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Blog | Thursday February 7, 2019

Large Companies Have a Key Role in Strengthening Small Supplier Integrity

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Last year, I was proud to participate as an adviser in a project commissioned by the U.K. Government’s Business Integrity Hub, which has been established to provide practical support for companies to help prevent bribery and corruption when doing business overseas. The project, run by Business Fights Poverty, has sought to find out how to encourage small and medium-sized enterprises (SMEs) to take business integrity issues more seriously and adopt meaningful anticorruption compliance.   

As part of the project, we conducted an extensive literature review and complemented it with an online survey, 24 interviews, and two business roundtables in which we gathered perspectives from both multinationals and smaller enterprises. This gives us deep insights into how corporate anticorruption efforts need to evolve—and enables us to make a strong case for fresh thinking from large multinationals.

SMEs and Issues of Business Integrity

The schizophrenic state of play in anticorruption efforts is highlighted in the research results: While 90 percent of the small and medium-sized companies with which we spoke consider doing business with integrity important for commercial success, fully 30 percent found that having a strong approach to integrity presents a disadvantage in winning business.

The barriers to a more robust implementation of integrity are considerable. Smaller companies feel that an overall lack of understanding of bribery and corruption issues persists, and that systemic corruption challenges in many markets may offer ‘no choice’. Finally, they cite a lack of direct control over their own agents, distributors, and suppliers. All these challenges, combined with familiar sales and commercial pressures, also confront large multinational corporations. But they are exacerbated in smaller companies by two factors: a lack of dedicated compliance resources, and—compared with large multinationals—a lack of leverage to drive behavioral change in third parties.

Smaller companies feel that an overall lack of understanding of bribery and corruption issues persists, and that systemic corruption challenges in many markets may offer ‘no choice’.

Despite the challenges, there is plenty of room for optimism. Strikingly, smaller companies do not view regulatory pressure as the strongest argument for anticorruption programs, having (rightly) assessed that regulatory resources are far more likely to be aimed at large multinationals. And SMEs understand the argument that integrity helps in winning and retaining customers, accessing finance, and building trust and reputation. Small companies fully understand that if they want to do business with large customers or credible financial institutions, having a basic anticorruption program in place is non-negotiable. Smaller companies also see that integrity risks are shared by businesses in the same value chain, and they are calling loudly for a more collective, collaborative approach to address them.       

The Role of Multinational Companies

The single, overwhelming message from this research? Multinational companies need to take a more active role in influencing supplier integrity via procurement processes enforced across their value chains. This is particularly important because only large companies have the financial resources to hire compliance consultants and the market clout to access regulators as needed. Smaller companies need concrete help from their biggest customers.

Large multinationals could start by applying the thinking they have used to drive sustainability into their supply chains. As we at BSR work with first-tier suppliers to multinationals such as Apple Inc., GlaxoSmithKline Plc, and Walmart Inc., we find that increasingly stringent environmental and social mandates from customers are driving transformative change along the value chain. These large companies have adopted an engaged perspective that gives their suppliers the necessary time and guidance to bring programs up to scratch, while also making it clear that adoption of sustainability standards is a condition for retaining their business over the long term. 

While these supply chain sustainability programs can be very effective, companies generally do not extend them to cover bribery and corruption issues. This is because legal liability is involved. This results in siloed and misaligned approaches to business-partner risk in many companies. When environmental and social ‘red flags’ are identified, a large company is usually prepared to collaborate with a small supplier to drive improvement; the standards in question are voluntary, and regulatory risk is deemed to be manageable. In contrast, a company compliance team conducting due diligence regarding suppliers and distributors under the U.K. Bribery Act will simply terminate relationships in which it identifies ‘red flags’ concerning integrity.

This is a logical response to the legal and reputational pressures facing large companies. It is essential in mounting an ‘adequate procedures’ defence and helps to shield large companies from regulatory risk. However, if the end game is to reduce corruption in modern society (as opposed to helping corporations deflect legal liability), this approach makes little sense. Companies that don’t treat workers properly and violate environmental standards are also highly likely to be paying bribes; these practices characterize a risk-taking, short-term culture. Indeed, such companies may be paying bribes to evade social or environmental regulations.

Multinational companies need to take a more active role in influencing supplier integrity via procurement processes enforced across their value chains.

What’s Next

New laws such as the Modern Slavery Act, combined with investor pressure, are encouraging a more integrated approach to environmental, social, and governance issues. Moreover, the anticorruption field could make far better use of the collaborative tools and approaches to systemic change that have been so effective in tackling such issues as human rights and climate change. The highly successful Maritime Anti-Corruption Network is a model that could be used to good effect in other industries.

Our research shows that U.K. suppliers to large multinationals hunger for more support from their customers, and that customer demand can best incentivize stronger integrity programs. If large companies were to begin advising their suppliers on how to address integrity challenges and navigate regulatory risk, this could help transform the anticorruption environment. Through collective action, we might also start to address some of the entrenched integrity challenges in high-risk markets: repeated facilitation-payment demands accompanied by extortion, for one. This would constitute a more effective, empathetic, and constructive approach than the protective, self-interested mindset that now dominates corporate anticorruption programs. The U.K. government is ready to work with companies to explore and encourage this new thinking.

Blog | Tuesday February 5, 2019

Improve Sustainability with New Air Freight Alliance

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To protect people from the catastrophic effects of global warming beyond 1.5°C, business must continue to take action to limit climate change. As such, BSR is pleased to announce the launch of the Sustainable Air Freight Alliance (SAFA), a forum for buyers and suppliers alike to collaborate on air freight emissions reduction. The alliance is now open for membership, and we invite all interested parties to join an introductory webinar (U.S. time zone/Asia time zone).

While countries continue to make progress on their individual national commitments under the Paris Climate Agreement, industries have the power to mobilize large-scale emissions reductions. As an example, the International Maritime Organization (IMO) announced in April 2018 that the shipping sector would aim to halve its emissions by 2050 against 2008 levels.   

While countries continue to make progress on their individual national commitments under the Paris Climate Agreement, industries have the power to mobilize large-scale emissions reductions.

Currently, air transport represents around two percent of global carbon dioxide emissions. However, the air freight sector is projected to grow at five percent per year until 2050—faster than any other mode—and with potential to increase emissions significantly. In recent years, the industry has undertaken collective engagement through the Air Carbon Initiative and the development of a reporting protocol agreed via the Global Logistics Emissions Council in coordination with the International Air Transport Association (IATA). The aviation industry has also achieved performance improvements and commitments thanks to the leadership of the International Civil Aviation Organization (ICAO), IATA, and individual airlines.

However, there remains no consistent forum for direct business-to-business exchange between the various stakeholders, which is key to driving collaborative solutions. There is also a general lack of transparency around the application and use of the environmental performance information requested from airlines by shippers for their reporting and decision-making needs.

To address this gap, leading airlines, shippers, and freight forwarders have united to develop the Sustainable Air Freight Alliance—a unique buyer-supplier collaboration to track and reduce carbon dioxide emissions from air freight and promote responsible freight transport.

Following an incubation with active contribution from over 15 companies, SAFA is now open for membership. Participants include DB Schenker, DHL, Finnair, GEODIS, H&M, Maersk, Nike, and United Airlines.

The leading forum for air transport sustainability, SAFA provides a platform for collaboration allowing companies to:

• Build dialogue with business partners to understand needs and strengthen long-term business relationships
• Demonstrate company and industry leadership on sustainability
• Reduce exposure to risks (such as regulations) to the air freight industry by leveraging collective knowledge and action
• Credibly measure and report their emissions performance
• Help shape international standards, in line with ICAO, IATA’s work, and sectorial initiatives
• Access a collaborative forum for sharing sustainability information, best practices for reducing GHG emissions, and innovation opportunities to help achieve company goals

To find out more about the Sustainable Air Freight Alliance, please register for an introductory webinar (U.S. time zone/Asia time zone) and reach out to our team.

Blog | Thursday January 24, 2019

What Larry Fink’s 2019 Letter Means for the Future of Business

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Last year, Larry Fink’s annual letter to CEOs forged its way into public and corporate consciousness. In it, Fink, chief executive officer of BlackRock Inc., the world’s largest investment firm, made the bold declaration that “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” A direct riposte to Milton Friedman’s 1970 argument that “the social responsibility of business is to increase its profits,” Fink’s statement rapidly appeared in thousands of articles and PowerPoint slides. Suddenly, every business meeting I attended featured a conversation about the implications of the “Larry Fink letter.” The mainstream business press is still debating the questions Fink raised.

This year’s highly anticipated letter from Fink appeared on January 17, reiterating and expanding upon many of his 2018 points. Its advice to business reflects sustainability best practice and is fantastic news for anyone with concerns about today’s social disruption and environmental destruction. Here are our four main takeaways:

It’s such a big deal that it spawned a hoax—which people fell for

An activist group called the Yes Men released a spoof letter the day prior to the publication of the official document, saying that BlackRock would begin treating companies that do not adhere to the Paris Climate Agreement as “sin stocks”—like purveyors of tobacco and weapons. It is hard to overstate how significant such a move would be for companies and for the environment; as Fink subsequently showed, BlackRock is not ready to put its money where its mouth is to such an extent. Nonetheless, publications including the Financial Times were fooled by an idea that they would have deemed utterly implausible coming from BlackRock just five years ago. So the reaction to the hoax letter proves two things: Responsible investment possibilities are expanding at an accelerating rate, and the debate over the future of corporate responsibility is now sufficiently mainstream to spawn its own fake news.

“Purpose” is happening, whether we like it or not

As a corporate responsibility practitioner, I tend to roll my eyes when I hear the term “purpose.” A 2017 survey indicated that although businesses are highly enthusiastic about it, there is no consensus as to what “purpose” actually means. Fink uses the term 21 times in his 2019 letter and defines it as “a company’s reason for being,” a statement unlikely to clarify matters. He equates purpose with long-term value creation and hails it as an “animating force” for achieving profits via a stronger strategy and culture, not as a detriment to growth.

Fink also quotes a survey wherein by a 63 percent margin, millennials agree that the primary purpose of business should be to improve society, rather than generate profits—and then skates past tough questions as to whether and when these goals might conflict. It is the time horizon of corporate planning that he takes aim at, arguing that stakeholder trust and social responsibility offer the only path to profitability over the long term. This might leave companies wondering how they should address his calls to provide workers job and retirement security in the context of aging and automation, not to mention the very future of our economic models in an era of global warming and resource scarcity. This debate will inevitably continue.

Questions about implementation are growing louder

The chorus of questions about how BlackRock translates its position into meaningful action lost no volume in 2018. The 2017 proxy season saw both Vanguard Group and BlackRock support two climate-related shareholder proposals; this was a big step, but there were a total of 90 on corporate tables. BlackRock has also struggled to navigate the gun control debate; it divested from gun manufacturers but went on to exclude from ESG funds even retailers that had acted to make it harder to purchase guns in the aftermath of the Parkland, Florida, shootings.

BlackRock aims to effect change through engagement and discussion with companies, not hostile shareholder resolutions—and it has cause to argue that this is working. The 2018 proxy season saw far fewer shareholder proposals on climate, precisely because the energy and extractives sector is shifting its approach in an attempt to anticipate and respond to pressure.

So are questions about the interaction between business and politics

Fink explicitly calls on business to solve societal challenges that have been left unaddressed by governments. As the credibility and functionality of political systems across the world faces ever-more-extreme pressures, it is tempting and comforting to view corporate scale as the answer to many pressing challenges we face. Nonetheless, Fink’s efforts raise important questions about the rapidly escalating power of corporate boards, not to mention the future of democracy in an environment where we look to corporations instead of governments to solve our problems. There are strong counter-arguments that business should focus its attention on the murky worlds of lobbying and tax avoidance, pushing for regulatory capacity and action rather than expanding into territory being vacated by today’s governments.

This year’s BlackRock letter marks a further step forward in an increasingly high-stakes debate about the future of the corporation and its nascent shift from shareholder value to stakeholder trust, from risk to impact, and from growth to sustainability. As ever greater numbers of influential people seek answers to the questions Fink raises, the pace of change is accelerating. I’m already looking forward to next year’s letter.

Blog | Tuesday January 22, 2019

How Futures Thinking Can Help Us Shape Globalization 4.0

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The agenda for the World Economic Forum’s Annual Meeting 2019 presents an audacious challenge: developing a model for Globalization 4.0.

This challenge comes at a hinge point in history. Over the past 30 years, the global economy has delivered immense human progress: For the first time, more than half of humanity is considered middle-class. But it seems the existing model is running out of road. Income inequality is rising, sparking populist challenges to the market economy. Climate change and natural resource depletion are already creating human and economic dislocation that are, in turn, creating social and political instability. And the pace of technological change requires new thinking about how to build legal and ethical frameworks so that the use of these amazing new tools is based on shared values.

Just as these changes have created a radically different set of issues to understand and address, we also need radically new ways of thinking to help us understand and shape the path forward. Futures thinking is an invaluable tool in informing and testing strategies for the next era of globalization.

At times like ours, with rapid, interconnected 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 help deliver insight into the social and political context in which businesses make decisions and the rules under which societies apply their values. They are designed to complement more traditional analytical approaches, which too often offer precision at the cost of failing to anticipate truly disruptive change.

Already, we can see many of the tectonic shifts likely to define the coming decades. A changing climate will reshape our natural world and our economy. The shifting nature of work and the rise of new technologies will present both immense opportunity and profound dilemmas. The specific nature and timing of these changes cannot, however, be foreseen. We know that increasing drought will threaten food supplies and that increasingly violent storms will disrupt global supply chains—but we don’t know where or how. We know that automation will both create and destroy jobs, but the pace of destruction and the likeliest new opportunities are hard to predict. We know that advances in technologies create profound questions, as we are seeing today with the sharp debate over gene-edited babies, with different principles applying in different locations.

In outlining its vision for Davos this year, the World Economic Forum has challenged us to redefine globalization for our era through “wider engagement and heightened imagination.” Looking at potential scenarios for our shared future is an invaluable way to apply these principles. As an example, the scenarios outlined in our Doing Business in 2030 report explore whether and how our information and decision-making will reflect global consensus or deep fragmentation.

This is one of the fault lines along which our future is being shaped, with signals of both consolidation and fragmentation visible. There are forces of consolidation in our world: technologies bring greater transparency, and urbanization means that people's’ experiences are increasingly similar. Equally we see forces of fragmentation: different values applied to privacy rules and medical ethics, and nation states ceding power to cities and regions while simultaneously asserting nationalist views.

There is also a very good chance that the future will reflect both the reality of divergent models and the need for global consensus. Indeed, Globalization 4.0 will almost certainly be defined through countless experiments reflecting different cultural norms and expectations, with different economic objectives and conditions, and under diverging political systems. Eras of great change often evolve in diverse ways before converging (if they ever do). And at the same time, there is a crying need for collective global answers to the climate crisis, increased migration, and the uses of technology that are reshaping the very question of what it means to be human.

Decision-makers in business, government and civil society will therefore have to be “multi-lingual,” and prepared to steer their organizations through a range of possible futures. Not only that, the dividing lines between different types of institutions can be a barrier to progress. As we wrote in our Doing Business in 2030 scenarios: “If humans are to flourish on a thriving planet amid rapid technological change, we need to reorient the relationships between civil society, government, and business.”

Globalization 4.0 won’t be defined for all-time in one week at Davos. But to ensure we make a good start, futures thinking and the ability to conceptualize multiple futures are essential.

Ultimately, the future scenario we want, and the one the world needs, is yet to be written. While future scenarios depict how external forces could evolve in the coming years, it is up to us, working together, to write a new and better story. That is the great prize, and there is no time to lose.

This article originally appeared on the World Economic Forum website.

Blog | Thursday January 17, 2019

Global Tech Companies, Partners Identify Tools to Fight Human Trafficking

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In June 2018, a coalition of global tech companies, civil society organizations, and international institutions jointly launched Tech Against Trafficking, a collaborative effort to support the eradication of human trafficking.

By tapping into their technical expertise, capacity for innovation, and global reach, the company members of Tech Against Trafficking believe that technology can and must play a major role in preventing and disrupting human trafficking and empowering survivors. The group will work with anti-trafficking experts to identify and investigate opportunities to develop and scale promising technologies.

“We all want to leverage our resources and skills to help further the impact of the tools already out there,” says Eric Anderson, head of the Modern Slavery Programme at BT. “But to do that effectively, we first need to know how technology is currently being used, what’s working and what’s not, and where the gaps are.”

The group has embarked on an ambitious project to understand and map the landscape of existing tech tools being used in the anti-trafficking sector. Over 200 anti-trafficking tools were identified, with the majority (approximately 69 percent) working to identify existing victims of human trafficking and address and manage the risk of child and forced labor in corporate supply chains.

“We were surprised at how few of the tools are intended to directly benefit or engage with victims or vulnerable populations. Of those tools with publicly available information, only 11 percent are geared toward worker engagement, 9 percent are educational, and 2 percent focus on victim case management,” says Livia Wagner of the Global Initiative, co-founding organization of the RESPECT initiative*, which led the research. “Of the identified tools, we also noted a strong concentration of tech tools developed and operating in the Global North, despite higher prevalence rates of human trafficking in the Global South. This is most likely due to our lack of insight into the use of technology in these regions, and we’ll need help from organizations on the ground to better understand how tech is, or is not, being used.”  

Following this initial identification process, Tech Against Trafficking is evaluating each of the more than 200 tools to better understand how they work, how effective they have been, and the barriers they face to scaling their impact. The evaluations are based on publicly available information and are ongoing as the group conducts outreach to organizations developing technology applications.  

Tony D’Arcy, head of corporate responsibility reporting, communications and customer relations at Nokia, stated, “We know this is just the start, but we are looking forward to sharing the results of our landscape mapping to understand how technology is being used to combat human trafficking across geographies and sectors. The initiative will be publishing an interactive map of these tools, with the goal of increasing collaboration and encouraging the use of innovative technology to support a multi-pronged approach to eradicating trafficking.”

Tech Against Trafficking intends to make this map as comprehensive as possible and invites all organizations using technology to combat human trafficking, in every language and every region around the globe, to review and recommend additions to the list of identified tech tools, found here. We encourage interested organizations to reach out to the BSR team with any additions.

We invite all interested technology companies to contact us to find out how to get involved.  

*The RESPECT initiative was founded by the Global Initiative, Babson College’s Initiative on Human Trafficking and Modern Slavery, and the International Organization for Migration.

Blog | Friday January 11, 2019

Procurement in 2019: Shared Objectives, Shared Challenges

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In 2019 procurement executives can help advance their objectives by aligning with their colleagues in trade finance and the sustainability department. At the end of 2018, BSR and Bank of America Merrill Lynch held an event in London to discuss what our future supply chains will look like and how procurement, trade finance, and sustainability can work together.

The objectives and challenges of these three seemingly disparate groups are more aligned than you might think. As such, there is value in working together to achieve a shared vision for supply chain management.

Aligned Objectives

The 2018 Deloitte CPO survey showed that, once again, the top priority for procurement chiefs was cost savings, and their top strategy was consolidating spend.

Managing the corporate social responsibility (CSR) strategy rose to sixth position, which suggests that procurement and sustainability agendas are increasingly aligning. In some of our own research, we have found trade finance professionals want to integrate sustainability more firmly into their offerings, which implies there is room to work together.

Sustainability professionals also welcome efforts to consolidate spend among a smaller pool of suppliers, as long as CSR issues are considered in the equation. Indeed, working with a smaller number of first-tier suppliers can help focus sustainability efforts and improve performance in this area.

At the same time, when considering suppliers that are further upstream, all actors agree having improved visibility and a more connected supply chain is better. For sustainability, it enables them to have an impact where challenges exist; for procurement, it helps to better manage risk and ensure security of supply; and for trade finance, it opens up opportunities to provide financing to a broader array of companies with a wider set of service offerings.

Finally, everyone needs to digitalize. Digitalized supply chain finance is overtaking traditional trade finance mechanisms. Procurement chiefs are looking to digitalise their processes, while sustainability professionals are increasingly using digital tools, such as satellite imagery, to help in their efforts to drive performance.

Shared Challenges

There are shared challenges as well. The first is how they measure sustainability performance of suppliers at all tiers of the supply chain. As certifications, audits, and other traditional measurements of sustainability performance are being called into question, and as the number of databases and tools measuring sustainability performance increases, complexity grows.

Trade finance professionals need to consider this in their know-your-customer efforts, and buying organizations need to consider what they are going to ask for and potentially reward. The attendees to our event agreed there is a tremendous opportunity to learn from each other and harmonize efforts and datasets.

Another challenge these three face is in trying to break down silos. Sustainability professionals need to be in the room with finance and procurement, but they often don’t speak the same language. Procurement and finance can see some correlation between sustainable suppliers and high-performing suppliers, but they need a better articulation of this fact.

Finally, engaging and accessing upstream suppliers is a critical issue for everyone. Procurement knows some of the greatest supply chain risks lurk there, and this aligns nicely with sustainability’s perspective on where their biggest challenges lie. Trade finance can see opportunities to finance further up the chain, but they also need better access to be able to derisk the opportunities such that they become financially interesting.

In short, we can see a path forward from three siloed approaches—where procurement optimization, maximizing financial returns from trade finance, and achieving sustainability objectives in the supply chain could become truly integrated. Perhaps this is what supply chain transformation should really be about.

Blog | Thursday December 27, 2018

ICYMI: Our Top Sustainability Insights from 2018

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2018 was a big year for many of the issues that BSR works on: We saw climate, human rights, and women’s empowerment make headlines around the world, from the release of the new IPCC reports and protests in France, to the removal of military officials from social media in Myanmar, to the #MeToo and #TimesUp movements in the United States.

We also spent this year thinking about the major forces that we see shaping our world for decades to come, from artificial intelligence (AI), automation, and blockchain to the increasing impacts of our changing climate on people and supply chains globally.

We know it can be easy to miss a blog post or a report launch in today’s news cycle, so we’ve rounded up some of your favorite pieces of content from this year.

Without further ado, here they are, for your end-of-year reading pleasure.

Blogs and Case Studies

• Seven Things Every Company Should Know about Artificial Intelligence and Sustainable Business explores—you guessed it—how your organization can start thinking about AI and sustainability.
• Announcing a New Collaboration Using Tech to Combat Human Trafficking introduces our Tech against Trafficking collaborative initiative.
• We Need to Talk about Blockchain—Together considers why collaboration will be essential to realizing the sustainability promise of blockchain.
• Our Human Rights Impact Assessment of Facebook in Myanmar summarizes our work with the company on its programs and policies in this space.
• How Luxury Can Lead the Future of Sustainable Business describes the opportunities the Responsible Luxury Initiative identified for the industry to increase its sustainability leadership.
• The Coca-Cola Company: Building a Climate-Resilient Value Chain is a case study of our work with the company to examine climate risk and resilience beyond its direct operations.
• Three Hot Debates in Sustainability Reporting Today addresses questions like whether companies should move to more real-time sustainability reporting or stop using “materiality” outside of investor relations.
• An Exciting New Era for ESG and Socially Responsible Investing in Japan shares an update on key developments in this space and the global implications.
• How Do We Solve the Plastic Waste Puzzle? provides an overview of our work on this topic with companies in the Asia-Pacific region.
• How Businesses are Collaborating for the SDGs gives five examples of private-sector collaboration toward the accomplishment of the Global Goals.

Reports

• Redefining Sustainable Business: Management for a Rapidly Changing World is a guide for sustainability practitioners in today’s dynamic environment.
• State of Sustainable Business 2018 details the results of our 10th annual BSR/GlobeScan survey of BSR member companies.
• Private-Sector Collaboration for Sustainable Development shares insights on how companies can contribute to the realization of the UN SDGs.
• Doing Business in 2030: Four Possible Futures leverages futures thinking to share four possible scenarios for 2030, which you can use to help your company develop a more resilient business strategy.
• Win-Win-Win: The Sustainable Supply Chain Finance Opportunity describes the massive opportunity for business to leverage supply chain finance to realize sustainability objectives.

We published a lot of great content on other cross-cutting issues, too, including a series of reports about the nexus between climate and other key sustainability topics, a set of papers on the human rights implications of artificial intelligence, a new video and guidance for more gender-sensitive supply chains, and the Sustainability Short Takes video campaign on hot topics in our space, which we will continue next year.

This is my last post as the editor-in-chief of the blog—while I’m staying here at BSR, I’ll be moving over to do more work directly with companies on sustainability management and strategy. Of course, you’ll be in great hands with my successor, Aimee Louise Bataclan, and we’ve got lots of exciting content lined up for you in 2019.

From me and my colleagues here at BSR, we wish you a safe and happy new year, and we look forward to working with you next year to create a more just and sustainable world.

Blog | Wednesday December 19, 2018

COP24 Set the Rules of the Road; Now We All Have to Drive

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In a part of Poland where local residents still have bags of coal delivered to heat their homes, the 2018 UN Climate Conference (COP24) in Katowice saw countries agree to rules on how they will measure and report progress to reduce carbon emissions under the Paris Agreement.

In the context of a challenging global political landscape on climate, crafting a single set of rules that brings the Paris Agreement to life was a significant achievement. But it’s important that we don’t confuse setting the rules of the road with strong climate leadership.

What’s at stake could not be clearer. COP24 began in the shadow of the IPCC’s Special Report on the impacts of 1.5°C of global warming. The report warned that failing to reach global net-zero emissions in 2050 would cause more extreme weather events, additional damage to coastal infrastructure and reduced food security. Achieving the 1.5°C goal would improve health, reduce poverty, and help build a sustainable, resilient economy that leaves no one behind.

Business ambition was on full display at COP24, with shipping giant AP Moller Maersk announcing a net-zero carbon goal by 2050, IKEA announcing 80 percent reductions of emissions from production processes by 2030, and American utility Xcel Energy announcing a switch to all zero-carbon power by mid-century.

Companies including Mars, Mahindra, and Microsoft urged governments to choose the economic opportunities of our zero-carbon future over the economic risks of our high-carbon present and past in their “Talanoa Dialogue” discussions with Ministers. This was backed up by the 500 companies now committed to the Paris-aligned emissions reductions known as science-based targets.

One of the early outcomes of COP24 was the conclusion of the Solidarity and Just Transition Silesia Declaration. It demonstrated that enhancing political will for climate action will depend on ensuring that the economic opportunities of the zero-carbon transition are widely shared, while minimizing disruption to people and communities. Governments who ignore the need for a just transition risk growing unemployment and even civil unrest.

Businesses made a joint call to action at the Global Climate Action Summit in September. At COP24, they joined investors, cities, and regions to call on governments to increase domestic policy ambition, develop long-term plans toward the net-zero economy, and help create quality jobs.

While the Paris rulebook underpins global ambition over time, COP24 fell short of an explicit commitment to improve domestic policies over the next two years. However, in the spirit of the Paris Agreement, a High Ambition Coalition—including Canada, the European Union, France, Germany, Italy, Spain, the United Kingdom, New Zealand, many small island states, and the group of Least Developed Countries—emerged to announce that they would step up ambition by 2020.

The High Ambition Coalition invites businesses and other sub-national actors to join them in this effort, and we encourage you to do so by email here.

For businesses digesting the impact of the COP24 outcome, the developments provide glimpses into our future.

• First, sub-national coalitions are steering us toward ambition. The We Are Still In movement in the U.S. and the Global Climate Action Summit demonstrate that together, businesses, investors, cities, and regions can be as impactful as national governments—or more.
• Second, the High Ambition Coalition is the way forward. In a fractured international political landscape, businesses taking strong climate action will find friends banding together and governments offering their hand. Progress will come from different constituencies arm in arm.
• Third, through rising support for the just transition, the climate and inclusive economy agendas will increasingly intersect. More and more, we must emphasize how climate action does not merely protect our environment. It reduces inequality, generates jobs and improves public goods like health.

For those willing to drive action toward a zero-carbon future, the next stop is already on the horizon—the UN Secretary General’s Climate Summit next September. By then, we will measure success not by the road underneath us, but by how fast we are going.

Find out how your company can take action.

Blog | Monday December 17, 2018

BSR18 Participation Report (for Japanese Newsletter)

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Blog | Monday December 17, 2018

Why Multilateral Human Rights Bodies and Frameworks Are Vital for Business

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This year marks the 70th Anniversary of the Universal Declaration of Human Rights. At BSR, we are pleased to reflect on and celebrate the progress initiated by that landmark declaration. However, it is also important to highlight and address growing threats to the international human rights regime.

2018 has been a difficult year in this regard. The United States withdrew from the UN Human Rights Council, signaling a retreat from multilateralism. And toward the end of the year, there were threats to the funding of the Office of the High Commissioner for Human Rights (OHCHR).

BSR believes that this matters not just for politics, but for business—and many business leaders that we speak with agree.

Multilateral institutions and frameworks for human rights are critical to ensuring that human rights are consistent for individuals around the world—in different countries and cultures with different political regimes and histories. However, they are equally critical for business and its operations.

The unanimous adoption of the UN Guiding Principles on Business and Human Rights (UNGPs) in 2011 marked the first time that the international human rights regime, originally developed for states, was authoritatively applied to business. Subsequently, leading companies have played an active role in uptake and promotion of their implementation. Businesses rely on these Principles to guide their human rights policy frameworks and due diligence processes through which they assess, manage, and report on human rights-related risks across their operations and supply chains. Support for the UNGPs extends to influential organizations representing business, including the International Organization of Employers, the International Chamber of Commerce, and the U.S. Council for International Business.

Together, the UNGPs and OHCHR are a powerful force, giving business a much-needed touchstone for human rights and supporting the continued proliferation and enforcement of human rights policies around the globe, from corporate offices to supply chains.

The UNGPs help level the playing field in global competition and promote the rule of law in countries where this has historically been lacking. Additionally, the requirements embedded into the UNGPs are entirely consistent with the increase in regulation of business and human rights issues around the world, from the Modern Slavery Act in the U.K. and similar pending legislation in Australia and Hong Kong to the CLOUD Act in the U.S.

OHCHR is at the heart of efforts related to the UNGPs. As part of its global mandate to promote and protect human rights, OHCHR is the institutional home of the UNGPs and thus serves a critical function as a centralizing body for managing, stewarding, and promoting adoption and implementation of the Principles.

In addition, companies that take measures to assess, mitigate, and remediate risks related to human rights, whether concerning forced labor and human trafficking or broader labor rights, have benefited from the research and guidance developed and disseminated by OHCHR. For example, OHCHR is currently engaged in an important two-year study to help clarify the role of companies and states relating to operational grievance mechanisms for harms arising from business operations. OHCHR is taking significant steps to engage companies directly, so that the guidance adequately addresses the real-life challenges that business experiences in difficult operating contexts. As regulations around human rights due diligence and reporting continue to spread around the world, the expertise and guidance of OHCHR on how business can meet the expectations set out in the UNGPs will become even more relevant for companies. 

Together, the UNGPs and OHCHR are a powerful force, giving business a much-needed touchstone for human rights and supporting the continued proliferation and enforcement of human rights policies around the globe, from corporate offices to supply chains.

In this anniversary year, BSR encourages all companies to express their support for these institutions. Moreover, we call for continued adequate funding for OHCHR in 2019 and beyond to ensure that the various human rights challenges emerging around the world can be met by companies in a consistent and effective fashion.

For companies wishing to engage on this and other policy issues related to human rights, BSR’s Business Action Platform for Human Rights helps companies support policy frameworks that protect and promote human rights at a time when these universal Principles are increasingly under threat. For more information or to get involved, please contact us.