From Future 500
Each year, Future 500 releases a report of what we predict will be the most critical social and environmental issues driving corporate-stakeholder engagement in the coming year. This year, we anticipate that corporations will be challenged to go even further than last year, using their economic influence on policy and politicians while being asked to take a bigger stand on global issues. This dynamic will be showcased at COP21 in Paris, where stakeholder expectations of companies’ commitments to mitigate climate change will culminate.
In 2016, we predict that stakeholders will continue to organize around issues like chemicals, water scarcity and local control of resources, challenging the private sector to drive change in their supply chains, make more time bound commitments and be more transparent. We anticipate increased focus on women impacting the global economy and concern around global ocean health, an issue moving to the forefront of our list.
As presented in the following analysis, 2016 promises to be another exciting year to break through conflict and drive workable solutions through proactive stakeholder engagement opportunities. We hope that our annual report continues to help companies and their stakeholders see beyond conflict to find ways to collaboratively forge common ground solutions to our most pressing global problems.
1 – BRAND POLITICS: Reigning in Government Affairs
By Brendon Steele, Director of Stakeholder Engagement
Last year, we highlighted the changing paradigm facing consumer-facing brands and their suppliers, where brands and retailers are now expected to both own the environmental and social impacts of their products and supply chains and stake clear, public positions on a myriad of hot political issues – even if immaterial to a company’s business.
Many issues – such as labor rights for an apparel company – are easy to anticipate, but some issues can blindside a company. What can be anticipated is that with the 2016 U.S. Presidential elections, a company’s political giving, the degree of income inequality between its executives and employees, and its record relating to any hot political issues, may all be placed in the spotlight, without warning.
Furthermore, new campaign tactics have been emerging in response to longstanding political gridlock. Version 1.0 was to encourage new supply chain standards – regulation by retail – by big brands and retailers such as Disney and Walmart. In the emerging version 2.0, advocacy stakeholders are now encouraging companies to take proactive public policy stances and even activate their political lobbying for certain solutions. Given the significant influence corporations have over politics and branding, this demand is no surprise. Taking a neutral stance of “we don’t lobby” or “we’re not involved in politics, period” will not inoculate a company from pressure to ultimately take a public position, particularly if a company’s leaders espouse a sustainability goal while their government affairs networks are subverting that goal.
As advocates of all stripes assert pressure, they will ask: What are your lobbyists telling legislators on climate? Why do you publicly support a public policy to price carbon while supporting groups (e.g. ALEC) that seek to undermine such efforts? If you are to associate with organizations that hold positions contrary to your public policy goals, how do you assert your power to influence that organization?
While sometimes divisive or distracting, the ability to anticipate and proactively and coherently answer such questions will separate future corporate leaders and laggards in the eyes of advocacy stakeholders as well as the general public.
2 – THE RISING BLUE ECONOMY: Valuing Oceans
By Shilpi Chhotray, Sr. Manager of Stakeholder Engagement
Commercialization of our oceans presents an array of growing problems for stakeholders and will only ramp up in 2016. The rise of the so-called “Blue Economy” has motivated government and industry alike to come to the table to discuss how to combine market based solutions, sound policy, and innovative technology to protect our oceans and coastlines. Yet even with these cross-sector strides, companies should expect increased stakeholder pressure in the coming year to accelerate solutions for marine protection and ocean pollution.
To safeguard marine resources, NGOs like The Nature Conservancy, Environmental Defense Fund, and Pew Charitable Trusts are pushing industry to integrate greater sustainability and human rights standards into their supply chains. Shipping vessels, fisheries and aquaculture operations, deep-sea mining companies, and the cruise industry are particular targets. Greenpeace ranks the top US seafood retailers annually based on their sale of “red list” seafood, storewide policies, and transparency information, driving greater consumer awareness. In its annual report card, Friends of the Earth assesses how well cruise lines are shifting to greener alternatives, helping push passengers to “cruise wisely” – factoring shipper’s human health and the marine environment practices into consideration when booking trips.
Brand-wise, in 2015 Whole Foods took the top spot for their efforts in confronting illegal fishing and for protecting sensitive marine habitat.
Plastic pollution, with its impacts on both marine life and human health, has also risen to the forefront as a top focus for stakeholders. Last year, we saw a number of groups – campaigners, activists, celebrities, and mainstream NGO’s – mobilize around this issue. Activist groups like 5 Gyres and Story of Stuff mobilized against progressive companies like Unilever and Johnson and Johnson, calling for a phase out of micro-beads in toothpaste and face wash. Mainstream NGO’s like Ocean Conservancy enlisted several industry players into the Trash Free Seas Alliance to take a stand against floating plastics.
In 2016, we see efforts to monitor the health and monetization of ocean resources expanding as more and more groups join stakeholder coalitions to increase pressure on business and government to protect our global oceans.
3 – CLIMATE POLICY BATTLES: Next Round
By Brendon Steele, Director of Stakeholder Engagement
In 2016, we will continue to see the entrenched splintering of corporate asks on climate protection, a continuing long-term effect of the disintegration of the enormous environmental coalition that unified to back 2009 U.S. cap-and-trade legislation. However, with COP21, the new EPA Clean Power Plan and the upcoming U.S. Presidential election, climate activists are beginning to rally for the next round of climate policy battles, both globally and domestically.
The fossil fuel divestment movement gained steam in 2015, mobilizing a dedicated set of advocates and pressuring philanthropic organizations, universities, and pension funds to divest from fossil fuel companies. While development of unconventional sources like the Canadian tar sands and the Arctic have historically motivated significant activism, the downturn in global oil prices has left activists feeling like the market has finished what they started. Companies will continue to see opposition to fossil fuels across the board, from Oil Sands, to Arctic drilling to energy transport and fracking, but less targeted as campaigns shift to the federal and multi-national arenas.
Attention will now turn global, focusing on the Post-COP21 talks. Industry and government leaders will be making commitments to carbon reduction plans that various NGOs groups will hold them accountable to implement in 2016 and beyond. Companies that don’t take public climate positions (see Issue 1) will be seen as laggards, and targeted by global activist groups once the dust settles after COP21. From Canada, to Australia, Brazil, Indonesia, and China, businesses will be pressured by stakeholders to use their political influence to urge these governments to take action.
In the U.S., companies should expect pressure on two fronts: first, to support President Obama’s Clean Power Plan during the 2016 election, and regardless of who is elected, to communicate that support to the new president. Secondly, and more slowly-burning, we expect to see renewed pressure to support a federal climate policy – focusing on carbon pricing mechanisms like a revenue-neutral carbon tax rather than cap-and-trade. Pressure may take the form of public statements to private requests, to talking directly to lawmakers.
While a revenue-neutral carbon tax may sound far-fetched, the concept is attracting unexpected bipartisan support from increasing numbers of Republicans, from oil companies such as ExxonMobil, from traditional environmental leaders such as James Hansen, and from grassroots advocates like Citizens’ Climate Lobby. Understanding the nuance of carbon pricing now – especially revenue neutrality – will help companies align better with stakeholders in 2016 and beyond.
4 – RESTORATIVE FORESTS & AGRICULTURE
By Erik Wohlgemuth, COO
2016 will likely be the year when we begin to see the implementation of deforestation-free supply chain commitments, enabling transformative change in the health of the world’s forests and the people who depend on them.
We anticipate continued pressure on brands and suppliers to make deforestation-free supply chain commitments across commodities but also a marked increase in pressure on companies (signatories to the Bonn Challenge, the UN Declaration on Forests, the Consumer Goods Forum Deforestation Resolution) to follow through on their commitments. As NGOs and companies commit to the harder work of implementation, the focus will shift to distinguishing leaders and laggards, as typified by Greenpeace and RAN’s recent criticism of Cargill. Additionally, companies will feel heightening pressures to commit to large-scale landscape level conservation and restoration efforts.
In the midst of this battle are certification standards, criticized for not going far and fast enough, lacking stringent auditing and accountability to ensure compliance. FSC, generally considered the leading standard by NGOs and corporations for responsible forest management, is criticized for moving too slowly to meet demand while other standards bring more hectares under certification oversight that many feel are too weak. Will some standards innovate and strengthen quickly enough to pressure FSC? Is it FSC or none at all? Or will we see innovations in areas such as large-scale landscape conservation and restoration that leapfrog certifications?
Driving supply chain improvement will only get us so far in protecting forest and agricultural systems around the world. Many countries are also cracking down on dissent and the freedoms of civil society. There must be concurrent regulatory action to control corruption, patronage to elites, and shifting market distorting incentives that drive deforestation. More leading companies will therefore be challenged to leverage their political and economic power to pressure governments to take stronger regulatory action and allow constructive dissent (see Issue 1).
Such actions will be increasingly important in 2016 as the global economy currently shudders from slowdown in China. Lynchpin countries in global efforts to protect forests, such as Indonesia, Malaysia, Brazil (will the soy moratorium be extended?), China (land grabbing), Canada, and Russia, will be called on to step up regulatory action. But these countries face competing economic and political pressure to unleash domestic resource development as Indonesia is doing in aggressively encouraging palm oil production for domestic biofuels use.
Pressures for quick fix economic development measures threaten the success of broader countrywide commitments at COP21 to control carbon emissions through more systemic level protection of forest and agricultural lands, suggesting the world will again prove incapable of firmly committing to solutions to address the growing costs of adapting to a warming planet.
Will early implementation leaders like Wilmar and Asia Pulp and Paper maintain their position? Will Cargill, ADM, McDonalds, and PepsiCo, slower in their implementation, catch up? What form will NGO pressure on these companies take given the high stakes? As some of these questions get answered in 2016, it will be another interesting year for forests.
5 – WATER IS FOR FIGHTING OVER
By Kellen Klein, Sr. Manager of Stakeholder Engagement
With record-setting heat waves and droughts now regularly making international headlines, many stakeholders are seizing the opportunity to capitalize on growing public awareness of global water stress. For companies, that means moving beyond basic conservation and watershed cleanup projects. As highlighted in Issue 1, advocates and funders now want businesses to build on public attention by advocating for more responsible water policy, funding for aging infrastructure, and discussing how society values water resources.
In North America, all eyes are on California’s resiliency given the state houses the majority of many U.S. crops for domestic and overseas consumption. California is staggering from a fourth year of record-breaking drought that has led to increased fires across the state, emergency restrictions for water users and fines for those who waste. Stakeholders have also been active on this important issue, collectively adopting a “good cop-bad cop” approach that mirrors tactics seen in other water-stressed regions around the world. For example, campaigners and the media have publicly called out industry sectors and businesses perceived as lagging on water stewardship, hoping to “drought shame” them into better practices. Simultaneously, business-friendly NGOs have implemented new voluntary conservation programs, multi-stakeholder dialogues and task forces, while policy advocates have attempted to garner support for more proactive efficiency and monitoring regulations.
This combination of crisis and activism may finally be yielding water reductions in California, but global stakeholders remain largely unimpressed by the private sector’s efforts to protect water resources.
A dearth of water monitoring and limited transparency mean that many companies have little to substantiate their efforts, particularly when it comes to truly knowing the practices of their developing world suppliers. The lesson is one that spans issues and geographies – full disclosure is now the new norm and companies should fear that “gotcha” moment that could arise anywhere within their supply chain. Companies operating in water stressed regions should expect particular scrutiny and should be prepared with data (or better yet, have already shared it) if they hope to avoid becoming a campaign target. To reduce risk, companies should be engaging even their fiercest critics, who share understanding of the immensity and complexity of the challenges, to find ways to advance mutual solutions.
While the growing threat of water stress should be enough to scare most industry sectors into action, many stakeholders in thirsty regions fear progress will halt when (or if) rains return. Consequently, we anticipate a strong early-2016 push by western U.S. and EU water funders and NGOs to secure new policies, safeguards and best practices capable of outlasting even a “Godzilla” El Nino. Brands with a presence in Southeast Asia and China should be especially wary – the combination of drought, pervasive water pollution, and growing social activism could spell scandal for those linked to dirty or gluttonous suppliers.
As societies across the globe grow more concerned about their water resources, water-related campaigns and initiatives are rapidly climbing in importance. Recognizing the complex intersections of our food, water and energy systems, organizations across sectors can expect more nuanced asks from stakeholders and more robust expectations for how they should interact with water systems far beyond company walls.
Throughout 2016, we anticipate that major water users should expect increasing pressure to lend their voice in support of progressive water policy measures, such as simplified water markets and better pricing mechanisms. Those operating in wetter climes should capitalize on reduced attention by proactively identifying collaborative water stewardship opportunities – such as the Alliance for Water Stewardship and Water Action Hub – that reduce both reputational and operational risk.
[2016 Issues #6 – #10 are available in Part 2 of this article]
For more information about the report, please reach out to Mary Ann McDonnell at: mmcdonnell@future500.org
Article Source: Future 500 website at- www.Future500.org
