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Blog | Sunday May 23, 2021

China’s 14th Five-Year Plan: Broad Insights for Investors

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Since the launch of China’s 14th Five-Year Plan (14th FYP) in early March, China’s climate commitments—to peak carbon emissions by 2030 and achieve carbon neutrality by 2060—have been the focus of discussion among global politicians, thought leaders, issue experts, and businesses. Increasing interest by the international community to partner with China on climate has followed this target, with opportunities for collaboration seen at the China-France-Germany virtual climate summit, the joint meeting and statement between U.S. and China climate envoys John Kerry and Xie Zhenghua, and the Leaders Summit on Climate. 

“[The U.S. and China] intend to take appropriate actions to maximize international investment and finance in support of the transition from carbon-intensive fossil fuel based energy to green, low-carbon and renewable energy in developing countries.” 

U.S.-China Joint Statement Addressing the Climate Crisis 

At the same time, the business community seeks to understand the impact of these climate goals on the market. As we wait on details for local government policies and implementation plans, there are questions on how to understand ESG diligence and engagement in China. 

However, the 14th FYP clearly states a direction with heightened focus on environmental, social and governance (ESG) issues, with a surge in homegrown demand for ESG in the financial market. “In 2019, inflows into ESG-theme ETFs in China totaled US$20.5 billion, versus US$4.9 billion in 2018,” according to a report by Ping An, “ESG investments also outperformed.” 

Consequently, a significant shift in energy markets, technology solutions, and innovation will be needed to enable China’s changes. This shift will require the full commitment and participation of investors and lenders to ensure that financial flows move in support of China’s heightened focus on ESG and help to accelerate the journey toward a net zero economy.  

What does the FYP mean for investors? Where do ESG topics anchor when looking at investments in China? What are the risks and opportunities, and how might an investor engage its potential portfolio companies? 

To answer all these questions, investors need to look at the broader picture as laid out in the new FYP, as well as relevant industry upgrade plans and environmental stewardship approaches, since risks and opportunities will gradually become clearer in this dynamic environment. 

Here are five ways investors can seek opportunity: 

1. ESG should be considered both in equity and in credit markets. 

Even as ESG investment becomes mainstream in global capital markets, it is still in its early stage in China, despite the rapid changes of the regulatory environment and capital market. Many lenders and asset managers are not yet ready to consider or address ESG-related risks and opportunities in their investment decisions. 

It is important to build internal expertise to support the investment teams in understanding ESG-related risks through ESG disclosures of investments, identifying ESG risks and pain points, and integrating ESG factors into evaluation and decision-making processes, including looking at specific ESG factors in diligence, portfolio reviews, company engagement, etc. Moreover, helping investment teams understand how sustainability themes will create strategic investment opportunities in China. 

2. Energy markets and CO2 emissions regulations will change. 

Though the Chinese government has promised to peak carbon emissions by 2030, coal remains at the heart of China’s post-pandemic economy. This was especially true in 2020, when businesses were eager to resume operations following lockdowns and energy markets were still heavily reliant on coal.

Emissions have not yet reached a turning point, leading to fears that China’s decarbonization plans and global climate efforts could be jeopardized. The next five years will be critical as the national plans and efforts will lay groundwork towards its promise of peaking emissions in 2030.  

Therefore, we can expect local government plans and policies, as well as industry engagement, to change drastically and rapidly to align with and achieve national plans. As a result, both energy architecture investments and companies dependent on outdated energy production may face increasing risks. 

3. Industry upgrade plans can have a significant impact.

Beyond climate policies and targets, it is essential to take a broader view on the FYP’s industry upgrade plans. These plans are part of China’s ecosystem restoration efforts and a response to the increasing costs of production, particularly social and environmental costs.  

Since the 13th FYP, China has pushed its industries to phase out the low-end, labor-, or resource-intensive manufacturing and replace it with higher value-added production and resource-efficient materials. We expect this to accelerate in the next few years.

As a result of these plans, resource-intense and low value-added business may lose their right to operate, especially in some regions under the ecosystem restoration plan. They may also face potentially significant capital expenditure (CAPEX) costs as they will be required to upgrade their product processes, improve pollution control mechanisms, and/or relocate. 

Dongguan, once the center of footwear manufacturing, is now aiming to become “an international manufacturing city and a modern eco-city” as well as establish “a globally influential and competitive cluster of world-class high-end manufacturing industries” in the Guangdong-Hong Kong-Macao Greater Bay Area. Under these policy levers, industries such as apparel, dyeing, and electroplating might no longer be welcome nor have the ability to obtain long term environmental permits. 

Consequently, investors will need to understand the current social and regulatory environment, particularly the industry upgrade plans, and how these changes might impact current and future business footprints, investment needs, access to labor/talent, and business permits. 

 4. Innovation—and opportunity—will be driven by the imperative of these changes.

A guideline was released in February 2021 to accelerate the development of a green and low-carbon circular economy, which specifically called out driving changes for a circular economy.

Many opportunities lie in the infrastructure sector (steel, cement, nonferrous metals, building materials), consumer products (textiles, paper making, leather production, plastics), and waste management (pollution control and waste recycling), which are also critical levers to support the industry upgrade plans. 

As an example, Kering and Plug and Play recently announced a second round of the K-Generation Award, focusing on fashion and biodiversity, during Shanghai Fashion Week. This award will be given to three new startups in the fashion industry focusing on protecting and restoring biodiversity.  

5. Engage with companies on the changing landscape.

When engaging current or potential portfolio companies, what matters most is their awareness of the changing landscape and their insight as to how this could impact their company.   

If the portfolio company isn’t aware of or doesn’t have a strategy regarding the changes, that is obviously a potential red flag. In assessing companies, investors should seek answers of the following three questions: 

• Do they understand their energy, water, pollution and other material footprints? 
• Do they have a point of view and strategy to address the sustainability impact on their business, particularly the climate-related issues? What will change, and how this will impact their businesses?
• Are they able to outline future risks and opportunities—not only in terms of mitigating impact on their business, but in seeking a valuable place in a circular economy (e.g. recycling integration)?

The time to invest in knowledge is now 

It is crucial to unpack these changes to navigate the evolving business and regulatory situation in China. An essential start is to build internal competency and expertise, to collaborate with stakeholders and business partners, to engage with your current portfolio companies, and to conduct evaluative process for future investments. Broader insights are essential to understanding local, industry, environmental, and national plans when informing your localized investment strategies and decisions. 

China’s direction on sustainable economic development has been set. At the same time, changing global political and economic developments will all have a strong impact on markets and future business success. Under these uncertainties, a future scenario planning methodology would be a good tool to develop a resilient business strategy. Consumer awareness and preferences for sustainable products are also changing, which we will explore in an upcoming blog. 

What’s next  

BSR’s China team will continue to unpack business impacts of the new FYP. Future blog posts will provide more details on industry impacts and how businesses should prepare based on insights and dialogues with climate and energy experts and important stakeholders across sectors. 

If you are interested in learning more about how BSR can help shape your China strategy, please reach out. 

Blog | Thursday May 20, 2021

Gender Equity in the Just Transition and the Shift to Green Jobs

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The social transformation required to solve the climate crisis is at a scale we have never seen before and will require substantial shifts in every part of our society and economy. The necessary transition away from high-carbon industries and technologies will impact all sectors and result in significant transformations in the availability and potentially quality of jobs. An estimated 6 million jobs in coal-powered electricity, petroleum extraction, and other sectors could disappear by 2030. On the flipside, the number of jobs in the renewable energy sector is anticipated to almost triple to nearly 29 million in 2050. 

As the transition gathers pace, women can and should be empowered to act as change agents as energy professionals, decision makers, and consumers.

However, despite some progress, women continue to face structural and cultural barriers to their participation. Women are better represented in the renewable energy sector compared to fossil fuels, occupying over a third of jobs, yet the gender pay gap remains large. In addition, the implications of new renewable energy projects on women and their communities are often ignored.  

The shift to green jobs offers an unprecedented opportunity to create a new paradigm for gender equality and women’s economic empowerment as we shift away from fossil fuels and build resilience to climate impacts and toward an economy that is fairer and more inclusive.

In this context, a gender-just transition incorporates the accountability structures needed to ensure women’s rights are protected and promoted. It also recognizes that women can also be powerful change agents during this transition: their voices, unique knowledge, and skills are vital to effective climate change solutions. Unleashing this potential will require challenging existing and new industries to consider moving away from current gendered constructs, workplaces, and policies not inclusive of women.

Pressure is growing for countries to ramp up their energy transition plans if we are to achieve the targets set out in the Paris Agreement and the Sustainable Development Goals. As this momentum grows and the energy transition becomes a reality, as a first step, it is essential to build a shared understanding of what a sustainable, green workforce looks like and how women and men can benefit equally from this transition.

How to Embed Gender Equality in Green Sectors

Moving away from fossil fuels and toward renewable energy will require the reskilling and upskilling of large workforces and building the resilience of the communities that support them. If this shift focuses exclusively on the current, predominantly male fossil fuel workforce, it will reinforce existing gender gaps in terms of workforce demographics, gender pay gaps, and discriminatory practices. It is vital to understand how business, governments, and development partners can bring women into traditional green jobs, including renewable energy, environmental research, and conservation, and close existing gender gaps for more inclusive and diverse green workforces.

There are also opportunities to integrate gender equality across supply chains in green sectors. In renewable energy supply chains, for example, little is known of how the industry is considering the differentiated impacts on women and men in human rights due diligence, an issue likely to increase as the sector continues to expand rapidly. There is a need to explore the gender dimensions of renewable energy procurement, the gendered impacts on local communities, and the potential to support and source from women-owned renewable energy-related businesses.

How to Ensure Decent Work for Women in Low-Carbon Jobs

A gender just transition will also mean looking beyond traditional “green jobs” within the energy sector to consider low-carbon jobs that contribute to broader societal resilience. This includes healthcare workers, educators, caregivers, small scale agriculture workers—workforces which are highly feminized but often underpaid and with precarious contracts and working hours. The COVID-19 pandemic has shed light on the vulnerable situation of these workers, many of whom are women of color, who make up most retail, health care, and service sector employees and are essential to the continued health and functioning of our communities.

Solutions to increase green jobs can do better by expanding our focus to be gender-just and strive for gender equality. Technological changes are impacting many jobs in these sectors, which women may be less prepared for given the gender gap in STEM skills. Business and governments can create and support decent job growth in these sectors and ensure meaningful and equal economic empowerment for women. However, we need research to understand how these jobs can complement the growth of green jobs (i.e., location of renewable energy plants, training and education opportunities for future green jobs, etc.). Low-carbon jobs can also be leveraged to contribute to a just transition. For example, retail workers support in-store recycling programs, but they will require adequate training and skills development.

In the words of Mary Robinson, former Irish president, UN climate envoy and current UN rights commissioner:

“Climate change is a man-made problem with a feminist solution.” 

Today, we have an opportunity to design and implement gender-just solutions to the major challenge of our time: ensuring that the transition to renewable energy leaves no one behind. Join us as we seek to answer these questions and help to shape a truly just transition.

Blog | Wednesday May 19, 2021

Modernizing the Social Contract in 2021: Five Developments for Business to Consider

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When we launched our call for business to help redefine the social contract in late 2019, we had no idea what the next 18 months would bring.

• The once-in-a-century pandemic has exposed deep problems with the social safety net. Over the past year, we have seen how inadequately prepared our institutions are to handle issues, from unemployment and loss of income to access to health care. 
   
• The economic toll of COVID-19 has fallen most heavily on certain populations. As garment workers lost thousands of jobs along with access to vaccines and palliative care, governments around the world struggled to set up programs and policies capable of providing a measure of relief. This has affected so many women, in particular, producing a “shecession,” or disproportionate impact on women, from which we are still struggling to emerge.
   
• COVID-19 continues to rage, with profound impacts now causing widespread death and illness in India and other countries in South and Southeast Asia.  This continues against the backdrop of a lack of consensus about how to make vaccines available equitably across the globe.
   
• The murder of George Floyd and other Black Americans, an epidemic of racially motivated attacks on Asian-Americans, police violence in Europe, as well as hate expressed against disadvantaged groups across the globe has provided a wrenching reminder of the unequal status and treatment of so many of our fellow citizens.
   
• An ongoing “democratic recession” has resulted in widespread global reductions in human rights protections and access to free and fair elections.
   
• The speed at which disinformation travels and our reliance on the digital world raise acute questions about how to deploy these highly valuable tools, affecting our physical and emotional health, how we work, and social interactions.
   
• The world of work has also been upended. Essential workers have faced serious risks. The rise of remote working creates a fundamentally different environment. Increased use of e-commerce is likely to accelerate non-traditional forms of work with less access to universal benefits.
   
• There are also growing questions about intergenerational equity, which is most pronounced in aging societies, but is present globally and raises serious questions about social safety nets, health care investments, and educational and employment opportunities in a changing economy.
   
• In the United States, 2021 has brought about one of the most significant expansions of the social safety net in decades. While this has been most immediately responsive to the disruptions of COVID-19, it is also seen widely as a shift to address gaps that have widened inequality and interfere with social and economic mobility and security.

2020 has taught us many new lessons. COVID-19 has shown—in a tragic way—how interconnected the world is. All the events of the past year and a half have also reinforced and deepened the urgent need to redefine the social contract and the key role business must play in that effort.

The core principles we set out last spring are even more compelling today.  

It is more essential than ever to build long-term value for all stakeholders as the north star for business. The need to ensure that Boards are dedicating more attention to ESG issues has accelerated. Massive public investments needed to restore economic vitality are quite rightly focusing on a transition to a net zero economy, economic and social mobility and security, and advancing equity. It is also essential for the private and public sectors to ensure people have the skills needed for 21^st-century livelihoods. It is essential to make even greater progress toward an inclusive, equitable clean energy economy. And social consensus on new technologies remains essential if we are to take full advantage of innovation. Finally, the need to ensure equity and inclusion is of paramount importance and must be integral to all the principles of the renewed social contract.

It is also essential that the historic developments of the past year be integrated into how we think about a modern social contract. Here are five developments that are crucial to modernizing the social contract, particularly as it relates to the relationship between business and society.

1. Climate Justice Ascendant

At long last, the debate over climate action has embraced social and economic justice. The transition to net zero will only be possible if it is built on the basis of preserving livelihoods, addressing the needs of communities whose health and well-being has suffered in an economy dependent on fossil fuels, and enabling equitable access to the clean energy economy. Net zero plans that do not include net zero economic opportunities for all will be insufficient.

2. Equity and Opportunity in a Hyper-Digital World

It has become a cliché to say that ten years of digital adoption occurred in 2020 alone. The world of work has been remade. Our reliance on digital tools has skyrocketed. This has immense impacts on multiple aspects of our lives, from privacy and human rights, to access, to mental health and well-being. There are also unintended consequences of this shift, such as the crisis facing public transportation systems. Business should take an active role in reimagining work, and the second-order effects of remote work, and establish human rights reviews of technologies coming to market. Otherwise, new business and work models could reinforce inequality and lack of access.

3. Capital Market Reforms Accelerate

The long-desired shift to a harmonized set of rules guiding reporting and disclosure appears closer than ever. It is fundamentally important that business leaders continue to push for capital market reforms that align incentives with long-term value creation embracing ESG principles. The rise of the Task Force on Climate-Related Financial Disclosures (TCFD) and the Sustainability Standards Board of the IFRS Foundation are excellent steps in this direction, and widespread business support will hasten the creation of a more rational and powerful system for measuring value.

4. Supply Chain Social Contract

Supply chain workers have been devastated by the economic disruption of the past year. This has been most acute in the apparel sector, where millions of workers, the vast majority of them women, have lost income and livelihoods. Many global companies have scrambled to offset some of these losses, but this cohort of people are often least protected by social safety nets. Most companies believe that due to inequitable vaccination rates, COVID-19 will continue to impact key sourcing locations—and the people who depend on supply chains for their jobs and income—for several years. A new bargain for supply chain workers is badly needed.

5. Democracy Protection

Democracy and human rights remain under immense pressure in many parts of the world. In the U.S. in particular, many have spoken out against voter suppression and are being called upon to combat ongoing efforts to disenfranchise people, especially people of color.  Businesses have also been considering how to respond to human rights restrictions in China, Myanmar, and elsewhere. Business has a massive stake in protecting rule of law, and this is a time when it is badly needed.

All the events of the past year and a half have also reinforced and deepened the urgent need to redefine the social contract and the key role business must play in that effort.

Some of these elements are outside the traditional comfort zone of business. They are, however, squarely in line with the expectations of business. The 2021 edition of the Edelman Trust Barometer, for example, shows that 86 percent of respondents believe CEOs should speak out on societal issues, and 65 percent of respondents believe CEOs should be held accountable to the public, and not only the Board and stockholders.

The changes we outline here are essential to building more resilient societies, at a time when we have all been stretched to the limit. In order to do that, it is high time for companies to dedicate themselves to building resilient business strategies. Over the past year, resilience has gone from a buzzword to an imperative. But no company can be fully resilient if the societies in which they operate are not resilient. The need to build and adapt modern social contracts fit for our fast-changing world is therefore a business necessity and the foundation on which business success depends.

The destructive power of 2020’s events is clear. So too is the fact that people, communities, businesses, and governments have re-prioritized their actions and investments. This shows what is possible, even when a crisis is not upon us. 

What we choose to do with what we have learned during this intense time of challenge and innovation will determine how we will be judged by history. It is time for business to recommit to the core principles we outlined as the key elements of a social contract that enables a just, inclusive, and sustainable economy and that creates a strong foundation on which business can innovate and thrive.

Blog | Friday May 14, 2021

Women’s Digital Inclusion: The Risks of Going Too Fast and Not Fast Enough

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Please note: Currently the dire developments of the COVID-19 pandemic in India are preventing HERproject from implementing program activities in workplaces in India. We are closely following the situation and extending support to our team and implementing partners in India. If you would like to support, here are some ideas: https://mutualaidindia.com

The uneven global deployment of COVID-19 vaccines is a stark reminder that the existence of a life-changing innovation doesn’t translate to universal access to and enjoyment of its benefits. Similarly, the access to digital technology is far from equally distributed.

Globally, women have less access to technology, mobile phones, and internet connectivity. In low- and middle-income countries, 165 million fewer women than men own a mobile phone and over 300 million fewer women than men access the internet on a mobile. The mobile gender gap is widest in South Asia: in countries like Bangladesh, women are 52 percent less likely than men to use mobile internet.

Against this backdrop, HERproject launched our new program HERessentials, which aims to help bridge the digital gender divide among workers in global supply chains. The program, delivered digitally through a tablet-based learning app, provides female and male workers with critical knowledge and resources on health, financial inclusion, and gender equality in times of crisis. Through HERessentials, workers will also get the opportunity to become more comfortable using digital technologies.

To explore the challenges of leveraging digital approaches, we invited Sonia Jorge of Alliance for Affordable Internet (A4AI) and the Web Foundation and Mariana Lopez of the GSMA Connected Women Programme for a discussion earlier this year.

We explored three key insights that are applicable to stakeholders working to bridge the digital gender divide.

1. Access to devices is only the first of many steps

Ensuring that women have access to mobile phones and SIM cards is the first step towards closing the digital gender gap.

GSMA research highlights that the most immediate hurdle for women having their own mobile phone is the affordability of handsets. Data and service fees are also an issue. A4AI research shows that nearly 2.5 billion people live in countries where the cost of the cheapest available smartphone is a quarter or more of the average monthly income. Women in many countries are more likely to have lower quality handsets and to share these with their husbands, children, or other family members. Often, this results in them having less exposure and time to learn how to use and benefit from mobile phones.

Affordability is key, but so is having the skills and confidence to use digital technologies. GSMA research shows that a lack of digital literacy and skills is the key barrier preventing female mobile owners from adopting mobile internet. HERproject shares the same experience: without training, digital services may offer little to no benefits. For instance, in 2017 the garment industry in India digitized wages, but three years later HERproject research showed that male and female workers still withdrew all their wages on payday.

Introducing women to digital devices in an open and safe training environment, such as with HERessentials, is one way to kick start their journey to becoming connected. After receiving training that addresses financial literacy and social norms in a risk-free environment through the HERfinance Digital Wages programs, we have seen workers in Bangladesh becoming active mobile money users. Post-training, women were conducting around eight mobile money transactions per month.

As with all behavior change, introducing technology is about providing both a clear case on its benefits to women, as well as the tools and skills to reap those benefits. This requires demonstrating the benefits of technology, mobile, internet; supporting women with the knowledge required to make empowering decisions and trusting them to decide how they want and need to use technology.

2. Take responsibility for women’s safety

Safety and harassment fears are significant barriers that inhibit women from benefiting from or even wanting to use a mobile phone. For example, while mobile money can offer more privacy when conducting financial transactions, women are less likely to become active mobile money customers if they experience harassment from mobile money agents. The online environment also brings risks, including violence, fraud, surveillance, identity theft, misuse of personal images and data, exposure to explicit content and more.

For these reasons, enabling women to use digital technologies also entails supporting them to understand how to use them in a way that is safe and secure. For example, by helping them to protect their data; from not sharing personal information such as bank details to using security settings that allow content to be shared only with known contacts.

This also includes recognizing and addressing online harassment: what it is, where it happens, and what to do (including how to block and report inappropriate content and behavior).

Finally, it also requires that companies and governments take action to address online gender-based violence. The Web Foundation has led a series of workshops to assess how product and policy solutions impact women’s safety online. It is now working with stakeholders, including companies, to design policies that support safe online experiences.

3. Bring men along from the get-go

Frequently, the hurdle for women not using technology sits closer to home. Many women have limited autonomy and power to decide whether or not to access mobile phones and the internet, with male family members often acting as gatekeepers.

This can be about protection: women can be seen as vulnerable to corruption by the negative side of the internet, which some see as a potential risk to the family’s reputation. It can also be about control or power dynamics: Mobile phone ownership can promote independence and, in turn, disrupt the status quo and traditional views of women’s roles in the household. For these reasons, men may try to discourage and prohibit female family members from owning and using mobile phones.

As such, it is important to support men’s understanding of the value of a female family member’s access to phones and the internet. What’s key here is making clear how the whole can family benefit from a woman’s access to technology.

GSMA research in South Asia found that use cases that have both personal appeal for women and externally justifiable rational benefits are particularly important to help persuade gatekeepers that access to mobile internet will benefit the entire household. Examples include video calling (especially for those with family living far away or overseas), learning a productive new skill (e.g. sewing, cooking), helping with their children’s education or contributing to household income (e.g. through information to improve farming).

Equal access is not a zero-sum game. It benefits everyone. It is therefore necessary to involve and include men in training sessions and make them aware of the relevance of mobile services for women’s day-to-day lives. For this reason, HERessentials trainings are implemented with both men and women workers, demonstrating the usefulness of digital tools to all.

Empowering women through digital technology benefits businesses, economies and societies

The commercial potential of bridging the digital gender divide is enormous. Women are half of the potential market for businesses. Over five years, closing the gender gap in mobile ownership and internet use in low- and middle income countries could deliver US$140 billion in additional revenue to the mobile industry. HERproject is testimony that training women workers on using digital services in the workplace has positive impacts both for them and their workplaces. HERessentials is now building on this work and contributing to build up women worker’s digital skills as the program expands from Bangladesh to India, Pakistan, and Central America.

The COVID-19 pandemic has further highlighted the cost of not having digital skills and being excluded from the online world. There are risks in going too fast, and we need to continue to evaluate and address the existing barriers and new challenges that women face to be part of the digital future. At the same time, the pandemic has shown that the risk of not going fast enough is greater than ever: inclusion cannot wait.

Blog | Wednesday May 12, 2021

Beyond #StopAsianHate: Building an AAPI-Inclusive Workplace Culture

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“Our community is being attacked. We are dying to be heard.”

In February 2021, civil rights activist Amanda Nguyen went viral. In a social media video—which has received more than 52,000 likes—she called on mainstream media networks to cover violent attacks on elderly Asian Americans.

It worked.

Major news outlets drove attention to the spike in hate crimes against Asian Americans over the past year, noting that advocacy group Stop AAPI Hate received reports of more than 3,800 hate incidents since the start of the COVID-19 pandemic.

Yet as the #StopAsianHate movement garnered support from business, policymakers, celebrities, and the wider public, the violence continued. In March, a shooting rampage in Atlanta targeted Asian-owned businesses and killed eight people, six of them women of Asian descent.

Groups have attributed the sharp increase in hate crimes against the Asian American Pacific Islander (AAPI) community in part to the xenophobic rhetoric of former U.S. President Trump. However, AAPI racism is not new.

As the U.S. celebrates AAPI Heritage Month this May, there is an opportunity for business leaders to learn more about the AAPI experience and help to build a more just, sustainable, and inclusive world—beginning in the workplace.

Understanding the Diversity within the AAPI Community

Employees are one of the most important stakeholder groups to any business. While you may list AAPI staff in just one or two boxes in the EEO-1 documents, it’s important to remember how broad and far-reaching the term AAPI is.

The term AAPI accounts for more than 24 million people in the U.S., whose origins span East Asia, Southeast Asia, the South Asian subcontinent, Polynesia, Micronesia, and Melanesia. AAPIs can include first generation immigrants or those whose families have been in the U.S. for generations, and come from varied income levels and education backgrounds. It’s also important to remember that AAPI experience in the U.S. will be different than those of Asian or Pacific Islander colleagues based in other countries.

Recognizing this diversity of cultures and experiences is necessary to connect and engage with colleagues, clients, and community members of AAPI descent. When crafting diversity, equity, and inclusion (DEI) strategies, there is no one-size-fits-all approach to working with AAPIs.

Confront Existing Biases about Asian Americans and Pacific Islanders

As the past year has brought to light, there is a long way to go to achieving racial justice in the U.S. And as the recent hate crimes have demonstrated, many communities suffer from racist violence.

Most companies have systems in place to deal with overt discrimination and racist acts. Creating truly inclusive workplaces, however, involves confronting individual bias—even those that could be perceived as ‘positive.’ The model minority myth—the belief that Asian Americans have overcome discrimination and are more successful than other ethnic minorities—is problematic for multiple reasons.

Primarily, it perpetuates many of the stereotypes that lead to microaggressions in the workplace: they excel at science and math, they are good workers but not leadership material, and there are expectations around being quiet and docile. Other common workplace microaggressions include the constant questioning over “Where are you really from?” and “How do you speak English so well?” or confusing Asian employees for one another.

Learning about these biases is important not just for leadership and managers, but for all colleagues to understand any stereotypes or prejudices they may have about AAPIs. Without this shared understanding about implicit biases, it is impossible to make meaningful progress on social and racial justice.

Apply a Lens of Equity and Inclusivity across Sustainable Business Practices

A company’s commitment to racial justice does not exist in a vacuum, separate from business strategy or sustainability practices. In fact, a business can only fulfil its commitment to racial justice if it takes diversity, equity, and inclusion (DEI) action beyond its human resources practices.

As BSR’s Diversity, Equity, and Inclusion Director L. Simone Washington has written, DEI is “a philosophy that permeates throughout a company’s business operations,” and business should apply “a critical lens to its policies, practices, and programs and to identify how it can be more inclusive and create opportunities for those who are systematically marginalized.”

This can include ensuring that business climate plans advance climate justice solutions, assessing how products and operations may disproportionately impact a group of people, applying intersectional approaches to gender equality programs, and more.

What’s Next

Over the past year, we have seen companies across all industries make statements in support of racial justice—from #BlackLivesMatter in June 2020 to #StopAsianHate in March 2021. Some have even put forth commitments related to hiring, promotion, investment, and sourcing to advance diversity and equity goals. Still, there is more work to be done—to address systemic racism, to build Black wealth, to destroy the model minority myth.

One immediate action business can take to support the Asian-American community is to support federal legislation to address anti-Asian American hate crimes. The bill passed in the U.S. Senate in April and is expected to face a House vote this month.

As BSR continues to work with member companies, the business community, and partners to build a more just, sustainable world, we seek to actualize a vision for equity and inclusion. We hope you will join us.

Blog | Wednesday May 5, 2021

Companies Can and Should Act to Prevent Gun Violence

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In the U.S., we have seen that it’s possible to go to work—be it at a retail store, a corporate office, a distribution center, a grocery store—on an otherwise normal day and never come home to your family.

Far too many Americans have experienced gun violence: 58 percent of American adults or someone they care for have experienced gun violence in their lifetime. On average, more than 100 Americans are killed with guns every day, and hundreds more are wounded. Even if you avoid death and injury from a workplace shooting, the trauma endures. 

Many companies may see the issue of gun violence as falling outside their sphere of responsibility and influence. However, companies have a responsibility to provide safe working environments for their employees—something they cannot reasonably guarantee given the current state of gun violence in the U.S.

At the same time, gun violence costs taxpayers, businesses, survivors, families, and communities US$280 billion per year—on top of the immeasurable emotional costs. For employers, this is US$1.4 million a day lost in productivity, revenue, and costs associated with gun violence.

Companies have a responsibility to provide safe working environments for their employees—something they cannot reasonably guarantee given the current state of gun violence in the U.S.

Companies are already taking public stands on and working to address other issues intricately linked to gun violence, such as mental health—nearly two-thirds of gun deaths are suicides—and domestic violence—on average every month, 53 American women are shot to death by an intimate partner, and many more are shot and wounded. These issues have only been exacerbated by the COVID-19 pandemic, making business action on the issues and gun violence all the more relevant.

Companies can and should work to protect their employees and the communities they operate in from gun violence by:

Understanding how your business impacts gun violence. Firearm manufacturers and retailers aren’t the only ones that should act to prevent gun violence. Companies from across industries should understand how their business may have an impact. This can range from directly manufacturing or selling firearms, investments in or business relationships with firearms manufacturers, operating restaurants and retail locations where firearms can be carried or where employees are at a greater risk of gun violence, or media and advertising practices that might promote gun violence, among others. All companies, no matter the size or sector, can impact gun safety and help to prevent gun violence in the U.S.

Raising awareness with your employees and consumers on the impacts of gun violence. National Gun Violence Prevention Day takes place on June 4 this year and is an opportune time to increase awareness among staff, consumers, business partners, and communities. In addition, companies can provide support to employees and their families who are victims of gun violence through mental health benefits. Business can also offer educational and volunteer opportunities for employees with local gun violence prevention partners.

Advocating for common-sense gun safety legislation, which has broad support from Americans across the political spectrum, at the state and national levels. Companies can use their influence to make an impact on policy through direct relationships and conversations with legislators on this issue. Businesses can also ensure their financial support is going to politicians who support legislation that will make their employees and their families safer. This includes assessing their company’s involvement in industry groups that publicly or financially support policymakers who advocate against gun safety policies.

Gun violence may seem like a problem without a solution. But it’s not.

Research from Everytown for Gun Safety, the largest U.S. gun violence prevention network, has shown how simple policy changes such as strengthening our background check laws can save lives and protect families and communities. While these changes may seem politically divisive, 92 percent of Americans support background checks for gun sales.

The U.S. Senate is poised to address gun safety in the coming weeks, with expected action on background checks, and now is the time to take action. Corporate America’s support is critical on this issue. If you are interested in learning about how your company can support this effort or work to prevent gun violence more broadly, please join the upcoming webinar on January 19, 2022, from 11:00 am - 12:00 pm EST. Feel free to connect with our team to learn more as well.

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Blog | Monday May 3, 2021

European Union Sustainability Reporting Directive

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Blog | Monday May 3, 2021

Inside BSR: Q&A with Melissa Do

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Inside BSR is our monthly series featuring BSR team members around the world. This month, we connected with Melissa Do, an Associate based in our San Francisco office. Melissa chatted with us about the part Animal Planet played in her sustainability journey, her experience working with U.S. government entities, and her work on climate change.

Tell us a bit about your background. Where are you from, where are you based, and how have you been since the COVID-19 pandemic hit? 

I was born and raised in New Jersey to Vietnamese immigrants. I came to the San Francisco Bay Area for school, where I completed my undergraduate and graduate studies in interdisciplinary environmental science and focused on biological, ecological, and biogeochemical systems. As many can attest to, the weather, people, and scenery make it difficult to leave the Bay Area once you’re here!

During the COVID-19 pandemic, I’ve been fortunate to be able to spend a good part of 2020 hunkering down with family in Seattle. Working from home can have its challenges, but it’s been great getting some time back in my day by not having to commute to the office.

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

Growing up, one of the ways that my grandmother and I bonded together was through watching nature documentaries on Animal Planet. It was from there that the seeds of my deep respect for nature and animal conservation were planted.

That interest in the natural world led to my studies of and research on animal behavior and conservation at Oxford and in the Great Barrier Reef. Here, the themes of coexistence and cooperation arose, and they became foundational to my approach to life and work. I found myself asking: Where can I best apply these values and create the most value during my limited time on this uniquely fragile and majestic blue planet?

That’s what has led me to the climate work that I do at BSR where, from my little corner of the earth, I strive to inch toward more a stable climate with the businesses with which we work. It’s tough going sometimes, especially since the clock is ticking on sufficient global climate action, but I remain hopeful.

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

I have been deeply involved with a few BSR climate collaborative initiatives, including Transform to Net Zero, and have worked on climate strategy and general sustainability management projects. Incubating, launching, and then implementing the work of collaborative initiatives is sometimes challenging, but it’s always interesting.

Observing companies working together pre-competitively to raise the floor on climate ambition has been a real highlight of my work at BSR. It has also been rewarding to work with companies from very different sectors in finding common ground and collaborating on climate action.

How did you get into working on sustainable business?

I started out my career as an environmental scientist. In this role, I worked closely with U.S. federal, state, and local government entities, assessing the environmental impacts of utility-scale renewable energy and infrastructure projects on sensitive environmental and social resources.

I observed the important work being done on the government side, but given the complex dynamics inherent in government work, the pace of action is naturally slower. I wanted to explore working with businesses, where there is more freedom to act quickly and innovate on sustainability, so I found myself at BSR!

I joined BSR in mid-2019 as an Associate and have been working closely with the Climate Change team and tech sector companies. In the Associate role, I can explore many different types of projects with companies of various sizes and sectors.

Coming from an interdisciplinary background, I try to view challenges and solutions holistically within the global ecosystem. The opportunity to work with a wide variety of companies has been a great learning opportunity to understand the synergies connecting all the actors in the broader business and sustainability landscape.

It has undoubtedly been a difficult year. What were the things that brought you joy amid lockdown? And what are you most looking forward to when the pandemic is over?

The extra time I had to hang out with my dog by working from home was super valuable and made the uncertainty and gravity of the pandemic a little less stressful. Whenever it is safe and appropriate to do so, I’m very much looking forward to traveling internationally again in the future!

Blog | Wednesday April 28, 2021

China’s Climate Goals, The 14th Five-Year Plan, and the Impact on Sustainable Business

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Following a weeklong meeting in March, China’s 14th Five-Year Plan (FYP), which covers 2021-2025, was approved by the National People’s Congress at the Two Sessions in Beijing. The plan signals the direction of China’s economic, environmental, and social development in a critical period in which China will lay the foundation for its climate goal to peak carbon emission by 2030, reiterated by President Xi at the China-France-Germany virtual climate summit on April 16.

How will the 14th FYP steer the country’s development for the next five years, and what does it mean for business? In this blog post, we look at the environmental and climate considerations of the new FYP.

An Evolving Environmental Approach: From Pollution Control to Emissions Reduction

In the recently released plan, energy and climate targets take center stage. For the first time since 1986, China has omitted a numerical GDP target in its FYP, instead setting longer-term climate goals and introducing the idea of a CO₂ emissions cap. The FYP set an 18-percent reduction target for CO₂ intensity and a 13.5-percent reduction target for energy intensity from 2021 to 2025.

This marks a significant shift from pollution prevention to carbon emissions reduction.

In the 12th FYP, the Chinese government began dedicating significant funds and high-level attention to reducing energy consumption and greenhouse gas emissions, and it declared war on pollution in 2014. This continued into the 13th FYP, with specific sectoral targets and milestones to eliminate pollution.

In the 14th FYP, energy and climate stand out as a central-policy priority, building on the existing efforts and strategies focusing on ecological and environmental protection.

The 14th FYP Will Guide Sector-Specific and Regional Plans to Reduce Carbon Emissions

The international business community and climate experts have raised questions regarding China’s energy transition and specifically how it will reach its 2030 emission peak goal through actions set in the 14th FYP. These details, especially regarding timeline, road map, and the KPIs at the local and sectoral level, will be clarified in the 14th FYP’s forthcoming sector-specific and regional plans. These clarifications are important and worth watching for.

Still, we have information from key ministry and state-owned enterprises, which take the lead in setting direction for policy implementation. For example, the Ministry of Ecology and Environment (MEE) will set targets for nationwide greenhouse gas emission controls between late 2021 and early 2022. These targets will break down those outlined in the FYP at the sectoral and administrative level and will provide greater details concerning road maps and action plans for implementation, evaluation, and reporting.

Industry experts anticipate there will be more demand for both mandatory and voluntary carbon disclosure. In particular, as the national carbon emission trading market kicks off in 2021, there will be increased expectations for data on emissions reductions and company measures to control emissions.

Meanwhile, state-owned enterprises also vowed to peak carbon emission and reach carbon neutrality goals ahead of the country’s goal. The State Grid Corporation of China released a plan for peaking emissions and achieving carbon neutrality goals in March 2021. China Baowu, the world’s largest steel company, announced its aim to have CO₂ emission peak before 2023 and Sinopec, the world’s largest oil refiner, has set a target for carbon emissions to peak by 2025. 

Major cities, including Beijing and Shanghai, the industrial provinces of Guangdong and Jiangsu, and the island of Hainan, have all included emissions peaks in their proposed five-year plans, which will align with the overarching national blueprint guiding policy through 2025.

Business Operating in China Should Expect Changes to the Market to Align with Climate Goals

As sector-specific and regional FYPs start to take form, these policy changes will gradually be delegated down to businesses and society across sectors and regions.

The net-zero transition will have a significant impact on almost every part of the supply chain, particularly those still dependent on coal-fired power and which are not yet ready to transition to renewables. This could include sectors such as mining, steel, petrochemicals and chemicals, transportation, textiles as well as others. The impact will be concentrated in coal-reliant regions and provinces, affecting local economies, employment, tax revenue, and social benefits, and could push business and talent to regions where renewable energy is cheaper.

The financial market is responding quickly to the government plans. Carbon neutrality-themed shares in the Chinese stock markets have surged since early in the year. We also expect that the national carbon neutrality goal will activate the financial market and encourage more long-term value investors to focus on zero-carbon development and invest in zero-carbon assets, projects, and technologies.

Businesses operating in China should thus expect these changes to take into effect soon and prepare their own operations as well as their supply chains to meet both policy and market expectations for a net-zero transition.

What’s Next

BSR’s China team will continue to unpack business impacts of the national plan. Future blog posts will provide more details on industry impacts and how businesses should prepare through insights and dialogues with climate and energy experts and key opinion leaders from important stakeholders across sectors.

If you are interested in learning more about how BSR can help shape your China strategy, please reach out to connect with the team.

Blog | Tuesday April 27, 2021

Leaders Summit on Climate: Forward Progress to the Net Zero Economies We Need

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The Paris Agreement’s goals to keep global warming well below 2°C and pursue 1.5°C were never going to be reached all at once, but rather by countries strengthening their emissions reduction targets every five years. For the first time since Paris, the Leaders Summit on Climate kicked off a new round of stronger targets from major emitters, which will culminate at COP26 this November.

Signaling full U.S. engagement in the global effort to combat climate change, the Summit stepped toward the net zero economies we need.

Leading the way:

These updated pledges will meaningfully draw the global emissions curve downward but fall short of staying on track toward the Paris goals. We must look to the major emitters to do more ahead of COP26. And when the COP is done and dusted, we must look to governments to implement these targets as domestic policy, providing more certainty to guide business action.

These targets and others will galvanize the business transformation of BSR’s members and the wider business community. By innovating across business functions, companies will seize the economic opportunities of an inclusive net zero economy, leading to better jobs, shared prosperity, and Paris-aligned emission reductions during this Decisive Decade.

By working with leading collaborations such as Transform to Net Zero and the 1.5°C Supply Chain Leaders and with our members, BSR will spend the coming years bringing net zero implementation ever closer to reality.

The Summit also was also notable for the launch of two major private-sector initiatives: the Glasgow Financial Alliance for Net Zero, including a new Net-Zero Banking Alliance, and Lowering Emissions by Accelerating Forest finance (LEAF), a new public-private coalition with the aim of mobilizing more billions to protect tropical forests at jurisdictional scale.

The new national targets remind us that net zero pledges ring hollow unless, as the Transform to Net Zero Position Paper and Action Plan sets out, they are consistent with and supplement shorter-term science-based emissions reductions across value chains. And the LEAF coalition reminds us that the need to remove carbon from the atmosphere to achieve net zero targets cannot blind us to the need to invest in avoided emissions to keep the door to Paris open.

Leading businesses on climate are called in these different directions—to achieve science-based reductions across the value chain en route to net zero goals and to invest in solutions to systemic issues like tropical deforestation. After the Leaders Summit on Climate, we know they will be joined by governments eager to accomplish the same.