Human Rights in Supply Chains: ESG Regulations and Compliance Strategies

Human Rights in Supply Chains: ESG Regulations and Compliance Strategies

ESG (Environment, Social, Governance) has become a focal point for businesses, driven by events like the COVID pandemic, rising sustainability concerns, diversity and inclusion initiatives, and increased whistleblowing. According to an article by Navex, this has heightened scrutiny on companies to enhance their environmental practices, supply chain integrity, and workforce diversity, with significant emphasis on human rights in supply chains.

Human rights abuses, such as modern slavery, have garnered public outrage and regulatory action, leading to stricter laws to eradicate such abuses. Companies must ensure compliance to avoid severe financial and reputational damages. 

The article highlights these key regulations:

• EU Corporate Sustainability Reporting Directive (CSRD): Effective from 2025, it mandates extensive ESG reporting for large companies, emphasizing double materiality.
• European Corporate Sustainability Due Diligence Directive (CSDDD): To be approved by mid-2024, it holds companies accountable for human rights and environmental violations in their supply chains.
• UK Modern Slavery Act: Enforced since 2015, it requires businesses to report measures against modern slavery and will be strengthened with more stringent content and publication requirements.
• California Transparency in Supply Chains Act: Effective since 2012, it demands disclosures from large manufacturers and retailers on their anti-trafficking and anti-slavery efforts.
• German Supply Chain Due Diligence Act: In force since 2023, it mandates risk management systems to prevent human rights violations within supply chains.
• The French Duty of Care law, despite its controversies and challenges, has inspired similar legislation globally, highlighting the need for robust human rights protections in business strategies. 

Effective human rights compliance strategies should involve comprehensive stakeholder engagement, risk mapping, due diligence, and integration of human rights concerns into company policies and decision-making processes.

Ultimately, prioritizing human rights in supply chains is complex and requires significant commitment, but it fosters resilience and demonstrates a strong ethical stance, benefiting both the organization and its stakeholders.