Ok next question. There are a range of incentives we need, so regulatory, some market driven. Here are a few that come to mind:
(1) Mandated transparency and due diligence. We have seen this now for the top 6,000 EU companies, Chinese state-owned enterprises, relating to specific contexts such as Myanmar or on trafficking/forced labour or conflict minerals. Approaches to "know and show" need to be standardised - the work of the UN Guiding Principles Reporting Framework is important here.
(2) Objective benchmarks for measuring not just the intent of companies but their actual performance. This is why we started work on the "Corporate Human Rights Benchmark" with a range of partners to rank the top 500 publicly listed companies in the world, and also develop sector-specific rankings to help drive competitive behaviour.
(3) The two above points only work if they help drive investor and consumer behaviour, and also that of governments in terms of public procurement (often 20% of GDP), export credit, trade missions and so on. We are beginning to see some of these "economic consequences" explored in some public procurement initiatives, as well as NCP decision making under the OECD Guidelines.
Zahid Torres-Rahman said:
Great insights so far! Let's move on to our second question:
2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?
I agree with this. All key stakeholders have to be accountable and responsible. The question is what models can we use? Pvt and social sectors have great experiences coming from their ends, but how do we recognise these and move away from ceding responsibilities to just one stakeholder? I think it is important that we also start looking at how valuable are the clusters and networks that the Private Sector and Social sector has created to think through accountability issues. The point is how do we create the required value? Does the interface of markets/ profits and society/social justice create good value or good business cases?
Alison Ward said:
I agree with the discussion. And think that transparency is at the heart of this. Cotton can be traded 10 times between farm and garment - so a complex supply chain ....
But the connections are there - as I know that if mill receives poor quality yarn they will be back in touch with their suppliers quickly.
It's not just about global business being accountable but about engaging the middle of the supply chain.
Yes, locating the business case is challenging. There is a longer term case dependent on reputation, supply chain safeguarding, employee motivation, market creation (e.g. if Unilever raises demand for more WASH products, including toilets, they sell more Domestos), but difficulty identifying shorter-term ROI.
Alison Ward said:
We have to appeal to values and value - we know that there are businesses wanting to make change BUT we have to show there is (of course) long term business value. I hear many businesses now talking about legacy - so not just our impacts today - but also about tomorrow.
Alison Ward said:
Francis West said:
Clearly, Government has a central role to play in driving up ESG standards and in terms of human rights are the primary duty bearers. Nevertheless, businesses can help raise the bar in that respect and use their incredibly powerful voices- both in the UK and in the Global South – to affect change. A good example of this is when H&M and other major retailers lobbied the Cambodian government to raise wages in the garment sector. In the UK, the Modern Slavery Act contains a supply chain transparency clause largely down to lobbying by businesses and organisations like ETI.
Zahid Torres-Rahman said:
Great insights so far! Let's move on to our second question:
2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?
Oxfam has worked with others to produce a community-based human rights impact assessment tool (see link) that offers an alternative, bottom-up approach to Human Rights Impact Assessment (HRIA) tools that have been developed by industry bodies and companies. The latter tend to work top-down, are managed by the companies, focused largely on corporate risk, and are weak on transparency, accountability and stakeholder engagement.
A community-based human rights impact assessment approach thus offers an alternative path, allowing affected communities to drive a process of information gathering and participation, framed by their own understanding of human rights. Communities can engage in solving human rights threats by working with NGOs, companies, and governments on a more equal footing. By starting with perspectives of affected people, the HRIA focuses on their concerns and their aspirations for human rights realization.
Great question Abdi. We're actually working on a report right now with the CSR Initiative at Harvard Kennedy School that looks at how best to harness business in delivering the SDGs, and hope to inform that with what we've learnt from the MDGs. The report should be out towards the end of September. What are your reflections on the question?
Abdi Malik O. Ismail said:
What lesson were learned from the Millennium Development?
I agree with this- I posted on public procurement earlier and think it's important not to forget mandatory measures. There's business support for this also, with the recent Economist research indicating that nearly a third of business leaders see mandatory reporting on human rights for their companies as a good thing.
I think the consumer piece is much more challenging, but important nonetheless.
John Morrison said:
Ok next question. There are a range of incentives we need, so regulatory, some market driven. Here are a few that come to mind:
(1) Mandated transparency and due diligence. We have seen this now for the top 6,000 EU companies, Chinese state-owned enterprises, relating to specific contexts such as Myanmar or on trafficking/forced labour or conflict minerals. Approaches to "know and show" need to be standardised - the work of the UN Guiding Principles Reporting Framework is important here.
(2) Objective benchmarks for measuring not just the intent of companies but their actual performance. This is why we started work on the "Corporate Human Rights Benchmark" with a range of partners to rank the top 500 publicly listed companies in the world, and also develop sector-specific rankings to help drive competitive behaviour.
(3) The two above points only work if they help drive investor and consumer behaviour, and also that of governments in terms of public procurement (often 20% of GDP), export credit, trade missions and so on. We are beginning to see some of these "economic consequences" explored in some public procurement initiatives, as well as NCP decision making under the OECD Guidelines.
Zahid Torres-Rahman said:
Great insights so far! Let's move on to our second question:
2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?
Great discussion. Let's move on to our third question:
Question 3: How can businesses and development partners collaborate more effectively to take ESG performance to the next level of scale and impact, including the reporting of impact?
I think this idea of community based human rights assessment is important. We are increasing our work here in India on women's rights through local capacity building. I will take a look at your framework - thanks.
Alison
Penny Fowler said:
Oxfam has worked with others to produce a community-based human rights impact assessment tool (see link) that offers an alternative, bottom-up approach to Human Rights Impact Assessment (HRIA) tools that have been developed by industry bodies and companies. The latter tend to work top-down, are managed by the companies, focused largely on corporate risk, and are weak on transparency, accountability and stakeholder engagement.
A community-based human rights impact assessment approach thus offers an alternative path, allowing affected communities to drive a process of information gathering and participation, framed by their own understanding of human rights. Communities can engage in solving human rights threats by working with NGOs, companies, and governments on a more equal footing. By starting with perspectives of affected people, the HRIA focuses on their concerns and their aspirations for human rights realization.
I agree with a lot of the points being posted so far.
A key enabler for companies is the role of pure innovation in improving ESG performance. One of the critical challenges to addressing ESG impacts is that ESG is seen as an aspect of business performance, rather than being integral to business performance. Companies can be incredibly innovative, in terms of the products they make, their approaches to market, and even the collaboration they can achieve with competitors. It is this innovation, aligned to achieving positive financial, social and environmental outcomes wherever a business operates - including its value chain - that can be a key enabler for companies alongside regulatory environments, consumer drivers and others.
Zahid Torres-Rahman said:
Great insights so far! Let's move on to our second question:
2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?
One of the clear lessons is that the private sector needs to be involved. It also seems that aggregate targets in some cases exacerbated inequalities. This is why a rights based approach needs to be front and centre of the SDGs. In that sense, it is incredibly unhelpful that the SDGs don’t currently contain even a reference to the UN Guiding Principles, despite such great emphasis throughout the two year debate on the role of the private sector. The UN Human Rights Council unanimously endorsed the Principles after 6 years of their development and this would be an infinitely sensible place to start when conceiving private sector involvement in the delivery of the Goals.
Zahid Torres-Rahman said:
Great question Abdi. We're actually working on a report right now with the CSR Initiative at Harvard Kennedy School that looks at how best to harness business in delivering the SDGs, and hope to inform that with what we've learnt from the MDGs. The report should be out towards the end of September. What are your reflections on the question?
Abdi Malik O. Ismail said:
What lesson were learned from the Millennium Development?
And of course we see the Millennials and Aspirationals as stating an interest in these issues - but we are not yet seeing this translate into a desire to spend more for ethically products and services (beyond the ethical core of 6-10%)
Francis West said:
Yes, locating the business case is challenging. There is a longer term case dependent on reputation, supply chain safeguarding, employee motivation, market creation (e.g. if Unilever raises demand for more WASH products, including toilets, they sell more Domestos), but difficulty identifying shorter-term ROI.
Alison Ward said:
We have to appeal to values and value - we know that there are businesses wanting to make change BUT we have to show there is (of course) long term business value. I hear many businesses now talking about legacy - so not just our impacts today - but also about tomorrow.
Alison Ward said:
Francis West said:
Clearly, Government has a central role to play in driving up ESG standards and in terms of human rights are the primary duty bearers. Nevertheless, businesses can help raise the bar in that respect and use their incredibly powerful voices- both in the UK and in the Global South – to affect change. A good example of this is when H&M and other major retailers lobbied the Cambodian government to raise wages in the garment sector. In the UK, the Modern Slavery Act contains a supply chain transparency clause largely down to lobbying by businesses and organisations like ETI.
Zahid Torres-Rahman said:
Great insights so far! Let's move on to our second question:
2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?
In terms of linking the informal to the formal sector of enterprise we need to move away from the idea of "eliminating the exploitative middleman" etc and engage the hard grind of participatory market systems development, looking at a variety of value chains in turn and convening all the players along these chain to identify specific ways where interests can be aligned, In this way the micro producers to can see if there are any actions they can to take and propose where capacity building can be applied to improve their access and expand into national and international markets. Obviously convening such consensus building dialogues comes with a cost and does not always yield benefits- but this is a good deployment of cooperation assistance.
Finally, in terms of the last question, I think we need to think carefully about which ESG measures should be pre-competitive and which competitive.
In terms of the former, there is much more space for multi-stakeholder initiatives rooted into local contexts and involving Asian, African and Latin American companies, governments and civil society. We are beginning to see some of these in SE Asia and East Africa but there is much more room for this and it means OECD and non-OECD ambassadors sitting together on this in third countries. I think the G7 announcement on supply chains, UNGPs and OECD Guidelines was very important - if the German Government can now work with the Chinese Government for a similar G20 announcement next year - this would open more pre-competitive space and drive collaboration between states and businesses.
With regard to the competitive space, I think investors need to offer real economic incentives based on solid ranking on human rights performance. Again states can lead by example with public procurement and export credit policies.
Zahid Torres-Rahman said:
Great discussion. Let's move on to our third question:
Question 3: How can businesses and development partners collaborate more effectively to take ESG performance to the next level of scale and impact, including the reporting of impact?
John....I note that your incentives 1 and 2 seem negative in nature. Specific to agriculture mobile money.... the potential to increase market share, transaction fee revenue, reduce costs and streamline the value chain are more aligned with the interests of the private sector. Mobile network operators (MNOs) need to roll out into rural areas in pursuit of break-even and ROI. Large commodity buyers want to reduce their costs of paying farmers in cash and do so with mobile money creates a direct line of communication with the farmer while also creating a financial identify for the farmer...and providing safety, security, storage and other benefits for the farmer. We're in the 21st century and it is remarkable that we still pay farmers in cash when all we need is the imagination and commitment to pay them into their mobile wallets.
John Morrison said:
Ok next question. There are a range of incentives we need, so regulatory, some market driven. Here are a few that come to mind:
(1) Mandated transparency and due diligence. We have seen this now for the top 6,000 EU companies, Chinese state-owned enterprises, relating to specific contexts such as Myanmar or on trafficking/forced labour or conflict minerals. Approaches to "know and show" need to be standardised - the work of the UN Guiding Principles Reporting Framework is important here.
(2) Objective benchmarks for measuring not just the intent of companies but their actual performance. This is why we started work on the "Corporate Human Rights Benchmark" with a range of partners to rank the top 500 publicly listed companies in the world, and also develop sector-specific rankings to help drive competitive behaviour.
(3) The two above points only work if they help drive investor and consumer behaviour, and also that of governments in terms of public procurement (often 20% of GDP), export credit, trade missions and so on. We are beginning to see some of these "economic consequences" explored in some public procurement initiatives, as well as NCP decision making under the OECD Guidelines.
Zahid Torres-Rahman said:
Great insights so far! Let's move on to our second question:
2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?
Partnerships are crucial to unlocking impact. It is hugely important for companies to get outside expertise- especially in the area of human rights. Critical friends can ask the questions that internal stakeholders can’t, offer insights on issues and geographies that a company may not have access to. Collaboration is key to solving complex issues such as child exploitation with social, economic and cultural roots – not problems that companies, governments, communities or NGOs can fix on their own.
In terms of reporting, the Modern Slavery Act and the EU non-financial directive, due to be transposed into UK law by the end of 2016, offer the chance to set a really high bar for reporting. It’s important that companies publish their principal risks and approach to dealing with these issues- the more information there is on solutions to intractable supply chain issues the better.
Zahid Torres-Rahman said:
Great discussion. Let's move on to our third question:
Question 3: How can businesses and development partners collaborate more effectively to take ESG performance to the next level of scale and impact, including the reporting of impact?
I think businesses and all other key stakeholders should seek to create shared value; putting in place initiatives, policies that enhance competitiveness while at the same time advancing economic and social conditions for communities in which they operate. Thre has to be strogn and more targetted attempts to make key connections between social and economic progress.
I also think that thre ahs to be away of putting together the availlable resources to create a mix that enable channeling of these resources in an impactful way, supporting progress within the attainment of SDGs. I am sure this can also help to manage percieved risks, and enhance the impact of debelopment initiatives that focuses on improving societies. In view of this i think more financial resources have to be dedicated to women's empowerment in supply chains.
Collaboration through building of clusters is also important - understanding what every one brings to the table. No company is self –contained. There is always need to get support from organisations with relevant expertise to determine the most appropriate actions and the skills required.
Zahid Torres-Rahman said:
Great discussion. Let's move on to our third question:
Question 3: How can businesses and development partners collaborate more effectively to take ESG performance to the next level of scale and impact, including the reporting of impact?
Hi Stuart - I was delighted to see last year that one of the forward thinking spinners here in India has started their own CSR offer - complete with a brochure and mission statement. We want to encourage international brands to work with these thought leaders. Small steps!
Stuart Coupe said:
In terms of linking the informal to the formal sector of enterprise we need to move away from the idea of "eliminating the exploitative middleman" etc and engage the hard grind of participatory market systems development, looking at a variety of value chains in turn and convening all the players along these chain to identify specific ways where interests can be aligned, In this way the micro producers to can see if there are any actions they can to take and propose where capacity building can be applied to improve their access and expand into national and international markets. Obviously convening such consensus building dialogues comes with a cost and does not always yield benefits- but this is a good deployment of cooperation assistance.
Work with others on a common understanding of the issues and their implications, using benchmarks, wage ladders etc. If relevant benchmarks are not available, support their development using a recognised methodology.
Go beyond a case by case, or factory by factory approach to look at clusters of employers or sectors.
Develop a coordinated approach to influencing public policy debates with governments via industry associations or wider coalitions of “unusual suspects”.
Positive examples include: stakeholder collaboration in the tea industry – work Oxfam was involved in with the Ethical Tea Partnership and others in Malawi; the Fairwear Foundation garment sector multi-stakeholder initiative has worked to move corporate members ‘beyond audit’ and to remove barriers to a living wage e.g. through developing wage ladders and instituting a performance benchmarking system; the World Banana Forum has enbabled multi-stakeholder dialogue on issues facing the industry with support from the FAO – involving trade unions, small producer organisations and southern governments in the process; the example of the garment industry lobbying the Cambodian government on wages is another.
How these initiatives are set up, who is at the table, their governance and accountability mechanisms are key to their effectiveness to truly affect positive systemic change.
Alongside undertaking due diligence to determine primary areas of impact, businesses, governments and civil society should corral around thematic issues in the SDGs. From our perspective, the recently announced Global Partnership to End Violence Against Children would be a great place to start: http://16-2endviolenceagainstchildren.org/overview.html
Zahid Torres-Rahman said:
Great discussion. Let's move on to our third question:
Question 3: How can businesses and development partners collaborate more effectively to take ESG performance to the next level of scale and impact, including the reporting of impact?
Being involved in a number of different value chain initiatives in the agriculture sector I am seeing that many of the solutions required are often systemic and multifaceted in nature and take us beyond the traditional single project based approach to solution solving towards a more platform based, or collective action, way of thinking that involve a series of cross sector actors or cross initiative actions coming together in a more aligned way. This poses challenges for traditional supply chain auditing as it will require us to be looking at how do you measure impact of a series of disconnected actions that come together at differing points along any given value chain. However before it is possible to measure collective impact there is a need to become a lot better at also coordinating and aligning actions being undertaken across different sectors in order to bring about the necessary scale of action to achieve genuinely transformational change at an entire value chain level. This also requires the building up of local capacity to effectively catalyse, broker and facilitate such multifaceted action and a policy environment to support this as we are seeing through the SAGCOT Centre in Tanzania amongst others.
My question is how much work is being done to look at measuring these more platform orientated or collective action approaches when it comes to impact assesment on the ground?