Thailand to introduce mandatory supply chain due diligence law

Thailand is taking a major step towards strengthening corporate accountability by drafting a new law that will require businesses to conduct human rights and environmental due diligence in their supply chains.

This proposed mandatory human rights and environmental due diligence law (mHREDD) will build on Thailand’s existing commitments and align with international frameworks.

The law will apply to businesses operating in Thailand, requiring them to identify, prevent, and address human rights and environmental risks in their operations and supply chains.

An estimated 29.3 million people are living in modern slavery in Asia and the Pacific, according to the latest Global Slavery Index. This accounts for 59 per cent of the total global population.

It’s estimated there were 401,000 people living in modern slavery in Thailand on any given day in 2021.

Thailand has faced regular criticism for its handling of human rights issues, including the recent forced deportation of 40 Uyghur asylum seekers to China.

This move has highlighted concerns about the country’s commitment to human rights, especially during its term on the UN Human Rights Council.

The country’s push for a supply chain due diligence law is driven by several factors:

• International trade and investment: Thailand is seeking Organisation for Economic Co-operation and Development (OECD) membership, a move that would require a demonstrated commitment to responsible business conduct.
• Reputation and global standing: Strengthening human rights protections will enhance Thailand’s image as a responsible business hub.
• Alignment with global standards: As more countries introduce due diligence laws, Thailand aims to stay competitive and meet international expectations.

The Thai government is still working through several critical elements of the law, including:

• Whether implementation will be phased in gradually or apply immediately.
• How to support small and medium-sized enterprises (SMEs) to comply with the requirements.
• Strategies for building corporate capacity to meet due diligence obligations.

The law is expected to include a mix of penalties and incentives to drive compliance:

• Civil penalties: Companies that fail to meet their obligations could face financial consequences.
• Tax benefits and public contracts: Businesses that comply with due diligence requirements may be rewarded with tax incentives and access to government contracts.

Thailand was the first country in Asia to introduce a National Action Plan (NAP) on Business and Human Rights (NAP BHR) in 2019.

The second NAP (2023–2027) has paved the way for the drafting of human rights due diligence (HRDD) laws or measures.

In addition, Thailand has made a voluntary commitment to explore a human rights due diligence law as part of its Universal Periodic Review at the United Nations in 2021.

The proposed law is expected to align with the United Nations Guiding Principles on Business and Human Rights.

It will also follow guidance from the Office of the High Commissioner for Human Rights on key considerations for mandatory due diligence.

These efforts come at a time when businesses are facing growing global scrutiny over human rights risks in supply chains.

The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) has pushed many governments to show their companies follow HRDD standards.

However, proposed changes to the CSDDD under the Omnibus proposal could weaken its effectiveness, which may influence Thailand’s approach to its own legislation.

By introducing a mHREDD law, Thailand can set a precedent in Asia for corporate responsibility.

The law will help ensure businesses take responsibility for human rights risks in their supply chains, protect vulnerable workers, and strengthen Thailand’s position as a leader in ethical and sustainable trade.

The estimated next steps include a draft by the end of March for Ministry of Justice consideration, followed by public consultations mid-year.