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Blog | Wednesday April 18, 2018

An Exciting New Era for ESG and Socially Responsible Investing in Japan

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While the proportion of socially responsible investment (SRI) relative to total assets managed in Japan was only 3.4 percent in 2016, compared to 52.6 percent in the EU and 21.8 percent in the U.S., the growth of SRI in Japan has been significant—242 percent from 2016 to 2017 to approximately US$1.13 trillion, according to the 2017 Japan Sustainable Investment Forum Report. Why has this happened?

In recent years, Japan has made a massive shift to begin to integrate environment, social, and governance (ESG) factors into its investment strategies. For Japanese companies, this creates an environment of support for sustainability efforts, and we are likely to see these practices increasingly become the norm. Companies headquartered outside Japan, too, would be wise to take note, as this shift by the world’s third-largest economy is likely to have implications for not only their Japanese operations but across their value chains abroad.

In short, the pro-business Japanese government has made the nation’s expectations for sustainable business practices clear, helping investors understand a broad set of ESG issues that are material for their investment strategies and providing structure and support to enable social dialogue.

Japan’s changes to date and roadmap for the future are well-summarized in the Ministry of Economy Trade and Industry (METI) report commonly known as the Ito Review 2.0. The initial Ito Review, published in 2014, showed the challenges created by the lack of long-term asset management culture, combined with a lack of dialogue on investor expectations. In response, the Japanese government has taken a systematic approach to address this issue. 

The next year (2015), the Tokyo Stock Exchange, with support from the Financial Service Agency (FSA), issued the Japanese Corporate Governance Code, which established fundamental principles for effective corporate governance at listed companies in Japan, with the intention of encouraging sustainable corporate growth and increased corporate value over the mid- to long-term.

And when the Japanese Government Pension Investment Fund (GPIF), the world’s largest pension fund, with approximately US$1.3 trillion in assets under management today, signed the UN Principles for Responsible Investment (UNPRI) in 2015, the impact had on not only Japan’s investment landscape, but also globally, was catalytic. It demonstrated how an asset owner with an ESG champion at its helm can swiftly translate its conviction into change in the marketplace.

GPIF has emphasized the relationship between ESG and long-term value, explaining that for long-term investors, material ESG factors have implications for investment performance by definition. By extension, this means that taking these factors into account in investment analysis and decision-making is consistent with fiduciary duty.

Pressure for both investors and companies to change toward responsible investments and sustainability has come not only from the Japanese government but also from civil society. In the past few years, both international and local NGOs in Japan have started voicing concern on topics including climate change, investment in coal/fossil fuels, and the sourcing of paper/pulp and palm oil.  

This year’s Responsible Investor conference, RI Asia Japan, was held in Tokyo on April 10-11. The event attracted both local and international audiences, and reflected the changing focus of Japan’s investment landscape. Discussions have moved beyond whether investors should integrate ESG or not, and instead focused on the “how,” including addressing the more nascent areas of ESG integration into fixed income and passive strategies. This shift alone represents significant progress from where Japan sat in its closed ecosystem just a few years ago.

The framing of the opportunity to connect an ESG investment strategy to the UN Sustainable Development Goals (SDGs) has been rapidly accepted by Japanese investors and businesses alike. As Hiromichi Mizuno, Executive Managing Director and Chief Investment Officer of GPIF, explained at the event, the number of articles talking about ESG in Japan has quadrupled over the past two years.

Yet at both at RI Asia and two BSR side events around the conference, it was clear that Japanese investors seek deeper guidance on how to properly integrate ESG considerations into their investment strategies. A few key learnings from the event for the investor community included the following:

• Mainstream Japanese investors new to ESG can learn a great deal from international players who have long integrated ESG in the core of their investment strategies, such as AXA, Clearbridge, Wellington, BNP Paribas, UBS, and others.
• ESG reviews of companies commonly use information from major ESG date/rating providers; investors should leverage this data as a starting point. In-house analysts can use it to inform their own deeper research and analysis, but they should also engage in dialogue with companies directly.
• Socially responsible investments are not only about integration and engagement, but can also take the form of innovative products. There could be a new market opportunity to attract various investors by developing innovative financial products, including fixed income and impact investments, unique to the communities addressing ESG challenges in line with SDG goals.

The next few years are likely to tell the story of how SRI takes hold, proliferates into the Japanese investor and business communities, and, hopefully, helps define ESG leadership in Asia and around the world. At BSR, we’ll continue to watch this space and and work with our member companies, including our banking and investment members, to assist with their responsible investing needs.

Case Studies | Monday April 16, 2018

Creating an Internet Powered by 100 Percent Renewable Energy

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Data center operations account for two percent of all U.S. electricity use—and this proportion is unlikely to shrink. In 2012, BSR brought tech leaders together to form the Future of Internet Power, a collaborative initiative working toward a shared vision: an internet powered by 100 percent renewable energy.

The Challenge

While the thriving technology sector provides significant business and social benefits—many of which help to reduce negative environmental impacts—data centers are energy intensive. In 2010, data centers represented 2 percent of all U.S. electricity use, and that percentage is unlikely to decrease, given our increasing reliance on mobile and internet communications.

Today, internet companies and data center operators are addressing their impacts by considering the source of the electricity that powers their data centers, which is often a mix of renewables, natural gas, and coal. Moving beyond incremental improvements in the energy mix requires access to and use of sustainable, low-carbon electricity at scale. To make this a reality, companies will need to both collaborate across the industry and partner with local utilities and policymakers to develop the infrastructure and promote the regulations that will enable renewable energy procurement for internet power.

Our Strategy

In 2012, BSR launched the Future of Internet Power (FoIP), a collaborative initiative composed of some of the world’s most influential companies working to power the internet with 100 percent renewable energy. Today, FoIP members include Adobe, Akamai, Autodesk, Bank of America, eBay, Facebook, Hewlett Packard Enterprise, Salesforce, Symantec, TimeWarner, VMware, and Workday.

For internet companies, powering data centers with renewable energy can require clearing a number of hurdles: navigating regional environmental policies and incentives, in some cases paying cost premiums for renewable versus coal power, and addressing challenging infrastructure requirements for offsite power generation. These and other factors make sourcing low-carbon power difficult for individual companies to manage alone. Through FoIP, companies collaborate with peers, suppliers, and power developers to build smarter approaches and identify opportunities for shared or joint investment.

Our Outcomes and Impact

FoIP has played a foundational role in helping the technology sector set aggressive and achievable commitments to renewable energy. As of April 2018, nine FoIP members had committed to 100 percent renewable energy: Adobe, Autodesk, Bank of America, eBay, Hewlett Packard Enterprise, Facebook, Salesforce, VMware, and Workday.

FoIP also launched the Corporate Colocation and Cloud Buyers’ Principles, which outline six criteria that companies would like their data center service providers to meet. This includes providing data on customer energy consumption, disclosing facility energy sources, and supporting renewable energy advocacy. As of early 2018, 17 customers of industrial data center service providers (also known as “colos”) and cloud services became signatories, demonstrating their support for the six Principles, and four cloud and colo providers became Principles supporters, committing to work with their customers to put the Principles into practice.

In 2018, FoIP’s focus will be on finalizing and rolling out new tools for companies choosing renewables when making data-center siting decisions, encouraging colos to procure renewables, streamlining and standardizing the documentation required to make data-center-related renewable energy claims, and continuing to collaboratively tackle greenhouse gas accounting challenges in Scope 3 emissions.

Lessons Learned

In addition to sharing best practices and collaborating on solutions through FoIP, BSR’s one-on-one work with companies creates a model that we can customize for other businesses to develop and manage renewable energy infrastructure projects.

We have learned that big challenges like these require collaborative solutions. Building on the FoIP approach, we have been able to expand the group’s mission by working through other partnerships, including the Renewable Energy Buyers Alliance, a collaboration with the World Resources Institute and World Wildlife Fund Buyers' Principles initiative, and the Rocky Mountain Institute's Business Renewables Center. By working together, we can scale our impact even more, while making it easier and more efficient for businesses to help shift the energy mix powering the internet toward renewables.

Reports | Monday April 9, 2018

Women in the Jewelry Supply Chain: Landscape Review of Barriers to Women’s Economic Empowerment

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This white paper explores the role of women in the jewelry supply chain and the challenges they face to their well-being and advancement. The study focuses on precious metals (primarily gold), diamonds, and colored gemstones and highlights three key phases: mineral and gemstone extraction, diamond and colored gemstone cutting and polishing, and jewelry manufacturing.

While this paper is not an exhaustive review of all the ways the jewelry industry impacts women, it provides emerging perspectives, analysis, and observations designed to stimulate dialogue and inform ongoing debate.

This paper was prepared for a convening in April 2018 to bring together key stakeholders in the jewelry value chain—from mining companies and manufacturers to retailers and brands—and explore how the jewelry industry can be a positive driver of women’s empowerment and gender equality.

This research was supported by the Ministry of Foreign Affairs of the Netherlands and Swarovski.

Blog | Wednesday March 28, 2018

Next-Generation Private-Sector Collaboration for Sustainable Development: Q&A with Neste

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This blog post is part of a series of interviews on how the private sector contributes to sustainable development through collaboration. It is adapted from an interview that BSR’s Cecile Oger and Laura Marie Uhlmann held with Adrian Suharto, Sustainability Manager at Neste, as research for Private-Sector Collaboration for Sustainable Development, a new report from BSR and The Rockefeller Foundation.

BSR: What role does multistakeholder collaboration play at Neste?

Adrian Suharto: Collaboration is anchored in Neste’s sustainability strategy. As a company, we seek to act responsibly in society and in the use of natural resources, and one way to do so is through multistakeholder collaboration. Neste is an active member in collaborations like the Roundtable on Sustainable Palm Oil (RSPO), the International Sustainability and Carbon Certification (ISCC) Association, the RSB, and other industry collaborations or working groups, all of which help us address sustainability challenges crucial to not only our company but our industry more broadly. Hence, there is a strong internal drive at Neste for collaboration motivated by both our sustainability goals and business goals, as we understand that we cannot tackle industry-level problems in isolation.

BSR: How does collaboration start?

Suharto: Collaboration can be used to leverage influence and economic power to drive positive—even transformational—change. A natural starting point for collaboration is when an organization realizes that it has a stake in a certain issue that aligns with the interests of other stakeholders.

If you take the example of RSPO, one of the key reasons that global brands and retailers, palm oil processors and traders, manufacturers of consumer products, social and environmental NGOs, smallholders, investors, and many others started collaborating on palm oil sustainability was that there was increasing pressure to act as civil society organizations were raising public concern and awareness about the adverse environmental and social impacts associated with palm oil cultivation and increasing use. Companies quickly understood that this issue touched upon different sectors, and the challenges could not be addressed by any single actor or even a single industry alone. Hence, the RSPO was founded as a platform to convene a diverse range of stakeholders around this one common challenge and seek to collectively and effectively address the sustainability challenges of palm oil.

BSR: In your experience, what are some of the key challenges that companies face when engaging in collaboration, and how can these be overcome?

Suharto: A major obstacle to collaboration is a lack of consensus. This is especially common in large, multistakeholder collaborations. Although all actors might acknowledge the need for collaboration, reaching consensus to take action and move ahead on certain issues can be a real challenge.

Competition between companies can also impede successful collaboration. While large companies have a lot of leverage in collaborations due to their economic power, some can be afraid to compromise their competitiveness, be accused of antitrust violations, or lose face in collaborations for which they do not feel prepared. Neste’s commitment to sustainability is very strong, and our palm oil supply chain is 100 percent traceable. We additionally use only certified palm oil. We have experienced cases in the past when other companies that were less advanced in terms of their sustainability commitments on certain issues have been reluctant to collaborate with us.

At the RSPO, we have been successful in avoiding these challenges by working with selective suppliers with similar ambition levels to push forward on the sustainability of palm oil. The lesson here is the role of leadership: If you want a collaboration to be successful, it is important to have a few strong leading organizations that set an example and demonstrate how shared challenges can be solved collectively.

BSR: You mentioned leadership as a success factor for collaboration. What are additional drivers that make collaboration successful?

Suharto: Collaborations are successful if they are relevant to the companies that participate in them, or, in other words, if there is a strong value proposition for companies to collaborate. The RSPO is again a good example. But companies also need to recognize that collaboration requires dialogue, rather than competition. Hence, dialogue and the intention of different actors to collectively tackle shared sustainability challenges are what truly drive successful collaboration.

BSR: What role will collaboration play in the future, and what are the opportunities for companies in engaging with different stakeholders to address sustainability challenges collectively?

Suharto: I believe that the private sector will increasingly look at collaboration as a means to tackle major sustainability issues because it is the most effective way to achieve improvements and transformational change. This will become the new norm.

I also expect to see an increasing level of consolidation in the collaboration space. Many collaborations target similar sustainability challenges and operate in the same region. Understanding common goals through dialogue, not only between companies but also between and across collaborations, is the way forward.   

Blog | Tuesday March 27, 2018

Corporations as Citizens: Have We Come Full Circle?

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From the business leadership that helped to deliver the Paris Climate agreement, through Larry Fink’s recent letter to CEOs about social purpose and long-term growth, to the even more recent examples of Citigroup, Walmart, and Dick’s Sporting Goods changing their approaches to gun sales, business is leading on a wide range of sustainability and social issues.

What this fundamental shift really calls out is the idea of a corporation as a person coming full circle. Whatever one may think about the implications of the Citizens United decision on campaign finance in the U.S.—and the impact of corporate money and influence in our democratic system has been widely criticized—it clearly expanded the definition of corporate “personhood.” In the case, the majority ruled that corporations, as associations of individuals, have free speech rights under the First Amendment.

As Wikipedia states, “a person is a being that has certain capacities or attributes such as reason, morality, consciousness or self-consciousness, and being a part of a culturally established form of social relations, such as kinship, ownership of property, or legal responsibility.” This is very different from the institutional concept of a corporation defined by Milton Friedman: specifically that a company's sole responsibility is to increase profits for its shareholders.

If companies are like people, it follows that they should act more like people, or at least members of a community. You don’t take care of your family members because you are legally required to; you do it out of love. You don’t shovel your elderly neighbor’s sidewalk because you have to; you do it out of companionship. Thousands don’t donate money, supplies, time, and even their own blood to victims of natural disasters because of a legal obligation; they do so because they have empathy for other people.

Yet until the past few years, our society has not expected corporations to act in the same way. We might look to governments, religious institutions, or nonprofit organizations to “take care” of society, but not our corporations. Despite great work in the corporate sustainability field, we have not expected, or even wanted, corporations to truly act like citizens.

In fact, with Citizens United, there have been legitimate concerns that the power of corporations to capture government to serve narrowly defined short-term shareholder interest has grown too strong.  But does it have to be this way?  Could Citizens United actually be a path for companies to leverage their influence for the good of society? We are seeing hopeful signs that this could be changing, as more companies behave as institutions that have the rights—and the responsibilities—of good citizens.

In the U.S., with our devotion to capitalism and the spirit of entrepreneurship, we’ve long held up the ideal of a company. And while a lot of societal challenges depend on cross-sector collaboration and a fair regulatory environment, perhaps it makes sense that we go back to that ideal of a corporate citizen. This entails acting with integrity, contributing positively to one’s community, and putting society above one’s self interest when the two are in conflict.

As Fink wrote recently, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

Those of us who work in corporate sustainability are familiar with a long-standing debate about what we call it—corporate responsibility, sustainability, corporate citizenship, shared value, etc. Many of us who moved away from “responsibility” language did so because it seemed to set the bar too low: Shouldn’t we aim for more than being responsible? What about the value creation opportunities and the need to drive positive change? On the other hand, a focus on the value creation side implies that it’s always a win-win; sometimes, companies have to make hard decisions where it may cost more in the near term to do the right thing.

Whatever we choose to call it, we can and should expect businesses to stand up for what they believe is right, to treat their workers and communities well, to act with integrity and as role models for society—not because the government requires it, but because that’s what it means to be an upstanding corporation. If a company is bestowed certain privileges from society, then they have inherent obligations to that society.

In many ways the shift we’ve been experiencing over the past year comes back to the idea of a company as defined by the Citizens United decision. If we believe in the promise of capitalism, then we should be looking to business to lead and to “take care” of society. We should hold all companies to the expectation that they be these ideal corporations—and in doing so, that they be exemplary citizens.  

Blog | Thursday March 22, 2018

Why Hiring 100,000 Impact Workers Is Only the Beginning: Interview with The Rockefeller Foundation

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This week, the Global Impact Sourcing Coalition (GISC) challenged the business process outsourcing (BPO) industry to hire 100,000 new impact workers by the end of 2020. The group also announced the launch of the world’s first Impact Sourcing Standard, designed to increase the adoption of Impact Sourcing by setting out uniform criteria for what it entails.

At the launch, we caught up with Mamadou Biteye, Managing Director, Africa Regional Office, The Rockefeller Foundation, as he reflected on the development of the GISC and its progress to date.

Mark Williams: What need led to the formation of the Global Impact Sourcing Coalition?

Mamadou Biteye: Economic inequality is one of the most threatening global challenges of our time, jeopardizing stability and social progress worldwide. The World Bank estimates that 2.1 billion people in the developing world are surviving on less than US$3.10 a day, and more than half of the world's poorest people are in sub-Saharan Africa. For these individuals and their families, income inequality creates a cycle of poverty that can persist for generations. One of the most sustainable means to reduce such inequality is to ensure that poor and vulnerable populations have access to formal employment and training, giving them the opportunity to lift themselves and their families out of poverty. GISC is trying to do this by creating access to opportunities of gainful employment.

Williams: How did the GISC come into being?

Biteye: As part of its Digital Jobs Africa initiative, whose aim was to catalyze new, sustainable employment opportunities and skills development for African youth through ICT, The Rockefeller Foundation had been working with the private sector for six years to influence their adoption of Impact Sourcing in their hiring practices. We later partnered with BSR, a global non-profit organization that works with its network of more than 250 member companies to build a just and sustainable world. BSR is today the secretariat and facilitator of the Coalition.

Williams: How has the GISC grown since its launch?

Biteye: In September 2016, The Rockefeller Foundation and BSR launched the GISC with 20 founding members, including companies and partner organizations. An additional 23 organizations have since joined. GISC’s member companies have a combined workforce of over 1.6 million BPO workers, representing an estimated 10 percent of the global industry.

Williams: How important is the collaboration for the BPO industry and can other industries follow its lead?

Biteye: The Rockefeller Foundation initially targeted the BPO industry in areas such as call centers and data entry, due to their fast growth and high potential for job creation. Today, leading BPO providers have become early champions of Impact Sourcing and are eager to prove the business case for this inclusive hiring practice. While the initial uptake has been a major success in the BPO sector, Impact Sourcing is applicable across sectors and across industries. The BPO sector serves as an excellent forerunner.

Williams: How does The Rockefeller Foundation support industry collaboration?

Biteye: For more than a century, we have worked through partnerships to create the change we want to see and improve the lives of poor and vulnerable. This has been the case not only via Digital Jobs Africa and GISC, but across many of our initiatives at The Rockefeller Foundation, so it is truly in our DNA to bring different organizations together and facilitate their working together to address our challenges for greater impact. We have been fortunate to work with very capable organizations, BSR being one, to catalyze our funding and especially our impact.

Williams: What do you predict for the future of Impact Sourcing?

Biteye: Since the formation of the GISC, we have seen the increasing positive social impact that can be achieved through Impact Sourcing and the power of procurement. The Global Impact Sourcing Challenge will take this ambition to the next level and, together with the new Impact Sourcing Standard, will be the catalyst for a global increase in inclusive hiring practices.

To learn more, please email gisc@bsr.org, and visit our website at gisc.bsr.org. Read more about how The Rockefeller Foundation and BSR approach private-sector collaboration for sustainable development.

Blog | Wednesday March 21, 2018

Culture, Behavior, and Corporate Integrity 2.0

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At the Organisation for Economic Co-operation and Development (OECD) Integrity Forum in March of last year, the OECD concluded that a narrow focus on anti-corruption and fraud prevention has proven insufficient, and companies must broaden their approach to building “cultures of integrity.” Since then, social and political dynamics have further sharpened the need for companies to rethink corporate purpose, values, and ethics beyond compliance. In other words, it is time to launch Corporate Integrity 2.0.

Corporate Integrity 2.0 means considering ethics and integrity across the organization, not simply delegating ownership to the compliance team or responsible business functions, and managing this as much more than a response to regulatory risk. It involves using the latest behavioral research to shape decisions on governance, incentives, and oversight and working collaboratively with other organizations in the public and private sectors to tackle systemic social challenges. It entails considering the meaning of corporate values and understanding that these are determined in practice by strategic decisions, reward structures, and political and commercial relationships.

As BlackRock’s 2018 letter illustrates, the mainstream investment community is becoming increasingly vocal in its demands for companies to demonstrate social value. Businesses are also being called to step up and take action on a range of societal concerns, such as tax transparency, lobbying, inequality, immigration, women’s rights, and climate change—all areas that traditionally sit more squarely in the realm of public policy.

In response to these dynamics, there has been a notable growth in willingness of companies to take public positions on key issues, and several commentators have noted the rise of “CEO activism” as part of a new effort to engage with society in a more impactful way. Questions of corporate values and purpose are front and center in the minds of senior leadership teams, and this trend is only set to accelerate.

One question that has received far less media attention is what this means for how companies structure, manage, and organize themselves internally. Shifts are occurring here, too, but progress is far more incremental, and many companies tell us that they lack concrete direction on their next steps. As we have argued elsewhere, how to build and sustain an organization whose employees are happy, motivated, and ethical is one of the most complex, elusive questions confronting business leaders today.

As the OECD’s upcoming paper on behavioral insights for public integrity argues, creating cultures of integrity is a complex and multilayered effort. Employees need support and guidance on the ethical aspects of their daily decisions, but the cues an organization gives via its structures and management decisions are equally important.

Most compliance programs assume that individuals are rational actors making cost-benefit calculations, deciding to avoid misconduct if they perceive that the likelihood of detection or punishment outweighs the benefit of the wrongdoing. However, a compelling body of academic research suggests that this is not the best way to understand unethical behavior. Humans have a propensity to rationalize and justify their own decisions, and the organizational and group context is of overwhelming importance in this regard. Risk is increased via a range of factors, including role stress, poorly designed incentives, time pressure, diffuse accountability, and overly draconian preventative regimes. Companies have a huge opportunity to incorporate these findings into their programs today, and in the process can reduce the enormous cost and compliance burdens of approaches whose effectiveness is questionable at best.

We think there is a bigger opportunity to more cohesively align the ethics and compliance and sustainability agendas within organizations. Given what we know about how humans are motivated, how they respond to situational cues, and how fear of punishment may have negative unintended consequences, the compliance team needs more tools in its arsenal to inspire, drive pride in the organization, and demonstrate a commitment to values that are about more than competitive advantage and growth. The work of sustainability teams to use business’s energy and innovation to drive positive change is invaluable in this context.

Many—if not most—of the pressing strategic questions facing corporate leaders today do not fit squarely into the remit of a single department. To drive coherence and alignment around values and integrity, we are working with companies to create advisory groups, board committees, or cross-functional management teams with representatives from various functions. This process challenges companies to pay more attention to the relationships, resources, and power available to different groups and teams. If rhetoric and resources are out of sync, that will be highly visible across the organization, and employees will draw their own conclusions about what is truly important. But when these governance approaches are designed using behavioral best practice, they provide the possibility of an entirely new approach to managing integrity.

Companies are re-examining their core values, stakeholder concerns, and the way they make decisions across diverse areas, such as policy engagement, lobbying, marketing, and risk. This has created the possibility of transformational change in tomorrow’s organizations, which is why I believe it’s time to launch the era of Corporate Integrity 2.0.

Join me at the 2018 OECD Global Anti-Corruption and Integrity Forum in Paris next week to discuss what this might look like for you.

Blog | Tuesday March 20, 2018

Our Challenge to Businesses: Hire 100,000 New Impact Workers by 2020

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The Global Impact Sourcing Coalition (GISC)—a collaboration between leading companies to build more inclusive supply chains—is challenging the business process outsourcing (BPO) industry to hire 100,000 new impact workers by 2020. This challenge is made in tandem with our launch of the world’s first Impact Sourcing Standard, designed to increase client companies’ adoption of Impact Sourcing as a high-impact procurement practice by setting out uniform criteria for suppliers.

Together, the standard and the challenge have the potential to drive job creation for economically and socially vulnerable people across global supply chains.

Through participating in GISC, client companies can partner with a network of suppliers around the world that are committed to upholding the Impact Sourcing Standard, which defines required policies, practices, and management systems expected of suppliers that set about hiring, training, and creating career opportunities for employees who were previously long-term unemployed or living below the poverty line. We call these employees impact workers because their employment can help them realize their potential to achieve economic self-sufficiency and support their families and communities.

Kemar, an employee at Sutherland Jamaica, describes his experience: “In high school I was concerned that, based on where I lived, I wouldn’t have the opportunity to be employed. A community leader came to me and said there are people who want to get in contact with youth like myself who grew up in volatile communities [to train us and help us find jobs]. I thought, let’s see what happens, and I am very thankful for the opportunity that was given to me.”

The benefits of Impact Sourcing include the following:

This practice is not just good for impact workers. It also benefits suppliers and their buyers directly. For buyers, the benefits include a more stable supplier workforce, as well as increased social impact and a demonstration of corporate citizenship.

Suppliers, meanwhile, gain access to a large and untapped talent pool, save costs compared with traditional workers, and stand to benefit from increased workforce performance. Cathy Kalamaras, managing executive of people at Webhelp SA, says of the benefits of inclusive employment, “In 2017, we placed 230 Impact Sourcing candidates into our business. Over and above the ROI, which showed a 46 percent cost saving and performance delivery improvements, we have enjoyed the enthusiasm, positive attitudes, and willingness to develop of our new group of colleagues. Webhelp sees this as testimony that this is a sourcing model well worth investing in.”

With the launch of this Standard, GISC is also unveiling our bold challenge to buyers and suppliers: to hire 100,000 impact workers by 2020. By taking part in the Challenge, companies will be contributing to Sustainable Development Goals (SDGs) 8 and 10.

Many of GISC’s members have already stepped up to the challenge, collectively pledging to hire 12,000 impact workers by 2020, with more pledges to come. Murali Vullaganti, founder and CEO of Impact Sourcing social enterprises PeopleShores and RuralShores, says, “As part of our continued commitment to improving lives through Impact Sourcing, we are pleased to respond to the Impact Sourcing Challenge and pledge to hire 3,000 new impact workers across different states of India in our RuralShores business and 1,000 new impact workers across different states of the United States for our PeopleShores business by the end of 2020.”  

We invite all buyers and their suppliers to get involved. For more information, please reach out to us.

Blog | Thursday March 15, 2018

The Women’s Empowerment Principles in Practice: Analyzing One Year of Data

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This year, the level of corporate engagement in International Women’s Day (IWD) was unprecedented. Companies marked the day seemingly everywhere: ANN announced it achieved its milestone of empowering 100,000 women across its supply chain; others, like Pottery Barn, launched special-edition products celebrating women whose proceeds benefit BSR’s HERproject. Still others, including Swarovski, launched collaborations and campaigns to bring visibility to those women across society who are often forgotten.

One week after IWD, we are releasing new insights on the extent to which companies are taking steps internally to integrate a gender lens into their policies, programs, metrics and reporting. To date, 1,800 companies have signed onto the Women’s Empowerment Principles (WEPs); the WEPs Global Trends Report, which we authored in close collaboration with the partners of the tool, reviews the aggregate practices of companies that have used the WEPs Gap Analysis Tool. Developed to give companies guidance on how to implement the WEPs, the tool is a joint project of the UN Global Compact, UN Women, the Multilateral Investment Fund of the IDB, and the Inter-American Investment Corporation, and is supported by the BSR, Governments of Japan and Germany, The Coca-Cola Company, Itaipu, and KPMG.

This first trends report provides a snapshot of corporate performance—across the WEPs categories of leadership, workplace, marketplace, and community—on gender equality and women’s empowerment.

Here are some of the key findings on how companies are managing these critical issues:

• Leadership: A majority of companies—69 percent—have a commitment from their leadership on gender equality and women’s empowerment, while only 32 percent have an organization-wide gender equality strategy.
• Workplace: 45 percent of companies have a policy addressing equal pay for work of equal value, and 15 percent are setting goals to build the pipeline of women in management positions.
• Marketplace: 12 percent of businesses include gender equality criteria in supplier management tools; only 5 percent of companies have set procurement targets for women-owned businesses.
• Community: 52 percent embed gender in philanthropic, advocacy, and partnership efforts, while only 10 percent assess differential impacts on men and women during human rights or social impact assessments.

The data show there is a lot of opportunity for companies to translate their commitments into policies and programs that support concrete action.

If you’re looking to better understand your company’s performance on these issues, taking the WEPs tool is a great first step. 

Let’s make sure we continue to celebrate and focus on women’s advancement well beyond a single day or month.

Blog | Wednesday March 14, 2018

Sustainability Management for a Rapidly Changing World: Q&A with Maersk Group’s Annette Stube

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In the spring of 2017, we spoke with a number of our members about how sustainability is managed within their companies, including what is working and what isn’t. These conversations informed our report Redefining Sustainable Business: Management for a Rapidly Changing World, which presents our blueprint for creating resilient business strategies.

Annette Stube, head of sustainability at Maersk, shared her insights on the role of the sustainability team, sustainability risks for the company, and how to measure impact.

Charlotte Bancilhon: What are your main opportunities and challenges related to the integration of sustainability into Maersk’s corporate strategy?

Annette Stube: Maersk is implementing a new sustainability strategy following organizational change. Maersk is a 120-year-old conglomerate with many different kinds of businesses. Today, we are refocusing our business on transport and logistics, spinning off our industrial and oil and gas businesses. In light of this change, Maersk has developed new corporate strategy, which leverages the synergies between businesses. We aim to be a global integrator of container logistics.

This is a good time to be speaking about sustainability at Maersk. We have shaped our sustainability priorities to support this corporate strategy. The priorities include our historic corporate responsibility agenda, which is focused on mitigating negative impacts, but they also include how Maersk can contribute to solving sustainability mega-challenges like climate change, food loss, and informal trade barriers, which prevent thousands of companies in developing countries from accessing international supply chains.

Bancilhon: How has your materiality assessment helped you in this process?

Stube: We conduct a materiality assessment every year. We have used the outcome of our enterprise risk management process to inform our sustainability materiality assessment. This has been hugely valuable, as we are able to distinguish between what is a business risk and what is not and manage it accordingly. Executives get tired of hearing that all sustainability issues are risks, and really, they are not. We may still want to handle them, but for other reasons.

For example, the sulfur oxide emissions (SoX) from our ships have impacts on coastal population’s health. New regulations capping SoX are timely. We have supported this legislation, but it will be very costly in terms of compliant fuel, and currently there is no enforcement mechanism. Savings of between US$700,000 and US$1 million for a single trip between Asia and Europe by using non-compliant fuel could be tempting for some. The real business risk therefore is that without an enforcement mechanism, we might be put at a real competitive disadvantage.

Bancilhon: How do you measure the impact of your sustainability efforts?

Stube: For our sustainability programs, we define value both for our company and for society. For example, our programs around enabling trade provide growth for Maersk and economic development for society as a whole. We keep this duality in mind, and our programs need to deliver on both objectives.

A few years ago, we wanted to look at measuring our impact. We were able to define indicators related to process, but we have still yet to fully crack the code in terms of defining indicators related to the actual larger societal impacts of our efforts. For the business, value creators include growth, cost reduction, brand building, and employee engagement. It is very useful to measure the return-on-investment of our programs but remains difficult to put exact numbers on it.

Bancilhon: Does your sustainability reporting support improved sustainability performance?

Stube: Sustainability reporting makes a lot of sense to us. Reporting has an effect to solidify program management. Applying a reporting regime gives us the same understanding across the business. Reporting on program outcomes pushes teams toward high quality outcomes.  

Bancilhon: What is the role of the sustainability team in all of this?

Stube: The scope of the sustainability team is evolving. My team needs to have deep sustainability knowledge on the well-known issues, but sustainability people are also ‘translating’ what is happening in society to the company—and vice versa. For this, new competencies are needed. These teams will increasingly not only be people mitigating environmental impacts, but people with a different understanding of global economies and how we as a company can play a role in solving the larger problems. It goes way beyond, for example, environmental expertise to find ways of supporting economic development and job creation. It can mean doing business in a slightly different way to make trade more inclusive or being involved with a new set of stakeholders to develop the markets. This is a really exciting transition, although we must continue to be on top of the more well-known agenda as well.

We invite our member companies and other interested stakeholders to engage with us and continue to shape the future of sustainable business through our Redefining Sustainable Business event series this year. Please visit our calendar for the most up-to-date information about events in your region.