At a glance
- Business and Trade Secretary Jonathan Reynolds announced the commitment on Nov. 5 after a review of responsible business conduct.
- For allocators, supply-chain human rights work moves from voluntary reporting into an obligation a regulator can test, with withdrawal of goods as the backstop.
- The rules would apply to UK companies and to non-UK businesses with UK-generated revenue above £350 million.
UK companies with more than £350 million in revenue would be required to identify and address human rights and forced-labor risks in their supply chains under legislation the government committed to introduce.
Business and Trade Secretary Jonathan Reynolds announced the commitment on Nov. 5 after a review of responsible business conduct. The review found the existing framework for preventing forced labor "fragmented and overly reliant on voluntary action and reporting measures," leaving the UK "out-of-step" with other major economies.
For allocators, supply-chain human rights work moves from voluntary reporting into an obligation a regulator can test, with withdrawal of goods as the backstop. A portfolio company above the threshold will need defensible supplier mapping, which puts the diligence file rather than the sustainability report at the center of a review.
The rules would apply to UK companies and to non-UK businesses with UK-generated revenue above £350 million. Companies would need to identify, assess and address risks of human rights abuses and labor exploitation in their operations and supply chains. The legislation is anticipated to align with the OECD Guidelines for Responsible Business Conduct and the UN Guiding Principles on Business and Human Rights.
Reynolds said the law will carry enforcement powers, including a regulator able to investigate businesses suspected of placing goods made with forced labor on the market and direct their withdrawal. Withdrawal could be ordered where due diligence obligations have not been met and forced labor is identified.
The announcement follows U.S. tariffs on UK imports imposed earlier this year after the U.S. Trade Representative listed the UK among trading partners failing to effectively enforce a ban on forced-labor goods, ESG Today reported. The UK review predates the tariffs, and the announcement cited the need to align with major trading partners.
Investors, business associations and civil society welcomed the move but called on the government to cover environmental due diligence as well, Responsible Investor reported. Drafting legislation will determine whether environmental due diligence is included.
Reported by the Policy & Disclosure desk from ESG Today and Responsible Investor. Published . Corrections