicaragua have not signed it. The overwhelming majority of businesses and investors believe that the Paris Agreement is essential to ensuring innovation, competitiveness, and job creation, in addition to the evident benefits with respect to combatting climate change. Furthermore, evidence suggests that a strong majority of the American public believes the same thing. 

In spite of counterproductive policies coming from the U.S. administration, we are confident that the business community will continue to lead on climate action. BSR will continue its work with businesses, nonprofit partners, and other stakeholders to accelerate the transition to the resilient low-carbon economy. We will work with companies to set and implement science-based emission reduction targets, to help remove emissions from their supply chains, to invest in a low-carbon future, and to become resilient to climate risks. We will maintain our sharing of best practices in climate leadership. Our BSR collaborative initiatives on climate change will continue to help companies collectively promote low-carbon shipping and trucking, renewable energy for data centers, climate resilience, and climate finance. Along with our partners in the We Mean Business coalition, we will keep uniting the business community in taking climate action.

The resilient, low-carbon economy that the Paris Agreement envisions offers the innovation, jobs, and security Americans need. We urge the United States to reconsider withdrawal from the agreement and from the policies which implement it.

“U.S. withdrawal from the Paris Agreement is a major mistake that will serve as a setback for climate action, global cooperation, and business, which overwhelmingly supports Paris. This decision not only damages the global consensus on how to address climate change, but also the innovation, competitiveness, and job creation that can flow from the steps outlined in Paris. Despite this deeply regrettable decision, I am confident that business—very much including American companies—will remain resolute in showing how the transition to low-carbon prosperity can be achieved and can improve livelihoods. BSR will continue to work with businesses that understand this and that are leading the way to 21st-century business models.” —Aron Cramer, President and CEO, BSR

Blog | Wednesday May 31, 2017

Can Marketers Change the World?

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We have reached a tipping point for sustainability marketing.

For years, consumers said they were interested in buying more sustainable products and services, but sales of green products remained a niche market. This indicated a “value-action gap,” with consumers saying they would make values-driven purchases in surveys but failing to follow through in reality. 

Today’s headlines tell a different story.

Tesla is now more valuable then Ford and GM, brands under Unilever’s Sustainable Living Plan are growing 50 percent faster than the rest of the portfolio, and Nike is making more than a billion from shoes that are radically more resource-efficient. These brands and others have put sustainability at the forefront of their marketing—and are reaping the rewards. That’s good news for their bottom lines and good news for the planet.

How have some companies cracked the code to convert consumer aspirations for a better world into sales?

A group of brands from BSR’s Sustainable Lifestyles Frontier Group—AT&T, eBay, Johnson & Johnson Consumer Inc. (JJCI), McDonald’s, and Walmart, with guidance from BSR, Futerra, and Stanford University—set out to explore this question. Following initial research, the group tested insights in the marketplace, moving beyond theory and into action. Each brand identified a sustainable behavior they could influence and a method to explore the effectiveness of their marketing efforts.

The Value of Sustainability

The results, along with lessons and advice, are captured in our latest study “Big Brands Big Impact: A Marketer’s Guide to Behavior Change,” including these highlights:

Sustainability is a value add, not the only value. When testing messages to promote a digital home security and energy automation system, AT&T found that the most effective messaging focused on benefits like security and control over one’s home, rather than carbon footprint reduction. However, in surveys, consumers said they were interested in energy conservation. This suggests that even if using a product delivers environmental benefits, those benefits should not necessarily be the primary focus of marketing efforts. When it comes to purchasing, these AT&T customers were influenced more by the perceived value of the product and its functionality. 

“Consumers are looking for companies to be more and more environmentally and socially conscious,” said AT&T Director of Sustainability Integration Roman Smith. “It’s important for companies to understand how to best tap into that trend as we market and communicate our offerings. Being a part of the Sustainable Lifestyles Frontier Group has helped us do that.”

Making sustainability fun can drive engagement. When testing out different recycling signage at a San Francisco restaurant, McDonald’s found that playful imagery with vibrant colors captured customers’ attention and provided an unexpected moment of joy. By getting their attention in a whimsical, engaging way, it was easier to get the customers to focus on the “task” of recycling. These signs were much more effective than the “control scenario” sign, which lacked color and provided basic instructions.

“Being part of the Sustainable Lifestyles Frontier Group gave us the opportunity to extend our promise to bring delicious feel good moments to everyone, even at the recycling bin. The partnership of sustainability and marketing influenced sustainable behavior change and 'scaled for good' both the customer experience and landfill diversion,”  said Victoria Zimmerman, Global Supply Chain and Sustainability Manager, McDonald's.

Helping people become more sustainable can improve brand reputation. Both eBay and JJCI found that when their communications helped consumers be more sustainable, these messages also improved consumers’ perception of the brands as environmentally responsible. JJCI tested social media posts that encouraged consumers to recycle by explaining how recycling can reduce landfill waste and by giving them do-it-yourself ideas such as using empty containers as planters. These posts improved participants’ perception of the brand as environmentally responsible, which could give the brand a competitive advantage when other factors such as price and performance are equal.

The bottom line?

It’s not about green marketing; it’s about great marketing.

Just as selling a drink isn’t all about selling the taste, selling sustainability isn’t all about saving the planet. For some brands, marketing sustainability might mean capturing attention by creating moments of joy; for others, it might mean using sustainability as an additional benefit to strengthen the value proposition; and for still others, sustainability can provide valuable storytelling opportunities.

As more and more mainstream consumers continue to shift toward buying sustainable products and experimenting with sustainable behaviors, marketers must believe that they can change the world—but they need to bring the same thorough, subtle approach to marketing sustainability as they would to marketing any product.

To learn more about marketing for sustainability, read the insights and case studies in “Big Brands, Big Impact,” and consider hosting a meeting with your marketing and sustainability colleagues to explore how your brand can use marketing to influence social or environmental behaviors. 

Blog | Tuesday May 30, 2017

Despite U.S. Uncertainty on Paris, Business Momentum for Climate Action Remains Strong

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At the G7 Summit concluded this past weekend, the United States was unable to join consensus on the Paris Agreement on climate change, with a decision postponed to this week. BSR urges the United States to remain in the Paris Agreement on climate change. In this we are joined by the CEOs of major American companies, by some of the largest companies operating in the United States, and by more than 1,000 companies that employ 1.85 million Americans who have reaffirmed their commitment to American participation in the Paris Agreement.

We are confident that the business community will continue to lead on climate action, following the vision of the Paris Agreement, informed by climate science, and driven by the business imperative for innovation, jobs, and growth. U.S. participation in and implementation of the Paris Agreement would speed our transition to a resilient, low-carbon economy, enable American and global businesses to face the future with confidence, and spark innovation that will create shared prosperity.

Although the U.S. administration is pulling back from its leadership at home and abroad, incredible momentum on climate action remains. The business community is increasingly reducing greenhouse gas emissions and building climate resilience in line with the Paris Agreement. We anticipate that this leadership will accelerate, as companies set and implement targets for their own operations and throughout the vast global footprint of their value chains, and protect workers in these value chains from inevitable climate impacts.

For example, Walmart’s Project Gigaton aims to remove one billion tons of emissions from its supply chain by 2030—equal to the annual emissions of Germany. And last week HPE launched a supply chain program based on climate science to remove 100 million tons of emissions—equal to the annual emissions of Greece. 266 companies have now committed to setting science-based targets which represent their share of keeping warming well below 2°C. General Mills has committed to a 28 percent reduction by 2025 across its value chain, from farm to fork to landfill.

The low-carbon economy will take the lion’s share of finance in coming years. Annual renewable energy investment has grown from US$45 billion to more than US$270 billion over the last decade—by a factor of six. Through 2040, US$7.8 trillion out of the US$11.4 trillion invested in power generation will go toward renewable energy.

The low-carbon economy will also generate innovation and jobs. For instance, Goldman Sachs predicts that electric vehicles will experience a compound annual growth rate of 32 percent in the next 10 years, and Tesla aims to produce battery cells by 2020 that are 30-35 percent cheaper than they are today. The solar and wind industries are both creating jobs 12 times faster than the rest of the U.S. economy. Smart policy incentives will accelerate this low-carbon innovation, bringing wide economic benefits.

Together, we’re building a resilient, low-carbon economy that enables growth, good jobs, security, strong communities, and a healthy planet. We believe the business community understands the inevitability of the low-carbon transition and recognizes the opportunity it represents. U.S. withdrawal from the Paris Agreement, and the withdrawal of domestic policies which implement the agreement, are major errors which would weaken our economy, our health, and our environment.