The UK’s (absent) regulation of human rights risks

During her time as Foreign Secretary, Liz Truss strongly condemned China’s targeting of Uyghur Muslims and other ethnic minorities in Xinjiang. She stated that evidence showed forced labour, severe restrictions on freedom of religion, the separation of parents from their children, forced birth control, and mass incarceration. She reiterated the UK’s commitment to hold China to account for its human rights violations. While these statements have been made, investors, think tanks and policymakers have called for the UK to take a more vigorous approach to regulate human rights risks within supply chains and labour standards. 

In the UK, the last leading piece of business-related human rights legislation was the Modern Slavery Act in 2015. As a comparison, the EU has made great strides in the last decade to incorporate appropriate and specific human rights measures into legislation focused on the economy, most notably the Corporate Sustainability Due Diligence Directive (CSDDD). The CSDDD is ambitious in nature and will apply to both EU and non-EU companies that are active in Europe. Essentially, it will lead to greater and more cohesive oversight of all levels of the supply chain. Although the Directive will have no direct applicability to the UK - and there are no concrete plans (as of yet) for the UK to review its approach - it will be challenging to ignore CSDDD in a truly global economy.

Alongside the pursuit of profit, corporations are beginning to consider geopolitical concerns and the social risk of their activities. This change in approach is reflected best in the Corporate Justice Coalition’s (CJC) urging of the UK government to adopt mandatory human rights and environmental due diligence legislation for businesses and financial institutions. The Coalition - which is made up of 39 investors who represent £4.5 trillion of assets under management - believe new laws should cover “the operations and value chains of all business enterprises and financial institutions” based in the UK and include appropriate provisions to hold companies liable if they fail to prevent human rights or environmental harms. The group’s statement follows the publication of CJC’s research showing that four out of five members of the British public would support a mandatory human rights and environmental due diligence law. Of course, while the responsibility of protecting human rights is shared, putting forward legislation lies mainly with government. 

The UK is gaining increased scrutiny on its failure to stay true to its word when it comes to protecting human rights. There was a recent announcement of legal action against Trade Secretary, Kemi Badenoch, by a former internment camp inmate in China in direct response to the absence of UK action in taking measures against human rights abuses in Xinjiang. The Transform Trade organisation found that UK companies operating overseas are afforded far greater legal protections than the citizens of the countries they invest in, leading to corporations getting away with human rights and climate change abuses. The necessity for the UK government to take a more active role is becoming clearer. Although the government has announced its intention to introduce a new Modern Slavery Bill, it has made no plans thus far to follow the EU’s lead in introducing a national-level mandatory due diligence law to increase transparency in supply chain provisions. 

There is a level of urgency in place for the UK to implement something similar to the EU, not only from an ethical standpoint, but clearly from an economic case too. Social responsibility has become a critical consideration for businesses and investors in transactions as new regulations are targeting social issues. There is no longer an option for the UK government to standby and not implement effective measures against human rights violations. By doing so, the UK indirectly allows for businesses to waive morality and ethical values in exchange for higher profit margins. Whilst the element of sovereignty holds true, upholding and fulfilling human rights and fundamental freedoms is a global matter. It should not take a backseat in light of geopolitical and economic stability. There is a need, both nationally and internationally, for appropriate regulation to become a more central focus for the UK government. While most EU regulations do not immediately affect UK companies, regulatory divergence is already challenging cross-border firms and their value chains. 

Stricter regulation that seeks to address forced labour and other human rights concerns in global supply chains is inevitably growing in the EU and US - when will the new UK government follow suit? UK investors and corporations must determine how they can get ahead in actively investigating and removing transparency issues within their supply chains.