Quick Take

Revisiting the Business Case for Human Rights

July 21, 2025

Over the past two months, I interviewed over a dozen corporate executives, consultants and representatives of multi-stakeholder initiatives in Europe to better understand how current legal developments and geopolitical shifts affect their work on human rights.

The responses fall into two camps: Large multinational companies that have a history of addressing human rights challenges in their own operations and in their supply chains. In general, their commitment to human rights is strongly institutionalized and not derailed by recent changes. But they do point out that budgets are tight and their human rights teams are not growing. As a result, those in charge of managing human rights are often stretched and some are close to burnout. Looking ahead, many believe that though real-world human rights challenges are on the rise, their companies are not adequately prepared to address future risks.

Many other companies are further behind. In these companies, human rights projects have either been deprioritized or indefinitely postponed. With the dismantling of the European Union’s Corporate Sustainability Due Diligence Directive and the substitution of a less ambitious Omnibus procedure, many internal human rights advocates are now deprived of the legal compliance rationale that had convinced senior management to lead on these issues.

In this context, many internal advocates for human rights within companies are being asked to make the business case for human rights. As legal requirements to conduct human rights due diligence are weakening, advocates both in and outside of companies are being asked whether and how engaging in human rights leave companies financially better off.

The question of the business case has been dismissed by normative business ethics scholars and human rights activists as morally and conceptually flawed. However, making a business case for human rights is pragmatic and is closely related to whether and to what extent human rights safeguards are implemented in corporate practice.

Recognizing these competing perspectives, when addressing the business case question, we need to start by accepting some inconvenient truths.

Limitations of the business case

The business case for human rights, narrowly defined, relates to short term returns on investment (ROI), which are reported quarterly. There are currently no studies based on longitudinal and reliable data that would plausibly correlate a company’s human rights engagement to improved short term ROI. When companies undertake compliance with human rights standards, their actions are not cost-free because they routinely require added investments. This inconvenient truth contradicts the often too optimistic and simplistic sales pitch of consultants in the business and human rights field. For example, as companies consider paying a living wage, they will need to increase their production costs. If the business case is tied only to short-term ROI, the case will be impossible to make. To capture the benefits of adopting human rights principles in practice, it will be necessary to adopt a more long- term view.

Why the business case still matters

In the longer term, there is a growing body of evidence demonstrating that engaging in human rights makes good business sense. Companies can avoid unnecessary business risks and create new business opportunities. They can also develop stronger brand reputation, mitigate community conflict, improve supply chain resilience, and enhance their firm’s success in attracting and retaining talent. These positive effects are business-relevant and will matter in the long-term and in ways that are not easily captured on a balance sheet. The uncertainty and long-term nature of making these improvements should not prevent corporate leaders from investing in human rights. After all, this is what leaders with foresight do: they invest in research and development, in new technologies such as AI, and in training, all without a concrete measurement or the promise of enhanced short-term ROI.

Reframing the business case

The business case for human rights needs a new narrative. It must be based on a broader understanding of the role of business in society and of what matters to long-term business success. Corporate leaders who only see human rights as risks, costs that need to be contained, or as irrelevant externalities will miss out on making investments that will help ensure longer-term business sustainability. For example, investing in workers in global supply chains is likely to reduce turnover and absenteeism, improve productivity and quality, and strengthen business relationships, which in turn enhance business agility and resilience in a globally volatile business context.

BHR scholars need to conduct research on this important topic, viewing it as an exercise in principled pragmatism. They need to explore which business model elements are most likely to align profits and principles. For example, which characteristics of collective business and human rights initiatives will help companies to pool resources and expertise and boost their social license to operate? These questions will take on increasing importance in the future as a globalized economy continues to expand, business practices become more transparent, and governments assume a more active regulatory role in addressing corporate conduct relating to human rights.

Look out for a book written by Dorothée Baumann-Pauly, Justine Nolan and Andy Symington on business model transformations to be published by Routledge in 2026.