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2025.04.18

[Latest in 2025] Overseas Laws and Regulations on Human Rights Due Diligence and Examples of Japanese Companies

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Part I ArticleIn the first part of this report, we explained the background and necessity of the "Guidelines for Respecting Human Rights in Responsible Supply Chains, etc." formulated by the Japanese government. In the second part, we will introduce overseas laws and regulations on human rights due diligence (DD) and Japanese companies' responses to them, with specific examples. In particular, we focus on risk assessment and countermeasures in the supply chain and value chain, and examine the challenges faced by companies and their solutions.

Increasing regulation is not the only challenge companies face in managing their global supply chains. The multi-layered nature of trading partners and the complexity of data management are also major factors. In recent years, supply chains have become more visible, and companies are increasingly required to manage not only primary suppliers, but also secondary and tertiary suppliers. Furthermore, risk management methods throughout the value chain are diversifying, and risk monitoring using technologies such as AI and blockchain is becoming increasingly important.

Key points of this article

Overseas human rights due diligence legislation: you can check each law and whether your company is involved.
Human Rights Due Diligence Cases of Japanese Companies: Understanding Advanced Cases and Challenges in Japan

Overseas Human Rights Due Diligence Legislation [Latest Regulations in EU and US].

In recent years, legislation for human rights and environmental due diligence (HREDD*) on corporations has been gaining momentum in many countries around the world.
In Europe and the U.S., the broad trends are as follows

Europe:Legislation requiring companies to conduct human rights due diligence and disclose informationis progressing, and responsibility for the entire value chain is being strengthened.
U.S.A.: In the U.S.A.,Regulate the importation of products manufactured by forced laborLaws have been applied and oversight of certain areas and industries has been strengthened. In addition, in California,Require companies to disclose and report to regulators on risk responses in their operations and supply chainsA legal system has been introduced.

Thus, while human rights due diligence regulations vary from country to country and region to region, there is a common and accelerating trend toward stronger risk management throughout a company's supply chain. Below is a list of the major human rights due diligence laws and regulations in effect or scheduled to be in effect as of 2025.

area	laws and ordinances	summary	Japanese companies that will be affected
EU	Corporate Sustainability Due Diligence Directive (CSDDD)	Require due diligence implementation and disclosure of human rights and environmental risks in the value chain of the company, its subsidiaries, and established business relationships. It also takes into account the governance status of the countries and regions in which the entity is involved.	Manufacturing companies, trading companies, financial institutions, etc. operating in Europe
Germany	Supply Chain Due Diligence Act	Companies in Germany above a certain size are required to conduct due diligence and disclose human rights and environmental risks in their supply chains. Assessment and preventive measures for human rights risks such as forced labor and related environmental risks are required. Primary suppliers are subject to this requirement, while indirect suppliers are subject to audit only when risks are recognized.	Manufacturing companies, component suppliers, etc. that do business with the German market
France	duty of care law	Provides for human rights and environmental due diligence in the supply chain and requires covered companies to develop, implement, and disclose a plan. The plan must include risk identification and measures to prevent serious violations. Particular emphasis is placed on avoiding impacts on the parent company's overseas subsidiaries and supply chain.	Companies operating in France
United States of America	Uyghur Forced Labor Prevention Act (UFLPA)	In principle, imports of products from the Xinjiang Uyghur Autonomous Region are prohibited and presumed to be the product of forced labor. However, exceptions can be made if the importer complies with the UFLPA strategy and shows "clear and convincing evidence" that the product is not forced labor. Products of companies on the specified list are also subject to the same import ban.	Companies that export products to the U.S., especially those related to apparel, electronic components, and agricultural products
United States (California)	Supply Chain Transparency Act	Requires manufacturers and retailers above a certain size to disclose how they are addressing human trafficking and slave labor risks in their supply chains.	Companies doing business in California

Table 1: List of Legalized Human Rights DD Regulations in Each Country [Latest by 2025] (Prepared by aiESG based on data from the Ministry of Foreign Affairs)

The Corporate Sustainability Due Diligence Directive (CSDDD), to be finalized in 2024, will require companies to identify and address human rights and environmental risks throughout their value chains, and will have a particularly It is expected to have a significant impact on Japanese manufacturers and trading companies based in Europe. Germany's Supply Chain Due Diligence Act (effective 2023) and France's Duty of Care Act (effective 2017) also require companies to disclose information through risk assessment and implementation of measures.

The CSDDD will gradually expand the scope of eligible companies, and its impact on small and medium-sized enterprises will also need to be closely monitored. (SeeCommentary] Understanding the European Corporate Sustainability Due Diligence Directive (CSDDD))

Meanwhile, the Uyghur Forced Labor Prevention Act (UFLPA) will be enforced in the U.S. in 2022, prohibiting the import of goods related to forced labor in China's Xinjiang Uyghur Autonomous Region. As a result, Japanese companies are also required to conduct appropriate due diligence and promote supply chain visibility when exporting to the US. In addition, the State of California enacted the "Transparency in Supply Chains Act" in 2012, which requires companies above a certain size to disclose information on human rights due diligence.

In connection with the UFLPA, U.S. authorities are increasing their scrutiny of certain industries after 2023, particularly in the garment, electronic components, and agricultural products sectors, which require companies to properly manage risk. These regulations can affect deeper into the value chain, making it imperative for companies to strengthen their supply chain audits.

*Human Rights and Environments Due Diligence (HREDD) is the overall process by which companies identify, prevent, mitigate, and remedy negative impacts related to human rights and the environment. It is not a specific law or directive, but rather a framework of concepts and principles.

Human Rights Due Diligence Case Studies of Japanese Companies

In recent years, as human rights due diligence (DD) legislation has become increasingly common, particularly in Europe and the U.S., Japanese companies are also strengthening their response. In particular, companies with global supply chains are required to identify and assess the human rights risks of their business partners and take corrective measures.

From this section, we will introduce specific initiatives by Japanese companies and explain how each company is strengthening its human rights risk management. Each company is analyzing its supply chain and establishing a monitoring system according to the characteristics of its business, and is practicing risk management in accordance with international standards.

The following table summarizes the efforts of representative Japanese companies from the three perspectives of "how supply chain analysis is utilized," "status of human rights DD implementation," and "human rights risk management as a corporate strategy.

Company Name	Use of Supply Chain Analysis	Implementation of human rights DD	Human Rights Risk Management as a Corporate Strategy
Sojitz Corporation	Conducted risk analysis for each project using the database of international NGOs. Developed improvement plans with the customary input from outside experts.	Conducted risk assessments for each business field, shifting from a uniform CSR questionnaire to individual analysis. Demanded remedial action from high-risk business partners and conducted on-site investigations as necessary.	Established the "Supply Chain CSR Action Guidelines" and set a long-term vision "Sustainability Challenge" until 2050 to promote respect for human rights throughout the supply chain.
Kirin Holdings Company, Limited	Conducted human rights risk mapping to identify high-risk countries and regions. Strengthened risk management with input from external experts.	In the identified risk areas, on-site visits are conducted and action plans are formulated for each operating company. The head office is in charge of progress management and monitoring.	As part of the "Creating Shared Value (CSV)" management strategy, human rights are positioned as an important issue and a human rights policy has been formulated. Supplier guidelines also reflect a human rights perspective.
Kao Corporation	Conducted risk assessment of primary suppliers using an international NPO's information sharing platform. Identified human rights risks in the palm oil industry and enhanced traceability.	Conducts risk assessments of suppliers and requests improvements if they fall below standards. If necessary, additional evaluation is conducted using an independent survey form.	Kao formulated and published the Kao Human Rights Policy following the formulation of the Guiding Principles in 2011. Established a consultation service on the website to receive reports from general consumers.

Table 2: Examples of Human Rights DD Implementation by Japanese Companies (Compiled by aiESG based on data from the Ministry of Foreign Affairs)

Challenges Facing Japanese Companies

Although Japanese companies have made steady progress in human rights DD, the following issues still exist (Reference: JETRO, Japan Federation of Bar Associations)

(1) Difficulties in data visualization and traceability

It is necessary to accurately identify the risks and signs of human rights violations not only to primary suppliers, but also to secondary and tertiary suppliers.

(2) Cost burden and impact on suppliers

Strict human rights DD imposes additional burdens not only on the company itself, but also on its business partners.
Lack of resources is especially problematic for small and medium-sized enterprises, which often find it difficult to cope with the situation.

Flexibility to respond to changes in national laws and regulations

Frequently updated laws and regulations, such as the EU's CSDDD and the U.S. UFLPA, require a quick response.
It is essential to establish a compliance system that conforms to the standards of each country, and ongoing information gathering and system reinforcement is required.