PROFESSOR: So based on those pressure sources

across from media coverage and increasing awareness

of consumer preference for more sustainable products, industry
competitiveness, increasing regulatory compliance
requirements, companies are now needing to take a stance
and measure their impact.
So in that five steps, it's really
steps two and three where they are now required
to take a strategic stance.
Are they driving more fair and equitable supply chains?
How are they going to do that?
And as the foundation of the how and what they should be doing,
they want to measure and report their overall impacts
so that they can actually baseline make sure
they're actually making improvements.
And these become iterative.
So measuring reporting, really informing that strategic stance
to ensure that they're making progress over time,
and based on their improvements, they're
taking more aggressive goals and commitments.
So there are numerous different frameworks out there.
This is not intended to be exhaustive.
But an overall framework that many companies
have looked to as a starting point, for instance,
is the United Nations Global Compact,
which frames different components of what it means
to be a sustainable business.
So across human rights, businesses
should be supporting and respecting
protection of internationally proclaimed human rights,
that they're not complicit in human rights
abuses across labor, that there's
a freedom of association, elimination
of all forms of forced and compulsory labor,
effective abolition of child labor,
and elimination of discrimination.
Environmental principles, looking
at precautionary approach to addressing
environmental challenges.
This is seen significantly in climate change and reduction
of carbon emissions.
Undertaking initiatives to promote greater
environmental responsibility, and investing
in environmentally friendly technologies.
And in governance for anti-corruption,
working against corruption in all its forms.
These are the overall broad principles for United Nations
Global Compact.
As you get into different industries,
there are numerous other industry coalitions
and standards bodies as you deep dive
on any number of these areas.
For instance, in apparel, there's
a sustainable apparel coalition.
In electronics, there's Responsible Business Alliance,
and different coalitions that set the specific principles
as it pertains to industries and how
they need to start deep diving on each
of these social and environmental dimensions,
and how companies can begin to comply.

As companies really understand that

and take that strategic stance on social environmental
commitments in their supply chain,
they really want to understand and measure
their impact and priorities and sustainability.
And to get an overall sense of where they should be starting,
there's a couple different approaches
to really understand and really develop a stance.
Some can be a stakeholder survey,
any kind of risk assessment, so understanding
where their hot spots of impact are in the supply chain.
Looking at SWOT, strengths, weaknesses, opportunities,
and threats, for their supply chain strategy,
and how sustainability and social
environmental impacts have implications there.
They can be benchmarking against peer companies,
revisiting their corporate mission to really include
sustainability.
So there's multiple different ways
that they can start to include this more broadly
and start measuring for their strategic stance.
If we think about the materiality assessment as one
example, this is becoming a more increasing business practice
where they understand and map out different dimensions.
So impact on stakeholders, and then interest to business.
They look at this as a two by two matrix
where they start using some of those different other
assessment areas we talked about to start mapping these issues
and really allow them to understand where they should
be starting.
So this is high impact low interest issues, so high impact
to the stakeholder, but possibly low interest, low impact
low interest, low impact high interest.
And obviously, where the items fall on high impact,
high interest issues is often where businesses start.
This materiality assessment can be
informed by numerous other assessments
where they really start to understand,
for instance, their different environmental impact areas.
And they have information about each of those areas
where they can map it against what their stakeholders care
about.
The same with social responsibility issues,
and really allow them to come to a more rigorous assessment
of where they should be investing their resources,
what goals they should be committing to,
and how they actually can make meaningful improvements
in sustainability across their supply chain.
In this example from BASF, a major chemical company,
they did this materiality assessment
and mapped all these different issue
areas that are pressure elements for them,
that these are topics that they are concerned about,
their stakeholders are concerned about.
It's core to their business, and really
use the assessments for each of these areas
to map them across this continuum.
Of course, being corporate branding,
they wanted to make sure that nothing was unimportant.
So it was mapped at high, very high, and extremely high,
which you can see, really, in that fourth quadrant,
falling here across the spectrum of energy and climate, those
that they see as incredibly important both for BASF
and for their stakeholders.
And looking across different dimensions of water pollution,
product stewardship, renewable resources,
these are the ones that have stood out
as key topic areas that allow them to recognize
how many different issue areas they need
to have in their purview, but allow them to start and invest
accordingly based on that assessment.