In this interview, we spoke with Roger Branigin, our colleague and human rights expert based in the US and part of our extended team, about how recent US political and regulatory changes are impacting companies and what this means for business and human rights.
In what ways are recent political, economic, or regulatory developments in the US reshaping the business landscape for domestic and international companies?
First, to frame the discussion, we need to clarify what those developments are. The second Trump administration has been marked by a series of rapid, and in many ways haphazard, initiatives designed to reduce federal regulation, limit government capacity for oversight, restrict access to public services, shift tax relief to wealthier Americans, engage in economic protectionism, and suppress dissent. To that end, federal policies and programs on trade, immigration, public infrastructure, and human services have become politicized and weaponized in unprecedented ways that threaten vulnerable and marginalized communities. At the global level, however, the administration has been more selective in its approach to human rights, supporting legislation and diplomatic initiatives such as the Uyghur labour laws that align with its stance on US security while pulling back from a broad range of other US human rights commitments.
At the same time, significant constraints on the administration remain in place. Vigorous legal countermeasures and increasingly vocal public and business opposition to some of the proposed changes have stymied the administration’s efforts to push forward with large parts of its domestic agenda. In the past few weeks, the administration has shown a tendency to back off more aggressive measures, including hiking import tariffs and stepping up immigration enforcement, if they threaten to upset capital markets or offend important business constituents. In recent years, many states have also stepped up or reinforced a patchwork of requirements that have human rights implications, such as increased climate change accountability, environmental protection, and supply chain due diligence, that serve as a bulwark against changes at the federal level.
Right now, it is unclear whether Trump will remain consistent in his policies when faced with political or business pushback, whether courts will rein him in if he does press ahead, or whether and how long those policies might remain in place if he does succeed. For those reasons, it is too soon to tell what the lasting effect on the business and human rights landscape will be.
Which sectors are most likely to be impacted by current US developments, and why?
Of course, companies within each sector differ in how well positioned they are to absorb these uncertainties. Companies vary in both their maturity and their preparation to respond to changes in the US. Speaking again from a human rights standpoint, however, we can say that at least three sectors are likely to be impacted in the short term:
First are those US companies that rely on vulnerable immigrant workforces facing possible deportation. That includes the agricultural, hospitality and food services, manufacturing, and construction sectors. (other sectors have a higher percentage of foreign workers, but they generally involve higher-skilled and higher-paid workers). The immigration crackdown implicates not only undocumented labourers who may be the direct target of enforcement efforts, but also legal residents who may live with or among threatened family members or communities.
Second are manufacturing companies who source products or key components from low-wage countries with minimal worker protections. Some of those companies may find themselves effectively closed off from US markets and could be forced to close or redirect sales to other markets, placing their employees at risk of job losses or disruptions in income. Other firms and/or their suppliers may try to cut costs to remain competitive by depressing compensation below the level of a living wage or by pressing workers to work excessive hours for the same pay.
Third are companies that promote workplace policies and strategies that run afoul of the administration’s policies on diversity, equity and inclusion (DEI). Many of those companies (as well as the academic community) are already facing pressures to reduce the protections they have afforded vulnerable or historically marginalized communities and/or to bend their commitments to the administration’s ideology. Efforts by the Trump administration to deprive or roll back those protections can be expected to continue.
What are the key risks or uncertainties that companies should be monitoring in the current US environment? Which emerging challenges should be top of their mind?
I can provide a short list but then would turn this question around. The key human rights risks that companies should be following are potential adverse impacts on the safety, health, and personal security of recent immigrant populations; discrimination against vulnerable communities; diminished protection of the environment both natural and workplace; and the loss of civil liberties. But companies should not remain reactive in their approach to these threats. Instead, companies should focus on developing their internal reasons for promoting good human rights practice and grounding them in their business strategies and operational practice. That means companies should take the initiative and advance the human rights protections to align with their business goals.
How can businesses effectively adapt to the current landscape in the US?
The short answer is, by proactively managing their human rights risks if they aren’t already doing so. For companies committed to doing business responsibly while delivering on shareholder value, the recent changes have generated more uncertainties — risks to people and to business — that must be managed in ways that go beyond external compliance or reactions to short-term policy swings. Drawing on available best practice, companies should develop their own framework to manage adverse impacts to people based on their risk appetite. In that regard, and despite the limitations that may emerge from European directives, the UN Guiding Principles still serve as the most reliable, authoritative and forward-looking set of global norms and standards:
- first by defining how adverse impacts to people relate to their long-term strategy and value proposition
- then mapping out the likely impacts in their operations and extended value chains
- defining targets to prevent or mitigate those impacts
- and finally implementing or strengthening their due diligence and supply chain management practices to meet those priorities.
Now more than ever, companies need to define their own risk environment instead of relying on legal or regulatory compliance.
What role can companies / corporate management play in promoting human rights despite setbacks and declining institutional trust in the United States?
There may be declining trust among the global community in American leadership and support for human rights initiatives, but two factors may counterbalance that trend.
One is that the administration’s approach to human rights, especially abroad, does not necessarily equate to reducing or eliminating protections for human rights. In some areas, the Trump administration may continue to support or even advance human rights initiatives — for example, efforts to prevent forced labour in Xinjiang, bans on child labour, and efforts to raise substandard wages — if they also serve US economic or security interests. Even where federal efforts fall short, state requirements continue to raise the bar for responsible business conduct. Companies should look for ways to align their human rights strategies with these priorities.
The second is that companies have an opportunity to work individually and collectively to define their long-term human rights priorities. By treating human rights protections as business imperatives essential to maintaining ethical integrity, worker recruitment and retention, brand protection, investor expectations, and other interests of the business community, business leaders can pressure the administration not to interfere with their plans. So far, Trump has shown that he is willing to listen to the business community if it speaks loudly enough.
If you would like to discuss these topics further with us or with Roger directly, you can reach us here.
We will be continuing this important conversation in our upcoming webinar on human rights and business risks, planned for September. To stay updated and receive registration details, follow us on LinkedIn.