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Margot Thompson-Wells

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Margot supports BSR member companies across industries in advancing human rights and sustainability management throughout their value chains. She also works on BSR’s Human Rights Working Group team, helping companies around the world implement the UN Guiding Principles on Business and Human Rights and navigate emerging trends and best practices to strengthen their human rights strategies.

Before joining BSR, Margot worked in partnerships and public affairs at the United Nations Foundation, where she managed relationships with civil society, corporate partners, and UN agencies to advance the Sustainable Development Goals (SDGs). Her work included managing Global Goals Week, leading private sector engagement for the award-winning #EqualEverywhere gender equality campaign, and coordinating a U.S. Youth Climate Consultation for UN Climate Strategy alongside youth activists and UN bodies. Before this, Margot worked at a Colombian foundation in Bogotá and at a Geneva-based NGO focused on children's rights.

Margot holds a BA in International Relations from the University of Exeter and is fluent in English, French, and Spanish.

Blog | Monday August 21, 2023

Bringing the Most Vulnerable to Climate Change to the Boardroom

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Boards and executives rarely hear directly from the communities most affected by climate change, who are seldom represented in the boardroom or included in stakeholder engagement. Given the extent of inequities that heighten their exposure to climate risk—low-income livelihoods across supply chains; lack of access to basic financial, legal, and public services; and a plethora of diversity divides—a voice in the boardroom might seem to come low on the list of priorities.

But a different perspective is gaining momentum: boardrooms and governing bodies need people from the climate frontline if they are to take meaningful action on ESG, both to reduce their exposure to climate risk and to address the increasingly recognized climate adaptation gap. 

Current policies will push around 2 billion people out of the environmental and climatic conditions“climate niche” that best support human life by 2030, increasing to around 4 billion—an estimated third of the global population—by the end of the century, according to a recent study.

The climate adaptation gap refers to the understanding that those most vulnerable to climate impacts have the least means of increasing their own resilience. Not only do they lack the funds, access, and rights to invest in and safeguard their future, from building skills to adapt to workforce volatility to developing land and property to withstand climate impacts, they lack the influence to drive action that might mitigate risks. 

The risks to these communities are risks to business. There are vulnerable workers and dependents across the supply chain from farms and plantations; extractive sites; factories; transport; to logistics. The more businesses can understand how these communities are affected, the better they can work with them to counter the risks. This is where a voice in boardrooms and executive leadership can make a difference.

The need coincides with growing calls for more representation at the highest levels of corporate governance, particularly of women and youth, and linked specifically to climate change. As one student wrote in a letter to the Financial Times: "Age diversity is extremely low among chief executives and across most boards of directors in listed companies. At the same time, our species is facing global grand challenges that are profoundly characterized by an intergenerational dimension.”

Changing Expectations from Regulators, Investors and Customers 

Activism on climate action is increasingly reaching the boardroom—with calls for change from regulators, investors, customers and employees. In the EU, the Corporate Sustainability Due Diligence Directive, the Corporate Sustainability Reporting Directive (CSRD), the Green Taxonomy, and the Mandatory Human Rights Due Diligence Directive (HRDDD) are redefining the role of boards by obliging them to oversee climate, social impact, human rights and governance at their companies. In the US, the draft Securities and Exchange Commission rule will likely require disclosures on how the board is overseeing climate-related risks and opportunities, prompting a review of existing governance structures. And the recent International Sustainability Standards Board (ISSB) Sustainability Disclosure Standards also call for an increased board role in reviewing climate-related risks and opportunities. 

Meanwhile, these regulatory requirements are surfacing deep tensions in how companies can best protect and serve all employees. For instance, pressure on reporting brought by recent EU legislation could have the catastrophic impact of squeezing smallholders, who lack the resources to meet new requirements, out of supply chains. Indonesia and Malaysia responded to the recent deforestation law by sending top officials to Brussels to seek fairer treatment for small palm oil farmers.

Beyond legal requirements, expectations of business directors are changing, with investors and other stakeholders demanding deeper board engagement and oversight, more transparency, and opportunities to engage with directors. The financial risks will also become more apparent with the increasing impact of climate change, as well as the challenges it presents to insurance. 

Building Climate Resilience through Stakeholder Engagement 

Business can enable credible action to build climate through diverse representation and engagement at the highest levels of governance, particularly on boards and Stakeholder Advisory Councils . The challenges of a just transition and achieving climate justice demand that businesses co-create solutions with frontline communities. For this, those leading the charge need a firsthand understanding of the risks and impacts. They also need a mindset change, widening their focus beyond near-term value generation to encompass long-term risk mitigation and adaptation, and beyond what’s material to their stakeholders today to monitor shifts that may appear distant but whose impacts could quickly escalate to render business-as-usual impossible.

This is not to underestimate the extent of change required. As David Korngold, Director of Business Transformation says: “Meaningful corporate engagement with stakeholders is set back by transactional or extractive relationships, overreliance on large global voices, and under-engagement with affected stakeholders—including fleeting interactions. Not only this, but engagement is often treated as the end-goal, rather than a means to co-create an equitable future.”

Recommendations for Business Leaders 

Business leaders that act will not only get ahead of regulation, stakeholder expectations, and activism, but they will find themselves better positioned for effective leadership and resilience, thanks to expanded knowledge, competencies, and expertise. Key recommendations include: 

• Prioritize diversity in the representation and engagement of stakeholders at the highest levels of governance

• Develop mechanisms to engage with affected stakeholders, whether through Stakeholder or External Advisory Councils or other direct dialogues in close collaboration with management 

• Use engagements to listen to current issues, maximizing the opportunity to increase directors’ understanding of climate risk and enable thoughtful dialogue with affected parties 

• Empower External Advisory Councils to amplify the voices of stakeholders and enhance their oversight

• Schedule regular meetings to cultivate highly engaged and committed standing groups 

BSR has extensive experience engaging with boards and Stakeholder Advisory Councils, including on climate justice and adaptation. For more information, please contact the Sustainability Management team.

Blog | Thursday August 10, 2023

Implementing a Long-Term DEI Approach: Lessons from the Asia-Pacific Region

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Since 2020, BSR has worked closely with our APAC member companies by tailoring existing approaches to identify goals, build strategies, and assess progress using metrics as part of a wide range of DEI consulting projects. Through our partnership approach, BSR works with APAC companies, mostly at the nascent stage of their journeys, to embed DEI across their businesses and corporate culture, as well as global member companies by applying local and context-specific approaches to DEI in their operations throughout the region. 

As social norms, cultural nuances, and evolving legal and regulatory frameworks shape DEI priorities in APAC, companies operating in this region can take several key steps to successfully implement a long-term strategy for DEI. Based on our experience, we recommend a combination of the below: 

DEI Assessments 

Before setting an ambitious long-term vision and mission, a company can undertake a DEI assessment to understand and evaluate its current efforts to promote DEI internally, while identifying opportunities for further engagement. An assessment may include a review of the level of DEI initiatives already in place, corporate commitments from the top, current policies and practices, and stakeholder and employee engagement. An assessment of the external landscape, current trends, and peer practices is also useful as a benchmark to shape the company’s understanding of how employees and other stakeholders comprehend DEI.

Putting it into practice: Using BSR’s methodology, we conducted a DEI assessment for an APAC company who wished to evaluate the effectiveness of its DEI efforts and assess where it stood on the maturity curve, a framework that determines a company's level of maturity or the ability of a company to continuously improve in DEI. Furthermore, the assessment gauged the company’s high-level progress on DEI, i.e., determining what strategy, policies, and procedures it had in place; internal DEI governance; and the level of external reporting on DEI topics. The assessment determined that the company was at a nascent stage on the DEI maturity curve and resulted in recommendations to not only address identified gaps but also steps that they needed to take to build an established DEI program. 

Landscape Analysis and Research on DEI Themes

Given the ethnic, cultural, and linguistic diversity of the APAC region, it is important to see how DEI varies in companies across different countries. Understanding regional context, as well as socioeconomic, political, and cultural nuances, can help companies better identify priorities and respond sensitively to the needs of their workforce and other stakeholders.

Putting it into practice: BSR conducted DEI landscape analyses for APAC member companies seeking to understand the DEI context of the region in which they operate. The research provided an overview of the legal and regulatory frameworks and identified priority areas of focus where they could dedicate their attention and resources. 

DEI Awareness Raising and Capacity Building

As companies demonstrate their commitment to DEI by establishing and implementing relevant policies, they may wish to socialize these among their workforce and build awareness and internal capacity within their own operations and subsidiaries on an ongoing basis. Training need not only cover company policies and commitments—it can also address issues such as institutional and structural discrimination, as well as unconscious bias. 

Putting it into practice: BSR developed a DEI Handbook for a global private equity firm, and in the following year, BSR updated the Handbook to provide APAC-specific context, including emerging legislative developments and cultural and social nuances, to support the firm’s portfolio companies in the region. BSR also co-led a series of webinars for APAC portfolio companies on sharing and leveraging the Handbook as a guiding resource. 

Setting DEI Goals and KPIs 

To support the development of a DEI strategy, it is crucial that companies set goals and targets informed by high-level aspirational visions, followed by key performance indicators (KPIs) to measure progress. A high-level vision and ambition can drive a company’s DEI efforts from the top while communicating progress internally and externally.

Putting it into practice: BSR helped APAC companies to set and refine DEI goals, followed by targets and KPIs, to monitor progress and benchmark against leading companies’ practices. BSR also supported APAC companies in developing DEI action plans as part of materiality and human rights assessments. 

Our Takeaways

In our experience of working with companies in APAC, whether they are taking the first step in their DEI journey, localizing a global DEI policy, or already mature in their DEI approach, there are a few key commonalities that these companies share that have helped to pave the way for successful work.

1. Buy-in from senior leadership is key to driving DEI efforts. Companies are securing senior leadership support and buy-in as this is key to demonstrating company commitment and critical for the success of internal DEI efforts. Setting the tone from the top increases accountability while embedding nuanced DEI strategies across business departments. This also enables companies to go beyond the “ad hoc” or “nascent” stage of the DEI maturity curve toward being more established and transformational in the long term. 

2. Meaningful employee engagement informs DEI priorities. DEI priorities are becoming increasingly reflective of the needs of the workforce, including the most underrepresented groups. Fostering safe dialogue with employees through regular focus group discussions and employee perception surveys can offer insights into what employees need and how companies can proactively support them.

3. Companies are seeking to take a more multi-dimensional approach to DEI. While gender equality has been a common theme for many companies in APAC, companies are beginning to include additional material topics. Where gender is concerned, companies are moving away from just increasing the number of women in senior leadership to also focusing on equity by addressing the gender pay gap.

As the momentum on DEI picks up in APAC, BSR will continue to engage companies and support ambitious targets as they mature in their DEI journey.

For more information on how BSR works with companies in APAC on DEI, please get in touch. 

Blog | Wednesday August 2, 2023

Partnering with Procurement to Deliver on Net Zero

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Companies are increasingly active and ambitious in their journeys to reduce detrimental impacts on the environment. Led in part by stakeholder demand, legislative pressure, and a clearer understanding of declining available natural resources, a paradigm shift has taken place. Many organizations now have in place not only large sustainability teams but supply chain teams that are well-versed in issues like deforestation and water scarcity and are finding that ESG has made its way consistently into boardroom discussions. However, if companies are truly going to achieve their net zero visions, one critical partner that needs to be engaged is the Procurement Team.

When it comes to engaging with suppliers, there is a real focus on managing existing suppliers who are currently contracted to provide key services and materials across a company’s value chain. Supply Chain teams are integrating with more traditional sustainability teams, assigned Key Performance Indicators (KPIs), exposing employees to new ways of thinking, and producing integrated reporting with the sustainability team.

The same has yet to occur with procurement teams. While managing the existing supplier base is of course integral in the path toward net zero–it is not the sole area of focus. And in fact, influencing change with a current supplier base, many of whom have long-term, multi-year contracts already in place, can be much more challenging than integrating stricter ESG requirements at the procurement phase.

Currently, most companies’ procurement sits separately from the sustainability initiatives—this is a missed opportunity. Not only does procurement control a large amount of budget, but they also sit at the critical juncture where an organization has the most leverage: the phase before a contract is awarded. Setting a high bar on environmental topics before suppliers are either brought on, or re-upping contracts for new engagement, allows companies to get more aggressive on their requirements.

Many procurement teams are energized by the prospect of helping to achieve a more stainable future for their organization but lack the critical resources to do so.  

Businesses can engage procurement on net zero transformation via the following steps:

Set the Stage.

• Get buy- in from Leadership that sustainability will be a key element embedded into business decisions. Executives can communicate that remit directly to procurement and explain how additional criteria are being added to the traditional Time, Cost, Quality trifecta. 

• Help them understand how sustainability will serve as a risk mitigation tool and be a value add to their department. 

Train and Communicate.

• Understanding that this has not been a traditional subject covered in their role, provide access to training via internal meetings, webinars and direct them to publicly available resources on ESG topics. 

• Recognize that embedding sustainability into the procurement function is a long process, and institute regular check-ins between procurement and sustainability teams. 

Assign Proper Governance and KPIs.

• Ensure that there is at least one sustainability expert on the procurement team to serve as the point person and liaison between the Procurement, Business, and Sustainability teams.

• Give the procurement team clear targets and objectives to work toward, thus incentivizing them to push for further integration of sustainability into sourcing decisions.

Codify Policies & Procedures.

• Create sustainable procurement policies (including deciding what certifications to use) and an accompanying rollout procedure. It may be best to pilot this policy in a smaller region/department to see how it works in practice and adjust accordingly.

• Integrate sustainability into the onboarding process for new suppliers, ensuring that suppliers fully understand the requirements being asked of them.

Amend the Supplier Scorecard.

• Embed sustainability topics into the supplier scorecard and increase weighting, thus incentivizing suppliers to integrate sustainability more quickly into their operations. With the new legislative push (mainly from Europe at this juncture) toward due diligence, Procurement teams have a clear mandate to request much more information during the RFP process as suppliers are trying to win business.

Source from zero-emissions suppliers.

• In conjunction with reducing the impacts of current suppliers, there is a unique opportunity to select suppliers who have already achieved carbon neutrality in their own operations. 

Integrate with Design Teams.

• Suppliers are selected many times, based on design specifications. This means that it is essential for Procurement and Design to work together to understand what opportunities exist, barriers that are non-negotiable, and where the biggest opportunity for change exists.

Remember that this is not a one-off session with Procurement. This should be the beginning of a deep connection and integration of sustainability into sourcing decisions. Acknowledge that there is a reason that Procurement will need time to shift their traditional ways of selection and onboarding and provide the necessary support and guidance to help them on their journey.

For more information on engaging procurement on key sustainability topics contact BSR’s Supply Chain Sustainability team.

People

Orissa Erwin-Rose

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Orissa leverages technical and policy expertise to help companies identify and address the human and child rights impacts of their technology products and services.​

Orissa brings an expertise in child rights impact assessment (CRIA) methodologies in the digital environment and led our collaboration with UNICEF to develop a CRIA tool. She also contributes to BSR’s work on Generative AI, systematic risk assessments mandated by EU regulation, and human rights focused stakeholder engagement.  

Orissa earned an MS in Information Management and Systems from UC Berkeley and a BA in History with honors from Scripps College. UC Berkeley awarded Orissa the Promise Fellowship and Sarukkkai Social Impact Award for her work at the intersection of technology and social justice.

Blog | Thursday July 27, 2023

Scaling Anti-Trafficking Efforts Across Sectors Through Collaboration

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Human trafficking is on the rise around the world. Every year, conflicts, humanitarian crises, climate change, and socioeconomic challenges leave millions of people vulnerable to exploitation by traffickers.

On July 30, the United Nations marks World Day Against Trafficking by calling on the global community to reinforce commitments to eliminate human trafficking. We are proud to answer that call and to announce that the Tech Against Trafficking (TAT) coalition has merged with the Global Business Coalition Against Trafficking (GBCAT) in an effort to enable a more comprehensive business approach to scale anti-human trafficking efforts through collaboration between leading multinational business, civil society, survivors and academia. 

Established in 2012, GBCAT aims to harness the power of business across all sectors to prevent and reduce human trafficking, and expand survivors’ access to resources. TAT launched in 2018 as a coalition of technology companies collaborating with global experts to help eradicate human trafficking using technology, including job skills training. With this merger, TAT is now one of three core workstreams of GBCAT, and the unique focus on the use of technology to prevent, disrupt, and reduce human trafficking will become part of GBCAT’s efforts. Together, we aim to create a one-stop hub for businesses to work together across sectors and from different angles to eliminate human trafficking.

GBCAT’s work is focused on three workstreams: 1) Corporate Supplier Capacity-building, 2) Survivor Empowerment and Employment, and 3) Tech Against Trafficking (TAT).

Corporate Supplier Capacity-building:

GBCAT supports capacity building among small and medium sized enterprises to prevent and eradicate human trafficking. Its Toolkit on Addressing Forced Labor and Modern Slavery Risks aims to help companies that work in corporate supply chains identify areas of their business that carry the highest risk of modern slavery and develop a simple plan to prevent and address those risks.

GBCAT has also published a compendium specifically for procurement functions to help ensure that business partners are conducting business free of modern slavery. Most recently, GBCAT published free, downloadable template policies to help corporate suppliers establish standalone, comprehensive corporate policies on modern slavery and child labor. GBCAT plans to build on these efforts by directly engaging corporate suppliers and updating GBCAT’s Supplier Portal with new resources. 

Survivor Empowerment and Employment:

Safe and sustainable employment is one of the most effective ways to prevent the exploitation of vulnerable individuals and the re-exploitation of survivors of human trafficking and other forms of slavery. As a key focus area, GBCAT published a guide that describes actions business can take to empower and employ survivors. Additionally, GBCAT and Futures Without Violence developed a free virtual training for managers on how to implement a trauma-informed workplace that supports both employees and survivors of human trafficking. Looking ahead, the coalition plans to build on this work, including efforts to pilot a survivor employment program in the U.S. 

Tech Against Trafficking (TAT):

Digital information and communication technologies can serve as a powerful tool to disrupt and reduce modern slavery. Tech Against Trafficking aims to advance the use of technology solutions to fight human trafficking, while addressing the misuse of technology to facilitate crime.​ 

​TAT works with civil society, academia, technologists, and survivors to identify promising uses of technology in the anti-trafficking field, and to advance and scale the use of these solutions through its Accelerator Program. As more businesses are using technology and data to address forced labor risks in their supply chains, TAT is exploring how to strengthen the labor data and technology ecosystem. TAT is also focused on facilitating cross-industry sharing and collaboration to prevent technology-facilitated trafficking. 

Current GBCAT members include Amazon, Boost Engagement, Carlson, The Coca-Cola Company, Google, Marriott International, Meta, and Microsoft. BSR provides executive leadership and secretariat support for GBCAT. GBCAT welcomes inquires from any company that wishes to actively contribute to our mission to harness the power of business across sectors to prevent and reduce the incidence of human trafficking, and support survivors.

Sustainability FAQs | Friday July 21, 2023

Laws and Regulations for Just and Sustainable Business

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This FAQ sets out the BSR perspective on new laws and regulations relevant for our work. The field of just and sustainable business is entering a new era where actions that have previously been voluntary are becoming mandatory. We believe it is essential that the spirit of the law is achieved as well as its letter, that compliance supports ambitious human rights policies and sustainability goals, and that regulatory requirements are used to help create a world in which all people can thrive on a healthy planet. 

This FAQ does not set out the detailed requirements of laws and regulations since many of them are evolving at the time of writing. 

Recent Developments

What new laws and regulations are impacting the field of just and sustainable business? 

Many of the most significant laws and regulations originate from the EU and do or will apply to all qualifying companies doing business in the EU, not just European companies. However, relevant laws and regulations exist in other jurisdictions too. The following non-exhaustive examples illustrate the range and breadth of these regulations: 

• US SEC Climate Disclosure Rule will require public companies to disclose climate-related information, such as Scope 1, 2, and 3 emissions, climate-related risks and opportunities, and governance practices. 

• EU Corporate Sustainability Due Diligence Directive (CSDDD) will require large companies to conduct due diligence to identify, prevent, or mitigate adverse impacts on the environment and human rights. 

• EU Corporate Sustainability Reporting Directive (CSRD) requires companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment. 

• EU Digital Service Act (DSA) is a form of mandatory human rights due diligence for social media companies and other large online platforms. 

• EU AI Act will require due diligence by companies providing and deploying artificial intelligence. 

• EU Sustainable Finance Disclosure Regulation (SFDR) requires financial market participants to disclose environmental and social risks, including how they impact people and the planet.  

• EU Taxonomy Regulation sets out a framework to classify economic activities carried out in the EU as “green” or “sustainable”, including both environmental objectives and human rights safeguards. 

• The German Supply Chain Due Diligence Act, Norwegian Transparency Act, and French Corporate Duty of Vigilance Law all require forms of human rights due diligence. 

• The UK Climate-related Financial Disclosure Regulations (CFDR) requires large companies to disclose climate-related financial information. 

• Japan Exchange Group is introducing new listing rules that will require companies to disclose information about their ESG performance, including their policies, targets, and progress in addressing ESG issues. 

• Financial Market Commission of Chile requires companies to disclose a range of ESG issues, including on human rights and climate change. 

A key theme underpinning these changes is the expectation that companies identify, address, and report their “impacts outwards” on society and the environment, not simply the “impacts inwards” of society and the environment on the company. 

Are these new “hard laws” consistent with existing “soft laws”? 

Most new laws and regulations do a good job of adopting existing well accepted “soft law” standards and converting them into “hard law” requirements. For example: 

• Concepts core to the UN Guiding Principles on Business and Human Rights (UNGPs)—such as how to assess, address, and report on adverse impacts on people—provide the foundation for due diligence requirements in the CSDDD and the DSA. 

• The four-part framework of governance, strategy, risk management, and metrics used by the Taskforce on Climate Related Financial Disclosures (TCFD) has been adopted by the European Sustainability Reporting Standards (ESRS) that implement the CSRD. 

• The reporting standards previously developed by the Global Reporting Initiative (GRI) and the International Sustainability Standards Board (ISSB) are the starting point for most disclosure requirements. 

This means that companies already implementing approaches founded upon the UNGPs, TCFD, GRI, and ISSB are best placed to achieve compliance with new laws and regulations. 

Are the new laws and regulations consistent with each other? 

Some of the new laws and regulations have adapted standards created for one field (such as human rights or climate change) and applied them to other parts of the field. This has significantly enhanced consistency between them. For example, the CSRD adopts prioritization severity criteria drawn from the UNGPs (i.e., scope1, scale2, and remediability3) and applies them to its materiality assessment requirement across all sustainability issues (thereby enhancing consistency with the CSDDD), while the TCFD framework has been adopted by the CSRD for all issues, not just climate change.  

While the new laws and regulations are not perfectly harmonized (e.g., they don’t use precisely the same terminology and definitions) they are very well aligned (e.g., they do not contradict each other) and are very complementary (e.g., companies can achieve more by complying with them in combination). 

Impact on Sustainability Strategies

Will compliance with these laws and regulations mean accepting the “lowest common denominator” of responsible business conduct? 

No. By requiring business practices based upon existing “soft law” standards, we believe these new laws and regulations do or will significantly raise the bar for responsible business conduct and bring changes that advance the overall field of just and sustainable business. Companies who already follow the “soft law” standards are in a strong position to comply, and the long tail of companies who don’t will need to improve.  

Will compliance with these laws and regulations lead to a “check box approach”? 

If a “check box approach” means taking a disciplined and methodological approach to the deployment of just and sustainable business practices then yes, we do believe that elements of a “check box approach” will emerge, and this disciplined and methodological approach will bring some benefits. However, we believe that it will be important for companies to seek compliance with both “the spirit of the law” and “the letter of the law”.  

What is the difference between “the spirit of the law” and “the letter of the law”? 

The “spirit of the law” is the intent or purpose behind the law, while the “letter of the law” is the actual wording of the law. In other words, the spirit of the law is what the law is trying to achieve, while the letter of the law is what the law actually says. 

While the “letter of the law” provides certainty and predictability, we believe that the “spirit of the law”—focusing on the outcomes the law is seeking to achieve—is more important in the case of regulations impacting just and sustainable business. We welcome the fact that many of the new laws and regulations are articulated as outcomes-oriented, which encourages such an approach.  

How can compliance with laws and regulations be combined with ambitious approaches to just and sustainable business? 

There is a risk that the growth of new laws and regulations will result in a narrow focus on compliance, risk-averse actions, and overly cautious public communications. 

However, we believe that companies should seek to connect compliance with the law (e.g., mandatory due diligence; regulated disclosure) with broader commitments that the company has already made (e.g., human rights policy, transparency commitments, climate goals). These objectives are mutually re-enforcing. 

For example, we believe that companies should implement an approach to human rights due diligence that (1) achieves the aspirations of their human rights policy and the responsibility to respect human rights under the UNGPs and then (2) extracts the subset of information, data, and actions needed to demonstrate compliance with mandatory human rights due diligence and reporting requirements.  

In other words, the steps and evidence needed to achieve compliance with the letter of the law should be built into the company’s human rights due diligence as a design requirement, but they should not serve as its final objective, which should instead be to meet the company’s responsibility to respect human rights. 

We frame it this way because the “spirit of the law” means respecting human rights, while the “letter of the law” means demonstrating that certain process steps have been taken. 

Impact on the Field of Just and Sustainable Business

Will the focus on compliance reduce the relevance and impact of the just and sustainable business profession? 

No, we believe the focus on compliance will increase the impact and significance of those working in just and sustainable business functions.  

There is an understandable concern that laws and regulations will make important global priorities (e.g., achieving climate goals, respecting human rights) the mandate of finance, legal, and compliance teams, taking influence away from the sustainability, human rights, and social impact teams whose ambitions may be more transformational. 

However, those in the just and sustainable business profession have an essential role to play in understanding how regulations should be interpreted and working alongside finance, legal, and compliance teams to shape how regulatory requirements are met in practice. We should not be “passive actors” watching from the sidelines. 

The impact of the just and sustainable business profession will be enhanced for three main reasons: (1) our subject matter expertise and practical experience is essential for achieving compliance; (2) the greater level of attention, review, and scrutiny of compliance (e.g., from senior executive and board review) will significantly increase the visibility of our work; (3) there will be even more opportunity for collaboration across professions (e.g., risk management, compliance, strategy, sustainable business working together) to improve the quality of all our work. 

Will the focus on compliance reduce the quality of human rights and other forms of due diligence? 

There are two scenarios that could emerge for company approaches to due diligence—one pessimistic, and one optimistic: 

• Pessimistic scenario: “The emphasis on regulated transparency and discoverability means we need to be careful about anything we record. It is in our best interests to only know and show risks where we have a good history of addressing them.” 

• Optimistic scenario: “We need to demonstrate to regulators that our due diligence processes are thorough, credible, and defensible. It is in our best interests to know and show all our risks and what we are doing to address them.” 

It is our job in the just and sustainable business field to pursue the optimistic scenario. This means applying the same approach to due diligence globally (e.g., not one version for the EU and one for the rest of the world) and undertaking meaningful due diligence in good faith, not as narrowly as possible. 

What might influence the outcome? 

A key variable will be company culture, where we should seek a company culture of achieving both compliance with the “spirit of the law” and ambitious policy commitments over time. The new wave of regulation raises the profile and importance of just and sustainable business which requires an all-company approach.  

For example, if a company’s Board and management must verify its actions and results on climate and human rights in the supply chain, then product design, procurement, transport and logistics, and other functions must be fully bought in, and results measured. It will be important to promote and enable culture change to ensure that performance matches requirements and that both compliance and ambition are sustained over the long term. 

What will the impact be on company participation in multi-stakeholder efforts that seek transformative change? Is there a risk that companies will pull back on participation? 

We believe that the underlying reason for the growth in multi-company and multi-stakeholder efforts that existed in the voluntary era also apply in the regulated era—specifically, that major challenges can only by successfully addressed by companies and stakeholders working together, rather than alone.  

Further, there is a distinction between the “subject matter agnostic” nature of many emerging laws and regulations and the largely “subject matter specific” nature of today’s multi-company and multi-stakeholder efforts. 

Finally, it is worth nothing that participation in multi-stakeholder efforts is one way that companies can demonstrate requirements for meaningful stakeholder engagement that are included in several upcoming laws and regulations (e.g., EU DSA, EU CSDDD). 

Will strategy become constrained by compliance? 

Business strategies are never driven by legal requirements, and the same should be true of just and sustainable business strategies. Senior management and Boards are now mandated by law to focus on multiple aspects of sustainability-related compliance, but this mandate should be considered necessary rather than sufficient for effective leadership.  

It is more important to develop innovative strategies for just and sustainable business (e.g., that address climate risks and opportunities and both respect and promote human rights and social justice) from which compliance with laws and regulations can be demonstrated. Legal requirements as the baseline, and not constrain innovation and ambition. 

Will these changes require higher standards for data? 

Yes. Data verification, as well as the processes that generate data, will become more important. This raises the stakes for everyone: teams need to be more confident in their data; auditors need to have the right skills for assurance; Directors need to sign off with confidence.  

One specific characteristic of note is the distinction between quantitative and qualitative data. For quantitative information (such as pay equity, water use, and climate information) there are well recognized methods for assurance, but for qualitative information (e.g., prioritization of human rights risk or approach to climate justice) there are fewer guideposts available. 

There is an assumption that the laws and regulations listed above are largely “good”. What if “bad” laws and regulations emerge? 

The laws and regulations listed above are generally positive for the growth of just and sustainable business practices.  

However, we do see three important risks. First, there is a risk that the governments also introduce laws that conflict with international human rights law or widely accepted standards of business conduct. Second, there is a risk that governments introduce laws and regulations that “look and feel” like this positive examples above, but in reality, are “cover” for laws with nefarious purpose, such as imposing surveillance requirements or limits on company collaboration with civil society. Third, there is also a risk that laws and regulations will be vaguely worded with ample room for interpretation. 

In these scenarios business has a responsibility to use its leverage, alone and in collaboration with others, to either oppose or improve such laws. 

Reports | Thursday July 20, 2023

AI and Human Rights in Extractives

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Artificial intelligence (AI) is driving change within the extractives sector, transforming companies’ value chains, from geologic risk analysis to workplace management, and potentially leading to major human rights impacts. This report identifies human rights issues associated with increased use of AI technology in the extractives sector and provides recommendations to companies on addressing these impacts.

Reports | Thursday July 20, 2023

AI and Human Rights in Financial Services

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Financial institutions are increasingly using AI technologies, from reducing operational costs to delivering customer service. Yet this evolution may bring human rights risks—as well as opportunities—that companies can’t ignore.

This report identifies human rights issues associated with the growing importance of AI technology to financial services and provides recommendations to companies on addressing these impacts.

Blog | Tuesday July 18, 2023

ESG Scenarios: Leading Sustainability in a New Context

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The past few years have seen sustainable business on a rollercoaster ride—ascending one moment, plunging the next, twisting and turning, and yet racing along all the while. The role of the Chief Sustainability Officer (CSO) has required a steady hand and a cast-iron stomach. 

As part of ongoing engagement with members, BSR convened 25 US-based Chief Sustainability Officers or their equivalents from leading companies in financial services, technology, retail, healthcare, energy, food, travel, manufacturing, and industrial sectors.

The workshops centered around four potential scenarios and examined the short- and medium-term future of corporate sustainability in the context of increased regulatory activity, the polarization of ESG, the macroeconomic context, state/national/ global shifts on ESG, and stakeholder expectations. Key issues included “greenhushing” with continued corporate action on sustainability but a pullback in communications; a scenario with a resurgent “sustainable growth” economy putting Chief Sustainability Officers in business leadership positions; and an “ESG winter” where a weak economy is blamed on ESG and companies withdraw entirely. Each scenario included an imagined “CSO Inbox” to bring the day-to-day concerns to life. The convening aimed to identify actions each individual and company could take to help them steer through different possible futures. 

Despite differences in sector, geography, and even changes in current events across the two-month duration, three distinct themes emerged consistently across all the workshops: 

 

The role of the CSO is more fraught and fragile than ever.

From increased mandatory ESG reporting requirements to scrutiny over "greenwashing," partisanship over "ESG", and economic uncertainty, it’s a challenging time to lead sustainability at a company. Participants were open about the obstacles they face, the pressure of mounting expectations, and the urgency of the problems they are aiming to solve. Some of the common challenges cited include: 

• Maintaining ambition: In light of increased scrutiny and new regulations, setting ambitious targets that will be considered credible, not merely compliant.

• Navigating Upcoming Regulations: Tracking and responding to a myriad of fragmented, and sometimes conflicting new regulations and requirements. 

• Data and Verification: Gathering audit-ready ESG data. 

• Finding Signal in the Noise: Tuning out hype to focus on priorities and action, and helping internal stakeholders do the same. 

• Scrutiny over language: With partisan concerns over ESG on the one hand, and heightened sensitivity to greenwashing on the other, corporate communications and language is subject to intense review and debate. 

 

Every scenario requires robust action on sustainability. 

It was helpful for participants to recognize that—regardless of economic volatility and the anti-ESG landscape in the U.S. —the underlying factors that have been driving increased sustainability action remain strong and undeterred.

Sustainability leaders said that they would need to continue to focus on progress on their most material ESG issues for several reasons: 

• They have been focused on long-term business value, so their strategies will continue to be relevant regardless of the political or economic context.

• Direct business risks related to ESG (e.g. health and safety, climate impacts) are climbing the corporate risk register. While “ESG” terminology can be controversial, the fiduciary responsibility to address those risks is widely recognized. 

• Nearly all of the companies will be subject to European regulation and mandatory reporting requirements. 

• Stakeholder expectations for corporate action and disclosure remain high—especially among investors, employees and customers. 

• The business-to-business relationship remains critical and drives much of the strategic imperative. This was true for traditional B2B companies, as well as consumer-facing that still have value chain expectations from retailers or business partners.

Participants expressed ambivalence around so-called “greenhushing” (the phenomenon of companies quieting their sustainability communications, even as they continue to take action). Some emphasized the importance of companies speaking up for sustainability and pushing back on politicization; others were content for the role of CSO to focus less on communications and more on substance; most agreed the work itself would continue even if the communications strategy may change. 

 

Sustainability leads can adapt tactics and increase resiliency.

Participants were united in the need to maintain ambition: it’s a moment for leaders to be rigorous in their approach, vocal about what matters, focused on how their work affects people and business, and creative in solutions. Some tactics included: 

• Focus on material risks and opportunities, not jargon.

• Participants recognized they need to better understand and articulate how salient and material issues impact long-term business value, and how short-term actions link to the long-term. 

• The term “ESG” may feel controversial in some US political corners, but the substance is not. Rather than arguing for the importance of “ESG”, most companies plan to focus on using direct language to emphasize the importance of the underlying issues. 

• Build integrity of ESG efforts, and anticipate global requirements.

• There’s value in integrating ESG into core systems and policies such as enterprise risk management, various compliance and data systems and controls, and financial filings. 

• Drive purposeful leadership in policy and business.

• Companies may need to consider ESG regulations and attitudes as part of market and geopolitical risk analysis, including at the state level in the U.S. Many non-US based companies are beginning to carry out risk assessments for the United States.  

• Participants also highlighted the increased need to align policy and sustainability priorities (e.g., in political spending, donations, policy agendas) and disclose activities. 

• Build internal alignment and support from the Board.

• Most participants had noticed an increase in Board engagement on ESG, and a clear understanding of its direct relevance to strategic advantage and increased resilience. 

• Participants were also trying to build bridges with other parts of the organization, notably legal, data science, and investor relations teams, along with P&L owners. 

•  Get comfortable with uncertainty.

• Finally, participants enjoyed using the scenarios exercise to identify potential risks/opportunities and potential steps for resilience and see value in customizing it to their particular industry. 

Throughout all three events not a single company expected to backtrack or reduce their commitments. Instead, CSOs came together with a palpable desire for comradery, a mutual aspiration to maintain and grow their commitments, and an eagerness to share and explore best practices. 

BSR member companies can contact their relationship leads for more information about upcoming events for sustainability leaders.