Human Rights Due Diligence May Repeat the Limitations of CSR

Emerging frameworks still rely heavily on corporate disclosure and monitoring systems – like CSR initiatives, which often fail to make fundamental improvements in workers’ lives. 

Most of the world’s manufacturing capacity is concentrated in Asia, yet an increasing number of rules intended to regulate global supply chains are being developed in Europe. The European Union’s recent human rights due diligence legislation reflects this trend. Although these laws are adopted and implemented within Europe, their practical focus often lies in Asian manufacturing hubs, where a large share of global consumer goods for Western markets are produced.

To address labor abuses in global supply chains, European governments and the EU are increasingly promoting human rights due diligence (HRDD) legislation. These laws represent a significant shift in how governments seek to regulate corporate responsibility. Yet, similar to earlier Corporate Social Responsibility (CSR) initiatives, these emerging frameworks continue to rely heavily on corporate disclosure and monitoring systems.

For more than three decades, companies’ CSR programs have included codes of conduct, supplier audits, and sustainability reports describing efforts to improve labor conditions. While these initiatives have helped establish compliance systems, they have often failed to make fundamental improvements in workers’ lives. Recurring sweatshop scandals, wage theft cases, and forced labor allegations  suggest that voluntary corporate commitments have produced only modest improvements in working conditions.

Although recent EU due diligence laws are attempting to address these shortcomings by linking supply chain oversight to legally binding frameworks, many of them continue to rely heavily on corporate self-reporting and internal compliance systems that replicate the logic of CSR. As a result, there is a risk that human rights compliance will become overly procedural – that is, performative rather than substantive. Without objective, even external enforcement mechanisms and independent sources of information, such laws risk becoming just another language-heavy list of regulations that is wordier but no more effective in on-the-ground prevention of human rights abuses.  

These challenges are becoming increasingly visible as debates intensify over how to enforce the European Union’s Corporate Sustainability Due Diligence Directive even as the European Commission is preparing its implementation guidelines  for the EU’s Forced Labor Regulation.

Early experience reveals limitations of these frameworks. Germany’s Supply Chain Due Diligence Act took effect in 2023, yet enforcement actions such as fines, public sanctions, and mandatory corrective measures have remained limited as regulators adjust their enforcement approach. So far, no major financial penalties have been imposed, and it remains unclear whether the law has significantly, if at all, improved labor conditions in overseas factories.

History suggests that due diligence laws will remain limited if they rely primarily on corporate self-reporting. When companies are responsible for identifying and disclosing labor risks within their own supply chains, they face incentives to underreport violations or frame problems as isolated incidents rather than systemic issues.

At the same time, companies operate within an intense global race for profit and market share. Fierce price competition – further intensified by ultra-low-cost e-commerce platforms such as Amazon, Temu, and Shein – pushes cost pressures down the supply chain and compresses delivery schedules. Suppliers often operate on extremely thin margins and respond by lowering wages or demanding excessive overtime from workers. Low base wages force many workers to rely on long overtime hours to maintain basic livelihoods, making excessive working hours a structural feature of global supply chains.

The limits of CSR commitments illustrate this problem. In the mid-1990s, a wave of sweatshop scandals pushed global brands to adopt CSR standards, including a maximum 60-hour work week for supplier factories. Yet violations remained widespread. In 1999, I conducted field research at Yue Yuen Industrial (Holdings) Limited in Dongguan, then the world’s largest footwear manufacturer, employing roughly 150,000 workers and producing shoes for brands such as Nike and Adidas. Workers routinely worked more than 60 hours per week. Investigations conducted in 2025 reveal that, despite CSR directives, the 60-hour work week standard announced more than two decades ago has yet to be fully implemented across many brand supply chains. 

Similar patterns persist in global garment and footwear production. Investigations in Bangladesh, Cambodia, Vietnam, Indonesia, and parts of China document that, during peak production seasons, work weeks of 70 to 90 hours are not unusual. 

A further complication lies in the geography of regulation. CSR and HRDD frameworks are largely designed and promoted in advanced economies, while production remains concentrated in developing countries where labor law enforcement is weaker and independent unions often face significant restrictions. This separation between regulatory authority and production realities makes it difficult to collect credible information about working conditions.

In countries such as China, collecting labor-related evidence can itself carry legal risks, making effective enforcement difficult, if not impossible, to implement. China accounts for nearly one-third of the global manufacturing output. If supply chain regulations adopted in Europe or North America cannot be effectively enforced within Chinese production networks, the global impact of due diligence laws will be considerably weakened.

The United States has increasingly adopted a different approach. Rather than relying primarily on due diligence requirements, U.S. policy has used trade tools to influence global supply chains. Tariffs imposed under Section 301 of the Trade Act, along with enforcement mechanisms such as the Uyghur Forced Labor Prevention Act (UFLPA) and Customs and Border Protection’s Withhold Release Orders (WROs), illustrate a shift toward trade enforcement as a mechanism for addressing labor concerns in global supply chains.

If due diligence laws fail to produce meaningful improvements in labor practices within major manufacturing hubs in Asia, governments may increasingly rely on tariffs, import restrictions, and other trade measures. Such a shift risks accelerating the fragmentation of global trade as supply chains reorganize around competing regulatory and political systems.

For human rights due diligence to deliver meaningful improvements in workers’ rights, enforcement must extend beyond Western borders. Effective oversight should include independent factory investigations, anonymous worker testimony, and stronger legal protections for whistleblowers. Financial penalties imposed on non-compliant companies could be used to fund independent investigations, creating a self-rewarding enforcement system.

Ultimately, corporate behavior will change only when the cost of violating labor standards exceeds the economic gains from suppressing wages, extending working hours, or outsourcing production to informal workshops. Therefore, the success of human rights due diligence depends not on expanding compliance procedures, but on establishing credible and enforceable systems capable of reshaping the incentives that govern global supply chains.

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Most of the world’s manufacturing capacity is concentrated in Asia, yet an increasing number of rules intended to regulate global supply chains are being developed in Europe. The European Union’s recent human rights due diligence legislation reflects this trend. Although these laws are adopted and implemented within Europe, their practical focus often lies in Asian manufacturing hubs, where a large share of global consumer goods for Western markets are produced.

To address labor abuses in global supply chains, European governments and the EU are increasingly promoting human rights due diligence (HRDD) legislation. These laws represent a significant shift in how governments seek to regulate corporate responsibility. Yet, similar to earlier Corporate Social Responsibility (CSR) initiatives, these emerging frameworks continue to rely heavily on corporate disclosure and monitoring systems.

For more than three decades, companies’ CSR programs have included codes of conduct, supplier audits, and sustainability reports describing efforts to improve labor conditions. While these initiatives have helped establish compliance systems, they have often failed to make fundamental improvements in workers’ lives. Recurring sweatshop scandals, wage theft cases, and forced labor allegations  suggest that voluntary corporate commitments have produced only modest improvements in working conditions.

Although recent EU due diligence laws are attempting to address these shortcomings by linking supply chain oversight to legally binding frameworks, many of them continue to rely heavily on corporate self-reporting and internal compliance systems that replicate the logic of CSR. As a result, there is a risk that human rights compliance will become overly procedural – that is, performative rather than substantive. Without objective, even external enforcement mechanisms and independent sources of information, such laws risk becoming just another language-heavy list of regulations that is wordier but no more effective in on-the-ground prevention of human rights abuses.  

These challenges are becoming increasingly visible as debates intensify over how to enforce the European Union’s Corporate Sustainability Due Diligence Directive even as the European Commission is preparing its implementation guidelines  for the EU’s Forced Labor Regulation.

Early experience reveals limitations of these frameworks. Germany’s Supply Chain Due Diligence Act took effect in 2023, yet enforcement actions such as fines, public sanctions, and mandatory corrective measures have remained limited as regulators adjust their enforcement approach. So far, no major financial penalties have been imposed, and it remains unclear whether the law has significantly, if at all, improved labor conditions in overseas factories.

History suggests that due diligence laws will remain limited if they rely primarily on corporate self-reporting. When companies are responsible for identifying and disclosing labor risks within their own supply chains, they face incentives to underreport violations or frame problems as isolated incidents rather than systemic issues.

At the same time, companies operate within an intense global race for profit and market share. Fierce price competition – further intensified by ultra-low-cost e-commerce platforms such as Amazon, Temu, and Shein – pushes cost pressures down the supply chain and compresses delivery schedules. Suppliers often operate on extremely thin margins and respond by lowering wages or demanding excessive overtime from workers. Low base wages force many workers to rely on long overtime hours to maintain basic livelihoods, making excessive working hours a structural feature of global supply chains.

The limits of CSR commitments illustrate this problem. In the mid-1990s, a wave of sweatshop scandals pushed global brands to adopt CSR standards, including a maximum 60-hour work week for supplier factories. Yet violations remained widespread. In 1999, I conducted field research at Yue Yuen Industrial (Holdings) Limited in Dongguan, then the world’s largest footwear manufacturer, employing roughly 150,000 workers and producing shoes for brands such as Nike and Adidas. Workers routinely worked more than 60 hours per week. Investigations conducted in 2025 reveal that, despite CSR directives, the 60-hour work week standard announced more than two decades ago has yet to be fully implemented across many brand supply chains. 

Similar patterns persist in global garment and footwear production. Investigations in Bangladesh, Cambodia, Vietnam, Indonesia, and parts of China document that, during peak production seasons, work weeks of 70 to 90 hours are not unusual. 

A further complication lies in the geography of regulation. CSR and HRDD frameworks are largely designed and promoted in advanced economies, while production remains concentrated in developing countries where labor law enforcement is weaker and independent unions often face significant restrictions. This separation between regulatory authority and production realities makes it difficult to collect credible information about working conditions.

In countries such as China, collecting labor-related evidence can itself carry legal risks, making effective enforcement difficult, if not impossible, to implement. China accounts for nearly one-third of the global manufacturing output. If supply chain regulations adopted in Europe or North America cannot be effectively enforced within Chinese production networks, the global impact of due diligence laws will be considerably weakened.

The United States has increasingly adopted a different approach. Rather than relying primarily on due diligence requirements, U.S. policy has used trade tools to influence global supply chains. Tariffs imposed under Section 301 of the Trade Act, along with enforcement mechanisms such as the Uyghur Forced Labor Prevention Act (UFLPA) and Customs and Border Protection’s Withhold Release Orders (WROs), illustrate a shift toward trade enforcement as a mechanism for addressing labor concerns in global supply chains.

If due diligence laws fail to produce meaningful improvements in labor practices within major manufacturing hubs in Asia, governments may increasingly rely on tariffs, import restrictions, and other trade measures. Such a shift risks accelerating the fragmentation of global trade as supply chains reorganize around competing regulatory and political systems.

For human rights due diligence to deliver meaningful improvements in workers’ rights, enforcement must extend beyond Western borders. Effective oversight should include independent factory investigations, anonymous worker testimony, and stronger legal protections for whistleblowers. Financial penalties imposed on non-compliant companies could be used to fund independent investigations, creating a self-rewarding enforcement system.

Ultimately, corporate behavior will change only when the cost of violating labor standards exceeds the economic gains from suppressing wages, extending working hours, or outsourcing production to informal workshops. Therefore, the success of human rights due diligence depends not on expanding compliance procedures, but on establishing credible and enforceable systems capable of reshaping the incentives that govern global supply chains.

Li Qiang is the founder and executive director of China Labor Watch, and a human rights advocate with over 30 years of experience investigating global supply chains

human rights due diligence

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