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Audio | Thursday February 13, 2025

A Year of Uncertainty: Maintaining Progress Amidst a Battle of Ideas

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Following his recent blog about the “Ten Big Questions Facing Sustainable Business Leaders in 2025,” BSR President and CEO Aron Cramer chats with David Stearns about the EU Omnibus package and its potential impact on regulatory requirements, why sustainability goal setting remains a valuable exercise in an environment of political pushback and uncertainty, the future of COP (with or without U.S. involvement), and why sustainable business must shift the language it uses to describe—in tangible ways—its connection to improving people’s lives and wellbeing.

Blog | Wednesday February 12, 2025

Healthy Planet, Healthy People, Thriving Businesses: Four Steps to Center Health Equity in Climate Action

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Mario Abreu

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Audio | Thursday February 6, 2025

A Conversation with Mario Abreu, Group VP, Sustainability, Ferrero

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Mario Abreu, Group VP, Sustainability at Ferrero chats with BSR Managing Director, Transformation Christine Diamente, and host David Stearns about the cross-functional role of sustainability at Ferrero, how he maintains a focus on ambition, and why the nexus between climate change, people, food, and planetary limits should be humankind’s top priority.

Blog | Thursday February 6, 2025

CSDDD: Using a Risk-Based Approach to Address Human Rights and Environmental Impacts in Supply Chains

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In many ways, the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) effectively codifies the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Due Diligence Guidance for Responsible Business Conduct into law. It includes one of the most critical concepts from those voluntary standards: the expectation that companies take a risk-based approach to addressing upstream and downstream human rights and environmental impacts across the value chain, rather than focusing on impacts associated only with direct business partners (i.e., Tier 1), which tend to be less severe.

With good reason, companies are asking practical questions regarding the feasibility of assessing impacts across entire networks of direct and indirect business partners. Fortunately, these are the same questions the business and human rights field has been grappling with for more than a decade, and practitioners have made significant progress in developing practical ways of fulfilling such a challenging requirement.

Risk-based due diligence concentrates less on following the chain of business relationships tier by tier and more on high-risk value chain segments where adverse impacts are more likely. In practice, this means that when companies are determining where to conduct an impact assessment, they can skip a Tier 1 relationship and jump directly to the main source of the human rights or environmental impact, e.g., at the extraction site of a key commodity, which has well-documented concerns regarding discharge of chemicals into local water sources.

The CSDDD’s risk-based approach, which aligns with the UNGPs, OECD Guidelines, and the Corporate Sustainability Reporting Directive (CSRD), involves mapping activities across the supply chain, identifying areas of risk, and assessing existing efforts to mitigate impacts. Crucially, relevant stakeholder engagement informs each phase of the approach, with the CSDDD articulating a clear expectation for meaningful engagement with stakeholders—including rightsholders—throughout each step of the due diligence process.

Mapping Activities Across the Supply Chain

In CSDDD Article 8.2.a., the first step entails an actual mapping of a company’s “chains of activities,” (CSDDD Article 3.1.g) which means not just Tier 1 relationships, but understanding the broader context related to the supply of raw materials, products, or parts of products that are connected to a company’s Tier 1 relationships. For example, if a company produces electric vehicles, then there is an expectation to map (and eventually assess and engage, as described below) down to the lithium and cobalt extraction sites, where typically the greatest human rights and environmental impacts lie.

Stakeholder engagement should inform the mapping exercise and can mean different things in the supply chain context, depending on where in the supply chain such activities are being conducted. Where direct stakeholder engagement is not possible (e.g., direct interviews with workers at the cobalt mine), CSDDD allows for engagement by proxy, such as with representative NGOs or civil society organizations, academics, or other types of experts who have a good understanding of human rights and environmental impacts on the stakeholders and rightsholders.

Identifying Areas of Risk

The second step involves conducting a high-level risk analysis to help prioritize due diligence efforts. Many companies deploy a mix of sources to apply risk categorization to their extended supply chains, considering factors such as country risk, product/service/commodity risk, and more. These often rely on a combination of publicly available indices as well as fee-based databases and involve qualitative and quantitative considerations.

Stakeholders should also be consulted to offer insights on the analysis, reflecting on both the risks themselves and the prioritization of risks. Such risk analyses are usually done on a periodic basis (e.g., once a year), but the best approaches can factor in both real-time and future-scenario considerations, such as a war or an adverse climate event happening in a sourcing country not previously identified as high risk.

Assessing Existing Efforts to Mitigate Impacts

The third step considers whether existing management systems are robust enough to manage the identified impacts and whether existing information can be leveraged to paint a more complete picture. For example, if a buying company uses a human rights or environmental impact assessment report of a supplier closely connected to a particular supply chain, then the buyer obtains a clear understanding of the actual and potential human and/or environmental impacts of a particular supply chain far upstream (CSDDD Article 8.4). This helps prioritize buying companies’ and suppliers’ resources, avoids repetition, and leverages the efforts of peers and other stakeholders.

Together, these three steps in the risk mapping process help answer the very important question of where to begin: by identifying the activities of the company’s chain most at risk and providing an informed set of priorities. Once this exercise has been completed, the company should have a much clearer sense of where to focus its energy and resources when conducting human rights and environmental assessments, focusing on the areas of greatest human rights and environmental impacts—as confirmed through stakeholder engagement—and applying a severity and likelihood analysis as informed by the UNGPs.

Identifying Human Rights and Environmental Impacts through Multi-Stakeholder Initiatives

In addition to direct stakeholder engagement, multi-stakeholder initiatives offer a way for companies to identify actual or potential human rights and environmental impacts deep in supply chains in a way that individually may otherwise be too burdensome. Such initiatives can also serve as critical proxy representatives, with the added benefit of potentially reducing engagement fatigue of suppliers, NGOs, or other groups receiving numerous requests from companies across supply chains. Depending on the nature of the initiative, they may help companies aggregate resources and leverage to address a particular issue, achieving greater positive impact in a given sector over time than any single company could acting in isolation.

One such example is Action for Sustainable Derivatives (ASD), a collaborative initiative co-facilitated by BSR and partner organization Transitions, which conducts collective grievance monitoring on behalf of its members. It also organizes monthly discussions with key NGOs to align on priority concerns, deepen mutual understanding of details and root causes of grievances, and agree on recommendations for the sector to address the impacts.

A Pragmatic and Logical Roadmap

Mapping, identifying, and assessing human rights and environmental impacts in upstream and downstream value chains is a comprehensive task that should not be underestimated, and makes up the first major step in an overall due diligence process, before those impacts can be remedied and/or mitigated. This is not only due to the breadth and depth of most corporate supply chains, as issues like a lack of leverage, lack of transparency and traceability, and more, exacerbate these challenges. Regulations requiring companies to take these actions have increased significantly in recent years, and failing to take the necessary steps can have legal, reputational, and financial consequences.

Fortunately, CSDDD provides a pragmatic and logical roadmap that acknowledges these challenges and encourages companies to seek out solutions through a methodical approach and active stakeholder engagement. Such collaboration and engagement with stakeholders is explicitly called out in the CSDDD and includes civil society, NGOs, national human rights and environmental institutions, defenders, and more. Each can play a role in the identification, mitigation, and remediation of human rights and environmental impacts.

If you would like more information on meeting the CSDDD’s expectations, please reach out to BSR’s Human Rights team.

Reports | Tuesday February 4, 2025

Centering Health Equity in Climate Action: A Toolkit for Businesses

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As the world experiences escalating physical and chronic effects of climate change, including intensifying wildfires in California, extreme cold across the United States, and the increase in floods, hurricanes, and droughts globally, the well-being of people, the planet, and businesses is increasingly affected. Businesses must recognize the interconnection between business health, human health, and environmental health, as all three are mutually co-dependent for long-term prosperity. 

When businesses integrate promoting health equity into their climate and nature strategies, they create co-benefits that strengthen business resilience, support vulnerable communities, reduce healthcare costs, and promote a healthier and more prosperous society. 

In this toolkit, Centering Health Equity in Climate Action (CHEC), a BSR collaborative initiative, demonstrates how climate change negatively impacts the health of vulnerable communities and, in turn, affects businesses. Intended to help companies on their climate and health equity journey, the toolkit provides real-life examples from CHEC members who have successfully integrated health equity into their existing sustainability initiatives. 

The following four practical steps are expanded upon in the toolkit and offer businesses a path forward to centering health equity within their climate strategies:

• Understand the company’s climate and health equity impacts
• Start with the most impacted in the value chain
• Measure, manage, and monitor
• Embed climate and health equity throughout the organization

Reports | Thursday January 30, 2025

Child Rights Impact Assessments in Relation to the Digital Environment

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The digital age has brought tremendous benefits to society, including for children. However, the spread of digital technologies also comes with a broad spectrum of risks to which children are particularly vulnerable. To address these risks, companies developing or deploying digital technologies have a responsibility to conduct due diligence to identify and address the adverse human and child rights impacts with which they are involved.  

Child rights impact assessments (CRIAs) can support companies’ due diligence efforts by using a methodology informed by the UN Guiding Principles on Business and Human Rights to identify and assess actual or potential impacts on children.  

In 2023, UNICEF engaged BSR to explore current CRIA trends and develop a tool that companies can use to systematically identify, assess, and address their impacts on children. The project involved extensive research into existing child rights resources, a review of current CRIA practices, an assessment of child rights considerations in new regulations, and stakeholder engagement. This paper shares key findings from this research, as a precursor to the digital environment CRIA tool that UNICEF will publish in 2025.  

Blog | Tuesday January 28, 2025

The EU Omnibus: What’s at Stake for Business, People, and the Planet

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Last November, the EU Commission President, Ursula von der Leyen, announced plans to create an Omnibus Simplification Package that would streamline reporting requirements in three EU Green Deal laws: the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD). These rules have been designed to complement each other:

• Adopted since 2020, the EU Taxonomy establishes a classification system for environmentally sustainable business activities, including screening criteria for their contribution to environmental objectives and minimum social safeguards that must be met.
• Adopted from January 2023, companies must report on their material impacts, risks, and opportunities in line with the European Sustainability Reporting Standards (ESRS), with the largest in-scope companies reporting in 2025. Companies have an obligation to report their Taxonomy-aligned activities in their management report.
• The CSDDD, adopted in 2024, requires companies to conduct human rights and environmental due diligence, adopt Climate Transition Plans, and report on their adverse impacts on people and the environment and how they are managed. CSDDD does not impose additional reporting requirements—companies may report on their adverse impacts under CSDDD in their CSRD management reports without having to issue a separate CSDDD report.

EU discussions on the Omnibus are ongoing, with the draft proposal expected in late February 2025.

A leaked document indicates that on January 29, the EU will release details on the Omnibus proposal as part of its “competitiveness compass” report. Key areas for attention include focusing on the “most harmful activities”, ensuring alignment of data requirements and investor needs, and “proportionate” timelines. Once the Commission approves the language, it will be subject to debate within the European Parliament and Council.

The Omnibus announcement follows “big narrative” calls from business to reduce red tape and support competitiveness, as well as genuine questions and concerns from companies seeking to comply, such as the need for more guidance on certain CSDDD provisions. Opponents of the European Green Deal have mounted pressure campaigns to weaken the rules, including by reducing obligations and the scope of companies covered. 

While effective interoperability and avoiding overlapping reporting requirements is beneficial, the possibility of reopening the legal text at this late stage has led to widespread concern among business leaders and civil society. For instance, re-opening negotiations could weaken key elements of alignment with the OECD Guidelines on Multinational Enterprises and the UN Guiding Principles on Business and Human Rights (UNGPs), which are essential for preserving the balance between feasibility and achieving sustainability impacts.

This would undermine significant business support for CSDDD and CSRD and may obstruct and negate progress made by business, including investments of time and money to build out their compliance infrastructure.

In January 2025, Nestle, Mars, Unilever, Primark, Ferrero, and others sent a letter to the European Commission, raising concerns that the forthcoming Omnibus package might dilute the new regulations, particularly the CSDDD, and jeopardize business certainty and investment. Earlier, over 400 French companies, including L’Oreal, Carrefour, and Amundi, argued that complaints that CSRD, CSDDD, and the Taxonomy hurt European competitiveness are overblown and are made by parties that haven’t closely examined the text.

Abruptly transforming “simplification” into “deregulation” risks creating unintended consequences for business, not to mention for people and the planet. Instead of changing what has yet to take place, greater value lies in assessing achievements and challenges after implementing the current rules in their entirety and, if necessary, making reforms at a later stage. To support companies, the EU Commission should adopt the necessary delegated acts and guidelines to provide greater clarity and enhance the practicality of existing measures while considering the needs and questions of business.

As the world waits to see the Omnibus proposal, companies are encouraged to proceed based on the existing legal text, including by aligning their compliance efforts with international due diligence and reporting standards and pursuing their ambitions for business transformation.

Reach out to us for further information or to connect with a member of our team.

Blog | Thursday January 23, 2025

Corporate Sustainability Governance Fitness Test: Three Actions for Leaders

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As we enter 2025, navigating business leadership on key sustainability issues has never been more challenging. Political polarization, the advent of mandatory sustainability reporting regulations, and an environmental, social, and governance (ESG) backlash have created a paradox: companies are expected to disclose their sustainability programs yet may be punished for doing so. Wars and a burgeoning energy crisis are disrupting supply chains and straining long-held assumptions about material availability and business models. At the same time, the emergence of AI-enabled misinformation campaigns is causing companies to question what they know and how they can credibly communicate with stakeholders.

Business leaders are currently grappling with how to govern in such a chaotic, disruptive environment. In the first blog in our three part series, The Silent G: Six Questions Every Leadership Team Should Ask about Sustainability Governance, BSR Managing Director Christine Diamente suggested the answer lay in getting the foundations in place: organizational structure, stakeholder engagement, and resilience. Here we take a deeper dive into these three topics.

Getting the Organizational Charts right: Governance structures, roles, and responsibilities

It’s tempting to mistake a governance flow chart for a map: follow the boxes and lines, and it will take you where you want to go. But flow charts defining authority and decision-making (usually flowing down), and accountability and information (usually flowing up), are just the beginning. Does the chart reflect reality? Does a current materiality assessment inform issue management? Do issue owners possess the requisite capacity, skill, time, and resources? Does an oversight body validate issue assessments, vet assignments, review targets, and KPIs, and ensure incentives aligned with corporate strategy? Is there a flexible mechanism to spot emerging issues and institutionalize or sunset old ones? 

BSR supports its members to stress-test and upgrade their sustainability governance systems by:

• Adopting a sustainability issue management model across teams. A dedicated sustainability team led by a Chief Sustainability Officer (CSO) (or equivalent) works across business functions to translate material issues and corresponding data into operational goals, targets, and KPIs. They should ensure a balance between embedding material issues across the business while looking ahead to emerging issues. Issue ownership rests with the function best equipped to manage them in concert with other organizational goals—thus Procurement has KPIs for supply chain sustainability; Product Development is charged with incorporating more sustainable materials into product design; etc. An executive-led steering committee oversees this process and is accountable to the C-Suite, which in turn reports to the Board.
• Leveraging materiality assessments. Materiality, when well executed, validates known issues and illuminates previously obscured or emerging issues. New issues trigger issue-specific assessments, which yield the information and insights required to confirm impacts, identify affected stakeholders and design corresponding strategy, data collection and controls. These steps constitute an early warning system—a yellow flag to prevent a red or to transform to a green—allowing companies to refresh their policies, practices, and training before an issue becomes a crisis. We’ve seen this process successfully deployed with human rights, living wage, and climate resilience, amongst others. Materiality assessments can also be a useful catalyst to refresh strategy, reporting, and communications.
  •  For more insights, see So You've Completed a Materiality Assessment: Now What?
• Doubling down on integration: A materiality assessment can also reveal that sustainability governance systems and policies are essentially dormant, without the organizational focus, skillsets, or resourcing needed to animate them. The task then becomes operationalizing governance through integration.
  • BSR’s recent report, The Impact of Mandatory Sustainability Reporting on Corporate Functions, is an overview of how diverse functions across the enterprise are evolving in response to new requirements. For example, mandatory sustainability disclosure laws have prompted the creation of an ESG Controller responsible for ESG data measurement and reporting. This position leverages financial acumen to connect ESG to financial and operational data; prepares risk assessments, forecasts, and reports; and ensures that control processes appropriately address and deliver on goals.
  • Increasingly, companies are also creating dedicated Sustainability training functions or a sustainability academy to ensure that the entire organization has a program to upskill continuously on current and emerging sustainability trends relevant to the business. This can include all-employee training sessions to dedicated, bespoke programs for specific expert functions, C-suite, and the board of directors.

Cracking the Code on Stakeholder Engagement

In a climate of increased stakeholder expectations, companies must identify priority stakeholders and understand their perspectives and concerns. Of particular priority are rights-holders: those whose human rights are or could be affected by the company’s operations or value chain, and who often lack a direct, trusted line of communication with the company.

BSR employs a 5-step process to help companies build stakeholder engagement strategies for long-term business value.

There is a learning opportunity at each step in this process. Co-creating Climate Justice Interventions Between Business and Communities lays out 10 principles for co-creating stakeholder engagements for long-term value creation, including listening to learn, contending with systemic historic and contemporary injustices, and moving at the speed of trust. These principles can be applied with a wide range of stakeholders and rights-holder engagements to build the foundations of solid, long-lasting collaborations.

Building Resilience, from the Value Chain Forward

In many ways, business resilience is the holy grail: a well-designed sustainability strategy delivers a more robust, flexible, and resilient business. How does one start? It won’t surprise you to learn that any sustainability-led resilience strategy is grounded in a few material issues. BSR helps companies select priority issues; explore their evolution through futures exercises; map related impacts; and use the insights gained to build and test strategies. To broaden the aperture of their thinking, many companies are turning to External Advisory Councils to bring authoritative yet often less visible stakeholder interests to the fore, allowing executives to stress-test their strategies before they are adopted and deployed and strengthen their approach, especially at value chain level.

In our experience, leaders who ask the right sustainability governance questions—and have the vision and tenacity to find the right answers for their company and context—have the most resilient governance structures. Check out BSR’s corporate governance activities or contact the Sustainability Management team to put your system to the test.

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Chris Sheehy

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Chris works with BSR member companies at the intersection of technology and human rights, including by helping companies integrate human rights principles and practices in their responses to emerging regulations for digital services. ​

Chris spent eight years at the Global Network Initiative, working to protect freedom of expression and privacy in the ICT sector. Supporting GNI’s member network of civil society organizations, technology and telecommunications companies, academics, and investors, he built consensus on policy positions and advocacy tools to engage with governments and international organizations on rights-respecting laws and regulations. Chris also led shared learning among GNI's expert membership on emerging digital rights issues, and he helped facilitate a board review of independent assessments of member companies’ implementation of the GNI Principles.​

Prior to his career in business and human rights, Chris worked in research and program management at a think tank focused on Middle East issues and an NGO focused on post-conflict recovery. He holds a BA in International Affairs from James Madison University.