The July mass layoffs at the U.S. State Department, which saw more than 1,300 employees—including the dissolution of the Business and Human Rights (BHR) team—have implications that go beyond diplomacy. As noted by economist Carey Durkin Treado, these cuts strip U.S. businesses of critical support in navigating human rights risks and complying with global regulations—putting them at a competitive disadvantage.
Global expectations around business responsibility have evolved significantly, with frameworks like the UN Guiding Principles on Business and Human Rights and OECD Guidelines placing responsibility on companies—not just governments—to avoid human rights abuses. These include both “upstream” issues (e.g., forced labor in supply chains) and “downstream” concerns (e.g., selling surveillance tools to oppressive regimes). Nearly 28 million people are estimated to be in forced labor, highlighting the scope of the challenge.
In recent years, many major economies—including the EU, France, Germany, and the UK—have enacted or proposed human rights due diligence (HRDD) laws, requiring businesses to assess and report human rights impacts. The EU’s Corporate Sustainability Due Diligence Directive, adopted in July 2024 and effective from 2028, is particularly broad in scope. A 2025 survey of German corporate leaders found that HRDD laws gave them an advantage over U.S. competitors.
Previously, the State Department’s BHR team played a central role in helping U.S. companies understand and navigate these complex regulatory landscapes through diplomatic engagement and international policy coordination. With the elimination of the Office of Multilateral and Global Affairs under the recent reorganization, U.S. businesses lose access to this valuable expertise.
Without this guidance, U.S. businesses may struggle to comply with global human rights requirements—particularly as consumer and investor demand for responsible business practices increases. ESG investing is projected to reach $40 trillion by 2030, underscoring the long-term market relevance of human rights alignment. Losing institutional support risks eroding U.S. competitiveness on the global stage.
Why It Matters
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Highlights a competitive disadvantage as U.S. firms lose vital guidance navigating global human rights laws.
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Undermines compliance with emerging international regulations, like the EU’s 2028 HRDD directive.
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Weakens economic resilience, as U.S. companies may falter in global markets where rights diligence is mandatory.
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Limits innovative leadership in ethical, responsible business practices.
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Erodes long-term sustainability, as ESG-aligned businesses gain favor with consumers and investors.
Key Social Outcomes
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Weakens public trust in American businesses’ commitment to human rights.
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Reduces worker protections globally, as fewer companies proactively avoid harmful supply chain practices.
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Undermines corporate accountability, especially in complex transnational operations.
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Dampens ethical globalization, by reducing U.S. influence in promoting responsible standards.
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Erodes capacity for cross-border collaboration between government and private sectors on human rights issues.
Publication Date & Live Link
- Publication Date: August 21, 2025
- Live Link: theconversation.com
