BSR 2010: Business for Scalable Responsibility

BSR 2010: Business for Scalable Responsibility

The theme for this year's Business for Social Responsibility (BSR) conference was innovate, integrate, and inspire. Underlying those themes, however, were keynotes and sessions highlighting the challenges, needs and opportunities for developing solutions at scale. BSR's mission to "work with business to create a just and sustainable world" was showcased by the diverse group of presenters and attendees.

From Julia Ormand's opening keynote describing slavery around the world (which her mom urged her to "keep it light") to presentations from Walmart, Intel, SABMiller, and Avon, many of the presenters described programs that look outside the borders of their companies to the greater impact they can have across their supply chains. Some of the biggest impacts where scale is critical are energy, water, and women.

Powering Change in China

During a breakout session on energy efficiency and the supply chain Ken Lanshe, Vice President of Global Sourcing for Shenzhen Walmart, described how the company was working with the BSR Energy Efficiency Partnership (EEP) to help their Chinese suppliers achieve 20 percent to 30 percent savings from energy reductions at their factories. For the world's largest retailer, scale means "piloting" a program at 200 factories and growing that number to more than one thousand.

The challenge is mostly financial, as small factories can't afford the initial investments required to procure the equipment and services to make them more energy-efficient. To help jumpstart this process, partnerships have been launched where financial institutions create energy efficiency investment vehicles, essentially third-party debt financing, for these projects and work with ESCOs (energy services companies) to engineer a solution for the factories. This allows the factories to become more efficient without the upfront capital investment.

One of the ways in which Walmart is helping to get the program to scale is by identifying sets of factories with common processes (e.g., metal fabricators or injection molding shops) so that common solutions can be implemented across a large number of sites at once. Mr. Lanshe observed that while no supplier wants to share cost models with their competitors, they are willing to share the experiences with energy efficiency projects and this has helped accelerate the program across Walmart's supply base.

Mr. Lanshe shared several lessons learned, including:

Align your program with a corporate commitment (GreenBiz has written about Walmart's commitment to eliminate 20 million metric tons of greenhouse gas emissions from its global supply chain by the end of 2015 here)

Mandate your program to strategic suppliers and factories. In addition to mandating the program, Mr. Lanshe also stressed mandating sub-metering at the factories to eliminate any potential for fraud)

Incentivize participation. One way in which Walmart looks to do this is to shift additional production volumes to their top energy efficiency performers as a reward for participating in the program

Perhaps the biggest lesson learned is that "you can't do it alone." Mr. Lanshe stressed that it requires partnering with NGOs, financial institutions, ESCOs, other retailers, and government to make an impact at scale.

A Deeper Dive into Water

Another topic of discussion at the conference was water (and not just the lack of it in the meeting rooms). In several discussions by retailers and at a session featuring Intel and SAB Miller (read Joel Makower's account of that session here), the extended supply chain issues associated with water use were often floated as the most immediate impact of climate change.

Water footprinting exercises are still in their early stages, but for companies who have analyzed this, the impacts extend cross their supply chains and companies are grappling with how to focus their efforts to address these issues. Levi's Michael Kobori (proudly wearing his San Francisco Giants World Series hat all last week) called attention to Levi's recent announcement to reduce water use by as much as 96 percent in the jeans finishing process. But the company's bigger impacts are in the growing of cotton as well as the use and end of life of their jeans. Michael continues to work on programs that will address their bigger impacts in terms of water.

In other conversations with retailers and manufacturers, it's clear that these are early times but also that corporations are keenly aware of the importance of the issue. SAB Miller's Andy Wales implored the audience to make sure we fully understand the issues and impacts and act transparently before ratings and reporting requirements cloud the issue. As Intel's Gary Neikirk noted "Intel uses eight million gallons of water. Is that a lot? We don't know." Should companies be held to their direct impact or evaluated by their efforts in concert with local watersheds? There is a lot of work to be done, but it appears that many of the right questions are being asked.

Supply Chains of Diversity

Actress Julia Ormond opened the BSR conference with praise for California's recently passed SB 657, legislation designed to help eliminate slavery and human trafficking from product supply chains. According to the press release from Governor Schwarzenegger's office "SB 657 requires major retail sellers and manufacturers doing business in California to disclose their voluntary efforts to eradicate slavery and human trafficking from its direct supply chain for tangible goods offered for sale."

As spokesperson for the Alliance to Stop Slavery and End Trafficking (ASSET), Ms. Ormond reiterated the supply chain theme by describing her realization that "slavery is in my home because it's in the products we consume…supply chains help us create the map to find the victim."

Supply chains can also help empower women and, as described by Avon CEO Andrea Jung, they can deliver a way out of poverty and an earnings opportunity for women around the world. As the company approaches their 125th anniversary as "the original social network," Ms. Jung noted how the company is the largest micro-lender in the world. With their reach of 6 million Avon representatives and more than 300 million very dedicated customers, they have leveraged their scale to combat breast cancer and domestic violence with impressive results.

With their recently launched "Hello Green Tomorrow" program, they will seek to have a similar impact on bringing an end to deforestation. With an initial focus on South America's Atlantic Rainforest, the program has already helped to plant 2 million trees. In a follow-up discussion with Tod Arbogast, Avon's Vice President of Sustainability & Corporate Responsibility, he noted that this was just the early stages of their commitment to re-forestation and that the company expects it to evolve and scale in the same way as their other two signature programs.

Whether it's water, women, or energy, the BSR conference offered important insights into how cross-sector collaborations can help bring about solutions that can make a large impact. As more companies, NGOs, and government agencies learn to work together, the challenges of developing world-changing programs can be solved. BSR is helping to point the way, providing lessons and valuable insights to help others learn to scale responsibly.

Photo CC-licensed by Peter Gene.