The Current Status of Business vs Human Rights Due Diligence

These last weeks, across the domains of conflict commodity sanctions in Sudan, the EU's evolving regulatory architecture (reporting, forced labour, procurement, deregulation), and Australia's shift toward criminal liability for businesses for lack of protection against slavery — the dominant trend is unmistakable: human rights due diligence is migrating from voluntary commitment and disclosure-only frameworks, toward enforceable, consequence-bearing obligations. 

The recent sanctions on gold trade with Sudan - banning the purchase, import, or transfer of gold originating in Sudan, alongside a ban on exporting mercury and cyanide—chemicals central to artisanal gold mining—to Sudan ; and OHCHR guidance on gum arabic trade with Sudan, show that conflict-linked supply chains attract both legal prohibition and heightened human rights due diligence expectations simultaneously.

The ongoing saga of the EU framework, despite internal tensions between strengthening and diluting instruments, is building an interconnected system where reporting (ESRS), market-access prohibition (Forced Labour Regulation), and public procurement leverage should ideally reinforce each other—although gaps and rollbacks are threatening coherence.

Australia's potential reforms to its (counter) Modern Slavery Act, represent perhaps the starkest inflection point, transforming eight years of paper-based reporting into potential criminal liability.

Why wiring human rights compliance into business architecture matters:

(a) Financial risk mitigation. Non-compliance now carries direct financial consequences: sanctions exposure for Sudan-linked gold trade, forced-labour product seizures and market exclusion under EU rules, potential criminal fines in Australia, and US tradetariffs of up to 12.5% for countries deemed insufficiently active on stoppping forced labour. Supply chain disruptions from seized shipments, contract terminations, and litigation costs compound these direct penalties. Companies that treat due diligence as an episodic compliance reporting exercise rather than embedded architecture will face reactive, costly interventions—precisely the scenario these frameworks are designed to penalise.

(b) Sustainable long-term survival. Beyond immediate penalties, the regulatory convergence across jurisdictions means that companies operating internationally face increasingly harmonised expectations. Businesses that build human rights due diligence into operational structures— SAP/ERP, DPP, supplier codes, traceability systems, stakeholder engagement mechanisms, board-level oversight, and integrated risk management—gain first-mover advantages: access to procurement markets with sustainability criteria, investor confidence under enhanced disclosure regimes, resilience against sudden regulatory shifts, and the trust of consumers, communities and government.

Conversely, those relying on minimal compliance or loopholes face mounting exposure as enforcement tightens globally.

The structural argument is straightforward: bolted-on compliance or vague reporting fails under pressure; built-in compliance adapts, survives, and creates competitive advantage in a world where the costs of human rights failure are rising and the tolerance for negligence is disappearing.

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