Bsr Report 2010

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RedeningLeadershipBSR Report 2010

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Business eists or a urose ic is not just about makin rots.Te rst callene to any business is to make clear o tat urose

serves societal nees an to emonstrate o it conucts its business in

ays tat are resonsibleandrotable. Net, it is about ettin bot

sies o te equation into te core stratey an business rocesses an

communicatin coesively an transarently about o tis aroac

uies ecisions an o it enerates enance value, contributin to

more balance eveloment an sustainable rot. Tat, in my vie,

is leaersi in sustainable business.

Lise Kino

Chie Sustainability OfcerNovo Nordisk

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Redening LeadershipBSR Report 2010

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CONTENTS

1 Letter From the CEO 2 The State oSustainable Business

OUR MISSION

We work with business to create

a just and sustainable world.

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38 Our Challenges32 Our People 42 Financial Statement12 Our Impact

16 Case Studies Confict Minerals Best Buy ExxonMobil Hyatt Hotels KKR Maersk Line Sumitomo Trust and

Banking

23 Sustainable ConsumptionInitiative

24 Partnership Development

26 Research

28 BSR Conerence

30 Membership

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Letter From the CEO | 1

Letter From te CEO

We chose the theme Redening Leadership or the BSR Report2010 because the undamental challenges in our world require

nothing less. At its best, business can deliver the creative solutions

that the world needs: low-carbon prosperity or a planet that will

have 9 bil lion inhabitants by 2050. But business as usual or

leadership as usual wont make it happen.

One o the most exciting aspects o todays ast-changing world is

the unprecedented opportunity or every one o us to be a leader.

Each o us has the tools to create, inspire, and collaborate in ways

that previous generations could not have imagined. This gives us

all immense power to build the kind o world we wanti we use

that power wisely.

Every year, we report on BSRs activities and the state o sustainablebusiness. This Report, like our past eorts, provides a window

into our activities, our accomplishments, and our challenges. This

is consistent with our commitment to transparency and our

commitment to implement the same advice we provide our member

companies on their own sustainability reports.

In this Report, you will see several examples o BSR in action, as

we work with our member companies and a wide range o

stakeholders and experts to advance sustainable business. We

also hope to illuminate some o the challenges we ace in

working toward our mission. Like others committed to making

sustainability the norm in business, we see many ways we can

make aster progress: The process o producing this Report givesus a chance to refect on how we can do exactly that.

Throughout the Report, we include perspectives on how leadership

in sustainable business is changing. The State o Sustainable

Business section presents our viewpoint on whats most needed

to make sustainable business a reality. We are also honored to

present refections on leadership rom ve globally recognized

sustainability leaders rom diverse organizations.

Our Report is designed not only to provide a look back at 2010,but also to share our insights on where we need to go rom

here. To that end, we wil l be weaving the theme o leadership

into our activities throughout 2011. The BSR Conerence 2011,

which will be in San Francisco November 1 through 4, will also

ocus on Redening Leadership.

I am particularly excited about the new eatures we have added to

this Report, including video clips that provide additional depth

and perspective on the topics we cover. We truly hope this Report

will spark a reaction and inspire you to continue the conversation

about the issues covered here. We value your input and encourage

your thoughts on how to dene leadership in sustainable business.

Visit www.bsr.org/report to give your viewpoint.I hope this Report underlines the importance o new ways o leading

and reinorces how essential it is or everyone to be a leader. With

that in mind, lets get to work!

Aron Cramer

BSR President and CEO

Throughout this Report, we use this icon to designate casestudies and other items or which we have created videoclips providing additional perspectives and inormation.

VISIT www.BSR.ORg/REpORT TO V IEw ThESE VIdEOS.

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Te State oSustainable Business

2 | BSR Report 2010

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The State o Sustainable Bus iness | 3

weter it is a lobal economic crisis, natural isasters in Asia, or revolutionary

times in te Arab orl, one cannot eny tat te ell-bein o businesses is

intertine it te ell-bein o societies. Sustainable business ractices bot

itin an oranization an toar society at lare are, ten, no loner an otion;

rater, tey are a matter o survival, cometitiveness, an o eistence beyon te

sort term. Leaersi in sustainable business, ten, becomes our ability tosare knolee, crat artnersis, leverae netorks, mobilize resources, an

ut our skills at te service o all stakeolers in orer to aress te economic,

social, an environmental callenes e are all acin.

Fai ganour

CEOAramex International

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4 | BSR Report 2010

Leadership in business looks very dierent in todays

global, integrated, digital, and transparent world.

Business aims to deliver more than just rising share

prices and aces a more diverse array o questionsthan ever beore. Meeting these challenges requires

nding the right balance o fexibility and commitment,listening and communicating, and a global view

that respects diversity. Whats more, leadership today

must be earned and renewed daily; it is no longer

bestowed by sel-perpetuating hierarchies.

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6 | BSR Report 2010

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At its best, business can lead the way toward

prosperity or 9 billion people, create groundbreaking

technologies or social benet, and nd ways to

help us radically reduce our use o natural resources.Achieving this is no small eat.


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8 | BSR Report 2010

In the world o sustainability, our dimensions oleadership are essential or everyone in business

and provide the best path to a meaningul

dierence or all companies and the wider world.

Traditionally, leaders were supposed to have all the answers.

Today, it is more important to ask the right questions o the

right people, no matter where they are ound. The solutions

to tomorrows challenges wont come rom centralized R&Dlaboratories, so leaders have to listen to weak signals and

nontraditional voices.

Leaders increasingly live by the motto there are a lot o smart

people in the world, and most o them dont work or me,

and thereore aim to be masters at gathering ideas and solutions

rom all corners o the globe. This is especially crucial given

that the biggest sustainability challengesaccess to ood, energy,

and water, and the drive or community development and

workers rightsare elt most acutely in rising economies. This

trend is reinorced by the increased instinct or crowdsourcing,

or smart-sourcing ideas rom loose networks, using technology.

Leaders also need to work with nontraditional partners,including customers, competitors, and employees, who are no

longer passive parties to arms-length transactions, but actors

shaping their own utures.

In 2010, several large companies exhibited leadership by

raising the bar on their own sustainability perormance.

Companies including Panasonic, Walmart, Marks and

Spencer, and Unilever distinguished themselves byadopting ambitious targets, creating a sustainability

north star or their organizations, and inspiring other

businesses to do the same. Even more striking, many

CEOs have taken personal ownership o such goals,

even as they acknowledged that meeting those targets

is neither automatic nor easy. This trend represents a

welcome change: For many years, business leaders were

reluctant to commit to targets they couldnt guarantee

achieving. The act that they now see more risk in not

setting big goals than in missing big goals shows how

much has changed.

Set Ambitious Targets Learn From the Margins

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We rely on leaders to anticipate the uture. But todays pace

o change is much more intense than ever. The potential

or truly disruptive change is great. The tenure o CEOs is

shrinking. The survival o any one large company is notguaranteed, and the social license to operate can be erased

overnight. Leaders have to encourage their organizations

to understand the winds o change beore they become a

Category 5 hurricane. Doing this means questioning

assumptions and, as we have said in past BSR Reports,

paying more attention to long-term trends than short-term

market gyrations.

Sail Fearlessly Toward

the Future

A sustainable economy depends on the right inrastructure

and by that we dont mean just bridges and buildings. A

sustainable uture hinges on supporting social, fnancial, and

policy inrastructures. This means that leaders can no longerbe satisfed with merely making their own institutions the best

they can be; they need to invest in the commonsshared

resources that help their institutions, and others, reach their

ull potential. Leadership is no longer about separating

yoursel rom others; its about bringing others along with you.

As a result, more leading businesses are working on

systemic solutions to complex challenges. In the policy realm,

it is heartening to see companies respond to inaction at the

international level by calling or a price on carbon, which they

recognize is the key to making the transition to low-carbon

prosperity. Value chain solutions arerightlytaking

greater importance through eorts like the InternationalLabour Organization and International Finance Corporations

partnership on the Better Work program, which brings together

governments, companies, and workers representatives to

establish dignifed work, and the Better Cotton Initiative, which

takes on a single commodity. These examples go well beyond

transactional partnerships that are a staple o the sustainable

business world. They are investments in whole systems that

enable sustainable business to thrive. Without this, companies

committed to sustainability will continue to ace headwinds.

Invest in Inrastructure

o All Kinds

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10 | BSR Report 2010

www.BSR.ORg/REpORT

The ultimate test o a leader today is how he or she

enables others, because more people have the

opportunity to make an impact than ever beore and

have the means to easily connect with like-mindedpeople around the globe. In this world, leaders need

to set big goals, listen to diverse voices, be architectso complex systems, and live both in the present

and the uture.

And lets not orget: Everyone can be a leader,

and we need all leaders to make the uture a

sustainable one.

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The State o Sustainable Business | 11

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Our Imact


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Our Impact | 13

Many eecutives unerstan tat te lon-term success o teir business is

inetricably linke to te ell-bein o eole an lanet. But e are illin to

act on it. Its te ierence beteen li service an bol action tat enes

true sustainability leaersi: uttin rinciles into ractice, rivin cane

beore bein riven, resistin te temtation o sort-term ain, investin in

common oos, an insirin oters to o te same.

geor Kell

Executive DirectorUnited Nations Global Impact

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San Francisco | 43 sta

Ne York | 11 sta

wasinton, d.C. | 2 sta

From helping the worlds largest shipping company develop a

sustainability strategy to building a multi-stakeholder coalition

to address the challenge o confict minerals in the Democratic

Republic o the Congo, we work with business in all sectors

and all regions to create a just and sustainable world.

In this section, we highlight our eorts to redene leadership

in sustainable business with our member companies and other

stakeholders through our consulting projects, our Partnership

Development and Research initiatives, and the BSR Conerence.

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Our Impact | 15

Beijin | 10 sta

guanzou | 10 sta

hon Kon | 6 sta

BSR OFFICES ANd STAFF IN EACh LOCATION

Argentina

AustraliaBangladesh

Belgium

Bolivia

Brazil

Cambodia

Canada

Chile

China

Colombia

Costa Rica

Democratic Republic o

the CongoDenmark

Dominican Republic

Egypt

El Salvador

Finland

France

Germany

Guatemala

Honduras

India

Indonesia

Italy

JapanJordan

Kenya

Laos

Malaysia

Mexico

Mongolia

The Netherlands

Nicaragua

Norway

Pakistan

Papua New Guinea

Peru

The PhilippinesRussia

Saudi Arabia

Singapore

South Arica

Sweden

Switzerland

Thailand

United Arab Emirates

United Kingdom

United States

Vietnam

2010 BSR pROJECT LOCATIONS BY COUNTRY

paris | 8 sta

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ThE ChALLENgE

In the eastern Democratic Republic o the Congo (DRC), where armed confict has claimed

more than 5.4 million lives over the past 15 years, militant groups controlling most o the

regions mines use the trade in tin, tantalum, tungsten, and gold as important sources ounding. At the same time, this tradewhich eeds into complex supply chains or products

ranging rom cell phones and cutting tools to jet engines and jewelryis an important source

o income or a million people in the region.

The si tuation presents a dilemma: How can business suppor t the people who rely on these

minerals or their livelihoods without perpetuating the use o confict minerals in this war zone?

Campaigning NGOs, development organizations, governments, and industry working groups

are addressing this important situation in a variety o ways. BSR is promoting collective

action to reduce human suering and advance economic development through a working

group that began in 2009 with companies including Dell, HP, Intel, and Motorola.

OUR STRATEgY

The complex ity o these issuesthe need to improve supply chain transparency, sever the

link between the minerals trade and confict, and continue to support local communitiesrequires multidimensional solutions involving business, governments, and others working toward

a common goal. Using BSRs experience building collaborative solutions to human rights

dilemmas, and working with our extensive network o NGO partners, we developed a plan

to raise companies awareness o the issues and acilitate constructive dialogue among

business, investors, government, and NGOs. This necessary step laid the groundwork or

urther work in 2011 ocusing on identiying actions companies can take to reduce their

use o confict minerals.

Following an initial BSR-led orum in 2009 that gathered nearly 50 people to strategize potential

actions, we partnered with the GE Foundation to expand our eor ts and bring in additional

industries. In May 2010, we published a report highlighting critical supply chain issues, opportunities

to support diplomatic peace-building eorts, and ways to promote local economic empowerment.

We concurrently convened a second orum with more than 100 industry, investor, and NGOrepresentatives to explore action in these areas.

OUR IMpACT

Already, our e or ts have increased business leaders awareness, promoted action on the

DRC confict and its link to the minerals trade, and helped build a shared understanding between

civil society and business on how the private sector can contribute to confict reduction.

In collaboration with the shareholder advocacy group As You Sow, we catalyzed new partnerships

among companies, investors, and NGOs to address these challenges.

BSR worked with these organizations to prepare the only multi-stakeholder input to the U.S.

Securities and Exchange Commissions (SEC) regulations requiring publicly listed companies

to report on their use o confict minerals. More than 20 companies, investors, and NGOs

signed the consensus document, which included recommendations or reliable supply chain

due diligence processes, third-party auditing, and company disclosures.

While our work has supported company initiatives and the development o strong, consensus-

based SEC requirements, we are acutely aware that there is no easy solution to the confict

minerals issue. We continue to advise companies on ways to address conlict minerals in

their supply chains and support ongoing multi-stakeholder engagement to solve this

complex challenge.

Leading Business Action onConfict Minerals

STAKEhOLdERS ENgAgEd

By engaging stakeholders rommultiple sectorsincludingDell, the GE Foundation, andIntelwe increased action bybusiness leaders and developedrecommendations endorsedby more than 20 parties.

INdUSTRIES

Energy, ICT, Mining,Pharmaceuticals and Biotechnology,Transportation and Logistics

STAFFEd FROM

New York, San Francisco,Washington, D.C.

SERVICES dELIVEREd

Stakeholder Engagement,Sustainable Supply ChainManagement, Reporting and

Communications

pARTNERShIp dEVELOpMENT

www.BSR.ORg/REpORT

150+

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Best Buy: A Focus on DeliveringSolutions and Sustainability

ThE ChALLENgE

In an industry acing growing concerns about e-waste, the rapid obsolescence o products,

and continued supply chain human rights issues, the senior leaders at Best Buy aim to

transorm the companys business model rom one based on selling only products to onethat ocuses on delivering digital connectionsthose technologies and services that help

connect customers to people, knowledge, ideas, and un. Recognizing that sustainability

is key to that uture, Best Buy partnered with BSR to turn that vision into a practical strategy

aligned with the companys other key priorities.

OUR STRATEgY

Our three-phase approach allowed Best Buy to set a clear direction or its sustainability objectives:

1 Assessment

Given Best Buys rapid growth in sales and its move into new services and businesses, we

began by conducting interviews with 40 Best Buy executives and more than 20 external

sustainability experts and stakeholders. We used this inormation to examine Best Buys

business direction, management perspectives on sustainability, and current gaps in the

companys sustainability-related activities. Next, we mapped near-term trends aectingthe consumer electronics industry, such as new regulations and the increasing costs o

input materials. We also reviewed outside perspectives on Best Buys role in developing

more sustainable products and the opportunities associated with the companys desire

to transition rom products to solutions.

2 Materiality

We analyzed more than 60 sustainability issuesrom digital privacy, to access to technology,

to product saety, to transportationbased on how they aect Best Buys business and

based on their importance to consumers, communities, governments, NGOs, and others.

We presented the results to Best Buys Sustainability Team and Advisory Group, which

used the presentation to agree on our priority areas: Product Stewardship, Sustainability

Solutions, Access, and Inspired Workplace.

3 Strategy DevelopmentOnce Best Buy's senior leaders validated BSRs conclusions, BSR and the sustainability

team dened goals or each area:

Product Stewardship: to lead the industry rom product design to end-o-use solutions

Sustainability Solutions: to provide products and services that allow customers to lead

more sustainable lives

Access: to build business models that enable people who dont have it today to access

all the benets o the connected world

Inspired Workplace: to become the preerred place o work because o sustainability eorts

We also helped Best Buy develop specic targets or each area, and we proposed a

sustainability governance structure that creates clear leadership and accountability withinthe company and a structured review process that incorporates external input.

OUR IMpACT

By nature, strategy projects set the direction or changes that come into practice ully over the

medium to long term. Best Buy has made signicant progress in establishing its sustainability

strategy and a oundation or progress. To begin implementing this strategy, company leaders

have started to develop relationships with consumer products manuacturers that are ocused

on sustainability and are key to the achievement o Best Buys sustainability goals.

ISSUES NARROwEd TOFOUR pRIORITIES

We analyzed more than 60 issuesand conducted more than 60interviews to create a strategy andgoals ocused on our Best Buypriorities: Product Stewardship,Sustainability Solutions, Access,and Inspired Workplace.

INdUSTRY

Consumer Products

STAFFEd FROM

Guangzhou, New York,San Francisco

SERVICES dELIVEREd

Materiality Analysis,Strategy and Integration

CONSULTINg

Our Impact | 17

60 4

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ExxonMobil: Early Planning orSustainable Economic Development

ThE ChALLENgE

As the operator o the Papua New Guinea Liqueed Natural Gas Project (PNG LNG)a large-scale,

integrated development project that includes gas production and processing acilities in the

highlands, as well as onshore and oshore pipelines and liqueaction acilities in the Port MoresbyregionExxonMobil has the potential to greatly impact the economy o the PNG. Independent

assessments anticipate that the project may double the PNGs gross national product, greatly

increasing government and landowner revenues, creating jobs, and stimulating related

industry developments.

Early in the project, to ensure delivery o these long-term local benets, ExxonMobil created a

robust national content program that seeks to develop a qualied and globally competitive

local workorce and supplier base. The program also aims to identiy opportunities or strategic

investments in health, education, and inrastructure. The company engaged BSR to assist with

an early assessment o the in-country capabilities.

OUR STRATEgY

In the rst phase o our work, BSR conducted a review o the local context to provide ExxonMobil

with an early indication o existing workorce, supplier, and civil society capacities and needs.We then began research and interviewed approximately 100 representatives o:

1 Vocational and academic institutions, to assess existing local workorce qualications and

potential ocus areas or ExxonMobil training initiatives

2 Local suppliers and businesses that could be eligible to support project construction and

operations, as well as capacity-building alternatives

3 NGOs ocused on education, health, and community development, or possible partnerships

with ExxonMobil in deploying strategic investment projects

BSR then created a preliminary database o PNG-based organizations in the three categories

above, and we gave ExxonMobil an assessment o the wide-ranging perspectives on existing

local capacity or the company to integrate into its national content planning.

In the second phase o our work, we used a tool designed with ExxonMobil to assess locally

owned supplier companies against eight specic business criteria to provide a third-party

view o the companies perormance, training requirements, and initial eligibility or supporting

the PNG LNG project. Our phase-two activities helped ExxonMobil assess prospective local

supplier companies in order to:

Lay the groundwork or ExxonMobil to constructively engage with local suppliers early in the

project-planning phase.

Identiy local training needs and capacity-building opportunities.

Match supplier capabilities with project needs.

Set local supplier expectations regarding ExxonMobils standards or business conduct.

Promote accountability by ocusing on suppliers corporate governance improvements.

OUR IMpACT

Many o BSRs recommendations were incorporated into ExxonMobils comprehensive national

content plan. Our phase-one work helped provide the groundwork or the company to determine

workorce training objectives and supplier-development strategies, to ormulate strategic

community-investment priorities, and to enter into partnerships early in the project lie cycle. In

phase two, BSRs assessments allowed ExxonMobil to engage early with local suppliers to

discuss their areas o strength and opportunities or development. It also allowed or local

companies to improve their business perormance and potentially become eligible or engagement

in the PNG LNG project.

Both phases o our work helped establish tangible baselines, early activities, and long-term ocus

areas or sustainable economic development programs ocused on workorce development,supplier development, and strategic community investments in the PNG.

INdUSTRY

Energy

STAFFEd FROM

Hong Kong, San Francisco

SERVICE dELIVEREd

Local Economic DevelopmentStrategy

INTERVIEwS IN pApUA NEw gUINEA

For the Papua New GuineaLiquefed Natural Gas Project,we helped ExxonMobil createsustainable economic developmentprograms ocused on workorceand supplier development andstrategic community investments.

100+

CONSULTINg

www.BSR.ORg/REpORT

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ThE ChALLENgE

One o the biggest industries globally, travel and tourism contributes up to 10 percent o the

worlds economy and about one in every 12 jobs. Yet most companies in this sector are

still in the early stages o assessing and addressing their sustainability impacts. To bettercommunicate the newly public companys commitment to responsible practices, and to

prepare or the increased transparency required o public companies, Hyatt leaders partnered

with BSR to articulate a vision or an integrated sustainability strategy.

OUR STRATEgY

Our goal was to help Hyatt build a strategy that connects corporate responsibility objectives

to business goals in ways that:

Deliver value and innovation to Hyatts operating companies.

Identiy and mitigate sustainability risks.

Build trust externally and engage colleagues internally.

At Hyatt, which owns, manages, and ranchises hotels, engaging internal stakeholders suchas general managers, owners, associates, and executives was an essential rst step in

understanding the unique global and local sustainability challenges each property aces.

First, BSR interviewed several executives to establish senior managements current and uture

conception o CSR. We then conducted workshops in Asia, the Middle East, Europe, and

the United States to identiy current activities, prioritize CSR issues, and understand regional

nuances. Several key themes emerged:

Addressing poverty and inequality in local communities through education and economic

sel-suciency

Recruiting, developing, and retaining sta

Managing the environmental ootprints o its hotels, expanding its commitment to sustainable

sourcing, protecting the biodiversity o the areas surrounding its hotels, and using sustainabledesign and construction

OUR IMpACT

This work allowed Hyatt to develop and implement Hyatt Thrive, a strong, practical CSR vision

representing Hyatts goal o creating thriving communities, places where we are proud to work,

our neighbors want to live, and our guests want to visit. The platorm, which establishes a global

CSR ramework with a common vision and strategic ocus that can easily be implemented

locally, is centered on our pillars: educational and personal advancement, health and wellness,

environmental sustainability, and economic development and investment. Hyatt Thrives primary

objective is to help the company communicate its philanthropic, environmental, and community-

engagement initiatives, and to position Hyatt to ocus on and articulate the value it brings as a

global company to the many communities it serves.

The CSR strategy has spurred additional sustainability initiatives, including a new human rightspolicy statement that reerences specic industry issues such as human tracking. Hyatt

Thrive also led to an improved approach to aligning Hyatts giving and volunteerism with the

our pillars o the Thrive ramework.

Hyatt Hotels: Developingan Integrated CSR Strategy

Our Impact | 19

INdUSTRY

Travel and Tourism

STAFFEd FROM

Hong Kong, New York, Paris

SERVICES dELIVEREd

Materiality Analysis,Strategy and Integration

REgIONAL STRATEgY wORKShOpS

We worked with Hyatt to developan integrated sustainabilitystrategy that connects corporateresponsibility objectives tobusiness goals and engagesboth senior leadership and thebroader employee base.

CONSULTINg

4

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KKR: Boosting ESG PerormanceThrough a Supply Chain Strategy

ThE ChALLENgE

A US$61 bil lion global investment rm, Kohlberg Kravis Roberts & Co. L.P. (KKR) has more

than 60 private-equity portolio companies that operate in 15 general industries in the United

States, Europe, the Middle East, and Asia. The rms value-creation model includes activemanagement o ESG issues as part o its eorts to build stronger companies.

In late 2009, KKR joined BSR, seeking a comprehensive partner or managing ESG issues

within its portolio, and looking to gain rom our expertise in responsible supply chain

management. KKR recognized that labor and environmental conditions in the supply chain

were growing in importance or a number o its portolio companies, and company leaders

saw an opportunity to provide guidance and resources on this topic as part o the companys

management o risks across its portolio.

OUR STRATEgY

Recognizing that KKR had a unique opportunity to help rms in its portolio learn rom proven

practices and one another, BSR created a Supply Chain Sustainability Resource Guide and

subsequent workshops covering best practices, international standards, industry collaborations,

established certication processes, and resources to help with the implementation o supplychain eorts. The workshops included an in-person event at a Responsible Sourcing Summit

and subsequent web-based programs to get buy-in rom and raise awareness among portolio

companies general counsel and senior procurement or merchandising ocers. The attendees

were able to share the guide with colleagues who are responsible or developing or improving

their own supply chain programs.

BSRs approachbuilt on nearly two decades o experience in responsible supply chain

management across industries and geographiesincluded the basic elements o a program

as well as more innovative elements drawn rom our Beyond Monitoring initiative.

OUR IMpACT

This projectwhich helped KKR build a community o practice within its portoliowas a

valuable opportunity to leverage the partnerships that a leading investment rm has with multiplecompanies to highlight sustainable practices and improve ESG perormance overall, on a

large scale.

Since our project began, more than hal o KKRs portolio companies have participated in

one o the training events, with direct executive engagement, and KKR has ollowed up

with its holdings to determine specic issues o interest or urther education. Additionally,

many companies have used the resources to initiate a responsible supply chain program

or to enhance their current supplier requirements, monitoring programs, or participation in

industry eorts.

BSR is now working with KKR to take the next step and assess supply chain risks across its

portolio, identiy gaps, and develop specic action plans or high-priority companies. We believe

that KKRs innovative approach to creating a community o practice and identiying supply

chain management as a key opportunity or value creation in its portolio can set an importantprecedent or private equity more broadly.

INdUSTRY

Financial Services

STAFFEd FROM

Hong Kong, New York

SERVICE dELIVEREd

Sustainable Supply ChainManagement

OF KKRS pORTFOLIO COMpANIESTRAINEd AT ExECUTIVE LEVEL

We designed a resource guide andtrainings to help KKR rewardsustainable supply chain practicesand improve the ESG perormanceo its portolio companiesandset an important precedent orprivate equity more broadly.

>50%

CONSULTINg

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Our Impact | 21

CONSULTINg

ThE ChALLENgE

As the worlds largest container shipping company, Maersk Line transports more than 15 percent

o all shipped containers. In an industry that transports more than a third o the value o global

tradeand accounts or about 4 percent o the worlds carbon emissionsMaersk Line has atremendous economic, social, and environmental ootprint. Facing pressure to reduce the

companys environmental and social impacts, Maersk Line leaders viewed this challenge as an

opportunity to oer customers a value proposition on sustainability that could not be matched

by competitors. Company leaders asked BSR to help develop a uture-prooed sustainability

strategy.

OUR STRATEgY

BSR and Maersk Line collaborated to build a comprehensive sustainability approach that

supports the corporate strategy and responds to long-term trends. Our work ell into three phases:

1 Internal Review and Current State

Through interviews with executive management, regional leaders, and sustainability

proessionals, BSR gathered details about Maersk Lines corporate objectives, strategy,

business model, and existing sustainability eorts. This work claried company strengthsand weaknesses and dened key drivers or the companys sustainability perormance.

We discovered that Maersk Line lacked a comprehensive approach to working on and

communicating about sustainability, which made it dicult or company managers to

establish a business case or new programs.

2 External Review and Future State

Next, we built a set o uture trends such as hypertransparency, regulated carbon, and

resource constraints that business leaders would need to consider in strategic planning or

the next seven to 10 years. We then tested these trends with employees and management

teams to ensure a global perspective and identiy specic regional challenges. Together with

consultations with the companys major customers and key industry stakeholders, this input

helped company leaders articulate the near-term changes in the business environment,

including the direction o key customers expectations.3 Build Vision and Strategy

BSR helped Maersk Line dene a strong sustainability vision supported by objectives such

as reducing carbon-dioxide emissions by 25 percent by 2020 and striving or zero sulur-

dioxide emissions. This strategy will raise the bar or sustainability in the industry. BSR also

helped Maersk Line develop objectives, strategies, and key perormance indicators to

guide the companys uture work in the core areas o environment, social responsibility,

health and saety, security, and business ethics. In what is a rst or this industry, Maersk

Line integrated sustainability into its customer value proposition, underlining the idea that

sustainability strengthens the companys competitive edge and serves as a means o

market dierentiation.

OUR IMpACT

BSRs work has helped give Maersk Line a new, comprehensive direction or sustainabilityandthe company has reaped positive results rom this course. In 2010, the management team

declared that environmental sustainability would be one o the companys top three uture

dierentiators. In September 2010, company leaders announced that Maersk Line would switch

to low-sulur uel when calling port in Hong Kong, thus contributing to an 80 to 95 percent

reduction o local sulur-dioxide emissions that have a damaging impact on port communities

health. In part because o these eorts, in November 2010, the company received the

European Business Award or Environmental Awareness or integrating sustainability into its

business strategy and operations.

Maersk Line: Developing aFuture-Prooed Sustainability Strategy

INdUSTRY

Transportation and Logistics

STAFFEd FROM

Hong Kong, Paris, San Francisco

SERVICES dELIVEREd

Materiality Analysis,Stakeholder Engagement,Strategy and Integration

REdUCTION IN CO2EMISSIONS

We helped Maersk Line set a strongsustainability vision supported byclear objectives: reducing carbon-dioxide emissions by 25 percent by2015 and striving or zero sulur-dioxide emissions.

25%

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CONSULTINg

www.BSR.ORg/REpORT

Sumitomo Trust and Banking:A Sustainable Investment Strategy or China

ThE ChALLENgE

Sustainable investing, the integration o ESG actors into investment analysis, helps mitigate

risks, drive long-term nancial returns or investors, and create an eective lever to shit

companies toward greater environmental and social responsibility. Building on 10 years osustainable investing experience in its home country o Japan, Sumitomo Trust and Banking

sought a partner to help apply its investment model to China, where ESG risks are high.

China has a more complicated ESG landscape or many reasons, including its relatively basic

environmental and social regulations in certain areas, low levels o ESG inormation disclosure,

and ew nancial proessionals with knowledge o ESG actors. Sumitomos objective was to

create a sustainable investment und composed o Chinese equities. The ormation o this und

required in-depth understanding o the Chinese market and the identication o high- and

low-perorming companies based on ESG actors. Sumitomo asked BSR to support this

project with research and advice on ESG integration in China.

OUR STRATEgY

We identied the lack o credible and comprehensive ESG data in China as the major barrier

to running a successul ESG und. In response, we created a customized monthly ESGnews screener that analyzed publicly traded companies across more than 90 ESG issues.

To provide the inormation Sumitomo needed to make investment decisions, the news

screener incorporated both international norms and standards or nancial analysis and China-

specic context. The system covers developments related to Chinas main sustainability

concerns, tracks local regulations and laws, and is available in both Mandarin and English.

To help Sumitomo react quickly to changes in the perormance o portolio companies and

other associated investment risks, we created a real-time news eed that delivers color-coded

inormation on high-risk developments. This additional layer o inormation helps measure

how portolio companies are actually perorming rather than merely which ESG data they

are disclosing.

Because screening services alone are not sucient or analyzing and measuring companies

ESG awareness, management quality, and perormance, we provided Sumitomo with in-depthresearch on specic portolio companies, events, and ESG issues. The research ndings

served as strategic inputs or Sumitomos stock selection.

OUR IMpACT

In March 2010, Sumitomo successully launched the China Good Company stock und, the

rst sustainable investment und oered in the country by a non-Chinese nancial institution.

Within 12 months o operation, the portion o A-shares in the und outperormed the market

benchmark by 4.5 percent. This new investment model and good perormance has attracted

signicant attention and serves as a role model or domestic and international investors in China.

For the next step, Sumitomo is looking or opportunities to go beyond ESG inormation

analysis and will leverage the companys shareholder rights to engage with its portolios to

nurture sustainable perormance in the long run.

INdUSTRY

Financial Services

STAFFEd FROM

Beijing, Hong Kong

SERVICES dELIVEREd

Materiality Analysis,Reporting and Communications

ESg ISSUES SCREENEd MONThLY

Our research and analysis enabledSumitomo to create a newinvestment model and achieveoutstanding perormance thathas attracted signifcant attentionand serves as a role model orinvestors in China.

90

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Our Impact | 23

As the global population continues to grow, rom almost 7 billiontoday to 9 billion in 2050, it is imperative that we develop new

ways to enable all o the worlds people to live a dignied lie, with

access to basic products and services, while also preserving

healthy ecosystems.

That challenge is at the core o an initiative BSR began in 2010

to raise business awareness o this issue, and to recast it as an

opportunity or innovation. To explore how business can lead

the shit rom super consumption to sustainable consumption,

we launched a series o work that includes applied research,

collaborative learning opportunities, and consulting projects.

dEFININg ThE ISSUE, IdENTIFYINg ThE OppORTUNITYWe kicked o our sustainable consumption initiative with

the release o The New Frontier in Sustainability: The Business

Opportunity in Tackling Sustainable Consumption, which

identied business pathways in three parts o the value chain

cycle that oten have been overlooked in sustainability eorts

to date:

Product design: using sustainability to guide design approaches

to products rom the earliest stages o conception and

development

Consumer engagement: infuencing whatandhowpeople

consume

End-o-use: recapturing products at the end o their useul l ivesand converting them to serve as raw materials or other purposes

To test the ideas outlined in our research, we held two workshops

with member companies and experts in the eld o closed-loop

systems and consumer insight. A number o key themes emerged:

Sustainable product design is not just a matter o reducing the

impact o existing products, but rather rethinking how to deliver

the equivalent value in new ways.

Sustainable consumption means that business models

encouraging the quick disposal o products, or rapid

obsolescence, will have to change.

Infuencing consumer behavior will require that we tap intosocial networks, peer groups, and communities. It also will

demand that companies broaden their understanding o

consumersnot just as shoppers but as citizens.

whATS NExT

Feedback rom the workshop and other discussions with members

has sharpened our ocus or 2011, when we plan to look at rapid

obsolescence, its problems, and potential solutions. Also in 2011,

we will conduct an interview series with design thought leaders to

examine some o the emerging approaches to sustainable

products. Ultimately, we hope this work will provide our members

with practical guidance or designing more sustainable products,

inspiring consumers to shit their purchasing habits, anddeveloping end-o-use solutions.

OppORTUNITIES TO AddRESS SUSTAINABLE CONSUMpTION

IN ThE VALUE ChAIN CYCLE

Creating Business Opportunity by TacklingSustainable Consumption

By nearly any measure, the way we consume natural resources

is unsustainable: Research suggests that we are currently using

50 percent more natural resources than the Earth can sustain.

SUSTAINABLE VALUE

prouct desin

Processing andAssembly

Transportation

En-o-Use

Distribution

RawMaterials

Disposal

ConsumerEnaement

SUSTAINABLE CONSUMpTION INITIATIVE

MaterialInputRecycling

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US$2.5 millionin grant support in 2010

BY ThE NUMBERS

20countries in whichBSR is workingon grant-undedprograms:

Bangladesh

China

Costa Rica

Democratic Republico the Congo

Dominican Republic

Egypt

El Salvador

Guatemala

Honduras

India

Indonesia

Jordan

Kenya

Malaysia

Nicaragua

Pakistan

The Philippines

Saudi Arabia

United Arab Emirates

Vietnamwww.BSR.ORg/REpORT

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Our Impact | 25

pARTNERShIp dEVELOpMENT

With grant support rom public and corporate oundations,governments, and multilateral institutions, we design unique

partnerships on topics ranging rom womens health to the

environmental impacts o port operations. By working with

unders ranging rom a Swedish aid agency to the Rockeeller

Brothers Foundation, BSR leverages venture capital, our

member company network, and our own expertise as well as

the expertise o our diverse project partners to help solve

development challenges in emerging economies.

2010 hIghLIghTS

HERproject

We expanded our actory- and arm-based womens health

training programHERprojectwith a major investment romthe Swedish International Development and Cooperation Agency

and ongoing support rom the Levi Strauss Foundation. This

support allowed BSR to link member companies with local

partners who designed and provided training or emale workers

on health-related issues in Bangladesh, Indonesia, and Kenya

rom our original base in China, Egypt, India, Pakistan, and

Vietnam. These training programs, now active in 50 actories,

have impacted more than 70,000 women. Based on return-

on-investment metrics, this training has not only brought

improved worker health and awareness, it has led to reduced

absenteeism, lower turnover, and increased productivity.

CiYuan (China Philanthropy Incubator)With support rom the U.S. Department o State, CiYuan is

designed both to increase the impact o social investments in

China, and to build the capacity and expertise o Chinese

nonprot organizations and their project partners to und and

implement additional eorts. For example, BSR is supporting

a new, cross-sector collaboration that includes a multinational

company (HP), a U.S.-based nonprot (the Taproot Foundation),

a local nonprot (Huizeren), and a local oundation (the Narada

Foundation) to advance the pro bono service model in China.

Our hope is that this model will allow companies and civil society

organizations to share skills and build stronger organizations

capable o partnering with a wider range o partners.

Migration LinkagesA our-year program in partnership with the John D. and Catherine

T. MacArthur Foundat ion, our Migration Linkages initiative helps

protect the rights o migrant workers who are moving between

developing countries. We connect multinational companies and their

business partners with civil society groups, international

organizations, labor unions, and governments to make the global

migration system more transparent and advance responsible

labor practices. In 2010, we launched a pilot program to protect

human rights in the recruitment process or migrant workers in

Malaysia and in the Persian Gul.

Green Ports and Energy Efciency

With new unding rom the Rockeeller Brothers Fund, and buildingon our experience with BSRs Clean Cargo Working Group,

this project is aimed at evaluating the environmental perormance

o reight carriers, and working to make ports and terminal

operators more sustainable. As a rst step, we identied ports

most signicant sustainability issues and developed a ramework

or ports to consistently report on their perormance on those

issues. This unding also will allow BSR to expand our Energy

Eciency Partnership, a China-based eort to enhance the

energy eciency o small- and medium-sized enterprises in the

Pearl River Delta.

MAJOR FUNdERS IN 2010: pRIVATE, CORpORATE, gOVERNMENT

British Consulate General in Guangzhou

GE Foundation

International Finance Corporation

Levi Strauss Foundation

MacArthur Foundation

Rockeeller Brothers Fund

Swedish International Development and

Cooperation Agency

U.S. Department o State

Driving Innovation Through Partnerships

Since BSRs ounding, we have been strongly committed to achieving our

mission through powerul partnerships. BSRs Partnership Developmentteam is dedicated to catalyzing collaboration between business and social

and environmental innovators in the public and nonprot sectors to make

progress on systemic sustainable development challenges.

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RESEARCh

We produce our research with two key business audiences inmind: executives responsible or shaping corporate strategy and

practitioners in charge o implementation. Over the past three

years, our output has grown considerably, and so, too, have the

ways we convey our ndings. Like many organizations, we have

expanded the media through which we deliver our research,

relying on traditional channels like reports, events, the BSR Insight,

and external publications in the eld o sustainability. In 2010,

we also expanded our infuence through the addition o social

media channels such as Twitter, Facebook, YouTube, and

Youku (a Chinese video-sharing site), al lowing us to reach new

audiences with our research.

RESEARCh IN 2010

In 2010, we ocused on climate and energy, ecosystem services,

human rights, and sustainable consumption.

In addition to oering insight on emerging trends and solutions,

BSRs Research eorts ocus on applied learning designed to

promote and accelerate innovative eorts across our member

company network, the wider business community, and the

public. We achieve this by marrying lessons learned through

project work with research and analysis that allows or wider

adoption o good practices.

Our climate and energy initiative provides one example o how

this works. Ater working on Walmarts supply chain energy-

eciency program in China, we produced a research guideshowing companies how to replicate Walmarts work with their

own Chinese suppliers. Based on that research, we launched

our Energy Eciency Partnership (EEP) initiative, which brings

BSR member companies together with major suppliers to

improve energy management. The group has three objectives:

1 Create a platorm to share investments and think collectively

about emerging issues.

2 Train suppliers in the Guangdong and Shanghai regions on

energy management.

3 Collect eective energy inormation or reporting to sponsoring

companies.

Initially comprising 10 companies and nearly 80 suppliers in theconsumer products; ICT; and ood, beverage, and agriculture

industries, EEP trained suppliers to develop energy-management

plans and introduced them to local energy-service companies to

help them pinpoint opportunities or improvement. As a result,

suppliers started more than 100 projects that will help them

conserve energy and reduce greenhouse gas emissions. In 2011,

we will broaden EEP participation and develop tools or bringing

energy-eciency innovations to scale.

Also in 2011, we will ocus on a new initiative related to sustainability

uturesidentiying the key trends that shape business success in

the industries with which we work. We will also explore the business

opportunities in making sustainable consumption a reality, and wewill build on our previous work looking at how the world is

responding to sustainability challenges and the implications or the

uture o business.

Our Research team tracks emerging trends and solutions central

to building sustainable business. We aim to help business leadersstay ahead o the curve and shape uture-oriented decisions on a

wide range o challenges, rom energy management, to sustainable

consumption, to human rights.

Actionable Research on Sustainability

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www.BSR.ORg/REpORT

REpORTS

BSR issued 25 major reports in 2010, covering

topics ranging rom sustainable supply chain

management and investing in women to energy

efciency and sustainable consumption.

EVENTS

To disseminate our fndings, we held 17 events

and webinars in 2010. These dialogues have

been eective in disseminating our fndings and

helping BSR members gain insight on key issues.

MEMBER ENgAgEMENT

A unique aspect o our Research program is

the ability to engage with companies on

environmental and social issues. In 2010, our

Research sta participated in more than 20

major projects designed to enhance the

sustainability o companies and industries.

BSR INSIGHT

The Insightis BSRs leading weekly publication

that provides members with current inormation

on sustainability trends and practices. In-depth

discussions ocus on key sustainability issues.

2010 RESEARCh FOCUS AREAS

Climate and EnergyEcosystem Services

Human RightsSustainable Consumption

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wicke roblems eman systems

tinkin an brokerin artnersis

to acieve sustainable solutions.

So e no loner innovate lineally;

e try to innovate systemically.

Juit Roin

PresidentRockeeller Foundation

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Our Impact | 29

BSR CONFERENCE

The BSR Conerence 2010 was a central gathering point orBSR member companies and a diverse array o partners

and innovators.

The 44 sessions at the Conerence provided the unique insights

and diverse perspectives business leaders need to shape a

sustainable uture. Breakout sessions ranged rom one-hour

conversations with industry experts, such as internet policy

specialist Rebecca MacKinnon and Walmarts global sustainability

leader Matt Kistler, to interactive, two-hour workshops covering

topics as wide-ranging as Sustainable Investment in Emerging

Markets, Responsible Sourcing and Confict Minerals, the

Art and Science o Reporting Water-Related Risk, and CSR

and Policy: Improving Collaboration Between Businessand Government.

I3 plenary presentations, a new addition to the Conerence,

eatured personal refections on the Conerence theme rom

visionary leaders. Highlighting universal aspirations and innovative

leadership, presentations rom the Museum o Modern Arts

Paola Antonelli, Women or Women Internationals Zainab Salbi,

and Nai A. Al-Mutawa, creator o the comic series The 99,

demonstrated how each o us has the potential to create

awareness and drive change on important issues like health

care, access to inormation, and education.

Plenary and breakout sessions emphasized how innovative

partnerships are essential to the creation o solutions with largeimpact. Company leaders who understand our globalized,

integrated, collaborative world will be best positioned to succeed,

said BSR President and CEO Aron Cramer. They will be the

ones who capture increased market share and access to markets

through new products and services that deliver sustainable value.

They will create new business models that take advantage o the

collaborative spirit o our times. And they will be more likely to

meet the needs o vast new markets in rising economies. The

result will be more prosperous companies and a more sustainably

prosperous world.

The BSR Conerence 2011 will be held November 1 through

4 in San Francisco. To register and get updates on speakers,

sessions, and more, visit www.bsr.org/conerence.

BSR Conerence 2010:

Innovate. Integrate. Inspire.

SAMpLE pLENARY ANd BREAKOUT SESSIONS

Plenary Address by Andrea Jung, Chairman and CEO,

Avon Products, Inc.

BRICs and Mortar: Finding Local Partners in

Emerging Economies

Closing the Loop: Minimizing Product Lie-Cycle Impacts

Green ICT: Reality or Virtual Reality?

Healthier People, Healthier Planet: The Link Between

Wellness and Sustainability

Plenary Address by Judith Rodin, President,Rockeeller Foundation

Risk and Reward: Incorporating CSR into Due Diligence

The Role o Business in Promoting Human Rights

For a complete list o session summaries, visit www.bsr.org/session-summaries.

The BSR Conerence 2010Innovate. Integrate. Inspire.broughttogether more than 1,100 senior business executives, entrepreneurs,

and leaders rom the public sector and civil society to connect with

their peers and dene the business models essential or uture success.

1,109Attendees

37Countriesrepresented

BSR CONFERENCE 2010 hIghLIghTS

95Speakers

7,626Connections via Conerencenetworking site

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I BSR ave requent-fier miles,

I oul be an elite fier. AMd is te

tir comany tat I ave brout

into te BSR membersi, an te

obvious question is, y kee

comin back? Te anser is tatte BSR members an sta

reresent leain-ee tinkin

an action at te intersection o

sustainability an business.

Tim Moin

Director, Corporate ResponsibilityAdvanced Micro Devices

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Our Impact | 31

MEMBERShIp

BSR is proud to support and partner with our powerul networko member companies, who share with us a ocus on building a

just and sustainable world. We work every day to provide our

member companies with value based on the insights, expertise,

and relationships weve built through years o hands-on work in

the eld.

BSR Membership:

A Global Network o Sustainability Leaders

In recent years, we have invested in becoming a more globalorganization to be closer to our member companies and to

secure the expertise and network to serve our members well.

In 2010, we continued on this path, and, as such, our member

network has become more geographically diverse. The highest

levels o growth in BSR membership in 2010 came outside

the United States, with our membership base in Asia growing

by 47 percent, and our base in Europe and the Middle East

growing by 29 percent. Our U.S. membership grew by 6 percent.

Globally, we ended 2010 with 285 companies in our membership,

and our annual retention rate remained high, at 90 percent.

A ull list o BSR members is available at www.bsr.org/members.

2010 BSR MEMBER SURVEY

In June 2010, we conducted a member-satisaction survey to

improve our understanding o the value and quality o BSR

membership. Results indicate that a strong majority o members

is satised with membership. Respondents indicated that they

highly value two particular benets: our insight and analysis on

sustainable business, and the network and collaboration

opportunities that BSR provides. In 2011, we will take steps to

reach more people in our member companies and to individualize

the member experience on our website.

In 2011, our member eventsincluding webinars, meetings, and

working groupscovered a wide range o topics, including:

CSR and Government Aairs: Confict or Convergence?

Climate Adaptation

The New Frontier in Sustainability: The Business Opportunity

in Tackling Sustainable Consumption

ICT and Human Rights

Local Content in Emerging Markets

250+BSR membercompanies

MEMBERShIp BY INdUSTRY SECTOR

Consumer ProductsEnergyFinancial ServicesFood, Beverage, and AgricultureICTMedia and EntertainmentMiningPharmaceuticals and BiotechnologyTransportation and LogisticsTravel and TourismOther

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Our peole


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Our People | 33

To be a leaer in sustainable business means cartin a at toars a orl

ere business creates value or bot sareolers an society. It means builin

markets ere business succees by roviin reater access to oos an

services or eole, an transormin markets ere business succees by usin

te orls resources more eciently. Toays leaers comete on te usie

o sustainability, not te onsie o rofiacy. Sustainable business is smartbusiness it a lon-term ersective.

Racel Kyte

Vice President or Business Advisory ServicesInternational Finance Corporation

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Our ability to achieve our missionworkingwith business to create a just and sustainableworlddepends on having sta memberswith diverse experiences, perspectives, andnetworks. With that in mind, we consciously

aim to create a team with a wide range obackgrounds. Our employees come to BSRrom leading companies, pioneering socialinvestors, human rights and environmentalorganizations, and the public sector.

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Our People | 35

Our People

ONE gLOBAL TEAM

For most o BSRs history, San Francisco has been our

headquarters. Today, our reality is dierent. While San Francisco

remains our largest oce in terms o sta, we no longer think

o ourselves as having a single headquarters and regional

outposts. Instead, we operate as a single organization with

several integrated oces and management spread across

the organization.

Over the past three years, we have grown and decentralized our

team and activities. At the beginning o 2008, 80 percent o our

team was in San Francisco. Today, less than hal o our 102

employees are in San Francisco, and nearly 40 percent o our

sta is based outside the United States. BSR is now spreadacross seven oces in Asia, Europe, and North America, with

representatives in Latin America. The center o gravity within

the United States has changed as well, with our East Coast team

growing quickly in the past 18 months to 13 people working

rom New York and Washington, D.C.

To align management with our new reality and build a more unied

organization, we made various changes to our management

team, which now includes senior sta rom Hong Kong, New York,

Paris, and San Francisco.

During 2010, 19 employees let BSR, resulting in an overall sta

turnover rate o 20 percent. Employees let or a number o reasons,

including the pursuit o higher education, amily relocations, or orreasons o poor perormance.

We continued to host interns in our various oces, introducing

students rom the Chinese Academy o Sciences, Coro, HEC

Paris, the University o Caliornia, Berkeley, and other universities

to careers in sustainable business.

In 2011, we expect to continue growing, with an emphasis on

expanding our teams in New York, Paris, and our three Asian

oces. We will also continue to oer our employees opportunities

to spend time in other oces.

STAFF dEVELOpMENT

In 2010, we launched a new employee-development initiative,

with the objectives o increasing sta training and establishing

clearer career paths. Training in 2010 ocused on acil itation and

public speaking skills, writing, and coaching.

In 2011, we are planning to increase our support o employee

development. All employees have a speciic proessional-

development goal based on their unique skills and career

aspirations, and we are organizing relevant trainings or sta at

all levels. We are also revitalizing our career-manager program,

in which every employee has a career manager who provides

guidance and career coaching and manages our 360-degree

eedback process. We will also provide more guidance to thesemanagers to enable more eective and successul

career management.

EMpLOYEE ENgAgEMENT

Each year, we undertake an employee-engagement survey to

identiy key areas in which employee experiences at BSR can

be improved. In response to the 2010 survey, 77 percent o

respondents selected agree or strongly agree in response

to questions about their level o positive engagement at BSR.

Sta consistently agreed that they had the opportunity to do

their best every day, that they elt their colleagues cared about

them, and that they had opportunities to learn and grow. The

survey also revealed that 35 percent o sta did not eel theywere receiving enough recognition or praise on a regular basis.

BSR plans to address this concern in 2011.

dIVERSITY

We continue to strive to be an inclusive and diverse workplace.

All told, our sta members speak more than 15 languages and

dialects and represent 13 nationalities. Women comprise 54

percent o our global sta, and men make up 46 percent. At the

director level and above, 30 percent are women and 70 percent

are men.

GLOBAL STAFF

DIRECTORS AND ABOVE

30%Women

70%Men

54%Women

46%Men

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Depending on whom you ask, youll geta very dierent response to the question,

What do you do at BSR?

From translating emerging sustainability

trends into practical solutions or

companies to promoting CSR in China,

the work individual BSR sta members

do contributes in a unique way to our

mission. To provide a sense o the various

ways we accomplish this, we asked

several BSR stain each o the regions

where we have ocesthree questions:

about their role at BSR, how they

personally measure their impact, andtheir proudest moment in 2010.

Measuring Our Individual

Impact: Three Questions

or BSR Sta Members

What is your role at BSR?I provide companies in Europe with insight

based on their needs and based on trends

that impact their business. I help companies

project themselves beyond the short term

to look at the issueslike climate change

and human rightsthat will be relevant in

the long term and that could become

drivers o operational eciency.

How do you measure the impact o

your work?

The simplest measure I use is the level o

retentionwhether our member companiesare renewing their membership. A more

qualitative way I measure impact is by

looking at what our insight means on the

ground: the level o GHG emissions that

will not be emitted in the coming years,

or what a human rights initiative that we

connect to operations will mean or some

local communities, or instance.

Whats the biggest impact you

experienced in your work at BSR

in 2010?

I also measure the success o my work

based on whether a pilot project turnsinto something on a larger scale, which

happened several times in 2010. A client

came in with a specic issue, I provided

insight based on my understanding o

the business shes in, she got it, and then

her company made the decision to move

that project to the next level and embed

it in its operations.

What is your role at BSR?As a member o the management team,

I spend a lot o time thinking about the

uture o BSRwhere were going, how

to structure the organization, and how

to bring new ideas and new people into

the CSR space. My operational role is

to oversee several o BSRs unctions

including our Conerence and global events,

and the Partnership Development team

as well as our U.S. East Coast oces.


your work?The most compelling impacts are in the

subtle shits o the private sector. Ten

years ago, when I joined BSR, I was doing

a lot o convincing and cajoling companies

that sustainability was important. But

ater years o BSRs thought leadership,

persistence, and sheer sweat equity,

sustainability is now an accepted

cornerstone o a successul business.

Our ngerprints are everywhere in many

o the worlds largest companies and

in industries that were not looking at their

impacts beore.Whats the biggest impact you


in 2010?

The work I led with the travel and tourism

sector ramped up quickly, and those

companies are having a tremendous

impact on the environment, guests, and

employees in hotels. Eventually, it will

aect how we all make more sustainable

travel choices, infuencing one o the

worlds largest and most visible industries.

FARId BAddAChE

Director, EuropeParis ofce

KARA hURST

Vice PresidentNew York ofce

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Our People | 37

What is your role at BSR?

I translate emerging sustainability trends

into practical solutions or companies.


your work?

Internally, its the number o ways my

colleagues apply my research and build

on it in their own projects with companies.

Externally, my personal metric isnt a

numberits based on the discussions

(positive and negative) I have with member

companies who call with reactions to

my research. That helps me rene myuture work.



in 2010?

I helped trigger someones aha moment.

In a workshop or a beverage company

struggling with community opposition to

its operations, our objective was to develop

a new approach or the company to

engage local communities. Ater the rst

day, a company representative said her

understanding o engagement hadundamentally changed, and that she

needed to shit her central ocus on water

to communities.


I provide global technology leadership to

support BSR. But what I do on a daily

basis is not just about technology; its

about understanding what makes another

department tick. I am an extrovert, and

I enjoy talking with my colleagues about

how I can make their work lives more

ecient and productive.


your work?

One personal metric is that my colleagues

still like working with me. I eel a sense ovalue when coworkers ask me about

something they need and use inormation

technology in the solution.



in 2010?

My colleagues have told me their day-to-

day lie is easier because o my eorts,

which means a lot considering BSR stas

busy travel schedules. Over 95 percent o

our sta have laptops. Theyre not at their

desks rom 9 to 5; theyre in a hotel room,or an airport terminal, or a taxi. Technology

enables them to work on sustainability

rom anywhere in the world, at any time.


Broadly speaking, I promote CSR

in greater China and set the strategic

direction or BSR projects by providing

counsel to BSRs member companies

and their supply chain partners in China.

Another part o my job is people

development. I build and bring up the

China teamrom zero to more than

two dozen sta now.


your work?

In the beginning, in 2005, CSR in Chinalargely meant the policing o labor

practices in export actories. But in the

past ew years, I have seen an increasing

awareness o CSR through BSRs China

Training Institute, particularly in the supply

chain. Our eorts also have extended

to many other issues, and to work with

Chinese state-owned enterprises. People

now have a more proactive attitude

through our advisory work.


experienced in your work at BSRin 2010?

I am most proud o our Labor Relations

Practitioner (LRP) initiative, which has

brought together businesses and

national and local government to train

1,500 LRPs on labor rights and benet

1 million migrant workers at more than

1,000 actories.

LINdA hwANg

Manager, ResearchSan Francisco ofce

KIRK LONg

Director, Inormation TechnologySan Francisco ofce

wEI dONg ZhOU

China DirectorGuangzhou ofce

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Our Callenes


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Our Challenges | 39

To be a real leaer in sustainable business, it is necessary to balance te nees o

te customers an sareolers it tose o te lanet an uture enerations.

Leaersi oten comes it emans or immeiate rotability an year-on-year

rot, ereas sustainability oten requires innovation, investment, an a loner-

term vie. A real leaer in sustainability must tereore be oen to takin risks an

reenin success. Climate cane ill require ne metos o rouction anistribution in ic sustainable businesses ill lay a key rolebut only i tere

are real leaers reay to callene traitional tinkin.

Kumi Naioo

Executive DirectorGreenpeace International

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As we look back on 2010, we are

proud o our many successes

and equally mindul o the hurdles

we ace in achieving our mission.

They all into two broad categories:

structural barriers to progress and

BSRs own shortcomings.

Last year, we also reported on

our challenges. In 2010, we made

progress in surmounting some

o them, and we continue to work

on others.

We start this section with a review o our perormance inareas we highlighted in the BSR Report 2009.

FINANCES

Ater a fat (and dicult) year nancially in 2009, we had an

exceptionally strong 2010. We attribute some o this to

external actors: the stabilized economy and ongoing interest

in sustainabili ty.

ORgANIZATIONAL FOCUS

We also believe that the time we invested in rening our strategy

in 2009 paid o in 2010. As part o our eort to increase our

ocus, we spent time strengthening our prociency and eciency

in the oerings that are most in demand by our membercompanies, and we dedicated sta to leading our eorts on

topics such as human rights and climate.

gLOBAL INTEgRATION

We made good progress toward a more globally integrated

organization in 2010. Early in 2011, we decided to add our Asia

and EMEA regional managing directors to the core management

team. We also aimed to reinorce the One BSR model by

phasing out the notion that San Francisco is our headquarters,

moving to an organizational model that relies on all o our

oces as hubs that work together through integrated project

and unctional teams.

MEASURINg OUR IMpACTS

We did not pursue systematic eorts to measure our impact

in 2010, although we have established a more comprehensive

and consistent approach to implementing eedback rom

project reviews.

BOARd dIVERSITY

In 2009, we identied the need to increase the diversity o our

board. This is an area where we did not make progress in 2010,

but we expect that new directors in 2011 will contribute to a

more diverse board.

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Our Challenges | 41

KNOwLEdgE MANAgEMENT

We were slower than anticipated in 2010 in improving both our

systems and our culture o knowledge-sharing and management.

We did make progress, however, and have reinorced that by

adding a new position overseeing operations or our project teams.

As we continue to decentral ize our teams, the importance o

knowledge-sharing and management grows.

We also continue to ace multiple challenges in the external

environment. Two issues in particular stand out.

FOCUSINg ON pUBLIC pOLICY

The great optimism o 2009, in advance o the Copenhagenclimate summit, has now aded, and many have lost hope

that policy makers will provide reliable rameworks to support

sustainable prosperity. Adding to this, business infuence

over public policy too oten prioritizes short-term needs over

policy structures that avor long-term sustainability. BSR will

continue to make clear in all our activities how important public

policy is to the achievement o sustainability goals.

ShIFTINg AwAY FROM

CONSUMpTION-BASEd ECONOMIES

Most economiesand businessescontinue to measure their

success and well-being based on consumption-based models.

In 2010, numerous polls showed that consumer interest insustainability continued to wane rom its pre-recession heights.

We launched our sustainable consumption initiative in 2010,

and we continue to research and advance the concept as the

new rontier in business success. Progress is, however,

admittedly slow.

We continue to ace additional challenges concerning ourinternal operations.

MANAgINg gROwTh

We have been ortunate to add to our capacity in recent years,

enabling us to make urther progress toward our mission. Growth,

o course, also brings challenges, especially in the area o systems

and shared-services support. For example, we are not yet able to

invest in a ully unctional video-conerencing system, even though

that would be tremendously useul or our globally integrated

organization. We are also outgrowing our current model, in which

our shared-services unctions are centralized in one location, but

we are not big enough to invest in resources in all locations. We

also ace the need to maintain and reresh our culture, as well aspromote a shared sense o community and purpose across the

dierent BSR oces.

OpERATINg A hYBRId ORgANIZATION

We rmly believe that a mission-driven organization working

with business can deliver great results. As we have discussed in

the past, we choose to maintain our hybrid model because we

believe that a membership organization that delivers top-fight

consulting along with research and collaboration opportunities is

well-positioned to solve the diverse challenges o building a just

and sustainable world.

Each day, we make decisions about how best to balance theseactivities, and we inevitably have to make trade-os. For example,

in 2010, our Research team aced growing demands to lend

its expertise to consulting projects. This oered the chance or

direct impact but also meant that we deerred some o the

research we had hoped to complete. In 2011, we have addressed

this by reocusing the Research team on sustainability utures,

and we will be devoting more resources to the team to deliver on

that strategy.

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Through the eorts o our global team and partners, BSR

experienced healthy growth in 2010, as the global economy

stabilized and interest in sustainability remained very high.

Overall revenue increased 21 percent, to US$15.1 million.

All revenue categories grew in 2010, driven by growth in

grants (48 percent revenue increase over 2009) and consulting

(15 percent increase). Revenue rom the BSR Conerence 2010increased 34 percent, and membership revenue was up

12 percent. Overall, BSRs annual revenue has nearly doubled

up by 86 percentin the last our years.

Expenses increased 16 percent in 2010 as we expanded

our sta to 94 employees in seven oces to meet the

increased demand or our services, while keeping tight

control over discretionary expenses.

Financial Statement

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BSR FINANCIAL pERFORMANCE (FIVE YEARS)

Visit www.bsr.org/report or ull, auditedfnancial statements.

0

4

2

6

8

10

12

14

16

(in millions o US$)

15.1

12.512.8

8.1

12.712.7

8.3

Financial Statement | 43

ExpensesRevenue

14.7

2006 2007 2008 2009 2010

9.4

10.3

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AcknowledgmentsAbout This Report

This Report was produced by Faris Natour, Eva Dienel, Linda

Hwang, and Amon Rappaport. We would like to thank the case

study authors and the entire BSR sta or their contributions.We would also like to thank the BSR member companies proled

in these pages. Finally, we would like to thank Tomorrow Partners

or bringing this Report to lie visually, and we appreciate the help

o our riends at Hemlock Partners.

phOTO CREdITS

All photos are copyright BSR, except or the ollowing:

Inside ront cover: Novo Nordisk

Pages ii (let) and iv: World Economic Forum

Pages ii (middle) and 3 (right): Daria Hueske

Pages iii (second rom let) and 33: Sumitomo Trust and Banking

Pages iii (second rom right) and 39 (right): Tong LamPage iii (right): Beijing Eastphoto stockimages Co., Ltd/Alamy

Page 2 (let): Louis Vest, Houston Pilots Association

Page 5 (let): Christopher Herwig

Page 5 (right): Margarita Azucar

Page 6 (let): Nick Borzo

Page 11 (let): Marc Lewkowitz

Page 12 (middle): Global Reporting Initiative

Page 17: Best Buy

Page 19: Hyatt Hotels

Page 20: David J. Green/Alamy

Page 21: Maersk Line

Page 32 (middle): International Finance Corporation

Printed by Hemlock Printers with ultra-low-VOC,

vegetable-based inks on Mohawk Loop paper made with

Forest Stewardship Council-FSC certied, 100 percent post-

consumer-waste ber that was manuactured with wind

power and processed chlorine-ree. 4,167 pounds o carbon

dioxide or greenhouse gas emissions rom the paper lie

cycle, the transport, and the printing o these items have

been oset through investments in energy eciency and

non-ossil uel energy technologies.

Design: Tomorrow Partners, Berkeley, Caliornia

This is BSRs ourth annual Report, in which we provide an

overview o our activities, accomplishments, and the

challenges we aced in 2010. Our Report also includes ourperspective on the current state o sustainable business,

and what we see as the most important steps companies

can take to contribute to a just and sustainable world.

Ater careul consideration, we decided not to measure

and report on our environmental ootprint this year.

While that inormation is important, we believe our most

material sustainability impacts lie in our work helping BSR

members and clients reduce their own impacts, and, as

such, we have ocused our reporting on those activities.

Following the launch o this Report, we will convene an

external stakeholder group to review this publication and

provide eedback that we can apply to the BSR Report2011. As a result, this Report did not undergo external

stakeholder review prior to publication.

While BSRs nancial results included here have been

audited, other Report content has not undergone

third-party assurance.

For questions and comments about this Report, email

us at [email protected].

100%

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A leader in corporate responsibi lity since 1992, BSR works with its global network o more

than 250 member companies to develop sustainable business strategies and solutions

through consulting, research, and cross-sector collaboration. With oces in Asia, Europe,and North America, BSR uses its expertise in the environment, human rights, economic

development, and governance and accountability to guide global companies toward creating

a just and sustainable world. Visit www.bsr.org or more inormation.

BSR BOARd OF dIRECTORS 2010

Chairman: Mats Lederhausen, Founder and Chie Executive Ocer | Be-Cause LLC

Tony Brown, Senior Vice President, Global Purchasing | Ford Motor Company

Bob Corcoran, President and CEO | General Electric Foundation

Aron Cramer, President and CEO | BSR (Ex-Ofcio)

Roxanne Decyk, Retired Executive Vice President o Global Government Relations | Royal Dutch Shell

Robert Dunn, President and CEO |Synergos Institute

Fadi Ghandour, Founder and CEO | Aramex International

Richard Gillies, Director o Plan A and Sustainability | Marks and SpencerColin Le Duc,Partner| Generation Investment Management LLP

Pamela Passman, Vice President, Global Corporate Aairs | Microsot Corporation

Tae Yoo, Senior Vice President, Corporate Aairs |Cisco Systems, Inc.

Je Zalla, Co-Founder and Managing Director |Diatom Ventures

BSR SENIOR MANAgEMENT

Aron Cramer, President and CEO |San Francisco

Kara Hurst, Vice President |New York

Dan Luscher, Chie Financial Ocer |San Francisco

Eric Olson, Senior Vice President

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