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Reports | Tuesday November 6, 2018

Doing Business in 2030

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The operating environment for sustainable business is being radically transformed by a diverse set of powerful and complex interacting forces. From climate disruption to automation to artificial intelligence, these changes are rapidly creating an entirely new operating environment for business. Business—and the well-being of people and the planet—will depend on new strategies for the future that account for the profound changes underway and imagine transformative new opportunities to create a more just and sustainable world.

In conditions of rapid change, scenarios offer a powerful way to explore multiple distinct possibilities. Rather than predicting what the world will be, they provide stories of alternate futures that combine research into drivers of change, with informed speculation about how key uncertainties could play out.

Scenarios are not predictions or forecasts. The scenarios in this report are organized around two critical uncertainties: Will the forces of centralization or decentralization prevail? Will we stick with the current economic paradigm of endless growth and profit maximization, or will we shift toward a new paradigm that views the purpose of the economy as providing for equitable prosperity on a healthy planet?

Each scenario imagines how different answers to these questions might shape the future.

Blog | Monday November 5, 2018

Our Human Rights Impact Assessment of Facebook in Myanmar

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Today, Facebook has published the human rights impact assessment (HRIA) of the company’s presence in Myanmar that it engaged BSR to undertake earlier this year.

The question of how social media platforms can respect the freedom of expression rights of users while also protecting rightsholders from harm is one of the most pressing challenges of our time.

This challenge is even more testing in Myanmar, where the majority of the population is still developing the digital literacy required to navigate the complex world of information sharing online, and where a minority of users are seeking to use Facebook as a platform to undermine democracy and incite offline violence. The lack of rule of law and recent political, economic, and social history in Myanmar add to the challenging environment.

We didn’t want the HRIA to reproduce what was already known—so we asked ourselves, what can we do to help increase human rights protections in the future?

Last month, the UN Human Rights Council’s Independent International Fact-Finding Mission on Myanmar concluded that serious crimes under international law have been committed by military and security forces that warrant criminal investigation and prosecution. The use of Facebook to spread anti-Muslim, anti-Rohingya sentiment featured prominently in the Mission’s report.

In this context, the commissioning of this comprehensive HRIA is an important new milestone in business efforts to undertake due diligence and respect human rights. Facebook’s decision to publish the report in unredacted form also demonstrates an impressive commitment to transparency and sets an example for other companies to follow.

The challenging human rights context for Facebook and questions about the company’s response have been well-documented by international bodies, civil society organizations, and the media. Given this context, we didn’t want the HRIA to reproduce what was already known—so we asked ourselves, what can we do to help increase human rights protections in the future?

At the basic level, addressing this question meant thoroughly applying the UN Guiding Principles on Business and Human Rights to the letter—identifying and prioritizing Facebook’s actual and potential human rights impacts and making recommendations for how to address them.

However, we concluded that answering this question would require us to be disciplined in two very important ways.

First, it was essential to take an inclusive approach. We consulted directly with over 60 potentially affected rightsholders and stakeholders during two visits to Myanmar by BSR staff, and we made sure that we spoke to as diverse a range of voices as we were able to in the time available. This approach generated very important insights. While many stakeholders—and Facebook itself—emphasized that Facebook’s efforts have fallen short in the past, we witnessed a strong determination from everyone we spoke with, inside and outside Facebook, to address human rights in Myanmar as a matter of utmost importance and urgency. We are hopeful about collaborative efforts, both now and over the long-term.

Second, it was essential to take a distinctly forward-looking approach. Understanding the mistakes and shortcomings of the past established crucial context, but it was important that we focused on forward-looking analysis and recommendations.

This approach led to us make recommendations in five main areas. These recommendations are shaped by the observation that Facebook’s human rights impacts in Myanmar cannot be addressed by Facebook alone, but also require system-wide change:

1. Governance and accountability at Facebook, including human rights policies, formalized governance structures, and public communications.
2. Community standards enforcement by Facebook, such as continuing to build a cross-functional team that understands the local Myanmar context, as well as a stricter implementation of Facebook’s credible violence policy and further development of artificial intelligence solutions that support human decision-making.
3. Engagement, trust, and transparency, such as publishing a local, Myanmar-specific version of Facebook’s Community Standards Enforcement Report and supporting international mechanisms created to investigate violations of international human rights.
4. System-wide change, including advocacy efforts aimed at policy, legal, and regulatory reform and continued investment in efforts to increase digital literacy and counter hate speech.
5. Risk mitigation and opportunity enhancement, such as preparations for the 2020 elections in Myanmar and for the possibility that WhatsApp becomes more commonly used, as well as the development of new products and services that accelerate growth of the digital economy in Myanmar.

Facebook’s blog to accompany the publication of the HRIA described in some detail the company’s stance and current status for each of these five areas.

We believe that the implementation of these recommendations is far more important than the HRIA itself. For this reason, we hope that the publication of the HRIA in full provides three main benefits: first, to provide a clear action plan for Facebook; second, to increase awareness of the human rights approaches available to Facebook and other technology companies engaged in Myanmar; and third, to stimulate further dialogue, collaboration, and solutions.

The report was made possible thanks to the many stakeholders and rightsholders in Myanmar who participated in the assessment process. We encourage everyone interested in the human rights situation in Myanmar to read the report in full, and we look forward to updates from Facebook in the future on its progress implementing the recommendations.

Blog | Friday November 2, 2018

All the Ways to Follow Us at #BSR18

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On Tuesday, we’re kicking off the BSR Conference 2018 in New York City. Over the course of three days, we’ll hear from thought-provoking speakers on how we can create a new blueprint for business. This year’s Conference comes not only at the time of the U.S. midterm elections—the results of which will be woven into conversations throughout the week—but also at a time when cultural shifts, disruptive technology, political divisiveness, and the impacts of climate change are making it even more pressing for us to create a global economy that delivers on the promise of prosperity for all.

It all starts Tuesday evening with opening remarks from BSR President and CEO Aron Cramer and the launch of new scenarios for doing business in 2030, followed by a special presentation and #ThatsHarassment short film screening from actor, director, and producer David Schwimmer and a plenary spotlight with Asher Jay, creative conservationist and National Geographic explorer.

On Wednesday morning, we’ll hear from C-Suite executives—Emanuel Chirico of PVH Corp., Marie-Claire Daveu of Kering, and Beatriz Perez of The Coca-Cola Company—as well as best-selling author Anand Giridharadas. In the afternoon, Novartis Chief Executive Officer Vasant Narasimhan will discuss access to medicine, and a panel of human rights experts—including John G. Ruggie—will highlight the 70th anniversary of the Universal Declaration of Human Rights.

On the final day, New York Times reporter David Gelles will speak to business, politics, and the culture wars, and Etsy CEO Josh Silverman will update us on the company’s impact strategy. We’ll close the Conference with a keynote address from Jodi Kantor and Megan Twohey, the New York Times investigative reporters who broke last year’s Harvey Weinstein story, igniting the #MeToo movement.

Whether you’re joining us in person or online, here are the best ways to follow along:

1. Catch the livestream.

We’ll broadcast most plenary sessions in a live video feed. Visit the livestream registration page to sign up and join in.

2. Get social.

No matter your favorite social media platform, we’ll be there:

• Twitter: We’ll live tweet the entire event from @BSRnews using the hashtag #BSR18. 
  
  
  
   
• Instagram: Follow our Instagram account, @bsrorg, for exclusive, behind-the-scenes looks at the Conference. Post your photos using #BSR18—and don’t forget to tag us!
  
   
• And more: Explore the biggest launches and best photos from the week on Facebook, LinkedIn, and Flickr.

3. Ask questions. 

We’re opening up some of our plenary sessions for questions from Twitter—while you’re watching the livestream, ask our keynote speakers about their experiences using #BSR18.

4. Follow up.

We’ll have videos, wrap-ups, and other content available after the event, so be sure to visit the BSR blog, our YouTube channel, and the BSR Conference website.

Single-day passes are still available, so if you’re in the area, join us! Whether you’re with us in the plenary hall or participating virtually this week, we look forward to hearing your thoughts on #BSR18.

Blog | Monday October 29, 2018

Five Tips for Improving ESG Disclosure in Asia

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The business context for environmental, social, and governance (ESG) impacts is complex and evolving rapidly, challenging companies to manage an increasingly diverse set of risks while adapting to global megatrends such as climate change, automation, and population growth. Through ESG transparency, companies have an opportunity to increase accountability and corporate responsibility and translate this into long-term growth.

In Asia, ESG disclosure has increased, especially in Japan, in part due to the proliferation of reporting policies set by governments. Stock exchanges and regulators are also mandating increased transparency to build investor trust and confidence, particularly in emerging markets. Corporate responsibility reporting has become a valuable tool for increasing ESG disclosure, and Asian companies have made significant progress, posting some of the highest annual reporting rates globally over the past decade, closely behind those in North America and surpassing those in Europe. However, due to a lack of comparable data, depth, and verification, the value of this information to stakeholders has been limited.

Corporate responsibility reporting has become a valuable tool for increasing ESG disclosure, and Asian companies have made significant progress, posting some of the highest annual reporting rates globally over the past decade.

Positively, we are beginning to see change in critical markets. In China, under the revised (2018) Code of Corporate Governance for Listed Companies, entities are required to disclose information on their board and management composition. Those who fail to comply or issue false information will be penalized to protect investor interests.

As these markets continue to mature and grow, so will the role of ESG in securing the sustainability of the region’s transformation. Therefore, now is the time to reflect on the importance of ESG disclosure and consider how data can be collected, shared, and acted on to take advantage of emerging opportunities.

Here are some things to keep in mind as you begin to enhance your ESG profile in Asia:

1. Know your audience: To begin, make sure that you have identified all relevant stakeholders. To do this, map stakeholder groups, engage them early, understand their expectations, and build trust through frequent and informed engagement. For experienced companies looking to enhance their ESG data and communication, focus on the most critical, relevant, and material issues as they relate to your business and your stakeholders.
2. Assess the ‘critical’: Understanding your environmental and social impacts is essential to building an effective governance structure. After an organization has determined its material sustainability impacts and mapped those to business value drivers, it can look to the various sustainability standards and frameworks to guide credible, reliable disclosure.
3. Work smarter, not harder: The foundation of any market is a common language for communication. As the attention around the role and necessity of business in driving solutions to pressing global social and environmental challenges increases, so does the need for greater consistency in company communications on ESG performance. Think about what you want to achieve, know your audience, and determine the smartest approach.
4. Share and compare: Establish a long-term plan, so that investors and stakeholders can understand your vision, goals, and achievements. Demonstrate how sustainability priorities are embedded in business priorities. Provide comparable data to allow readers to benchmark and assess performance, while disclosing procedures and management systems that support.
5. Emphasize value: Reports can be used to develop a purpose and rationale for actions that can be rewarded through internal engagement and brand equity. Increasing the quality and decision-usefulness of the data disclosed allows for greater ESG analysis. Explore opportunities to translate value into clear financial terms.

As companies gain more experience with ESG reporting and sustainability management, the business case for high-quality ESG measurement and reporting systems to enhance stakeholder confidence will become even clearer. While we have seen significant developments in ESG integration and disclosure in Asia over the past several years, opportunity remains to improve quality and enable communication that empowers stakeholders, reduces disruption, and supports sustainable growth.

Blog | Thursday October 25, 2018

Four Reflections on the Human Rights Implications of Artificial Intelligence

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This is part of a series of blog posts BSR has published in 2018 exploring the intersection of disruptive technologies and sustainability.

Over the past few years, the technology industry has been under the spotlight for social, ethical, and human rights issues arising from the rapid development of artificial intelligence (AI). Yet AI will be deployed in almost every sector of the economy—companies in mining, agriculture, healthcare, retail, financial services, or transportation are all exploring how AI can be turned into innovative customer solutions, new business models, and massive operational efficiencies.

This means that human rights teams and decision-makers in non-technology companies will need to engage with the social, ethical, and human rights issues relating to the use of AI in their respective industries.

Given the uncertainty around the deployment of AI, futures methodology can be applied to consider different scenarios and assist companies in identifying their potential human rights impacts of the future.

On October 3, we ran a workshop to assist companies in the exploration of these issues. The workshop did two things: First, it identified the barriers and challenges of applying human rights due diligence practices to new and disruptive technology through industry-specific roundtables. Second, it trained companies to anticipate AI-related human rights issues and take tangible steps toward addressing them through an innovative futures methodology exercise. We specifically engaged non-technology companies, in addition to the ICT sector, to broaden the discussion about the diverse opportunities and risks associated with AI.

Reflecting on this workshop, we reached four main conclusions:

1. AI is becoming increasingly relevant to non-technology companies and should be considered in human rights due diligence processes. Examples like the use of algorithms to assess credit-worthiness in the financial sector, automated purchasing in the retail industry, and the use of AI in connected health demonstrate that the widespread application of AI is slowly transforming almost every company into a technology company. This creates an urgent need to consider whether AI is reshaping existing human rights risks and opportunities or creating entirely new ones. A human rights due diligence process that ignores AI and other disruptive technologies runs a high risk of being incomplete.
2. The questions outnumber the answers. The impact of AI on human rights is uncertain, with a wide variety of potential scenarios. In this context, a practical next step for companies is to broaden the range of questions they ask about potential impacts in the future—even if the answers to these questions are unknown. Some early stage questions may include: Can my company describe whether specific choices or decisions arrived at by AI have impacted the human rights of customers, users, or employees? How could a lack of understanding around the algorithmic decision-making process affect my ability of my customers to understand their rights? Are algorithms discriminating against certain populations—either intentionally or unintentionally? If my company expands operations to new countries and cultures, are the same algorithms and data going to be used to make decisions, and if they are, what are the potential ramifications?
3. A human rights due diligence and futures methodology “mash up” has potential. Futures thinking, strategic foresight, and scenario planning methodologies have been in existence for many years, as have human rights due diligence methodologies. However, to our knowledge, the two methodologies have not been combined since the publication of the UNGPs. Given the uncertainty around the deployment of AI, futures methodology can be applied to consider different scenarios and assist companies in identifying their potential human rights impacts of the future.
4. Industry-wide human rights impact assessments could be a way to increase the capacity of entire industries to address AI and human rights. While the tech sector is actively engaged in the task of incorporating human rights into the design, development, and deployment of AI, other industries also have work to do. Working with industry peers to identify human rights impacts, risks, and opportunities will allow for shared learning and support efforts at individual companies to address the human rights impacts of AI.

As we move into 2019, BSR will continue to prioritize the connection between disruptive technology and human rights, and we will endeavor to put these industry explorations at the forefront of our agenda.

Blog | Wednesday October 24, 2018

Millennials, Gen Z, and the Future of Sustainability

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In the 2018 BSR/GlobeScan State of Sustainable Business survey, we learned that corporate reputation remains the number one driver of sustainability efforts at BSR member companies. Consumer/customer demand came in second; yet many sustainability leaders believe there is room for improvement in their communications about their sustainability efforts to these groups.

Investments in more sustainable products and a more coherent sustainability narrative are likely to pay increasing dividends: As millennials (born between 1981 and 1996) and Generation Z (born between 1996 and 2011) become a more and more influential consumer group and employee demographic, the demand for sustainability is likely to increase.

An entire blog post—and then some—could be written about the differences between these two generations. Yet many of the business implications of their increasing influence are the same.

Specifically, these two groups, more than older generations, highly value two things:

1. Meaningful work
2. Products that align with their values

As millennials and Generation Z become a more and more influential consumer group and employee demographic, the demand for sustainability and purpose is likely to increase.

This presents major opportunities for sustainable business. Here are two ways that you can realize them.

1. Invest in and communicate about your sustainability programs to support employees’ desire for meaningful work.

Study after study has shown that purpose is what both attracts and keeps younger workers. This is a huge opportunity for companies that are hoping to hire and retain the next generation of talent: Millennials became the largest generation in the labor force in 2016, and they will make up 75 percent of the global workforce in 2025.

Unfortunately, only a minority of millennials believe that businesses behave ethically and business leaders are committed to helping improve society, the 2018 Deloitte Millennials study found. Gen Z and Millennials both cited “being a good employer” as the number one CSR issue they care about, consistent with the general population, but more than older generations, they seek out employment at companies that demonstrate a commitment to responsibility.

In one survey, three quarters of millennials indicated they consider a company’s social and environmental commitments in deciding where to work, and two thirds said they would not accept a job somewhere without a strong sustainability program.

We learned in the BSR/Globescan survey that although many companies speak about employee engagement and recruitment as a primary benefit of sustainability efforts, less than 20 percent of company respondents saw it as a top-three driver of their programs.

However, some companies, like Workday, are investing in becoming desirable places to work for younger employees. Millennials make up 53 percent of Workday's almost 9,000 employees today. The company has “anchored its culture in research on generational differences,” which has included creating career development opportunities for employees, collecting data on employee engagement, building green teams, and placing a high priority on a giving its people a sense of purpose.

This appears to be paying dividends. The organization, ranked fourth on the 2018 “100 Best Workplaces for Millennials” list, has reported 35 percent revenue growth over the past three fiscal years and an 80 percent retention rate for its new-hire program for recent college grads.

2. Take a position on social and environmental issues—and make sure it’s consistent with your actions.

In a recent LIM College study, almost 90 percent of respondents agreed, “Millennials and Gen Z will help create more sustainably-produced products by convincing businesses and governments to alter existing practices.” In other words, these consumers are creating demand for sustainable products, from clothing to home goods to cars.

Moreover, Cone Communications found that Gen Z, which will account for 40 percent of all consumers globally by 2020, is the generation most likely to believe that companies should address urgent social and environmental issues: 94 percent of those surveyed said so (compared to 87 percent of millennials).

This isn’t limited to products, either. It also applies to a brand’s approach to social justice issues. As synthesized in a recent issue of Above the Bottom Line, FleischmanHillard’s latest research reveals that two thirds of U.S. consumers and 80 percent of U.K. consumers say they have stopped using products or services because the company’s response to a certain issue doesn’t align with their views.

The same research suggests that approximately 60 percent of consumers expect companies to speak up on important issues, even if those same consumers don’t agree with the companies’ positions—and this is true for 75 percent of millennials.

As millennials and Gen Z make up a larger and larger proportion of consumers around the globe, companies will increasingly need to be prepared to take a position on social debates and back it up with action.

It’s worth noting, however, that our recent Polecat research suggests that consistency in public policy efforts and overall positioning isn’t only important for people born after 1981: This issue ranked second as a priority for the public overall in our scan of social media conversations.

Millennials and Gen Z are already changing what is expected of business, and resilient companies are addressing this reality now through investments in sustainability, integrity, and advocacy.

If you’re interested in hearing about the future of sustainable business directly from a few of the millennial leaders who will bring it to life, join us at the BSR Conference 2018 in New York City November 6-8.

Blog | Tuesday October 16, 2018

The Future Is on the Agenda at BSR18—Will You Join Us?

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This year’s BSR Conference comes at a time of profound change. Market conditions are turbulent. Around the world, poverty rates continue to fall—at the same time, inequality continues to grow.

Technology is sparking both utopian and dystopian views of the future. Culture is also changing fast, not least through the #MeToo movement. And just last week, the latest report from the Intergovernmental Panel on Climate Change reveals that despite many important initiatives, the world is not taking sufficient action to avoid seriously damaging climate change.

It is almost certainly the case that these changes, many of which are intertwined, will only grow in pace and intensity in the years ahead. What is a business to make of all these changes, and how can companies navigate our era of intense, inter-connected, non-linear change?

What is a business to make of all these changes, and how can companies navigate our era of intense, inter-connected, non-linear change?

At the BSR Conference 2018, we will be unveiling scenarios that can help you and your company make sense of the evolving world over the coming years and decades. These are not predictions of what the world will be like in 2019 or 2028. Rather, they aim to illuminate the underlying forces that are creating the market and social framework in which business will be operating.

Specifically, the scenarios revolve around two fundamental questions:

1. What forces of centralization and decentralization will define our culture, economy, and political context?
2. Will the world continue to rely on familiar, consumption-led economic models or shift to a new economic model that defines value in a more holistic way?

There is no single answer to these questions. Instead, we will present four scenarios that anticipate how these crucial questions could play out by 2030.

These scenarios tell stories of how our world might evolve, with important implications for business.

This is no academic exercise. Each of our four scenarios explores core elements of the sustainable business agenda: the shape of supply chains, availability of natural resources, and nature of employment, as well as product and service development, health, and energy and climate. In this way, the scenarios will enable planning and decision-making central to the achievement of the social, economic, and environmental outcomes crucial to business and embedded in the Sustainable Development Goals and the Paris Agreement.

These scenarios will be unveiled on the opening night of the Conference. But they are intended to live well beyond that: We hope that these scenarios will be widely used throughout the BSR network to consider how business can shape strategies that will thrive, regardless of which scenario, or hybrid of these scenarios, ultimately defines the coming decade.

As we continue in our effort (launched at last year’s BSR Conference) to redefine sustainable business, we aspire to drive the agenda forward with this year’s event. As ever, the Conference will facilitate new partnerships and collaborations through networking opportunities with participants from around the globe. It will present insights and inspiration from a diverse array of speakers from the private sector, civil society, government, academia, and elsewhere.

We will explore the ways that leadership is practiced in our fast-changing world. Our sessions will offer both provocative thinking to change how you think about sustainability in the long term and practical insights you can use the following week.

If a truly just and sustainable world is our desired endpoint—and it must be—then the scenarios we will introduce can help companies and business leaders across sectors understand the changing conditions on the journey toward that goal.

We look forward to welcoming you to New York and to joining with you to make the most positive possible future our new reality.

Blog | Monday October 8, 2018

Four Ways to Enhance Your Materiality Assessment

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The world is changing, with massive implications for business strategy and value creation. Whether it is new energy systems, disruptive technologies, new business models, changing demographics, hyper-transparency, or rising geopolitical uncertainty, the operating context for companies is evolving.

We believe the best response to address our changing world is not to continue integrating sustainability into company strategy, but to develop a completely new way of designing business strategy and creating value. As many sustainability practitioners will tell you, materiality is critical to establishing and refining your company’s approach to sustainability and environment, social, and governance (ESG) issues. Sustainability is a broad and evolving concept: A materiality assessment prioritizes the most important issues and topic areas for your company, helping you develop and refine your sustainability strategy and external reporting.1. 

The relationship between materiality and financial reporting, risk, or issue management not always clear to the core business, which is likely related to the historic separation of sustainability and business strategy. To create a more resilient business strategy with sustainability at its core, here are four ways to enhance your materiality process:

1. Leverage Data Analytics and Artificial Intelligence

BSR partners with reputation intelligence firm Polecat to incorporate big data into materiality. This approach enhances the materiality process by providing data-driven insight on public perceptions of key ESG issues in your company and industry to inform prioritization. Polecat’s MeaningMine can identify stakeholder segments, like Tier 1 media, investors, and NGOs; consumer segments; and language-based regional segments to identify the most prominent issues for each. Used as a supplement to qualitative assessment inputs, such as interviews, big data strengthens the output of the materiality assessment by expanding your external reach, allowing for a more robust sense check of initial findings, illuminating risks and issues of most concern, and identifying emerging issues.

2. Conduct Regional Assessment

Sustainability/ESG priorities can vary significantly by region, which means globally focused assessments may not always capture the nuances of regional or market-specific expectations. This is particularly true for international companies with diversified business portfolios and regional business units. For example, a recent assessment with a member company revealed that terrorism and security was an extremely high priority for its operations in the Middle East, though this was not a priority at the global level. Similarly, topics like diversity and inclusion, genetically modified organisms (GMOs), and automation typically see varying prioritization by region due to regional legislation, public sentiment, and broader business action. A regional approach to materiality can help provide nuance and inform human and financial resource allocations to address priority issues. Moreover, engaging with your regional teams through the materiality assessment is an excellent way to gain buy-in and drive interest and internal support for both the assessment itself and sustainability/ESG more broadly.

3. Future-Proof

While materiality is undoubtedly useful, it is a static assessment, typically only capturing your company’s present priorities. Priorities can gradually change over time, or they can shift rapidly and unexpectedly—as we have seen with the recent increase in concern over corporate integrity and diversity—making your sustainability strategy unforeseeably obsolete. Resilient strategies must consider the disruptive trends, unintended consequences, and residual impacts that may affect them in the future. We have collaborated with various member companies in scenario-planning workshops to test current and emerging material priorities against various future scenarios. As one interviewee for our recent report, Redefining Sustainable Business: Management for a Rapidly Changing World, told us, “Scenario planning is not a prediction of the future, but a way to understand how our business would look in a new environment and to test the resilience of the business in the future.” Future-proofing helps to identify highly dynamic issues, critical uncertainties, and likely strategic implications for sustainability and the business.

4. Align with Enterprise Risk Management (ERM)

Incorporating sustainability into ERM is an increasing focus for companies, as it offers a tangible pathway to integrate sustainability priorities into the business. Materiality is often misunderstood and undervalued by the business and can be confused with enterprise risk. ERM can also be limited, as it tends to focus on short-term risks that are measurable and manageable. We can help you align your sustainability and risk management frameworks and incorporate risk-oriented sustainability priorities into ERM. This alignment can help your company improve its risk processes to better manage cross-cutting, significant long-term risks like climate change.

Scenario planning is not a prediction of the future, but a way to understand how our business would look in a new environment and to test the resilience of the business in the future.

These new approaches to materiality are not mutually exclusive: They can all be incorporated into your materiality assessment to help your company more effectively anticipate and manage priority issues and risks. If you’re interested in learning more about how to leverage them for your sustainability work, please contact us or join us in New York this November at the BSR Conference.

Blog | Monday October 1, 2018

Are Companies and Stakeholders Focusing on the Same Sustainability Priorities?

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This year, we conducted our 10th annual survey on the State of Sustainable Business in collaboration with GlobeScan. This year’s results show that the line between sustainability issues and mainstream business issues is increasingly blurred as businesses experience the consequences of social and political disruption in a rapidly changing world.

This conclusion is most striking when we look at this year’s top priority issues, both included for the first time this year to capture changes in the business landscape. These are ethics/integrity (high priority for 76 percent of companies) and diversity/inclusion (high priority for 71 percent of companies). While ethics has traditionally been regarded as the domain of the compliance function and diversity/inclusion has primarily been seen a human resources issue, sustainability practitioners rank these issues at the top—suggesting, at minimum, that they are coming to be considered priorities from a holistic, organizational perspective.

Our member companies also told us that they view corporate reputation as the primary driver of their sustainability efforts, at a time when public trust in business continues to decline. In response to this, we worked with our big data partners at Polecat to understand whether companies are correctly prioritizing the issues that are most relevant to their reputations: Specifically, we looked at online news and social media conversations around the business practices of 4,000 global companies across sectors.

In online media reporting across the board, the top two priorities were (1) ethics and integrity and (2) diversity and inclusion, with climate change, water, and community health following closely behind. This seems to suggest that company priorities are highly aligned with issues in the news.

While human rights is not explicitly called out separately as a high priority in online media, each of the top five priority issues that emerged (listed above) has a strong human rights component. Journalists seem to be increasingly focused on the impact that business has on communities and other stakeholders.

We also used Polecat to track social media attention toward business—a more direct reflection of which issues the public is focused on than online media reporting affords. On Twitter and other social media sites, people are overwhelmingly focused on questions of corporate ethics and integrity, even more intently than in online media.

The second-highest concern for the public was corporate influence over public policy—arguably a corporate integrity issue. In recent years, scrutiny over lobbying and political financing has mounted dramatically. Indeed, the level of social media attention to this issue eclipses concerns about such topics as company approaches to diversity, climate change, and water.

This finding indicates that, for all the concern over reputational risk, companies may not be ready to address the public’s more challenging questions about interaction with policymakers, as well as what is perceived as the undue influence exercised by business. Given recent increases in transparency and business activism on social issues, it is likely that scrutiny of how corporate rhetoric aligns with corporate political spending will continue. BSR also considers it highly likely that questions about good jobs and tax avoidance will, over time, become more central to public understanding of what it means to be an ethical company.

Overall, despite some obvious gaps, companies generally seem to be paying attention to the issues of greatest potential reputational impact. The next question is how they should organize themselves to respond.

Approaches to diversity and integrity pose big questions for an entire organization, not just the sustainability function. While this year’s survey results show that three-quarters of practitioners are working to better integrate sustainability issues into strategic planning, it also indicates that they have had limited success so far. Corporate communications, procurement, and public affairs continue to be the internal areas in which sustainability has the most traction, though fewer than half of respondents deemed their organization’s communications on sustainability effective at present.

Overall, the 2018 State of Sustainable Business results give reason for both optimism and caution when considering how prepared business is to respond to disruptive trends. Companies are clearly hearing concerns. However, they are still focused on messaging, reputation management, and on the symptoms—rather than the root causes—of reputational risk.

Finally, companies are realizing that most of the profound challenges they face require alignment and collaboration across the organization. This has led directly to our focus at BSR on exactly how and when to collaborate with key functions across the organization, as well as our reframing of the sustainability practitioner’s role as that of change agent, futurist, and builder of coalitions.

Blog | Thursday September 27, 2018

From the Global Climate Action Summit to UNGA Week

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Over the past couple of weeks, the New American Road Trip traversed the United States, with zero emissions vehicles making the trek from the Global Climate Action Summit to UNGA/Climate Week in New York City.

These events come at a crucial time. The intersection of business and society is a busy place. Companies are navigating a complex set of profound changes: the related challenges of urgent climate action, erosion of human rights protections, and innovations reshaping the world of work, not to mention ongoing reminders of the need to ensure that women are able to thrive in society without fear of discrimination, or worse. All this comes when faith in business and the global economy remains low, and when the competitive pressures in a changing economy are intense.

The New American Road Trip reminds us of the opportunities that all this change is creating for companies that dive headlong into the future. Crossing North America in an EV that didn’t require hourly recharging was unimaginable a decade ago and has shown how even our most familiar cultural icons are being remade.

The Global Climate Action Summit two weeks ago served a very important purpose. As intended, the Summit catalyzed a number of significant new climate commitments. More businesses—now nearly 500 in all—have committed to science-based targets; nearly a 40 percent increase from the number a year ago. A coalition of foundations committed US$4 billion in new commitments to combat climate change. And the lead Summit host, California Governor Jerry Brown, committed his state—the fifth biggest economy in the world if it were a nation-state—to achieving 100 percent climate neutral power by 2045. No entity of such size has made such an audacious commitment to date.

Crucially, the human dimension of our changing climate was also at the core of the action in San Francisco. We welcome this: BSR has released four reports that explore the intersection of climate and other sustainability issues: supply chain management, health, inclusive economies, and women’s empowerment. We also launched, along with Mars and Coca-Cola, the Climate Resilient Supply Chain Leaders Platform, which will grow in the coming months as large global companies aim to engage their business partners in creating business solutions—and human protections—in light of a less predictable operating environment.

I also had the opportunity to explore the human dimension of climate change in dialogues organized by the B Team with leaders from business, labor, and civil society, as well as other changemakers, to ensure that the just transition is firmly on the climate agenda. Attention must be paid to those displaced by the clean energy transition.

Action to address the social impacts not only of climate, but of the other massive changes remaking our world, will be essential if we are to reach the Sustainable Development Goals.

Action to address the social impacts not only of climate, but of the other massive changes remaking our world, will be essential if we are to reach the Sustainable Development Goals (SDGs); however, I always approach UNGA Week with a bit of a divided soul. While it is inspiring to be in the company of a global community committed to the vision of the SDGs, it is equally concerning that we seem to be speaking primarily to ourselves at a time when there is massive discontent and such a lack of public trust. For the sustainability agenda to resonate outside the community of people who come to New York this week, it is essential that it deliver economic opportunity for those who are being left behind by the many changes remaking the economy.

For global companies, this means going beyond discussions of the future of work to the creation of solutions. There is both an imperative to address those living in poverty and a need for commitments to economic opportunity and security in the global north. The productivity gains coming from technology and innovative business models will not come to full fruition if they don’t also address the needs for skill development, basic social protections, and lifelong learning.

The New American Road Trip was a great way to remake a 20th century social ritual. But the question before us is bigger than that. In light of the many changes redefining the economy, from climate to technology to longer lifespans, we need to redefine the social contract, and business has a crucial role to play in this.   

The innovators that answer these questions will define the 21st century, and the time has come for us to do so.

In New York, there is increased recognition of this need, which I find encouraging, but there is not yet enough of a commitment to next steps. The SDGs remain front and center for all of us who are here, and there is growing recognition of the link between economic security and climate action. But it is what we choose to do after we leave that will determine the extent to which we are able to make our ambitions a reality.