Xerosphere

By Aron Cramer, President and CEO

Now that oil has stopped flowing into the Gulf of Mexico, it is time to consider the lessons that can be drawn from the Deepwater Horizon spill.

Most of our collective attention has focused on what went wrong on the rig. We’ve also spent a lot of time wondering why the federal government couldn’t summon the wherewithal to plug the leak, and even whether President Obama was angry enough.

But any honest assessment of what’s gone wrong must lead us right back to ourselves. The common thread that runs from the spill in the Gulf to the mortgage crisis to the spate of suicides at the Chinese factory producing iPods and iPads is insatiable consumer demand for more and more, at lower and lower prices. We all like inexpensive gasoline, the latest shiny electronic gadgets, and mortgages cheap enough to let us trade up to a larger house. But as we have seen this year, neither our economy nor our planet can sustain this demand.

The good news is that a more promising commercial model—one based on “sustainable consumption”—is emerging as a viable alternative. This concept, which is being embraced by corporate mainstays like Nike, Best Buy, Levi Strauss & Co., and Unilever, boils down to one simple idea: delivering more value with less stuff.

For too long, sustainability has been understood to mean only limits and restrictions. Sustainable consumption turns this idea on its head, as a way to unleash business innovation to develop products and services that deliver better living standards without further burdening our already overtaxed planet.

Some companies have already figured this out. Best Buy is investing in home information-management systems that provide not only video on demand, but also data that help you reduce your home energy bill. Nike is exploring “closed loop” manufacturing models that take most of the waste out of its athletic footwear. Levi’s is calling on customers to wash their 501s in cold water (and turn used jeans over to Goodwill), slashing the energy used to clean your clothes, which in turn saves money. eBay’s business model, which essentially recycles mountains of goods, prevents the need to devote new resources to make new products.

The beauty of sustainable consumption is that it doesn’t rely on all of us becoming better or more virtuous people. Instead, it aims to make every consumer a partner with companies in constructing an economy that uses natural resources more wisely. This will limit the need to “drill, baby, drill” in every corner of the globe, and it will quell our hunger for ever more exotic financial instruments and Chinese factories that can pump out new products faster and faster.

Sustainable consumption is also the best possible safeguard against a systemic natural resource crash that could be every bit as disruptive as the crash of the financial system in 2008. The evidence suggests that the risk of that is real. It appears that 2010 will be the hottest year on record, heightening the urgency to solve climate change. The Global Footprint Network estimates that we are using 40 percent more resources today than the planet can supply, and that this will rise to 100 percent by the middle of the next decade. If we are to maintain advances in living standards around the world, it’s clear that we need new business models, as well as innovation and new public policies, to make the leap to a genuinely sustainable economy.

It’s tempting to finger BP or Goldman Sachs as the exemplars of all that’s wrong with the economy. But let’s not debate whether things went as they should have in the Gulf or on Wall Street: They didn’t. Instead, let’s focus on the cure. The post-recession, post-oil-spill economy should embrace a vision of business—and consumption—that creates value without causing blowouts either on oil rigs or in financial systems. If we do that, we will be one step closer to an economy that can deliver prosperity for a planet with seven billion people.

By Aron Cramer, President and CEO

In a year when all eyes have been on the oil spill in the Gulf, automobile recalls, and the ongoing debate over behavior in the banking system, the Wall Street Journal—inexplicably—weighed in today by publishing a piece titled "The Case Against Corporate Social Responsibility." University of Michigan business school professor Aneel Karnani's piece was nothing more than a rehash of the arguments first made more than four decades ago by Milton Friedman. His assertion that delivering returns for shareholders is the only responsibility of business was wrong then, and it is wrong today, as even Jack Welch now acknowledges.

These arguments get trotted out every so often, as The Economist did in a 2005 cover story that it essentially recanted in 2008. Still, it is incomprehensible to me that anyone would still argue that companies considering the economic, social, and environmental impacts of their operations are making a mistake. Not surprisingly, Karnani could not provide a single example of when corporate responsibility has inflicted harm. The weak support for his arguments may be because there is such considerable evidence to the contrary. Most companies have discovered—to their benefit and ours—that considerable opportunity awaits companies that leverage their resources to tackle the world's biggest challenges.

I have the privilege of leading BSR, an organization that works with nearly 300 member companies—including some of the largest in the world—to integrate social, ethical, and environmental principles into their business strategies. In my experience, companies like GE, Nike, Ford, and Hitachi embrace corporate responsibility both as a means of advancing their commercial interests and to address big global challenges like health, energy, mobility, and efficiency. The examples of their impact are easy to come by: By developing more efficient trucks, Walmart has saved immense amounts of money while reducing its logistics costs. Nike has used sustainability to innovate new products such as those in its Considered line, which are designed with fewer toxics and waste and more environmentally preferred materials. And Unilever is using corporate responsibility to find new market opportunities for everyday products including soap and tea. What's more, new companies such as Method, and older enterprises such as Seventh Generation have built their very identities around environmental questions.

These are just a few of the cases that prove that companies focusing on corporate social responsibility not only generate profits, they also benefit society. Indeed, if, as Karnani posits, a focus on CSR were "dangerous," we would not see so many companies reporting publicly on their corporate responsibility efforts, nor would we see so many business school students (including many of those at the University of Michigan, where Karnani teaches) flock to work for companies that embrace a social purpose along with their business interests.

The businesses that embrace corporate social responsibility are best positioned to grasp the market opportunities in our fast-changing world. Karnani does business a disservice by rejecting an idea that has great power and potential.

Professor Karnani teaches at the Ross School of Business at the University of Michigan. That's where I'll be in October, speaking at the annual conference of Net Impact, a wonderful organization that promotes CSR in business schools. I suspect that the 1,500 business students who attend the conference each year will have something to say about Professor Karnani's "case" against CSR. I wonder if the good professor will try to convince these ambitious business students that they should forsake their interest in CSR. Maybe he'll be out of town instead.

By Aron Cramer, President and CEO

Leaving Heathrow in mid-July, I picked up two novels for my summer vacation reading. One, Ian McEwan’s Solar, was an obvious choice. What could be better than seeing one of my favorite authors, anointed by many as the reigning champion of English-language fiction, take on the topic of renewable energy? The other book, Financial Times columnist Lucy Kellaway’s In Office Hours—her latest take on businesspeople behaving badly—was ostensibly a light read, with little link to sustainability.

With my vacation now (sadly) in the past, I can say that both books are worth reading. Sustainability is at the center of McEwan’s book, and is but a supporting actor in Kellaway’s. His book focuses on clean tech, and hers is about how a major oil company deals with sustainability. McEwan’s lead character, an academic who stumbles into a role promoting solar energy, is a largely unsympathetic man, who occasionally does the right thing—though usually for the wrong reasons. Kellaway’s two protagonists are essentially decent women who succumb to temptation and poor judgment.

Surprisingly, Kellaway’s book, with the folly of workplace affairs at its center, actually provides more insight about how the transition to low-carbon energy is likely to play out.

Her fictional oil company, Atlantic Energy, has an ambivalent relationship with sustainability. Her lead character, a member of the company’s board, shows flashes of genuine interest in sustainability, and strains to make the financial case for new investments in a volatile economy. The CFO dreads having to sit down with environmental campaigners. The company is aggressively looking at whether a major investment in renewables can be profitable, while remaining culturally and financially tied to oil, to the point of putting on old barrel in its lobby, despite the apparent violation of its own health and safety rules (real energy company execs will find this implausible).

Meanwhile, McEwan too often plays his title character, Solar, for laughs. It’s not news that advocates of renewable energy are fully human, with the same foibles that afflict everyone. Worse, many of the laughs are obvious, such as the misadventures of Michael Beard, the scientist at the center of the book, who exposes himself to the frigid temperatures in embarrassing ways on his obligatory trip to the Arctic.

Kellaway, on the other hand, who uses human comedy as the foundation of her book, shows how hard it is for new paradigms to break through the politics and economics of sustainability amid the daily drumbeat of stock analysts who can drive down a company’s share price for the smallest misstep of unconventional statement.

It’s likely that McEwan’s book will be remembered much longer than Kellaway’s, though hers says more about how hard it is to make change happen. Hers is also funnier, and more sympathetic.

But both books reinforce the crucial point, often forgotten by all of us in the sustainability world, that, all too often, human and organizational behaviors affect outcomes as much as climate summits, technological innovation, or grand pronouncements by political leaders. Fiction, it turns out, has much to teach us about sustainability.

These two books are good reads for anyone lucky enough to still be looking forward to their summer vacations. And they sure beat taking a CSR report to the beach.

By Cody Sisco, Manager, Advisory Services

Decisions about how we spend our money can affect our happiness, but only under the right conditions. Based on the emerging social science of “happiness studies,” and as reported by the New York Times, “our types of purchases, their size and frequency, and even the timing of the spending all affect long-term happiness.”

Beyond a certain level required to meet basic needs, more income and purchasing power don’t necessarily translate into greater happiness. However, money spent on leisure and services—including vacations and meals—and on calculated purchases that are planned and anticipated over substantial periods of time, can add to happiness. This has implications for sustainability and our shift toward sustainable consumption.

Companies should seek to understand the links between sustainable consumption, happiness, and customers, and use this insight to change what products and services they offer and how they market them.

Through our recent report and through workshops we are holding with companies, BSR is exploring opportunities for business to champion sustainable consumption. Here are some initial tips for how companies can create value (and happiness) for consumers without creating more stuff:

• Product design: Embrace the concept of “less (stuff) is more (happiness).” Understand the potential links between reducing environmental impact while creating more value for consumers.
• Consumer engagement: Find ways to build social interactions, which increase happiness, into your marketing strategies. Social networking sites like Yelp and Facebook can create communities that are linked to your products and services.

By Dunstan Allison Hope, Managing Director, ICT Practice, Advisory Services

Recent restrictions announced by the governments of the United Arab Emirates and Saudi Arabia on the use of BlackBerry services—citing various national security concerns—have shed light on challenging ethical questions that are growing in importance for major global companies across the whole information and communications technology (ICT) industry.

If you’ve closely followed mainstream media over the past few years, it would be understandable to conclude that almost all responsibility for protecting freedom of expression and privacy online lies in the hands of Google, Yahoo! and Microsoft. The media became so obsessed by a small number of high-profile brands that it dangerously drew our collective attention away from issues of great relevance elsewhere in the industry.

But over the past 18 months, attention has started to gradually shift. The (now defeated) Green Dam, Youth Escort proposals in China highlighted that PC brands could play a major role in restricting freedom of expression where governments demand it, while the 2009 Iranian elections sparked a debate about the ethics of selling telecommunications equipment into countries with poor human rights records.

So now that internet services providers, PC brands, telecoms network equipment manufacturers, and handset firms have all felt the heat on privacy and freedom of expression, what does this say about human rights in the ICT industry?

Here are three key points for ICT companies:

• First, human rights of freedom of expression and privacy are directly relevant for all companies in all parts of the ICT value chain. Companies can no longer say: “That’s mainly an issue for internet companies, but not really for us.”
• Second, there is a need for the ICT industry and its stakeholders to better understand how the ICT network—as a whole ecosystem, rather than as separate components—impacts human rights. Different parts of the ICT value chain are highly interdependent and the system as a whole can be designed to minimize risks to human rights at every stage of the ICT value chain.
• Third, we’re diving deeper and deeper into a game of cat-and-mouse between governments and ICT companies, where governments will seek to impose increasingly sophisticated surveillance and filtering technologies and methods on (unwilling) companies.

The challenge is to turn these conclusions about the relationship between human rights and the ICT industry into specific actions for individual companies. As a minimum, I’d advise ICT companies to start with two things:

1. Undertake a companywide human rights assessment to understand which products, services, technologies, operations, and customers present the greatest risks (and opportunities) for human rights. In today’s game of cat-and-mouse, it pays to be one step ahead.
2. Become active participants in global, industrywide dialogues (such as the Global Network Initiative) to drive collaborative, pro-human rights agendas in the ICT industry as a whole.

Dunstan is co-author of Big Business, Big Responsibilities (Palgrave MacMillan, 2010), which includes a chapter that explores human rights in the internet age.

By Pei Bin, Director, China Partnership Development

At the recent Aspen Institute Socrates Summer Seminar, I attended the session “Soft-Power: U.S. Leadership in a Hardball World,” moderated by Professor Joseph Nye. The session sparked my own reflections on the existence (or lack thereof) of soft power in China. While everyone at the Aspen Institute expressed strong and positive interest in China, the majority of the United States still views China as a threat. As our President and CEO Aron Cramer once said: “One thing our countries have in common is that we see our weaknesses through the prism of the perceived power of the other country, and sometimes we lose sight of the balance between the two.”

As a Chinese national, China’s economic confidence is clear to me, but despite this, the country still lacks any sort of soft power—or, in other words, a strong global profile and image abroad. China’s dramatic economic development—driven by top-down policy support and bottom-up entrepreneurship at all levels and across all regions—was achieved at the cost of cheap labor, environmental deterioration, and the exploitation of natural resources. And even though China has brought 500 million people out of poverty, the majority of the population is still living in remote, mountainous regions and fighting for survival daily.

I echo David Shambaugh’s sentiment from a recent article in the International Herald Tribune: “China will not develop its soft power until it develops civil society.” The Chinese government needs to do a lot more to enable civil society development in China. For the past 30 years, the government has committed to further reforms to foster the development of trade associations and private foundations but with a concomitant desire to control the process. The growth in the number of private foundations in the past several years suggests the growing space for civil society in China; however, there is a lot more the government must do on this end.

In addition to a civil society, China needs to provide more support and guidance for Chinese companies that want to expand their operations overseas. There are nearly 60,000 trade associations and chambers of commerce in China, but their roles are quite limited. This is a stark contrast to the EU trade associations and governments that actively support companies’ internationalization efforts.

Additionally, Chinese companies that go abroad need to step up their efforts to engage local communities and stakeholders in their countries of operation. Many of these international projects have been contracted out to construction companies that have no knowledge of community development or sustainable development and lack international management skills. While they have helped build hard infrastructure, such as roads and clinics in Africa, Afghanistan, Peru, and beyond, they have failed to empower local communities, and as a result, have further tarnished China’s international image.

China is certainly an economic power with regard to volume, but it definitely cannot be considered a powerful international leader without raising its global profile and image abroad. Chinese companies should focus more on the social return on investment and driving positive social changes in local communities where they operate.

By Faris Natour, Director, Research & Innovation

On Wednesday, the UN General Assembly declared that access to safe and clean drinking water and sanitation is a human right. While not directly legally binding, this step will end the longstanding debate about the status of water as a human right. With almost 900 million people worldwide without access to clean water this long-overdue declaration reflects the importance of water as a sustainability challenge. It is also good news for business.

All companies have significant water impacts, whether as users, service providers, or innovators of technology that enables access to clean water. For these companies, the UN’s declaration provides more clarity on their responsibilities and represents an opportunity for innovation and leadership.

Clarity
There is a growing global consensus around corporate responsibility for human rights, which is based on the framework introduced by UN Special Representative John Ruggie. While it is the state’s duty to protect human rights, companies have a responsibility to respect all human rights, including the right to water. Respect is defined as “non-infringement,” ensured by proactive due diligence measures such as policies, impact assessments, management systems, and reporting.

Widely supported and endorsed by governments, businesses, and civil society groups around the world, this framework is something companies can and should use to help understand their water impacts and to manage those impacts effectively. Ruggie’s baseline standard provides a clear, globally applicable framework for corporate responsibility in this area.

Opportunities to Innovate
The growing challenge of water scarcity is also an opportunity for business. It is an opportunity to create new ways of providing value using less or eventually no water. It’s also an opportunity to develop new technology and more efficient production processes to help minimize water use and pollution. There are many good case studies of companies leading the way. Unilever, for example, has developed laundry detergents that require less water when used by the consumer, helping the company win new customers and preserving water in developing countries that are suffering from water scarcity.

Business Can Lead
Leading companies like Unilever have seized the opportunity for innovation. Others, like Pepsi or Suez, the French water-services company, publicly recognized water as a human right long before this week’s UN declaration. While much work remains to be done, they serve as good reminders that business can play a leading role in the effort to help the world’s poor gain access to clean water and sanitation.

I am sure those involved in crafting this declaration will disagree, but this was the easy part. The hard part is still ahead: We need more leadership, more ideas, and more action from business, governments, and civil society to realize this right for all human beings. If we don’t do anything, the declaration will have been meaningless.

By Eric Olson, Senior Vice President

The publication of BSR’s latest report on sustainable consumption, which describes the topic as the “New Frontier in Sustainability,” gives me cause to reflect on more than a decade of work in the field. I entered the “field” of sustainability under the influence of corporate pioneers such as Ray Anderson of Interface and thought leaders such as Paul Hawken, Amory and Hunter Lovins, and Bill McDonough, who together shined a bright light on the role that business can and must play in the transformation of our global economy from one based on the linear “take-make-waste” industrial model of the 20th century to one that recognizes the need to fully account for environmental and social impacts on a cyclical, “cradle-to-cradle” basis.

The current wave of interest in sustainability (and sustainable consumption) can therefore be seen, in part, as the “mainstreaming” of ideas that have been around for a long time. At the same time, it is important to note that we have learned a lot over the last 15 years—both about the nature of the challenges and opportunities we face (the “what”) and the tools and approaches we need to address them (the “how”).

So when we refer to sustainable consumption as the “new frontier” in sustainability, what we have in mind is the translation of thought leadership into action—sustained action, on a massive scale. The report argues for the practical application of a systems-based approach, in which tangible near-term actions such as radically increased resource efficiency buys us the additional time needed make the more radical investments—in things like alternative energy sources and materials and behavioral and policy changes—that will be required to achieve a truly sustainable economy in the long run.

By Aron Cramer, President and CEO

As the 2010 reporting season winds down, and the debate over integrated reporting heats up, it is a useful time to take stock of where reporting is today, and where it may be headed.

Integrated reporting is the topic du jour for report wonks. It's an idea whose main selling point is persuasive: requiring environmental, social, and governance (ESG) matters to be included in the single report of record a company issues would be a great step toward the mainstreaming of sustainability into business decision-making.

Maybe.

It's equally possible that such a step could have the unintended consequence of reducing, or dumbing down, the ESG content on which companies report. There are two primary reasons for this.

First, the regulators--and company lawyers--will begin to take a much greater interest in the assertions made about sustainability performance. I've heard this from multiple senior executives. It is not hard to imagine this having a chilling effect on some of the aspirational language contained in reports. And as most company report managers will tell you, it is precisely such aspirational language that makes a report a tool for advancing company strategies and commitments.

Second, there is only so much space in an integrated report. As a practical matter, it's likely that integrated reporting could result in a decline in the amount of information being presented in a formal report. The obvious fix to this problem is to provide information through other channels, such as social media, or issue-specific reports. But if the answer to this problem is to create new vehicles for ESG information, doesn't it defeat the purpose of an integrated report in the first place?

What's more, the vision of integrated reporting is also muddied by the ever-changing media landscape. Integrated reporting is rising as a concept just as the information world is disintegrating. With people seeking out their own take on information and news, and with multiple sources ready and able to deliver just that, it may be that the concept of an integrated report is swimming against the tides. This has nothing to do with values or purpose, and everything to do with the realities of 21st century communications. It is possible that an integrated report is to sustainability what the daily newspaper is to journalism: a model that won't survive the digital revolution.

But these may well be issues that can be worked out, and there is considerable energy ready to do just that. The Global Reporting Initiative expressed its support for integrated reporting by 2020, and the International Integrated Reporting Steering Committee is likely to announce new steps forward in the coming weeks. South Africa has taken the lead in realizing that vision, with the 450 companies on the Johannesburg Stock Exchange now required to issue integrated reports, and a committee has been established to create the guidelines. Bob Eccles at Harvard Business School is conducting a working conference to explore the topic further in October (I serve on the steering committee for the event). And rumors are that the G-20 will put this topic on its agenda for 2011 when France holds the Chairmanship.

Integrated reporting is an idea whose time has clearly come. Now the task is to make sure that it's a practice we're ready for.

This post was also published on FastCompany.com's Ethonomics.

By Aron Cramer, President and CEO

As the 2010 reporting season winds down, and the debate over integrated reporting heats up, it is a useful time to take stock of where reporting is today, and where it may be headed.

Integrated reporting is the topic du jour for report wonks. It's an idea whose main selling point is persuasive: requiring environmental, social, and governance (ESG) matters to be included in the single report of record a company issues would be a great step toward the mainstreaming of sustainability into business decision-making.

Maybe.

It's equally possible that such a step could have the unintended consequence of reducing, or dumbing down, the ESG content on which companies report. There are two primary reasons for this.

First, the regulators--and company lawyers--will begin to take a much greater interest in the assertions made about sustainability performance. I've heard this from multiple senior executives. It is not hard to imagine this having a chilling effect on some of the aspirational language contained in reports. And as most company report managers will tell you, it is precisely such aspirational language that makes a report a tool for advancing company strategies and commitments.

Second, there is only so much space in an integrated report. As a practical matter, it's likely that integrated reporting could result in a decline in the amount of information being presented in a formal report. The obvious fix to this problem is to provide information through other channels, such as social media, or issue-specific reports. But if the answer to this problem is to create new vehicles for ESG information, doesn't it defeat the purpose of an integrated report in the first place?

What's more, the vision of integrated reporting is also muddied by the ever-changing media landscape. Integrated reporting is rising as a concept just as the information world is disintegrating. With people seeking out their own take on information and news, and with multiple sources ready and able to deliver just that, it may be that the concept of an integrated report is swimming against the tides. This has nothing to do with values or purpose, and everything to do with the realities of 21st century communications. It is possible that an integrated report is to sustainability what the daily newspaper is to journalism: a model that won't survive the digital revolution.

But these may well be issues that can be worked out, and there is considerable energy ready to do just that. The Global Reporting Initiative expressed its support for integrated reporting by 2020, and the International Integrated Reporting Steering Committee is likely to announce new steps forward in the coming weeks. South Africa has taken the lead in realizing that vision, with the 450 companies on the Johannesburg Stock Exchange now required to issue integrated reports, and a committee has been established to create the guidelines. Bob Eccles at Harvard Business School is conducting a working conference to explore the topic further in October (I serve on the steering committee for the event). And rumors are that the G-20 will put this topic on its agenda for 2011 when France holds the Chairmanship.

Integrated reporting is an idea whose time has clearly come. Now the task is to make sure that it's a practice we're ready for.

This post was also published on FastCompany.com's Ethonomics.

By Peder Michael Pruzan-Jorgensen, Managing Director, Europe, Middle East and Africa

“Know what you carry” was the threatening message that met me many years ago as I crossed the border between two South East Asian countries. The accompanying noose on the sign left no doubts to the consequences of not knowing what I was (inadvertently or not) transporting.

Knowing what you carry is becoming a major corporate responsibility issue for a wide range of industries. From internet services companies to container ships, companies face the mounting challenge of better controlling what happens inside their service offerings. Expectations differ from industry to industry, so it begs the question, “How far does business’ responsibility extend?”

Telecommunication and internet service providers have long battled a range of views of what responsibility they should have for content transported through their wires and portals—not a simple question when 24 hours of content are uploaded to YouTube every minute.

The shipping industry—which transports a third of global trade on 240 million trips each year—also faces great challenges in controlling its immense cargo. Many of us still remember the horrific images of the Chinese workers who had suffocated in a container trying to get to the U.K. And, unfortunately, human trafficking is just the tip of the iceberg with other illicit transport including electronic waste, timber, and counterfeit products.

With the continual rise in transactions in both these industries, inevitably comes a rise in new regulations and expectations that companies deploy a range of measures to reduce the possibility that they are complicit in issues such as human rights violations.

Yet the response to these new expectations can be as varied as the expectations themselves. In the internet sector, some claim that companies should carry liability for supporting public policy goals and remove certain types of content. At the same time, free speech advocates worry about the “slippery slope” and make a compelling case that placing any liability on companies will only serve to chill freedom of expression, especially in closed societies.

On the flip side, the container shipping industry has focused mainly on ensuring legal compliance and has maintained the position that the ultimate responsibility for the content in the ”box” rests with the shippers and the customers. Yet, there too, change is afoot. A few of the major shipping lines are asking themselves if, in fact, they should have an opinion about the content of the cargo they move around the world. The world’s largest container shipping line, Maersk Line, recently made headlines across the world when it announced that it would stop transporting illegal unreported unregulated fish (IUU fish) and that it was reviewing its policy regarding acceptance of future seafood shipments.

While these two industries are taking different tacks, the questions are ultimately relevant to all industries: What criteria should you use to determine if an otherwise legal transaction is ethically unacceptable? How do you determine corporate complicity? Given the impracticality—and impossibility—of individually checking the millions of transport containers and video uploads, just how far does the responsibility of the company and industry extend? And when is it right to impose self-control—and when is it not?

What do you think?

By Marshall Chase, Manager, Advisory Services, BSR

The U.S. financial reform legislation signed into law yesterday includes a provision requiring publicly traded companies to report on their use of “conflict minerals”—including gold, tin, tantalum, and tungsten—whose trade helps fund armed groups in the Democratic Republic of the Congo (DRC).

While stakeholder campaigns have focused on the use of these minerals in the information and communications technology (ICT) sector, conflict minerals also make their way into a variety of other supply chains, which means the legislation is likely to affect industries including jewelry, automotive, canned goods, aerospace, energy, and others.

For companies new to this subject, BSR’s recent report identifies significant areas for action, such as:

1. Supply chain responsibility, including monitoring and verification through opportunities such as the ICT industry’s supply chain transparency initiatives, which are open to non-electronics companies
2. Government engagement to support international peace-building efforts and stronger, more accountable local governance
3. Capacity-building efforts to encourage equitable local development initiatives and improve conditions at mines

Look for more from BSR on this subject, as we continue working with companies to define the role of the private sector in addressing the issue of conflict minerals.