Archives: Resources

• IHRB notes that a wide range of agricultural and mined commodities can be associated with adverse human rights impacts “at the point of production or extraction”, including impacts on:
  • Workers: Such as unfair, unsafe or unhealthy working conditions, child and forced labor, as well as exploitation and/or discrimination of migrant workers. Where lowest cost is the largest business driver (e.g. in the commodities market), farmers, stockbreeders, fishermen and smallholders have limited influence in negotiating terms of trade and receive an ever-diminishing share of the fruits of their labor. (See further Red Flags 1 and 19).
  • Communities: Such as activities taking place in the absence of adequate community consent, resettlement of indigenous communities without Free, Prior and Informed Consent (FPIC), public/private security forces infringing on workers’, Indigenous Peoples’, and communities’ rights.”
• Where commodities of unknown provenance are bought, sold, traded and hedged, it becomes difficult for companies upstream in the value chain to understand where the materials came from or under what conditions they were produced, and therefore to influence these decisions so as to address potential negative impacts on the rights of people in the value chain.
• The physical impacts of climate change, already being felt in certain regions, are expected to further intensify the impacts on people in the value chain. A recent report by PWC, details how extreme heat and prolonged drought are expected to disrupt major commodity supply chains—for example, by 2050 over 70% of cobalt and lithium production will be impacted—due to concentrated sourcing patterns in particular regions. These conditions not only threaten yield and extraction costs—they are also anticipated to drive down worker productivity and directly endanger the health, safety, and livelihoods of miners and farmworkers.
• In parallel, the global transition to a low carbon economy and the digital transformation are increasing demand for a number of commodities that have been linked to severe human rights risks and impacts. The extraction, processing and, in some cases, transportation of key minerals used in clean energy and information technology applications have been linked to issues such as child labour, forced labour, land grabbing, deforestation and environmental pollution. Reports indicate that companies accounting for 75 percent of the global battery market have connections to one or more supply chain companies facing allegations of severe human rights abuses. This is a worrying trend, particularly when coupled with projections for dramatically increasing demand for such commodities. The International Energy Agency has predicted that mineral demand for clean energy applications alone is set to grow by three and a half times by 2030 on the pathway to reaching global net zero emissions by 2050.
• In response to net zero emissions commitments, demand has increased for greenhouse gas (GHG) emissions-based commodities, notably carbon credits. These commodities represent GHG emissions that were avoided, reduced or removed, for example through projects that prevent deforestation or plant trees. Governments, companies, and individuals may purchase these credits to compensate for, or “offset,” their emissions elsewhere. However, human rights due diligence on projects generating carbon credits is often inconsistent—many schemes fall short on meaningful community consultation, land rights protections, and equitable benefit-sharing. As a result, some of the underlying projects from which market-based carbon commodities are sourced have been linked to human rights violations.
• Some examples of risks to people associated with this business model include:
  • Child Labor: Research by Impact details the pervasiveness of child labor throughout the artisanal cobalt mining sector in the Democratic Republic of the Congo (DRC). For example, mica mining, particularly in illegal small-scale artisanal mines, has been associated with child labor. Over 22,000 child laborers have been identified across only two geographic areas in India (which cover less than half the so-called “mica mining belt”).
  • Forced Labor: Research across multiple organizations has explored how the textile/apparel, agricultural and renewable energy sectors have pervasive connections to forced labor in China’s Uyghur Region, with implications across international commodities markets associated with these sectors, including for cotton, tomatoes and polysilicon (used for solar panels). A recent study by Global Rights Compliance has detailed how China’s expansion of critical mineral exploration, mining, process and manufacturing in Xinjiang region is a critical risk for companies across multiple sectors – from electronics to aerospace to energy.
  • Land grabbing and forced evictions: In the DRC, Amnesty International has documented multiple cases of forced evictions of entire communities as companies seek to expand industrial-scale cobalt and copper mining projects in response to the growing demand for these commodities for use in rechargeable batteries.
  • Violation of free, prior and informed consent: In Cambodia, a two-year investigation by Human Rights Watch of Cambodia’s Southern Cardamon REDD+ carbon crediting project revealed widespread mistreatment of the Chong people, as well as extended project-related activities in the absence of consent of impacted Chong communities.
  • Deforestation and environmental pollution: In Indonesia, the world’s largest producer of nickel (a critical input to renewable energy and electric vehicle batteries), Climate Rights International found that there has been extensive deforestation and water pollution as part of the nickel industry’s recent expansion there, resulting in severe impacts for the livelihoods of local communities.

• Business, Reputational, Operational, Regulatory and Legal Risks: Commodity markets are synonymous with extreme price pressure on farmers and other workers at source, which can undermine availability of product and stability of supply. The company also risks being involved in business relationships with disreputable organizations or individuals, including groups using forced or child labor or operating unsafe working environments, or may be financially supporting conflict. Operational challenges, reputational damage and even legal risks can arise where such connections come to light and the business must act reactively to exclude such sources from their value chain. Where traceability to individual companies is limited, entire industries can face civil society pressure to improve (e.g. in the case of palm oil).

• The US Government enacted the Uyghur Force Labor Prevention Act in 2021, which prevents the entry of products made with forced labor into the United States by investigating and acting upon allegations of forced labor in supply chains. Thousands of shipments from the electronics, apparel, footwear, pharmaceutical, agricultural, industrial, and automotive sectors have been reviewed for connections to forced labor, resulting in goods “totaling hundreds of millions of US dollars” being denied entry at the US border.

• In 2023 the Amsterdam City Council decided to ban Colombian coal from the Port of Amsterdam in response to reports and complaints that this “blood coal” was associated with serious human rights violations. Relatedly, in August 2025, the Dutch National Contact Point formally accepted a complaint by Colombian farming communities, supported by PAX and SOMO, against HES International and the port authorities of Rotterdam and Amsterdam for their involvement in transporting “blood coal” linked to forced displacement of over 59,000 people in a northern mining region of Colombia.

• In 2022, Peruvian indigenous leaders filed a case with the Dutch National Contact Point against the Louis Dreyfus Company B.V. (LDC) arguing that despite abundant public information concerning grave environmental and human rights impacts, LDC continued to purchase crude palm oil from the Ocho Sur Group whose oil palm plantations are involved in the illegal deforestation of over 12,000 ha of Amazon virgin forest, human rights violations of the Indigenous Community of Santa Clara de Uchunya and the Shipibo-Konibo people and corruption schemes for land grabbing.

• A Global Witness report found that several major international brands were sourcing palm oil from Brazilian plantations linked to violence, torture and land fraud. Based on mill lists or on public information available on trade data systems, Global Witness identifies 20 companies, including Danone, Ferrero, Bunge, Hershey, Kellogg, Nestlé and Pepsico, with direct or indirect links to human rights abuses.

• In December 2021, the non-profit organization Public Eye released research alleging that Swiss-based commodity traders, together owning over 550 plantations of various agricultural commodities across the world on at least 2.7 million hectares, fail to take sufficient responsibility for human rights and environmental abuses on their land holdings, including evictions, labor abuse, and deforestation. Their interactive platform names several agricultural traders, including Archer Daniels Midland, Bunge, Cargill, Chiquita, LDC, Neumann Kaffee Gruppe and Viterra.

• In 2023, the Centre for Research on Multinational Corporations (SOMO), published a report documenting allegations of sexual abuse, harassment and exploitation linked to the Kasigau Corridor conservation project in southern Kenya, operated by the California-based firm Wildlife Works. This project is the source of “carbon offsets” purchased by companies such as Shell and Netflix.

• The Dutch National Contact Point for the OECD Guidelines for Multinational Enterprises (NCP) received a complaint from a consortium of 22 Italian associations and NGOs in 2022 alleging violation of the OECD Guidelines by Stallantis N.V. and FCA Italy S.p.A and requesting the disclosure of detailed information on their suppliers’ operations at cobalt and other minerals mining sites in the Democratic Republic of the Congo. The complaint, which represents one of the first focused on a company’s mineral supply chain, was accepted by the Dutch NCP (after being deferred by the Italian NCP) and is pending decision.

• Regulatory Risk: The EU’s deforestation regulation, currently scheduled to come into effect from 30 December 2025 (and June 2026 for smaller companies) requires companies to prove key agricultural commodities (e.g., soy, palm oil, coffee, cocoa) coming into the EU have deforestation-free origins. The regulation also includes provisions around violations of nationally applicable laws that relate to land rights, environmental protection, labor rights, and free, prior and informed consent.

• Business Opportunity: Focusing on improved livelihoods for people within the supply chain helps to build more resilient corporate supply chains. Opportunities for price reduction and new sources can be unlocked:

Barry Parkin, Chief Procurement and Sustainability Officer of Mars, has noted that supply chains are “broken.” In a 2018 article arguing that the “commodity era is over,” he identifies win-win opportunities to “move beyond commodities that are bought and sold in markets where the lowest cost is the largest business driver. Instead, we must shift to long-term models for corporate buying that are anchored on building mutuality, reliability, resilience and risk management into the core of our buying patterns.”

*For an explanation of how companies can be involved in human rights impacts, and their related responsibilities, see here.

• Companies risk being directly linked to human rights impacts as a result of harmful practices associated with the commodities going into their products.
• Where companies ought to be aware of risks associated with commodities incorporated in their products, including, for example, where a commodity is overwhelmingly sourced from one location where it is associated with human rights impacts, the company may be contributing to impacts if it fails to use its leverage to try to address the impacts, either alone, or in collaboration with others.

Addressing impacts on people associated with this red flag indicator can contribute to a variety of SDGs, depending on the impacts associated with the commodities. This may include, for example:

• SDG 1: Eradication of poverty in all its forms.
• SDG8:Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all, in particular:
  • Target 8.7 Eradication of forced labor, modern slavery and human trafficking, securing the prohibition and elimination of the worst forms of child labor, including the recruitment and use of child soldiers, and ending child labor in all its forms by 2025.
• SDG 10: Reduce inequality within and among countries.
• SDG 12: Ensure sustainable consumption and production patterns, in particular:
  • Target 12.6 Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.
• SDG 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels, in particular:
  • Target 16.2 End abuse, exploitation, trafficking, and all forms of violence against and torture of children.

Risk Identification and assessment

• What opportunities exist to build greater visibility into our direct and indirect sourcing relationships?
• Which commodities that we use may be of higher risk from a human rights perspective, based on known information about potential source countries?
• How might the company’s actions to address its climate-related risks and opportunities change its reliance on certain commodities? How does the company determine the human rights risks associated with those changes? How has the company factored such considerations into its overall approach to its climate change mitigation and adaptation planning and implementation?

• How have environmental, social and human rights-related safeguards been built into the process of sourcing carbon-based commodities?

• Where information about impacts associated with the commodity is scant, how can we learn from known information about human rights impacts associated with other commodities sourced from the same area?

• Which partnerships, including with peers, international organizations, academics or NGOs, can we leverage to gain greater transparency or ensure traceability? Where no initiatives exist, can we create one?

Taking action

• What leverage do we have with our direct suppliers, traders and processors to address risks and impacts?

• How can we increase our leverage e.g., through contractual clauses, commercial conversations, expertise, joint capacity building, etc?

• Have we considered whether and how we can reduce our reliance on commodities markets and increase our engagement, visibility and leverage with the producers of the raw materials on which our business relies? Have we considered available examples from other companies to articulate the longer-term business benefits of this approach?

Transparency, shortening of supply chains and longer-term commitments from buyers can “demystify complex supply chains,” and allow “different actors [to] identify and minimize risks and improve conditions on the ground and inform whether and where progress is being made.”

• The Child Labour Platform, a multistakeholder initiative, aims to convene stakeholders to address the root cases of child labor in the agricultural and mining sectors – with a focus on cocoa and cobalt – through initiatives aimed at prevention, assessment and remediation, provision of guidance to improve company practice, as well as to develop innovative collaboration models.

• In September 2024, the Solar Energy Industry Association sought public comments on their draft solar supply chain traceability standard which is the first of its kind and details how to conduct forced labor-focused due diligence, including building a traceability system to trace the provenance of materials from upstream suppliers. As of September 2025, the updated standard is still awaiting final publication.

• In 2018, the BMW Group and Codelco, a Chilean copper mining company, signed an agreement to cooperate on a sustainable and transparent supply of copper. In the “decommoditized” copper market, prices reflect differences in levels of certification.

• Many large consumer goods companies are disclosing the source of their palm oil through the Roundtable on Sustainable Palm Oil, including Unilever, which, in 2018 announced that it was “the first consumer goods company to publicly disclose the palm oil suppliers and mills it sources from” (both directly and indirectly), and Nestle, which reported that by the end of 2023, 96% of its palm oil supply was deforestation-free and has implemented satellite monitoring systems to detect and address deforestation risks. The Roundtable on Sustainable Palm Oil (RSPO) maintains a “Shared Responsibility” framework, requiring members to incrementally increase their uptake of certified sustainable palm oil, with specific targets set for different member categories. In 2024, the RSPO introduced a verification manual and sanction mechanisms to ensure compliance with these commitments.

• The Global Battery Alliance convenes actors across the battery value chain to align on sustainability performance expectations for batteries around principles of transparency, traceability, accountability and circularity. The organization’s Battery Passport is an emerging global sustainability reporting and certification scheme for batteries, which can help supply chain companies demonstrate their commitment to build supply chain transparency, while managing reputation risk and becoming more resilient to supply chain disruptions.

• The Taskforce on Scaling Voluntary Carbon Markets was a multi-stakeholder initiative working “to scale effective and efficient voluntary carbon markets”. Members, including buyers and sellers of carbon credits, standard setters, civil society, and academics, were focused on recommending solutions to issues compromising the integrity and effectiveness of voluntary carbon markets, including ongoing concerns about the social impacts of carbon projects. The Integrity Council for the Voluntary Carbon Market was one of the outcomes of this initiative.

• A growing share of food commodities are now marketed as value-added (sustainable) products. California-based B-Corp Uncommon Cacao supplies raw cocoa beans to artisan chocolate makers disconnected from world market prices. It aims to provide a transparent alternative to commodity exchange and certified cocoa by setting fixed farm gate and export prices annually to help farmer incomes grow.
• In September 2019, Mars launched “Our Palm Positive Plan”, which is focused on transforming their “palm supply chain to deliver deforestation-free palm oil and advance respect for human rights”. A key element of their approach is simplifying, validating and making their palm oil supply chain more transparent, including publication of their palm oil suppliers and mills, which declined from more than 1500 to less than 100 in the initial stages of their commitment. They have also focused on fostering and building long-term relationships with suppliers based on their alignment to and performance against criteria set by Mars, including criteria focused on targeting damaging recruitment fees typically paid by migrant plantation workers. As of 2024, the company reports 100% traceability to mill level and 96.3% to plantation level, with 99.8% of its palm oil certified under the Roundtable on Sustainable Palm Oil (RSPO) standards. Mars has also made commitments to responsible cocoa procurement.
• An impact investing fund created by Danone, Firmenich, Mars and Veolia with respect to vanilla, offered a 10-year commitment, cooperative and a minimum price, through an “innovative model where formers and industry players share both the benefits and risks.” The project estimates that 60% of cured vanilla’s value will go back to farmers (compared to initially observed shares of 5% to 20%).
• Amsterdam-based startup Sourcery is a global sourcing and digital trade platform that aims to connect brands, manufacturers, traders and growers in the cotton supply chain. The platform enables concrete, verifiable data on the conditions around cotton growing – tracked by and licensed to the farmers who grow it – to be attached to the cotton traded on international markets, which has the potential to increase transparency and traceability of cotton supply chains.

• Finance Against Slavery & Trafficking (FAST) is a multi-stakeholder initiative that works to mobilize the financial sector against modern slavery and human trafficking. They offer a number of tools, including a connection and risk tool, as well as a leverage practice matrix.
• SOMO (2024) Facing the facts: carbon offsets unmasked is a series of articles focused on the human dimension of corporate carbon offsets and the associated voluntary carbon markets.
• SEIA (2021). Solar Supply Chain Traceability Protocol is a set of recommended policies and procedures designed to identify the source of a product’s material inputs and trace the movement of these inputs throughout the supply chain.
• Public Eye (2019) Agricultural Commodity Traders in Switzerland – Benefitting from Misery? Details how agri-food commodity traders are linked to human rights violations and how power asymmetry needs to be addressed
• PWC (2024) Climate risks to nine key commodities: Protecting people and prosperity
• Global Rights Compliance (2025) Risk at the Source: Critical Mineral Supply Chains and State-Imposed Forced Labour in the Uyghur Region
• Blas, J., & Farchy, J. (2021). The world for sale: Money, power, and the traders who barter the Earth’s resources. Oxford University Press. 
• IHRB (2018) The Commodity Trading Sector: Guidance on Implementing the UNGPs is a tool for the commodities trading sector as a whole in developing a shared practice of responsible trading which is consistent with international standards relevant for the respect of human rights.
• SOMO (2018) Global Mica Mining and the Impact On Children’s Rights is a mica-focused report that maps global production of a commodity and seeks to identify direct or indirect links to child labor or any other relevant children’s rights violations.
• OECD-FAO Guidance for Responsible Agricultural Supply Chains provides guidance for enterprises across the agricultural supply chain, from the farm to the consumer, anchored by a “framework on risk-based due diligence.”
• The BHRRC Transition Minerals Tracker which provides information on the human rights implications of the seven key commodities vital to the low carbon transition.
• International Cocoa Initiative which works to protect the rights of children and adults in cocoa-growing areas in West Africa.

Citation of research papers and other resources does not constitute an endorsement by Shift of their conclusions.

• Impacts on people through resource depletion or industrial emissions into air, soil, water, and biodiversity can occur as a result of individual or collective corporate activities.

  • The activities of individual companies may, for example, overtax a resource, particularly in an existing context of scarcity. While individual corporate activity is more typically regulated than cumulative impacts (see below) this is not the case in all jurisdictions (rural areas in some geographies).

  • A company may also contribute to cumulative impacts, where it is one of several actors whose actions together result in a total impact that depletes, destroys, pollutes or otherwise damages a resource or access to that resource.

• In both cases, this can lead to impacts on people’s health, livelihoods and other human needs. People most visibly and directly affected by corporate resource use or pollution can be those in physical proximity to sites of corporate activity, such as in the vicinity of extractive projects, power plants, infrastructure projects, large farms or plantations, industrial fisheries or large corporate headquarters in urban areas.

• However, certain types of resource depletion or pollution can affect people at significant distances, including across jurisdictional boundaries. For example, air pollutants from coal and oil power generation can impact environments and people downwind from the pollution source, or overexploitation or pollution of marine resources can affect fish, marine ecology and fishing communities much further afield as pollution moves with currents and fish/ecology can have large habitation areas.

• Industrial waste management, including of wastewater and hazardous materials (e.g., “forever chemicals”, heavy metals, and microplastic precursor materials) can have disastrous impacts on human health and the environment. Inadequate chemicals management and disposal, inappropriate product usage or product end-of-life (mis)management can lead to chemicals travelling long distances from their original source, accumulation in various organisms, biomagnification up food webs, and human exposure leading to health impacts, including various cancers.

  • For example, on microplastics, a UN report details how they are becoming “so widespread in our environment that they have been found everywhere from bottled water to Arctic snow”. Possible impacts on human health, according to the report, include lung inflammation, carcinogenicity, gene mutilation and repercussions for reproductive health. In addition, plastics make a direct contribution to climate change, accounting for 20% of total oil consumption and their manufacture, recycling and incineration is energy intensive, resulting in high carbon emissions (see also Red Flag 25).

• Government authorities “frequently fail to undertake cumulative/ strategic impact assessments, and even where such assessments are undertaken, human rights information relevant to such assessments is not taken into account” (OHCHR).

• Corporate activities may be associated with:

  • Reduced water quality or quantity for local communities (Right to health, right to safe and clean drinking water).

  • Long-term health problems amongst local people as a result of their own emissions, or as contributors to cumulative air, soil and water emissions from multiple industrial facilities concentrated into a single area (Right to health)

  • Emissions from a single factory or several factories that flow into a single waterway – reducing fish stocks, polluting the potable water supply, and undermining local livelihoods and nutrition (Right to adequate standard of living, right to food, right to safe and clean drinking water, right to clean, healthy and sustainable environment)

  • Price inflation, pressures on social services and affordable house and increased levels of anti-social behavior in towns near to or hosting extractive projects that attract a large influx (“in-migration”) of actual/aspiring workers and their families (e.g. housing, rents and access to medical services). (Right to an adequate standard of living (right to housing))

  • depletion of fish stocks, impacting local communities’ food security, as well as livelihoods of artisanal fisherman (Rights to food and health, Right to work, and Right to a clean, healthy and sustainable environment)

  • large-scale deforestation (e.g., for palm oil plantations or industrial livestock farming) jeopardizes communities’ access to clean water, food, land and breathable air while increasing exposure to disease (Rights to health, safe and clean drinking water, and a clean, healthy, and sustainable environment).

  • Scarcity of resources for indigenous or other local communities, resulting from industrial pollution of soil or water or a company harvesting natural resources for use in products (Indigenous Peoples’ rights)

Climate change exacerbates this Red Flag in multiple ways. Increasing frequency and severity of extreme weather events (e.g., storms, floods, droughts, heatwaves) can create new, or further intensify existing, natural resource depletion or pollution risks. For example:

• Reduced river and stream flows during droughts concentrate pollutants, increasing their toxicity and complicating water treatment efforts

• Floodwaters can carry industrial pollutants far beyond their original sites, spreading contamination to new areas and complicating cleanup. Overflow or leaking of industrial sites and waste storage areas, release pollutants—including heavy metals, chemicals, and untreated wastewater—into rivers, lakes, and groundwater.

• An increasingly vicious circle across air pollution, climate change and wildfires is having increasingly detrimental impacts on human health, ecosystems and agriculture.

• Higher water temperatures can worsen chemical reactions that create toxic byproducts in industrial wastewater, creating even more toxic and damaging impacts on ecosystem services. Further, industrial thermal pollution can further exacerbate warming, stress aquatic life and reduce water quality.

Physical climate impacts will exacerbate the impacts on local communities resulting from industrial depletion or pollution of natural resources where these resources are increasingly scarce or under threat. Some examples include:

• In Latin America, industrial water demand coupled with multi-year droughts is compromising water availability for local communities.

• Insect pollinators, which have been threatened by agribusiness insecticide use and air pollution for years, are now under further threat due to climate change, which can bring negative impacts for crop yields and food supply.

• Industrial contaminants (heavy metals, microplastics) when combined with climate stresses (drought, erosion) are degrading soils critical for agriculture, with implications for smallholder farmers and agricultural communities.

Further, the transition to a lower carbon economy is also intensifying impacts on people in relation to this Red Flag. For example:

• Mining for the critical minerals needed for renewable energy technologies, such as copper, cobalt and lithium, is depleting and contaminating water supplies in several locations globally and risks making already water-stressed areas more vulnerable.

• The transition is also increasing the demand for land – a critical natural resource. An estimated 54% of energy transition minerals are located on or near Indigenous Peoples’ land. Similarly, the deployment of large-scale renewable energy projects can be land-intensive and many of them are already competing with other local land uses by Indigenous Peoples, customary land holders, pastoralists, forest guardians and local farmers.

• Reputational risks: Individual company and cumulative impacts can generate considerable attention and multinational corporations are often targeted for criticism, particularly where people believe that appealing to governments may have little effect.

  • In Uruguay, Google’s plans to build a data center to service Google users worldwide met with widespread public protest and media scrutiny, due to the anticipated water use to cool the data center’s servers (estimated at 7.6m liters daily), on top of existing industry and agribusiness water demands and in the midst of a multi-year drought, linked to climate change-related prolonged water stress.

  • In 2024, Serbian protesters took to the streets and mounted road blockades in opposition to Rio Tinto’s planned lithium project, citing concerns about water and land pollution. The project’s proponents argue that the US$2.4B project could meet up to 90% of Europe’s current lithium needs for electric vehicles and mobile devices.

  • In 2014 Volkswagen was embroiled in a reputationally damaging scandal, as well as being fined the US EPA, for installing software into some of its diesel vehicles to cheat regulatory emission limits. The limits aim to reduce cumulative air pollutants which affect human respiratory health in addition to the broader environment.

  • A UNEP-FI report sets out how insurance providers and investors with businesses inadequately addressing plastic pollution risks within their portfolios can lead to physical, transition, liability and reputational risks for the financial institutions.

• Legal, Financial and Regulatory risks: Companies that do not address their potential or actual impacts can face legal action for their contribution or preemptive legal action to avoid company activities that are perceived to negatively impact local communities or other stakeholders. Further, even without legal action, concerns over corporate resource use or emissions can lead to shutdowns or regulatory action with significant financial impacts.

  • Over the past 25 years nearly 10,000 court cases have been filed in the USA alleging harm from exposure to “forever chemicals” (per- and polyfluoroalkyl substances or PFAS). Some 140 industries are facing litigation, with settlements in those cases so far totaling $16.7 billion. European litigation is also on the rise with more than 2,000 sites identified as far exceeding “safe” PFAS pollution levels.

  • 3M reached a US$10.3B settlement with several US public water authorities in 2023, to resolve water pollution claims tied to PFAS contamination of the public water supply by their processing facilities. In response to public and regulatory pressure, the company announced it would cease manufacturing PFAS and phase them out of all its products by 2025.

  • In 2022, Shell agreed to pay US$16M to four Nigerian farmers and their communities to compensate for damage allegedly caused by pollution coming from leaks in its oil pipelines.

  • In Tamil Nadu, India, public outrage over the potential water shortages and industrial pollution led to state authorities cancelling the planned construction of a Coca-Cola bottling plant in 2015.

  • In July 2024, a California court ruled that the Earth Island Institute’s lawsuit against major consumer goods companies (including Coca-Cola, P & G and PepsiCo), for allegedly creating a public nuisance from plastic packaging polluting California’s waterways, could proceed.

  • A multi-billion dollar mine expansion in Peru was abandoned over community concerns about water stress and environmental pollution. Attempts by Newmont to resurrect the project have been met with public opposition and court rulings against the mine’s expansion.

  • In 2024, following a multi-year dispute and Supreme Court ruling in Norway over Europe’s largest onshore wind farm and the right of Indigenous Peoples to raise reindeer on the land, Statkraft finally settled with the local Sami people for a share of energy produced, new land for reindeer grazing and a NOK 5 million grant.

  • Freeport-McMoRan’s Grasberg mine, which had, for years, been releasing untreated, toxic mine tailings directly into the river (with devastating impacts for local water supply and food security), was faced with new Indonesian standards in 2018, which required over 90% of tailings to be stored on land going forward. Following the company’s response that compliance with these new standards “cannot be done”, the company’s shares dropped by 18.2% and rendered Freeport that day’s worst performer on the S&P500.

  • In Taiwan, drought conditions, which are expected to be further exacerbated by climate change, have pitted the country’s powerful semi-conductor industry against Taiwanese rice farmers, significantly raising the profile of the issue. When the government issued tighter restrictions on water use in 2021, the output of the world’s biggest contract chipmaker, TSMC, was put at risk.

  • In the US, a Washington State ban on bottled water companies tapping into groundwaters sources did not pass through a state House committee, but it nonetheless raised local and national lawmakers’ scrutiny of water extraction by the bottled water industry. In 2020, US House Democrats launched an investigation into bottled water industry practices.

  • Norwegian ship owner Georg Eide was sentenced to six months unconditional imprisonment and his company fined 2million NOK (€200,000) for having assisted scrap dealer Wirana in attempting to scrap a vessel on a Pakistan beach where there was no capacity or infrastructure to recycle or dispose of hazardous wastes in a safe and environmentally sound manner.

The State has a duty to protect its people from harm to their health and other human rights, through appropriate regional planning and/or industry-wide regulation. However, States are not always able or willing to manage impacts: corruption may interfere with the management of single corporate impacts, for example, or the government may have a lack of technical capacity to understand and manage complex cumulative impacts. Notwithstanding, companies have a responsibility to address such impacts.

Cumulative impacts (also known as “collective impacts” are one of the two ways in a company can contribute to impacts (see OHCHR at page 16).

Situations can arise in which companies are directly linked to such impacts by way of their products, services or business relationships. Examples would include food and beverage companies that reply on agribusiness where resource-based impacts occur, and companies in various industries that rely on other commodities extracted in association with such impacts. In some circumstances, foreseeability of the relevant impacts and a lack of mitigation measures can, over time, lead to a situation of contribution.

Addressing impacts on people associated with this red flag indicator can contribute to a range of SDGs depending on the impact concerned, for example:

• SDG3: Good health and well-being, in particular Target 3.9: By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination

• SDG 6: Clean water and sanitation, in particular Target 6.3: by 2030, improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and materials, halving the proportion of untreated wastewater. And Target 6.4: by 2030, substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals

• SDG 12: Ensure sustainable consumption and production patterns, in particular: Target 12.6: encourage companies, especially large and transnational companies, to adopt sustainable practices; and Target 12.2: by 2030, achieve the sustainable management and efficient use of natural resources

• SDG 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

• How do we assess whether our use of and impact on natural resources could impact vulnerable populations that need to benefit from those same resources?

• Do we include in our assessments, the potential for contributing to these kinds of harm through cumulative impacts and transboundary impacts?

• Do we understand the degree to which climate change or the low carbon transition could exacerbate our use or pollution of natural resources?

• How do we assess baseline conditions, measure, monitor and respond to the impact of our activities, products and services, including when added to other existing or planned projects and developments?

• How do we engage with regulatory authorities and others to understand whether and how they mitigate these risks and measure the results?

• Where these risks exist, what sort of leverage do we have to influence the situation and how might we increase that leverage at the start of any project or investment? Have we considered ways of increasing our leverage by acting in collaboration with others?

• Have we considered – with reference to the latest technology – how we can reduce reliance on plastic/PFAS/ VOC use in, or leaching/off-gassing from, our products and/or their packaging?

• Closed-loop business models “keep products, components and materials at their highest utility and value – reducing the need for extracting and processing new resources and, in the process, cutting the related impacts on the environment” and people (UNGC Project Breakthrough).

• Some examples of resource recovery-based business models include:

  • India-based Phool has developed a process that converts harmful flower waste (which is a significant contributor to freshwater pollution in India) to “bio-leather”, which not only diverts harmful waste from freshwater sources, but also represents an alternative to conventional animal leather, the production of which is another significant pollution source.

  • Redwood Materials uses a hydrometallurgy process to recycle battery manufacturing scrap into raw nickel, cobalt and commercial-scale source of lithium, resulting in a significant reduction of carbon dioxide emissions, energy consumption and water use.

• Danone treats three key resources – water, milk and plastic – as part of closed loops, with a senior executive overseeing Danone’s cross-divisional, cross-functional, Strategic Resources Cycles Unit.

• OceanSafe is a textile technology company focused on creating circular, biodegradable alternatives to conventional polyester. Rather than manufacturing final garments, OceanSafe supplies fibers and yarns to partner brands and mills, enabling them to produce products that are safe for both natural systems and recovery/reuse systems. One of their products is biodegradable (>93% in seawater within 99 days) and performs comparably to standard polyester.

• Patagonia has, over time, increasingly oriented its business model toward reducing its environmental emissions and waste production and the negative impacts on people including workers, and those working in their supply chain.

Water quality and quantity

• The CEO Water Mandate: Shift, UN Global Compact and the Pacific Institute (Mandate secretariat) partnered on bringing a UNGPs lens to company efforts to respect the human rights to water and sanitation. Endorsers of the CEO Water Mandate commit to continuous progress against six core elements of stewardship and in so doing understand and manage their own water risks.

• The Water Resilience Coalition, an initiative of the CEO Water Mandate aims to bring together a critical mass of companies to build water resilience in their operations and supply chains, as well as investing in collective action to improve water resilience in the most water-stressed basins world-wide.

• A company in the food and beverage industry considering entry into Myanmar identified, among other things, potential impacts that could arise from reliance on extracted groundwater at one plant near a village which also depended on groundwater for domestic and livelihood use. The company’s actions in response included upgrading wastewater treatment stations at both plants and conducting assessments of local water sources. (See further CEO Water Mandate at p.78).

• Merck, a global pharmaceutical manufacturing company, has instituted closed loop cooling systems at over half of its facilities worldwide in order to reduce its freshwater use by approximately 3.3 billion gallons per year.

• A partnership between Kraft Heinz, a global food manufacturer and Ecolab, an industrial water efficiency technology, resulted in 51 million gallons of water saved (reducing its intake of local freshwater) and an overall $1.2 million in resource efficiency gains.

Chemicals

• In 2016, IKEA instituted a medium- to long-term chemical strategy, which covers more than 1000 suppliers and aims to identify and phase out harmful substances from the approximately 10,000 products sold by the company. To date the company has phased out PFAS, BPA, benzophenone, and titanium dioxide. The company is focused on increasing transparency in the supply chain and with customers; evaluating all materials, phasing out hazardous materials, ensuring suppliers are aligned with IKEA’s values and increasing broader awareness of the company’s chemical work.

• A cradle to cradle certification has been developed to encourage companies to design products for the circular economy (i.e. intentionally designing with reuse and/or recycling in mind) with the aim of reducing the negative impacts from materials on people and the environment, such as reducing plastic wastes and removing potentially harmful chemicals use beyond legislative requirements.

Cumulative impacts

• Rio Tinto’s, Why human rights matter: a resource guide for integrating human rights into Communities and Social Performance work at Rio Tinto (page 37) describes how the company incorporates its potential contribution to cumulative human rights impacts into its assessment of the social impact of mining, metals and associated operations.

Resource use

• The “Eco-Industrial Park” model, wherein multiple firms collaborate within a given geographic location to more efficiently use natural resources, as well as reduce waste generation and emissions, has been found to be successful when there is very active community involvement and engagement in the design, construction and operational phases of these parks.

General

• UNEP Finance Initiative (2024) Human Rights Toolkit provides insight and due diligence lines of inquiry based on company sectors. Those related to agriculture, manufacturing, minerals and metals extraction, as well as the digital economy are particularly relevant in the context of this business model risk. UNEP also provides a human rights and environment due diligence guide (currently in draft).

• UN Global Compact provides comprehensive guidance for business on inter-related human rights and environmental risks and due diligence considerations. Useful case studies and links to further sources of guidance are provided.

• UN Development Program (2024) Practical Tool for Business on Human Rights Due Diligence and the Environment (HRDD+E)

• The UN Special Rapporteur on the human right to a clean, healthy and sustainable environment provides various relevant resources.

Cumulative Impacts

• UN Global Compact (2014) Cumulative Impacts on Human Rights: UNGC webinar addressing the “challenges and best practices in respect of cumulative human rights impacts.” Includes contributions from UNU, Shift, First Peoples’ Worldwide, Rio Tinto and Anglo American.

• Cumulative Human Rights Impacts in the Maplecroft/ UN Global Compact Human Rights and Business Dilemmas Forum: Contains scenarios, examples, case studies and suggestions for business in relation to the question, “How should a responsible company identify and address its incremental contribution to a cumulative human rights impact, particularly an impact on an individual or a community that is the result of the combined actions of several actors?”

• IFC (2013) Good Practice Handbook Cumulative Impact Assessment and Management: Guidance for the Private Sector in Emerging Markets: Contains guidance concerning cumulative impact assessment in the context of an ESIA (environmental and social impact assessment) or stand-alone CIA (cumulative impact assessment).

• UN Working Group on Business and Human Rights Expert Roundtable on Cumulative Human Rights Impacts.

• Danish Institute for Human Rights (2014) Human rights impact assessment guidance and toolbox: Has a dedicated section on analyzing impacts, including cumulative impacts.

• Union of Concerned Scientists (2024) Cumulative Impacts Policies: A Promising Approach to Environmental Protections and Cumulative Impacts Guide. These resources provide insight into cumulative impacts, what they are, where they originate from, the impacts they can have for public health and how communities can take action to address them.

Sector specific

• Mega-infrastructure investment: OHCHR (2017) Baseline Study on the Human Rights Impacts and Implications of Mega-Infrastructure Investment (pp. 50 and 61).

• Shipbreaking: Guidance on safe and clean ship breaking

• Mining: BHRRC (2025) Transition Minerals Tracker

• Oil & Gas: Amnesty International (2023) Fatal fuels: Why human rights protection urgently requires a full and equitable fossil fuel phaseout

Water pollution & usage:

• The CEO Water Mandate’s Water Action Hub  “raises awareness, catalyzes collaboration, and scales critical lessons on water sustainability around the world.” It catalogues over one thousand water-related projects, including distilling lessons learned on many projects.

• The Ceres Valuing Water Finance Initiative Benchmark assesses company performance on water pollution and use across the high-tech, food, beverage, and apparel sectors.

Deforestation

• Forest 500 (2024) The human rights blindspot in deforestation action

• Swedwatch (2019) Undercutting Rights: Human rights and environmental due diligence in the tropical forestry sector. A case study from Cameroon

Forever Chemicals

• WHO Chemical Safety and Health

• European Environment Agency (2024) What are PFAS and how are they dangerous for my health?

Plastics, including microplastics

• Plastic collective (2023) How Can Businesses Reduce Plastic Use and Improve Their Plastic Footprint

• Oceanwise (2025) A Guide For Businesses On Best Plastic Reduction Practices

• UNEP (2019) Microplastics

• UNEP, UNEP-FI and PSI (2019) Unwrapping the risks of plastic pollution to the insurance industry

• UN Forum on Business and Human Rights (2023) How can the UN Guiding Principles end plastic pollution?

Citation of research papers and other resources does not constitute an endorsement by Shift of their conclusions.

• As stated by the UN Office of the High Commissioner for Human Rights (OHCHR), “[l]and is not a mere commodity, but an essential element for the realization of many human rights”. As a source of livelihood and a strong element of the identities of Indigenous Peoples, pastoralists, campesinos and other local communities, land is a fundamental aspect of economic, social and cultural rights. The rights of smallholder farmers are also impacted in locations where land use is contested, as competing interests from governments, corporations, and conservation projects can lead to displacement or restricted access. In such contexts, weak land tenure systems and lack of formal recognition of customary land rights leave smallholders especially vulnerable. This has implications not only for farmers’ livelihoods and food security but also broader sustainable development objectives, such as environmental stewardship.

• Companies can be involved with negative impacts where they acquire land rights in locations in which rights to land are contested, relying on assurances from sellers or lessors, whether governments or private individuals, without further due diligence to identify whether competing claims exist.

  • Human Rights Watch released a detailed report documenting illegal land confiscation from farmers in Myanmar, some of which was sold to companies.

• The transition toward a low carbon economy is expanding the range of businesses that carry this business model risk.

  • This is exemplified by the renewable energy value chain, wherein there is not only a voracious appetite for land to develop low carbon energy projects (e.g., wind and solar farms or biofuel processing facilities) there is also increasing demand for land-derived inputs for these low carbon technologies, such as critical minerals or biomass. One study found that the demand for transition minerals is so great that severe shortages are anticipated for several of them by 2100. Given that Indigenous Peoples manage an estimated 20% or more of the Earth’s land surface and over 50% of transition minerals needed for the energy transition are located on or near Indigenous territories, these demands for land across the renewable energy value chain are putting further pressure on the rights of Indigenous Peoples, as well as other vulnerable communities.

  • National and corporate net zero commitments are also driving demand for land-based carbon sequestration and mitigation projects (“nature-based solutions”) to supply global carbon markets with carbon credits. While such projects are, in principle, undertaken to support positive climate outcomes, the environmental and social safeguards underpinning such projects vary widely. Almost all carbon credit methodologies, standards and certification schemes lack rigorous human rights due diligence and, as a result, can lead to real and acute harms to people. For example, a “REDD+” carbon offsetting project in Cambodia has recently been accused of violating the rights of Indigenous communities by excluding them from decision-making, restricting access to ancestral lands, disrupting livelihoods and failing to uphold protections for Indigenous land tenure and cultural rights.

• The physical impacts of climate change, including increased drought, flooding, and extreme heat, can magnify the risks associated with this business model feature by intensifying competition over scarce resources, accelerating land degradation, and triggering displacement of vulnerable communities. Further, insecure tenure rights limit the ability of these communities to invest in adaptive measures such as soil restoration, water management, or agroforestry, leaving them less able to withstand climate shocks and compounding the impacts on people resulting from this business model feature.

• Impacts on land rights, including those arising from corporate activities, affect people differently, with disproportionately negative effects on individuals and groups who are traditionally discriminated against and marginalized, including women, indigenous peoples, rural communities and small-scale farmers. Where tenure is insecure, business activities can inadvertently cause these groups to lose rights to lands and resources, triggering a range of negative social impacts.

  • Rural poor: In low- and middle-income countries, up to 28 per cent of people have limited access to land or don’t have security of tenure. For the rural poor, access to land is the most critical way to make a living. Farming lands, forests, water and fisheries are essential resources for the enjoyment of their right to an adequate standard of living, including the right to adequate food and nutrition, water, and sanitation. Many rural poor people access land and other natural resources under informal systems with limited systematically documented rights, which leaves them vulnerable to dispossession by those who are more powerful.

  • Indigenous Peoples: Indigenous Peoples have specific human rights to own, use, develop and control the lands, territories and resources that they possess by reason of traditional ownership or other traditional occupation or use, as well as those which they have otherwise acquired. In line with their land-related human rights, set out in the UN Declaration on the Rights of Indigenous Peoples, any project that affects their territories and resources should only be undertaken with their Free, Prior and Informed Consent (FPIC). The lack of recognition of indigenous peoples and of their land rights, and differing interpretations of what actions and evidence are needed to demonstrate FPIC have led to the dispossession and forced evictions of Indigenous Peoples from their ancestral lands, as well as associated impacts to their cultural heritage and traditional practices. Indigenous Peoples’ representatives have highlighted “the increasing trend of criminalization and attacks against Indigenous Peoples Human Rights Defenders”, including in the context of the low carbon transition.

  • Women: Women also face severe challenges regarding access, use and ownership over land and its resources in many regions, with statistics showing that women consistently own less land than men, regardless of how ownership is conceptualized. Discrimination in inheritance, and/or the lack of proper land tenure and control can affect women’s livelihoods, food security, economic independence and physical security, making them more vulnerable to poverty, hunger, gender-based violence and displacement.

  • Ethnic minorities are disproportionately affected by low access to and ownership of land, often because of wider societal discrimination. ‘Land grabbing’ is compounding the vulnerability of minorities.

• Land-related conflicts are getting more violent. Between 2012 and 2023, more than 2100 people, including both Indigenous and non-Indigenous human rights defenders, have been killed or disappeared for standing up to protect their homes and lands, with almost 40% of those cases linked to mining & extractives, agribusiness, logging and hydropower.

A company may cause impacts where it fails to conduct resettlement processes in line with human rights standards and due process, including the use of excessive force to remove people from land it has acquired. It could also cause negative impacts on people’s human rights where it fails to provide adequate remedy for any damage to land, property, water access and quality, or land-based livelihoods resulting from its activities.

A company may contribute to negative impacts where it acquires land from a State or a third party in circumstances in which it is, or should be, aware that there may be competing claims to the land and does not conduct proper due diligence to investigate land ownership and consult with affected groups. It may also contribute to impacts where it makes it more difficult or impossible for the rightful owners to access and benefit from the acquired land.

Companies downstream of land usage in their supply chain may be linked to land-related impacts by way of their products or services. For example, a company in the food and beverage industry that purchases agricultural commodities through a food processing company, or directly from a sugar grower or other agricultural company, may be linked to land related abuses occurring at source. Moreover, linkage may occur when a company acquires or uses disputed land despite having taken reasonable measures to verify that the land titles were fully legitimate and not the result of dispossession or any other type of denial of ownership by rightful communities.

In cases of linkage, once the company becomes aware of the claims, it may move into a situation of contribution over time if it takes no action to investigate and/or address the impact.

Due Diligence Lines of Inquiry adapted from the Danish Institute for Human Rights’ Human Rights Compliance Assessment Quick Check.

• Are the State policies and laws that ensure tenure rights non-discriminatory and gender sensitive? Does the State ensure equal tenure rights for women and men, including the right to inherit and pass on these rights?

• Does the State recognize as indigenous any groups that claim indigenous status, and does it recognize Indigenous People’s rights with regard to land, as set out in the Declaration on the Rights of Indigenous Peoples?

• Before purchasing land, did we investigate all existing claims and conflicts and consult with all affected parties, including both legal and customary owners, and if Indigenous Peoples are involved, did we obtain their free, prior and informed consent and have we come to any agreements around fair and equitable benefit-sharing?

• Considering that government maps do not always accurately reflect the traditional land usage of Indigenous Peoples, are we verifying this information, such as with the help of a person with deep expertise in and understanding of indigenous cultures and local tenure arrangements?

• Do we understand the way in which the land may be used by other local, non-Indigenous, communities and the potential implications that our proposed land-use may have on those communities? Do we have a process by which to arrive at benefit-sharing agreements with these non-Indigenous communities?

• When purchasing or leasing property from governments or large-scale landowners, did we investigate past occupation of the land to ensure that no forced relocations had been performed, unless done in conformity with international standards?

• Do we conduct due diligence with regard to the ownership and usage of land from which we derive key commodities or services through our supply chain, where such land is in regions with weak protections for traditional land rights or a history of land-related conflicts?

• Do we ensure that we do not participate in or benefit from improper forced relocations, and that we adequately compensate inhabitants involved in voluntary relocations?

• Does the company honor the rights of local or Indigenous Peoples on company-controlled land?

• Are our employees and security personnel trained to interact appropriately with indigenous and other local communities, allowing safe and unimpeded use of the land and its resources without harassment or intimidation?

• Do we have on-going processes in place to engage with local communities in order to understand any land-related impacts that may arise from our activities? Are we confident that local communities – women as well as men – feel able to raise issues with the company as part of those dialogues?

• Have we considered women’s uses of land? Have women been involved in any decision-making processes about how land will be used and appropriate mitigation measures?

• Does the company have a broader community engagement or Indigenous Peoples policy and process, which includes the principle of Free, Prior and Informed Consent?

• Do we have processes in place to integrate issues raised by communities into company decision-making in a timely fashion?

• Have we committed sufficient internal resources, capacity and time towards implementing strong policies on respecting rights of Indigenous Peoples and implementation of free, prior and informed consent?

• Does the State provide access to impartial and competent judicial and administrative bodies to resolve disputes over tenure rights, including effective remedies where appropriate?

• Do we have mechanisms for hearing, processing, and settling any grievances of local communities? How confident are we that communities trust those mechanisms and feel able to use them in practice?

• To what extent have we developed a plan for how we might decommission our project at end-of-life? Is this plan adequately financed and has it been consulted with potentially affected stakeholders or their proxies?

Guidance for Companies

• Landesa Business Enterprise Supporting Materials: https://ripl.landesa.org/support/1

• Landscope (a system for measuring tenure risk) https://landportal.org/library/resources/landscope

• Shift, The Human Rights Opportunity: Land Rights, https://www.shiftproject.org/sdgs/land-rights/

• Exploring Shared Prosperity: Indigenous leadership and partnerships for a just transition (2024),

• Indigenous Peoples Major Group, with contributions from the Danish Institute for Human Rights (2018) Doing it right! Sustainable energy and indigenous peoples

• Human Rights and Biodiversity Working Group (2022) A rights-based path for people and planet

• UN Global Compact (2013) Business Guide to the UNDRIP

• UN Food and Agriculture Organization (FAO), Respecting Free, Prior and Informed Consent: Practical Guidance for Governments, Companies, NGOs, Indigenous Peoples and Local Communities in Relation to Land Acquisition, Governance of Tenure Technical Guide No. 3 (2014),

• First Nations Major Projects Coalition – Tools & Resources

• First Nations Clean Energy Network (2023) Aboriginal and Torres Strait Islander Best Practice Principles for Clean Energy Projects

• World Economic Forum (2023) Using a People-positive Approach to Accelerate the Scale-up of Clean Power – A C-Suite Guide for Community Engagement (White Paper)

Key Standards

• UN Declaration on the Rights of Indigenous Peoples

• IFC (2012) Performance Standard 5, Land Acquisition and Involuntary Resettlement,

• UN Office of the High Commissioner for Human Rights, “Basic Principles and Guidelines on Development Based Evictions and Displacements,” (Annex 1 of the report of the Special Rapporteur on adequate housing as a component of the right to an adequate standard of living).

• UN OHCHR (2015) Land and Human Rights: Standards and Applications, HR/PUB/15/5/Add.1,

• UN FAO (2012) Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security

Other Useful Materials

• Global Reporting Initiative (2016) Land Tenure Rights,

• Danish Institute for Human Rights (2024) Human Rights Land Navigator

• Measuring global perceptions of land and property rights (2024), https://www.prindex.net

• International Land Coalition (2024) A Land Use and Tenure Indicator to Protect Traditional Knowledge

• ODI and TMP Systems (2019) QTR Tenure Risk Tool

• Realizing Women’s Rights to Land and Other Productive Resources , https://www.ohchr.org/sites/default/files/Documents/Publications/RealizingWomensRightstoLand_2ndedition.pdf

• LandLinks, Fact Sheet: Land Tenure and Women’s Empowerment, https://www.land-links.org/issue-brief/fact-sheet-land-tenure-womens-empowerment/

• Securing Women’s Land Rights for Increased Gender Equality, Food Security and Economic Empowerment, UN Chronicle (2023) https://www.un.org/en/un-chronicle/securing-women’s-land-rights-increased-gender-equality-food-security-and-economic

• Rights and Resources Initiative, Who Owns the Land? – A global baseline of formally recognized indigenous and community land rights (2015), https://rightsandresources.org/wp-content/uploads/GlobalBaseline_web.pdf

• FAO (2016) Free Prior and Informed Consent: An indigenous peoples’ right and a good practice for local communities

Citation of research papers and other resources does not constitute an endorsement by Shift of their conclusions.

Financial, Reputational and Business Continuity Risks:

• Where taken to the extreme, speed of roll-outs has been noted as a factor in “tech product launch fail[ures].”

• Where workers reach the limits of their capacity to absorb demands for greater speed, continued demands risk injuring and/or alienating the workforce. Employees may resist through the only means available where appropriate avenues to discuss the impacts of speed are unavailable:

  • in the poultry processing industry, following injuries and unmet requests from workers to slow line speeds, “workers began jamming chicken bones into the machinery to stop the processing line. It was the only way they could get some relief from the frantic pace.”

  • A group of Goldman Sachs junior bankers joined forces to develop a slide deck detailing extensive overwork, which circulated on social media and ultimately made headline news drawing attention to the grueling work culture of investment banking.

• In instances where an industry’s reputation becomes synonymous with a speed-based business model, there is a risk of legal and regulatory action. For example, in 2021 the US Department of Agriculture issued a speed limit on hog slaughtering in the pork sector, as a result of a court ruling in favor of worker groups, which has financial implications for pork processing plants.

• Where excessive speed is built into the business model, it can undermine sustainability efforts at the operational level. Moreover, increasingly savvy consumers, advocacy organizations and investors are looking beyond individual sustainability initiatives and programs and are quick to label them “greenwashing” if they perceive that the business model continues to increase the risk of negative impacts. A recent study of the five leading Spanish “fast-fashion” brands found that “many consumers perceive [sustainability] communication as greenwashing, resulting in negative impact on brands’ reputation.”

• The prefixes “fast” or “ultra-fast” have developed negative connotations when associated with products (and industries producing such products) due to concerns about both environmental impacts and impacts on supply chain workers, as well as community and worker health. In 2022, Greenpeace launched a campaign against Singapore-based online fashion brand SHEIN, which it argues “forces suppliers to deliver at breakneck speed” resulting in a “business model built around the exploitation of the environment and people”. SHEIN, which is “one of the major players driving the acceleration of ultra-fast fashion” has also been the subject of OECD National Contact Point complaints in Belgium and France, alleging violation of the OECD’s MNE guidelines, including with respect to poor working conditions in the company’s value chain driven by excessive demands resulting from product delivery turnaround times.

Where a company demands excessive speed from its workers, it may cause impacts on their health, safety or other working conditions. The company may also cause impacts if products are unsafe due to excessive speed in R&D phases.

Where a company’s purchasing practices create demands for speed in the supply chain, they may contribute to impacts caused by suppliers at different tiers in their chain, in their efforts to comply with these demands.

Addressing impacts to people associated with this red flag can contribute to, inter alia:

• SDG 8: Decent Work and Economic Growth, in particular

  • Target 8.8 on protecting, “labor rights and promot[ing] safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment.”

  • Engagement with the human dimensions of “fast” business models can have positive environmental impacts, and contribute to Target 8.4, “Improve progressively, through 2030, global resource efficiency in consumption and production and endeavor to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programmes on sustainable consumption and production, with developed countries taking the lead.”

• Can we map where demands for speed are originating – both internally and externally to our business?
• How are demands for speed absorbed within our value chain and by whom? How do we know whether or to what extent those pressures are passed onto vulnerable workers in our value chain?
• How do we attempt to avoid or reduce such impacts and how do we know whether we are succeeding?
• What channels do we have for hearing concerns from our own workers, and workers in our value chain, related to any impacts from demands for speed, and to hear their views on how we could reduce these impacts? How do we know whether people feel able to use them?
• Do we involve internal human rights experts at the R&D stage to help identify potential risks to people from rapid product rollouts and adaptations?

* Mitigation examples are current or historical examples for reference, but do not offer insight into their relative maturity or effectiveness.

Speed in the supply chain

• Primark uses “off-season production to lengthen lead times and allow factories to plan their production more effectively and provide stable employment in typical low seasons.” This model may assist suppliers to manage fluctuating demand, including demands for speed from other buyers.

Speed in client services or financial firms

• In response to public scrutiny of gruelling and unhealthy investment banking work culture, JPMorgan and Bank of America implemented measures to crack down on excessive working hours for junior bankers through work blackout periods, more rigorous tracking of work hours and imposing work limits of 80 hour/week.

Speed in Meeting Deadlines for Construction

• In the construction context, researchers studying strategies to counter the effects of schedule pressure highlight the importance of, for example, attainable schedules, proactive planning and extensive communication with workers. Simulation models have highlighted two critical success factors for safety management in construction operations: managing rework and schedule delays. See further here.

• In the tech world, some have called for alternative business models, particularly for start-ups, that reframe success as long-term or organic growth.

• Various “slow” movements (e.g., slow food, slow fashion, slow goods) have recognized the social and environmental advantages of reducing or eliminating the speed imperative from the business model.

  • Slow and Steady Wins the Race, which is a US clothing collection that creates classic garments and accessories made using simple, durable materials. The company introduces new styles at a regulated pace year-round, rather than the usual accelerated pace of the seasonal fashion schedule. Various other examples, including Patagonia and Boden, are detailed in the article “99 Sustainable Clothing Brands by budget”.

On Production Lines

• South Poverty Law Centre (2013) Unsafe at These Speeds.

• Oxfam America (2015) Lives on the Line: The high human cost of cheap chicken

• Human Rights Watch (2019) When We’re Dead and Buried, Our Bones Will Keep Hurting: Workers’ Rights Under Threat in US Meat and Poultry Plants.

On “Fast-Fashion” and supply chains

• KnowTheChain is a resource for companies and investors to understand and address forced labour risks within their supply chains.

• Center for Biological Diversity (2023) At What Cost? Unravelling the Harms of the Fast Fashion Industry

• Business and Human Rights Resource Centre (2024) Shein, ultra-fast fashion and forced labour risks: Key issues for investors

On the slow movement

• Good on you. (2023) What is Slow Fashion?

• Slow Food is a global movement of local groups and activists united by the common goal of ensuring everyone has access to good, clean and fair food.

On Technology-based Start-ups

• Medium, Stanier (2019) Silicon Valley’s Grow-or-Die Culture Is Costing Us: Startup founders must set a new tone instead of burning through their employees.

On Construction

• Industrial Safety and Hygiene News, Leemann (2016) Deadlines can erode safety and promote risk-taking: Summarizes studies on the identification and mitigation of impacts from demands for speed in construction.

• Buniya, M. et al. (2021) Barriers to safety program implementation in the construction industry, Ain Shams Engineering Journal, Volume 12, Issue 1.

On Just Transition

• AIMprogress (2023) The Fast Moving Consumer Goods Sector and the Just Transition: The State of Play and the Road Ahead

• Business and Human Rights Resource Centre (2024) Rush to renewables: Toward migrant worker rights and a just energy transition in the Gulf

Citation of research papers and other resources does not constitute an endorsement by Shift of their conclusions.

• Financial and Legal Risks, including Loss of Investment:

  • Water: In 2014 a water crisis occurred in Flint, Michigan, where the water utility was managed by Veolia, a French multinational. The crisis exposed residents to high levels of lead, which is a neurotoxin and “a decade later, community members continue to grapple with the long term physical and mental health problems unleashed by the water crisis”. According to reports, Veolia knew about issues related to lead in the water, but at the time it was “interested in securing future work with Flint”, so did not take appropriate action. After several years of litigation involving multiple defendants, including the State of Michigan and Veolia North America, there have been several financial settlements for impacted Flint residents, amounting to an estimated USD660 million, as of October 2024. In March 2025 in the United Kingdom, water company Thames Water narrowly avoided temporary nationalization; 30 years of privatization, including issues associated with the involvement of financial institutions, are said to have led to accelerated costs of borrowing and higher costs to consumers.

  • Security: Investors in a company to which the Australian government outsourced the operation of offshore detention facilities for asylum seekers, came under pressure from civil society to divest due to allegations of inhumane conditions at the camps. A sustained campaign by faith-based investors and investment networks from 2017 to 2019 focused on investment in the private prison industry. The investors “raised questions about human rights abuses in the companies’ prisons that were uncovered by investigations and identified in lawsuits”, and cited “inmate deaths, poor medical care, allegations of physical and sexual abuse of detainees, and violence.” JPMorgan Chase announced in March 2019 that it “will no longer bank the private prison industry.” In 2021 a US prison snacks provider faced investor pushback on a debt deal, with one investor noting that “[a]ny business whose model is a beneficiary of increased levels of incarceration is really being met with a number of institutions that are outright prohibiting participation” and noting that this “limits the potential buyer base.” A “prolific private equity investor in prisons” also faced criticism along with the prison companies themselves for business models that “very clearly prey on communities of color” by effectively turning systemic racial inequalities into a source of revenue.

  • Housing: There has been considerable public concern about financialization of housing. In Ireland in 2021, almost 40,000 people signed a petition to demand the Government take more action against “vulture” investment funds purchasing large quantities of (distressed or undervalued) residential real estate. Several U.S. Senators have publicly addressed concerns about Blackstone’s role in the housing market, including a 2022 letter urging the firm to halt evictions and criticizing its impact on rental affordability.

• Reputational, financial and legal risks:

  • Privatized essential service providers have heightened exposure to bribery and corruption risks, particularly in the context of high-value, large-scale contracts and complex procurement processes. This is exacerbated in regions with weak oversight and regulatory frameworks. Transparency International highlights that the water sector, in particular, is characterized by high-risk procurement, with various forms of bribery related to licensing, procurement, and construction. Moreover, the Water Integrity Network reports that corruption can increase the costs of building water infrastructure by as much as 40%, equating to an additional $12 billion annually needed to provide worldwide safe drinking water and sanitation.

  • In 2018, the US Department of Education deemed a number of private-equity owned for-profit colleges “not financially responsible.”

• Business Opportunity and Continuity Risks: Risk of loss of government contracts, increased scrutiny and reconsideration of the social license to operate of the entire industry, potentially leading to government intervention, including renationalization or “remunicipalization” of services.

  • Following the G4S immigration center scandal mentioned above, the Independent newspaper ran an article by the paper’s Chief Business Commentator with the headline “Private companies should not be doing this sort of work.” The company later announced it would end its involvement in the immigration and asylum sector but remain involved in the private prison sector.

  • In 2016 following mounting criticism on conditions, the US Justice Department ended its use of private prisons. Civil society noted that the move “should prompt other federal departments and state governments” to follow suit (see Human Rights Watch).

  • In 2017 the Australian government closed its main offshore immigration detention processing center on Manus Island following allegations of inhumane conditions at the center, operated by a private company.

  • A “significant global trend” has been observed involving the “rejection of the private sector, due to its failures to provide adequate services” in water and sanitation, leading to renewed public ownership of those services (see UN Special Rapporteur for Special Rapporteur on the human rights to water and sanitation). Civil society has produced guides for remunicipalization of water for communities and policy makers, premised on claims that “PPPs turn out to be worse for public budgets in the long term, and lead to poor services and a loss of democratic transparency.” In the UK, there have been calls to “abandon the notion that public transport can be left to the private market” from the perspective of quality and accessibility of services.

  • Following years of concern about safety, accountability, financial oversight, and fragmented operations in the context of privatized rail infrastructure, the UK has been phasing out passenger rail franchising, with services being brought into public ownership under the Passenger Railway Services (Public Ownership) Act 2024. The process is expected to be completed by late 2027.

  • In 2015, a Swedish council became the first to limit private profits in healthcare (specifically capping private profits in publicly funded healthcare at a regional level).

The UNGPs address privatization directly in Principle 5 and its commentary, noting that “States do not relinquish their international human rights law obligations when they privatize the delivery of services that may impact upon the enjoyment of human rights”. As such in the context of privatization, both the state duty to protect, and the corporate responsibility to respect, human rights are directly relevant to these types of impact.

If they fail to meet basic standards for enjoyment of rights, companies offering services upon which dependent populations rely to realize their rights, are at risk of causing a human rights impact.

The following situations are examples of situations that may give rise to an argument of contributing to impacts:

• A private company reduces services to a level that creates an environment in which violence flourishes (e.g. in a private prison);

• Aggressive pricing by the company is a factor in rendering the final price of a good or service too high for vulnerable or isolated populations to access it.

* Mitigation examples are current or historical examples for reference, but do not offer insight into their relative maturity or effectiveness.

• In Senegal, private company Senegalaise des Eaux (SDE), a subsidiary of Saur International, has been the private partner in a public-private partnership for water management since 1996. Water supply and sanitation in Senegal is characterized by a relatively high level of access compared to the average of Sub-Saharan Africa. The company extended the service to reach low-income settlements, with social tariffs available to ensure affordability, and offers detailed customer surveys and a complaints system (see C. de Albuquerque)

• Other mitigation examples have involved action on the part of the state to maintain or reclaim control over aspects of the service provision that intersects with respect for stakeholders’ rights.

  • For example, following accusations of abuse of detainees, the BBC reported that the UK Home Office had concluded that contracts for the private provision of services in migrant detention centers were “no longer fit for purpose, given the lack of scope to impose financial penalties and enforce improvements in conditions and treatment” and that it had plans to include in new contracts “performance measures covering staff recruitment, induction, training, mentoring and culture” and “a contractual role for the Home Office to monitor the appropriateness of the use of force against detainees and the care of staff and detainees following an incident”.

  • In the nursing care space, US researchers have called for “policy changes that better align private equity incentives with the interests of consumers, or patients” such as by “linking provider payments to performance, which could include metrics like quality and efficiency”.

• Private Equity

  • New models of purpose-driven private equity firms state their goals to provide conscious capital driven by their values and the interests of stakeholders; see e.g. Spindletop Capital which aims to provide “purpose-driven healthcare growth equity”; Leapfrog Investments which states that it focuses on “providing critical health services to underserved consumers” in Africa and Asia, and ABC Impact with the stated aim of “provid[ing] growth equity to purposeful companies driving meaningful change in line with the UN Sustainable Development Goals” including in the fields of water solutions and healthcare and education, and measuring outcomes through an impact measurement model.

  • A 2018 legal proposition in Sweden to cap returns on invested capital in publicly funded services to 7% was directly related to concerns about private equity involvement in sectors like nursing homes and schools. Ultimately unsuccessful, the initiative aimed to limit excessive profits and ensure more funds were reinvested into improving service quality.

• The Global Alliance for Banking on Values provides an overview of how values-based banks are working with affordable housing providers, “from developers to social organizations or public institutions, for reasons that range from viewing housing as a fundamental right, creating environment friendly and sustainable communities, or protecting disadvantaged communities such as migrants and individuals and families living on low incomes”. For example, GABV notes that in Germany, Umweltbank has financed the “City quartier Güterbahnhof” in the city of Tübingen wherein 93 out of the 157 flats are categorized as social housing.

General

• University of Leeds paper (2018) discusses privatization and the exacerbation of inequality in the context of a various once-public services (e.g. water, electricity, transportation): Privatization, Inequality and Poverty in the UK: Briefing prepared for UN Rapporteur on extreme poverty and human rights

• The OECD’s Infrastructure Anti-Corruption Toolbox (I ACT) is a holistic multi-stakeholder approach to empowering actors across the infrastructure value chain to prevent, detect and report corruption. 

• DIHR’s AAAQ (Availability, Accessibility, Acceptability and Quality) toolbox aims to support the operationalization of the rights to water, sanitation, food, housing, health, and education. Designed with a multi-stakeholder approach in mind, the open-source Toolbox offers common methodologies for all stakeholders as well as tailored tools for states, rights-holders, business, civil society and National Human Rights Institutions (NHRIs).

Private water and sanitation services:

• The Special Rapporteur on the human rights to water and sanitation will focus his 2020 report on “privatization and the human rights to water and sanitation.” See concept note and progress of public consultations here.

• Shift, Pacific Institute and UN Global Compact (2015) Guidance for Companies on Respecting the Human Rights to Water and Sanitation: Bringing a Human Rights Lens to Corporate Water Stewardship.

Private Prisons/ Detention Centers:

• Human Rights Advocates submission on Article 9 of the International Covenant on Civil and Political Rights discusses the effect of the profit motive on conditions in private prisons as a part of its “focus on what governments are required to do to avoid having detention becoming arbitrary when a person’s liberty is turned over to a private entity.”

• Human Rights Watch (2017) Code Red: The Fatal Consequences of Dangerously Substandard Medical Care in Immigration Detention a report analyzing 15 deaths in immigration detention custody in the US, concluding that “healthcare and oversight failures … present in so many of them” point to “larger, systemic deficits in immigration detention facility health care” in both publicly and privately run facilities.

Residential Care Facilities

• Human Rights Watch (2018) “They Want Docile”: How Nursing Homes in the United States Overmedicate People with Dementia.

• See also below under Private Equity

Private Equity

• Principles for Responsible Investment (2020) “Aligning private equity investment practices and structures with ESG goals”

• Knowledge at Wharton (2024) “How to Align Private Equity Motives with Nursing Home Outcomes”

• Bernaz, (2023) “Business Strategy as Human Rights Risk: The Case of Private Equity”: This article (which cites Shift’s Business Model Red Flags) applies business and human rights principles to private equity business strategy and concludes that “the underlying model makes these harms inevitable, and therefore […] the PE model itself should be considered a human rights risk”.

• The Predistribution Initiative: “[PDI] is a nonpartisan, multistakeholder non-profit that works with investors and their stakeholders to improve financial analysis and investment decision-making processes in ways that more adequately value workers, communities and nature”.

Financialization of Housing

• Office of the High Commissioner for Human Rights, Special Rapporteur (SR) on the Right to Adequate Housing. Financialization of Housing. This portal includes reports from the SR, including country-specific reports, resources including a documentary, and a response from Blackstone to a letter on the subject from the SR.

• Responsible Investment Organisation SHARE has a portal on affordable housing, and Principles and Progressive Framework for Responsible Investment in Housing

Citation of research papers and other resources does not constitute an endorsement by Shift of their conclusions.

• Companies can cause adverse human rights impacts when they fail to carry out meaningful consultation with affected stakeholders and their actions negatively affect human rights. A failure to allow time for the conduct of Free, Prior and Informed Consultation (FPIC) with affected Indigenous communities, or to ensure that FPIC with these communities has been conducted by others, is itself a breach of Indigenous people’s human rights. More generally, a company may cause human rights impacts when it sets timescales which preclude consultation with affected communities as part of a risk assessment and mitigation process, and the company’s actions then have negative impacts on communities such as forced displacement, depriving communities of access to water, food or livelihoods or preventing them of entering cultural sites.

• Organizations (including companies, mega-event organizers and financial institutions) can contribute to adverse human rights impacts when their business models create demand for speed in the delivery of projects by third parties, and the demand for speed prevents third parties from carrying out meaningful consultation with local communities, resulting in adverse human rights impacts.

Addressing impacts on people associated with this red flag can contribute to ensuring responsible, inclusive and participatory and representative decision-making at all levels (Target 16.7 of SDG 16: promoting peaceful and inclusive societies).

The results of consultation with groups affected by projects can enable companies to better understand and mitigate risks to people, which can contribute to the following SDGs:

• SDG 1: End poverty in all its forms everywhere. Meaningful consultation can help ensure that people – particularly vulnerable communities – have equal rights to economic resources, including ownership and control over land.

• SDG 2: Zero hunger. Meaningful consultation can help agricultural productivity and incomes of small-scale farmers, in particular women and Indigenous communities, including through secure and equal access to land and productive resources.

• SDG 3: Good health and wellbeing. Meaningful consultation can help protect stakeholders’ health by preventing negative impacts such as pollution of soil, air or water sources, or impacts from poor working conditions such as fatigue, stress and accidents.

• SDG 6: Clean water and sanitation. Meaningful consultation can help prevent pollution of water sources.

• SDG 7: Affordable and Clean Energy. Meaningful consultation can help to ensure that clean energy projects are advanced swiftly and with public support.

• SDG 13: Climate action. Meaningful consultation can help to ensure that the transition to a lower carbon economy is fast because it is fair.

• Do we understand the local context and the potential ways in which our project can impact on people?

• Do we have a process to sensitize our staff about local issues and the local context?

• Do we know which stakeholders we need to consult and how to structure the consultations to make them meaningful and accessible?

• Have any vulnerable or historically marginalized groups been identified in or around the project site?

• Do we know if groups that self-identify as Indigenous Peoples are impacted by the project and, if so, do we understand how that will impact project timelines?

• Do those responsible for community engagement have the requisite skills and experience for engaging with affected stakeholders, including Indigenous Peoples?

• Do our project plans allow sufficient time for consultation to take place?

• Do we actively support community relations managers to carry out the consultations?

• Does advice from community relations managers get reported to the executive?

• Are we prepared to review the project plan based on insights from the consultations?

• Do we measure and/or have we accounted for the cost of conflict with local communities?

• The Indigenous Peoples’ Rights International (IPRI) and the Business & Human Rights Resource Centre are making the case for a renewable energy transition that centers Indigenous Peoples’ rights, interests and prosperity, as determined by them, in pursuit of a global transition that is fast because it is fair and sustainable. Among other resources, the report outlines emerging benefit-sharing modalities with real-world examples of where and how they are being deployed, as well as recommendations for regulators, renewable energy developers and financial institutions.

• In Alaska, the Red Dog Mine operation, which sources nearly 5% of global zinc supply, was developed through an operating agreement between Teck Resources and 15,000 Iñupiat shareholders of NANA Corporation.

• One of the largest seafood companies in the southern hemisphere is 50% owned on behalf of the Māori people of New Zealand and 50% by the Japanese company Nissui.

General

• Shift, UN Global Compact Netherlands & Oxfam. Doing Business with respect for human rights – Chapter 3.7: Stakeholder Engagement – Making it Meaningful

• Shift (2018) Engaging Affected Stakeholders: Evaluating the quality of processes for company-community engagement

• Investor HREDD Precision Tools (2025) Stakeholder Engagement Guide (beta)

• Task Force on Nature-related Financial Disclosures (2023) Guidance on Engagement with Indigenous Peoples, Local Communities and affected stakeholders

• Science-based Targets Network (2024) Stakeholder engagement and science-based targets for nature

• UNEP Finance Initiative (2025) Human Rights Toolkit: Infrastructure

• Buhmann, Karin et al. (2024) The Routledge Handbook on Meaningful Stakeholder Engagement

• Amazon Watch (2023) Respecting Indigenous Rights: An Actionable Due Diligence Toolkit for Institutional Investors

• Equator Principles (2021) To Enhance Access to Effective Grievance Mechanisms and Enable Effective Remedy

• Equator Principles (2020) Guidance Note: Evaluating Projects with Affected Indigenous Peoples

• IFC (2007) Stakeholder Engagement: A good practice handbook

• IFC (2007) Note on ILO Convention 169 and the private sector

Sector specific:

• Business and Human Rights Resources Centre (2024) Stop and listen: Pathways to meaningful engagement with rightsholders in the global rush to mine for transition minerals

• Business and Human Rights Resource Centre (2024) Exploring Shared Prosperity: Indigenous leadership and partnerships for a just transition.

• IIED paper (2016) Meaningful community engagement in the extractives sector

Citation of research papers and other resources does not constitute an endorsement by Shift of their conclusions.

• Where the business model is premised on securing cheapest prices for customers (as opposed to other differentiating factors such as quality or service), retail prices often remain constant or reduce, even when costs of production, raw materials or demands for high-speed or just-in-time delivery increase. In such cases the company may use its purchasing power to place heavy price pressure on suppliers working on narrow margins, such that costs are passed onto the most vulnerable people in supply chains – such as factory workers, including migrant workers, women workers, producers and small-holder farmers – affecting their livelihoods and those of their families. (Right to fair/living wage; Right to adequate standard of living)
• Suppliers under excessive price pressure may be incentivized to demand excessive overtime from workers, not pay or suppress wages or overtime, or not provide safe working conditions. Risks are exacerbated when the company provides little or no commitment to long-term sourcing, disincentivizing investment in improving working conditions. (Right to just and favorable conditions of work; Right to Health)
• Risks are greatest where the company locates (and relocates) production to countries where minimum or industry wages leave workers in poverty and workers lack adequate protections in law or in practice. These same countries are then incentivized to keep labor costs low to maintain competitive advantage and continue to attract foreign investment from multinational companies. (Right to an adequate standard of living; Right to fair/living wage)
• Business models centered on delivering low-cost goods and services often impose intense cost pressures on suppliers, leaving little room for investments in worker protections or sustainable practices. As the world transitions to a lower carbon economy, many companies are facing pressure to decarbonize across their value chains. Buyers’ supply chain emissions reduction targets can exacerbate the inherent pressures of the low-cost goods and services business model, when responsibility for emissions compliance, including associated costs, are passed on to suppliers without guidance or financial support for making the necessary emissions reductions. To implement low carbon workflows or investments to satisfy buyers’ emissions requirements in an already cost-constrained environment, suppliers may reduce workers’ wages, require excessive overtime, or underinvest in workplace safety, particularly in regions with weak labor protections. Other buyers’ decarbonization strategies that could negatively impact supply chain workers if not managed appropriately, include:
  • shifting sourcing patterns (e.g., supply chain consolidation or diversification, “agile” supply chains, or nearshoring/reshoring);
  • automating or introducing new low carbon technology or machinery, and;
  • circular economy measures (e.g., reducing production, reducing waste, renewable or recycled materials).
• Further, as the physical impacts of climate change intensify — including rising temperatures and more frequent extreme weather events, such as storms and flooding — workers in supply chains face escalating risks, particularly in labor-intensive sectors like fashion & textiles, and food and beverage. In environments where employers, under pressure to keep production costs low, are unwilling or unable to invest in climate change adaptation measures, such as heat adapted conditions, adjusted working hours, or paid leave during extreme weather, workers endure growing exposure to heat stress, dehydration, or accidents. Productivity losses – already shown to be linked to extreme heat – impact employers’ costs and output potential, as well as workers’ wages and job security. A study by the Global Labor Institute found that without significant investment in climate change adaptation, physical climate impacts on workers in the fashion sector will only get more pronounced as global temperatures rise, with increasingly devastating impacts on workers and job availability in major production hubs like Vietnam and Bangladesh. These impacts will be particularly acute for groups that are already more economically and socially vulnerable, such as migrant workers, women, or smallholder farmers. Thus, failure to adapt or maladaptation has the potential to further exacerbate the negative risks to people inherent in this business model.

• Financial, Reputational, and Operational Risks: Companies operating in a hyper flexible sourcing context (i.e. where sourcing can move quickly and easily between multiple locations) may benefit from lowest prices, but face reputational risks linked to the ease of exploitation of low-skilled, low-paid workers in such sourcing geographies with minimal protections for them. The short-term and remote nature of many supplier relationships can reduce buyers’ leverage to do anything about abusive behaviors in their supply chain when they are highlighted by civil society, consumers or their own audits.
  • In October 2022, a UK documentary alleged exploitative labor practices in Shein‘s supply chain. The allegations highlighted systemic issues within the ultra-fast fashion model, which emphasizes rapid production and low costs, often at the expense of worker welfare. In response, Shein pledged a $15 million investment over three to four years to improve working conditions and oversight. Despite these efforts, subsequent reports, including Shein‘s 2023 Sustainability Report, disclosed ongoing concerns, such as instances of child labor and excessive working hours within its supply chain. These findings have continued to attract scrutiny from regulators and human rights organizations (see investor briefing here), impacting Shein’s attempts to pursue public listings in major markets.
  • In 2020, a UK-based low cost online retailer, Boohoo Group, faced significant backlash after reports emerged of labor rights abuses in its UK-based supply chain. The scandal led to a sharp decline in Boohoo‘s share price (wiping more than GBP1.5B off its valuation over a week-long period) and prompted several retailers to drop its products. The company commissioned an independent review, which confirmed the allegations. While there has been some follow-up to address the issues identified, the company faces ongoing criticism regarding systemic labor violations in their supply chain. Further, in May 2024, 49 of its investors filed a legal claim seeking GBP100M in damages alleging the company made “untrue or misleading statements and failed to disclose material information” about the matter to the market.
  • In July 2020, Violet Apparel, a Cambodian factory owned by Ramatex Group, closed “with less than one week’s notice”, terminating 1,284 workers without paying USD1.4 million in legally mandated severance. Although, a workers rights organization alleges that Nike-branded products were produced there, Nike maintains it hasn’t sourced from Violet Apparel since 2006. However, more than 50 human rights groups and over 70 investors have urged Nike to ensure compensation, alleging failures in supply chain oversight and due diligence.
  • An increasing number of institutional investors view payment of a living wage as a material investment factor linked to financial, reputational, and operational performance. In Europe, the Platform Living Wage Financials coalition—comprising 22 financial institutions overseeing over €7 trillion in assets—posits that paying a living wage can reduce operational risks, particularly in company value chains. Meanwhile, UK investors such as Scottish Widows, Axa and Aviva Investors have recently backed shareholder resolutions linking living wage commitments with long-term business resilience, recognizing that not paying a living wage poses risks to talent retention, productivity, and shareholder value.
  • Tragedies affecting workers in the supply chains of global brands that benefit from low cost production implicate entire industries: in the wake of the Rana Plaza collapse, companies sourcing from Bangladesh that did not have garments produced in at Rana Plaza were equally affected by campaigns that focused on the complicity of the “entire industry” in conditions leading to the tragedy.
• Operational, Regulatory and Reputational Risks: Companies may find themselves unable to guarantee traceability as suppliers under extreme price pressure often sub-contract production, leading to a longer, less transparent and less controllable supply chain.
  • In December 2024, a report by China Labor Watch revealed that coffee farms supplying Nestlé and Starbucks were engaging in labor practices that violated both companies’ sourcing standards. The investigation uncovered that the drive to meet demand for lower cost coffee products resulted in suppliers sub-contracting from smaller, uncertified “ghost farms” at which there were recorded instances of child labor, excessive working hours, lack of formal contracts, and inadequate safety measures. This resulted in operational, regulatory and reputational risks for Nestle and Starbucks who were: (i) accused of contravening their own ethical sourcing standards, (ii) at risk of non-compliance with supply chain regulation in key markets, and (iii) making headlines in major news outlets.
• Financial Risk and Business Opportunity Risk: Data shows consumer concerns about lowest price apparel goods, for example, and an increase in the number of consumers, particularly younger consumers and higher income consumers, who state that they would be willing to pay more for ethically sourced, sustainable goods. This suggests that there could be important shifts in consumer preferences that will impact lowest cost goods. Failure to address this may have financial implications including in the form of missed opportunities to adapt.

• Financial and Operational Risks: The Global Labor Institute at Cornell University published a study mapping out the supply chains of six unidentified low cost global apparel brands operating in Bangladesh, Cambodia, Pakistan and Vietnam. The study found that all six would be hit materially by extreme heat and flooding, which could “erase USD 65 billion in apparel export earnings” by 2030, as workers struggle under high temperatures and factories close.
• Regulatory Risk: Operating on a low cost goods and services business model can be associated with regulatory risk. Regulation has been tabled in some jurisdictions to reduce waste associated with low cost goods. Some examples include:
  • In 2025, France’s Senate approved a law seeking to curb advertising by companies selling garments with extremely rapid turnover, low cost and short lifespans, with enforcement now awaiting passage through a joint committee and presidential signature. It targets all media advertising—including digital, traditional, and influencer ads—and is proposed to take effect on January 1, 2026.
  • Noting, among other things, that “garment workers face the brunt of the [fast fashion] industry’s race to the bottom”, lawmakers introduced legislation during New York’s 2025/26 legislative session seeking to mandate environmental and social due diligence for the apparel and footwear sectors for companies with over $100 million in global revenue, requiring supply chain transparency and due diligence, with penalties for non-compliance.
  • The EU has agreed on binding rules that force brands—especially low-cost, fast-fashion producers—to finance textile waste collection, sorting, and recycling under an extended producer responsibility system, with fees targeting ultra-fast production. From January 1, 2025, all EU member states are required to implement separate textile collection, while digital passports and stricter eco-design standards further mandate durability, recyclability, and supply-chain transparency and traceability.

The UNGPs note that companies should “strive for coherence between their responsibility to respect human rights and policies and procedures that govern their wider business activities and relationships [including] …. procurement practices” (Principle 16, Commentary).

Where the incentives for impacts are embedded in the buying company’s purchasing practices, it may systematically rewards buyers for placing extreme pressure on suppliers, and punish those that invest in protections for workers in ways that raise their costs (and therefore prices to the buying company). In such circumstances, the company may be considered to contribute to impacts on supply chain workers. Similarly, where the company executes a strategy to benefit from wages below a living wage, including, in some cases, by lobbying against minimum wage increases, it may contribute to the impacts experienced by workers.

Addressing impacts to people associated with this red flag can contribute to, inter alia:

• SDG 1: End Poverty in All its Forms Everywhere, in particular

  • Targets 1.1 and 1.2 on eradicating extreme poverty and reducing by half the number of people living in poverty (according to national definitions).

• SDG 8: Decent Work and Economic Growth, in particular

  • Target 8.8 on protecting “labor rights and promot[ing] safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment.”

• SDG 10: Reducing inequalities within and between countries
  This goal becomes relevant as profit margins and returns are concentrated at the buyer/investor level, with less and less value making it into the pockets of the poorest in the supply chain
  

• SDG 12: Responsible Consumption and Production, in particular

  • Target 12.5 on substantially reducing waste generation through prevention, reduction, recycling and reuse.

For Buyers:

• Do our contracting/tendering processes unduly incentivize cost cutting or disincentivize supplier investment in rights-related improvements (e.g. annual bidding for contracts; procurement decisions based on lowest-cost alone). How do we ensure that lowest price bids reflect greater efficiencies rather than externalization of costs onto supply chain workers? Have we considered the five principles of responsible purchasing that Better Buying has identified that affect a supplier’s ability to provide good working conditions?

• How do we incentivize and reward our in-house buyers and how do they perceive the factors on which they are judged to succeed? Do we consider factors other than lowest price (e.g. relationship and capacity building; adherence to sustainability codes etc.)?

• Do our in-house buying staff have sufficient knowledge, incentives and support to assess how and when their decisions will place human rights at risk, and to know from whom to seek assistance when they do?

• How do we know whether our buyers follow our processes, rules or guidelines in practice when engaging or contracting with suppliers?

• Do we engage with our suppliers in ways that help us understand how far they can go to meet our demands while still respecting the rights of their workers? Do we work with suppliers in countries of production to increase worker protections?

• Do we take a short term, transactional approach to supply chains or do we develop supply chain partnerships?

• How are we engaging with our industry peers to uphold human rights in our shared supply chains, recognizing this is a pre-competitive issue? Are we engaging in multi-stakeholder initiatives that are actively working to improve wages and livelihoods in the supply chain?

• How have we engaged with our suppliers on our GHG emissions reduction strategies and the potential implications those strategies could have for supply chain workers?

• How are we integrating the potential impacts on supply chain workers of physical climate change impacts (e.g., extreme heat and flooding) into our expectations for suppliers?

For suppliers:

• Do we have sufficient knowledge, incentives and support to assess how and when buyer decisions will place human rights at risk?

• Do we engage regularly with our buyers to help them understand the implications of their demands on respecting the rights of workers?

• Do we provide constructive feedback to buyers on purchasing practices that have negative impacts on workers, either through direct engagement or through buyer ratings services?

• How have we explored using legislative requirements (e.g., from the EU) to engage with buyers on their purchasing practices and changes that can support more effective due diligence?

• Do we understand the potential impacts of buyers’ climate-related emissions reduction requirements on our workforce and have we communicated them to the buyers?

• How have we factored physical climate change impacts (e.g., increasing frequency, duration and severity of extreme heat) into our operations and expectations of our workers?

*Mitigation examples are current or historical examples for reference, but do not offer insight into their relative maturity or effectiveness.

• Increasing leverage through collaboration: Given the systemic nature of the issues, collaborating with other companies may be one of the most effective ways to affect change. For example:

  • ACT is a coalition of over 40 global apparel brands, working alongside IndustriALL Global Union to secure living wages through industry-level collective bargaining. Building on the original Memorandum of Understanding, brands are committed to ensuring their purchasing practices support higher wages via five key commitments—including itemized labor costs, fair terms, responsible exit strategies, and mandatory training—underpinned by the ACT Labour Costing Protocol and a robust Accountability & Monitoring Framework. In May 2024, ACT and IndustriALL signed bilateral support agreements focused on wage improvements and better working conditions in the Cambodian garment and footwear sector.

  • Launched in 2023, the UN Global Compact Forward Faster initiative calls on companies to commit to ensuring 100% of their employees earn a living wage by 2030. Participating companies must also develop joint action plans with suppliers to extend fair wage practices through their supply chains. Early steps include wage assessments, pilot pay adjustments, and public reporting to drive sector-wide accountability. Over 1,400 businesses, including JA Solar and Adiantes, have joined with measurable, time-bound wage targets.

• Understanding and addressing pressures on farmers and suppliers: The Farmer Income Lab, launched by Mars, with Dalberg and Wageningen universities and Oxfam USA, is a collaborative effort to identify ways to increase smallholder farmers’ incomes – beginning with Mars’ supply chains in developing countries – and to understand how to create positive outcomes for farmers at scale.

• Focusing on purchasing practices: The Better Buying Institute (recently acquired by Cascale) is an organization that provides tools and research to help companies improve purchasing practices in ways that support fairer, more sustainable supply chains. Better Buying’s anonymous supplier feedback system enables suppliers to confidentially evaluate their customers’ purchasing practices across areas such as planning and forecasting, payment terms, and order changes, which provides structured and candid insights that might not otherwise be shared openly, helping buyers and suppliers to identify where practices may create unnecessary cost pressures or labour rights risks. For example, Under Armour has used these supplier evaluations to address issues such as forecast accuracy, production timelines, and vendor training. SanMar, a large US-based wholesale apparel supplier, has publicly shared its Better Buying scores to demonstrate its commitment to transparency and accountability. The company has also used the supplier feedback to refine its forecasting processes, reduce last-minute order changes, and improve communication with manufacturing partners.

• Exploring customer willingness to pay for better practices: In April 2024, as part of its participation in the Tony’s Open Chain initiative, Waitrose introduced a small yellow “Tony’s Open Chain” label on its private-label chocolate bars and raised prices by about 10%, which the company reported having had a positive impact on its sales, at least in the early weeks of its sales. Member brands of the Tony’s Open Chain collaboration— which includes Waitrose, Aldi, and Ben & Jerry’s—commit to paying a living-income premium above Fairtrade prices to bridge income gaps for cocoa farmers. The initiative is reporting early positive outcomes related to reduced child labor rates and reduced deforestation.

• Partnering with expert organizations to pilot new approaches: In 2021, Brands Fashion, in partnership with GIZ and Fairtrade, piloted a living wage initiative covering around 1,000 textile workers in India. The project certified the company’s entire supply chain under the Fairtrade Textile Standard, making it the first apparel firm to achieve this. These 1,000 workers were employed in selected certified factories where Brands Fashion had established relationships and sufficient influence to implement wage increases, worker training, and democratic representation.

• Recognizing and acting upon the correlation between human rights and overall supplier performance: Research by Business Fights Poverty and Cambridge Institute for Sustainability Leadership, supported by Shift, has highlighted a direct correlation between how a supplier treats their workers and the overall performance of that supplier on a range of factors. Research interviews with buyers identified a clear link between the quality and reliability of suppliers, and the working conditions and levels of pay received by workers in supplier factories. As such, mitigating risks to supply chain workers can help to mitigate other risks associated with supplier performance and create the opportunity for improved business performance. To measure this correlation, the procurement teams of some leading companies now benchmark and track the corporate payback from investments in responsible purchasing practices.

• Integrating extreme heat adaptation actions into supplier codes of conduct: Levi’s’ 2025 Supplier Code of Conduct addresses the brand’s expectations for workplace health and safety across its strategic suppliers and has explicit expectations for managing extreme heat, which specify requirements such as the provision of potable water near work areas, shaded or cooled rest zones, and defined work/rest schedules.

• Contributing to a regulatory environment that enables respect for rights: In 2014, eight apparel brands wrote to the Cambodian deputy prime minister and the chairman of the local Garment Manufacturers Association to say they were “ready to factor higher wages” into their pricing.

In the US, the Fair Food Program, established by The Coalition of Immokalee Workers (CIW) in 2011, brings together the CIW, farmworkers on participating farms, farmers and retail food companies. Among the many facets of the program is a “penny per pound” premium that is paid by participating buyers on top of the regular price paid for tomatoes or other covered products. The premium is then passed through by farmers as a bonus on worker’s paychecks, which are monitored by the Fair Food Standards Council, the program’s independent monitoring body. See further from Shift here.

Alternative models can focus on differentiating through quality and/or ethical and transparent sourcing. Various “slow” movements (“slow food,” “slow fashion”) etc. offer products in which the value proposition incorporates fair, transparent and sustainable sourcing and manufacturing, with a focus on durability and quality.

The ETI highlights examples in the apparel industry, including:

• Nudie Jeans (higher priced but ethically sourced and more durable jeans)

• People Tree (apparel produced using organic cotton, sustainable materials and traditional skills that support rural communities)

• “Crowd farming” (consumers receive food directly from source and sponsor the cultivation of raw materials)

ASKET is a Swedish menswear company that operates on the premise of a permanent, season-less collection. They focus on producing only “essential” garments that are continually refined, reducing overproduction and quick style turnover. They sell directly to consumers at full cost transparency—detailing origin, factory working conditions, and itemized pricing—with the aim of shifting focus from cheap volume to long-term value. ASKET generates around $10 million in annual sales by relying on a transparent, durable-focused business model that also emphasizes repair and resale programs to support a full lifecycle approach and to differentiate from a low-cost, disposable fashion model.

Tony’s Chocolonely prioritizes ethical sourcing, fair labor practices, and long-term sustainability over price minimization. The company implements five core sourcing principles: 100% traceable beans, paying higher prices to farmers, empowering farmers to have greater control and bargaining power in the supply chain, establishing long-term purchase agreements, and supporting improvements in bean quality and productivity. The company also introduced a feature it refers to as “Mission Lock,” which is a legal structure focused on maintaining the company’s ethical mission, preventing any changes to its core values and sourcing principles.

• Shift (2025) Living Wage Accounting Model and Progress Tool

• Cascale’s Better Buying programme

• Business and Human Rights Resource Centre (2025) The missing thread: Workers absent from fashion companies’ climate plans

• Fashion Revolution (2024) What Fuels Fashion?

• Global Labor Institute (2023) Higher Ground? Reports 1 & 2.

• Ethical Trading Initiative (2024) Extreme heat: Risks for workers in global supply chains

• Ethical Trading Initiative (2025) Flooding: Risks for workers in global supply chains

• Ethical Trading Initiative (2025) Common Principles for Responsible Purchasing Practices in Manufacturing Industries

• Ethical Trading Initiative (2024) Common Principles for Responsible Purchasing Practices in Food

• Global Deal (2024) The Global Deal Flagship Report

• Reinecke, J., Donaghey, J., Bocken, N. and Lauriano, L. (2019) Business Model and Labour Standards: Making the Connection Ethical Trading Initiative, London

• Fair Labor Association (2020) Fair Compensation Strategy

• IDH Roadmap on Living Wages: A Platform to Secure Living Wages in Supply Chains

Case example

• Rana Plaza Factory Fire (IHRB)

Citation of research papers and other resources does not constitute an endorsement by Shift of their conclusions.