Quick Take

The World Still Awaits a Proper Evaluation of Human Rights Due Diligence

January 21, 2026

Though Europe’s debate over human rights regulation has led to a weakening of the concept of due diligence, the EU’s new omnibus proposal is about to become hard law for big businesses operating in Europe. Yet the efficacy of this promising policy tool has yet to be fully tested. A new report on the financial sector’s human rights practices assembles useful case studies but sidesteps the essential question: Which of these practices actually work?

The report from Shift, Business for Social Responsibility and the Danish Institute for Human Rights—“Human rights due diligence in the financial sector: A compendium of industry case studies and practice,”—arrives at a critical moment. Only 6% of the top 400 global financial institutions (approximately two dozen companies) have due diligence processes in place, making guidance for the remaining 94% crucial if the directive is ever fully extended to the finance sector.

Unfortunately, the Omnibus’ new amendments to the due diligence directive make that prospect less certain. The original directive specifically directed the European Commission to study a mandate for due diligence on financial clients in 2026. That has become a general study in 2031 on whether and how to extend due diligence. Regardless, the finance sector is so intertwined with the rest of the economy that its experiments are instructive for all businesses.

The researchers at Shift, BSR, and DIHR have focused on the ethical pioneers in finance—many from Scandinavia or the Netherlands—and shared their noteworthy experiences. The report’s annexes scour years of scattered, hard-to-find sources to assemble a collection of both due diligence and stewardship examples from high finance.

But while the report is a useful first step, it needlessly limits the inquiry from the outset. A prominent disclaimer on page one clarifies that the authors “have not evaluated the human rights outcomes or impacts of mentioned company-led policies….” An introduction to the annexes adds that they do not endorse “the various approaches or outcomes.” And, lest we miss the point, two footnotes stress that “the authors do not offer insight into [the] relative maturity or effectiveness” of the examples so painstakingly assembled.

This choice leaves to another day the essential project of assessing human rights due diligence efforts by its ultimate measure: real-world outcomes. The NYU Stern Center for Business and Human Rights has previously evaluated human rights stewardship based on outcomes. Perhaps a similar study of HRDD is overdue.

In the meantime, it’s worth dwelling on the few examples in the new report that share enough real-world impacts for readers to attempt evaluation.

Success

The Hague-based FMO Bank raised concerns about the working conditions of drivers hauling farm crops long distances on shoddy roads to its client’s agricultural processing plant in India. Drivers were often forced to wait overnight without extra pay or decent accommodations. The bank pushed its client to engage with transporters to raise drivers’ pay—the result of that engagement is not provided. But we do know that, as a result of the Dutch bank’s supplications, the Indian food processor began making food, shelter, and sanitation available for truck drivers forced to wait overnight. That’s exactly the sort of real-world change that HRDD is all about.

Limited Impact

Another Dutch bank, ABN AMRO, identified a hundred clients doing business with solar suppliers operating in Xinjiang. In 2022, it began reaching out to a few of those clients, with the goal of “rais[ing] awareness.” Raising awareness is, by definition, what occurred. But Uyghur forced labor is an intractable problem, and it’s unclear whether due diligence (or even import restrictions) can make much of a dent in that problem so long as Xinjiang-linked solar suppliers dominate the market for polysilicon. This may be an example where the bank fulfilled its duty, but human rights due diligence is an inadequate policy tool.

Then there is the story of the resistance mounted to the Dakota Access Pipeline by ING (yet another Dutch bank). After the Standing Rock Sioux Tribe complained that the oil pipeline imperiled its water supplies and sacred burial grounds, ING sold the loan it had extended to the development group, sold its shares in the parent companies, ended its banking relationship with them, and continued campaigning to stop the project. ING was a paragon of responsibility. But its efforts had no impact – the pipeline went on to be completed. ING notes that it would have had more leverage before issuing the loan. But the early-stage environmental and social due diligence reports for the project had raised no red flags. Perhaps the implicit lesson is that a responsible bank needs to be active in human rights due diligence from the earliest phase of a project, to make sure it’s done right.

Rather than declaring real-world impacts out of bounds, advocates need to undertake rigorous outcome-based evaluation of human rights due diligence. What works, what doesn’t, and why? Until we answer those questions, we’re building policy on good intentions rather than evidence. “Human rights due diligence in the financial sector” is a limited but still useful resource. The most essential work of evaluation remains to be done.

Values-Based Investing