Business and Human Rights in the U.S.: 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 U.S. business and human rights, and larger sustainability, landscape remains highly textured. The Trump Administration is anticipated to actively support certain business and human rights issues that dovetail with its priorities and business interests. It likely will not stand in the way of others that demonstrably create financial value for U.S. businesses. It has actively objected to some, and already withdrawn certain regulations that afford human rights protections. We also can anticipate varied treatment for U.S. versus foreign companies, and issues that arise in the U.S. versus abroad. As summarized by the Heritage Foundation’s “Project 2025,” the Administration’s blueprint for action, “The U.S. cannot neglect a concern for human rights and minority rights, which must be balanced with strategic and security considerations.” Evaluating the federal business and human rights approach is only the first hurdle, however. Individual states are seeking to dilute the impact of certain business and human rights and larger sustainability issues the Administration has deprioritized, often requiring a granular analysis around the specific location where the issue arises and the amount of business done by a company in any given state. As a result, to gain a full understanding of the business and human rights approach, and true regulatory risks and impacts, for any given issue, companies will be compelled to ask a series of questions:

1. How does the issue align with Administration objectives?

2. Does the issue involve a U.S. company or person?

3. Does the issue arise outside the U.S.?

4. If the issue arises in the U.S., in what state does it arise?

5. How much business is the company doing in that state?

‍

i. The Federal Government: Domestic Conduct

Two principles  – human rights and sustainability activities that align with “strategic and security considerations,” or create business value – can be anticipated to guide Administration strategy over the next four years. Numerous business and human rights issues fall outside those two criteria. At the same time, certain Administration priorities align with sustainability and human rights – albeit in a manner often reflecting a deliberate choice between rights that may be in tension. These might include:

• Active and perhaps enhanced or expanded enforcement of forced labor import bans, which aligns with Administration priorities of protecting U.S. workers from the influx of cheaply created goods. That enforcement of the includes the Uyghur Forced Labor Prevention Act, limiting the importation of goods with ties to the Xinjiang Uyghur Autonomous Region of China, and Section 307 of the Tariff Act of 1930, prohibiting the importation of goods tainted by forced labor. We also can expect enforcement of federal law prohibiting the importation of goods from North Korea, under the North Korea Sanctions and Policy Enhancement Act.
  

• Wages and conditions for U.S. workers. In a related vein, as reflected in the President’s Executive Orders, the Administration is likely to support strategies that prioritize wages and conditions for U.S. workers. For instance, Project 2025 advocates amendments to the Fair Labor Standards Act to require that workers are paid time-and-a-half for hours worked on the Sabbath (e.g., Sunday or employers with a religious observance at a different time), and promoting flexible work options and worker independence.
  

• Collective bargaining. The  Administration generally is reported to be hostile to unions. However, its position, reflected in Project 2025 and the writings of the highly influential America First Policy Institute, is likely to promote “non-union” worker voice through other means of organized employee involvement.
  

• 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.
  

• Privacy. The Administration likely will seek to protect the privacy of U.S. individuals, and the cybersecurity of U.S. businesses, consistent with a view of civil liberties generally, a perceived lack of privacy protections related to taxpayer rights, and threats posed to the U.S and American citizens by China and Russia.

The federal government also is likely to recognize that some sustainability issues, which are not Administration priorities, may nonetheless be important to U.S. businesses and their financial stakeholders. Corporate ESG 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.  As one important example, this Administration will not require or encourage climate-related reporting, has eliminated climate-change incentives and programs that it believes distort the free market and are ineffective, and will actively promote U.S. fossil-fuel exploration and development, among other things. Yet consistent with Project 2025 and similar think tank publications, it likely recognizes that global investors place value on GHG emission targets and progress against them, and that disclosures may be compelled by foreign laws where U.S. businesses choose to operate; the Administration is therefore unlikely to prevent climate-related disclosures outright, provided they are accurate and supportable, nor hinder the private sector in developing programs that support carbon capture and other technologies.

Ultimately, to gain insights into how any given business and human rights issue in the U.S. 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 U.S.

The federal government also will likely draw sharp distinctions between business-related conduct that occurs in the U.S. versus conduct that occurs abroad. Similar to domestic activity, the federal government will pursue business and human rights and sustainability-related regulatory and enforcement efforts where it dovetails with an administration policy priority. Within this category, examples include:

• Overseas labor rights. As Project 2025 has advocated, consistent with protecting American workers from weak labor standards and exploitative conditions in foreign markets, future free trade agreements can be expected to include requirements surrounding the use of forced or compulsory labor, the rights of workers to organize and participate in a union, and a mechanism that allows for an investigation of labor rights violations at covered facility.
  

• Trafficking and child labor. Also to protect American workers from unfair competition abroad, we can expect monitoring and enforcing child labor, human trafficking, and labor provisions in trade agreements and preference programs.
  

• China and Iran. Consistent with 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.

However, in general, based on its actions to date and the approach of the prior Trump Administration, we can expect a sharply reduced focus on other areas of business and human rights. These may include the use of Global Magnitsky sanctions, supply chain abuses that do not negatively impact U.S. workers, overseas health and safety harms from factories or operations, environmental impacts from development, airborne pollutants or waste, or Indigenous Peoples’ rights.

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 U.S., and if so, does it align with political or foreign policy objectives.

‍

iii. Federal Government: U.S. vs. Foreign Companies

Although the federal government has not stated it expressly, consistent with its America First approach, we can anticipate differential treatment, at least in some areas, for U.S. versus foreign companies. To protect American businesses and workers, regulatory enforcement proceedings for violations of U.S. labor and trade laws by non-U.S. companies may be pursued in a manner disproportionate to those of U.S. companies. Indeed, as many have noted, during the first Trump Administration, penalties under the Foreign Corrupt Practices Act escalated against non-U.S. companies. Similar regulatory trends may emerge.  

As U.S.-related business and human rights issues are evaluated, understanding whether the company is a U.S. or non-U.S. company also will be relevant.

iv. Individual States

Federal treatment of business and human rights and sustainability issues is only the first step, however. Individual states have been pursuing their own agendas, often in reaction to recent federal initiatives. A number of the relevant areas related apply to businesses domiciled in the states, while others target a certain level of business activity within the state. For instance:

• Climate. While the federal government will not pursue mandatory climate reporting and other climate-related initiatives, states have adopted their own measures. 24 states, representing more than half the population of the U.S., 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. A wide number of states are also seeking to promote a climate agenda through building codes, including California, Colorado, New York, Washington, and Massachusetts.

• Environment. Beyond climate issues, 30 states have adopted 154 state policies focused on PFAS, and more are likely to come. More states also are likely to introduce policies to protect people from other toxic chemicals. Eleven states have standards, such as Maximum Contaminant Levels, for certain PFAS in drinking water, which should grow. Likewise, while the early executive orders predictably targeted aspects of the National Environmental Protection Act, some 20 states have adopted their own version of the law, which will provide blueprints for additional states.
  

• AI. On his first day in office, President Trump repealed the Biden Administration’s AI blueprint, which sought to limit bias and undermine privacy rights, on the grounds that it limits AI innovation and imposes onerous government control over AI development. However, there is a growing patchwork of AI regulatory frameworks at the state and local level. In all, some 450 bills were proposed last year in US states and territories, in 23 different AI-related categories, with particular trends focused on consumer protection, deepfakes and government use of AI. California has passed legislation to regulate the use of generative AI, and Colorado has a comprehensive AI law requiring developers and deployers of high-risk AI systems to avoid algorithmic discrimination. In a related manner, New Jersey’s Attorney General has construed state anti-discrimination laws to apply to discriminatory outcomes resulting from AI tools; the Governor of Virginia just vetoed a law that would have done the same.
  

• Supply Chains. While the federal government may deemphasize corporate conduct regarding foreign supply chains outside of labor-related areas, we may see an uptick in several states. California already has a moderns slavery law on the books. Massachusetts, New York and Washington have considered similar laws, and are likely to do so again. New York’s Fashion Law was close to passing last year, and requires fashion sellers to conduct and disclose due diligence; Washington has considered a similar law. More states will consider these approaches and others like them.
  

• Child labor. The Administration is likely to reduce certain child labor protections as defined by international standards. Laws passed and proposed in a range of states have followed this approach. However, many other states recently have passed new child labor protections, or enhanced perceived outdated laws, a trend likely to increase. Indeed, of the five states with new child labor laws that went into effect January 1, 2025, one (Indiana) is loosening protections, while Colorado, Illinois, Virginia are enhancing protections, and California requiring employers who voluntarily undertake social compliance audits to determine if there is child labor in operations disclose the outcomes.
  

• Prescription drug costs. While the President withdrew a Biden Administration Executive Order seeking to limit the prescription drug costs, numerous states are considering boards or other bodies to examine the affordability of medicines for their residents. A range of states, including Massachusetts, New Jersey and New York, have introduced measures that allow states to issue fines for drug “price gouging.” Others have agreed to allow the importation of drugs from Canada, Europe and other markets.

Cutting across these areas, other states have pursued claims under state deceptive trade and marketing laws against companies with public human rights-related disclosures that allegedly have not matched company practices. These cases emphasize that if a company wishes to take advantage of a federal regulatory rollback on an issue not otherwise regulated by a governing state, it should ensure its public messaging changes, as well.

In any event, for any given business and human rights or sustainability issue, it is therefore not enough to simply evaluate the likely federal response. It will be imperative to conduct a state-based analysis to determine the local impact, including where the issue is arising, and the nature and amount of business a company is doing in the state.

Conclusion

While the Trump Administration has moved quickly to reshape human rights and sustainability policies, its approach to any given issue will depend on whether the issue aligns with an administration policy, will hamper US businesses, involves a U.S. or foreign business, or arises inside or outside the U.S. The inquiry then must move to the potential regulatory oversight in individual states. This textured approach to business and human rights in the U.S., while complex, remains highly dynamic.

‍