Shift Project

How can investors and standard setters evaluate a company’s social targets? Targets feature heavily in current reporting standards and requirements - which creates opportunities for ESG data providers to look more closely at the types of targets that companies are setting. In this week’s instalment of our series Strengthening the S in ESG, we explore what meaningful social targets look like: https://lnkd.in/eycHdgGx Effective targets will be outcome-oriented, measurable, clearly scoped, time-bound, and informed by engagement with external stakeholders. Where companies have good social targets in place, this can offer greater confidence to investors that companies are actually putting in the work to drive behavior change and better outcomes for people, and businesses. Stay tuned for Guideline 2 when we’ll be looking at indicators that can provide real insight into a company’s due diligence processes.

What sorts of indicators could give investors and standard setters a clear picture of a company’s decision-making and behavior when it comes to stakeholder engagement? In this week’s guideline in our series Strengthening the S in ESG, we look at the development of indicators designed to evaluate the scope and quality of a company’s engagement with the people affected by its operations. As outlined in the #UNGPs, this is critical to preventing and addressing human rights risks across a company’s operations and value chain. Read it here: https://lnkd.in/e_sHiMUH And stay tuned next week, when we’ll look at effective indicators on social targets.

In the first Guideline in our series Strengthening the S in #ESG, we look at how to leverage indicators that are strong predictors of business decision-making and behavior in relation to three dimensions of business practice that standard setters and investors are increasingly paying attention to: - 1A: Governance - 1B: Stakeholder Engagement - 1C: Social Targets Today, in part 1A, we look at existing and potential indicators that could support a more comprehensive evaluation of companies’ governance practices. Currently, only a small number of social-related Governance indicators evaluate board-level scrutiny and oversight of sustainability commitments or programs. Where they do, visibility is greatly limited. And, data providers are not evaluating board members’ 'S' competence, nor evaluating the existence of efforts to inform the board of the company’s management of social risks. Stay tuned for the release of 1B and 1C, when we’ll explore indicators relating to Stakeholder Engagement and Social Targets. 📖 Read part 1A here: https://lnkd.in/eNSCxymR

In Guardrail 3 in Shift's new series, Strengthening the S in ESG, we look at how to steer clear of indicators that offer insight into a company’s intentions, but no insight into whether these are followed through in practice. We explore how this can inflate a company’s S score, and encourage over-simplistic box-ticking exercises that do not manage risks to people, the company or its investors. Of the almost 700 indicators used by ESG data providers that we assessed, more than 10% assessed the existence of policy commitments, without insight into whether this was backed by action. These indicators signal a company’s intentions but say nothing about the extent to which the company is translating intentions into responsible business practices. Read it here 👉 https://lnkd.in/erjPNP_V Next week, we’ll release the first of our Guidelines in this series, focused on the value of indicators that are strong predictors of business decision-making and behavior.

How can we meaningfully measure company performance on social issues? That’s the question we’ve set out to answer in our new 6-part series, Strengthening the S in ESG, based on our analysis of almost 1300 social and governance indicators used by ESG data providers. In Guardrail Two, we look at indicators that encourage users to reach unjustified conclusions – including composite indicators that make outsized claims, indicators with weak causal links, and indicators that lack the necessary context to be interpreted properly. We identify those indicators that could be adapted – and those which should be avoided entirely. 👉 https://lnkd.in/erjPNP_V Stay tuned for Guardrail 3 next week, when we’ll be looking at indicators that offer insight into a company’s intentions, but no insight into whether this is followed-through in practice.

🗓️  Join Caroline Rees today for the second session of Responsible Companies, Frank Bold "Getting Ready for the EU Sustainability Reporting Standards" webinar series. Together with Lisa Rydén (Tetra Pak), Maxime Belingheri (L’Oréal) and Allan Lerberg Jørgensen (OECD), they will discuss the interplay between corporate #sustainability due diligence and #reporting processes, addressing implementation challenges and best practice. ⏰ When? Tuesday 28 May, 3:00pm - 4:30pm CEST 📍 Where? Online (Zoom) Register here 👇 https://lnkd.in/eWgX_ejD

In breaking news, the Council of the European Union has just approved the Corporate Sustainability Due Diligence Directive (CSDDD). This means that the legislative process has been completed and the Directive will now become EU law, marking a historic moment for business respect for human rights. The Directive is substantially aligned with the international due diligence standards – the UNGPs and OECD Guidelines – adopted over a decade ago. Like those standards, it expects companies to identify where and how workers, local communities and the environment may be negatively impacted by their own activities and those of their business partners, and to work to prevent and address those impacts throughout their value chains. This means it has real potential to drive better human rights and environmental outcomes, rather than being a mere tick-the-box compliance exercise. Member States now have two years to transpose the Directive into their national laws. In the years ahead, the European Commission and Member States will operationalize the #CSDDD by adopting guidance and accompanying policy measures. This next phase will help to further ensure alignment between EU law and the UNGPs. So, companies have time to get their houses in order and can start doing so now. Because the Directive is grounded in the international standards, there’s no need to wait for formal guidance to begin the process of identifying and addressing risks to people and the environment in a company’s value chain, given the wealth of existing publicly available materials. To get started, check out our Frequently Asked Questions about the EU CSDDD 👉 https://lnkd.in/ekPZny9d

How can we meaningfully measure company performance on social issues? With growing recognition of the need for common metrics, we’re launching our new 6-part series, Strengthening the S in ESG, based on our analysis of almost 1300 social and governance indicators used by ESG data providers. Through the Guardrails and Guidelines that make up this series, we’ll unpack how to support the design, selection and use of better metrics. In our first instalment, Guardrail One, we look at how to avoid indicators that create perverse behavioral consequences – such as those focused on reported complaints, grievances or incidents, training, social audits, and corporate philanthropy. In our research, we found that at least 8% of the ~700 ‘S’ indicators in use fall into this trap. 👉 https://lnkd.in/erjPNP_V Better S metrics are key to equipping investors, business leaders, regulators and civil society with the tools to advance business respect for human rights. Stay tuned for Guardrail 2 next week, when we’ll be exploring how to avoid indicators that encourage unjustified conclusions.

Good news - the CS3D has now been officially approved in parliament! However, after the twists and turns of the last few months, many companies are still trying to understand what the #CSDDD means for their responsibility to respect human rights. That’s why Shift’s Standards experts Rachel Davis and Ruben Zandvliet have put together answers to some of the most commonly asked questions from companies’ about the CSDDD, covering everything from civil liability to downstream impacts - plus immediate next steps 👉 https://lnkd.in/ekPZny9d This is the first in a series of free resources we’ll be releasing for businesses as they take their first steps towards implementation of the Directive - so stay tuned!