The scope of legal expectations from business in human rights: carrot or stick?

Although not all businesses acknowledge it, most face issues of human rights in their business operations or relationships. These issues can have positive or negative impacts, whether for their employees, consumers, or communities. In times of crisis, the issues of human rights in business are even more acute − as the COVID-19 pandemic has demonstrated, already having a dramatic impact on people across many supply chains. While the perception that states are responsible for human rights broadly prevails, businesses increasingly face growing expectations to assess, address, and remedy the negative impacts of their activities. Furthermore, developments in the past decade demonstrate the evolution of such expectations into legal requirements and mandatory regulation. States have employed various tools to influence business activities in this field, ranging from soft law to legal requirements both at national and international levels. This article analyses the main European trends of such an evolution within the selected areas of due diligence, non-financial reporting, and investment, and delves into recent developments from the perspective of benefits for business. It explores if the perceived benefits for businesses exclusively serve as a ‘stick’ that requires compliance, or whether they might extend beyond this.