Human Rights Due Diligence

Human rights due diligence (HRDD) is a risk-based management process through which companies discharge their responsibility to respect human rights. Its conceptual origin lies in the UN Guiding Principles on Business and Human Rights (UNGP), unanimously endorsed by the UN Human Rights Council in 2011, whose second pillar establishes the corporate responsibility to respect human rights. Unlike a one-off audit, due diligence is a continuous cycle that covers the company's entire operations, its products and services, and its business relationships along the value chain.

The process follows four core steps: first, identifying and assessing actual and potential adverse human rights impacts (risk analysis); second, integrating the findings into business processes and taking appropriate preventive and remedial measures; third, tracking the effectiveness of those measures; and fourth, transparently communicating how the identified impacts are being addressed. The benchmark is, at a minimum, the rights recognised in the International Bill of Human Rights and the ILO core labour standards. Particular importance attaches to prioritising risks by severity and likelihood and to engaging potentially affected stakeholders.

In Germany and the EU, human rights due diligence has shifted from a voluntary commitment to a legal obligation. Germany's Supply Chain Due Diligence Act (LkSG) has, since 2023, required in-scope companies to run a graduated due diligence process within their own operations and towards direct suppliers. At EU level, the Corporate Sustainability Due Diligence Directive (CSDDD/CS3D) extends the requirements across the entire chain of activities and links human rights with environmental due diligence. At the same time, the CSRD requires reporting on human rights due diligence processes via the ESRS social standards (S1 to S4), so that procedures and disclosure are closely intertwined.