For businesses operating in or connected to the UK, the corporate accountability landscape may be about to change significantly.
The Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill (the “Bill”) would require commercial organisations and public authorities to take active steps to identify and prevent human rights and environmental harms across their operations, subsidiaries and value chains.
While the Bill is still at an early stage and its future remains uncertain, it provides a clear indication of the direction of travel. Businesses are increasingly being expected not only to report on risks, but to demonstrate that they are taking meaningful action to prevent them.
What is the Bill?
The Bill would introduce mandatory human rights and environmental due diligence requirements for certain organisations operating in the UK.
In practical terms, this means organisations would be expected to identify, assess, prevent, mitigate and remediate human rights and environmental risks connected to their activities.
Why is the Bill different?
This is not simply another ESG reporting proposal. Rather than requiring organisations to disclose what they are doing, it would require them to take reasonable steps to prevent harm occurring in the first place.
If enacted, the Bill would move the UK beyond transparency and disclosure obligations towards mandatory due diligence, direct civil liability, fines of up to 10% of global turnover, potential criminal liability for directors and exclusion from public contracts. This highlights the growing challenge of navigating an increasingly fragmented global framework of human rights and environmental due diligence obligations.
A wide net: Who would be caught?
Commercial organisations
“Commercial organisation” is defined broadly to cover UK-incorporated companies that carry on business anywhere in the world, and non-UK incorporated bodies carrying on business in the UK, as well as UK and non-UK partnerships carrying on business in the UK. As a result, multinational businesses with UK operations should not assume that this is solely a UK corporate governance issue. The Bill could have implications across global operations and supply chains.
Public authorities
“Public authority” is defined in the Bill as a person wholly or mainly publicly funded, or subject to public authority oversight, and not operating on a commercial basis. This could include a wide range of public sector and quasi-public sector bodies, including local authorities, NHS bodies, regulators, arm’s-length bodies and certain publicly funded institutions.
What due diligence would be required?
The Bill would impose a duty to prevent defined “human rights and environmental harms” so far as is “reasonably practicable”, having regard to relevant international agreements, standards, goals and best available science (Section 2(1)). This duty includes an obligation to conduct ongoing human rights and environmental due diligence. Critically, these obligations would extend beyond an organisation’s own operations to its full “value chain”. This is defined broadly to encompass all upstream and downstream activities during the lifecycle of a good or service, including sourcing, processing, manufacturing, sale, logistics, finance, use and end-of-life disposal. The reach of this definition is significant, requiring in-scope organisations to look well beyond their immediate supply chains when assessing and addressing human rights and environmental risk.
What are the mandatory due diligence requirements?
The Bill sets out a minimum list of what “reasonable” due diligence includes, which is notably detailed. It includes:
- informed, meaningful and safe engagement with “rightsholders”;
- integrating gender-responsive due diligence into policies and management systems;
- identifying, assessing and addressing actual or potential harms (and climate vulnerability), through prevention, mitigation and remediation, taking account of baseline environmental conditions;
- maintaining an effective grievance mechanism aligned with the UN Guiding Principles on Business and Human Rights (“UNGPs”) Principle 31 effectiveness criteria;
- tracking and monitoring effectiveness and continuous improvement; and
- public communication and reporting.
The word “minimum” is deliberate. For businesses whose current approach to human rights and environmental risk is built around a Modern Slavery Act statement (as discussed below), these requirements would represent a substantial step up in expectations.
Could businesses be required to end supplier relationships?
Potentially, yes, as section 4 goes further and requires suspension or termination of business relationships as part of ongoing due diligence. This is a last resort where leverage could achieve change but mitigation fails, and rapidly where harm is severe, gross or systemic (including where it is imposed by state policy and leverage is not available).
This “responsible disengagement” obligation is a notable feature of the Bill. It means that compliance is not simply a matter of having the right internal processes in place — instead, it can, in certain circumstances, require businesses to exit supplier relationships entirely.
What are the reporting requirements?
Commercial organisations with annual worldwide turnover of £36 million or more would be required to publicly submit information to a searchable registry covering:
- a due diligence report;
- full, accessible and searchable disclosure of the value chain;
- ownership structures; and
- grievances and remedy status.
The report must be independently verified by relevant rightsholders in accordance with standards set by the enforcement body.
Any person could request information within one month about how an organisation prevents harms regarding a specific product, service or value chain actor, with limited grounds for refusal, and creates a criminal offence for materially misleading or false information in required disclosures.
These reporting obligations demand a level of supply chain visibility that many organisations do not yet have.
What happens if organisations fail to comply?
The Bill’s enforcement architecture is one of its most distinctive features, and one that sets it apart from several comparable international regimes.
Civil liability
The Bill creates civil liability where a commercial organisation fails to prevent harms in its own operations, products or services, subsidiaries, or throughout its value chains. Several noteworthy features of this civil liability regime are:
- There is a defence where the organisation proves it took “all reasonable steps” to prevent the harm, including due diligence.
- Joint and several liability for the same harm is expressly contemplated.
- UK jurisdiction is asserted regardless of where the harm occurred.
- Trade unions and civil society organisations may bring actions on behalf of victims in the public interest.
- Remedies include compensatory damages plus injunctive and preventative relief, clean-up and restitution, and supervisory orders.
- The limitation period is twelve years from when the infringement ceased and the relevant claimant knowledge tests are met. This is notably longer than the standard six-year limitation period under the Limitation Act 1980.
- The court may not award costs against a claimant except where “just and reasonable”.
Businesses should be aware that, in addition to the above-mentioned compensatory damages, a new enforcement body may impose administrative penalties of up to 10% of global turnover, as well as compliance notices, restoration notices, stop notices, exclusion from public contracts for up to five years, and costs orders (with failure to comply itself constituting a criminal offence). The Bill does not clearly explain how such administrative penalties would interact with civil remedies arising from the same underlying conduct.
Criminal liability
The Bill does not stop at corporate liability. It extends personal accountability to board members, and this should not be overlooked by directors of UK and international businesses.
Board members of commercial organisations would be collectively responsible for compliance under the Bill. A “responsible” person commits an offence if the commercial organisation receives two enforcement decisions for failing to prevent harm within five years, or if required reporting is materially false or misleading and the relevant persons knew or were reckless as to that fact. Penalties include up to two years’ imprisonment on indictment and potential director disqualification under the Company Directors Disqualification Act 1986.
A first enforcement decision carries significance beyond immediate compliance, as a subsequent finding within five years could expose directors to potential imprisonment and disqualification. Directors should assess whether they have sufficient visibility of their organisation’s human rights and environmental performance.
Corporate criminal offence
Section 11 creates a corporate criminal offence where certain serious offences are committed by an “associated” person in order to obtain or retain business or advantage. There is a defence where it was not reasonable to expect preventive procedures to have been in place, or where all reasonable steps including due diligence were taken.
The structural parallel with section 7 of the Bribery Act 2010 is apparent: a corporate offence triggered by the acts of an associated person, with a defence turning on the adequacy of preventive procedures. Businesses with existing Bribery Act compliance programmes may find a useful template to build from but should not assume those programmes will be sufficient without significant adaptation to address the scope of this Bill.
Notably, the Bill is not clear as to the precise consequences of a breach of Section 11. For example, it is unclear whether conduct giving rise to liability under Section 11 could also expose an organisation to civil liability under Section 8. This is one of several areas where the Bill’s drafting is likely to require further clarification.
Public procurement exclusion
Suppliers to public authorities should pay particular attention to the Bill, given the direct risk of exclusion from public contracts arising from enforcement action.
A new independent enforcement body
Section 7 requires the Secretary of State, within six months of the Act passing, to appoint an independent enforcement body with functions including: issuing guidance, conducting market investigations, investigating and enforcing on its own initiative or via complaints, supporting public authorities, and maintaining a public registry of in-scope organisations, enforcement decisions and submissions. The enforcement body would have investigatory powers including entry and inspection, compelling document production, compelling answers with declarations of truth, issuing penalties and notices, and referring criminal offences to the Crown Prosecution Service.
Beyond the Modern Slavery Act: How the Bill transforms the UK landscape
Existing UK law under the Modern Slavery Act 2015 (s.54) requires certain commercial organisations to publish annual statements outlining the steps they have taken to address modern slavery risks.
Unlike the Bill, s.54 does not impose due diligence requirements.
The Bill would move the UK from a reporting and transparency approach to a substantive prevention duty and due diligence duty. It extends beyond modern slavery to internationally recognised human rights, labour rights and a wide environmental concept, and adds an enforcement body with penalties of up to 10% of global turnover, civil liability, and director and criminal offences.
For businesses already subject to the Modern Slavery Act, it would be a mistake to assume that existing compliance programmes will be sufficient.
What should businesses be considering now?
The Bill was introduced in the House of Lords on 17 June 2026. As a Private Members’ Bill, its prospects remain uncertain and an earlier version failed to progress beyond Second Reading. Nevertheless, it provides a useful indication of the direction of travel in this area.
While the political pathway for this Bill remains uncertain, expectations around supply chain transparency, human rights due diligence and environmental accountability continue to increase. Businesses should monitor developments closely and may wish to consider the following steps now:
- assess the adequacy of existing human rights and environmental due diligence programmes;
- evaluate whether existing systems provide sufficient visibility over value chains and reporting requirements; and
- ensure boards understand potential personal exposure and governance implications.
We will continue to monitor the Bill’s progress and will publish further analysis as it develops.
For further information, please contact:
Andrew Dean, Partner, Bird & Bird
