The business case for human rights
GoodBlog | read time: 5 min
Published: 13 May 2026
The expectation for organisations to manage their human rights impacts is not a new one. The UN Guiding Principles on Business and Human Rights (UNGPs), introduced over a decade ago, established a common framework for how companies identify, prevent and address human rights risks across their operations and value chains. Although not legally binding, the UNGPs have increasingly shaped regulation and market expectations, narrowing the gap between voluntary guidance and mandatory requirements
However, meeting these expectations in practice has become more complex. Expanding regulation has translated broad expectations into more defined due diligence and accountability requirements, including the EU Corporate Sustainability Due Diligence Directive, France’s duty of vigilance law and Germany’s supply chain due diligence requirements. At the same time, geopolitical instability, tighter budgets and pressure to prioritise short-term investment are forcing many businesses to reassess how far they can meet growing expectations alongside commercial pressures.
In this context, does the business case for human rights need to be made more forcefully? A 2025 UNDP study, supported by the World Benchmarking Alliance, offers some useful insights. Analysing five years of data from 235 publicly listed companies operating in higher-risk sectors, the study found that a ten percent improvement in Corporate Human Rights Benchmark scores was associated with roughly a one percent increase in return on assets. It also found no evidence that markets penalise companies for investing in human rights, with valuations and future earnings expectations remaining stable or slightly positive for stronger performers. Taken together, the findings suggest that stronger human rights performance is not only compatible with financial performance, but may also contribute to improved business outcomes.
For human rights practitioners, this matters not because it replaces the regulatory or ethical imperative, but because it strengthens the case for sustained investment in due diligence at a time when resources are under pressure. The question is no longer whether a business case exists, but how it should shape day-to-day decision-making.
When human rights risks become business risks
The business case for human rights is often found in the ordinary decisions that shape how a business operates. Decisions about pricing, delivery expectations, suppliers and where to operate influence cost and performance, but they also shape pay, working hours, safety and the treatment of workers and communities. These day-to-day commercial pressures are often at the root of systemic human rights issues.
Pressure on price or delivery schedules can affect how suppliers manage their workforce, sometimes leading to excessive overtime or insecure subcontracting. Tighter production plans can increase the risk of accidents and weaken safety standards. Expanding into new markets without understanding local labour conditions can expose businesses to disputes, delays and regulatory scrutiny.
When these risks are missed, they can quickly escalate into operational disruption that affects delivery, continuity and cost, while becoming significantly harder to contain. Research on supply-chain disruption shows that operational failures can carry substantial financial consequences, with disruption costs sometimes running into a meaningful proportion of annual revenue for large companies. Yet while addressing these issues is often assumed to be costly, the UNDP evidence suggests otherwise. Improvements in human rights performance are not associated with lower operating margins or cash flow and, over time, are linked to stronger returns. Companies starting from a weaker position or with less mature programmes also tend to see the most pronounced gains.
This is where human rights due diligence and impact assessment become commercially relevant. When integrated into procurement, operations and supplier management, they help bring commercial and compliance pressures into the same conversation. By improving visibility into supplier practices and operational risks, businesses are better able to identify and address problems before they escalate into more serious disruption or disputes.
Regulatory exposure and reputational risk
Reputational risk has also changed in character. Stakeholders are no longer asking whether a company has a human rights policy; they are asking whether it can demonstrate how those commitments work in practice. Companies that cannot do so face growing scrutiny from investors, lenders, customers and employees alike, all of whom increasingly see human rights performance as an indicator of how well a business is governed and how effectively it manages risk.
There is also a significant financial dimension to this scrutiny. Serious social and human rights controversies, such as labour rights violations, unsafe working conditions or failures in supply-chain oversight, can increase financing costs as lenders and investors apply a risk premium to reflect potential legal, operational and reputational exposure. Conversely, companies that can demonstrate a systematic approach to identifying and managing salient human rights risks are generally viewed as lower risk and may benefit from lower costs of capital over time.
Managing human rights risk for long-term resilience
Human rights risks often emerge where oversight is weakest, particularly in complex supply chains or markets with weaker labour protections. Issues such as excessive working hours, unsafe conditions or undisclosed subcontracting can escalate quickly if they are not identified early.
Companies that manage these risks effectively tend to integrate human rights considerations into supplier selection, onboarding and ongoing supplier management, rather than relying solely on periodic audits. This becomes even more important in conflict-affected or higher-risk environments, where standard due diligence approaches are rarely sufficient. In these situations, more in-depth due diligence is necessary to ensure the risks are properly understood and mitigated, with stronger stakeholder engagement and grievance mechanisms playing an even more critical role than in other contexts.
Maintaining a clear understanding of operations and supply chains is not always straightforward, especially for businesses operating across multiple jurisdictions and regulatory regimes. However, our experience shows that a measured, risk-based approach makes this manageable in practice. In most cases, this means understanding where the most significant risks sit, how they arise and where oversight needs to be strongest. Such an approach enables organisations to prioritise resources where they are most needed and mitigate adverse impacts more effectively.
In addition, companies that understand their most significant human rights risks are generally better placed to adapt to changing regulatory, operational and geopolitical pressures. Over time, this strengthens operational resilience by helping businesses focus resources more effectively, respond earlier to emerging issues and avoid more serious disruption later on.
Practical approaches for business leaders
A clear assessment of where the greatest exposure lies is the best place to start. Whether the greatest risk sits in the supply chain, a particular market or a business unit, that assessment should determine which due diligence processes are needed, where impact assessments will add most value and which suppliers require closer attention.
Governance is equally important. Data from the Corporate Human Rights Benchmark shows that board-level accountability for human rights has increased significantly in recent years. In our experience, clear senior ownership is one of the strongest indicators of whether commitments actually change how a business operates. For compliance and legal teams making the case internally, that is often the critical question: not what the programme looks like, but who owns it and whether they have the authority to act.
Grievance mechanisms also play an important role in identifying and addressing risks early and are increasingly embedded within emerging regulatory standards, including the EU CSDDD. A well-designed mechanism does more than provide a reporting channel; it gives companies earlier warning of issues that might otherwise only come to light once they have become serious problems. Targeted monitoring and training for teams facing the greatest commercial and human rights pressures can help reinforce this approach.
Human rights as a strategic opportunity
Human rights are no longer a reputational consideration sitting alongside the business. They are increasingly part of how businesses operate, make decisions and manage risk. Regulatory requirements are tightening, expectations continue to rise and the financial evidence no longer supports the assumption that strong human rights performance comes at a cost. Companies that respond with clear priorities and practical implementation are likely to be better positioned than those waiting for external pressure to force the issue.
At GoodCorporation, we work with organisations to strengthen how they identify and manage human rights risks across operations and supply chains, helping embed practical approaches into governance, procurement and decision-making. To find out more about our services in this area, visit our human rights webpage or get in touch to speak to a member of the team.
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