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Blog | Tuesday March 8, 2022

International Women’s Day: Business Trends and Opportunities

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I asked Kalpona Akter, a workers’ rights advocate who started working in the Bangladeshi garment industry at the age of 12, about the state of business and gender equality. As we enter the third year of the pandemic, has business done its part in supporting women who make up the majority of workers in her industry?

Akter replied: “We are not on a positive track. This pandemic has shown the draconian side of business. Many companies make payments through charity instead of paying workers what they are due: a living wage.”

Akter is not the only one to identify a lack of progress on gender equality. In the context of the pandemic, the World Economic Forum’s Global Gender Gap Report announced that it will take another generation to achieve gender parity, as closing the gender gap has moved from 99.5 years to 135.6 years.

McKinsey’s Women in the Workplace report last fall pointed to an increase of women in American-based companies taking on leadership roles—although these gains do not extend to women of color, who continue to be underrepresented at every stage of the pipeline. Despite this progress, all women are facing much higher levels of burnout than men, and many consider stepping back or dropping out of the workforce. Part of this is due to women, and particularly women of color, taking on additional work, looking after colleagues’ well-being, and building more inclusive workplaces—efforts that often go unrecognized and unrewarded.

BSR’s Women’s Empowerment Trends Report, developed with the UNGC, likewise points to limited progress in companies making meaningful changes to improve gender equality—and those changes we saw were often limited to commitment making rather than action implemented.

The fundamentals of how business can promote gender equality remain relevant and require sustained attention: removing bias from hiring and advancement practices, ensuring living incomes, workers’ rights, representation—especially for vulnerable groups—and considering how business decisions affect groups differently. Beyond the usual debate, what are the trends in the gender space that business leaders need to pay attention to this year? Where are opportunities for business to do better?

Stepping up on Care

By now, there’s much more recognition that invisible work, including caring for family members, the sick, children, and domestic tasks—work that is primarily completed by women—is essential to keeping economies running. Yet the disproportionate share of domestic work that women take on forms a barrier to their full participation in the paid workforce and is a primary obstacle to gender equality, as a new 17-country study from our friends at Women Deliver shows.

Global companies have taken steps to support employees, increasing flexibility and ability to work from home, providing more paid leave, supporting parents and caregivers for both women and men. These initiatives will be even more critical to attract and retain talent in 2022 and beyond. While there is no “one-size-fits-all” approach to flexibility in the workplace, listening to what employees value and being willing to experiment and adapt are important. Companies must also keep tracking data on the pipeline and ensure that policies don’t have negative consequences on individuals.

Tackling Gender-Based Violence

A rise in gender-based violence has formed a shadow pandemic that is characteristic of lockdowns, increased insecurity and stress within households, and reduced access to support services. With regards to global supply chains, increased production pressure and uncertainty contribute to a high-stress environment with greater risk for abusive behavior from managers.

A commitment to ending gender-based violence is critical, and taking action to address this within internal operations is a start. Companies can also demonstrate support for the ILO’s Convention 190 on eliminating violence and harassment in the world of work. Partnering with local organizations or collaborations such as Empower@Work is one way for companies to translate commitments to actionable measures to prevent and respond to gender-based violence in the supply chain.

Preparing for the Jobs of Tomorrow

Across sectors, the nature of work is in flux, and women stand to be left behind with the rise of new technology and digitalization, the emergence of jobs tackling the climate crisis, and other disruptive change. For example, the green gender gap, referring to the gap in skills addressing environmental sustainability, has not improved since 2015.

Companies can make sure that women have equitable access to upskilling and reskilling opportunities and combat occupational segregation that keeps women out of jobs traditionally held by men. Improving technical competencies and upskilling workers in the face of new automated technologies, for example, will be important in sectors such as manufacturing and services. Research indicates a combination of decision-making and soft skills are necessary alongside technical competencies, and an intentional approach to include women and underrepresented groups is key.

This International Women’s Day, the basics remain true, and business must remain committed to ensuring equal opportunities for women as employees, business partners, and community members. Akter reminds us that real action addressing issues that matter most to women, such as wages, should remain the focus. As we begin the third year of the pandemic, three areas require urgent investment from companies: addressing unpaid work and care, combating gender-based violence, and preparing for future jobs. We invite companies to reach out and engage on these important topics when considering how business can push for progress on gender equality.

Blog | Monday March 7, 2022

Applying the UNGPs to Technology: Our Point of View

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The UN Human Rights Council recently initiated an expert consultation on the practical application of the Guiding Principles on Business and Human Rights (UNGPs) to the activities of technology companies, and it sought formal input from stakeholders.

This consultation is very timely given the increasing relevance of technology to the realization of human rights in practice and the prominent role of the private sector in how technology is designed, developed, and deployed.

Over the past two decades, BSR has gained significant experience working with technology companies on human rights due diligence, including around 100 human rights assessments.

We have also led collaborative efforts (such as facilitating the creation of the Global Network Initiative, Responsible Business Alliance, and Technology Against Trafficking) and published research (such as Human Rights-Based Approaches to Content Governance in the Social Media Industry).

We’ve drawn upon this experience to make a submission to the consultation, which is available in full. We hope the submission provides a thoughtful contribution to the application of the UNGPs to the activities of technology companies. The key points are summarized below:

Human Rights Risks in Business Models

The need to understand the human rights impacts arising from company business models has rightly grown in focus over recent years. However, human rights due diligence practitioners can further define what human rights due diligence of business models means in practice, and the venture capital industry—an essential gatekeeper for technologies making it to market—requires more attention.

Human Rights Due Diligence and End-Use

Blog | Friday March 4, 2022

Time’s Up: Urgent Climate Adaptation and Business Transformation Key to Secure a Livable Planet

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IPCC’s recently released Sixth Assessment Report about climate impacts, adaptation, and vulnerability shines a light on the threat climate change poses to human well-being and planetary health. It makes plain an indisputable fact: our efforts to reduce emissions have been unsuccessful, as has been our action to adapt to climate impacts.

According to the report:

“Increased heatwaves, droughts and floods are already exceeding plants’ and animals’ tolerance thresholds, driving mass mortalities in species such as trees and corals. These weather extremes are occurring simultaneously, causing cascading impacts that are increasingly difficult to manage. They have exposed millions of people to acute food and water insecurity on a global scale.”

Many of these impacts will be irreversible, but we can substantially reduce them if we succeed in limiting global warming to 1.5°C above pre-industrial levels. If we don’t, the risks posed to humans and natural ecosystems will be exponentially worse.

A key point in the report is that climate, ecosystems, and people are interconnected and interdependent, both with regards to impacts—which makes risks increasingly complex to understand and manage—but also to solutions. As stated by Inger Andersen, Executive Director at the UN Environment Programme:

“Nature can be our savior, but only if we save it first.”

Climate change is and will increasingly impact ecosystems, e.g., accelerating the current rates of extinction, something that is projected to be 10-fold more extreme in a 3°C world than a 1.5°C one. Yet, nature has an incredible ability to store carbon and clean pollution while also providing sustenance for life, making biodiversity and ecosystem health paramount to adapt to the impacts of climate change and deliver a 1.5°C future. To do this in practice, scientists have concluded that we must conserve 30-50 percent of Earth’s land, freshwater, and ocean areas.

The interconnection of climate, nature, and human beings reminds us that climate and nature solutions will not be effective if not designed to be fair and inclusive to people. Around 40 percent of the world’s population already lives in areas highly vulnerable to climate change, and it is often in these areas that socioeconomic issues interact and compound, deepening and perpetuating poverty and inequities, food and water insecurity, health issues and the overall ability to live a safe and self-determined life. Communities already experiencing the ills of global inequities—who tend to be the least responsible for global warming—will face disproportionate impacts from climate change.

It is imperative that we accelerate transformational rather than incremental climate adaptation to address more pressing risks. It’s equally important that we invest our resources to support effective, feasible adaptation solutions that consider potential effects on both nature and people. We should implement them in conformity to the principles of justice to ensure that burdens and benefits are distributed equitably, and that solutions are co-created with affected communities, so they reflect the perspectives of local cultures and needs. Multistakeholder collaboration for learning, capacity building, and scenario analysis can support this.

By embracing climate-resilient development to safeguard their own businesses, companies can help to catalyze sustainable and just development by scaling up greenhouse gas mitigation while simultaneously driving adaptation. The IPCC directly calls on the private sector to help address these grand challenges, leading to several key take-aways for business:

Embrace 1.5°C as the minimum threshold of ambition

Set a 1.5°C-aligned net-zero commitment and take quick and transformational action to achieve net-zero value chains.

Assess and adapt

Climate risks are unavoidable, and businesses need to take action to ensure long-term resilience. Business leaders should identify those interconnected risks, their effects on nature (and vice versa), and fully understand climate injustices and inequities across the value chain, seeking to listen to how employees, suppliers, customers, consumers, and the community at large are affected.

Conduct climate scenario analysis as an effective way to grapple with climate impacts on a company and its supply chain, and adjust strategy accordingly.

Implement climate and nature solutions that work for both people and planet

Incorporate and deploy capital to nature-based solutions into your strategy. Such solutions can have positive benefits on both the climate and communities.

Deploy capital to finance community resilience across supply chains, to ensure climate action does not perpetuate climate injustices.

Apply justice, equity, and inclusion as key principles of your climate strategy and ensure the principles are upheld in policies, programs, and investments.

Urgent action is needed. As António Guterres, UN Secretary General, starkly stated: “Delay means death.”

Business has both an obligation, and an opportunity, to play a key role in driving adaptation and delivering climate-resilient development. BSR is here to help you to navigate the complexity of interconnected climate, nature, and people issues, and take decisive action, now.

Blog | Thursday March 3, 2022

Unlocking Opportunities in Access to Healthcare

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The right to health is a fundamental part of human rights and of our understanding of a life with dignity. While progress has been made in the past two decades, half the world’s population still lacks access to essential healthcare services. This continues to be one of the biggest global challenges and one that demands system-wide change.

For the past 12 years, BSR and the Healthcare Working Group have explored new methods to bring about change, via guiding principles, research papers, and multistakeholder dialogue. Today, the assessment is clear:

1. The healthcare industry has unique competencies they can harness for continued progress. By working alongside peers, governments, NGOs, and other organizations, companies can continue to help overcome barriers that prevent underserved populations from receiving quality healthcare and contribute to expanding universal and equitable access to all.
2. With regards to companies in the healthcare sector, access should be understood as a core business issue and opportunity. While long addressed through donations and one-off initiatives or programs, it is has become clear that real progress can only be achieved by integrating “access thinking” throughout a company: including from R&D to logistics, from the board room to the patient, from idea to impact.
3. There are still some largely untapped avenues for progress, and even the most mature business and corporations have opportunities to move the sector forward.

“The BSR Access to Healthcare Leadership Ladder framework is an important step forward in establishing standards for industry-led access programs. We encourage all stakeholders, within and outside the industry, to get involved and agree on such standards, in order to establish a common understanding of the industry’s role and achievements in improving global access.”

—Profs. Veronika Wirtz and Peter Rockers, Boston University School of Public Health

As a step in their collective action for driving progress, BSR and the HCWG have developed the Access to Healthcare Leadership Ladder, a maturity diagnostic and ambition-setting tool to guide and drive progress on access to healthcare. Based on BSR research and dialogues with external experts (including academics, industry associations, investors, relevant foundations, and NGOs) and HCWG members, the Ladder aims to achieve HCWG members’ shared vision of access to healthcare.

The tool helps companies to drive impact by assessing the current level of maturity and opportunities for progress across different dimensions that constitute access to healthcare, helping companies look at their practices through a value chain lens, realizing the extent to which access is currently integrated across their organization, and identifying gaps and opportunities for further improvement.

The Ladder has been designed to cover a broad spectrum of access issues for healthcare companies, irrespective of the medicine they develop or the market in which they distribute their products. Furthermore, the tool is relevant to any company and should provide insights to even the most mature companies.

In the Ladder, access maturity is evaluated across the company value chain through nine dimensions: six dimensions covering the “four As” (Availability, Affordability, Accessibility, and Acceptability) plus three dimensions covering business practices and measurement.

For each of the dimensions, the Ladder defines four maturity levels:

• Working at a base level, i.e., defining the minimum practice, beyond regulatory requirements
• Achieving good access practices, i.e., an overview of good practice
• Pioneering innovative solutions, i.e., examples of current, innovative practices
• Driving impact, i.e., next steps to achieving the HCWG vision of access

We trust the Ladder will be a useful tool to spark the higher ambitions and resources needed for underserved patients across the world to receive quality healthcare.

The Ladder now enters a pilot phase that companies are welcome to join. For any questions or comments, please contact the Healthcare Working Group.

Download a presentation of the Leadership Ladder

Blog | Wednesday March 2, 2022

Mastering a Purposeful Approach to ESG Due Diligence in Mergers and Acquisitions

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There’s no denying that 2021 was a year of significant growth in M&A, and global M&A activity is poised to climb even higher in the year ahead. M&A can be a tremendous tool for companies looking to adopt more resilient business strategies, but failing to account for the critical ESG elements can undermine success and lead to negative outcomes for business. Investors and regulators are placing more emphasis on corporate ESG performance and disclosure, including in M&A activity and financing terms. In addition, a lack of alignment around ESG topics (e.g., related to labor, governance, and corporate values) can substantially disrupt the post-merger integration process. As a result, interest among M&A teams in ESG is steadily growing, with requests to sustainability teams for guidance and frameworks on effectively integrating ESG considerations into standard due diligence.

To help our members meet this demand, BSR has built upon the guidance offered in our 2019 paper Key Considerations in Managing ESG Through a Merger and developed a set of simple steps that companies can follow to conduct effective ESG diligence in M&A. We hope that the guidance below will help our members to better evaluate the potential impact of ESG issues on business value while embracing purposeful sustainability leadership to better navigate these turbulent times.

Each company will need to develop its own approach to diligence that appropriately integrates ESG into each stage of the deal flow. The diligence process should help a company consider any potential impact of the merger or acquisition on their sustainability strategy and the long-term value of the combined entity. There are several basic elements to consider:

A red-flag check.

The objective of this step is to understand any major ESG-related opportunities or risks as part of the initial target identification process.

• Consider the “future fitness” of the core business and relevant assets. For example, do the target’s products and services appear to be compatible with the net-zero economy? Do they support or erode individual rights to privacy? Do they heavily rely on commodities with fragile supply chains (e.g., in conflict zones, reliant on current geopolitical conditions, or susceptible to extreme weather)? Does the business model present significant risks to human rights or a revised social contract (e.g., working hours, living wages and access to basic benefits, emerging legal requirements)?
• Conduct a media scan to understand any major ESG related risks. Searching for media coverage of human rights violations, serious privacy or data breaches, harassment, labor disputes, corruption, or environmental degradation can help to identify any major liabilities or cultural concerns that should be investigated upfront. Tools such as BSR’s partner Polecat perform big data analysis of online and social media, which are specifically focused on ESG.

A set of basic ESG governance questions.

The goal is to understand a target’s overall maturity related to ESG and ability to address current and emerging ESG issues:

• Does the company have a dedicated person or function responsible for management of ESG? What is their level of seniority? What type of oversight mechanisms govern ESG? Does the board play an active role? Is the CEO part of a regular ESG review cycle? What is the training program for the C-suite and board to understand ESG?
• Has the company conducted an assessment to determine its material ESG issues?
• Does the company have an ESG strategy or policy that addresses material sustainability topics and impacts from assessment results?
• Does the company have measurable timebound targets related to material ESG issues?
• Does the company publicly report performance on material ESG topics in line with relevant ESG reporting standards and regulatory requirements? Which regulatory frameworks for ESG disclosure is the company bound to according to jurisdiction?
• Does the company actively engage with external stakeholders, for example through an advisory group?

A shortlist of potentially material ESG topics based on industry, business model, and geography and evaluation of the inherent risk or opportunity level.

• As a starting point, review material issues identified for your own business. Complement this list of issues with information from tools like the SASB, MSCI, or GRI industry profiles in combination with a standard set of publicly available geographic indices (e.g., Transparency International’s Global Corruption Index), and industry- or topic-specific guidance from organizations like CDC.
• It may help to develop a standard list of topics reviewed in any deal (e.g., climate, human rights, and business ethics) alongside a list of possibly relevant additional topics (e.g., hazardous waste).
• Ask yourself how big the risk associated with each issue might be if it went unmanaged. Consider impacts across the full value chain, from raw material sourcing through product use and disposal across all relevant geographies.
• Be sure to take a double materiality approach that considers both possible impacts to business value and the environment, society, and economy associated with the target company.
• Consider dynamic issues that could be relevant in the next 5-10 years for the post-merger organization alongside issues for the individual business today. It may help to have a standard set of scenarios to evaluate performance across a range of possible future operating environments and to regularly monitor emerging issues.

Due diligence to understand risks and opportunities for each material topic.

Pull together an information request for the company based on material issues identified and tap experts as needed to help evaluate performance. Consider the following elements:

• Related policies and commitments: Do policies exist, and are they relevant to the new company?
• Governance: Is there clear ownership and accountability for performance?
• Performance management systems: Do management systems exist and are they certified to relevant external standards? Have goals been set, and are KPIs regularly tracked?
• Track record: Review performance data (e.g., GHG emissions), do a deeper dive on media coverage, consider litigation, and targeted stakeholder activism.

While it is ideal to have as much information as possible early in the process, in practice some of the components can come together after a deal is announced and before it is finalized. It’s worth noting that there are many reasons why M&A deals proceed even against significant ESG challenges. In fact, deficiencies in effective management can offer opportunities to create tremendous value and positive impact. Either way, it is essential to devote resources to defining sustainability strategy, governance, management, and disclosure protocols during and immediately following a merger. It is essential to have a clear and complete picture of the deal by both parties and a defined action plan to realize the potential of every business to maximize its long-term value and contribute to a more just and sustainable world.

Blog | Tuesday March 1, 2022

Ukraine: The Business Response

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The news of Russia’s invasion of Ukraine has shaken the world.

First and foremost, we stand with the brave people of Ukraine, who have been subjected to unnecessary and unfathomable suffering due to this illegitimate and brutal invasion of a sovereign nation. We are horrified by the death, destruction, and displacement Ukraine is experiencing. We urge the rapid end to this conflict with the restoration of full respect for democracy, rule of law, and human rights, and international cooperation to end the suffering of the Ukrainian people. This invasion should also remind us that millions of people in many parts of the world also continue to live under the threat of devastating political violence, often without the global attention the invasion of Ukraine has received.

The situation in Ukraine raises significant questions for business. Vast numbers of companies have ended or suspended their activities with Russia, combined with economic sanctions undertaken by numerous governments. We strongly support these efforts, in the name of the most rapid end possible to this conflict.

While the situation continues to unfold rapidly, there are seven key points for business to consider. Some point to immediate actions, and some relate to longer-term questions. BSR has been providing updates and advice to companies on how they can and should contribute to the most rapid resolution possible.

• Protect Staff: First and foremost, it is crucial that companies take all measures to ensure that their staff in affected locations are protected and that they can offer support to relatives in Ukraine, Russia, and other affected countries. This support extends to the impact these events may have on colleagues who are not directly affected, but who are concerned about new security risks presented by Russia’s actions.
• Express Support for Rule of Law: We have called in other contexts for businesses to express their support for democracy, human rights, and rule of law, and this is a time to restate these calls to action. At a time when human rights, democracy, and rule of law are under threat in all regions of the world, business should use its voice clearly and consistently to reinforce these fundamental underpinnings of both society and business.
• Withdrawal or Suspension of Commercial Relationships: Hundreds of companies have decided to withdraw from Russian activities. These decisions, taken by the lion’s share of international business, avoid potential complicity in the invasion. They also stand to reinforce the economic sanctions undertaken by most of the governments of the world’s largest economic actors and send a strong signal of solidarity with the Ukrainian people.
• Support Relief Efforts: Business can bring to bear the financial, logistical, and other support that can mitigate the human suffering of refugees and others displaced by this conflict. In addition to direct support, business can and should express its support for refugee and other displaced populations, not only in Europe but elsewhere.
• Stay Focused on Climate: Yesterday’s report from the Intergovernmental Panel on Climate Change (IPCC) makes plain the need for decisive, urgent action to combat the growing climate crisis.  The situation in Ukraine is now occupying the minds of policymakers and business leaders. The spike in energy prices is already causing some to argue that we cannot “afford” to focus on clean energy. We cannot let the urgent crowd out our focus on matters of long-term importance. Business leaders should not only reconfirm their commitment to net zero, but also communicate to policymakers that we cannot lose precious time in the transition to an inclusive clean energy economy.
• Prepare for Future Threats to Resilient Business: The news from Ukraine reinforces the essential value of futures thinking in business strategy. As Nik Gowing has written, we are living in an era when the previously unthinkable becomes reality. This extends well beyond geopolitics to social, economic, and environmental shocks. Futures thinking through the lens of scenarios enables companies to anticipate profound change. Boards and leadership teams should use these tools to ensure that their businesses are truly resilient.

The world is facing another humanitarian crisis, and an attack on the rules-based international order. Business action can help to alleviate suffering, express global solidarity with displaced people and support for human rights, and, in doing so, reinforce practices that will help their companies achieve resilience in the face of a world that delivers wave after wave of change.

Reports | Tuesday March 1, 2022

Generation Equality Forum: Stepping Up for Women and Girls

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In June 2021, the private sector stepped up to set a new agenda on gender equality. The Generation Equality Forum called for all stakeholders to make clear financial commitments across six Action Coalitions that highlight critical issues to the advancement of gender equality and the creation of a world free from gender biases and discrimination. The forum resulted in a record US$40 billion in pledged commitments and new investments in gender equality over the next five years.

BSR’s Generation Equality Forum Report provides an overview of private-sector commitments, highlighting exciting new investments and remaining gaps in efforts needed to achieve gender equality.

Blog | Wednesday February 23, 2022

Luxury’s Move to E-Commerce and Its Implications for Sustainability

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Post-pandemic estimates project that revenues in the e-commerce market will grow by 46 percent, from US$3.53 trillion in 2019 to US$6.54 trillion in 2022. This expansion brings with it an increase in greenhouse gas (GHG) emissions, resources, and social risks. As e-commerce continues to grow, brands and retailers face a series of sustainability risks as well as opportunities to shape consumers’ purchasing habits in the years to come. 

The luxury industry is no different. The global COVID-19 pandemic accelerated the adoption of e-commerce by luxury brands and consumers. In 2019, e-commerce made up between 10 and 15 percent of global luxury sales across Europe, the United States, and China. By 2020, this figure had increased by at least 50 percent. Bain & Company projects that as much as one-third of all personal luxury purchases will take place digitally by 2025, with revenues reaching an estimated US$136 billion. 

The expansion of luxury brands’ e-commerce footprint—whether via their own channels or multi-brand marketplaces—carries with it social and environmental risks and opportunities. Luxury brands will have to address these potential issues as they implement their sustainable business commitments and make decisions regarding their online distribution and marketing strategies. 

In 2021, BSR’s Responsible Luxury Initiative (ReLI) took a closer look at the environmental and social risks and opportunities related to e-commerce in the luxury industry. The group developed an Action Guide detailing actions that luxury brands can take in their e-commerce value chains (transport, fulfillment, e-store, distribution, and returns), both individually and with their partners, focusing specifically on climate, resources, and people topics.

While efforts to reduce the impact of e-commerce are emerging, such as the French responsible e-commerce charter, luxury brands can demonstrate leadership by driving exemplary practices within their eco-systems. They can both seek to mitigate specific risks (i.e., reliance on same-day or next-day delivery and GHG-intensive air freight) and leverage their power to drive cultural change, such as luxury consumer acceptance of reusable mailers and slower shipping speeds. 

Below, we share the research’s key findings and ReLI’s perspective on opportunities specific to the luxury sector. In 2022, ReLI invites luxury brands to join the initiative and explore a key focus: how to decrease delivery speeds, which are a significant driver of GhG emissions, while maintaining high levels of consumer satisfaction and service. 

Climate

E-commerce drives up the GHG emissions of a luxury brand, especially in the transport and delivery of goods (last mile and rushed deliveries), including returns. Certain data indicate that the average emissions per item from e-commerce operations can be lower with large and highly efficient US retailers compared to traditional brick and mortar (1700 grams of CO2 eq. versus 2050 grams of CO2 eq.,). However, accelerating delivery can lead to the opposite scenario—rushed online deliveries emit more carbon than in-store shopping (about 300 grams of CO2 eq. more in an urban area, with delivery and packaging contributing the most to the overall carbon footprint).  

An expanding online footprint means that luxury brands must tackle increased complexity—in terms of data tracking and measurement and managing programs with business partners—to achieve significant reductions in GHG emissions required by many luxury brands’ commitments to a decarbonized future. Luxury brands should include their e-commerce footprint in their emissions tracking and reduction plans—encompassing those of transport and logistics partners—and collaborate to reduce emissions, including via relevant green freight initiatives and programs.

Luxury brands can demonstrate leadership by focusing attention on some of the root causes of growing emissions. They can reduce the movement of goods via strong demand management and inventory visibility systems. In this aspect, the luxury industry has an edge on traditional retail, given greater sophistication when it comes to inventory tracking, related to higher product value. Luxury brands can also dramatically reduce reliance on air freight while investing in sustainable aviation and greener modes of transport (air freight emits 20-30 times more carbon than ocean shipping). 

As cultural influencers and standard-setters, luxury brands have a compelling opportunity to inspire new consumer preferences and behaviors related to shipping speed and over-ordering. Over half of consumers are unaware that express delivery services produce more emissions. However, ​85 percent of consumers in a recent survey indicated that they would opt for slower delivery if they were made aware  that it meant a reduction in emissions.

Emissions related to packaging represent a significant share of GHG emissions, which is further addressed in the “Resources” section. 

Resources

E-commerce intensifies the use of natural and other resources via its reliance on transport and packaging materials. This can be especially acute in the luxury industry, where valuable products need to be protected (e.g., bubble wrap, foam, airbags) and consumers expect a rich “unboxing experience.” According to DHL, in some e-commerce categories, there is up to a 40-percent void in packaging.

Luxury brands have two significant opportunities related to resources in the e-commerce value chain. First, they can rethink both B2B and B2C packaging systems, pioneering the luxury experience with responsible and reusable packaging options that go beyond resource-intensive recycling. A compelling example comes from the champagne brand “Ruinart,” which launched a minimalist “second skin” packaging that is nine times lighter than existing boxes and is fully recyclable. 

In a similar method to incentivizing slower shipping delivery, luxury brands can drive new behaviors by educating and potentially incentivizing consumers to return their mailers, rather than tossing their box. Brands are starting to experiment with these emerging reusable mailing systems, such as Hipli, Living Packets, or Olive. Hipli operates a returnable packaging service for brands and consumers, with packages that can be reused at least 100 times. LCA results show that Hipli has a lighter footprint than a cardboard box and is designed to be recycled at end of life.

Luxury brands can also influence sustainable resources via their products. They can increase communication to consumers on their e-stores related to environmental and social product offerings (using easily understandable and comparable data) and support increased desirability and purchase of better options, including preowned products. Several luxury marketplaces now feature sustainability edits, such as Net-a-Porter’s NET SUSTAIN, and re-sale options, such as Farfetch’s Second Life or Reflaunt via Yoox Net-a-Porter. In another example, Gucci clients can browse through a set of icons on its website to discover the sustainability features of around 400 products.

People

Luxury brands are faced with a multitude of social considerations to monitor across the e-commerce value chain, given the involvement of many transport, logistics, and service partners globally. The transport and logistics industry relies on low skilled labor, often from vulnerable groups (e.g., migrants, contractors, women, and youth) particularly during peak periods. Low wages and limited social security can prevail for dockers and truckers as well as gig workers at fulfillment centers. Given these risks, brands should pay particular attention to increasing visibility of the labor practices of their transportation partners and enabling change. Ikea, for example, carried out a study on wage practices and working conditions in its transportation supply chain specifically.  

Luxury brands should also drive exemplary practices on persistent and emerging issues in the digital world. They can lead on strong digital privacy and trust approaches for their consumers. Secondly, they can lend their influence and pave the way for more inclusive digital marketing, including leveraging the power of their influencers on societal topics.

If you would like to learn more about these topics, or get involved in ReLI’s 2022 workstream, please consult our new case study and reach out to us for further information.

Blog | Thursday February 10, 2022

New York’s Trendsetting Legislation Unveiled: Fashion Sustainability and Social Accountability Act

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In early January 2022, in what looked like a groundbreaking move, the Fashion Sustainability and Social Accountability Act (Fashion Act) was unveiled in New York State. The Fashion Act, if passed, would make New York the first US state to pass a law that would hold fashion companies accountable for their role in climate change and other human rights impacts. Given the international nature of fashion companies, growing consumer demand for transparency and sustainability from fashion companies, and increasing legislation surrounding human rights and sustainability, it is likely that New York’s Fashion Act will be setting a trend rather than standing alone. 

Though legislation related to mandatory human rights due diligence is currently being discussed in the European Union, and countries including France, the United Kingdom, Germany and Australia have laws in place related to human rights and modern slavery, this would be one of  the first laws specifically targeting the social and environmental actions of the fashion industry—which has been called “one of the least regulated industries”—and requiring changes. It would also go beyond California’s Garment Worker Protection Act by including the manufacturing portion of the value chain. 

The Act also stands out in terms of the sheer number of companies that would be impacted—meaning that companies that have only started considering ESG issues will be held to the same standard as industry leaders and will need to seriously enhance their performance related to human rights and environmental impacts. 

At a high level, the Fashion Act requires global apparel and footwear companies doing business in New York with more than $100 million in revenues to disclose their environmental and social due diligence policies. 

Specifically, companies are asked to map at least 50% of their supply chain, disclose their material production volumes, share where in their supply chain they have the greatest social and environmental risk or impact when it comes to fair wages, energy, greenhouse gas emissions, water and chemical management, and share concrete plans to reduce those impacts—and disclose this information online. The Act references standards including the Paris Climate Accords and the UN Guiding Principles on Business and Human Rights (among others) when describing how the plans and disclosures should be made. 

Companies would be given one year to comply with the mapping requirements and 18 months to comply with the disclosure requirements. The Act would be enforced by the New York State Attorney General and noncompliant companies that don’t remedy the issue within three months of notice may be fined up to 2% of their annual revenue—meaning that the lowest earning companies would be fined a minimum of $2 million.  

While the Fashion Act is a New York law, it is expected that, if passed, the implications will be global, due to the number of fashion companies doing business in New York with revenue over $100 million, and their supply chains spanning both the country and the globe.  

Fashion companies should therefore pay close attention to the progression of the Fashion Act, as well as their sustainability and human rights risks and impacts. We have previously advised on why and how to assess human rights impacts and have provided a deep dive into climate change and human rights, steps to setting net-zero greenhouse gas emissions, and guidance on sustainability reporting. 

Given the Fashion Act’s consistency with existing environmental and human rights standards, fashion companies leading on sustainability and human rights will be well-positioned to comply. For example, setting public targets in-line with a 1.5C pathway, reporting on key material issues and human rights risks, as well as maintaining supply chain transparency are all consistent with the new mapping and disclosure requirements.

So far, the Act has been both praised and criticized—and two letters, written by a group of 20 labor and advocacy groups, as well as reuse advocates, have suggested revisions. Regardless of its passage, the emergence of the Fashion Act reinforces BSR’s position that the role of business in addressing sustainability challenges has never been more important than today—and the size and scale of the Fashion Act indicates a global trend towards sustainability and human rights.  

The Fashion Act is currently being considered in Senate and Assembly committees, and the sponsors hope to bring it to a vote in late spring. It would need to be passed by both houses of the New York state legislature and signed by the Governor before it becomes law.

Blog | Tuesday February 8, 2022

Inside BSR: Q&A with Anna Iles

Preview

Inside BSR is our monthly series featuring BSR team members from around the world. This month, we connected with Anna Iles, a Futures Associate Director based in Hong Kong.

Anna chatted with us about her sustainability journey around the world and her work at BSR on futures thinking.

Tell us a bit about your background. Where are you from, and where are you based? What is your favorite hobby?

I’m from the north of England, and I have now lived in Hong Kong for five years after three in Singapore. We live on Lantau Island, which is mostly a national park rich in wildlife, beaches, and peaks—a far cry but only a short ferry ride from the city. I love getting out and about: my favorite sort of escape is touring with a bike and a tent—and I’m hoping we can find some way to do that with three kids (one toddler, twins on the way).

How did you first get involved in sustainable business?

My first internship was as a journalist with the environmental magazine Down To Earth in Delhi. This was a formative experience where I learned how intricately social justice is bound up with environmental challenges. Back in London, I worked for women’s health and social care nonprofits and edited the Women’s Environmental Network newsletter before becoming editor of the sustainable solutions magazine Green Futures, published by Forum for the Future.

I developed a passion for futures thinking as a way to support business and society in navigating complex and emerging challenges. In 2014, I relocated to Forum’s Singapore office to set up the Futures Centre, a collaborative platform for tracking change and thinking about its implications. Then, I moved to Hong Kong to run my own futures and innovation agency, working with UNICEF, UNDP, schools, and youth organizations, as well as businesses.

What are some interesting projects that you get to work on as part of your role at BSR? What do you enjoy about them?

I joined BSR’s Sustainable Futures Lab last year, leading our work on emerging issues and our publication The Fast Forward, as well as working with businesses to explore the implications of today’s changes and their capacity to address current challenges and work toward a more sustainable and equitable future.

I appreciate the wide range of topics we work on (recently nature’s rights, carbon capture and storage, the impacts of climate change on mental health) and the access to business leaders with both the power to influence their sectors and the ambition to do so.

It’s also terrific, particularly after four years as a solo ship, to have so many colleagues with diverse backgrounds, interests, and expertise to share ideas with about how critical changes today could play out and what they might mean for different sectors.

What issues are you passionate about and why? How does your work at BSR reflect that?

I’m interested in how we think and the life of ideas: How can we expand our perspectives and embrace new ways of understanding ourselves and the world? Before joining BSR, I published a book The Innovation-Friendly Organization, exploring how organizational culture can enable ideas to thrive (or not). The importance of diversity stands out, as well as the potential to indulge in curiosity.

More recently, I’ve been exploring how we can apply futures thinking to conflict situations, as a way to reframe perspectives and create new starting points for dialogue.

At BSR, my colleagues and our members are very open to trying out new ways of thinking. For instance, we’ve used fictional personas to explore the potential impact of emerging trends for stakeholders in the fashion and luxury industries, and we found this useful in cultivating an empathetic and human-centric approach to strategy and planning.

Adjusting to life during a pandemic can be complicated. What were the things that brought you joy amid the uncertainty and challenges of the past year? What are you looking forward to in 2022?

My son was born at the start of the pandemic, and the rise of flexible remote working has made it easier for me to juggle parenting and professional life. His cheeky, affectionate spirit is a huge joy: It’s the little things like him picking up a plum at the market the other day and biting into it, then lobbing it straight at the saleswoman when I explained we had to pay for it…

The sad thing is that our families and friends “back home” haven’t been able to meet him yet (a common story), given Hong Kong’s three-week quarantine period and intermittent bans on incoming flights. We’re expecting twins very soon, and so I’m most looking forward to welcoming them and then hopefully taking all three back to the UK.