On 4 November, a ministerial statement from the Department for Business and Trade confirmed what many human rights advocates, sustainability, compliance and procurement professionals have been anticipating for some time: the UK Government’s commitment to introduce mandatory human rights due diligence (mHRDD) legislation for large UK and overseas businesses, alongside new enforcement powers targeting goods produced using forced labour.
The announcement represents a significant milestone in the evolution of responsible business regulation in the UK. Whilst once considered a global leader following the introduction of the Modern Slavery Act in 2015, many jurisdictions around the world have moved ahead with more robust due diligence requirements. Countries including Canada, Australia and Thailand have all moved to enhance modern slavery reporting, while the European Union has taken a further step through the Corporate Sustainability Due Diligence Directive (CSDDD), requiring businesses to actively identify, prevent and address human rights and environmental impacts across their operations and value chains.
With the prospect of being seen as a ‘dumping ground’ for goods made with forced labour, the government’s proposed framework signals a shift from transparency-based reporting requirements towards a more proactive, risk-based approach to managing human rights risks. If implemented as proposed, UK businesses with a global turnover exceeding £350 million, alongside non-UK businesses generating more than £350 million in UK revenue, will be required to undertake mandatory human rights due diligence across both their operations and supply chains.
This will require organisations to move beyond simply publishing statements and instead demonstrate that they have appropriate systems and processes in place to identify, assess, mitigate and remediate human rights risks linked to their operations and their supply chains.
The Government has also outlined enforcement plans, with a regulatory body expected to have powers to investigate businesses suspected of placing goods linked to forced labour on the UK market. If businesses fail to meet minimum due diligence expectations, the regulator could take action, including restricting or removing non-compliant goods from circulation. These proposals bring the UK more closely into alignment with emerging international regulations, in particular the EU’s Forced Labour Regulations, which will apply to Northern Irish businesses under the Windsor Framework
While the details of the legislation remain under development, organisations should avoid waiting for the final text before taking action. Businesses that begin preparing now will be significantly better positioned to adapt to future compliance requirements and demonstrate responsible business practices to customers, investors and regulators.
Practical steps organisations can take today include:
- Assessing whether they are likely to fall within the proposed scope of the legislation by reviewing global turnover and UK revenue thresholds.
- Familiarising themselves with the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.
- Reviewing existing policies, governance structures and operational processes to ensure human rights risks are appropriately identified, assessed and managed.
- Mapping and risk-assessing the supply chain to identify areas of elevated human rights risk.
- Establishing risk-based due diligence mechanisms that provide clear remediation and reporting mechanisms where human rights impacts are identified.
Although the legislative process is only just beginning, the direction of travel is now clear. Human rights due diligence is rapidly becoming a core business requirement. Organisations that invest in stronger due diligence processes, encourage supply chain transparency and advocate better supplier engagement will be better prepared for future regulatory and client expectations.
To learn more about the OECD Guidelines for Responsible Business Conduct, including the OECD’s six-step due diligence framework and practical approaches to supply chain due diligence, download our informative white papers using the links below.
