Human Rights Due Diligence May Repeat the Limitations of CSR

Emerging frameworks still rely heavily on corporate disclosure and monitoring systems – like CSR initiatives, which often fail to make fundamental improvements in workers’ lives. 

Most of the world’s manufacturing capacity is concentrated in Asia, yet an increasing number of rules intended to regulate global supply chains are being developed in Europe. The European Union’s recent human rights due diligence legislation reflects this trend. Although these laws are adopted and implemented within Europe, their practical focus often lies in Asian manufacturing hubs, where a large share of global consumer goods for Western markets are produced.

To address labor abuses in global supply chains, European governments and the EU are increasingly promoting human rights due diligence (HRDD) legislation. These laws represent a significant shift in how governments seek to regulate corporate responsibility. Yet, similar to earlier Corporate Social Responsibility (CSR) initiatives, these emerging frameworks continue to rely heavily on corporate disclosure and monitoring systems.

For more than three decades, companies’ CSR programs have included codes of conduct, supplier audits, and sustainability reports describing efforts to improve labor conditions. While these initiatives have helped establish compliance systems, they have often failed to make fundamental improvements in workers’ lives. Recurring sweatshop scandals, wage theft cases, and forced labor allegations  suggest that voluntary corporate commitments have produced only modest improvements in working conditions.

Although recent EU due diligence laws are attempting to address these shortcomings by linking supply chain oversight to legally binding frameworks, many of them continue to rely heavily on corporate self-reporting and internal compliance systems that replicate the logic of CSR. As a result, there is a risk that human rights compliance will become overly procedural – that is, performative rather than substantive. Without objective, even external enforcement mechanisms and independent sources of information, such laws risk becoming just another language-heavy list of regulations that is wordier but no more effective in on-the-ground prevention of human rights abuses.  

These challenges are becoming increasingly visible as debates intensify over how to enforce the European Union’s Corporate Sustainability Due Diligence Directive even as the European Commission is preparing its implementation guidelines  for the EU’s Forced Labor Regulation.

Early experience reveals limitations of these frameworks. Germany’s Supply Chain Due Diligence Act took effect in 2023, yet enforcement actions such as fines, public sanctions, and mandatory corrective measures have remained limited as regulators adjust their enforcement approach. So far, no major financial penalties have been imposed, and it remains unclear whether the law has significantly, if at all, improved labor conditions in overseas factories.

History suggests that due diligence laws will remain limited if they rely primarily on corporate self-reporting. When companies are responsible for identifying and disclosing labor risks within their own supply chains, they face incentives to underreport violations or frame problems as isolated incidents rather than systemic issues.

At the same time, companies operate within an intense global race for profit and market share. Fierce price competition – further intensified by ultra-low-cost e-commerce platforms such as Amazon, Temu, and Shein – pushes cost pressures down the supply chain and compresses delivery schedules. Suppliers often operate on extremely thin margins and respond by lowering wages or demanding excessive overtime from workers. Low base wages force many workers to rely on long overtime hours to maintain basic livelihoods, making excessive working........

© The Diplomat