Business And Human Rights In The US: A Textured Approach

The policy shifts in the wake of President Trump's inauguration have been swift, impactful, and notably visible. While actions such as withdrawing from the Paris Climate Accord or aggressively targeting Diversity, Equity and Inclusion (DEI) initiatives have grabbed headlines, the US business and human rights landscape remains highly textured. The Trump administration appears poised to resist certain business and human rights-related issues, support others that dovetail with administration priorities, and not stand in the way of others that create financial value for US businesses. As summarized by the Heritage Foundation's "Project 2025," "[t]he US cannot neglect a concern for human rights and minority rights, which must be balanced with strategic and security considerations." Beyond the federal business and human rights approach, individual states are considering strategies to dilute the impact of certain administration business and human rights decisions, often requiring a granular analysis around the specific location where the issue arises and the ability of the state to regulate it. As a result, gaining a full understanding of the US business and human rights policy-related risks and impacts, for any given issue, involves five questions:

1. How does the issue align with administration objectives?
2. Does the issue involve a US company or person?
3. Does the issue arise outside the US?
4. If the issue arises in the US, in what state does it arise?
5. How much business is the company doing in that state?

i. The Federal Government: Domestic Conduct

Between 2016 and 2020, the first Trump administration pursued business and human rights objectives where they meshed with political and/or foreign policy objectives, and did not oppose business and human rights issues that create value for business. These two principles are likely to guide administration strategy over the next four years.

Numerous business and human rights issues fall outside those two criteria. However, certain others do not. These might include:

• Forced labor import bans. Active and possibly enhanced or expanded enforcement of forced labor import bans, such as under the Uyghur Forced Labor Prevention Act and Section 307 of the Tariff Act of 1930, which aligns with administration priorities of protecting US workers from the influx of cheaply created goods.
• Wages and conditions for US workers. As reflected in the President's Executive Orders, the administration is likely to support strategies that prioritize wages and conditions for US workers, including overtime for working on weekend days connected to religious observance.
• Anti-trafficking. A strong commitment to enforcing anti-trafficking laws, such as the Trafficking Victims Protection Reauthorization Act, aligns with the administration's efforts to strengthen the Southern Border and enforce crimes associated with immigration.
• Freedom of speech and religion. The Trump administration has made clear that it also sees certain issues—such as alleged censoring of conservative voices on social media and discrimination against traditional religious beliefs and practices—as core human rights issues, at least for US companies.
• Privacy. The administration will seek to protect the privacy of US individuals, and the cybersecurity of US businesses, consistent with a view of civil liberties generally, a perceived lack of privacy protections related to taxpayer rights, and threats posed to the US and American citizens by China and Russia.

To be clear, pursuing some of these strategies may come at the expense of other business and human rights areas. The federal government also is likely to recognize that some sustainability issues, which are not administration priorities, may nonetheless be important to US businesses and their financial stakeholders. Sustainability initiatives are vociferously opposed when they cannot be proven to create financial value for companies in ways the market assesses – such as risk and quality of management, growth, capital return, and access to finance. But support is more likely to exist when they can be connected to such business priorities.

Ultimately, to gain insights into how any given business and human rights issue in the US will be viewed at the federal level, it will be important to ask (a) how the issue aligns with political or foreign policy objectives, and (b) whether the issue can be persuasively defended as creating financial value for companies in traditional ways recognized by the market.

ii. Federal Government: Conduct Outside the US

The federal government also will draw sharp distinctions between business-related conduct occurring in the US versus abroad, and as with the domestic approach, pursue efforts that may support overseas business and human rights priorities where they dovetail with policy priorities. Examples include:

• Overseas labor rights, trafficking and child labor. Consistent with protecting American workers from weak labor standards and exploitative conditions in foreign markets, the Administration is likely to pursue policies to monitor and enforce child labor, human trafficking, and labor provisions in trade agreements and preference programs.
• China and Iran. Given administration concerns about the threats posed by China generally, expect continued use of government tools – such as export controls and sanctions – justified on human rights-related grounds. The steps taken toward Iran likely will be similar.
• Global Magnitsky. The first Trump administration made limited use of Global Magnitsky sanctions against potential human rights violators, at least as compared to other governments, and the same likely will be true for the next four years.

To further evaluate how the administration will view any given business and human rights issue, it will be important to ask whether the issue arises inside or outside the US.

iii. Federal Government: US vs. Foreign Companies

Although the federal government has not stated it expressly, we might anticipate differential treatment in some areas for US versus foreign companies. To protect American businesses and workers, regulatory enforcement proceedings may be pursued differently between US and non-US companies – a trend noted by some during the first administration. Understanding whether the company is a US or non-US company also may be relevant.

iv. Individual States

Federal treatment of business and human rights issues is only the first analytical step, however. Individual states have been pursuing their own agendas, often in reaction to recent federal initiatives. For instance:

• Climate. 24 states, representing more than half the population of the US, have agreed to align with the Paris Climate Accord. California's Climate Accountability Package aims to promote transparency and accountability in corporate climate reporting, New York has introduced bills that would have a similar effect, while other states have passed laws standardizing utilities to supply carbon-free electricity, or are also seeking to promote a climate agenda through building codes.
• Environment. Beyond climate issues, in response to federal environmental regulations, states are reconsidering approaches to PFAS and other toxic chemicals, and states are enhancing protections aligned with the National Environmental Protection Act.
• AI. In response to early Executive Orders, states are actively considering new AI frameworks to address discrimination concerns, and some states have publicly stated that local anti-discrimination laws will apply to discriminatory outcomes resulting from AI tools.
• Supply chains. Several states have recently introduced bills to conduct due diligence and/or make disclosures regarding human rights and environmental issues in their supply chains. Some of the proposals are general, while others target certain industries, such as footwear and apparel companies.
• Child labor. The administration is likely to reduce protections of child labor as defined in international standards, while individual states have recently introduced proposals for new child labor protections.

A number of these areas apply to businesses domiciled in the states, while others target a certain level of business activity within the state. In addition, on a more general level, we can expect some states to increase claims under deceptive trade and marketing laws against companies with public human rights-related disclosures.

Therefore, for any given business and human rights or sustainability issue, after evaluating the likely federal response, it may be important to conduct a state-based analysis to determine the local impact, including where the issue is arising, and the business the company is doing in that state.

Conclusion

While the Trump administration's rapid policy implementation has reshaped human rights and sustainability in the US, the approach to any given issue will depend on multiple factors. This textured approach to business and human rights in the US, while complex, remains highly dynamic.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.