Dear readers,
This August, I took three weeks away from the office to step back, gain perspective, and reflect on the human rights issues that matter most to business.
Among the many topics I considered was how companies can navigate ongoing debates on German and European supply chain legislation alongside wider geopolitical uncertainty. The past year’s back-and-forth on regulation has been frustrating, with key questions still unresolved. While the German and French governments jointly endorsed the EU Commission’s reform proposals (“Omnibus”) during their meeting on 29 August in Toulon, the legislative process for EU sustainability rules is likely to extend into spring. There is, however, a glimmer of progress: German ministers have agreed to present an amendment to the existing Supply Chain Act (LkSG) in parliament. The proposal would remove reporting obligations, limit fines to serious violations, and confirm that the German Act will ultimately be replaced by the revised EU CSDDD.
While Europe takes its time, other regions are pressing ahead with due diligence rules. In the United States, enforcement under the Uyghur Forced Labor Prevention Act has recently been expanded to five additional sectors. Canada’s 2024 legislation obliges large companies to publish annual reports on forced and child labour, while Australia is consulting on reforms to strengthen its Modern Slavery Act. The UK has also updated its guidance to tighten enforcement. South Korea has reintroduced a binding due diligence bill, Thailand has begun drafting one, and Japan continues to promote its national guidelines on human rights in supply chains.
The shifting reliability of global partnerships, combined with the political turbulence stemming from the new U.S. administration, adds a layer of uncertainty to trade relations, raising the question of whether we are moving toward new forms of cooperation or simply deeper mistrust. Relations with China remain unsettled, while opportunities in Latin America, India, East and Southeast Asia, and Africa are still unfolding.
Whether and when German and European policymakers will establish a more assertive geopolitical strategy and new trade agreements is still uncertain. In this environment, companies cannot wait for clarity from policymakers; they must stay agile, pursue opportunities proactively, and build resilience into their supply chains.
Against this backdrop, I ask myself what constants companies can rely on to guide their human rights risk management. Three aspects strike me as essential:
1. Forced labour and children’s rights in supply chains
These issues will stay at the top of the agenda. Laws such as the EU Forced Labour Ban and the U.S. Uyghur Forced Labor Prevention Act are not under debate; if anything, enforcement is being tightened. The latest report from the U.S. Customs and Border Protection authority shows stricter implementation. This means import bans in the U.S. and EU are a serious risk for importers. Notably, at the end of August, the EU and U.S. agreed in their joint trade statement to cooperate more closely in combating forced labour, signalling a growing consensus on this topic. Beyond legislation, violations of children’s rights and forced labour remain serious risks that can heavily impact B2B business, financing, and brand value.
