Funding rightsholder-driven due diligence
A new Swedwatch report shows that limited funding for worker and community driven due diligence approaches is undermining efforts to hold companies accountable to human rights and environmental standards. The report outlines how funders and donors can better invest in these approaches to meet the opportunity posed by new mandatory due diligence laws. It features case studies showing how effective resourcing of these approaches can advance rightsholder priorities.
Key findings
1️⃣ Low and diminishing funding. A mere 0.62% of Official Development Assistance and philanthropy supports worker and community driven approaches to due diligence.
2️⃣ Quality of funding is essential for worker and community driven due diligence. Current funding is often short-term, inflexible, and inaccessible to the actors with trust and proximity to business impacted communities and workers.
3️⃣ Resources flooding to failed industry approaches reliant on self-disclosure. ESG ratings products, often marketed as tools to meet mandatory due diligence requirements, rely on company self-disclosure for 87% of their human rights data, and yet amount to over 80 times the size of human rights foundation funding for research and documentation.
The rise of mandatory human rights and environmental due diligence (mHREDD) legislation is potentially transformative for the 450 million people working in global value chains in addition to the hundreds of millions more affected community members. These laws impose legally binding obligations on companies to identify and assess risks of human rights violations and environmental harms in their value chains, prevent harms from occurring, and respond to harms which have occurred.
Accountable businesses as an amplifier of rightsholder priorities
Business activities within global value chains have significant impacts on a wide range of rights holder priorities. Health funders should see opportunities in legislation which would regulate mining companies, given that 23 million people live in floodplains contaminated by heavy metals. Funders working to address poverty should care about legislation which imposes binding obligations on companies to enforce living wages across value chains. Environment and climate funders should see immense opportunity in legislation which could finally change the incentive structures for supply chains which currently contribute to deforestation and climate breakdown.
However, the era of mandatory due diligence legislation has risen at the same time as a sophisticated compliance industry which promises rigorous due diligence but delivers more of the same failed corporate self-regulation. If funders and donors want to meet the opportunity posed by mHREDD legislation and enable meaningful corporate accountability, they must mobilise funding to build power of workers and communities.
In our latest study, Swedwatch identified three core findings. First, the quantity of funding for worker and community driven approaches is low and diminishing. Second, the quality of funding has significant impact on the effectiveness of corporate accountability. Third, unless the ecosystem of actors supporting workers and communities are better resourced, mHREDD legislation risks resulting in more corporate self-regulation.
More on each key finding below 👇🏼.
Download the report
This report is based on a range of interviews conducted by
Swedwatch with stakeholders from civil society, donors, funders and funder groups.
1. Available funding is low and diminishing
Swedwatch, using data from the ‘Advancing Human Rights’ research from the Human Rights Funders Network, estimates that in 2020—the latest available year— only $2.237 billion of philanthropy and Official Development Assistance (ODA) supported worker and community driven approaches to due diligence. This is just 0.62% of combined ODA and philanthropy. Figure 1 shows the contrast to available resources for industry approaches to due diligence and shareholder payouts for companies in scope to the CSDDD.
Figure 1: Industry approaches and profits dwarf grant making
Between 2014 and 2023 publicly listed companies in-scope of the CSDDD paid their shareholders €2.9 trillion euros in dividends and untaxed share buybacks. Just 10% of an average year would increase annual available grant funding by almost 13 times over.
These funding gaps are particularly pronounced when it comes to specific strategies which are necessary to enable effective and worker and community driven due diligence. Based on interviews with over sixty individuals representing funders and civil society, this research surfaced 7 strategies with acute funding needs. As the chart below shows, protection, legal and community organising strategies are severely underfunded, accounting for only 0.11%, 1.3% and 2.14% of related human rights foundation funding.
Figure 2: Legal, protection and community organising strategies are severely under resourced
See more on funding legal strategies with the Legal Empowerment Fund and Badabon Sangho.
See more on protection funding with the Environmental Defenders Collaborative and the Zero Tolerance Initiative and the Building Responses Together Network.
2. When we talk about accountability, funding quality matters
Restrictive, ‘risk’ intolerant, and overly burdensome funding practices mean that actors with most trust with communities and workers, particularly communities in more vulnerable situations, are least likely to access funding. Human rights defenders account for just. 11% of ODA and of that, only 47-57% reaches local NGOS and defenders (mostly through national level organisations).
Legal services are only accessible to LBQ women in Uganda who are already aware of organisations like us. If you want them to be able to make use of legal processes, you need to fund our outreach. Mutyaba Gloria, FARUG.
The length of funding does not match the length of accountability processes
Interviews with civil society indicated that long-term sustainable funding is essential to building trust with communities and enabling follow up on long-term accountability processes.
If you don’t have long term funding then you don’t have any representative body of workers to negotiate with in the first place. Zia Ur Rehman, Awaz Foundation Pakistan
Most funding operates on short-time frames (of 12 months or less), which do not match up with the length of accountability processes. This discrepancy is shown in Figure 3 which shows average grant length in contrast to the lengths of different corporate accountability processes, and demonstrates that grants sometimes do not even cover the length of preparation before a grievance can be filed, let alone the grievance process itself. While some funders renew grants on a yearly basis resulting in long-term partnerships, interviews with CSOs suggest this is the exception rather than rule.
Figure 3: Grant-making timelines not suitable to accountability processes
It takes years to get impact in these cases, but with our grants or small-scale support we sometimes only get a few months to actually fund these cases. John Brownell, Green Advocates Liberia.
Flexible and systems-oriented approaches
Interviews underscored the need for flexible funding aligned with the priorities and methods of those closest workers and communities. However, only 9.49% of human rights foundation funding for Sub-Saharan Africa and Eastern Europe and Central Asia is considered direct flexible support. Between 2017 and 2020, just 19.1% of aid to human rights defenders was core funding, this figure is reduced to 12% for local NGOs.
Interviewees stressed that effective, worker- and community-driven due diligence requires a systems approach that addresses intersecting forms of oppression, invests in the broader ecosystem, and helps build a rights-based economy.
The [Rights Based Economy] looks at wider issues such as social protection, decent work and living wages, access to public services, tax and corporate regulation. It pushes for seismic shifts needed in global economic governance while fostering an enabling environment for economic alternatives… Marianna Leite, in Beyond Buzzwords: Mandatory Human Rights Due Diligence and a Rights-Based Approach to Business Models.
To see examples of how funders are making their funding accessible and responsive to communities, see the Casa Fund in Brazil and the Socio Environmental Funds of the Global South, the Environmental Justice Fund in South Africa, and the SAGE Fund.
To learn about funders who are working to provide long-term and sustainable funding, see the Freedom Fund, the Kenya Community Development Foundation, and the case of Piquia de Baixo the Sage Fund, JnT and FIDH.
See more on flexible funding with the Environmental Justice Fund, Legal Empowerment Fund and the Ford Foundation. See more on systems funding with the Freedom Fund and the Laudes Foundation.
3. Risks of a box-ticking approach and more self-regulation
As mHREDD legislation gains traction, a growing industry of for-profit actors—including social audit firms, ESG service providers, and sustainability software companies—is stepping in to meet mHREDD corporate compliance needs. Though often promoted through polished communications strategies, research has documented their failures to capture the experiences of workers and communities, let alone deliver justice for them. A 2025 OECD report found that ESG services—increasingly used by companies for their own due diligence—have glaring failures to capture human rights abuses. Over 80% of human rights metrics came from self-disclosed reporting from companies, effectively ceding oversight to the companies themselves. Despite this, the ESG ratings services market size is around 80 times the value of human rights foundation funding for research and documentation of harms committed by businesses.
These industry approaches cannot shield companies from their due diligence obligations, but without funding for worker representative and community based and supporting organisations, rights violations risk being drowned out in both the volume of data within ESG approaches and company efforts to suppress stories of harms. This means that even responsible companies will struggle to identify harms within their value chains, particularly for harms to the most vulnerable who have the least access to raise their voices.
See more on worker driven approaches to accountability with Electronics Watch and the Worker Driven Social Responsibility Model. For more on transparency and narrative building see SOMO’s service to provide transparency research and Luminate’s Ecosystem approach to funding public interest media.
What’s next?
This report has been produced at the time of a global funding crisis, which itself emerged in a time of a global poly-crisis. However, while this report did surface urgent funding needs, these needs do not compete with other funding priorities. Instead investing in worker and community driven due diligence should be seen as a strategic investment to reach the wide range of rightsholder priorities which are impacted by business activities. Several ideas emerged to help meet that opportunity.
✔️Increase coordination and collaboration between business and human rights funders and other thematic funders including those focusing on poverty, health, peace, climate and development.
✔️Invest in approaches including micro-levies and industry fees which ensure that companies pay their fair share but move beyond failed CSR approaches by centering independent governance with workers and communities.
✔️Push resources towards the funding models identified which are providing, accessible, flexible, long-term, and systems-oriented support.
See the full report for more data, case studies and recommendations on the way moving forward.