Pillar Two

Pillar Two is proud to be the local Australian partner for the United Nations Global Compact’s Business & Human Rights Accelerator alongside Shift Project as the global partner. We look forward to working with the UN Global Compact Network Australia to facilitating capacity building on core business and human rights standards and helping business participants to unpack what human rights due diligence means in their sectors, operating context and value chains. #bizhumanrights #esg #susty

🚍 NAVIGATING THE 'OMNIBUS LANDSCAPE': KEY TIPS FOR COMPANIES 🚍 Over the past week, we’ve been considering the implications of the European Commission’s Omnibus proposal which sets out substantial changes to the EU Corporate Sustainability Due Diligence Directive (CSDDD), Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS). Relevant changes are summarised below. In their original forms, while there was room for improvement, many stakeholders saw the CSDDD, CSRD and ESRS as having the potential to reshape the international business and human rights landscape, including by establishing a framework for mandatory human rights and environmental due diligence aligned with core international business and human rights standards including the UN Guiding Principles on Business and Human Rights (UNGPs). The changes proposed through the Omnibus have led to concerns from companies, investors and civil society alike that the amendments (if adopted) could weaken or derail these regulatory initiatives. As companies work to navigate the uncertainty of the Omnibus landscape and changing dynamics in the broader Environmental, Social and Governance (ESG) context, it is important they continue to move forwards in their work to respect human rights. Here are our top tips to help companies stay on track whether or not they are currently or could be required to comply with these regulatory initiatives. 🟣 Remember that while the scope and application of CSDDD, CSRD and ESRS and other laws in various jurisdictions may be debated, the international standards that underpin companies' responsibility to respect human rights have not changed, including the UNGPs. This means companies (including those not in scope of the EU initiatives) should continue to align their human rights risk management with the expectations set out in the UNGPs. 🔵 Recognise that the changes in the Omnibus, if adopted, would still maintain a range of the core requirements included in the CSDDD, CSRD and ESRS. For example, large companies (albeit a smaller number) will still be required to conduct human rights and environmental due diligence under the CSDDD and to conduct double materiality assessments under the CSRD / ESRS. 🟡 Treat the proposed requirements as setting the 'floor' for action (the minimum standards expected) and not the 'ceiling'. Prepare for stakeholders such as investors, customers and civil society to expect companies to go beyond the Omnibus requirements, including where they may consider the requirements fall short of the UNGPs' expectations which they may have been supporting for some time, especially around addressing risks across value chains. 🟢 Where appropriate, develop a position on the Omnibus proposal informed by the company’s internal and external human rights commitments and reporting and be prepared to explain this position if asked by stakeholders. #bizhumanrights #esg #omnibus

🚍 NAVIGATING THE 'OMNIBUS LANDSCAPE': KEY TIPS FOR COMPANIES 🚍 Over the past week, we’ve been considering the implications of the European Commission’s Omnibus proposal which sets out substantial changes to the EU Corporate Sustainability Due Diligence Directive (CSDDD), Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS). Relevant changes are summarised below. In their original forms, while there was room for improvement, many stakeholders saw the CSDDD, CSRD and ESRS as having the potential to reshape the international business and human rights landscape, including by establishing a framework for mandatory human rights and environmental due diligence aligned with core international business and human rights standards including the UN Guiding Principles on Business and Human Rights (UNGPs). The changes proposed through the Omnibus have led to concerns from companies, investors and civil society alike that the amendments (if adopted) could weaken or derail these regulatory initiatives. As companies work to navigate the uncertainty of the Omnibus landscape and changing dynamics in the broader Environmental, Social and Governance (ESG) context, it is important they continue to move forwards in their work to respect human rights. Here are our top tips to help companies stay on track whether or not they are currently or could be required to comply with these regulatory initiatives. 🟣 Remember that while the scope and application of CSDDD, CSRD and ESRS and other laws in various jurisdictions may be debated, the international standards that underpin companies' responsibility to respect human rights have not changed, including the UNGPs. This means companies (including those not in scope of the EU initiatives) should continue to align their human rights risk management with the expectations set out in the UNGPs. 🔵 Recognise that the changes in the Omnibus, if adopted, would still maintain a range of the core requirements included in the CSDDD, CSRD and ESRS. For example, large companies (albeit a smaller number) will still be required to conduct human rights and environmental due diligence under the CSDDD and to conduct double materiality assessments under the CSRD / ESRS. 🟡 Treat the proposed requirements as setting the 'floor' for action (the minimum standards expected) and not the 'ceiling'. Prepare for stakeholders such as investors, customers and civil society to expect companies to go beyond the Omnibus requirements, including where they may consider the requirements fall short of the UNGPs' expectations which they may have been supporting for some time, especially around addressing risks across value chains. 🟢 Where appropriate, develop a position on the Omnibus proposal informed by the company’s internal and external human rights commitments and reporting and be prepared to explain this position if asked by stakeholders. #bizhumanrights #esg #omnibus

Our 2nd Panel of Speakers for the Global Disputes Summit – 6 March 2025! Join us at the GDS – #Sydney Edition for an engaging discussion on managing legal and commercial risks in global supply chains. Speakers: Ruimin Gao, Senior Associate, King & Wood Mallesons Daisy Mallett, Independent Arbitrator Nicola Swan, Partner, Chapman Tripp Sarah McGrath, Director, Pillar Two 📅 Date: 6 March 2025 📍 Location: Ashurst's Sydney Office 🔗 Register now: https://lnkd.in/gkkkayyu Don’t miss this opportunity to gain insights from leading experts! #GlobalDisputesSummit #SupplyChainRisks #InternationalDisputes #Australia #GDSSydney

📣 NEW ASSESSMENT OF LARGE ASX COMPANIES' HUMAN RIGHTS PERFORMANCE 📣 This week, Macquarie University’s B&HR Access to Justice Lab released a report assessing the human rights performance of 25 of Australia’s largest listed companies against the expectations set out in the UN Guiding Principles on Business and Human Rights (UNGPs). The assessment used the World Benchmarking Alliance's 2021 Core UNGP Indicators methodology to assess companies across three areas: ‘policy commitments to respect human rights’; ‘embedding respect through ongoing human rights due diligence’, and ‘enabling accessible remedies and grievance mechanisms’. Companies were assessed based on publicly available documents. KEY REPORT FINDINGS 🟡 While ‘more than half of the assessed companies…make explicit commitments to respect human rights’, disclosure of human rights due diligence processes by companies remains an area for improvement, with this area receiving the lowest average score. 🟡 While some companies provided general information on how they engage with stakeholders, the report indicates that no companies reported engaging with ‘affected stakeholders’ during human rights due diligence. 🟡 While all assessed companies disclosed providing grievance mechanisms to workers, the report suggests less than half make these mechanisms accessible to external individuals and communities. 🟡 Some companies appear to have set ‘more rigorous’ expectations or obligations for suppliers / business partners than for their own operations, which the report suggests may reflect a ‘decision to pass the risk, cost and burden of [implementing human rights due diligence]...to their suppliers’. KEY RECOMMENDATIONS Specific recommendations for companies made by the report include that companies should: 🟡 ‘Develop…internal expertise [around human rights due diligence] and assign…adequate resources to…relevant [internal] teams’. 🟡 ‘Engage meaningfully [with] all relevant stakeholders (including affected rightsholders) at all four stages of human rights due diligence’. 🟡 ‘Lead by example in respecting human rights throughout their global operations, rather than passing the...[responsibility for] respecting human rights onto their business partners and suppliers’. HOW COMPANIES CAN USE THE REPORT Companies (including those not assessed in the report) can draw on the report's findings by: 📌 Reviewing the results to understand peer practice within and across sectors, including where there may be scope to collaborate with peers and through industry / other peak bodies to address key areas for development. 📌 Using the results to identify areas for improvement in their own response, including in areas such as stakeholder engagement.  📌 Drawing on the results to inform engagement with senior leadership and the Board about respecting human rights. Read the full report here: https://lnkd.in/gbXF6Wqw

🔍WORLD BENCHMARKING ALLIANCE (WBA) RELEASES SECOND FINANCIAL SYSTEM BENCHMARK 🔍 Last week, the World Benchmarking Alliance released its second Financial System Benchmark. The 2025 Benchmark assesses the performance of 400 financial institutions (including banks, insurers, asset managers and owners, sovereign wealth funds, pension funds and development finance institutions) across governance 📃, climate 🌏, nature 🌳 and social 🤝 issues. KEY HUMAN RIGHTS-RELATED FINDINGS Among other findings, the benchmark highlights that: 🔵 ‘While 25% of institutions [assessed through the benchmark] commit to protect workers’ rights and livelihood’, only 6% disclose they ‘have due diligence processes in place to identify risks to human rights in their financing activities’. The WBA report underscores that ‘voluntary due diligence disclosures are insufficient to protect workers’ and calls for a ‘mandatory disclosure’ approach. 🔵 Only 3% of institutions assessed have a climate transition plan in place. The WBA report notes that ‘[t]here is a severe lack of transparency of financial institutions’ plans for phasing out the financing of fossil fuels and redirecting investments to alternative solutions’, with an estimated $6 trillion in transition funding needed annually. 🔵 Just 1 institution of the 400 assessed disclosed a ‘process for addressing the concerns of workers and other stakeholders’ who may be negatively impacted by the climate transition. 🔵 Only 11 of the 400 institutions assessed scored 50% or more on the WBA’s responsible business conduct indicators. Among other criteria, these indicators assess institutions’ disclosures around committing to respect human rights, identifying and assessing human rights risks, and taking appropriate action to prevent, mitigate, or remediate those risks. Read the full WBA Financial Systems Benchmark here: https://lnkd.in/dBcGJhit

💡 SOMO RELEASES DATAHUB OF CORPORATE GROUPS IT ASSESSES AS IN SCOPE OF THE EU CSDDD 💡 Yesterday, SOMO launched a datahub listing the corporate groups (and relevant subsidiaries) it has analysed as being in scope of the EU Corporate Sustainability Due Diligence Directive (CSDDD). The CSDDD establishes a mandatory human rights and environmental due diligence requirement for relevant companies. Access the datahub here 🔍: https://lnkd.in/eGDV_iEi. KEY FINDINGS SOMO’s analysis highlights that: 🟡 4,282 corporate groups are assessed as being covered by the CSDDD, with 78.5% being EU based groups. 🟡 8 Australian corporate groups are assessed as being covered by the CSDDD. 🟡 The majority of the corporate groups assessed as being covered by the CSDDD operate in the manufacturing (24.6%), financial activities (20.2%), services (19.1%) or wholesale and retail trade (16.2%) sectors. 🟡 31% of corporate groups in scope of the CSDDD will have to comply with the CSDDD in 2027, 18% in 2028 and 51% in 2029. HOW CAN BUSINESSES USE THE DATAHUB? 🟢 Companies in scope of the CSDDD can use the datahub to show Board members and senior leaders which other companies in their sector or country might also be covered. This can help inform discussion about how the CSDDD may influence peer companies’ practices and help to illustrate the growing momentum around mandatory human rights and environmental due diligence. 🟢 More broadly, companies (whether or not they are in scope of the CSDDD themselves) can use the datahub to identify where large suppliers and corporate customers may be covered by the CSDDD. Where suppliers or customers may be covered, companies can consider engaging with these entities to discuss their approaches to preparing for the CSDDD. #csddd #bizhumanrights #humanrights

💡 SOMO RELEASES DATAHUB OF CORPORATE GROUPS IT ASSESSES AS IN SCOPE OF THE EU CSDDD 💡 Yesterday, SOMO launched a datahub listing the corporate groups (and relevant subsidiaries) it has analysed as being in scope of the EU Corporate Sustainability Due Diligence Directive (CSDDD). The CSDDD establishes a mandatory human rights and environmental due diligence requirement for relevant companies. Access the datahub here 🔍: https://lnkd.in/eGDV_iEi. KEY FINDINGS SOMO’s analysis highlights that: 🟡 4,282 corporate groups are assessed as being covered by the CSDDD, with 78.5% being EU based groups. 🟡 8 Australian corporate groups are assessed as being covered by the CSDDD. 🟡 The majority of the corporate groups assessed as being covered by the CSDDD operate in the manufacturing (24.6%), financial activities (20.2%), services (19.1%) or wholesale and retail trade (16.2%) sectors. 🟡 31% of corporate groups in scope of the CSDDD will have to comply with the CSDDD in 2027, 18% in 2028 and 51% in 2029. HOW CAN BUSINESSES USE THE DATAHUB? 🟢 Companies in scope of the CSDDD can use the datahub to show Board members and senior leaders which other companies in their sector or country might also be covered. This can help inform discussion about how the CSDDD may influence peer companies’ practices and help to illustrate the growing momentum around mandatory human rights and environmental due diligence. 🟢 More broadly, companies (whether or not they are in scope of the CSDDD themselves) can use the datahub to identify where large suppliers and corporate customers may be covered by the CSDDD. Where suppliers or customers may be covered, companies can consider engaging with these entities to discuss their approaches to preparing for the CSDDD. #csddd #bizhumanrights #humanrights

One more week to apply for our new Aussie based role supporting businesses across sectors to respect human rights in their own activities and through their business relationships around the world 🌍. Applications close 15 January. #bizhumanrights #susty #esg

Pondering a change for 2025? Just under two weeks until job applications are due for our new Australian based role. #bizhumanrights #esg #auslaw