Global Market Leaders: A Business and Human Rights Law Overview
Global Trends in Business and Human Rights
Global trends in business and human rights are increasingly characterised by a bifurcated dynamic: retrenchment in certain quarters of the United States and Europe, alongside sustained enforcement through trade measures and a gradual progression toward mandatory frameworks in parts of Asia-Pacific.
In the EU, 2025 has witnessed continued legislative momentum toward simplifying and recalibrating the scope of the Corporate Sustainability Due Diligence Directive (CSDDD). Even in its streamlined form, CSDDD will shape human rights due diligence (HRDD) practices not only for EU companies but also for non-EU companies – including Japanese companies – both through direct applicability in certain cases and, more commonly, through value-chain expectations. In parallel, trade measures grounded in human rights considerations are transitioning from legislation to enforcement. Following the adoption of the EU Forced Labour Products Ban Regulation in November 2024, EU member states began establishing competent authorities with investigative powers throughout 2025.
In the United States, the business and human rights landscape defies simple characterisation. Resistance to ESG and DEI initiatives has persisted, while trade measures rooted in human rights concerns remain actively deployed, influenced in part by US–China geopolitical tensions. Enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) decelerated in 2025 by value but has since regained momentum, and the forced labour prohibition under Section 307 of the U.S. Tariff Act of 1930 has been applied in several cases. The de minimis rule for low-value shipments – originally a customs facilitation measure – has drawn criticism as a loophole potentially undermining enforcement; a US executive order abolishing this exception was issued on 30 July 2025.
By contrast, notable developments have emerged across parts of the Asia-Pacific region, including the adoption of national action plans and movements toward mandatory frameworks, with significant proposals in South Korea and New Zealand reinforcing the broader shift from voluntary commitments to demonstrable processes and outcomes.
Japan finds itself within – and is affected by – these cross-currents. Japan revised its National Action Plan on Business and Human Rights in December 2025, newly identifying eight priority areas. Japan is also reforming labour migration governance, replacing the widely criticised Gino Jishu-sei scheme with the Ikusei Shuro scheme, scheduled to take effect on 1 April 2027. High-profile human rights issues in Japan’s entertainment and media industries have further heightened public scrutiny regarding human rights. Meanwhile, Japanese companies continue to confront pressing and operationally complex forced-labour risks in Southeast Asia, rendering effective human rights due diligence both a priority and a practical challenge.
Forced Labour Issues in Overseas Supply Chains
According to the International Labour Organization (ILO), adult migrant workers are more than three times as likely to be subjected to forced labour as adult non-migrant workers. Consequently, a significant number of migrant workers worldwide are trapped in conditions of forced labour, and Japanese companies are not immune to this risk.
Like other multinational corporations, Japanese companies operating in or maintaining supply chains across various jurisdictions – including Southeast Asia – have encountered substantial human rights challenges, particularly concerning the forced labour of migrant workers. Many migrant workers incur considerable debts to cover recruitment fees and are especially vulnerable due to their precarious legal status and cultural or linguistic barriers. These factors frequently give rise to debt bondage and forced labour.
In such circumstances, Japanese companies face an array of legal and operational risks. They may attract severe criticism from human rights organisations and experts and may be found in violation of local labour laws and regulations, exposing them to potential legal sanctions. Several jurisdictions, including the United States, prohibit the importation of goods produced with forced labour. The EU has developed similar regulations expected to enter into force in 2027. Companies may also face litigation in foreign jurisdictions. Under the U.S. Trafficking Victims Protection Reauthorization Act, victims of forced labour may bring civil actions in United States district courts against perpetrators, including persons who knowingly benefit from – or attempt or conspire to benefit from – forced labour. In 2024, the UK Supreme Court upheld the Court of Appeal’s decision that English courts possess jurisdiction to hear claims brought by migrant workers allegedly subjected to trafficking and labour abuses in Malaysia. These examples demonstrate that even where a company’s country of incorporation does not impose import bans on products made with forced labour, the presence of forced labour in supply chains poses critical legal and reputational risks.
We advise numerous Japanese corporations navigating these complex situations where migrant workers in their supply chains are alleged to be subject to forced labour, assisting clients in addressing both human rights risks and corporate risks.
Trends and Challenges in Human Rights Due Diligence by Japanese Companies
Since the adoption of the UN Guiding Principles on Business and Human Rights in 2011, progress by Japanese companies in implementing HRDD has not kept pace with developments in other advanced economies. However, following the formulation of Japan’s National Action Plan on Business and Human Rights in 2020 and the issuance of the “Guidelines on Respecting Human Rights in Responsible Supply Chains” by the Japanese government in 2022, Japanese companies have begun to accelerate their efforts.
A report published by the UN Working Group in May 2024 observed that HRDD uptake among SMEs remains a persistent challenge. This assessment is corroborated by a 2025 survey conducted by the Japan External Trade Organization (JETRO) targeting Japanese companies operating overseas, which found that while HRDD has been implemented by slightly over 30% of all responding companies, only 16.4% of small and medium-sized enterprises have done so. Accordingly, the revised National Action Plan includes provisions promoting HRDD initiatives among SMEs. The same survey further indicates that even among large enterprises, only 37.1% have implemented HRDD, meaning that a majority have yet to commence such initiatives – underscoring that broader adoption remains an ongoing challenge.
One central challenge in implementing HRDD is gaining comprehensive visibility over the entire supply chain. In modern industrial structures, supply chains tend to be extensive, and for Japanese companies in particular – many of which import resources and raw materials – cross-border supply chains are common, rendering it difficult to identify and monitor suppliers beyond tier-two.
Additional challenges arise in collecting information from suppliers. For overseas suppliers in particular, conducting on-site audits is often impracticable, resulting in reliance on surveys and questionnaires. In some instances, suppliers fail to respond or provide responses that do not accurately reflect actual conditions, impeding proper identification and assessment of adverse human rights impacts and delaying remediation. While increasing on-site audits may be one approach, resource constraints – especially for SMEs – render this infeasible in many cases. One countermeasure involves establishing grievance mechanisms directly accessible to victims of human rights violations at supplier sites; we have advised clients on implementing such mechanisms. Where developing in-house mechanisms proves impractical, a growing number of companies have turned to external platforms, such as the dialogue-based remediation platform offered by the Japan Center for Engagement and Remedy on Business and Human Rights (JaCER).