Search Results

Blog | Wednesday July 25, 2018

How Do We Solve the Plastic Waste Puzzle?

Preview

In May 2018, public and private sector representatives with a stake in plastic gathered in Hong Kong to discuss collaborative solutions to reduce plastic waste in Asia Pacific, including plastic design, technology, financing, infrastructure, and consumer behavior. The dialogue—hosted by The Coca-Cola Company and Swire Beverages and moderated by BSR—resulted in six recommendations for business action to address one of the most salient challenges facing the world today: plastic waste.

Over the last few decades, plastic has made life easier for many of us. It is durable and relatively inexpensive, and in many cases, plastic devices like IV bags and syringes have saved lives. However, the plastic production rate has skyrocketed—half of the plastic ever made has been produced in the past 15 years, and globally, only 9 percent of all plastic has been recycled. Approximately 150 million tons of plastic is currently floating in our oceans, and it is accumulating at a staggering rate—9 million tons per year.

Thus far, efforts to reduce waste have been flawed or insufficient. There are several obstacles to recycling plastics, including inadequate sorting processes, lack of recycling infrastructure, and limited financing. Given these challenges, as well as the range of actors involved—from manufacturers and food and beverage companies to waste collectors, consumers, and investors—the waste problem looks like a jigsaw puzzle. However, through combined efforts by all the stakeholders involved, it is one we can—and must—solve.

Focusing on the marine litter problem is treating the symptom of plastic waste, not the cause. For the time being, one of the most important steps to addressing plastic waste is to prevent plastic from becoming waste in the first place by ensuring it is recycled. To increase recycling rates, a key mindset shift is required: understanding that plastic is a commodity.

Commodities exist within markets, and right now the plastics recycling market is functioning well below its potential. This is especially the case in the Asia-Pacific region. Lacking supranational waste management regulation like the EU, APAC countries produce more than 60 percent of all the plastic that enters the oceans. In addition to the lack of regulation, many markets have insufficient recycling capacities, a weak supply of recyclable plastics due to inconsistent or suboptimal design of plastic products, poor recycling practices, and low demand for recyclable plastics resulting from the high cost of recycling versus the often lower cost of virgin (unused) plastic.

For many stakeholders, recycling plastic just isn’t worth it. It’s time we change that mindset and improve the system.

While business is just one piece of a puzzle that involves civil society, academia, and government regulation, businesses both small and large have an immediate opportunity to drive action. There are six feasible and realistic actions that businesses across the plastics value chain, and particularly in Asia Pacific, can take to help prevent plastic from becoming waste:

1. Generate baseline data on plastic use and recycling and recovery rates.
2. Innovate with alternative or zero packaging, new types of distribution, and consumer incentive schemes.
3. Consider setting voluntary standards on plastic design, which can increase the supply and commodity value of recyclable plastic material.
4. Establish cross-/inter-industry and public-private partnerships.
5. Inspire governments, investors, and SMEs to invest in waste reduction solutions through commitments on plastic use.
6. Create corporate green loans, bonds, and other financing mechanisms to stimulate the recycling industry.

What can this look like in practice? The Hongkong and Shanghai Hotels, the owner and operator of The Peninsula Hotels, announced a ban on plastic straws in its operations around the world by November 1, 2018. It’s the organization’s first step toward a broader commitment to transition away from single-use plastics by 2020. Additionally, a number of companies, including The Coca-Cola Company, The Dow Chemical Company, and PepsiCo have backed a US$150 million fund for solutions to the global ocean plastics problem, with a focus on recycling infrastructure investment in Southeast Asia, as part of a wider initiative called Circulate Capital.

While plastic waste should be considered a commodity market challenge, this does not mean that non-business actors don’t also have a role to play.

• Governments can set regulations on plastic composition and design to improve recyclability and support the plastics recycling industry through subsidies, tax cuts, and the provision of long-term, low-cost land for infrastructure.
• Civil society can support public awareness campaigns to educate consumers on the importance of plastic recycling; it also has an important role to play in advocating for regulatory change.
• Academia can produce localized research to inform national plastic policies and support government decision-making.
• Multilateral development banks and agencies can earmark funding for waste management infrastructure, as they have done for renewable energy in the past, particularly in low- and middle-income countries.

Keeping plastic out of landfill, the oceans, and the riverways is undoubtedly a complex task, with many entrance points, perspectives, and approaches. But now, with the global, political momentum on plastic waste, is the time for all actors to take action.

Read our full report on this issue, What Can Business Do to Prevent Plastic from Becoming Waste in Asia Pacific?, and get in touch with us if you’d like to learn more.

Reports | Wednesday July 25, 2018

What Can Business Do to Prevent Plastic from Becoming Waste in Asia Pacific?

Preview

Unfortunately, efforts to date to reduce plastic waste have been flawed or insufficient, and, as a result, there are approximately 150 million tons of plastic floating in our oceans today. This report aims to provide all actors with a stake in plastic with a primer on plastic waste and recycling in Asia Pacific and a set of realistic and feasible recommendations for businesses on what they can do to prevent plastic from becoming waste. It was developed in consultation with representatives from the private and public sectors, civil society, and academia.

Keeping plastic out of landfills, the oceans, and the riverways is undoubtedly a complex task with many entrance points, perspectives, and approaches. With global momentum on eliminating plastic waste, now is the time for stakeholders to act.

Blog | Monday July 23, 2018

How to Implement the TCFD Recommendations to Enhance Your Company’s Resilience

Preview

Climate change is one of the defining challenges of our era. The complex impacts it unleashes will produce significant new risks and opportunities for business. The Task Force on Climate-Related Financial Disclosures (TCFD) has called on all public companies to report on climate risks and how they address them in mainstream financial filings.

Since climate risk is systemic and applies across all sectors, the TCFD recommends that companies with annual revenues over US$1 billion report climate risks in non-financial reports in preparation for the day when these systemic risks become material. Engaging with the TCFD recommendations today serves two purposes: (1) reporting to external stakeholders and (2) creating resilient business strategies through scenario analysis.

On the first front, the TCFD recommendations bring a great benefit to sustainability practitioners by potentially unifying the fragmented landscape of climate reporting, with alignment with CDP, GRI, and SASB underway. Over 290 companies and organizations now publicly support the recommendations; 18 companies have expressly committed to implement them as fully as practicable over the next three years.

But it is the second purpose—the development of resilient business strategy through scenario analysis—that gives the most added value for companies engaging with the TCFD.

"The TCFD recommendations do an excellent job of helping an organization evaluate and communicate the risks associated with a changing climate,” said Bruno Sarda, VP of Sustainability at NRG Energy. “Beyond risk mitigation, the use of scenario analysis can help an organization identify opportunities to bolster its strategic resilience and relevance, ensuring that it can thrive not only today, but well into the future.”  

Scenario analysis has been used for decades by business and government to improve decision-making under conditions of uncertainty. Rather than basing decisions on single-point forecasts, under scenario planning, companies consider a set of plausible alternative futures to shape more adaptive and resilient strategies.

While we can increasingly predict the aggregate physical impacts of climate change, the secondary and tertiary impacts are inherently challenging to model. For example, it is highly plausible that drought and extreme weather events will cause large-scale human migration with destabilizing sociopolitical impacts—but this is not something that can be predicted with accuracy. Given how consequential these cascading impacts will be, business should use scenario analysis to start considering them now.

Here are our suggestions for how companies can implement the TCFD recommendations to both engage with stakeholders and improve their strategies.

1. Approach scenario analysis primarily as an opportunity to improve strategic resilience

The primary objectives of climate scenario analysis should be to grapple with the uncertainty of climate impacts, challenge a company’s own potential blind spots about the future, and modify business strategies to make them more robust and resilient. We believe firms should disclose the scenarios they are using, key assumptions contained in those scenarios, and information about plausible risks and opportunities for the business. At the same time, disclosure should not prevent an honest and challenging internal appraisal of business strategy.

As the EBRD and the Global Centre of Excellence on Climate Adaptation state, “the ultimate objective in disclosing the use of scenarios is to build investor confidence that a company is meaningfully engaged on the topic of climate change, that it is looking at a broad range of outcomes and is responsive and proactive, rather than defensive and reactive.”

2. Consider a broad range of climate risks and opportunities

We urge companies to take an expansive view of the potential risks and opportunities they may face. While much of the initial conversation around the TCFD recommendations has emphasized transition risk faced by companies in high-emitting sectors should emissions be reduced along a 2°C scenario, equal consideration must be given to the physical risks of climate change, which will be highly disruptive even if warming is held to this level.

Many of the most profound challenges associated with climate change lie in the cascading social, economic, and political changes that will result from physical impacts and are inherently hard to model or quantify. For example, climate-driven human migration, political conflict, economic dislocation, and changing disease patterns will have major implications for society and business. Scenario analysis offers an important opportunity to think about those risks and opportunities that are not easily built into current models.

3. Use scenarios tailored to the business and leverage data from diverse sources

Finally, although comparability in financial disclosures is important, scenario analysis is most effective when tailored to the specific circumstances of an individual company. An energy company may be most concerned about the uncertainty of inbound climate regulation, whereas a consumer products company may be most focused on the uncertainty of physical climate impacts on its agricultural inputs.

Each source of information, including the IEA’s New Policies Scenario and Sustainable Development Scenario, has its unique strengths and limitations. Were all companies to use the same scenarios, based on the same assumptions, they could inadvertently create the kind of economywide risk the TCFD recommendations seek to prevent. Using a diverse set of scenarios reduces the possibility that everyone will be wrong in the same way.  

While we agree companies should include at least one scenario that correlates with a 2°C world and another with a higher-temperature world, they should choose scenarios that play out the critical uncertainties that are most relevant to their businesses. It is important that these be plausible and challenging in grappling with the uncertainty of systemic climate risk and do not provide a false sense of security by ignoring the potential for disruption.

The ultimate purpose of the TCFD recommendations is to better prepare the private sector to understand and prepare for the uncertain impacts of climate change. Businesses should approach implementation not merely as a disclosure exercise, but as an important opportunity to enhance their strategic resilience.

If you’d like to discuss this in greater detail, please join us on July 26 at the Japan Conference on the TCFD Recommendations.

Blog | Thursday July 19, 2018

How Luxury Can Lead the Future of Sustainable Business

Preview

When luxury leader Chanel published its full-year earnings alongside its first sustainability report at the end of June, the company made a bold move to leave behind the discretion that has characterized it for decades and instead embrace greater transparency. This change signals disruption in the industry, and there is much more to come. While disruption can create challenges, it also offers great opportunity for businesses to become more resilient and ensure strong future growth.

Companies across industries are facing major challenges that, left unaddressed, will have an impact on the resilience of existing business models. These challenges—climate change and biodiversity loss, new technologies and automation, and rising economic inequality—have specific implications for the luxury sector. Climate change and biodiversity loss are affecting the supply of precious raw materials, as well as the resilience of the sector’s infrastructure; new technologies and automation are redefining the manufacturing process, retail experience, and nature of work; and rising economic inequality means luxury brands will need to re-affirm their value, particularly in emerging markets.

Given the luxury sector's role as influencers and trendsetters and its reliance on well-functioning ecosystems, what is the role of luxury to enable and help drive environmental and social progress?

BSR’s Responsible Luxury Initiative (ReLI) is today launching a new report that offers a roadmap toward a resilient luxury sector and highlights three opportunities for luxury companies to invest in future success. The report, Disrupting Luxury: Creating Resilient Businesses in Times of Rapid Change, was developed in coordination and dialogue with ReLI members, who include Cartier, Chanel, Harvey Nichols Group plc, The Hong Kong and Shanghai Hotels Limited, IWC Schaffhausen, Kering, LVMH Moët Hennessy – Louis Vuitton S.A., Michael Kors Holdings Limited, mytheresa.com, OTB, PVH Corp., Ralph Lauren, Richemont International S.A., Swarovski, and Tiffany & Co.

The three opportunities for luxury brands that we have identified in the report are to engage in the circular economy, contribute a positive impact on society, and strongly articulate value to all stakeholders.

Engage in the Circular Economy

Luxury companies can engage in the circular economy, a system that endeavors to protect resources by using less, wasting less, and recycling more, in the following ways:

• Adopt regenerative sourcing practices and invest in the restoration of important ecosystems to ensure the availability of precious raw materials derived from nature, such as wool, leather, exotic wood, cashmere, and rare essential oils.
• Expand product life cycles by sourcing recycled and upcycled materials for products and by designing new business models that enhance the value of luxury products through giving them many lifetimes.
• Build on existing collaborative relationships with key suppliers to identify, catalyze, and support innovation in materials and processes. 

Contribute a Positive Impact on Society

Luxury companies can use both their core business strategies and philanthropic agendas to contribute a positive impact. They can undertake the following:

• Further support social and environmental progress by assessing how products and services affect society and the planet and using complementary business and philanthropic strategies to address key issues.
• Use the power of their brands to promote cultural change toward gender equality and thereby contribute to women’s empowerment; focus on empowering women in luxury supply chains.
• Help ensure that people working in their value chains receive a fair wage and provide training for workers to give them the skills they will need for future jobs.

Strongly Articulate Value to All Stakeholders

Luxury companies can prepare for transparency and better engage investors and consumers on environmental and social progress in several ways:  

• Set a new standard for transparency by providing more details about how their business practices affect the environment and local communities.
• Capture the attention of shareholders who are interested in sustainability and looking to invest in companies that create long-term value.
• Engage consumers more deeply on a new value proposition for luxury that fully integrates sustainability.

These opportunities do not encompass everything that luxury companies must do to be more resilient and sustainable. Like all businesses, they should look to global frameworks, like the Paris Agreement and the UN Sustainable Development Goals, for guidance on fundamental practices.

However, these recommendations offer a luxury-specific perspective on resilience that builds on the sector's specificities and strengths, such as close relationships with suppliers, the ability to experiment with more flexible manufacturing capabilities than mass-produced goods, and a traditionally long-term view of business focused on preserving heritage and brand equity. 

Implementing these opportunities will allow luxury companies to become a model for other sectors, demonstrating how social and environmental sustainability can fuel future growth, drive innovation, and strengthen brand equity.

If you would like to learn more about the Responsible Luxury Initiative, please contact us.

Reports | Thursday July 19, 2018

Disrupting Luxury: Creating Resilient Businesses in Times of Rapid Change

Preview

Companies across industries are facing major challenges that, if left unaddressed, will have an impact on the resilience of existing business models. These challenges—climate change and biodiversity loss, new technologies and automation, and rising economic inequality—have specific implications for the luxury sector.  

Climate change and biodiversity loss are affecting the supply of precious raw materials, as well as the resilience of the sector’s infrastructure; new technologies and automation are redefining the manufacturing process, retail experience, and nature of work; and rising economic inequality means luxury brands will need to re-affirm their value, particularly in emerging markets. Given the luxury sector's role as influencers and trendsetters and its reliance on well-functioning ecosystems, what is the role of luxury to enable and help drive environmental and social progress? 

This report from BSR’s Responsible Luxury Initiative offers a roadmap toward a resilient luxury sector and highlights three opportunities for luxury companies to invest in future success. 

Blog | Tuesday July 17, 2018

Join Us to Empower 1.6 Million Women Workers through HERproject by 2022

Preview

The products and services that keep our societies advancing depend on interconnected economies and global supply chains. Often, if you follow these chains to their very end, you will find women in factories or on farms: Approximately 200 million women work in global supply chains. From Bangladesh and China to Kenya and Ethiopia, women are at the heart of the production of many of the clothes we wear and much of the food we consume.

Yet these women face specific systemic discrimination and inequality that make their lives harder—and that weakens the supply chain. This inequality exists both inside and outside the workplace. For example, a man with the same experience and educational background can expect to make 41 percent more than his female counterparts in the garment industry in Bangladesh. Meanwhile, women in MENA and South Asian countries do 80-90 percent of the total unpaid care work.

BSR's HERproject is based on the belief that women can be powerful agents of change to address these inequalities. When low-income working women are empowered to make and act on choices they value, they can change their workplaces, communities, and societies for the better.

Through discussions with our global brands and partners, we have developed a new vision and model for empowering women in global supply chains. The aim of our new HERproject strategy is ambitious: With our partners, we will double our impact and improve the well-being, confidence, and economic potential of ​1.6 million women workers by 2022.

The aim of our new HERproject strategy is ambitious: With our partners, we will double our impact and improve the well-being, confidence, and economic potential of ​1.6 million women workers by 2022.

Over the last 10 years, we have brought together global brands, their suppliers, and local NGOs to deliver workplace-based interventions on health, financial inclusion, and gender equality. Having worked with over 60 brands in 14 countries to empower over 800,000 women, HERproject has become the largest workplace program devoted to unlocking the potential of women workers in global supply chains. 

We are proud to have stood with inspirational—and powerful—women around the globe as they drive major change in their own lives as well as in the lives of their colleagues, families, and communities.

But we don’t believe in standing still. The supply chains we work in are constantly evolving; the lives and conditions of women are not static, and neither is HERproject.

To implement our strategy, we are asking brands to make a major commitment to women’s empowerment. Through HERproject, we would like to work with our partners and help them to:

• Integrate women’s empowerment into their sourcing practices​;
• Support and recognize suppliers to make progress on women’s empowerment;
• Work toward a greater level of integration and buy-in at the supplier level; and​
• Collaborate with peers and key stakeholders to set the agenda for improved outcomes for women in global supply chains.

We would also like committed brands to work with us to enhance the visibility of women workers in global supply chains through their collective reach and influence​. We commit to help brands speak up, louder and more frequently, for the rights and welfare of these women in global policy debates.

It’s time for all of us to up our game and aim higher. For genuine change for women in supply chains, we need to commit and collaborate. Our new strategy outlines a pathway for us to achieve our vision together: empowered women, dignified work, better business.

We look forward to deepening our engagement with our existing partners and to welcoming new partners to these efforts. To learn more about these possibilities and to discuss your involvement with HERproject, please contact us.

Reports | Tuesday July 17, 2018

Resilient Business, Resilient World: A Framework for Private-Sector Leadership on Climate Adaptation

Preview

Climate change represents a material risk to the private sector with profound implications across companies’ operations, in their supply chains, and in the vulnerable communities in which they operate. For the past three years, the World Economic Forum’s annual Global Risk Report has ranked climate risk high-priority in terms of both likelihood and impact. From extreme weather events, like hurricanes, flooding, and drought, to longer-term events like sea-level rise, the private sector faces a host of physical climate-related events that create risk on various aspects of the value chain. And yet, companies have the capacity to be powerful agents of climate resilience across society—if properly equipped with a comprehensive diagnosis of climate risk and tailored strategies for enhancing adaptive capacity to the effects of climate change.

This report assesses and consolidates the best available knowledge from natural and social science in the field of climate risk and resilience to present an accessible and actionable framework for private-sector leadership on climate change resilience inside individual companies, across complex global supply chains, and within frontline communities vulnerable to climate impacts.

Blog | Monday July 16, 2018

Global Climate Action Summit Update—Will We See You There?

Preview

With the Global Climate Action Summit coming up this September 12-14 in San Francisco, California, businesses, cities, states, investors, and citizens all have the opportunity to showcase extraordinary climate action commitments that will give world leaders the confidence to continue their support of the Paris Agreement and prevent the worst effects of climate change.

Earlier this month, BSR was pleased to issue Summit invitations on behalf of the Summit Co-Chairs to those of our members who have already demonstrated robust climate commitments through the We Mean Business Take Action Platform. We are encouraging companies to join us in supporting the Summit by making a new commitment, participating directly, or attending a side event. There are many ways businesses can engage.

The main Summit program is focused around five headline challenges:

1. Healthy Energy Systems;
2. Inclusive Economic Growth;
3. Sustainable Communities;
4. Land and Ocean Stewardship; and
5. Transformative Climate Investments.

BSR is working closely to develop compelling content and feature bold commitments from business around Challenge 2 on Inclusive Economic Growth—specifically showcasing how business leadership on climate can generate good jobs, broad-based economic opportunity, and inclusive, resilient growth. This issue includes the following sub-challenges:

• Science-Based Targets Challenge: Encouraged by Summit Co-Chair Anand Mahindra at Davos in January and through the more recent launch of the Oslo Climate Leadership Declaration, businesses around the world are being challenged to set science-based emissions reduction targets (SBTs) ahead of the Summit, thereby aligning with the Paris Agreement and the level of decarbonization required to keep global temperature increase below 2 degrees C. Companies that are ready to commit to an SBT can reach out directly to CDP to do so.
• Resilience Challenge: Resilience is defined as “the capacity to recover quickly from difficulties.” In the context of climate change, resilience is the ability of a system or community to rebound following a shock, such as a natural disaster. Companies are encouraged to make large-scale supply chain climate resilience commitments that will enable their suppliers to implement resilience strategies—protecting workers, communities, and the natural environment from climate change impacts. For business, building climate-resilient supply chains will enable impact at scale and deliver substantial benefits.
• Just Transition Challenge: Businesses, governments, and labor organizations can share success stories on and make commitments to both a) manage impacts on workers and communities transitioning away from high-carbon sectors and b) promote broad-based economic opportunity through the creation of good jobs in newly emerging sectors. Specifically, companies that procure renewable energy can pledge to integrate just transition and human rights principles into their procurement standards for renewable energy purchases.

In addition to securing commitments related to the above-mentioned Summit challenges, BSR will co-host an event on Tuesday, September 11 focused on various climate resilience efforts.

This side event will explore a number of approaches to help the public and private sectors establish more resilient communities, ecosystems, and supply chains, which can enable people, businesses, and institutions to thrive in a world of increasing climate risks. It will be open to Summit registrants and non-registrants alike, with advance registration required. Please save the date, and check back on the BSR events and Summit affiliate events pages for more details. 

For more information about the Summit, visit the Frequently Asked Questions page. If you have any questions about how to work with BSR to make sure your climate commitments are included in the business contribution to climate action, please contact us.

We hope you join us in San Francisco this September, as our collective efforts must lead to a turning point by 2020 in order to prevent the worst effects of climate change.

Blog | Thursday July 12, 2018

Three Climate Commitments for the Railway Sector

Preview

In 2015, the transport sector contributed 25.8 percent of total greenhouse gas emissions in the European Union (EU). In fact, transportation is one of the few sectors where greenhouse gas emissions are still rising. If the global community is to achieve the Paris Agreement goal of limiting the increase in global average temperature to well below 2°C (while seeking to limit it to below 1.5°C), the transport sector must make a major contribution.

Railsponsible is a collaborative initiative of railway companies focused on sustainable procurement. Current members are leading railway operators and rail manufacturers: Alstom, Bombardier, CAF, Deutsche Bahn, Knorr-Bremse, Nederlandse Spoorwegen, NMBS, RFI, SBB, SKF, and SNCF. To help the railway industry reduce its overall climate impact, the members of Railsponsible have developed a position paper on climate, setting out possible commitments and activities for both Railsponsible members and for their business partners in the sector.

When measured by the emissions generated during the “use phase,” rail is one of the most climate-friendly modes of transport: It contributes less than two percent of EU emissions despite having more than eight percent of market share. However, the rail industry supply chain includes energy-intensive raw materials, infrastructure development, manufacturing, and maintenance/overhaul, as well as end-of-life/recycling, all of which have significant impacts. Serious effort is needed to address the full climate impacts of the rail supply chain.

Three climate commitments for the rail sector

Railsponsible has identified three key climate commitments that are relevant to and supported or adopted by most Railsponsible members, who recommend that these be incorporated into railway sector companies’ climate strategies and sustainable sourcing approaches. The three commitments cover both manufacturing and transportation (following the life cycle of rail sector products):

1. Adopt an ambitious renewable energy target
2. Create an ambitious energy productivity target
3. Make climate change information available

Given the above, in designing their strategies, companies should consider their size and position in the rail supply chain. Where relevant, organizations may wish to translate these commitments into award criteria for tenders in their individual procurement processes.

Walking the talk

These suggested commitments are based on and reflect existing commitments from Railsponsible members, which are divided into two categories: absolute targets and relative targets.

An absolute reduction refers to a decrease the total quantity of greenhouse gas emissions. Absolute targets set by Railsponsible members include the following:

• Zero emissions for mobility (train, bus, car) and buildings by 2020 (Nederlandse Spoorwegen).
• 100 percent renewable energy by 2050 (Deutsche Bahn).
• Transparent reporting on emission performance data and targets (all members).

A relative reduction refers to the amount of emissions per unit of economic output. In this case, emissions might be reduced relative to the company’s total profits, units of a good produced (for suppliers), or passenger kilometers (for railway operators). Relative targets set by Railsponsible members include the following:

• Reduction of products’ energy consumption by 20 percent by 2020, compared to 2014 [Watt hour/passenger kilometer] (Alstom).
• No increase of carbon emissions until 2020 compared to 2015, while increasing production (Knorr-Bremse).
• 40 percent reduction in CO2 emissions from manufacturing per tonne of products sold (SKF).
• 20 percent increase in energy efficiency for passenger and freight traffic by 2025, compared to 2015 (SNCF).

We hope that Railsponsible’s three key climate commitments will help further advance the growing movement toward climate mitigation in the railway sector. While the examples presented above may provide inspiration to rail operators and to their suppliers, their applicability to individual companies will vary. We recommend careful deliberation and assessment before adopting a commitment.

Railsponsible members believe that the best way to set, implement, and advance climate objectives is through collaboration. Since its launch in 2015, Railsponsible has grown significantly and has provided an assessment platform for over 800 suppliers. The initiative provides a forum for both rail operator and system houses and their suppliers to discuss challenges, devise solutions, and work together on coherent implementation.

If you would like to join the Railsponsible collaboration, please contact us.

Case Studies | Monday July 9, 2018

The Coca-Cola Company: Building a Climate-Resilient Value Chain

Preview

The Coca-Cola Company has been working to reduce emissions in its supply chain for years—including not only those associated with bottling, but also those associated with growing ingredients, producing packaging, and distributing and refrigerating products. As climate change impacts have begun to manifest around the globe, the 132-year-old company partnered with BSR to take this work a step further to examine what climate risk and resilience might mean for The Coca-Cola Company value chain.

The Challenge

From agricultural ingredients, like citrus and tea, to hyper-local distribution systems, The Coca-Cola Company supply chain is one of the largest and most complex in the world. Coca-Cola products are sold in more than 200 countries and territories, and each of those markets faces unique exposure and vulnerability to the impacts of climate change.

Mitigation efforts—those focused on reducing greenhouse gas emissions—are vital to any company’s climate strategy and critical to global efforts to avoid unmanageable climate impacts. As the impacts of climate change are increasingly felt around the world, however, it has become clear that simultaneous efforts are necessary to increase adaptive capacity and build resilience.

“Resilience” is defined as “the capacity to recover quickly from difficulties.” In the context of climate change, resilience is the ability of a system (such as a bottling plant, distribution network, or supply chain) or community to rebound following a shock such as a natural disaster. Building resilience requires not only recognizing potential hazards like extreme weather events, but also understanding the underlying vulnerabilities that may affect recovery from these potential disasters. For example, insufficient infrastructure can reduce a community’s capacity to rebound following a disruption like an extreme weather event, as can poverty or gender inequality.

After years focused on climate mitigation and water stewardship, understanding climate risk and resilience was a natural next step for Coca-Cola.

Our Strategy

BSR partnered with Coca-Cola to begin building the foundation for a more resilient company that is better able to anticipate, avoid, accommodate, and recover from climate risks in the future. At the outset, we identified seven markets—Argentina, Brazil, China, India, Kenya, Mexico, and the United States—and two commodities—coffee and tea—to serve as proxies for the full Coca-Cola value chain. For each of these markets and commodities, we explored exposure to major climate hazards in the context of underlying vulnerabilities, such as rapid urbanization, at-risk populations, food and economic insecurity, and insufficient infrastructure.

Using this analysis, a benchmark of climate resilience activities in the food and beverage sector, Coca-Cola’s existing risk mitigation strategy, and insights from internal company interviews, we developed a framework for identifying and prioritizing climate-related risks. We then mapped Coca-Cola’s existing programs and initiatives to high-priority risks and outlined an approach for expanding this work further across the company’s major business units.

Our Outcomes and Impact

The climate resilience framework we developed aims to integrate resilience into Coca-Cola’s existing strategy, risk management, and sustainability systems. The framework is designed to connect and amplify The Coca-Cola Company’s efforts in empowering women, protecting the climate, and sustainably sourcing ingredients, as well as in water leadership and community development. Over time, we hope to see the framework used to help Coca-Cola create a more resilient value chain, enabling the company to confidently source responsibly cultivated ingredients, withstand or promptly recover from climate-related impacts, identify and reduce climate risks, and contribute to building value chain and community resilience where Coca-Cola is produced and sold.

We hope that these leading-edge efforts will inspire other companies, as well as their partners in the public sector and civil society, to take a more holistic look at climate risk in their value chains and communities and identify opportunities to build adaptive capacity and resilience.

Lessons Learned

Undertaking this work with Coca-Cola allowed us to translate what we know about climate risk and resilience into the context of a global supply chain. Here are a few suggestions for companies interested in exploring climate risk and resilience in their value chains:

• Start small: Begin with a selection of facilities, locations, or products that represent important aspects of your business. This will allow you to identify the most useful and important data points before scaling your approach across the organization.
• Integrate into existing systems: Rather than approaching climate risk and resilience as a new, standalone exercise, consider integrating climate considerations into existing risk management and/or sustainability systems.
• Appreciate both the global and the local: Much like water stewardship, managing climate risk and building resilience is both a global and intensely local challenge. While some tenets and approaches can be broadly applied, individual interventions must be customized and reflect on-the-ground realities.

Learn more about our work on climate-resilient supply chains.