Global factors such as the Covid-19 pandemic, policy changes in the US, the rise of artificial intelligence, increasing income inequality, ecocide and international conflicts have intensified human rights issues worldwide. As a result, businesses are now under increased scrutiny to ensure they are not complicit in human rights abuses and are taking concrete steps to protect human rights across their value chain.

Read our guide to help you understand the evolving human rights regulatory environment and the steps you can take to improve your human rights strategy, reporting policies, due diligence and remediation.

Why human rights matter more than ever

Human rights violations are increasing globally. The International Labour Organization (ILO) now estimates that more than 50 million people are trapped in modern slavery and trafficking networks, around 160 million children are engaged in child labour, and approximately 28 million people are enduring forced labour.

As human rights violations increase and become easier to identify, the expectations for businesses to increase their efforts to identify, remediate and disclose human rights impacts are rightly increasing too, driven by regulator and investor expectations.

With global turbulence deepening existing inequalities, companies must scrutinise their strategies and operations to ensure they do not contribute to human rights violations – directly or indirectly – and take swift, decisive action to remediate any harm uncovered.

An evolving regulatory landscape

Just one look at the abbreviations involved – CSDDD, UNGPRF, UNGC, GRI, MSA – is enough to illustrate how challenging the rapidly evolving regulatory landscape can be to navigate.

One of the key drivers for the increased focus on human rights in the regulatory landscape is the Corporate Sustainability Due Diligence Directive (CSDDD), initially released in April 2024 and following the Omnibus ‘Stop-the-Clock’ Directive is now due to be transposed into national law by member states by July 2027. This directive requires EU companies, and those with significant EU operations, to prevent negative impacts on human rights and the environment. Despite delays from the Omnibus proposal, the CSDDD has encouraged more companies to disclose against the UN Guiding Principles Reporting Framework (UNGPRF), helping raise the bar on human rights management and disclosure worldwide.

In addition, with the launch of the Taskforce on Inequality and Social-related Financial Disclosures (TISFD) in September 2024 – a global initiative developing recommendations and guidance for businesses and financial institutions to understand and report on people-related impacts, dependencies, risks and opportunities – the emphasis on how companies impact people and society, as well as how social and inequality issues influence a company’s financial performance, will only increase. The TISFD framework, which will provide guidance on inequality and social-related financial disclosures is expected to be launched publicly by the end of 2026.

Across the human rights reporting landscape, we’re seeing the emergence of several themes and common threads, including:

• a shift from voluntary to mandatory reporting
• an increased focus on human rights due diligence
• requirements to monitor compliance and progress on remediation measures
• disclosure of adverse human rights impacts
• mechanisms for stakeholders to raise grievances and report issues
• assessments of a wider range of negative impacts such as forced eviction and land grabbing
• reporting regulations focusing on specific issues such as modern slavery or indigenous rights
• concerns about addressing human rights in an increasingly digital world.

What does this mean for business?

The changes to the regulatory environment, alongside increasing stakeholder expectations, will require a significant shift in companies’ sustainability strategies, activities and reporting.

Here are our six key steps to align with evolving regulations and frameworks:

Understand the latest regulatory landscape

Map out the new requirements and identify which apply to your business. Consider company size, sector, products, services, operational locations and supply chain sources. Develop a transition plan to meet required deadlines.

Increase supply chain transparency

Fully understand the materials, components and products you source and from where. Focus on not just direct suppliers but the entire supply chain. Address risks to people throughout the supply chain, including exploitation of migrant workers.

Identify, assess and address actual and potential negative impacts

Conduct human rights due diligence across your business and supply chain. Engage with rightsholders and stakeholders when evolving business strategies. Cease, prevent or mitigate negative impacts, track progress, communicate actions and cooperate in remediation when appropriate.

Embed responsible business conduct into policies and management systems

Ensure you have the right governance structure and risk management processes in place. Provide and promote channels for stakeholders to raise concerns.

Build the right team

Recruit staff with specific expertise or consider external support from specialists. Support suppliers with training and collaborative work, and encourage open communication.

Invest in new data systems

Be prepared to collect and report significantly more information from suppliers, customers and local communities. Invest in systems to collate and analyse data from multiple sources, and track year-on-year performance.

Protecting human rights and business value

Human rights impacts are worsening, and global turbulence has exacerbated this further. Governments are driving corporate transparency and due diligence obligations through national and regional regulations. But good management of human rights isn’t just about compliance, it’s also about protecting your social license to operate and your corporate reputation, and ensuring that your business is not directly or indirectly contributing to the violation of people’s human rights in the pursuit of profits.

The guide provides insights into key legislation impacting the UK, Europe and the US, including the EU Omnibus, the CSDDD, the Conflict Minerals Regulation, the Sustainable Finance Disclosure Regulation (SFDR), the Modern Slavery Act and the Uyghur Forced Labor Prevention Act.

Flag’s expert guidance can help you navigate this evolving landscape and support your approach to human rights due diligence and reporting. Please get in touch with us at info@flag.co.uk if you need support.