Balancing Profit and Ethics: The Impact of Human Rights Due Diligence Laws on International Business Operations

Abstract

Supply chains have taken centre stage in the discussions on corporate accountability, sustainability, and protection of human rights across the world. Due to a series of alleged labour rights abuses, environmental destruction and systemic failures in governance, jurisdictions, such as the United Kingdom, France, Germany, and the European Union, have been responding with the creation of legislative tools to reinforce corporate due diligence and align business practices with international sustainability criteria, including the Modern Slavery Act 2015, the French Duty of Vigilance Law, the German Supply Chain Due Diligence Act, and a proposed Corporate Sustainability Due Diligence Directive (CSDDD). This article will look at the transformation, scope, and effectiveness of compulsory human rights and environmental due diligence frameworks in various jurisdictions. It will help to assess the effect on corporate governance, supply chain transparency, and accountability, and find the major challenges and opportunities to harmonise at the transnational level. Qualitative research design has been used, and it is based on the doctrinal analysis of law, critical comparison of statutes, case law, and secondary literature, and even comparative analysis of regulatory frameworks among jurisdictions. Articles in academic journals, legal commentary, policy papers, and official legislative documents were reviewed systematically to determine the trends in compliance, enforcement, and governing outcomes. Results indicate an increased overlap in legislative initiatives to introduce human rights and environmental due diligence into corporate practice, albeit with wide differences in application and implementation across regulations. The French Duty of Vigilance and the German LkSG are strict examples of corporate responsibility, and the UK Modern Slavery Act has been accused of laxity in enforcement. The future CSDDD is expected to offer a more harmonised approach at the EU level; however, its extraterritorial scope and balancing of the competitiveness of businesses with human-protecting rights measures are still disputed. All in all, companies are feeling the pressure of heightened compliance, and the evidence is mixed on whether this has led to substantive improvements for the workers and communities affected. The introduction of mandatory due diligence laws has changed the paradigm of voluntary corporate social responsibility to a mandatory requirement of the law. Although these frameworks have improved the global management of business and human rights, there are still problems with how to make these systems effective, eliminate the ritualistic nature of compliance, and deal with the power asymmetry of global supply chains. It is concluded in the study that there is a need to further harmonise the legislative measures and enforce them in a robust manner, and incorporate worker-led practices in ensuring legislative reforms yield significant protection of human and environmental rights.