Key news in this edition:
- Mitigating human rights risks in clean energy supply chains
- Hidden human rights risks in AI’s reliance on semiconductors
- Litigation as a tool for ESG accountability – the DRC vs Apple
Editorial
This special edition looks at the evolving landscape of supply chain due diligence, with a focus on human rights risks and the regulatory and legal developments shaping how companies manage them. In clean energy, investigative reports have linked the sourcing of minerals for EV batteries and solar panels to child labour, unsafe conditions, and environmental damage, prompting calls for businesses and public bodies to more closely align with the UN Guiding Principles on Business and Human Rights. Similar risks are emerging in the semiconductor industry, which sustain the rapidly growing artificial intelligence sector. Research has found that major component manufacturers often fail to address forced labour risks in complex mineral supply chains, with procurement practices sometimes making conditions worse. Legal action is also becoming a powerful tool for accountability, as seen in the Democratic Republic of the Congo’s cases against Apple over alleged sourcing of “blood minerals”. While outcomes have so far favoured the company, they illustrate the potential costs of weak due diligence. On the regulatory side, the EU has scaled back the scope of its Corporate Sustainability Due Diligence Directive, reducing coverage to direct business partners, though expectations for responsible supply chain management remain high. Beyond Europe, New Zealand has proposed modern slavery legislation for larger companies, which would bring it closer to markets like the UK and Australia.
Mitigating human rights risks in clean energy supply chains
As the global transition to renewable energy sources and electric vehicles (EVs) gains momentum, human rights issues associated with supply chains have come to the fore. In particular, issues relating to the sourcing and refining of minerals that are used in the EV batteries, such as nickel and cobalt, and the materials used in solar panels have been the subject of several investigative reports by human rights organisations and research centres. These issues include child labour and forced labour concerns, unsafe working conditions, and environmental damage, pertaining to the mining, smelting, and refining processes for metals used in EV batteries, and forced labour concerns relating to the production of solar panel components.
An investigative report from 2024 by Business & Human Rights Resource Centre found that nickel mining in Indonesia is driving deforestation and environmental harm, whereas an Amnesty International report from 2016 found that miners engaged in cobalt extraction in Democratic Republic of the Congo, including children as young as seven years old, work in unsafe conditions, risking permanent lung damage. The same report also pointed to a lack of awareness about these human rights risks among some battery manufacturers and EV manufacturers that are the ultimate buyers of the processed cobalt.
According to UN Guiding Principles on Business and Human Rights (UNGPs), companies should implement a human rights due diligence process to identify, prevent, mitigate, and account for how they address their impact on human rights; and should have processes to enable the remediation of any adverse human rights impacts they cause or to which they contribute. The same UN guideline also enshrines that states should promote respect for human rights by business enterprises with which they conduct commercial transactions, including through their procurement activities.
As the demand increases for renewable energy sources and EVs, it is the corporations’ and the public procurement bodies’ responsibility to make sure their policies on human rights due diligence for their supply chains are aligned with the international standards.
So what?
The transition from fossil fuel energy sources to renewable sources, in the form of wider use of EVs and solar panels, is widely seen as an exciting development in decarbonization efforts and in the fight against climate change. However, corporations should actively work towards ethical sourcing of minerals and materials and more transparent supply chain disclosures, so that this does not come at the expense of human rights of workers and risking environmental damage in other ways. Companies can leverage their position as the global minerals buyers to influence upstream mining companies and smelters to mitigate human rights risks, starting first with transparent public disclosure of information about where they source minerals and their suppliers. Public bodies should also implement measures that their procurement of solar panels are not indirectly associated with forced labour and they should actively seek alternatives to buying components from regions that are linked to forced labour.
[Contributor: Elif Korca]
Hidden human rights risks in AI’s reliance on semiconductors
Semiconductors – chips made of rare metals and other materials – are an essential component in most modern technology ranging from smart phones to graphics cards. They also underpin the rapidly expanding artificial intelligence (AI) industry. Not only are semiconductors critical to the hardware powering AI systems, but AI itself is accelerating advances in chip design and manufacturing.
The production of these chips depends on a complex global supply chain for rare earth elements and other critical minerals. Many of these materials are sourced in high-risk jurisdictions where labour rights abuses are well-documented. Child labour, unsafe working conditions, and forced labour have been reported in the mining, smelting, and refining of minerals such as cobalt, tungsten, and tantalum. These issues are often several steps removed from the companies that make or buy semiconductors, making them harder to detect without robust supply chain due diligence.
A recent study by the Business & Human Rights Resource Centre found that all of the largest tech component companies have significant room for improvement in addressing forced labour risks. The average company scored just 20/100, with purchasing practices scoring only 5/100 – indicating that procurement pressures may be exacerbating risks rather than mitigating them. The report also found that nearly all companies scored zero for ensuring workers’ right to organise, a key safeguard against exploitation.
Structural factors in the industry contribute to these vulnerabilities. “Just-in-time” production models, which are common in semiconductor manufacturing, can intensify supplier pressure to cut costs and corners, creating environments where abuses are more likely to occur.
So what?
The reports’ findings point to a need for stronger supply chain due diligence that includes not just semiconductor makers, but also the AI companies and wider tech sector that depend on their products. Businesses should conduct supply chain due diligence beyond their direct suppliers, build human rights standards into procurement, work with upstream partners to improve conditions, and be open about where and how they source materials. Without this, the drive for technological progress could carry a hidden cost for people and the environment.
[Contributor: Nickolas Bruetsch]
Litigation as a tool for ESG accountability – the DRC vs Apple
In December 2024, the Democratic Republic of the Congo (‘DRC’) filed legal complaints in France and Belgium against subsidiaries of US global tech giant, Apple Inc. (‘Apple’), alleging that Apple’s supply chain is tainted by so-called “blood minerals”. ‘Blood minerals’ or ‘conflict minerals’ are terms used to describe tantalum, tin, tungsten and gold (also known as 3TG) sourced from conflict-affected areas, where militant groups are known to fund their operations through illegal production of these minerals. This is a commonly used strategy, in which militants occupy producing mines, and force local communities to assist in the production of these minerals, often with many associated human rights violations, and then go on to smuggle the minerals into legitimate supply chains. The 3TG minerals, as they are nicknamed, are key inputs to many of the world’s most widely used technological products including cell phones, computers, automobile parts, light bulbs, and batteries.
Apple faced a similar legal case in 2019, alongside several other international tech companies, filed in the US by a group of victims and families of victims of child labour abuses in the DRC. The companies were accused of abetting the use of child labour in DRC mines, by indirectly sourcing products from these mines without sufficient supply chain due diligence. This case was ultimately dismissed in March 2024 by a US appeals court, which ruled that the companies’ buyer-seller relationship with its minerals suppliers did not constitute direct participation or legal responsibility for forced labour abuses. The recent complaint by the DRC against Apple in France was also dismissed in February 2025, as the Paris public prosecutor’s office ruled that the allegations were not sufficiently well-founded. The DRC’s legal team indicated that it would appeal this decision, and investigations are ongoing in Belgium.
So what?
Although these cases to date have not resulted in formal convictions, they indicate that international companies are facing increasing legal scrutiny over their ESG-related supply chain due diligence processes. Regulations such as the US Dodd-Frank Act and the EU Conflict Minerals Regulation require companies to account for their high-risk minerals sourcing practices and prove supply chain audits, and additional regulation such as the EU’s corporate sustainability due diligence directive are set to increase these requirements into the future. Litigation is a drain on company resources, and can have a severe impact on a company’s reputation, regardless of its outcome. These examples illustrate how international companies are being pushed to build strong corporate sustainability due diligence processes that could ultimately be defensible in a court of law, going beyond what is often seen as a box-ticking exercise.
[Contributor: Emma Shewell]
CSDDD amendments scale down supply chain due diligence obligations
The EU’s Corporate Sustainability Due Diligence Directive (CSDDD), adopted in April 2024, has been significantly amended under the Omnibus package in February 2025 to ease compliance and give companies more time to prepare. In June 2025, the Council agreed to narrow the scope to the largest firms with the resources to meet due diligence obligations and extended the implementation deadline to 26 July 2028.
The supply chain implications of the updated CSDDD will be less demanding than the original directive. Initially, the rules required companies to conduct comprehensive due diligence to identify, prevent, mitigate, and account for potential adverse human rights and environmental impacts across their entire value chain. This covered both upstream activities – the production and sourcing of goods – and downstream activities such as distribution, storage, and post-sale processes.
Under the Council’s June 2025 position, this scope has been narrowed. Companies will now be obliged to focus due diligence efforts only on their own operations, subsidiaries, and direct business partners, rather than extending checks to indirect suppliers. Lower-tier suppliers will only come under review if there is “objective and verifiable” evidence of risk. While this reduces compliance burdens, it also creates a greater risk that abuses in deeper tiers will go undetected, especially in sectors where the most serious issues often occur far from the end buyer.
The approach to non-compliance has also changed. The original directive leaned towards terminating supplier relationships when ESG requirements were not met. The revised text instead encourages suspension and active engagement, working with suppliers to address shortcomings and find solutions. This indicates a move towards remediation rather than disengagement, which can support long-term improvement but will require more investment in supplier monitoring and capacity building.
With some provisions now left to the discretion of EU member states, companies operating across multiple jurisdictions may face differing requirements. This will demand flexible due diligence strategies capable of meeting varying national standards.
So what?
Despite the delay and the reduced obligations for many businesses, there is a growing expectation for companies to manage their supply chains responsibly. Regulators, investors and customers are placing greater emphasis on transparency, sustainability, and ethical sourcing. Companies that invest in comprehensive due diligence and reporting programmes will be better placed to adapt to differing national frameworks and stay ahead in case EU-wide regulations change in the future.
[Contributor: Nina London]
New Zealand moves toward modern slavery legislation
In July, Labour MP Camilla Belich introduced the Modern Slavery Bill that would create binding supply chain due diligence obligations for larger companies. The proposal would require businesses with annual revenues over NZD 50 million to report on modern slavery risks in their supply chains and to outline the actions taken to address them. It would also establish an Independent Anti-Slavery Commissioner to oversee compliance.
The bill’s reporting requirements would apply to both domestic and overseas supply chains. Companies would need to identify and disclose risks of forced labour and exploitation, and show what steps they are taking to prevent or mitigate these risks. If passed, New Zealand’s law would bring its approach closer to that of trade partners such as the UK and Australia, both of which already have modern slavery legislation in place. This alignment could strengthen New Zealand’s credibility in international trade, particularly with partners that prioritise ethical sourcing in their procurement. It would also help local companies meet the expectations of overseas investors and customers who are accustomed to higher transparency and reporting standards.
Similar rules are already in place in other markets. Germany’s Supply Chain Due Diligence Act (LkSG), in force since 2023, requires large companies to map their supply chains, assess human rights risks, and take preventive or corrective action. Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act, effective January 2024, has expanded transparency but has faced criticism for relying heavily on self-reporting and having limited enforcement powers.
So what?
Mandatory modern slavery laws are becoming a key part of global supply chain due diligence frameworks. For companies trading internationally, this means aligning systems with multiple regimes, harmonising data collection, and building processes to identify and address risk at multiple levels. Businesses that act early to improve transparency and due diligence efforts in their supply chains will be better placed to manage compliance risks and future regulatory changes.
[Contributor: Dominik Wilk]
