Author: lily.russelljones

Shift publishes metrics to assess progress towards a just transition

Posted on by lily.russelljones

Shift has published a set of metrics to help companies measure how efforts to tackle climate change are impacting people. 

Shift collaborated with Business and Human Rights Centre, Business for Social Responsibility, Council for Inclusive Capitalism, LSE’s Just Transition Finance Lab, World Benchmarking Alliance and World Business Council for Sustainable Development (WBCSD) to create a set of “Just Transition Metrics.”

This set of 19 sector-agnostic metrics can be used by investors, regulators and companies to assess whether businesses have identified and are addressing the risks and opportunities for people connected to their climate transition plans.  

“It is vital that businesses taking much-needed action to tackle climate change don’t leave the poorest workers and communities worse off in the process,” said Shift President and CEO Caroline Rees. “We hope these metrics will enable companies, investors, lenders and regulators to measure progress towards a just transition, which benefits both people and planet.”

A spokesperson for WBCSD said: “When companies work towards a just transition, comparable data and metrics are needed to be able to measure progress. By establishing a common set of metrics on workforce, supply chain workers, and community outcomes, companies, investors and standard-setters become aligned on what meaningful progress on a just transition looks like in practice.”

The metrics focus on quantitative data to help users build a clear picture of how climate transition plans are affecting people, which groups are worst affected and whether adequate action has been taken to engage with affected workers and communities. 

For example, one metric examines how many jobs have been created and lost as a result of climate action, whether those jobs are full-time or part-time, and the gender balance and geographical location of those affected.

 “Businesses which fail to identify and address impacts on people risk seeing climate transition plans derailed by protests, legal action and intervention by regulators,” said Rees. “These metrics can act as a starting point to help businesses embed respect for human rights into their climate transition plans.”

The scope of the metrics has been limited to focus on data that Shift and collaborating organisations felt companies could reasonably be expected to gather and disclose. The metrics do not cover every possible scenario and variation. Instead, businesses, regulators and others can build on these metrics to capture additional impacts relevant to specific sectors and local contexts.

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Shift sets out how to improve the ‘S’ in ESG with new guidance on social indicators

Posted on by lily.russelljones

Shift has published guidance on how to measure the effectiveness of steps companies take to address their impacts on society.

Shift, a non-profit working globally to embed respect for human rights into business, analyzed the quality of thousands of social performance indicators used by data firms and standard setters. Social performance covers how companies manage their impacts on people, including their employees, supply chain workers and communities affected by the use of their products or services.

Shift has shared its findings in a research series called “Strengthening the ‘S’ in ESG,” which sets out recommendations for improving the design of indicators.

“There are now thousands of metrics being used to measure social performance. This interest is welcome, but the devil is in the detail. Low quality indicators risk confusing decision makers and can encourage poor behavior by businesses,” said Mark Hodge, the Vice President of Shift.

In the first phase of research, published in Summer 2024, Shift analyzed around 1300 indicators used to assess social performance. This included about 700 social indicators and 225 governance indicators used by five major data firms that measure the environmental, social and governance (ESG) performance of companies. A further 350 social indicators came from standards set by regulators, civil society organisations and others to evaluate and shape business behaviour.

Shift set out six recommendations for improving the design and selection of indicators:

  1. Avoid indicators that create perverse behavioral consequences
  2. Avoid indicators that encourage unjustified conclusions
  3. Avoid indicators that offer insight into a company’s intentions but no insight into whether this is followed through in practice.
  4. Use indicators that are strong predictors of business decision-making and behaviour.
  5. Focus on indicators that signal the quality of due diligence processes
  6. Use indicators that offer insight into a company’s contribution to positive outcomes for people.

For example, Shift recommends avoiding indicators which could encourage poor behavior. Indicators which measure the number of complaints made by staff, for instance, can create incentives for managers to pressure workers into hiding concerns. About 8% of social indicators used by ESG data firms risk encouraging poor behaviour, Shift found.

For the second phase of research, published in October, Shift analysed a further 1,800 social performance indicators which mostly came from benchmarks and standards. Researchers offered recommendations for the design of indicators covering three key areas of social performance: occupational health and safety, living wages and the impact of businesses on communities.

For example, Shift assessed 220 indicators used to measure the health and safety of workers. It found that most focused on past performance data, such as the number of injuries reported over one year. Instead, researchers recommend greater reliance on forward-looking indicators which signal whether firms are thoroughly investigating accidents and taking steps to ensure they do not reoccur.

“This research exposes the good, the bad and the ugly of indicator design,” said Hodge. “We have seen good uptake of our recommendations by investors and even regulators as they turn to the task of evaluating compliance with new legislation.”

Notes:

  • The first phase of our research covered indicators in use as of April 2024.
  • The second phase of research covered indicators in use as of May 2025.
  • We recognize that in some cases data firms could be using methodologies to reach conclusions about a company’s performance against a particular indicator that offers more nuance than we were able to capture in this research.
  • Shift included indicators from a wide range of benchmarks and standards in its analysis, including the Global Impact Investing Network IRIS catalogue of metrics, a set of indicators used to measure the social and environmental impact of investments, and ISO 30414, a series of indicators companies use to report on issues affecting their workforce, such as health and safety.

From regulation to action: What the EU due diligence rules mean for business

Posted on by lily.russelljones

March 20, 2026

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Rules that place greater responsibilities on firms to identify and address human rights abuses have been finalised.

After almost a year of negotiations changes to the Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Social Reporting Directive (CSRD) have become EU law.

While not without limitations, the directives represent a significant step forward.  They have the potential to drive meaningful action by companies to prevent the most severe human rights harms from occurring across value chains.

Now the real work begins. At Shift our advisors have been helping businesses get to grips with what the legislation means for them.

The good news is that both directives are grounded in the UN Guiding Principles on Business and Human Rights (UNGPs) which have been around for over 15 years. That means companies do not have to reinvent the wheel when preparing for compliance – they can benefit from a wealth of existing guidance that can help them begin identifying and addressing risks to people and planet.

This month Shift ran multiple webinars attended by hundreds of businesses from all over the world where we offered an in-depth look at the CSRD and CSDDD legislation. We will also be running an in-depth program from April-June to help businesses get to grips with CSRD. Alongside this we do extensive advisory work with companies on all aspects of human rights due diligence and reporting.

So what are the main developments businesses need to know about?

The Corporate Sustainability Due Diligence Directive

  • The directive requires businesses to identify actual and potential human rights and environmental harms caused by their operations, the operations of subsidiaries and by partners within their chain of activities.
  • Where harms to people and planet are identified companies must take steps to address these. For example, by agreeing action plans with suppliers to make sure the human rights of workers are being protected. 
  • EU companies with a net annual turnover greater than €1.5 billion and more than 5,000 employees are covered by the directive. Companies based abroad will also be covered if they have a turnover greater than €1.5 billion from their operations in the EU.
  • Over 1000 companies are expected to be in scope.  
  • Smaller companies cannot simply ignore the directive. This is because many of the business partners of the companies that are in scope will be impacted. This doesn’t mean larger companies will simply push due diligence requirements onto their suppliers. But they will need to collaborate with partners to help identify and address social and environmental impacts. 
  • EU member states have until July 2028 to translate the directive into national law and set up supervisory authorities to make sure firms are following the rules.  Firms have until July 2029 to comply. Those that don’t could be fined up to 3% of their net annual turnover.
  • The steps companies must take to identify and address risks under CSDDD mirror the expectations set out in the UN Guiding Principles on Business and Human Rights (UNGPs). This means companies already conducting due diligence in line with the UNGPs have a head start.

The Corporate Sustainability Reporting Directive

  • The directive requires companies to report on material sustainability impacts, risks and opportunities in their own operations and value chains. The detail on what companies must report is set out in the European Sustainability Reporting Standard (ESRS)
  • EU companies with a turnover of €450m or more and over 1,000 employees are covered by the legislation. These companies must publish a report that complies with CSRD in 2028 at the latest, covering the 2027 financial year.  
  • Companies based abroad will also be covered if they have a turnover greater than €450m from their operations in the EU or if they have an EU subsidiary or branch with more than €200m in annual turnover. These companies must publish a compliant sustainability report in 2029 at the latest, covering the 2028 financial year. 
  • In total about 5000 companies are expected to be covered by the directive.
  • The CSRD requires companies to report on their entire due diligence process – from how they identify impacts, to the steps they take to address them. And from details of how a company engages with affected stakeholders to how it ensures its grievance mechanisms are effective.
  • The CSRD goes beyond the CSDDD when it comes to the human rights impacts that companies must report on. This means that even if CSDDD does not require firms to take action on certain issues, CSRD may still require them to provide transparency.

What’s next?

EU Member States have until July 2028 to translate CSDDD into national law and set up supervisory authorities to check whether companies are following the rules. In the coming months the EU will also publish the final version of the ESRS, which will provide greater clarity on what information companies need to report under CSRD.   

Shift will be closely involved in this process. We work with policy makers and regulators to shape standards, and publish free resources to support businesses with implementation. We also sit on the board of EFRAG, an independent group which wrote the ESRS.

Companies have a lot to do to prepare for compliance, but it’s well worth putting the work in. Legislation influenced by the CSDDD is being considered in countries all around the world, including Switzerland, Australia, the UK, Canada, the USA, Thailand, South Korea and Indonesia.

Businesses have an obligation to step up to better protect people and planet. Drawing on more than 15 years of experience in embedding respect for human rights into business, Shift will continue to support effective implementation of these requirements – both through its public resources and its direct work with companies and other stakeholders. If you are looking to strengthen your approach, we welcome you to get in touch.