In the past few weeks, two European courts issued rulings that every Procurement Director should know about. One in London. One in Paris. Both concerned human rights abuses in corporate supply chains, with the parent company facing proceedings in its home courts. Yet, a large majority of the world’s biggest companies still score zero when asked about their systems for managing human rights risks. (Why? That’s for another article on another day.)
The business case for implementing human rights due diligence (HRDD) has been made, repeatedly. But, in 2026, is that case getting stronger or weaker – and what new developments should inform that debate? The answer is that it is getting stronger, but the sharpest arguments are no longer primarily about compliance. They are about operational resilience, supply chain stability, and what it costs, commercially, not to know where your goods come from, under what conditions, and at what cost to workers.
The Standard Business Case, Briefly
The regulatory exposure is now both real and global. National due diligence laws in France, Germany and Norway are already in force and already generating litigation. A growing number of jurisdictions beyond Europe – representing a substantial share of global GDP – are putting some form of mandatory human rights or ESG-related reporting in place. The direction of travel is clear, the geographical spread is widening. (The most significant single instrument – the EU’s Corporate Sustainability Due Diligence Directive – CS3D – is addressed in its own section below.)
Market access pressure reaches far beyond the companies formally in regulatory scope. As large firms are pushed to implement HRDD, they are pushing equivalent requirements down their supply chains as a condition of doing business. Suppliers that cannot meet these expectations, or demonstrate credible progress, are starting to lose tenders or face costly delays while they retrofit basic systems.
Reputational risk has not disappeared either; it has accelerated. The time-lapse between a “bad news” supply chain story and mainstream coverage has shortened dramatically. In consumer‑facing sectors especially, stronger human rights performance is increasingly resonating with customers, creating upside in market share and revenue, while companies that neglect these risks are seeing brand damage arrive quickly and prove difficult to reverse.
Investor behaviour is shifting in the same direction. Analyses of large‑cap companies point to significant increases in human rights disclosures and supplier audits across sectors and regions. Investors are gradually starting to treat HRDD not only as a way to mitigate downside, but as a signal of overall resilience and management quality. Companies that have mapped their supply chains and built functioning supplier relationships are increasingly seen as better placed to handle shocks in general.
CS3D After Omnibus: Less Ambitious, Still Structural
The EU’s CS3D as amended by Omnibus I is expected to be in force for in-scope companies by mid-2029. It would be misleading to describe the Omnibus process as anything other than a reduction in ambition. Thresholds were raised, leaving only the largest companies directly in scope. Penalties for non‑compliance were capped at 3% of global turnover (instead of the original 5% ceiling), and the civil‑liability regime, including specific avenues for unions and NGOs to bring claims, was removed. But the signal to business did not disappear with those changes. The core risk‑based due diligence duty – to scope, assess, prioritise, act, monitor and report – remains.
National legislators are pursuing their own due diligence laws regardless. Courts, as recent cases show, are developing liability routes that do not depend on CS3D at all. All this means that companies would be ill-advised to treat Omnibus as permission to “do less”.
Litigation and Enforcement: No Longer Theoretical
The Dyson litigation in the UK captures this shift. Limbu & Ors v Dyson Technology Ltd has been progressing through the courts since 2022, brought by 24 Nepalese and Bangladeshi workers alleging serious abuses in third‑party Malaysian manufacturers supplying Dyson, rather than in Dyson’s own subsidiaries. In 2025, the UK Supreme Court declined to let Dyson challenge jurisdiction, allowing the claims to proceed in the English courts, and the matter settled just last month (February 2026). The terms remain confidential, but the jurisdictional principle is clear: UK companies can face litigation at home for alleged human rights harms in their external supply chains, particularly where group policies are designed and overseen from the UK. In a separate case, World Uyghur Congress v NCA, the Court of Appeal recognised that trading in goods linked to forced labour can raise money‑laundering concerns under the Proceeds of Crime Act.
The Yves Rocher judgment in France pushes in the same direction. Earlier this month, the Paris Judicial Court ruled against the Yves Rocher Group for failing to fulfil its duty of vigilance in relation to a Turkish subsidiary, where dozens of workers who had joined a trade union were dismissed between 2018 and 2019. It is the first time a French company has been held liable under the Duty of Vigilance Law for conduct outside France. The court found that the group’s risk mapping had failed to capture risks linked to subsidiaries, that the parent had enough information to identify a serious risk to trade‑union rights, and that there was a causal link between those omissions and the harm suffered. The damages award was modest, but the legal direction is not.
Taken together, these cases show courts in two major European jurisdictions saying the same thing: parent companies can be held responsible for what happens in their value chains when they had information that should have triggered action and did nothing. Judges are becoming less interested in whether a policy exists and more interested in whether it is effectively implemented.
The enforcement environment around forced labour is reinforcing the point. The EU Forced Labour Regulation will apply to any goods placed on, sold within or exported from the EU where forced labour is found at any point in the chain, and is expected to start applying in late 2027. It will apply regardless of company size and will operate on a familiar logic: a presumption of non‑compliance, a burden of proof on the operator, and the power to refuse goods entry or withdraw them from the market.
In the United States, the Uyghur Forced Labor Prevention Act has already moved from concept to practice. US Customs and Border Protection has stopped several thousand shipments a year for review, with numbers rising and denial rates particularly high for shipments from China. Since the rebuttable presumption took effect in 2022, CBP has examined well over ten thousand shipments worth many billions of dollars, and enforcement has spread beyond apparel and polysilicon into lithium, copper, steel, PVC and aluminium — materials that sit at the core of automotive and electronics manufacturing. A “Made in Malaysia” or “Assembled in Mexico” label offers no protection if upstream inputs are linked to prohibited entities.
Critically, UFLPA does not require proof of intent or negligence. What it requires is evidence: documentation and data that demonstrate supply chain visibility. Businesses without that evidence are discovering the consequences at the border. In practice, companies preparing for the EU Forced Labour Regulation and for UFLPA are preparing for the same thing. Lawyers acting for claimants, meanwhile, are increasingly asking courts to go beyond damages and order organisational changes such as stronger escalation routes and effective grievance mechanisms. The bar for what counts as an adequate response is rising on both the litigation and regulatory fronts.
Resilience: The Real Reason to Focus on HRDD in 2026
The arguments above are all, at their core, compliance arguments – regulatory exposure, litigation risk, market access, reputational consequence. They are well-established and they are strengthening. But the argument that is doing the most work in 2026 is a different one entirely: operational resilience. In a period of sustained geopolitical disruption hitting supply chains from multiple directions at once, companies that know their supply chains are simply better placed than those that don’t.
Companies that have invested in meaningful HRDD tend to know their supply chains beyond Tier 1 and to have built relationships deep enough that information flows in both directions. They understand their logistics dependencies and realistic alternatives. Those are exactly the capabilities you need when disruption hits.
The pattern was already visible during COVID‑19. Businesses that had invested in risk‑based HRDD and in two‑way supplier relationships generally returned to something like “business as usual” faster after the first lockdown than peers that had not. The logic is straightforward: knowing your supply chain, and having relationships that can hold under pressure, is a general operational capability that pays off in both compliance and crisis contexts.
That same infrastructure is being tested again now. In recent weeks alone, conflict and security tensions around the Strait of Hormuz have forced major carriers to reroute vessels via the Cape of Good Hope, adding days to Asia-Europe transits and driving up insurance and logistics costs. (Maersk and others have been diverting ships around the Cape, adding eight to fifteen days to journeys). The Strait of Hormuz usually carries around a fifth of global petroleum trade, so disruption there hits both energy flows and merchandise trade, and helps push marine insurance premiums upwards too.
Similar volatility is playing out in trade policy. Last year’s US tariff shocks created exactly the kind of rapid, pressure-driven sourcing decisions that HRDD is designed to guard against. Reciprocal tariffs imposed duties of 37–49% on apparel from major sourcing countries including Bangladesh, Cambodia, Vietnam and Sri Lanka – hitting so broadly that there was no obvious low-tariff alternative. Buyers responded by delaying orders, renegotiating terms, shifting production between countries at speed, and in some cases moving back toward China. At factory level, the consequence was order delays, buyer indecision, and pressure on suppliers to absorb costs they could not absorb, with predictable risks of effects on workers. When sourcing decisions are made at that pace and under that pressure, without visibility into labour conditions and factory capacity at the destination, buyers are simultaneously creating human rights risk, reputational risk and legal risk.
In each of these examples, supply chain relationships determined the quality of the response. Companies that had invested in genuine HRDD – mapping beyond Tier 1, building real supplier relationships, establishing two-way information flows – were better placed to respond strategically than those that had not. In the tariff case, buyers making rapid sourcing decisions without that visibility were not just commercially exposed; they were simultaneously generating the human rights, reputational and legal risks the business case warns about. HRDD, done properly, means knowing where your goods come from, under what conditions, and what your supplier relationships actually are. That is the same knowledge base you need to respond to geopolitical disruption to your supply chain. Investing in one is investing in both.
An Honest Counterpoint
It’s true the picture is not uniformly strengthening. The EU Omnibus process has reduced formal regulatory pressure on a lot of companies. Meanwhile, the restructuring of the US State Department’s Bureau of Democracy, Human Rights, and Labor and the dismantling of USAID programmes have removed technical and diplomatic support that many companies (and consultants!) relied on for risk intelligence in complex sourcing environments. Some clear ESG retrenchment is visible in North American capital markets.
These are real counterforces, but they are primarily political and policy forces. The litigation exposure, the expanding national legislation, the integration of human rights risk into investor analysis, and the operational resilience case are structural and are moving independently of any one government’s position. It is also worth noting that the US administration driving the multilateral retreat is the same administration overseeing record UFLPA enforcement activity. Human rights policy and trade enforcement are not travelling in the same direction – which makes the case for HRDD more robust, not less, regardless of which signal you choose to watch.
Why 2026 is an Inflection Point
The business case for HRDD is not new. What is new is the strength of converging factors: a regulatory framework still expanding; a litigation and enforcement environment shifting from theoretical to demonstrably live; and a geopolitical context in which supply‑chain resilience has become a direct and immediate commercial advantage.
None of this is happening in a benign environment. Businesses are navigating rising costs, market volatility and shrinking budgets at the same time as these pressures are mounting. The question is not whether you can afford to act. Increasingly, it is whether you can afford not to. How to do this practically and proportionately is the subject of the next post in this series.
For now, send this article to your Procurement Director. Then get in touch with us. Whether you are just starting out on your HRDD journey, or seeking to strengthen your existing system – we can help you move from insight to impact.
CLC is a specialist Business & Human Rights consultancy. We help companies understand, manage and demonstrate their human rights performance across global supply chains.
