Quick Take

Human Rights and Competitiveness: Debunking a Myth or Creating a New One?

November 14, 2025

The debate over the so-called “business case” for human rights is being fueled by a new UNDP study that argues the perceived trade-off between competitiveness and respect for human rights presents a false dilemma. The study concludes that promoting human rights does not undermine business performance—it enhances it. Based on data from the Corporate Human Rights Benchmark (CHRB), as complied by World Benchmarking Alliance, the study only assesses management systems, not actual corporate performance.

Based on this inadequate and misleading assessment framework, the study goes on to assert:

There is no net financial penalty for doing the right thing
Improved human rights performance is positively correlated with profitability, particularly in terms of Return on Investments
Investors reward, rather than penalize, companies that demonstrate strong human rights practices—viewing them as indicators of sound management rather than “wasteful” expenditures

None of these suppositions are borne out by the facts. While robust human rights practices can indeed generate significant long-term value, examining the real costs and timelines reveals that improving human rights performance requires companies to reassess their business models and identify human rights problems that flow from them.

Typically, addressing these challenges requires added expenditures of time and money. Take the subject of fair compensation. In today’s globalized economy, many large corporations have outsourced manufacturing to poor countries with very low wages. To cite one example, the minimum wage in Bangladesh is $113 per month, or about 70 cents an hour. Global companies committed to upholding human rights should be negotiating contracts with their local business partners that enable them to pay fair compensation.

Similarly, in the mining sector, the largest global buyers routinely outsource responsibility to local mining companies and trading companies, ignoring the well-documented risks of informal artisanal mining practices, including child labor, unsafe working conditions, and environmental degradation. As we discovered, it is possible to formalize these mining operations but doing so generates costs—in both time and money—and most global buyers decline to make these investments.

This disconnect between the study’s optimistic conclusions and business reality becomes evident when we examine how companies actually make human rights decisions across different sectors. Rather than the seamless alignment of profit and principles that the study suggests, companies consistently face genuine trade-offs between immediate costs and uncertain future benefits—trade-offs that require careful analysis, not wishful thinking. Yet none of these real-world challenges are factored into the World Benchmark Alliance data, which covers five high risk industries: apparel, extractives, automotive, ICT manufacturing, and food.

Some of the CHRB’s own findings underscore the limitations of its data. According to last year’s State of Play report, only 12% of companies in the benchmark implement responsible purchasing practices, and just 17% work with suppliers on core issues such as forced labour and living wages. This clearly indicates that companies in the sample have yet to start the hard work of implementing human rights in a meaningful way. None of this is seriously measured in CHRB’s assessment of corporate compliance.

There is a business case for companies to address human rights concerns, but it needs to be framed quite differently. As colleagues and I wrote in a recent Council of Europe report, the business case cannot be reduced to quarterly financial results. It needs to be framed in a broader, long-term assessment that measures the link between responsible business practices and successful recruitment and retention of the best people, worker productivity, strengthened community relations in the places companies operate, and ultimately in enhanced investor and consumer loyalty. Benefits also include intangibles such as trust, resilience, and stakeholder commitment. Currently these factors are not being seriously considered.

Pushing too hard to prove a business case based on weak proxies risks doing more harm than good. It encourages a superficial approach to human rights—one that adds procedural steps, often in the form of ill-defined “due diligence” commitments that allow business as usual without seriously testing the underlying business models that create human rights risks in the first place.

We also need to be candid: meaningful engagement and substantive action will add costs but in the longer term it will make companies stronger.

Overselling the business case—and relying solely on financial performance metrics—invites both moral and analytical backlash. From a narrow cost perspective, employing children or other vulnerable workers who lack bargaining power is, of course, cheaper.

Debunking the supposed dilemma between human rights and competitiveness requires a longer-term perspective and an understanding of human rights performance that goes beyond procedural indicators. Without a serious assessment of real human rights risks, and what it will take to seriously address them, we risk creating yet another myth—one that is fragile and likely to backfire.