As companies operate across longer, more fragmented and more global value chains, identifying human rights risks has become a core part of responsible business conduct. From raw material sourcing and labour recruitment to manufacturing, logistics and distribution, adverse impacts can arise at multiple points in the chain, often far beyond direct operations.
The scale of the challenge is significant. The International Labour Organization estimates that 27.6 million people were in forced labour in 2021, while broader global estimates suggest that 50 million people were living in modern slavery, including 28 million in forced labour and 22 million in forced marriage. Child labour also remains widespread, with around 1 in 10 children globally in child labour and agriculture continuing to account for the largest share. Against this backdrop, businesses are increasingly expected not only to map risks, but to identify which risks are most severe for people and most relevant for decision-making.
Why this matters now
Frameworks such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance make clear that companies should prioritise risks to people, not only risks to the business. This means looking beyond what may be immediately visible in financial reporting and focusing on the most severe actual or potential impacts on workers, communities and other rights-holders.
At the same time, regulation and investor expectations are changing. Requirements linked to human rights due diligence, supply-chain transparency and sustainability reporting are pushing companies to connect saliency, business risk and governance more directly. In practice, this means companies increasingly need a view that is both rights-holder focused and decision-useful for internal management.
Salient and material issues are not the same
One of the most important distinctions in human rights risk identification is the difference between salient issues and material issues.
- Salient human rights issues are the human rights impacts that stand out because they are at greatest risk of severe harm to people. Severity is typically assessed using criteria such as scale, scope and remediability. In other words, saliency is viewed primarily through the lens of affected people.
- Material issues, by contrast, are those that could significantly affect a company’s financial position, performance, cash flows or enterprise value. This is a business lens, shaped by what management, investors and regulators consider important to financial decision-making.
There is often overlap between the two, but not always. A serious forced labour risk in a lower-tier supply chain may be highly salient from a human rights perspective even if it is not yet seen as financially material. Equally, a labour issue may become financially material very quickly if it triggers regulatory action, legal claims, investor pressure or supply disruption. This is why leading companies are increasingly trying to bridge both perspectives rather than treating them as separate exercises.
Moving from visibility to real risk identification
Identifying human rights risks in value chains requires more than a supplier code of conduct or a high-level mapping exercise. It involves developing a structured due diligence process that can move from broad visibility to more specific, decision-relevant insights.
The first step is usually value-chain mapping. This means understanding where the company’s upstream and downstream activities are located, which categories of suppliers and business partners are involved and where exposure is concentrated. In higher-risk sectors such as agriculture, mining, construction, electronics and apparel, limited visibility beyond Tier 1 suppliers can hide some of the most severe risks.
The next step is screening and hotspot analysis. External data sources, sector benchmarks and country-risk indicators can help identify likely exposure areas. Global labour data illustrates why this matters: agriculture accounts for the largest share of child labour globally, and forced labour remains concentrated in sectors tied closely to supply chains such as manufacturing, services and agriculture. Screening alone is not enough, but it helps organisations prioritise where deeper work is needed.
Why stakeholder engagement changes the picture
A common weakness in value-chain risk assessment is over-reliance on audits and self-reported supplier information. These sources are useful, but they often miss issues that workers and communities can identify quickly. Direct engagement with rights-holders, local organisations, worker representatives and community groups can reveal patterns that formal monitoring does not capture.
This matters particularly in contexts involving recruitment practices, wage withholding, excessive overtime, unsafe working conditions, land-use conflicts or barriers to freedom of association. In many cases, the most severe risks are not obvious from documentation alone. Companies that build worker voice and stakeholder engagement into due diligence tend to develop a more realistic understanding of where harm is occurring or likely to occur.
Prioritising what matters most
Once risks are identified, companies need to prioritise them. This is where saliency becomes especially important. The question is not simply which risks are most likely, but which could cause the most serious harm to people.
A practical approach often includes:
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Assessing severity based on scale, scope and remediability.
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Looking beyond direct operations to lower-tier suppliers and indirect business relationships.
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Considering which groups may be disproportionately vulnerable, such as migrant workers, women, children or informal workers.
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Reviewing whether existing controls are actually reducing risk in practice.
This kind of prioritisation helps organisations avoid spreading resources too thinly. It also creates a clearer basis for action plans, stakeholder engagement, board reporting and remediation pathways.
From saliency assessment to business action
A mature human rights risk identification process should not stop at a risk register. It needs to inform how procurement, sustainability, legal, compliance and enterprise risk teams make decisions.
This means integrating findings into supplier onboarding, contract terms, monitoring plans, grievance mechanisms and escalation procedures. It also means ensuring that salient human rights risks are visible to senior leadership, especially where they may evolve into regulatory, operational or reputational issues. As reporting expectations mature, companies are also under greater pressure to explain not just what their policies say, but how they identify their most serious risks and what they are doing about them.
Apparel as an example
The apparel sector remains a useful example because it combines complex sourcing chains, labour-intensive production and significant exposure to recruitment, wage and working-condition risks. Forced labour and child labour concerns can arise in upstream raw material sourcing as well as in manufacturing and subcontracting arrangements.
A company in this sector seeking to strengthen risk identification might begin by prioritising forced labour as a salient issue, then combine supply-chain mapping with engagement from local NGOs, worker groups and suppliers. It may introduce stronger traceability, deeper supplier due diligence, more targeted assessments in high risk regions and worker grievance channels that provide ongoing visibility into conditions on the ground. The value of this approach lies not only in compliance, but in improved visibility beyond Tier 1 and a stronger basis for mitigation and remediation.
What stronger practice looks like
In practice, companies tend to make better progress when they adopt a few core disciplines. They focus first on risk to people, not only financial exposure. They look beyond Tier 1 suppliers, because many of the most severe risks sit deeper in the chain. They combine internal and external data rather than relying on one source. They involve multiple functions, including procurement, sustainability, legal and risk teams. They also treat grievance mechanisms and stakeholder engagement as central sources of insight rather than as separate compliance activities.
Most importantly, they recognise that human rights risk identification is not a one-off exercise. Risks evolve with changing sourcing patterns, labour markets, conflict, climate pressure and regulatory developments. Due diligence therefore needs to be dynamic, not static.
Connecting saliency to double materiality and reporting
For many EU-facing companies, human rights risk identification now sits within a broader double materiality lens. In this lens, companies assess both how sustainability issues affect the business, or financial materiality, and how the business affects people and the environment, or impact materiality. Salient human rights risks are often the starting point for understanding impact materiality, because they highlight where people may face the most severe harm, regardless of whether those issues have yet shown up in financial metrics.
Evolving reporting requirements, particularly under the EU Corporate Sustainability Reporting Directive and related European Sustainability Reporting Standards, expect companies to explain how they identify and prioritise their most significant human rights impacts. That includes describing salient risks, how they were identified, how they relate to the value chain and how the company is responding. As due diligence legislation such as the Corporate Sustainability Due Diligence Directive advances, regulators and stakeholders will increasingly look for consistency between what companies disclose as salient human rights issues, the risks captured in double materiality assessments and the actions described in due diligence and remediation plans.
For EU-facing clients, this means human rights saliency assessments are no longer just internal risk tools. They are becoming core inputs into materiality analyses, board level discussions and sustainability reporting. Strengthening the link between saliency, double materiality and disclosures helps ensure that what is most important to people is visible in the topics management tracks, the information reported externally and the way resources are allocated to address human rights risks.
From issue lists to resilient value chains
The growing scale of forced labour, modern slavery and child labour highlights why companies need a more robust approach to human rights risk identification. Moving beyond a narrow focus on financial materiality does not mean ignoring business impact. It means starting with severity to people, then building the processes, governance and reporting needed to respond effectively and responsibly.
Companies that can connect saliency assessments, stakeholder engagement, value-chain visibility and due diligence action are likely to be better positioned for both resilience and regulatory readiness. In that sense, identifying human rights risks is not only about compliance. It is a core capability for building more credible, responsible and future-ready value chains.