Human Rights Due Diligence:
Why It Matters for Japanese Manufacturers in Malaysia

Human rights due diligence (HRDD) is rapidly evolving from a voluntary sustainability initiative into a practical business expectation. For Japanese manufacturers operating in Malaysia, customer requirements, industry standards, investor scrutiny and government policy are increasingly shaping how labour and human rights risks are managed throughout business operations and supply chains.¹

The key question is no longer whether Malaysian law currently mandates HRDD. It is whether businesses can demonstrate that they understand, identify and manage material human rights risks before those risks become commercial, operational or reputational problems.

From the UN Guiding Principles to Japanese Government Expectations

The modern HRDD framework originates from the UN Guiding Principles on Business and Human Rights (UNGPs), endorsed by the UN Human Rights Council in 2011. The UNGPs introduced the expectation that businesses should identify, prevent, mitigate and account for adverse human rights impacts that they may cause, contribute to, or be directly linked to through their operations and business relationships.¹

Japan subsequently adopted its National Action Plan on Business and Human Rights in October 2020 and published the Guidelines on Respecting Human Rights in Responsible Supply Chains in September 2022.² These Guidelines encourage Japanese companies to implement HRDD not only within their own operations, but also across their subsidiaries, suppliers and broader business relationships.

The framework has continued to evolve. In 2023, Japan's Ministry of Economy, Trade and Industry (METI) published practical implementation guidance, and in December 2025 Japan released a revised National Action Plan that continues to emphasise supply chain governance, disclosure, remediation and responsible business conduct.³

Although these measures are generally not legally binding, they increasingly influence procurement requirements, supplier codes of conduct, contractual obligations and internal compliance programmes.

Electronics Industry Standards Already Operate in Practice

For electronics manufacturers, labour and human rights assessments are not new.

The Responsible Business Alliance (RBA), formerly known as the Electronic Industry Citizenship Coalition (EICC), has maintained a common industry code of conduct since 2004. The current RBA Code of Conduct Version 8.0 took effect on 1 January 2024 and establishes expectations across labour, health and safety, environmental, ethics and management system requirements.⁴

Suppliers may be required to complete RBA self-assessments, undergo Validated Assessment Program (VAP) audits, implement corrective action plans and provide evidence of ongoing compliance.⁴

For many Malaysian electronics suppliers, these customer-driven expectations may have greater immediate impact than legislation, since they can directly affect customer approvals, supplier onboarding decisions and continuing commercial relationships.

Malaysia Is Signalling Future Regulatory Expectations

Malaysia took a significant step with the launch of the National Action Plan on Business and Human Rights (NAPBHR) 2025-2030.

The NAPBHR encourages businesses to adopt human rights policies, undertake due diligence, establish effective grievance mechanisms, address supply chain risks and communicate how human rights impacts are managed.⁵

Importantly, the NAPBHR also contemplates assessing the feasibility of introducing mandatory human rights and environmental due diligence (mHREDD), particularly in higher-risk sectors, including manufacturing.⁵

The NAPBHR does not itself create a mandatory HRDD obligation. However, it provides a strong indication of the Malaysian Government's policy direction and of the expectations that may increasingly shape future regulatory and commercial environments.

Addendum: Malaysia's New HRDD Guide and Japan's METI Framework

Malaysia's new Human Rights Due Diligence Guide for Businesses in Malaysia moves beyond the NAPBHR's policy-level commitments. It provides a six-step methodology modelled on the United Nations Guiding Principles and OECD Due Diligence Guidance, supported by worked examples, checklists and templates.⁶

Scope

Both frameworks extend due diligence beyond a company's own operations to its supply chain and business relationships.⁷ METI is more granular, expressly stating that a company's own due diligence should also cover risks connected to “other business partners” — such as investment or lending recipients, joint-venture partners and security providers — rather than only its direct suppliers.⁸

The Malaysian Guide instead frames scope through proportionality, including the complexity of business relationships and the level of leverage over business partners. This gives businesses more discretion in determining the boundaries of their due diligence.⁹

Prioritisation

Both frameworks assess severity by reference to scale, scope and irremediability, together with likelihood for potential impacts.¹⁰ Malaysia's Guide presents this through an accessible four-tier system: Critical, High, Moderate and Lower. It also provides a worked manufacturing example.¹¹

METI covers the same principles but places greater emphasis on structured risk factors such as geography, sector and enterprise-specific circumstances.¹² Malaysia's approach is therefore easier to apply initially, while METI provides more granular risk mapping.

Remediation

The Malaysian Guide adopts the same “cause, contribute and directly linked” framework used by the United Nations Guiding Principles and METI. Businesses should provide or cooperate in remediation where they cause or contribute to harm, while using leverage where an impact is directly linked through a business relationship.¹³

Both frameworks recognise similar forms of remedy, including compensation, rehabilitation, apology and corrective action.¹⁴

Practical Implication

Japanese manufacturers already applying METI-based HRDD should find Malaysia's framework familiar. The principal difference is scope: METI is more explicit about the relationships and indirect entities that may fall within a company's due diligence review.

Businesses operating under both frameworks may therefore use METI's broader scope as the more conservative benchmark, while applying Malaysia's priority tiers, worked examples and templates as practical local implementation tools.

Supplier Failures Can Become Buyer and Remedy Issues

Recent events involving a manufacturing company in Malaysia illustrate why HRDD is increasingly viewed as a supply chain issue rather than merely a supplier issue.

Publicly reported allegations concerning labour rights abuses and indicators of forced labour attracted scrutiny not only of the supplier itself, but also of downstream customers connected to the supply chain. Public discussion subsequently expanded to issues relating to remediation and worker compensation.¹⁵

Regardless of the particular facts of any individual case, the broader lesson is clear. Labour and human rights issues arising at supplier level can quickly become governance, commercial and reputational concerns for multiple organisations throughout a supply chain.

It is therefore unsurprising that many multinational companies are moving beyond traditional labour audits and towards broader HRDD frameworks intended to identify and address risks before they develop into more significant disputes or business interruptions.

Human Rights Risk Is Becoming Trade Risk

Human rights and forced labour concerns are increasingly intersecting with international trade policy.

In March 2026, the Office of the United States Trade Representative (USTR) launched investigations involving 60 economies concerning failures to prohibit imports produced with forced labour. Findings were published in June 2026, followed by tariff measures announced in July 2026.¹⁶

The significance of these developments extends beyond tariffs themselves.

They demonstrate that forced labour concerns are no longer viewed solely as environmental social and governance (ESG) or reputational issues. They are increasingly capable of influencing sourcing decisions, market access, supply chain resilience and wider commercial relationships.

European Requirements Will Reinforce Customer Expectations

Additional pressure is likely to emerge from Europe.

The European Union Corporate Sustainability Due Diligence Directive (CSDDD), which entered into force in 2024, requires companies within scope to identify and address adverse human rights and environmental impacts throughout their operations, subsidiaries and chains of activities. Under the current implementation timetable, the principal obligations are expected to start applying from July 2029.¹⁷

Even where a Malaysian supplier falls outside the direct scope of the Directive, it may still receive due diligence questionnaires, contractual commitments and audit requests from European customers or from Japanese customers supplying European markets.

For many suppliers, practical HRDD expectations are therefore likely to arrive long before any direct legal obligation applies.

Conclusion

For Japanese manufacturers operating in Malaysia, HRDD is no longer simply an emerging ESG concept. It is increasingly becoming a business expectation shaped by Japanese government guidance, electronics industry standards, Malaysian policy developments, customer requirements, trade measures and highly visible supply chain incidents.

The more useful question is not:

It is:

Businesses that begin mapping higher-risk relationships, reviewing recruitment practices, strengthening grievance mechanisms and establishing clear remediation processes are likely to be better positioned to respond to customer expectations, audit requirements and future regulatory developments.