Gitte Winther Bruhn: 0:03

These people, they are all part of corporate value chains. So they're out there making our clothes, or picking our crops, or working in the factories of businesses. So, people is very much just like the environment impacted by how companies operate. That's, of course, why we should focus on the S in ESG.

Tom Raftery: 0:24

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Climate Confident podcast. The number one podcast, showcasing best practices in climate emission, reductions and removals. And I'm your host, Tom Raftery. Don't forget to click follow on this podcast in your podcast app of choice, to be sure you don't miss any episodes. Hi, everyone. Welcome to the Climate Confident Podcast. This is a special episode in partnership with SAP, and with me on the show today I have my special guest, Gitte. Gitte, welcome to the podcast. Would you like to introduce yourself?

Gitte Winther Bruhn: 0:58

Yes, thank you. And thanks for having me. My name is Gitte Winther Bruhn and I'm the Global Head of Social Responsibility Solutions here at SAP.

Tom Raftery: 1:09

Okay, and what does that entail, Gitte? Because it's a bit of a mouthful and not entirely obvious, so tell us what it is you do.

Gitte Winther Bruhn: 1:18

Yeah. Yes. So, let me maybe start a bit with the basic because social responsibility. We, we hear a lot of names around what I'm operating in and that can be social responsibility. We hear of the S in ESG. We have responsible business conduct and we also hear things like business and human rights. So there are many names covering this topic here. So just maybe to, to put this out, but in all what this is about is of course, around the responsible business conduct and maybe if I can, I'd like to set a bit of, of context to to the whole topic here, why we are addressing it also from SAP's perspective because there are some some content factors because we all aware when we discuss sustainability, we all aware of the climate change and impact it has on our planet. But I think from a business perspective we do not pay the same attention to the people side of sustainability. And we're not giving it that same attention. But we should because we, we do see an increase in inequality globally. And it's, it's really a systemic risk, I would say, that we're seeing out there. And that's also giving us this rise of the S in ESG. So in the environmental, social and governance, the S is getting more and more discussed or getting more and more focused, fortunately. And this, of course, is fueled by the world around us. We have had pandemics, we have wars, and all of that is impacting both business operation But also people. So really fueling the entire area. And when we have increased inequality we also see that almost a political and economic system is eroding. And in the end, that's also constraining economic growth which of course, again, is impacting businesses. And I just looked into some of the facts and numbers before entering here. And inequality, I mean, 10% of the world's of the richest of the world's population now owns more than three quarters of the global wealth. So that's a large amount owned by quite a few people. We have more than 50 million people under some sort of modern slavery today. And child labor has risen for the first time in 20 years. So we have now passed... 140 million children that's actually working. And yesterday I just saw, due to our inflation, that around 165 million people actually fell into poverty in the last three years. So this is a situation that's just getting worse. So I think we can say inequality is to people what climate change is to the planet. That's, that's the context of where we are operating and the people. But business here, of course, is a vital part. It's part of, part of our society as well. And this is why we talk business and human rights and social responsibility for business. Because no business really exist in isolation. They need to collaborate with their society, they work in and operate in. So they also need to balance and ensure that they have their license to, to operate, so to say in there. And again, all the numbers I mentioned before, why is that relevant? Well, these people, they are all part of corporate value chains. So they're out there making our clothes, or picking our crops, or working in the factories of, of businesses. So, people is very much just like the... environment impacted by how companies operate. Okay, and that's, of course, why we should focus on the S in ESG.

Tom Raftery: 5:02

Okay. So Gitte businesses are going to have to respond to this. There's either going to be regulations passed or they'll have to respond voluntarily, I guess. You know, what, what do you see coming down the line in terms of regulations and businesses responses?

Gitte Winther Bruhn: 5:19

Yes. I think for, for, I think we, we have seen a path being laid out for, for a long time here. Since the universal declaration of, of human rights, I think from '48 we discussed human rights and, and also the responsibility of the entire society. That was very much cleared out by the guiding principle from, from UN on business and human rights in 2011. And as a minimum we see that businesses need to respect human rights. So there is a lot here of managing the business impact, both the positive and the negative that they do have on people with their business operation. So the UN guiding principle laid out this framework with the three pillars for human rights, where we have the state and the state role of protecting human rights. We have the business and the business that needs to respect human rights. And then we have the remedy side, where the state have a responsibility to provide, and ensure there is access to, to remedy. So these are really a standard set of conduct expected by companies and supporting that, so how to implement it. We for the first time heard of the due diligence being set also in to meet these responsibilities. So business responsibility here is it's not only for own operation. I think that's how it's often looked at. I need to look for my own employees and how I operate. But here we are actually discussing the entire value chain. It's both the responsibility of how your product or services are being used or the integrity and ethic of your suppliers. And if they are having any violation with human rights and even their suppliers. So it's, it's any stakeholder that that we have in our, in our value chain here. But we do see that still 76% of the world's leading 1000 companies is not disclosing any human rights due diligence details, meaning they do not have the insight, which is challenging, but nothing is being put out there. And that, of course, is leading for states to to lifting their obligation that they need to protect human rights and they will do that by enforcing mandatory human rights due diligence. And maybe I should just state here. I think due diligence is very much known in risk management, normally on a more financial side or risk to the business. But when we talk mandatory human rights due diligence, it's a focus on identifying risk to rights holders or the people that can be affected by your business and your value chain. So just there's a little different on how it's it's it's approach here.

Tom Raftery: 8:05

Okay, so with all of these responsibilities that are now coming on businesses, increased responsibilities, how can technology help companies deal with that?

Gitte Winther Bruhn: 8:18

Maybe be Tom, if fine with you, before going there, because what we do see is, is a lot of regulation. I, I think I never got to that point before. Sorry for that. Sure. And the diversity globally, and I think for any company working cross borders, which I think goes for most companies, the set of regulations that we see now being put out there is the challenge that they would need to, to deal with. Already from 2012, we saw the first lighter regulation first one from France with the first obligation to report yearly on the due diligence, but with no real liability. We do see that It was followed by both an Australian Slavery Act and, and latest, we have the German Supply Chain Due Diligence Act, where we start to see the complexity and I've also seen the harsher side of the regulation being put out there both in regards to their action what they need to do embed policies and assess their entire operation but also that we now have business liability, that we have a fines as we move forward. The States, Asia is also evolving on this area. There's no doubt EU is a front runner and we're all expecting the Corporate Sustainability Due Diligence Directive that they are working on and hopefully will finalize this year. And here we are very much in line with the, with the German act, but we see it's, it's it might even be harsher on their I would say both liability and on the fines, where we will have up to five percent of the worldwide net turnover and even banned from public procurement. So this is really starting to impact businesses and enforcing them to move forward. And of course this should not only be a a tick mark for complying the whole background for this, of course, is that we need to ensure the positive impact or from businesses on on people and stakeholders that are part of the entire value chain.

Tom Raftery: 10:21

Sure, sure, sure. And how can technology help companies with this?

Gitte Winther Bruhn: 10:27

Yes, so, technology here, as, as mentioned we are talking with a huge business challenge. And that's not the least, because as just mentioned, we have this whole global complexity and regulation. We also have distributed data across the entire value chain here. We need to consider, ensure transparency, accountability as well. And that's tough. Further, when we discuss human rights due diligence. We are discussing people meaning we need to address stakeholders. That's both within our value chains or our suppliers internally But also right holders so people we might have had any violation against doing our business operation. So there are a lot of new things that that we need to consider it. But technology no doubt is a forceful enabler here and can help scale. I mean some of the businesses I talked to will have over 100, 000 suppliers in their supply chain that they need to assess and ensure are complying with the human rights to diligence and 100, 000 supplies that cannot be done manually. We do need technology. We need to think smart here to make this happen. So, so definitely technology will play a role. I will also say we are not there. This, this is a journey for our customers. It's also a journey for us. But we need to get started and I've always looked at this to get this business impact. Let's get started with some ripple effects I would say for positive impact. And let's look at where we have low hanging fruits and where we can already get started. And if we do look at the stakeholder impact, which is so important when we deal with human rights due diligence, we have own operation, the consumer in the community, suppliers, and then we have the n-tier suppliers. But the closest and where we have the most data processes well known, that's within our own operation, also within our own products. So this is definitely a place where we can start mitigating and preventing. And already here we have different solution in place. With all of that, we also have this layer of data because we need to manage, we need to assess we also need to report. And in the end, what we're looking for is actually an outcome. Not just an output, but an outcome where we can start measuring the actions that we are doing. How effective are they and how much are they increasing the positive outcome Because what we really wanna promote, or improve is promoting the entire social equity and gender equality across our entire value chain and ensure human rights. And as mentioned, companies, businesses, they're already doing a lot of things. So, we just need to, think of this in a, in a different scale. Because already now, I mean, business within their own operation, they have EHS system to ensure a safe working environment. They would have HR system to ensure diversity and inclusiveness in the workplace. So a lot of these things are already in place. We also have procurement system. We can also manage a lot of the supplier assessment. I think where what we lack is the connection. So how can we deliver an end to end human rights due diligence process or management process where we have the the governance and risk management to embed the needed policies and have clear responsibility that we can then funnel both internally into our HR department, but also into procurement, but we need to align and we need to connect and we need to communicate across. So I think the building blocks are there. We can do the pieces, but we have a journey to bring down the complexity and increase the responsibility, so to say. So, that's our long term vision working on that. And in the meantime, of course, on the current solution, I mean, in our portfolio, there will be gaps. We need to understand what are the... What are some of the problem statement? And what are some of the new use cases that we're not covering? So we need to enhance along the path. So plenty of work to do, but technology is there and if I can address one thing, it's also the n-tier. So the supplier's supplier and their supplier. I think this is a challenge for any, any company. And we have seen this same challenge when it comes to, for example, the carbon side. We did launch SAP Sustainability Data Exchange to enable the request and share of carbon footprint information between the buyers and suppliers. And we need that same flow of accountability and traceability when it comes to the responsible business conduct. I will say we would need to manage people impact with the same attention that we manage carbon.

Tom Raftery: 16:34

Right? Cool. Cool. And, and how, how are SAP managing this kind of complexity?

Gitte Winther Bruhn: 16:42

Yeah, it's it's high. I've been with this company now for, for 16 years. I have never addressed anything with this high complexity due to the scale, because what we're discussing here is the, all the processes, all the line of businesses within a, a corporation and even much beyond. We have the regulation on top and we have areas where we do not have reach at the moment with technology. But I think SAP, with who we are and the reach we are, we have a responsibility to act on this. And when I look at the solution, we have the end to end businesses are reached within line of businesses and the data. I think this is a nice fit for us, the compliance perspective and the regulation as well. So I think there is a good fit for us stepping in and figuring out how we do solve this on this journey. But I will also say that no one can solve this alone. I mean, it goes for many of our topics within sustainability that they're very complex. So how we addressing the topic is we have established a mission based ecosystem. Gartner is calling it a purpose based ecosystem. So this is really stakeholders, partners coming together with, with a share, with a shared objective. And we will have our differences. We will bring in our technology, but we would need knowledgeable people. We would need businesses who's operating in the space because I and SAP, we are not the one sitting with the with the people down in the field who might have some violations. So we would need expert knowledge here as well. We have established an advisory council for social responsibility with companies who have highly complex value chains and we'll need to solve this, uh, and are challenged today. I'm also extremely happy that the World Business Council for Sustainable Development have selected us and our project here called Advance Shared Prosperity as an incubator project. So it's, it's really giving us a strong partnership and a further reach to more partners so we can work on this together with the different aspect. So we're trying to to work on this on a very systemic way in partnerships to ensure that what we develop and bring to market will also solve these business critical challenges that we see.

Tom Raftery: 19:09

Great. Gitte do you have any, you know, customer success stories or use cases you can talk to, to make this more practical for people?

Gitte Winther Bruhn: 19:18

As mentioned, we are collaborating with a series of businesses on this. But already now when we are talking social responsibility or responsible business conduct, we, of course, many companies out there already doing what is right. Maybe just to highlight a few within responsible sourcing where we are having this extra layer that any company can try to ensure that they are dealing with suppliers with a certain social impact. That might be minority owned suppliers and we have a business called WEConnect International, who have built a quite powerful platform to really achieve this equitable supply chain that will connect some of the world's largest buyers with women owned small businesses. So managing this entire business network is is something we see is, is also really increasing. And maybe to lean on that business network, I think with the scale we need here we will see much more of these ways of addressing the challenges within our business network, for example, we now have a, self assessment and credential for human rights, so any supplier can actually go in, fill it out with the certification, how they address human rights, and they can share that with any buyer they would like to. So they fill it out once and can share it many times. And I think this is very important for small suppliers who have very little means. And once the regulation kicks in, they will have to answer and be assessed over and over again. And moreover, small suppliers have no cost actually entering these business networks. So I think that's, that's a, that's a very nice fit. Another example is could be within workplace safety. And we have a customer in Brazil, Ternium, who is one of Latin Americans leading flat steel producers. And they really wanted to ensure the safe working condition, because no worker, of course should die performing the job they were hired to do. Until this happened, because we see more than 3 million people die on their job every year, so, so that's a lot. So, they have implemented EHS workplace safety so they can really establish best practices and ensure that any incident is really getting the right investigation, and can be documented by the root cause. So, they can make sure that... That incident is not happening again, that we implement the right training after that for the employees to avoid it. So really, they're establishing a high process for this and ensuring the the well being and the workforce are yeah, are safe.

Tom Raftery: 22:03

Okay, Gitte, we're coming towards the end of the podcast now. Is there any question I haven't asked that you wish I had or any aspect of this we haven't touched on that you think it's important for people to be aware of?

Gitte Winther Bruhn: 22:14

Yeah, definitely. I think what we should maybe briefly look at is the business opportunities here. So even though we are getting new requirements, regulation is kicking in, this is challenging. I hope businesses will also look at this both as an opportunity, of course, to do the right thing to, to have the right business conduct and ensure dignity with the people in, in their value chain. I mean, business have powerful levers at their disposal and they have very powerful reason to use them. So both staying ahead of the regulation that we see out there and the change that can be I would say a competitive advantage because as mentioned before, this is not really discussed and regulation every time we see it hits in on the area of human rights due diligence. It's a bit of a surprise. So. Look at it and at least implement the United Guidelines Principle for business and human rights as a first step. Having this, it's also giving business resilience in the supply chain. And I think with the volatility that we have seen the last years this is really something that can strengthen their supply chains. So by creating a diverse and equitable and inclusive workplace and value chain, they're ensuring the resilience of the supply chain. And not the least, and I think this will be more and more important, is the license to operate. I think I mentioned it briefly before but the, the whole brand damage or having cases out there where violation has happened and we do see them coming. So securing that is, is going to be so important and ensuring and, and being able to share that your brand is staying out and having respectful say business conduct. So I think not for all countries. The businesses here need to be accountable and aligning both policies towards regulation. And maybe one other good thing is I think we have also understood in all our research. There are global standards here. So it's even though we do see 15 regulation in action on human rights due diligence, they're all built. And so it's the UN guidelines guiding principle for business and human rights can lean on the OECD guidelines for for due diligence. So we do have a risk management process, a standard set out there. And this is, of course, also where we're leaning our technology to ensure it can support that process. So good news is we do have one process that can cover them all. It's not regulation by regulation, so I think that's a good point as well. So, and last thing I think, doing nothing will just be worse. I think where the whole inequality is going, by doing nothing, it's not going to be better for business. So I think we all need to do something to improve the state and business here, they need to help in delivering the playing field that we see here.

Tom Raftery: 25:24

Okay, cool, cool, cool. Gitte, if people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them?

Gitte Winther Bruhn: 25:37

So, I will, can I share some links to add in? Because we, we have, of course, our corporate site with social responsibility where there's access to all the, both the current solution that we have available, to ensure that we have responsible business conduct. Both within own operation within procurement et cetera. Further if I can share that link with you together with the World Business Council for Sustainable Development there's a white paper on tackling business inequality an agenda for business action, and it's, I would like to recommend that because it's the first time I see a strong read that has a business focus on responsible business conduct and what can be done in a, in a very simple way. So I would like to share that if you can, you can check it out. Of course, also on, on our corporate site.

Tom Raftery: 26:28

Sure. Yeah. No, no, you shoot me those links. I'll put them in the show notes and that way Gitte everyone will have access to them. Fantastic. Gitte that's been really interesting. Thanks a million for coming on the podcast today.

Gitte Winther Bruhn: 26:40

Thank you for having me. And I hope it shared some light on social responsibility.

Tom Raftery: 26:45

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about the Climate Confident podcast, feel free to drop me an email to Tom raftery@outlook.com. Or message me on LinkedIn or Twitter. If you like the show, please, don't forget to click follow on it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks, catch you all next time.