Search Results

Blog | Wednesday February 19, 2020

The Coronavirus’ Impact on Chinese Society and Supply Chains

Preview

January 25, 2020 was the Chinese Lunar New Year. As is tradition, families prepared for this important holiday by taking at least one week—or even more—to celebrate: factories closed down and domestic migrant workers happily returned to their hometowns, plane and train tickets were sold out by early January, families and close friends made plans for gatherings, and restaurants were sold out for the New Year holiday banquets. While the holiday is officially seven days long, many workers take as many as 15 days off, extending their holiday until the Lantern Festival, which takes place on the 15th day in the lunar calendar.

However, this year, I received a call on January 22, just days before the New Year, from the chef scheduled to arrange my at-home banquet. He said there had been too many requests for home banquets instead of restaurants because people were started to worry about the “Wuhan Pneumonia”—what we now know officially as the Coronavirus. The chef was suddenly overbooked. As a long-time friend, I agreed to let him go for bigger opportunities since my family dinner would have been rather small and simple—I did not want him to miss a more profitable opportunity. Little did I know that this was my last chance to have someone cook for me.

The following day, January 23, Wuhan was officially closed: no one was allowed to come into or leave Wuhan. The government announced that it would prolong the school holiday until late February.

Everyone was nervous. Our first reaction was to buy masks—but they were all sold out! Very soon afterwards, disinfectants were sold out in shops and on online platforms. Streets emptied quickly, and restaurants and shops were closed.

And many countries, including Great Britain, the United States, and Australia announced cancellations and reductions in flights from China, as well as limits on travel for Chinese citizens and foreign travelers who had been to Wuhan or China.

From that point on, people focused on changing their flight tickets out of China, staying home, and switching to online shopping for food. Four major online platforms—Hema (the supermarket under Alibaba), JingDong, Meiriyouxian, and Dingdong—were overloaded with orders for tofu, green vegetables, eggs, meats, and ginger, among others, and they were often sold out. These online platforms’ delivery services were overwhelmed, and they had to change their policies from delivery in 30 minutes to taking more than a day or not being available at all.

As of today, February 19th, the 27th day after the Chinese year, the Coronavirus has led to more than 2,000 deaths in China—a devastating impact. Across the country, schools are still closed and streets remain empty. Many people continue to work from home. Retail, restaurants, and entertainment companies are nearly completely closed across the country. The big question is when all will return to normal—for communities and families affected by the Coronavirus, for people across the country worrying about their own health, and for companies concerned for their workers’ wellbeing and wondering when production can resume. This has become a significant challenge for all business, especially in the manufacturing and service sectors. The longer they wait, the greater financial pressure emerges for business owners and workers whose income will be impacted.

As the majority of cities and counties are still blocked, plane and train services are reduced. This means workers cannot get back to work. Factories are facing huge financial challenges. Many retailers have closed operations: IKEA closed all its shops, Uniqlo and Levi’s have closed about 50 percent of their shops, and Burberry and Prada hardly have any visitors. Shanghai Fashion Week, originally scheduled to launch March 26, has been canceled.

Business is facing big challenges on how to deal with their stock in the Chinese market and how to place future orders. Since many Chinese factories are closed, manufacturers in Southeast Asia are also affected due to a lack of raw materials and components. The Coronavirus impact on China and global business, especially supply chains, will be enormous. This raises the ultimate question: how to build a resilient sustainable supply chain? As this challenge increases, some local governments are starting to take supportive measures to help factories resume their production, e.g., the Hangzhou and Yiwu government worked with some local governments to bring the workers back to these cities by organizing dedicated trains and transportation and providing support so that factories could maintain good health protocols.

BSR’s China team is planning to write a series of blog posts to provide insights regarding the impact on workers, supplier management, as well as the environmental impact as the crisis of the Coronavirus continues to unfold.

Blog | Monday February 17, 2020

Sustainable Business in Asia: Three Environmental Drivers of the Decisive Decade

Preview

Climate change is a global threat, endangering communities, resources, and economies around the world. For businesses in particular, climate change is a significant risk—to workers, operations, and supply chains. Many companies are already mobilizing: to limit their own impact, many are setting emissions reduction targets; to adapt to the growing risks, some are evaluating where their supply chains are located as well as what energy sources they use.

Companies with operations in Asia will face a unique set of challenges and opportunities as we enter the decisive decade of the 2020s. BSR has identified the following trends relating to climate and the environment that are likely to impact how companies do business in the region. We have identified these trends based on our work with companies in Asia, including our engagement with stakeholders throughout the region.

We expect these trends to impact sourcing strategies and supply chains, access to finance, employee engagement, sustainability leadership, and increasingly market and consumer engagement. For sustainable business to thrive in the next decade, companies need to be aware of:

1. The Increased Focus on Climate and Sustainability Determining Access to Finance

Climate change impacts and risks—such as rising sea levels, increasing cyclone intensity, water stress, and drought—pose a significant threat to Asia. China alone has 14 coastal cities and 154 million people in low-elevation zones. Indonesia has the world’s second largest coastline, exposing 60 percent of its population to sea-level risk and coastal surge; furthermore, Jakarta, its capital, is sinking. 

Climate risks, impacts, and the need for planning and resilience are being integrated into banking risk, banking relationships, and the Task Force on Climate-related Financial Disclosures. This means that the increasing global focus on carbon and climate will impact key relationships between businesses and their financial services providers. As their bankers begin to ask more pointed and specific questions, all businesses—including conglomerates and family-run businesses seeking access to global capital—will need to integrate deeper understanding of climate risks: from hazards such as flooding, to business exposures as demand for products/services change, to vulnerabilities of local infrastructure and communities. The financial imperative to understand climate risk is driving greater CFO engagement on climate and sustainability and will continue to do so. As a consequence, companies are having to develop greater firm-level competency, awareness, and integration of both climate and sustainability into their core business strategies. 

2. China’s Continuing War on Pollution

China has been waging and will continue to wage three battles: for clean air, clean water, and clean land. As this continues over the coming decade and is further integrated into the 14th Five-Year Plan, the war on pollution will continue the changes already being driven: polluting enterprises are being shut down, moving, or needing to significantly invest in pollution control as governmental enforcement, standards, and local government oversight change. Supply chains are experiencing—and will continue to experience—the impacts of this war on pollution in terms of increased supply chain uncertainty and supply chain movement as critical China-based suppliers in tier two or three cease operations or move to new locations.

3. Differing Country Investments in Renewable Energy

Individual countries’ choices to enable investments in renewables (or not) will be important to global supply chains and are highly variable around Asia—with Vietnam appearing to innovate and Indonesia at a crossroads where “an over-reliance on thermal coal and unsustainable sources…will lock the country into polluting energy supplies, for years, if not generations, to come.” Continued use of coal and other fossil fuels affects businesses’ Scope 3 carbon emissions—and most probably lock countries into higher energy costs over the course of the decade. 

As global business begin to contemplate fossil fuel-free supply chains, energy generation options in countries will become increasingly important. Whether is it a carbon tax in the producing country or a carbon tax at the border to the market country, this needs to be accounted when looking at value chain locations. Local energy options and future energy infrastructure development plans will need to be on the radar of procurement and supply chain leadership. 

Businesses already doing business in Asia or those with plans to expand operations and supply chains into the region need to pay attention to these trends as we move into the new decade. BSR’s Asia team can help develop strategies specific to the region to advance your company’s sustainability agenda—please feel free to reach out and connect with us.

Blog | Wednesday February 12, 2020

The Decisive Decade

Preview

Blog | Tuesday February 11, 2020

Human Rights Assessments in the Decisive Decade: Applying UNGPs in the Technology Sector

Preview

This blog is the first in a series of two about human rights assessments in the technology industry. The next blog will consider how to address the challenges raised here.

Over the past 10 years, the BSR team has undertaken a number of human rights assessments for companies in the technology industry. While most have not been published, recent publicly available examples include the assessments of Facebook in Myanmar, Google’s Celebrity Recognition tool, Telia Company’s exit from Eurasia, and Facebook’s proposed Oversight Board.

Our assessments have focused on a variety of topics: some have focused on geography, others on a new product, service, or technology, and others on how to integrate a human rights-based approach into a decision-making process. A common challenge throughout has been how to address traditional human rights concerns in the technology industry’s very different modern setting.

This challenge is well recognized by UN Human Rights, which has launched a project to provide guidance and resources to enhance the quality of implementation of the United Nations Guiding Principles on Business and Human Rights (UNGPs) in the technology sphere. As their scoping paper rightly recognizes, there is both a lack of clarity on how to apply the UNGPs in practice and a need to ensure that approaches are aligned with international standards. BSR looks forward to active participation in this project.

There is both a lack of clarity on how to apply the UNGPs in practice and a need to ensure that approaches are aligned with international standards.

Human rights assessments are just one part of the overall human rights due diligence approach expected by the UNGPs, though they are often a key input into the design of overall approaches for identifying, preventing, mitigating, and accounting for how companies address human rights impacts. Our past decade undertaking human rights assessments in the technology sector has raised several challenges, which must be addressed when designing human rights due diligence frameworks fit for the decade ahead as newer technology is developed, introduced, and adopted.

1. The role of users in shaping impact. A significant challenge when assessing human rights impacts is the interplay between the design of the product by the technology company and how it is used in real life, whether by individuals, enterprise customers, or governments. While technology companies may not typically be the cause of harm, they are often contributing or directly linked to it by the use of their products and services by others, and for this reason, it is increasingly common for companies to set out restrictions on how a product can be used. However, identifying violations while respecting user privacy is not easy—often technology companies simply lack visibility into the data needed to spot misuse. We often finish a human rights assessment for a technology company and wryly conclude that we should be undertaking the assessment for the companies using the technology, not just the company designing it.
2. The substitutability problem. “If we don’t sell this product to a nefarious actor, then someone else will” is a common refrain in the technology industry—and while not unique to the technology industry, this problem does take on special significance. Today’s concerns around facial recognition illustrates the point perfectly: the overall realization of human rights is not improved if a responsible company decides not to provide service to a nefarious actor and a different company chooses to do so anyway. At the global scale, there is no shortage of technology companies willing to step in where rights-respected companies decide not to.
3. The need for system-wide approaches. While today’s human rights assessments are typically undertaken for a single company, in the technology industry, the solutions often need to be applied at the system level. For example, the risk of governments gaining access to data and using it to violate human rights—extreme surveillance, for instance—cannot be addressed by one company acting alone. As such, collaborations such as the Global Network Initiative are essential in making sure that insights gained at the company level are addressed collectively. In many cases, standards setting, multi-stakeholder efforts, and regulation by governments are essential to effectively addressing adverse impacts.
4. The differential importance of local context. Users across the globe can quickly adopt and begin using a new technology product, service, platform, or feature, but the human rights significance can vary significantly depending on local contexts. This creates twin challenges of identifying what these impacts are in a timely fashion and trying to apply global policies in nearly 200 countries—and often different local contexts within each country. Companies can prioritize higher risk locations, but there is always a risk that countries, regions, and communities covered by the western media gain much more attention from companies than those that do not.
5. The challenge of scale. Related to the importance of local context is the sheer reach of technology, and the operational implications of this scale should not be underestimated. As we noted in our recent human rights review of Facebook’s proposed Oversight Board, “while efforts to provide access to remedy in other industries are typically designed to meet the needs of a bounded number of rightsholders, based in clearly defined geographical areas and speaking a limited number of languages, the Facebook Oversight Board needs to be designed to meet the needs of billions of rightsholders (both users and non-users), who could be anywhere in the world and who may speak any language.”
6. The democratizing impact of technology. In several recent human rights assessments, we have recommended that companies deploy approaches based on “allow lists” and “block lists” to define who should or should not be able to use a product, with the emphasis on avoiding or preventing product misuse in higher risk scenarios. The critique of this approach is simple: the original promise of technology is that it democratizes and opens closed societies, so who are companies to decide where, when, and how it gets deployed?
7. The government problem. The UNGPs clearly state that governments have the duty to protect human rights; however, in practice governments often fall well short of this duty and make use of technology, data, and regulations to violate rather than protect rights. In many other industry contexts, the laws are often good but are not being enforced, and in the technology industry, the laws are often bad and are being over-enforced. System-wide approaches are impossible when a key player in the system isn’t willing to cooperate or is a source of the problem—for example, facial recognition solutions need regulating, yet governments are often the customer using face identification in ways that violate human rights.
8. Assessing for uncertainty. A human rights assessment of a new product, service, or feature should focus on identifying, avoiding, preventing, and mitigating adverse human rights impacts that may be associated with this use—the challenge being that we often don’t know for certain how it will be used, where it will be used, or by whom it will be used. We’ve begun deploying futures and strategic foresight methods as part of human rights due diligence, but it would be naive to suggest we can anticipate every eventuality. This challenge is multiplied the further up the research and design chain that the human rights assessment takes place.

Will restricting the use of new products to avoid adverse human rights impacts also hinder the urgent priority of spreading the benefits of scientific advancement and technological progress, which itself is a human right?

Taken together, these challenges present a complex mix of ethical questions and dilemmas: When is it appropriate for a company to define how its product can and cannot be used, and when is it appropriate for government or society to do so? Will restricting the use of new products to avoid adverse human rights impacts also hinder the urgent priority of spreading the benefits of scientific advancement and technological progress, which itself is a human right? How much autonomy should companies provide rightsholders on how they use a product, and to what extent should that autonomy be restricted? Is it right that appropriate actions may vary at different levels of the internet, such the platform provider, service provider, or the infrastructure layer?

Looming behind these questions are also fundamental debates shaping the future of internet, such as the role of international standards-setting bodies in defining how the internet works, the risk that the internet “splinters” along geographic, political, and commercial boundaries, and whether governments should place limits on encryption.

The UNGPs and the various human rights principles, standards, and methodologies upon which the UNGPs were built provide a pathway to address these challenges, but much work remains to be done to define the direction this path should take. At BSR, we’ve undertaken human rights assessments knowing that they are just one part of a journey of discovery in learning about the impact of technology on human rights. We greatly appreciate companies that have contributed to the dialogue by publishing their assessments, and in the second part of this series, we will share more about the solutions to address the challenges raised here.

Blog | Friday January 31, 2020

Climate Action in the 2020s: Three Steps to Reducing Value Chain Emissions

Preview

From youth activists marching in the streets to economic leaders in Davos, the world is calling for business to combat the climate crisis. Indeed, business plays a vital role in the effort to limit global warming to 1.5°C in line with the Paris Agreement targets. And business is making progress: to date, 769 companies with a combined market cap of over USD$10 trillion have committed to setting science-based targets (SBTs) to reduce their greenhouse gas (GHG) emissions.

Most companies that have set SBTs have a good understanding of their Scope 1 emissions, generated by their own operations, as well as their Scope 2 emissions, generated from the energy sources that power their operations. Some companies have already taken significant steps to reduce Scope 1 and 2 emissions, with commitments such as using 100 percent renewable energy to power their operations. However, the greatest proportion of a company’s GHG emissions fall within Scope 3, their value chain. According to CDP, an environmental disclosure non-profit, a company’s supply chain emissions are on average 5.5 times larger than its Scope 1 and 2 emissions.

Some companies have already ventured into reducing their Scope 3 emissions: Walmart has engaged Tier 1 suppliers through Project Gigaton, HPE’s supplier collaboration program seeks to avoid 100 million tons of emissions, and L’Oréal's carbon balanced ambition aims to counterbalance GHG emissions by generating carbon gains through the sustainable sourcing of raw materials. Learning from these pioneering programs, it is now time to dramatically speed up climate action across value chains and deliver science-based GHG reductions for the Decisive Decade ahead.

Still, addressing Scope 3 emissions comes with several challenges in the context of fast-moving, globalized commodities markets regulated with price volatility: lack of transparency or knowledge of the supply chain, lack of direct connections with the next tier of suppliers, and reduced leverage to influence action.

The opportunity is undeniable: a company's value chain contains its largest GHG reduction potential, and value chain decarbonization is a necessity to achieve SBTs.

Companies dedicated to climate action still have a long way to go, even after they have set SBTs. Achieving their goals to limit global warming to 1.5°C requires taking on Scope 3 emission reductions—unexplored territory for most. And yet the opportunity is undeniable: a company's value chain contains its largest GHG reduction potential, and value chain decarbonization is a necessity to achieve SBTs. For companies that are pursuing SBTs, we see the following three steps as key to achieving value chain emissions reductions.

1. Focus on GHG Reduction Potential

Businesses aiming to reduce their Scope 3 emissions should start with a thorough understanding of their value chains and identify the areas with the greatest potential to deliver GHG reductions. This is an essential step—the greatest GHG reduction potential may not be the most obvious. Simply because a value chain may be the largest (e.g. by spend) or be the most GHG intensive (e.g. large agricultural commodities such as cotton for apparel, in some specific location), these may not have the most potential for reduction since they might already be optimized.

Overlooking the supply chains with the most emissions reduction potential might result in time and resources wasted. Companies need to begin with an understanding of which supply chains can or can’t be further optimized and concentrate on achieving decreasing emissions in the areas with the most potential for reductions.

2. Use a “Reverse Sourcing” Approach

A traditional sourcing approach calls for engaging Tier 1 suppliers, then working with them to engage their supply chains. This approach, while systematic, doesn’t prioritize the specific value chain players with the greatest emissions reduction potential.

To most effectively reduce GHG emissions, companies can apply a ‘reverse sourcing’ approach. This means targeting GHG reduction solutions at the root, rather than focusing on Tier 1 suppliers as an entry point. Depending on value chain specificities, businesses can identify value chain players, such as smallholder producers, upstream producers, manufacturers or others with the largest GHG reduction potential, beyond Tier 1. And therefore, target and implement actions to significantly reduce GHG emissions at that level.

Once a company has identified such an area with significant GHG reduction potential—for example, smallholder producers of raw materials—then, the company will have to connect relevant partners at every stage of the value chain between that supply chain actor and the company itself. This will involve developing new, long-term sourcing partnerships, as well as new business models to ensure that adequate investments are made towards these low-emission processes and emissions reductions targets can be met.

This shift of mindset—away from a more traditional approach to reverse sourcing—allows business to identify an array of appropriate GHG reduction solutions in the value chain, from raw materials projects to product innovation. 

3. Take Pilot Programs to Scale

By piloting the "reverse sourcing" approach, businesses will demonstrate the opportunities to achieve emissions reductions in their value chain. Further, the pilot will provide learnings and solutions demonstrating how working through value chains will help a company to achieve its SBT.

To effectively achieve their SBTs, businesses will need to scale up such pilot programs by engaging value chain actors more widely and operationalizing the right procurement processes. For value chains with overlapping suppliers, peer collaboration will be fundamental: by working together, businesses will be able to learn from successes of others, leverage the power of balance, and collectively address emissions in their respective value chains. 

Mitigating climate change and decreasing emissions is a matter of urgency—and addressing Scope 3 emissions in company value chains presents a great opportunity. Through identifying the value chains with the greatest GHG reduction potential, applying a "reverse sourcing" approach, and engaging with peers and value chain partners to bring pilots to scale, businesses will be able to reinvent their models, achieve their science-based emission reductions, and thrive in the long term.      

Leveraging this new approach is an opportunity to deliver significant emissions reductions in value chains. The BSR Climate and Supply Chain teams look forward to supporting businesses on this journey. To lean more about Scope 3 emissions reductions, please read our full report on this topic or connect with us.  

Blog | Thursday January 30, 2020

Coming in from the Cold: ESG Has Its Davos Moment

Preview

Last week’s gathering at Davos included an unprecedented focus on sustainability, as the 50th Annual Meeting of the World Economic Forum was dedicated to “stakeholder capitalism.”

I have been going to the WEF meetings at Davos since 2005. Fifteen years later, it is remarkable to see how sustainable business (or responsible capitalism or whatever term you want to use) has—to use an appropriate metaphor for the Swiss Alps in January—come in from the cold.

A lot has changed: in 2005, climate discussions were few and Al Gore’s sessions, coming months before “An Inconvenient Truth” was released, were lightly attended. Human rights were little discussed, and LGBTQI+ issues were nowhere to be found.  I am not sure Greta Thunberg’s parents would have imagined that their then two-year-old daughter would be one of the most influential voices at this global gathering at age 17.

This year, it was heartening to see the many new initiatives and announcements that emerged in the run up to and throughout the week at Davos. One that deserves specific attention is the effort to create a single Environmental, Social, and Governance (ESG) reporting and disclosure framework, something that’s become a bit of a “holy grail” in the sustainability world.

This effort could be an important turning point, but only if certain core principles, in the words of the report, potentially lead to “a generally accepted international accounting standard” for sustainable value creation.

The vehicle for the latest effort is a report released last week by the WEF’s International Business Council (IBC), a gathering of more than 100 large company CEOs. The report, Toward Common Metrics and Consistent Reporting of Sustainable Value Creation, reflects two intersecting developments: growing recognition of the importance of sustainability performance, both for business and the wider world, and growing frustration with the welter of reporting and disclosure frameworks, as well as the seemingly endless number of ratings and rankings.

The IBC’s interest and initiative is very welcome—a sign that it’s time to get serious about committing to assessing businesses on their impacts, and not only the shareholder capitalism model that has lost considerable credibility, especially in the last year.

This effort could be an important turning point, but only if certain core principles, in the words of the report, potentially lead to “a generally accepted international accounting standard” for sustainable value creation. The principles that should be at the core of this effort, and others that may emerge alongside it, are the following:

Material and Ambitious

There is great value in establishing a common baseline for what is material to investors as it relates to corporate sustainability performance. This approach sets a baseline, which is important. It is also essential that this model not reflect a lowest common denominator approach. The IBC seems to understand this in taking on—whether or not sufficiently—the issue of corporate tax disclosures, which is a very positive step.  As this effort evolves, it is essential that it have sufficient ambition across all topics.

Inclusive and Credible

There has been much grumbling about this effort—and also much interest and initiative—on the part of existing sustainability reporting standard setters. It is essential that the seminal work of these organizations be fully considered and integrated into the IBC effort. The drive to embed sustainable value creation in corporate reporting and listing requirements will not succeed if the views of broader society are not fully considered. If uptake by markets undermines uptake of disclosure by the wider world, little will have been accomplished. I was encouraged to see that the initial report makes extensive use of the work done to date by the GRI, SASB, TCFD, IIRC, etc. as well as well-recognized frameworks such as the UN Guiding Principles on Business and Human Rights.  Similarly, it remains an open question whether the Big 4 accounting firms are the right partners for this effort. They have massively important expertise and credibility with business—whether they have all the expertise they need and the credibility with wider society is subject to debate.

Consistent and Flexible

The IBC does well to propose both core and expanded metrics. This is absolutely critical for a variety of reasons. First, it is essential to have a “common core” that all companies are expected to report against. Indeed, the uptake of the Task Force for Climate-Related Financial Disclosure’s (TCFD) recommendations is testament to the fact that climate change is material for every company, though not always in the same ways or to the same extent.  It is also the case that the essence of sustainable business is the need to address the intersection of business and society, which for obvious reasons is always evolving. To take just two examples from the past five years, recognition of the need to restrict ocean plastics and support the rights of LBGTI people have skyrocketed up the business agenda. There will, therefore, be a need to ensure that emerging issues are explored and addressed on an ongoing basis. Time scales are crucial here: what is material and relevant today will be different in five years, let alone by 2050. This model needs to find a way to balance the needs of today and tomorrow… which is after all the essence of sustainability.

The “S” in ESG to Should Not Be Silent

Social issues are more challenging than many others. They reflect diverse societal norms and laws. They are often measured qualitatively rather than quantitatively. The “cross-cuts” on various issues, for example gender impacts of climate change, are essential but hard to measure.  However, these considerations often dominate public impressions of a company’s performance and the brand value that comprises such a large portion of a company’s assets.

Governance Matters

This effort risks being only words on a page if corporate governance does not evolve in a way that will ensure that Boards have the breadth of perspective to fully understand the import of the topics in whatever framework emerges. In the halls in Davos, it is widely accepted, though not often stated publicly, that Boards lack the expertise (and far too often, the inclination) to understand many ESG issues, not least, those on the social side. A parallel effort to ensure that Boards can bring their “A game” to making this framework real will be essential.

It is almost certain that we will see a profound transformation of corporate reporting and measurement in this decisive decade of the 2020s; the world badly needs it, and so do CEOs, Boards, and investors. Whether the IBC’s nascent effort provides the foundation for such reforms will depend on whether the principles established here are pursued fully and openly. Initial signs are good and there is much work yet to be done.

Blog | Wednesday January 29, 2020

In Conversation with Ross Rachey, Director, Global Fleet & Products, Amazon Logistics

Preview

Climate change has risen to the forefront of the business agenda. Companies like Amazon and other members of BSR’s Future of Fuels collaboration are exploring sustainable fuel technologies to minimize their greenhouse gas emissions and are in turn helping to accelerate the transition to a sustainable road freight system.

Private-sector collaborations are key to addressing broad challenges like climate change. By sharing best practices and fostering peer learning, companies in BSR’s Future of Fuels can accelerate and scale the adoption of sustainable fuel technologies faster than doing so alone. To that end, Future of Fuels launched its case study library in 2018 to provide a forum for our members and Sustainable Fuel Buyers’ Principles signatories who have tested sustainable fuel technologies to share their best practices, challenges encountered during implementation, and recommendations to other companies exploring similar fuel technologies.

Our latest addition to the Future of Fuels case study library is from Amazon, which collected operational data from electric delivery vans used in Paris, Milan, and Madrid over six months in 2018. Recently, I spoke with Ross Rachey, Director of Global Fleet & Products, Amazon Logistics at Amazon, to discuss the company’s approach to sustainable fuel technologies and how their work supports their broader climate and sustainability agenda.

The Amazon Case Study

Denielle: Amazon has strong ambitions on climate change mitigation. Talk me through the climate commitments Amazon has made on renewable energy, being carbon neutral, and Shipment Zero.

Ross: In September 2019, Amazon co-founded The Climate Pledge with Global Optimism, and Amazon became the first signatory to The Pledge. The Climate Pledge calls on signatories to be net zero carbon across their businesses by 2040—a decade ahead of the Paris Agreement goals. Within this commitment, we are working on goals to eliminate carbon emissions from specific portions of our operations even sooner.  For example, Shipment Zero is focused on customer shipments, aiming to deliver 50 percent of our packages with net zero carbon by 2030. And, our goals to become 80 percent powered by renewable energy by 2024 and 100 percent by 2030 will eliminate carbon emissions from the electricity that supplies Amazon’s fulfillment centers, data centers, and other operations. 

Denielle: Why did Amazon launch Shipment Zero? How do sustainable fuel technologies, such as electric delivery vans, fit into Amazon’s vision?

Ross: We are working backwards from our desire to innovate on behalf of customers, using a science-based approach to implement sustainable technologies and practices across our business. Last year, Amazon culminated a multi-year effort to measure greenhouse gas emissions from our business—and release it publicly—so that we could prioritize the parts of our business where we want to focus our decarbonization efforts. We plan to implement strategies in line with the Paris Agreement, including efficiency improvements, renewable energy, materials reductions, transportation electrification, and other strategies. This includes our plan to purchase 100,000 Rivian fully-electric delivery vehicles, with the first vehicles starting to deliver packages in 2021.

Denielle: How did Amazon come to the decision to explore and test electric vans?

Ross: Through participation in BSR's Future of Fuels collaboration, other public forums, and a review of available academic literature, we’ve spent the last three and a half years learning where clean transportation technologies and operational duty cycles are aligned, what Calstart calls the “Beachhead Strategy”, to decarbonize the transportation sector. In line with the logic of that strategy, Amazon has already deployed battery and fuel cell forklifts, and other clean technologies in many of our logistics facilities. Electrification of last-mile delivery is the logical next step. The last-mile duty cycle with daily routes and overnight parking and charging is well-suited to electrification.

As the share of clean and renewable energy sources grow, efforts to electrify transportation systems will deliver greater dividends and greater environmental impacts. 

Denielle: Why did Amazon begin testing electric vans in Europe? Are there particular advantages of testing in the European market compared to the United States and other markets?

Ross: We began testing in Europe because EV delivery vans that potentially suit our duty cycle were available from multiple manufacturers. We were excited about the opportunity to get vehicles on the road and begin learning more about electric vehicle operations. We’ve carried these learnings to pilots we’ve launched in other countries including United States, India, etc., and the learnings were foundational for the electric vehicle orders we are currently placing globally.

Denielle: Given your commitment to Shipment Zero and electric last-mile delivery vehicles, what’s next for Amazon in sustainable fuel technologies?

Ross: Amazon will continue working to deepen our knowledge when it comes to zero emissions transportation. While we are committed to electrification in some duty cycles, there are other technologies like renewable natural gas and hydrogen fuel cells that may be better suited to other duty cycles, and we will continue exploring these opportunities as they develop.

Understanding Sustainable Fuel Adoption

Denielle: Many companies are hesitant to explore various fuel technologies and build a portfolio, primarily due to concerns over operational complexity and financial risk. From your experience, what is the benefit of a company developing a portfolio of sustainable fuel technology options?

Ross: It’s true, there are costs, risks, and complexities in adopting a new technology, but technological innovation is in Amazon’s DNA, and we want to work with the innovators of today to ensure the clean technologies of tomorrow are designed to meet the demands of our customer-obsessed approach. We are confident that electric vehicle technology presents a host of advantages over traditional combustion engines, and we are excited to play an active role on further advancing electric transportation and continuing to explore additional alternative sustainable fuel technologies.

How to Enable and Influence the Future of Fuels

Denielle: In the context of Amazon’s climate commitments, using electricity as a fuel technology presents an interesting dilemma. While there are no tailpipe emissions, there can be emissions from electricity use if the electricity is not produced with renewable energy. How important is the "greening" of global energy infrastructure and increasing the renewable energy available on the grid to achieving Amazon’s goals, and what can companies do to promote that shift?

Ross: Clean energy is critical if we are going to rely on transportation electrification as a key strategy in the toolkit to fight climate change, but we can’t wait for a clean grid before we electrify transportation systems with the appropriate duty cycles. Just as Amazon has set a Shipment Zero target to deliver 50 percent of customer shipments net zero carbon by 2030, Amazon has publicly committed to achieve 100 percent renewable energy supply globally by 2030, in collaboration with utilities and renewable energy developers. As the share of clean and renewable energy sources grow, efforts to electrify transportation systems will deliver greater dividends and greater environmental impacts. 

Blog | Tuesday January 21, 2020

Five Insights on the Future of Reporting from Uber’s Safety Report

Preview

In December, Uber published its first-ever U.S. Safety Report, sharing the company’s approach to serious safety incidents—such as injuries, fatalities, and sexual assault or misconduct—and describing its recent safety investments. The report contains a wealth of quantitative data and qualitative information to help readers interpret the company’s safety performance and better understand the scale and characteristics of the issues at stake. For example, one surprising insight is that while media coverage tends to portray drivers as the most frequent sexual assault offenders, the data show that drivers report assaults at roughly the same rate as riders.

Some data provide good news for ride-sharing firms: The Uber-related motor vehicle fatality rate is about half the national average, likely owing to driver screening, minimum driver ages, and younger vehicles. But other data did not make for such positive reading: while reported incidents of sexual assault represent a very minor percentage of total trips (less than 0.0001 percent), that still accounts for more than 3,000 cases a year.

What was most noteworthy to us at BSR was that Uber would publish this report at all—the first of its kind published by a company and unlike anything published by its peers. Indeed, Uber deserves praise for voluntarily reporting on these important challenges, and its publication provides important lessons for other companies on the value of reporting.

Here are five insights on the future of transparency and disclosure from Uber’s report:

• Companies acting alone can use transparency and disclosure to shape a positive agenda. Uber’s Chief Legal Officer Tony West introduces the report by explaining that while most companies don’t talk about issues like sexual violence, “confronting sexual violence requires honesty, and it’s only by shining a light on these issues that we can begin to provide clarity on something that touches every corner of society.” We’re reminded of Google’s first “transparency report” a decade ago describing government demands for user data and content restrictions. Companies back then were reluctant to discuss these issues in public, yet Google chose to break the mold—and today, the quality of public dialogue on these issues is vastly improved. Companies have the potential to use transparency and disclosure to generate new momentum on shared challenges and not just wait for action by others.

• Companies facing similar challenges should publish comparable disclosures. The issues raised in the Uber report are not unique to Uber and cannot be addressed by Uber acting alone. For this reason, we found Uber’s challenge to its industry peers to be one of the most important elements of the U.S. Safety Report, with Uber encouraging “all organizations—airline, taxi, ridesharing, home-sharing, and hotel companies, as well as others—to share their safety records with their customers and exceed this report.” This also reminded us of the Google case, as since Google’s first effort, more than 70 internet and telecommunications companies have started publishing regular law enforcement relationship reports, with significant benefits for civil society organizations, policy makers, and other advocates. We’d like to see the same pattern emerge with safety too.

• Partnerships with those who use the data are essential. One of the challenges with being a first mover in disclosure is knowing what to report—what data is most likely to influence decision-making and provide value for those working on the issues at stake? In Uber’s case, the company partnered with the National Sexual Violence Resource Center (NSVRC) and the Urban Institute to develop a new data taxonomy to understand the reality of unwanted sexual experiences. This did not previously exist and has now been made available for use by other companies and organizations. This provides a very strong foundation for other companies to publish their own reports that are directly comparable to Uber’s report and paves the way for industry-wide efforts to emerge.

• Issue-specific reporting will grow in significance. Four years ago, we published our perspective that “the future of reporting will be triangular,” with short and general disclosures at the top of the triangle and detailed issue-specific disclosures towards the bottom. The Uber report is just one signal among many that some of the most interesting company disclosures today are happening at the bottom of the triangle—whether it is privacy, diversity, climate change, or supply chain labor conditions, companies are increasingly publishing issue-specific reports with very particular audiences in mind.

• Reporting should be harnessed to improve performance. The new consistent data taxonomy established by Uber for sexual harassment, misconduct, and assault is very important, particularly because without a consistent taxonomy, the field has struggled to enact reforms. We hope this consistent taxonomy can improve the performance of Uber and its peers by enhancing the quality of training, informing what safety technologies to invest in, and enhancing the impact of partnerships. As Karen Baker, CEO of the NSVRC, highlighted in her foreword to the report, the NSVRC “didn’t anticipate how much we would learn about informing and enhancing the way industries and corporations enact meaningful change, and how those changes contribute to efforts to prevent and end all forms of sexual violence.” We hope that transparency is used to help shift culture among drivers, riders, and staff toward a world where it is understood that safety incidents can, should, and will be taken seriously.

It is easy to criticize companies for ignoring their negative social impacts, but the fact is that shaping system-wide approaches to shared challenges is a difficult endeavor. Ironically, by raising the profile of Uber’s approach to safety, the number of incidents reported will likely go up before they go down—but rather than being portrayed as bad news, we hope this is welcomed as a sign that important issues are being openly addressed. We look forward to reading more in future reports about the impact of Uber’s safety efforts, such as new technologies, Community Guidelines, and the Safety Advisory Board. Most of all, we hope that Uber’s investment in a new reporting taxonomy for safety issues is adopted by other companies—as well as by Uber in their operations outside the U.S.—and that these reports improve our collective efforts to address sexual assault and misconduct.

Blog | Friday January 17, 2020

Davos 2020: Progress in a Time of Turmoil?

Preview

The 2020s dawn with the 50th Annual Meeting of the World Economic Forum (WEF) in Davos, which calls for a cohesive and sustainable world. This first Davos meeting of the “Decisive Decade,” however, comes amid a world in turmoil.

U.S. President Donald Trump returns to Davos just as his impeachment trial opens in Washington. Meanwhile, U.K. Prime Minister Boris Johnson is proclaiming loudly that he wants to achieve a breakthrough as the host of COP26 but has mandated that his government boycott Davos, forfeiting the chance to lobby for climate action in the name of “Getting Brexit Done.” The governments of France and China face challenges to their leadership on the streets of Paris and Hong Kong. Australia continues to suffer horrific wildfires, and Jakarta has suffered monumental floods.

All this means that the new decade has arrived at a time when the global community (if such a thing can even be said to exist right now) is at a crossroads. The need to achieve genuinely shared prosperity and decisive climate action has never been clearer, nor has the science, which is increasingly driving policies and action on climate action and biodiversity. Indeed, the WEF’s latest Global Risks Report, released this week, unprecedentedly cites environmental issues as the top five risks in the world. Peoples’ movements and political figures are calling—ever more loudly—for a fairer economy to reverse growing inequality. And people in the streets are—quite rightly—standing up for the protection of democratic principles that have come under increasing threat.

The need to achieve genuinely shared prosperity and decisive climate action has never been clearer, nor has the science, which is increasingly driving policies and action on climate action and biodiversity.

The answer to this disquiet is found in the following shared goals that broadly reflect the aspirations of the Sustainable Development Goals. And the need for business leaders to recommit to these objectives is more compelling than ever. Entering Davos Week 2020, there is clearly a new climate for business. To face it successfully, here is the agenda that all the leaders who are making the journey should embrace:

• More widely shared prosperity: Markets are trusted less and less each year. Younger Americans are expressing rising support for socialism. There are many reasons for this, but it all boils down to growing concerns about extreme wealth at the top and diminishing opportunities in the middle and lower ends of the economic scale. When the public loses faith in basic economic fairness, no matter what statistics say, change will be demanded. New social contracts are needed to ensure that societies progress together, and fairly.
• Net zero carbon: The number of nations, states, and cities—along with businesses—that have committed to net zero carbon by mid-century is growing fast. Our collective task is to expand these commitments and even more so, translate them into lasting change in the “real economy.” This will achieve more than any COP can.
• Technologies aligned with human rights and ethics: The 2020s will not see technology maximize its benefit to society without greater trust. Something akin to the concept of the precautionary principle applied to old technologies should become the new normal. This may slow the rollout of some ideas and business models, but it will lead to more lasting innovation that society actually supports.
• Women’s empowerment: The fact is that the #MeToo movement risks being left behind as new ideas and crises emerge. This would be a tragic mistake. The 2010s erased any doubt about the unequal treatment of women in business. The 2020s need to be a time when more women are CEOs and Directors, pay equity becomes a reality, and all women are able to pursue opportunities to contribute in all fields the same way men are.
• Support for open societies: Finally, business cannot stand aside while the principles on which open societies are based are being attacked. CEOs are reluctant to step into “political” issues, but there is a clear need for basic civil liberties to be supported. Business depends on stable operating environments to succeed, including the rule of law, fair treatment of all people, the protection of democratic processes, and the protection of global human rights. There is risk involved in supporting these bedrock principles…but there is more risk is allowing them to vanish.

As we pointed out in our Doing Business in 2030 scenarios, the road ahead likely will be marked by increased decentralization of power and influence. While Davos may be an example of the abiding influence of the most powerful, the world away from the Magic Mountain is increasingly influenced by a diverse array of actors.

What the world so urgently needs is action, with far more commitment than we have seen in the half century since Davos launched.

Stakeholder capitalism is embedded into the program at Davos this year—that’s fantastic. The latest “Larry Fink Letter” on the eve of Davos signals that capital markets are moving faster to meet the challenge. But this more equitable and sustainable vision of capitalism must be more than a theme, a process, or a matter of talk. It needs to reflect a seriousness of purpose and a commitment to an agenda that resonates not only in Davos but in the places where people believe that Davos Man (and increasingly, Woman) are ignoring their needs.

The stakeholder model advanced 50 years ago by Forum Founder and Executive Chairman Klaus Schwab is the right one. Making it work in a fragmenting world is no small thing. Davos often frames global debates, and that is no small thing, though conference themes come and go. What the world so urgently needs is action, with far more commitment than we have seen in the half century since Davos launched. If we are to achieve human progress—and avoid exacerbating the turmoil that greets the 2020s—over the course of the coming decade, we have no choice.  And the prize—truly shared prosperity that averts climate crisis—should be all the motivation we need.

Blog | Wednesday January 15, 2020

Business Leadership in Defending Inclusive Societies and LGBTI Rights at Davos 2020

Preview

Despite recent progress from Taiwan, which became the first country in Asia to pass marriage equality, to Botswana, where a colonial-era ban on same-sex relations was struck down, the ILGA World’s 2019 Map shows the breadth of discrimination currently facing LGBTI people across the globe. Nearly 70 countries still criminalize homosexuality, unconscionably very few countries legally recognize the identity of trans people, and only a handful protect the rights of intersex people. Tragically, for many LGBTI people around the world, homophobia, fear, and hate remain a daily reality. 

Next week, the World Economic Forum will host its 50th Annual Meeting, bringing together the world’s top leaders from the private sector, government, civil society, media, and academia to “address the most pressing issues on the global agenda.” The Partnership for Global LGBTI Equality (PGLE) is pleased that the economic inclusion discussion in Davos will shine a light on the discrimination faced by millions of lesbian, gay, bisexual, transgender and intersex people worldwide every day—more than fifty years after Stonewall, the “birth” of the gay liberation movement. 

Recognizing that the power of business could be leveraged to advance LGBTI inclusivity, in 2016, a group of companies organized a meeting in Davos that, according to UN Human Rights, “was a turning point in a long-overdue conversation among prominent business leaders and activists about practical measures companies can and should take to tackle LGBTI discrimination.” That conversation led to the UN Standards of Conduct for Business Tackling Discrimination against Lesbian, Gay, Bi, Trans, & Intersex People (UN Standards), issued by the UN in September 2017. 

From local jurisdictions to national assemblies, thought-leading companies have worked with a broad range of stakeholders across the world to fight homophobia, fear, and hate and to advance human rights for members of the LGBTI community. 

That meeting four years ago is but one of many examples of the key role that the business community has played in advancing LGBTI equality, diversity, and inclusion globally. From local jurisdictions to national assemblies, thought-leading companies have worked with a broad range of stakeholders across the world to fight homophobia, fear, and hate and to advance human rights for members of the LGBTI community. 

Like the UN Standards, the idea for forming the Partnership for Global LGBTI Equality was born in Davos—but a few years earlier—when some of the companies that later became our Founding Members organized an LGBTI roundtable discussion.  Over the years, the breadth of the Davos LGBTI discussions grew and, since 2015, have been part of the Forum’s official Annual Meeting program. 

Through the leadership, commitment, and support of our Founding Member companies, PGLE was formally launched by the Forum in Davos last year as a project of its Platform for Shaping the Future of the New Economy and Society. In addition to being a project of the World Economic Forum, PGLE is also working in collaboration with UN Human Rights and our civil society partners, Human Rights Watch and OutRight Action International. 

To quote in part from the Forum’s press release in announcing the creation of PGLE:

“Discrimination based on sexual orientation and gender identity not only violates universal basic human rights, it also adversely impacts the long-term economic prospects of individuals, businesses and countries. A 2017 UNAIDS study estimated the global cost of LGBTI discrimination at $100 billion per year. Businesses have an important role to play in respecting and protecting human rights through fostering workplace inclusion for LGBTI people.”

Simply put, PGLE is a coalition of organizations committed to leveraging their individual and collective advocacy to accelerate LGBTI equality and inclusion in the workplace and in the broader communities in which they operate. PGLE member companies recognize and take responsibility not just for the impact they have on their employees' lives but also on the broader communities in which they operate.

If you are in Davos next week, we hope you will join us for a discussion of “LGBTI Rights and the Role of the Private Sector” on January 21, 2020, from 7:30-9 a.m. at the SDG Tent (Ocean Room), 139 Promenade, Davos. Please RSVP here. 

We look forward to seeing you in Davos. If you’re unable to join us for the event, you can tune in to the livestream on the PGLE site. In addition, if you’re interested in learning more about leveraging the power of business to advance LGBTI equality, please feel free to connect with us.

Live from the World Economic Forum 2020: LGBTI Rights and the Role of the Private Sector