TOKYO -- Only 12% of major Japanese companies in a Nikkei survey said they screen for human rights violations, such as alleged forced labor by Uyghurs in China's Xinjiang region, at businesses that supply them indirectly.
The poll, targeting 100 or so leading executives, highlights the challenges of monitoring risks across sometimes global supply chains and the need for companies to work together to address the issue.
At 79.8%, an overwhelming majority of responding companies deemed such violations a growing risk to business.
"Human rights issues occupy a completely different space than they used to, for companies as well," said Takeshi Niinami, president and CEO of Suntory Holdings.
Of companies seeing human rights as a growing risk, 78.6% said they are specifically concerned about reputational harm. Other frequently cited concerns included discouraging investors, at 68%; clients canceling contracts, at 66%; and disruptions to supplies of raw materials, at 58.3%.
Many companies are already taking steps to reduce these risks, with 70.8% responding that they have adopted a framework to research and monitor human rights concerns.
But in that group, 41.3% said they are looking out for potential violations only in their direct business partners, while 33.7% said they focus on risks in their own group, including overseas subsidiaries. Identifying human rights concerns farther afield in the supply chain remains a challenge.
Nearly half, of 43.9%, of companies with existing monitoring frameworks said they plan to expand their efforts in some way.
"We conduct human rights due diligence based on the United Nations Guiding Principles on Business and Human Rights," said Masamichi Terabatake, president and CEO of Japan Tobacco.
But monitoring risks around the world is a difficult task, and more companies could opt to partner with other businesses amid growing international scrutiny regarding human rights.
"For issues our company cannot solve on our own, we hope to make progress by participating in industrywide and cross-industry initiatives," said Atsushi Katsuki, president and CEO of Asahi Group Holdings.