Business and human rights in Australia: five key trends shaping 2026

In 2026, Australian businesses will face growing pressure from investors, regulators and civil society to demonstrate genuine commitment to respecting human rights across their operations and value chains.

The focus is shifting beyond the existence of policies and disclosures toward the effectiveness of those measures in delivering real outcomes. Businesses that proactively respond to these heightened expectations will be better positioned to navigate evolving regulatory requirements, mitigate compliance and enforcement risk (including potential civil penalties), maintain stakeholder trust and protect their long-term social licence to operate.

Below, we outline five key business and human rights trends and offer five corresponding strategic recommendations for Australian businesses in 2026.

Trend 1 - Modern slavery and forced labour: a shift toward accountability

Australian businesses should prepare for significantly heightened focus on modern slavery due diligence in 2026, driven by developments both domestically and internationally.

The Australian Government is advancing reforms to the Modern Slavery Act 2018 (Cth) (Act)with consultations underway to strengthen the legislative framework as recommended in the 2023 statutory review and committed to in the Government's December 2024 response. Proposed enhancements directed to reducing modern slavery in Australian supply chains will also mean new compliance requirements for business, likely through expanded reporting criteria, mandatory due diligence obligations and possibly through declarations for high-risk suppliers. New compliance and enforcement powers, including the introduction of civil penalties, will elevate the consequences of non-compliance.

Australia's Anti-Slavery Commissioner is actively pursuing stronger requirements, including penalties and mandatory due diligence, citing statutory review findings that the current Act has not driven meaningful change for victims of modern slavery. The Commissioner's office has also committed to engage directly with companies whose reporting demonstrates persistent shortcomings.

From 1 July 2026, New South Wales government agencies will need to include heightened modern slavery clauses in tenders for high-risk procurement categories, which includes certain construction materials, facilities and buildings management services, ICT equipment and fleet vehicles. Suppliers bidding for high-risk government contracts will need to demonstrate the steps they are taking to prevent, identify, mitigate and remedy modern slavery in their operations and supply chains. This response will form part of the tender evaluation criteria, with higher quality responses receiving a higher weighted score.

Internationally, the United States continues to vigorously enforce forced labour import prohibitions under the Tariff Act and the Uyghur Forced Labor Prevention Act. The laws ban the importation of goods produced in whole or in part in a foreign jurisdiction using forced labour and imposes a rebuttable presumption that goods mined, produced or manufactured in China's Xinjiang Autonomous Region or by entities in China linked to forced labour are prohibited from importation. This has resulted in US Customs and Border Protection detaining shipments worth billions, many containing components traced to Xinjiang in China but originating elsewhere.

Recent US trade agreements with Southeast Asian nations will expand the US' objective of limiting the trade of goods made with forced labour, by leveraging trade policy to elicit commitments to impose similar forced labour bans and strengthen human rights protections across supply chains. Indonesia, for example, has committed to adopting and implementing a forced labour import ban and removing provisions that restrict workers' freedom of association and collective bargaining rights.

The European Union's Forced Labour Regulation will apply from December 2027 and prohibit all products made with forced labour from entering or leaving the EU, regardless of origin or company size. Risk-based investigations are a key enforcement mechanism, with any products found to be made with forced labour subject to withdrawal and disposal from the market.

As a consequence, Australian businesses operating without adequate modern slavery due diligence processes risk facing significant commercial consequences if their goods are found to be made with forced labour, as well as the resulting financial, reputational and legal consequences.

Trend 2 - AI and data centres: infrastructure growth and emerging risks

The recent publication of the Australian Government's National AI Plan in December 2025 reinforcesAustralia's aim to become a major AI and data centre hub in the Indo-Pacific, following significant government and private investment in infrastructure projects and AI announced between 2023 and 2025. This rapid expansion, however, presents human rights risks that Australian businesses and investors should consider and address to ensure the benefits of AI are realised appropriately.

The construction of AI data centres, especially 'hyperscale' facilities, can introduce a number of human rights risks. For example, in some countries, building data centres has been linked to poor labour conditions for construction workers and local communities have experienced disruption, as well as depletion of local resources if the consumption of vast amounts of water and energy is not managed responsibly and sustainably. This may, in turn, have further human rights consequences. These are important lessons for Australian businesses going forward.

According to a 2024 Senate report, data centres may already account for around 5% of energy use in Australia, with some projections suggesting this figure could grow to between 8% and 15% by 2030. While additional data centres will facilitate a significant expansion of AI capabilities, they could also create strain on local utility infrastructure without adequate planning, particularly in regional Australian communities, with the potential for costs to be passed onto consumers.

The National AI Plan acknowledges the need for national data centre principles covering sustainability, energy impacts and water efficiency, but implementation details remain sparse and human rights considerations are notably absent. Failure to properly account for any adverse human rights impacts at the early stages of project development can result in community opposition, with attendant commercial, reputational and legal risks, particularly in jurisdictions with statutory charters of rights.

With Australians less trusting and positive about AI than most countries, failure to properly mitigate human rights risks associated with deploying AI systems could potentially negatively impact the perception of AI and the benefits that it brings.

The broader AI value chain also presents human rights risks, particularly for data annotation and content moderation workers. Businesses should be mindful that these critical services, often performed by workers around the world, can involve exposure to sensitive content, potential psychological distress, and varying labour conditions. The complexity of global AI data supply chains underscores the importance of careful due diligence to ensure responsible practices throughout the supply chain.

Businesses looking to develop or adopt AI should ensure they have appropriate AI governance frameworks to mitigate these risks, informed by the Australian Government's recently released Guidance for AI Adoption. The guidance sets out six essential practices for responsible AI governance and adoption which will assist businesses to identify and appropriately manage potential risks in relation to the use of AI technology.

Trend 3 - Managing human rights risks in conflict-affected and high-risk areas

Growing global demand for critical minerals is increasing Australian businesses exposure to conflict-affected and high-risk areas (CAHRAs) either directly or through their supply chains. Businesses operating in CAHRAs face heightened risks of involvement in serious human rights abuses and violations of international humanitarian law. Without robust and defensible human rights due diligence, businesses operating in or connected to CAHRAs through their supply chains face rising litigation and other action focused on a range of human rights harms including complicity in war crimes and genocide.

The concept of CAHRAs is also gaining prominence across multiple regulatory frameworks. The EU Conflict Minerals Regulation, which came into full force in January 2021, requires importers of tin, tantalum, tungsten, their ores and gold to ensure their sourcing does not finance conflict or related abuses. In October 2025, the European Commission recognised its first supply chain due diligence scheme under this regulation, which EU importers can rely on to demonstrate compliance with the regulation.

While Australia does not have an equivalent due diligence regime, stakeholder expectations are evolving. Research by the Responsible Investment Association Australasia found 89% of Australians believe it is important their super fund or bank commits to respecting human rights, with more than half reporting that they would prefer to avoid investments in armed conflict.

Australia's role in supply chains for defence and renewable energy (which depend on critical minerals) intensifies pressure for heightened human rights due diligence in CAHRAs, with increasingly significant consequences for shortcomings. Companies unfamiliar with the heightened human rights due diligence requirements of conflict impact and sensitivity should seek expert advice to ensure they are protecting themselves against unintended consequences.

Trend 4 - Growing focus on downstream human rights impacts in the defence sector

Investors are increasingly looking to capitalise on defence sector growth by increasing exposure to traditional defence companies and 'defence tech' companies developing dual use technology. This exposes investors to being linked to human rights harms.

There are growing legal and reputational risks for companies whose products or investments are implicated in human rights abuses through downstream supply chains and intermediaries. For example, lawsuits have been brought and/or complaints made to relevant bodies alleging that goods manufactured by companies end up in weapons used in conflicts or have other adverse downstream human rights impacts. As defence spending accelerates globally, responsible investment strategies are also shifting to more nuanced assessments of downstream impacts of defence-related investments instead of blanket exclusions.

These developments underscore the growing importance of defensible human rights due diligence across the entire value chain for businesses operating or investing in defence-related industries to attract capital and proactively manage risk associated with unintended complicity in downstream human rights harms. It is also critical that investors ensure that responsible investment policies and processes are carefully calibrated to balance increased defence sector exposure and commitments to respect human rights.

Trend 5 - Sector collaboration: navigating competition law risk

Identifying and addressing human rights impacts effectively often requires a collaborative approach. This is particularly true in lower levels of the supply chain where businesses have limited visibility and leverage over suppliers. To address issues such as forced labour and modern slavery, businesses are increasingly turning to multi-stakeholder organisations and seeking opportunities for sector-based collaboration. However, many businesses continue to report that they remain hesitant to engage in sector-based collaborations due to concerns about competition law risks.

In December 2024, the Australian Competition and Consumer Commission (ACCC) published guidance on sustainability collaborations which highlights the risks arising from competitor collaborations in respect of sustainability goals but also provides a range of case studies that the ACCC consider to be "low risk" from a competition law perspective. The guidance was issued to assist businesses in working together to achieve sustainability objectives without contravening Australian competition law. The engagement of the ACCC in this topic reflects a recognition, as articulated by ACCC Chair Gina Cass-Gottlieb, that it "is critical that these legitimate collaborations are not hampered by a fear of breaching competition law - or confusion about how competition law operates."

The initial guidance, while helpful, was largely focused on collaborations in respect of environmental sustainability, creating uncertainty about the application of similar principles in different areas. For example, the case studies did not address joint action in respect of investigation, information sharing and remediation of modern slavery risks. However, the ACCC has been receptive to feedback from various stakeholders seeking further guidance and in December 2025 updated its guidance, working with the Office of the Australian Anti-Slavery Commissioner to include case studies specifically focused on low-risk collaborative conduct directly aimed at identifying and responding to modern slavery risks in supply chains.

The updated guidance should provide businesses with a roadmap for forms of sector collaboration that will be low risk from a competition law perspective. However, businesses must still carefully consider and manage competition law risks. Engaging with potential competitors, even for socially beneficial purposes, can inadvertently lead to anti-competitive conduct in contravention of Australian competition laws, particularly for conduct that could involve an exchange of competitively sensitive information or joint decision-making. Businesses should remain mindful of and seek independent legal advice before engaging in collaborative conduct to ensure their intended efforts can proceed whilst remain compliant with competition law.

Five strategic recommendations for Australian businesses in 2026

Human rights practices and impacts are being increasingly scrutinised by stakeholders, with some looking to litigation as a means to secure direct accountability for negative impacts while affecting change in the broader business community.

The trends identified above require strategic approaches that include the following.

• Anticipate strengthened modern slavery obligations, including civil penalties and due diligence requirements. Businesses should prioritise a review of current practices to ensure that they are well positioned to understand the uplift required by any new regulation.
• Implement AI governance frameworks. Businesses developing or adopting AI should have an appropriate AI governance framework including policies and processes to ensure responsible AI practices, a fit-for-purpose risk management framework and appropriate human oversight.
• Strengthen due diligence in high-risk sectors and CAHRAs. Businesses operating in, procuring from or investing in high-risk sectors (including AI, critical minerals and defence) or CAHRAs should undertake human rights due diligence to identify and manage potential human rights impacts and the legal and reputational risks to business. Operating in CAHRAs requires specific conflict sensitivity and impact analysis that goes beyond usual human rights due diligence requirements. We have previously written about the benefits of effective due diligence and operational level grievance mechanisms in such situations. If in doubt, expert advice should be sought.
• Adopt or strengthen grievance mechanisms. Robust grievance mechanisms can act as a warning system and key due diligence tool for identifying risks and threats to a company's social licence to operate. It can also prevent concerns from growing into major disputes which may lead to costly litigation or substantial settlements. Access to grievance mechanisms and appropriate remedy are a fundamental tool to demonstrate an organisation's respect for and commitment to human rights under the United Nations Guiding Principles on Business and Human Rights or UNGPs. Mechanisms should be designed with community engagement and consideration of the needs of particularly vulnerable groups.
• Implement guardrails for sector collaboration. Before engaging in sector collaborative conduct, seek legal advice on appropriate guardrails for joint initiatives to address human rights impacts, including modern slavery, to manage risks of anti-competitive conduct.

Looking ahead

The message from stakeholders is clear: businesses must demonstrate genuine commitment to respecting human rights across their operations and value chains.

With the focus in 2026 set to shift from the existence of policies and disclosures to their effectiveness in delivering real outcomes, Australian businesses that proactively address these trends and invest in robust governance and due diligence systems will better manage risk, maintain stakeholder trust, and secure long-term social licence.

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.

Lawyers Weekly Law firm of the year 2021	Employer of Choice for Gender Equality (WGEA)