Key takeaways:

• • • Only IEEPA‑based tariffs are up for refund — Refunds will flow electronically to importers of record through ACE, the government’s digital import/export system, but only once CBP’s process is finalized.

    • Liquidation and protest timelines are now critical — An organization’s tax concepts that directly influence which entries are eligible and how long companies have to protect claims.

    • Tax functions must quickly coordinate with other corporate functions — In-house tax teams need to coordinate with their organization’s trade, procurement, and accounting functions to gather data, assert entitlement, and get the financial reporting right on any tariff refunds.

WASHINGTON, DC — When the United States Supreme Court issued its much-anticipated ruling on President Donald J. Trump’s authority to impose mass tariffs under the International Emergency Economic Powers Act (IEEPA) in February it set the stage for what it to come.

The Court ruled the president did not have authority under IEEPA to impose the tariffs that generated an estimated $163 billion of revenue in 2025. In response, the Court of International Trade (CIT) issued a ruling in requiring the U.S. Customs and Border Protection (CBP) to issue refunds on IEEPA duties for entries that have not gone final. That order, however, is currently suspended while CBP designs the refund process and the government considers an appeal.

AtĚýthe recent , tax experts discussed what this ruling means for corporate tax departments, outline what is and isn’t a consideration for refunds and the steps necessary to apply for refunds.

As panelists explained, the key issue for tax departments is that only IEEPA tariffs are in scope for refund — many other tariffs remain firmly in place. For example, on steel, aluminum, and copper; Section 301 tariffs on certain Chinese-origin goods; and new of 10% to 15% on most imports still apply and will continue to shape effective duty rates and supply chain costs.

So, which entities can actually get their money back?

Legally, CBP will send refunds only to the importer of record, and only electronically through the government’s digital import/export system, known as the Automated Commercial Environment (ACE) system. That means every potential claimant needs an with current bank information on file. And creating an account or updating it can be a lengthy process, especially inside a large organization.

If a business was not the importer of record but had tariffs contractually passed through to it — for example, by explicit tariff clauses, amended purchase orders, or separate line items on invoices — they may still have a commercial basis to recover their share from the importer. In practice, that means corporate tax teams should sit down with both the organization’s procurement experts and its largest suppliers to identify tariff‑sharing arrangements and understand what actions those importers are planning to take.

Why liquidation suddenly matters to tax leaders

As said, the Atmus ruling is limited to entries that are not final, which hinges on the . CBP typically has one year to review an entry and liquidate it (often around 314 days for formal entries) with some informal entries liquidating much sooner.

Once an entry liquidates, the 180‑day protest clock starts. Within that window, the importer of record can challenge CBP’s decision, and those protested entries may remain in play for IEEPA refunds. There is also a 90‑day window in which CBP can reliquidate on its own initiative, raising questions about whether final should be read as 90 days or 180 days — clearly, an issue that will matter a lot if your company is near those deadlines.

Data, controversy risk & financial reporting

The role of in-house tax departments in the process of getting refunds requires, for starters, giving departments access to entry‑level data showing which imports bore IEEPA tariffs between February 1, 2025, and February 28, 2026. If a business does not already have robust trade reporting, the first step is to confirm whether the business has made payments to CBP; and, if so, to work with the company’s supply chain or trade compliance teams to access ACE and run detailed entry reports for that period.

Summary entries and heavily aggregated data will be a challenge because CBP has indicated that refund claims will require a declaration in the ACE system that lists specific entries and associated IEEPA duties. Expect controversy pressure: As claims scale up, CBP resources and the courts could see backlogs. If that becomes the case, tax teams should be prepared for protests, documentation requests, and potential litigation over entitlement and timing.

On the financial reporting side, whether and when to recognize a refund depends on the strength of the legal claim and the status of the proceedings. If tariffs were listed as expenses as they were incurred, successful refunds may give rise to income recognition. In cases in which tariffs were capitalized into fixed assets, however, the accounting analysis becomes more nuanced and may implicate asset basis, depreciation, and potentially transfer pricing positions.

Coordination between an organization’s financial reporting, tax accounting, and transfer pricing specialists is critical in order that customs values, income tax treatment, and any refund‑related credits remain consistent.

Action items for corporate tax departments

Corporate tax teams do not need to become customs experts overnight, but they do need to lead a coordinated response. Practically, that means they should:

• • • confirm whether their company was an importer of record and, if so, ensure ACE access and banking information are in place now, not after CBP turns the refund system on.
    • map which entries included IEEPA tariffs, identify which are non‑liquidated or still within the 180‑day protest window, and file protests where appropriate to protect the company’s rights.
    • inventory all tariff‑sharing arrangements with suppliers, assess contractual entitlement to pass‑through refunds, and align with procurement and legal teams on a consistent recovery approach.
    • work with accounting to determine the financial statement treatment of potential refunds, including whether and when to recognize contingent assets or income and any knock‑on effects for transfer pricing and valuation.

If tax departments wait for complete certainty from the courts before acting, many entries may go final and fall out of scope. The opportunity for tariff refunds will favor companies that are data‑ready, cross‑functionally aligned, and willing to move under time pressure.

You can find out more about the changing tariff situation here

Key takeaways:

• • • The supply hit is real, not just priced-in fear — Tanker insurance has collapsed, infrastructure is damaged, and volumes are physically offline. Some of this isn’t coming back quickly.

    • Tax policy is moving in five directions at once — Energy security incentives, BEPS 2.0 rollout, windfall tax rumblings — governments are improvising, and your effective tax rate is caught in the middle.

    • Your Evidence to Recommendations (EtR) guidance is probably already stale — If you haven’t stress-tested your EtR guidance against $100-plus per barrel oil and a multi-quarter disruption, you’re behind.

Let’s be direct: This isn’t a risky premium situation. When military strikes take out Middle Eastern infrastructure in the Persian Gulf and tanker insurers pull out of a corridor carrying 15% to 20% of global crude and liquefied natural gas (LNG), supply goes offline. That’s what’s happened.

At the time of writing, the price of oil continues to fluctuate. The recent release of the , which forecasts and analyze the global oil market, shows that more global markets are starting to say the word recession. And whether or not a recession actually materializes, the energy price environment has shifted in ways that will take multiple quarters, and maybe years, to unwind. For corporate tax departments, the question isn’t whether this changes their planning, it’s whether they’ve caught up yet.

Which scenario-modeling is most worth it?

Most ominously, nobody knows how this all ends, and that’s exactly why your tax team may need more than one base case.

The optimistic read is a short, sharp shock — prices spike, some flows resume, upstream books a windfall quarter, and consuming-country governments start muttering about excess profits taxes. Messy, but manageable.

The harder scenario is prolonged disruption: Hormuz remains constrained for months, along with repeated infrastructure hits with resulting rerouting that permanently shifts where profits land and which entities suddenly have a taxable presence for which they didn’t plan. Not surprisingly, transfer pricing and permanentĚýestablishmentĚý(PE) exposure get complicated fast.

Add to the mix, by the Organisation for Economic Co-operation and Development (OECD) that multinational corporate tax departments are still required to adhere to and now plan for how it may interact and intersect with the other two scenarios.

The policy environment is a mess, but in a very specific way

Here’s what makes this cycle different from 2008 or 2014: Governments are pulling in opposite directions simultaneously. The United States has pivoted hard toward energy dominance — domestic fossils, nuclear, extraction incentives. Meanwhile, BEPS 2.0 is still rolling out unevenly across jurisdictions, which means your organization’s effective tax rate in any given country depends heavily on where it sits in the implementation timeline.

Throw in — which historically shows up about six months after prices stay high and voters get angry — and you have an environment in which the gap between your statutory tax rate and your actual sustainable rate could widen fast if you’re not actively managing it.

5 actions tax team leaders can take now

Of course, none of these are new concepts; but in a fast-moving situation, the basics that get done quickly will beat the sophisticated that gets done late.

First, rebuild your EtR guidance around at least three commodity paths. Not as a theoretical exercise — as something your CFO can actually present to the board with a straight face.

Second, map out which legal entities are genuinely exposed to Hormuz-dependent flow volumes. Companies’ operations and trading teams often know this; but the tax team too often doesn’t until there’s a problem. Close that knowledge gap now.

Third, re-rank your project pipeline on a real after-tax basis. Updated incentive assumptions, global minimum tax, domestic versus cross-border production — run all the numbers again. Some projects that looked marginal six months ago may look very different now, and vice versa.

Fourth, build a windfall tax playbook before you need one. The data you’d need to defend your profit levels and capital allocation decisions takes time to pull together. Don’t leave that work until the week the legislation drops.

Fifth — and this is the one that gets skipped most often — make sure the company’s tax, treasury, and trading groups are talking to each other in real time. Hedging decisions, financing structures, physical flow changes — all of these have tax consequences, and they’re happening fast right now.

One final thought

Corporate tax departments that come out of this looking good won’t be the ones that predicted the conflict. They’ll be the ones who translated what’s happened into specific, actionable data and numbers for their leadership — presented quickly, clearly, and with their own company’s footprint in mind.

That’s the brief. Now go build it.

You can find more of our coverage of the impact of the ongoing War in Iran here

Key takeaways:

• • • Companies should act fast on refunds — Companies that paid IEEPA-based duties have potential refund claims, but statutory deadlines are ticking. Business leaders should map exposure, quantify opportunities, and file protective claims now.

    • Remember, other tariffs still apply — This decision only invalidated IEEPA-based tariffs. Tariffs based on Sections 232, 301, and 122 of the 1974 Trade ActĚýremain in force, and the administration is already signaling plans for new global tariffs.

    • Businesses should update their financial models — Tariff refunds flow through cost of goods sold, which affects taxable income and effective tax rates. Business leaders should review their transfer pricing models and contracts to determine which parties receive refund proceeds.

The U.S. Supreme Court’s recent ruling striking down the tariffs that the Trump Administration based on the International Emergency Economic Powers Act (IEEPA) creates immediate refund opportunities for businesses that paid billions of dollars in now-invalidated duties. However, the administration’s pivot to alternative tariff authorities means the trade policy landscape is shifting rather than settling.

Now, corporate tax and trade leaders must move quickly to preserve refund claims while building resilient strategies for the next wave of tariff changes that are already fully in motion.

What actually happened

In , the Supreme Court said last month that President Donald J. Trump went too far by using the IEEPA — a statute designed for genuine national emergencies — to impose broad, peacetime tariffs. The Court’s message was blunt: If you want sweeping tariff authority, get the U.S. Congress to give it to you explicitly — IEEPA doesn’t cut it.

This ruling invalidated the tariffs that relied solely on IEEPA, including certain reciprocal global duties and some measures targeting Canada, Mexico, and China. However, here’s the catch: Other tariff regimes — such as those outlined in Sections 232, 301, and 122 of the TradeĚýActĚýofĚý1974Ěý— are still standing. Those weren’t touched by this decision, and they’re not going away.

Check outĚýĚýfor more on the Supreme Court’s tariff decision here

Further, the administration isn’t sitting still either. There’s already talk of pivoting to Section 122 to impose a new 10% global tariff. So, while one door closed, another may be opening, which means the legal landscape is shifting, not settling.

Why this matters right now

There are several important factors to consider in the wake of this decision, including:

Start with the money — If your company paid IEEPA-based duties, your effective tariff rate on many imports just dropped. That , changes your margin picture, and could shift pricing dynamics across the retail, consumer goods, manufacturing, and automotive sectors.

Then there’s the refund potential — Billions of dollars were collected under tariffs that are now unlawful. The government won’t write checks automatically — indeed, the administration has already signaled it will fight broad refund claims — but for individual companies, the cash at stake could be significant.

Don’t overlook your contracts — Many commercial agreements include tariff pass-through clauses, price adjustments, and indemnities. Those provisions will determine which parties actually gets the money: the importer of record, the customer, or someone else in the chain. If you restructured your supply chain around the old tariff regime, you may need to rethink those decisions, too.

What businesses should do first

There are several steps business leaders should undertake to move forward in this new environment, including:

Map your exposure — Tax and trade teams need to pull multi-year import data by Harmonized Tariff Schedule (HTS) code, country of origin, and legal authority. Figure out which entries were hit specifically by IEEPA-based tariffs, as opposed to Section 232 or 301 duties, which again, are still in effect.

Quantify the opportunity — Calculate total IEEPA duties paid by entity, jurisdiction, and period. Include a rough estimate of interest, prioritize the highest-value lanes, and flag any statutory deadlines for protests or post-summary corrections. Missing a deadline isn’t something you can easily fix later.

Preserve your rights — If you’ve already filed test cases or joined class actions, revisit your strategy with counsel. If you haven’t, evaluate quickly whether to file protests, post-summary corrections, or other protective claims with the U.S. Customs & Border Protection. These procedures will evolve, of course, but the clock already is ticking.

Get the right people in the room — This isn’t just a tax problem or a trade compliance problem. Stand up a cross-functional working group that includes tax, customs, legal, finance, supply chain, and investor relations. Agree on who owns what, how you’ll share data, and how you’ll communicate, especially if the refund could move the needle on earnings or liquidity.

Financial reporting and tax implications

Most importantly, you need to reassess your tariff-related balances and disclosures. If refunds are probable and you can estimate them, that may affect liabilities, expense recognition, and reserves. Even if the accounting is murky, material claims may need to be discussed in your report’s Management’s Discussion & Analysis (MD&A) section or in footnotes.

On the tax side, tariff refunds and lower ongoing duties flow through cost of goods sold (COGS), which changes taxable income and your business’s effective tax rate. Timing matters: When you recognize a refund for book purposes may not match when it hits for tax, creating temporary differences that need Accounting Standards Codification 740 analysis.

And don’t forget transfer pricing. Many intercompany pricing models were built during the high-tariff period and may embed those costs in tested party margins. If tariffs fall or refunds materialize, those models and the supporting documentation may need updates. Review intercompany agreements that allocate customs and tariff costs to make sure they align with both the economics and the legal entitlement to possible refunds.

Think beyond the refund

Yes, the immediate focus is on getting your company’s money back and staying compliant — but this is also a moment in which more strategic thinking is required, including:

Run scenarios — Business show run their models to see what happens if IEEPA tariffs disappear and aren’t fully replaced. Model what happens if a broad 10% global tariff lands under Section 122. Model what happens if country- or sector-specific measures expand. For each scenario, stress-test your gross margin, cash flow, and key supply chain nodes.

Revisit your sourcing strategy — Some nearshoring or supplier diversification moves you made under the old tariff structure may no longer make sense. Others may still be smart as a hedge against renewed trade tensions. The tax team needs to be part of these conversations — not just because tariffs affect cost, but because new structures reshape your effective global tax rate, foreign tax credit position, and your base erosion and profit shifting (BEPS) exposure.

Fix your data and governance — Trade policies can move fast and unpredictably. If you can’t quickly pull clean import data, run classification reviews, or model your exposure across scenarios, then you’re simply flying blind. Now is a good time to fix that.

The bottom line

The Supreme Court’s decision closed one chapter of the president’s tariff story, but it didn’t end it. For corporate tax and trade leaders, the message is straightforward: Grab the refund opportunity, protect your position, and use this moment to build a more resilient strategy for whatever comes next.

Because if there’s one thing we’ve learned, it’s that the next round of tariff changes is already on its way.

For more on the impact of tariffs on global trade, you can download a full copy of the Thomson Reuters Institute’s recent 2026 Global Trade ReportĚýhere

Key insights:

• • • Different tools, different impacts— Tariffs raise costs but allow business to continue; sanctions create legal barriers that can make transactions impossible, with severe penalties for violations.

    • Scale brings scrutiny— Expansive US sanctions risk diminishing returns as targets develop workarounds and alternative financial systems.

    • Strategic or reactive use?— The core challenge isn’t whether sanctions work, but whether they’re deployed as part of coherent strategy or simply as visible action that avoids harder diplomatic or military choices.

In the foreign policy arsenal of the United States, economic sanctions have become a widely used weapon. As their use expands, so does the debate about how effective they actually are, what additional risks they create, and what unintended consequences they may bring.

Tariffs vs. sanctions: What’s the difference?

In wartime or during high-tension economic crises, both tariffs and sanctions can significantly impact businesses, but the two methods work in different ways.

Tariffs are a form of economic pressure. Governments use them to reduce an adversary’s export revenue, raise the cost of critical imports, signal disapproval of countries that continue doing business with the target, and generate funds for their own efforts. For companies, tariffs usually create friction rather than a full stop. Businesses can often continue importing, but at a higher landed cost. And that can compress margins and force decisions around topics such as renegotiating pricing, passing costs to customers, or shifting to lower-tariff suppliers.

Sanctions are closer to an economic blockade. They aim to isolate the target by banning broad categories of trade, restricting strategic sectors, blacklisting specific entities and individuals, and sometimes pressuring third parties through secondary sanctions. The business impact is often binary. For example, if a counterparty or its majority owner is sanctioned, trading partners generally cannot make the deal work by paying more. The transaction becomes illegal, and violations can trigger severe penalties.

How the difference shows up in operations

Consider a European manufacturing company in March 2022 that is trying to manage the crisis situation caused by Russia’s invasion of Ukraine.

If policymakers respond to the crisis with tariffs, such as a steep duty on Russian aluminum and timber, the primary challenge for this manufacturer is financial and operational planning. Costs rise, and then the company must decide whether to absorb the increase, reprice contracts, or switch suppliers, even if alternatives are more expensive.

Check out for more on the Supreme Court’s tariff decision here

If policymakers respond with sanctions, however, the situation can escalate quickly. Restrictions on major banks and key import categories, combined with aggressive designations of targeted companies and individuals can disrupt the entire supply chain. Payments can freeze, and goods can be delayed or seized. Even indirect connections to the sanctioned party can create problems, including for banks, shippers, insurers, and in some cases for logistics providers or warehouse owners. Indeed, what looked like a routine transaction can become non-compliant without warning.

The scale of sanctions use

Over the past several decades, the US has increasingly relied on economic sanctions as a core foreign-policy tool. In fact, by the early 2020s, US sanctions programs were targeting more than 30 countries and thousands of individuals and entities, with the sanctions primarily being administered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). That trend has not only continued but accelerated under the current administration, which has turned to sanctions more frequently amid a volatile political environment. As the use of sanctions has expanded on a massive scale, their breadth and effectiveness have come under growing scrutiny.

Indeed, the phrase economic warfare reflects how modern sanctions often operate.

Many sanctions now target entire sectors, not only military goods. Secondary sanctions can threaten foreign companies that do business with sanctioned parties, effectively using access to the US financial system and the dollar as leverage. Critics argue that sanctions can also cause harm to civilians through inflation, shortages of essential goods including medicine, and broader economic damage. While targeted sanctions are intended to focus on elites, broader measures can affect entire populations.

What makes sanctions risky

The overuse of sanctions can create several problems. Yet sanctions can be politically attractive because they offer visible action without direct military risk, which may increase the temptation to use them even when they are unlikely to work.

As sanctions become routine, however, their impact may weaken as countries and companies develop workarounds, find alternative payment channels, and establish sanctions-resistant trade networks. Broad pressure from US sanctions can also encourage efforts to reduce reliance on the dollar-based financial system. China, Russia, and others have invested in alternative payment mechanisms such as cross-border interbank payment systems (CIPS) and systems for transfer of financial messages (SPFS) and expanded the use of non-dollar currencies. Over time, this response can reduce US financial leverage.

Sanctions can also provoke retaliation, including cyber activity, support for US adversaries, or wider regional instability. Sanctions also may harden diplomatic positions and make negotiation more difficult. In some cases, shared sanctions pressure can push sanctioned states closer together, strengthening the very coalitions that the US is trying to disrupt.

The argument for a middle ground

Supporters of sanctions argue that they provide an option between doing nothing and using military force. They can impose real costs on harmful actors, signal resolve, and respond to domestic demands for action, while still preserving diplomatic channels and avoiding full-on armed conflict.

The central question, however, is whether sanctions are being used as a substitute for strategy rather than as a single tool within a broader strategy. As sanctions continue to expand, it is worth weighing their benefits against their limits and long-term consequences. For policymakers and businesses alike, understanding these dynamics is critical to making informed decisions and managing risk.

You can find out more about here

Key takeaways:

• • • The Strait of Hormuz crisis threatens a global recession — The effective closure of the Strait, which is being driven more by insurance withdrawal and risk perception than a physical blockade, has effectively halted roughly 20% of global petroleum flow. If this disruptions persist beyond 30 days, economic modeling points to overwhelming recession risk for major importing economies, with oil potentially reaching $100 to $200 per barrel depending on severity.

    • The world is facing an unprecedented dual-chokepoint shipping crisis — With the Strait of Hormuz effectively shut and the Houthis resuming attacks on the Suez/Bab el-Mandeb corridor, roughly one-third of global seaborne crude trade is compromised simultaneously. All five major container lines have suspended Hormuz transits, and the cascading delays will hit supply chains far beyond the Middle East, including those companies with no direct Gulf exposure.

    • Companies that act now will fare far better than those that wait — Supply chain disruptions propagate on a lag of two to four weeks, meaning that the pain from today’s anchored tankers hasn’t arrived yet. Businesses should immediately audit their Gulf supply chain exposure, secure alternative freight capacity before it disappears, and prepare for a significant escalation in cyber threats from Iran and its allies.

Just days into the largest military operation undertaken by the United States since the 2003 Iraq invasion, the potential closure of the Strait of Hormuz has triggered the most severe energy supply disruption since Russia’s invasion of Ukraine. The conflict with Iran has removed roughly 20 million barrels per day of crude from global markets and sent oil prices to above $80 as of press time. The conflict’s trajectory over the coming weeks will determine whether the world faces a manageable price shock or a full-blown recession.

How we got here

The February 28 strikes order by President Donald J. Trump followed weeks of negotiations around Iran’s nuclear program that ended without a deal just two days before the strikes began. Administration officials have since acknowledged that the timing was driven in part by Israel’s plans to strike Iran independently.

Iran’s Supreme Leader Ayatollah Ali Khamenei, age 86, along with his defense minister Brigadier General Aziz Nasirzadeh, the commander of the Islamic Revolutionary Guard Corps (IRGC), and approximately 5 to 10 senior Iranian officials, died in the opening salvo of the operation.

Even after the destruction of a large segment of Iran’s senior leadership, the war continues on. Hezbollah launched a rocket strike on March 3 with Israel initiating a ground invasion of Lebanon in response. Iran’s retaliation has extended across the region as drone and missile strikes have hit targets across Qatar, the United Arab Emirates (UAE), Kuwait, and Bahrain, while the US Embassy compounds in both Kuwait and Riyadh have been struck directly. Six American service members have been killed thus far.

Indeed, the regional escalation has given Iran the context to play one of the most feared cards in its arsenal — and one with the potential to throw an already fragile global economy into recession.

On March 2, Iran closed the Strait of Hormuz, vowing to attack any ship trying to pass through the strait. An European Union official said that began receiving VHF radio transmissions from the IRGC stating that no ships would be permitted to pass.

Ship-tracking data based on the MarineTraffic platform showed at least 150 tankers — crude oil and LNG vessels (those specifically built to transport liquefied natural gas — anchored in open Gulf waters. At least five tankers have been struck near the Strait, including one off Oman that was set ablaze, while the US-flagged tanker Stena Imperative was hit by two projectiles near Bahrain. On March 2, Marine insurers Gard, Skuld, and NorthStandard stated publicly they would effective March 5. One day later, four more of the 12 global insurance groups joined them, with London P&I Club, American Club, Steamship Mutual, and Swedish Club announcing similar moves.

Energy markets absorb the most severe supply shock in years

In light of 20 million barrels per day of crude being frozen out of the global markets, brent crude surged as much as 13% before settling at $83 per barrel, while WTI crude jumped to $76 at press time — both at their highest levels since the June 2025 conflict. Further, that several major oil companies and trading houses suspended shipments through the Strait as soon as strikes began.

“Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil,” said , head of the company’s geopolitical analysis, citing the immediate impact of halting of traffic through Hormuz. UBS analysts warned clients that a material disruption scenario could send brent crude above $120 per barrel, while Barclays projected $100 per barrel as increasingly plausible. Just twenty-four hours later, that range has widened considerably. Goldman Sachs now models $120 to $150 per barrel in a prolonged war, JPMorgan sees $120 if the war lasts beyond three weeks, and Deutsche Bank’s worst-case approaches $200 if Iran mines the Strait.

OPEC+ announced a modest 206,000 barrel per day output increase for April, but as LeĂłn told Reuters, markets are now more concerned with whether barrels can physically move than with spare capacity on paper. If Gulf export routes remain constrained, additional production provides limited immediate relief.

Global shipping faces an unprecedented dual-chokepoint crisis

While the energy supply shock is severe, it is only one dimension of a broader shipping disruption that has no modern precedent. For the first time in history, two of the world’s most critical maritime chokepoints are simultaneously compromised — the Strait of Hormuz and the Suez Canal/Bab el-Mandeb corridor, the latter under renewed threat after the Houthis announced they would resume attacks. Together, these two passages that connect Asia to Europe handle roughly one-third of the global seaborne crude oil trade and a significant share of containerized cargo. All five major container lines — Maersk, MSC, CMA CGM, Hapag-Lloyd, and COSCO — have suspended or halted transits through Hormuz and are rerouting via the Cape of Good Hope, adding weeks to voyage times.

The practical consequences for businesses extend well beyond higher shipping costs. The rerouting absorbs vessel capacity that was already stretched thin, meaning delays will cascade across trade lanes that have no direct connection to the Middle East. Companies that source components from Asia, ship finished goods to Europe, or depend on just-in-time inventory models should expect weeks — not days — of compounding delays.

Dubai, Doha, and Abu Dhabi — three of the world’s busiest air cargo hubs — are also facing disruptions, meaning the usual fallback of shifting urgent shipments to air freight is itself constrained. For affected companies, the window to secure alternative routing and lock in freight capacity is closing fast; those companies that wait for the March 5 insurance deadline to pass before acting will find themselves competing for scarce logistics options in a market where scarcity is already the defining feature.

3 scenarios and their divergent economic consequences

There are three most likely scenarios as this conflict unfolds, each with their own challenges and potential outcomes:

Scenario 1: Rapid regime collapse and quick normalization

Credible but unlikely in the near term, this scenario banks on the fact that Iran’s opposition is real — the protest movement of the last year or so has been the largest since 1979, and the regime’s legitimacy has been severely eroded by economic collapse and violent crackdowns. If internal collapse occurs, energy markets would normalize rapidly.

Brent crude would likely retreat to the $70 to $75 range within weeks as the primary disruption drivers — fear and insurance withdrawal, not physical blockade — dissipates. Tanker traffic would resume once insurers restore war-risk coverage.

Scenario 2: Prolonged conflict, Strait mostly reopened

This is the most likely outcome based on available analysis. Energy Aspects founder Amrita Sen said she expects oil prices to , noting it is unlikely Iran could maintain a complete closure. She assessed that the US and Israel possess the military capability to neutralize Iran’s ability to fully shut down the Strait but acknowledged that sporadic attacks on individual vessels are far harder to prevent.

This is the critical distinction: A full blockade is unsustainable against US naval superiority, but one-off tanker strikes create an insurance and risk environment that chills commercial traffic almost as effectively. In this scenario, oil prices remain very high before gradually declining as the U.S. Navy establishes escort operations and mine clearance, with an open question revolving around insurance companies’ willingness to insure floating barrels of flammable liquid sailing into an open warzone, even under escort. Asian refiners face weeks of constrained supply access.

Scenario 3: Sustained Strait closure for weeks or months

This is the catastrophic tail risk. Roughly 20% of global petroleum consumption and significant LNG volumes moves through the Strait daily, representing an estimated $500 billion in annual energy trade. Saudi Arabia’s East-West Pipeline and the UAE’s Fujairah pipeline offer bypass capacity, but these routes can absorb only a fraction of the 15 million barrels per day now stranded.

Capital Economics estimated that a sustained $100 crude price could add to global inflation. And UBS warned that if disruptions extend beyond three weeks, Gulf producers could exhaust storage capacity and be forced to shut in output, pushing brent crude into the $100 to $120 range if not substantially higher if a significant blockade is held for a long duration.

The economic modeling is unambiguous, however, showing that disruption beyond 30 days carries overwhelming recession risk for major importing economies.

What companies should be doing right now

Of course, the economic impact of this conflict will not arrive all at once. Supply chain disruptions propagate on a lag — the tankers anchored outside Hormuz today represent goods and energy that won’t arrive at their destinations in two to four weeks. Companies that wait until these shortages materialize before they develop contingency plans will find themselves competing for scarce alternatives alongside everyone else. The window to act is now, not when the pain becomes visible.

Audit your supply chain exposure immediately

Any inputs, components, or raw materials that originate from or move through the Persian Gulf are at risk — and that extends well beyond oil. For example, one-third of global fertilizer trade passes through the Strait of Hormuz, meaning agricultural and chemical supply chains face disruption as well.

Business leaders should identify their companies’ Tier 1 and Tier 2 suppliers that have Gulf exposure, assess existing inventory buffers, and begin conversations with alternative suppliers before demand for those alternatives spikes. And companies with operations dependent on Middle Eastern air hubs — such as Dubai, Doha, Abu Dhabi — should assume they’ll face weeks of disruption to business travel and cargo routing and therefore plan accordingly.

Prepare for a serious escalation in cyber threats

Iran and its allies — including Russia, which has condemned the strikes and has well-documented cyberwarfare capabilities — have historically used cyber operations as an asymmetric response to kinetic military action. Indeed, there are signs already emerging that such actions are already taking place.

US critical infrastructure, financial services, and professional services firms are all plausible targets. The steps to prevent this are straightforward but urgent: Companies need to ensure that multi-factor authentication is enforced across all systems, verify that endpoint detection and backup protocols are current, brief employees on heightened phishing and social engineering risks, and confirm that incident response plans are not just documented but actually ready to be exercised.

The cost of preparation is negligible; the cost of a ransomware attack or data breach during a period of global economic stress is not.

Peering through the fog of war

As the conflict’s economic aftershocks move from risk to reality, the companies that act decisively now by diversifying supply chains, securing logistics, and hardening defenses will not just weather the disruption, but emerge more resilient whatever the outcome.

You can find out more about here

Key highlights:

• • • Principles need a repeatable process —ĚýResponsible AI commitments become real only when companies systematize human rights due diligence to guide decisions from concept through deployment.

    • Policy and engineering teams should co-own safeguards — Ongoing collaboration between policy and technical teams can help translate ideals like fairness into concrete requirements, risk-based approaches, and other critical decisions.

    • Engage, anticipate, document, and improve continuously —ĚýInvolving impacted communities, running regular foresight exercises (such as scenario workshops), and building strong documentation and feedback loops make human rights accountability durable, instead of a one-time check-the-box exercise.

More and more companies are adopting responsible AI principles that promise fairness, transparency, and respect for human rights, but these commitments are difficult to put into practice when it comes to writing code and making product decisions.

, a human rights and responsible AI advisor at Article One Advisors, works with companies to help turn human rights commitments into concrete steps that are followed across the AI product lifecycle. He says that the key to bridging the gap between principles and practice is embedding human rights due diligence into the framework that guides product development from concept to deployment.

Operationalizing human rights

Human rights due diligence involves a structured process that begins with immersion in the process of building the product and identifying its potential use cases, whether it is an early concept, prototype, or an existing product. This is followed by an exercise to map the stakeholders who could be impacted by the product, along with the salient human rights risks associated with its use.

From there, the internal teams collectively create a human rights impact assessment, which examines any unintended consequences and potential misuse. They then test existing safeguards in design, development, and how and to whom the product is sold. “Typically, a new product will have many positive use cases,” explains Natour. “The purpose of a is to find the ways in which the product can be used or misused to cause harm.” In Natour’s experience, the outcome is rarely a simple go or no-go decision. Instead, the range of decisions often includes options such as go with safeguards or go but be prepared to pull back.

The use of human rights due diligence in the AI product lifecycle is relatively new (less than a decade old) and as Natour explains, there are five essential actions that can work together as a system:

1. Encourage collaboration between policy and engineering teams

Inside most companies, responsible AI is split between policy teams, which may own the principles, and the engineering teams, which own the systems that bring those principles to life. Working with companies, Natour brings these two functions together through a series of workshops to create structured, ongoing collaboration between human rights and responsible AI experts and the technical teams to better co-develop responsible AI requirements.

In the early stages of the collective teams’ work, the challenges of turning principles into practice emerge quickly. For example, the scale of applications and use cases for an AI product can make it difficult to zero in on those uses that . Not all products or use cases need to be treated equally, says Natour, and companies should identify those that could potentially cause the most harm. Indeed, these most-harmful uses may involve a “consequential decision” such as in the legal, employment, or criminal justice fields, he says, adding that those products should be selected for deeper due diligence.

2. Consider the principles at each stage of the development process

Broad principles and values, such as fairness and human rights, should be considered at each stage of the lifecycle. For the principle of fairness, for example, teams may assess which communities will use this product and who will be impacted by those use cases. Then, teams should consider whether these communities are represented on the design and development teams working on the product, and if not, they need to develop a plan for ensuring their input.

3. Engage with impacted communities and rightsholders

Natour advocates for companies to actively engage with impacted communities and stakeholders, including those who are potential users or who may be affected by the product’s use. This could be the company’s own employees, for example, especially if the company is developing productivity tools to use internally in their workplace. Special consideration should be given to vulnerable and marginalized groups whose human rights might be at greatest risk.

External experts, such as Natour and his colleagues, hold focus groups with such stakeholders as . The feedback from focus groups can then be used to influence model design, product development, as well as risk mitigation and remediation measures. “In the end, knowing how users and others are impacted by your products usually helps you make a better product,” he states.

4. Establish responsible foresight mechanisms

To prevent responsible AI from becoming a one-time check-the-box exercise, Natour says he uses responsible foresight workshops and other mechanisms as a “way to create space for developers to pause, identify, and consider potential risks, and collaborate on risk mitigations.”

The workshops use personas and hypothetical scenarios to help teams identify and prioritize risks, then design concrete mitigations with follow-on sessions to review progress. Another approach includes developing simple, structured question sets that push product teams to pause and think about harm. For example, Natour explains how one of his clients includes the question: What would a super villain do with this product? in order to help product teams identify and safeguard against potential misuse.

5. Create documentation and feedback loops for accountability

As expectations around assurance rise from regulators, customers, and civil society, strong documentation and meaningful, accessible transparency are essential, says Natour.ĚýClear, succinct, and accessible user-facing information about what a model does and does not do, about data privacy, and other key aspects can help users understand “what happens with their data, as well as the capabilities and the limitations of the tool they are using,” he adds.

Further, transparency should enable two-way communication, and companies should set up feedback loops to enable continuous improvement in the ways they seek to mitigate potential human rights risks.

The hardwired future

Effectively embedding human rights into the AI product lifecycle starts with a shared governance model between a company’s policy and engineering teams. Together they can collectively hardwire human rights into the way AI systems are imagined, built, and brought to market.

You can find more about human rights considerations around AI in our here

Key insights:

• • • Tech adoption is rising, but critical gaps remain — Adoption of technology has surged over the last year but several important trade functions are still not widely automated.

    • Satisfaction levels with technology remain low in some areasĚý— Trade leaders are generally satisfied with the gains they see from their use of technology, but lack of integration is hindering supply chain visibility efforts.

    • Organizations are increasing their technology investments — Technology budgets are expected to continue to grow this year.

The recently published 2026 Global Trade Report, from the Thomson Reuters Institute, discussed how the use of technology is rising across corporate trade departments, with trade professionals much more likely this year to report that their departments have deployed automated tools. In addition, many were even exploring the use of advanced technologies such as AI and blockchain.

In the report, the percentage of trade professionals that characterized their departments as being early adopters or behind the curve (meaning they’re still using manual systems) dropped significantly.

However, amid the rapidly growing adoption of technology, key challenges and gaps remain, the report showed.

Urgency to improve efficiency

Increasing efficiency in trade operations is a high priority, as workloads continue to increase. More than half (56%) of respondents said that workloads and overtime requirements have grown over the last year as a result of increased tariff activity and trade complexity. Respondents also cite more complex reporting and documentation requirements. And an even higher percentage said they expect those pressures to increase over the next year. As a result, nearly half (49%) of trade professionals surveyed report increased stress on their teams.

In addition, trade departments are taking on a more strategic role in their organizations, as detailed in the report, which noted that with the heightened trade and tariff volatility, trade professionals are more involved in executive decision-making and are expanding their scope of responsibilities, including having greater influence over procurement decisions. However, these added roles and responsibilities also mean that trade departments must take on additional workflows.

Fortunately, technology can be a critical force multiplier to help manage these changes. While about half of respondents said they expect increased budget allocations to hire additional staff over the next year, trade departments are increasingly looking to technology to help automate workflows and increase efficiency. In addition, automating routine tasks for compliance and reporting can free up staff time to focus on more complex tasks such as using advanced analytics and engaging in strategic planning.

It’s not surprising then, that while most respondents (52%) anticipate more budget for additional headcount this year, an even higher percentage (65%) said they expect more resources to be budgeted for technology solutions. This positions trade departments to reap the best of both worlds — more staff and greater use of technology to improve efficiency across the department.

Continuing technology gaps

Most trade departments, according to respondents, have now adopted trade and supply chain data analytics, automation for enterprise resource planning, supply chain management, and supply chain visibility. However, significant technology gaps remain, with relatively few respondents saying their departments have deployed tools and platforms to allow for global trade management (32%), managing tariff changes (7%), and managing classification changes (4%).

As a result, satisfaction with tech capabilities often remains modest at best. Fewer than one-in-five respondents report being very satisfied with the impact of technology on workflow efficiency for trade and supply chain management, keeping up with regulatory changes, or improving their ability to glean insights from trade data in order to drive business decisions.

One major contributing fact is that four-in-ten respondents said they are not yet satisfied with their organization’s level of technology integration. This lack of integration hinders the ability of the trading team to maximize their use of existing systems to track and analyze data across various functions and geographies. This is increasingly important as businesses seek to improve visibility across their entire supply chain.

Thus, it’s not surprising that system integration is the top technology investment priority for the next year. An overwhelming 83% of respondents said this is a high- or medium-priority to help support informed decision-making.

Only about a quarter of trade departments have visibility across regionsĚýĚý

— Thomson Reuters Institute, 2026 Global Trade Report

Modernizing trade technology

With 40% of organizations exploring emerging technologies such as AI and blockchain, and satisfaction levels remaining modest across currently deployed capabilities, a significant technology transformation opportunity exists. However, successful technology deployment requires strategic focus rather than adoption of the latest technologies simply for their own sake.

Trade leaders should focus their technology investments in several key areas:

Supply chain visibility platforms — Real-time tracking enables proactive rather than reactive management. Automated exception alerting, comprehensive visibility across multi-tier supply chains, and integration with other systems can create a solid foundation for data-driven decision-making.

Data analytics and predictive capabilities — The jump from 8% to 58% in the last year in respondents saying their organizations adopted and used trade and supply chain data analytics indicates widespread recognition of data’s strategic value. Organizations should invest in platforms that not only collect data but generate actionable insights through advanced analytics and machine learning. Predictive capabilities can anticipate disruptions before they occur, enabling preventive action rather than damage control.

AI-assisted product classification — Product classification is time-consuming, error-prone when done manually, and yet, critical for compliance. AI systems have the potential to dramatically improve both efficiency and accuracy while freeing trade professionals to focus on more strategic work rather than routine tasks.

More technology investments ahead

The recent surge in technology adoption is positioning corporate trade departments to increase efficiency and expand their capabilities. Despite numerous gaps depending on specific technology use, about half of trade leaders indicate they are already at least somewhat satisfied with the overall gains they are seeing because of their use of technology.

Despite the recent gains, however, significant gaps in technology adoption still remain. Fortunately, organizations are recognizing the importance and urgency of increasing their investments in technology, coupled with adding to trade department headcount.

While workloads and pressures continue to grow, the elevation of the trade department as a strategic partner to the business — along with growing involvement in decision-making at the executive level and increasing recognition of the trade function’s value to the business — suggests that organizations are likely to continue accelerating their investments in technology as an integral part of their growing commitment to supporting their in-house trade professionals.

You can download a full copy of the Thomson Reuters Institute’s 2026 Global Trade Report here

Key insights:

• • • Effective human rights due diligence — Human rights can be hardwired into procurement by setting standards that include clear documentation thresholds, a code of conduct that bans forced labor and trafficking, a supplier assessment questionnaire, a locally informed worker safeguards addendum, and a risk-based vendor-grading rubric.

    • Procurement should feature human rights enforceable obligations — Further, human rights can be hardwired into commitments, such as request for proposals, vendor evaluation, and contract clauses.

    • Engaging unions and community groups early can lead to strong execution — Effective implementation relies on early stakeholder structures (unions, community groups, etc.), robust worker grievance mechanisms, and independent interviewers, complemented by AI-driven monitoring and continuous, rapid risk response.

Mega sporting events can have a significant impact on local economies, but they also pose substantial human rights risks, including labor exploitation, forced displacement, and sex trafficking. With the Super Bowl and Winter Olympics coming up next month, and the World Cup in summer, it’s crucial that organizations, communities, and governments prepare now to mitigate any human rights problems with these events.

As an advisor to host cities on human rights with more than a decade of experience now as the chief executive of , I have seen firsthand how the right commitments and responsible contracting practices can help mitigate these risks. By prioritizing human rights and adopting robust contracting practices, the cities that host these mega sporting events can ensure a positive legacy that extends beyond the event itself.

This was a recent topic at an event hosted by ¶¶ŇőłÉÄę and the International Labor Organization as part of its in which representatives from host cities, civil society organizations, and governments came together to discuss best practices to turn commitments around human rights into action during the FIFA World Cup games later this year. As a participant in this event, Henekom shared our approach in translating high‑level human rights commitments into context‑specific safeguards in order to create the social architecture that aligns organizational practice with community needs.

January is National Human Trafficking Prevention Month in the United States.ĚýCheck out our Human Rights Crimes resource center to learn how toĚýstop and prevent human trafficking

Centering human rights by using rigorous contracting standards starts with local jurisdictions working with multidisciplinary stakeholders to embed strong and comprehensive policies and protocols at all stages of event planning. In my experience, an all-inclusive approach typically shares five elements:

1. 1. 1. Clear thresholds in human rights documentation that are designed for speed of business.
      2. Code of conduct with essential ingredients, which include explicit bans on forced labor, trafficking, and other exploitation.
      3. Supplier assessment questionnaire (SAQ) that flags geographic and sector risk, such as temporary labor of food service employees.
      4. Worker safeguards addendum (WSA) that is built from local labor stakeholders who have lived concerns that help to translate the United Nations Guiding Principles on Business and Human Rights (UNGPs) into local realities.
      5. Risk-based grading rubric for vendors that weights SAQ and WSA responses and turns them into a contracting risk rating.

In my experience, implementing these policies and tools deeply within the organization means embedding requirements at three critical junctures: i) request for proposals (RFPs); ii) vendor evaluation as part of the selection process; and iii) contract clauses. First, when subject-matter experts draft RFPs, the workflow should force-check human rights and sustainability language (or auto-insert standard clauses). Second, during vendor evaluation, the human rights team grades each SAQ/WSA and assigns a risk-based score. Third, contracts must lock in enforceability with particular emphasis on audit rights, corrective action plans, termination for cause, access to remedy, and accountability mechanisms, such as payment withholding.

Vendor contract agreements between the host cities and primary contractors are the best vehicle to incorporate enforcement of these rights. Likewise, provisions for these rights should also be incorporated into contracts between primary contractors and any subcontractors.

Centering human rights by using rigorous contracting standards starts with local jurisdictions working with multidisciplinary stakeholders to embed strong and comprehensive policies and protocols at all stages of event planning.

Temporary labor at mega sporting events — which include individuals working in private security, souvenir sales, construction, janitorial, and food service — adds complexity but does not have to stifle efforts to honor decent work and other human rights. With a solid sourcing policy, vendors get practical tools and technical assistance to implement requirements quickly.

Common examples include building a checks-and-balances loop with worker centers to receive complaints, and data reporting to track hours, wages, recruitment fees, and grievance outcomes. The risk-based grading rubric for vendors ideally determines the monitoring intensity, frequency of site visits, and reporting cadence.

Effective approaches for implementation

Beyond contract language, the following three actions and tools to help instill accountability in human rights commitments are recommended:

Working with stakeholders from day one — To effectively safeguard human rights, it’s crucial to establish standing stakeholder structures, such as advisory councils and labor roundtables, in order to co-create standards and monitor progress with unions and community groups. By doing so, organizations can ensure workers’ voices are heard, issues are escalated, and commitments are translated into tangible results through collective action and remediation advice.

Centering workers and ensuring access to grievance mechanisms — Establishing on-site, back-of-house centers for workers with confidential and multilingual intake processes, along with clear resolution pathways, is an effective way to drive accountability and reinforce human rights commitments. Using trained, independent worker interviewers with unannounced access to ensure compliance across venues, shifts, and subcontractor tiers further adds to this accountability.

Together, these approaches provide a means for workers to report concerns, verify compliance with policy requirements, and ensure that human rights are respected throughout the supply chain.

Using AI to fortify accountability — AI offers powerful tools for detecting and preventing labor exploitation in supply chains through automated monitoring and pattern recognition. Likewise, natural language processing may be able to analyze hotline transcripts and grievance logs to identify trends.

Even with the best policies and accountability tools, however, risks still persist because operating and business conditions are dynamic. New suppliers are added late, or a hot day turns into potentially harmful working conditions. This makes human rights due diligence a continuous requirement with ongoing risk monitoring, fast incident response, and a humble posture to make it right quickly, transparently, and fairly.

If host cities want a legacy that lasts beyond the mega sporting events’ closing ceremony, it is critical to ensure that the people who made the spectacle possible were seen, protected, paid, and heard. Doing the right thing is strategy — contracts and worker-centered approaches are how it shows up on the ground.

You can find out more about how organizations are trying to fight against human rights crimes here

Key takeaways:

• • • Clean energy takes center stage in corporate AI initiatives — Access to cheap, low‑carbon power will become a core driver of AI competitiveness, especially in the US, where electricity costs are on the rise.

• • • Corporate buyers of AI will exert new leverage over suppliers — Corporate buyers will increasingly use their purchasing power to push data center operators to align AI build‑outs with local climate, water, and community expectations — not just to supply more metrics.

    • AI’s human labor layer enters mainstream due diligence — AI labor supply chains will be brought into the mainstream supply chain and require human rights due diligence.

As we enter 2026, there are three main themes that many corporations will need to manage around issues of renewable energy, AI supplier behavior, and labor.

Theme 1: Renewables move to the center of corporate AI strategies

In 2026, AI competitiveness and energy policy will be tightly fused. With AI workloads driving up electricity demand amid datacenter buildouts, particularly in the United States, access to renewable energy sources in the form of abundant, cheap, low‑carbon power becomes a decisive factor in AI pricing and availability.ĚýCountries and companies that lock in this advantage early will shape AI deployment patterns for the rest of the decade.

“The economics of renewable energy are what is causing it to accelerate, even in the US,” says , an expert in sustainability and business. “Despite the political winds, the fact is that wind and solar are growing faster… because it is cheaper, better energy.”

In addition, countries and firms with large, subsidized renewable energy capabilities and flexible grids, such as China’s massive solar, wind, and hydro infrastructure, will have a low-cost advantage. (However, countries’ push for AI may counteract this by prompting governments to prioritize domestic AI stacks over purely cost‑optimized ones.) Yet, combining this asset , such as Kimi K2 and DeepSeek, it is not outside the realm of possibility that the country could emerge in the top spot in AI development and innovation.

Corporate pressure to increase AI adoption for efficiency combined with stakeholder expectations of investing in a low-carbon future will make renewables the center of corporate AI strategies. Increasingly, companies will be asked where their computers run, what energy mix powers them, how cost effective that energy mix is, and whether companies are effectively endorsing environmentally and socially harmful projects in host communities.

Theme 2: Local backlash forces suppliers and companies to confront AI’s impact

Over the last few years, big names among AI infrastructure providers have tried to take advantage of the AI revolution, in AI-related data centers, cloud systems, and other infrastructure with no end in sight over the next few years.

Despite the demand, local communities in which large data center construction projects are planned are pushing back. According to , $64 billion of data center projects in the US have been blocked or delayed amid local opposition since 2025. This opposition comes in part because of concerns regarding , strains on local water and natural resources, and the reduction of working farmland from data center rezoning attempts in rural communities.

In fact, AI data centers are pushing up electricity demand and fueling higher electricity prices for many US households. And, as retail electricity price increases over the next couple of years are likely to continue, it will be in part because of consuming more electricity.

As a result, the demand from stakeholders — in particular, those from local communities including local and state politicians — for increased transparency on the environment and social impacts of corporate AI services is likely to surge. In turn, corporate buyers of AI services will put pressure on the big AI service suppliers to provide more precision in the locations of such data systems as well as disclose more associated sustainability data, such as energy sources, grid impacts, and their level of community engagement where large AI infrastructure is based.

To deal with these competing priorities, boards of companies using AI services will need to reconcile AI cost‑cutting with their transition commitments by ensuring that cost advantages are not built on externalizing environmental and social harms.

Not surprisingly, in 2026, more boards will be drawn into explicit debates about whether AI‑driven cost savings justify exposure to higher community, political, and regulatory risk. This turns questions about data center locations and power contracts into mainstream agenda items.

Theme 3: The human layer of AI emerges as a centerpiece of the supply chain

The idea that AI is automating everything will sit uncomfortably alongside a growing recognition that large‑scale AI depends on a largely invisible workforce. Across the full AI life cycle of products — some of which rely on models that utilize labor in data collection, curation, annotation, labeling, evaluation, and content moderation — there are thousands of workers performing the tasks that make models safe, accurate, and usable.

As AI systems scale across sectors, demand for this human labor increases in volume and complexity, according to , a human rights expert at Article One Advisory. Indeed, much of it remains outsourced, precarious, or gig‑based (often in the Global South), with low pay, weak protections, and exposure to psychologically harmful content rampant. Civil society, unions, and regulators are beginning to connect AI innovation with labor rights and occupational health; and this reality makes the human layer of AI a frontline human rights issue rather than a technical detail.

The for AI‑related labor is likely to move from a niche concern to a mainstream pillar of corporate human rights due diligence. Companies will be under pressure to know what subcontractors and suppliers are doing to ensure human rights for individuals doing AI data enrichment and moderation work, under what conditions, and through which intermediaries.

Following the evolution of how conflict minerals or modern slavery have been integrated into supplier management, a shared view of AI labor supply chains by corporate procurement, legal, product management, and sustainability teams will materialize.

Forward into 2026

As AI becomes embedded in the infrastructure of daily life, companies will face mounting pressure to demonstrate that their AI strategies align with human rights and environmental commitments, not just efficiency gains. The convergence of these three themes signals that transparency in AI governance in 2026 will be inseparable from broader corporate governance and responsibility. And those organizations that treat these themes as compliance checkboxes rather than fundamental design principles will risk both reputational damage and operational disruption in an increasingly scrutinized landscape.

“Companies that fear the exaggerated risk of attracting the ire of activists are underestimating the greater risk of losing the goodwill of customers, investors, and employees that they need,” Friedman adds.

You can find out more about how companies are managing issues of sustainability here

Key highlights:

• • • Human rights risks are elevated for data enrichment workers — Data enrichment workers can face low and unstable pay, overtime pressure driven by buyer timelines, harmful content exposure with weak safeguards, limited grievance access, and uneven legal protections that hinder workers’ collective voice.

    • Human rights due diligence is essential for companies — Companies as buyers of these services must map subcontracting tiers, assess risk by employment model, document worker protections down to Tier-2 and Tier-3 suppliers, and audit and monitor their own rates, timelines, and payment terms to avoid reinforcing harm to workers.

    • Responsible contracting and remedy are a necessity — Contracts should embed shared responsibility, and include fair rates, predictable volumes, realistic deadlines, funded health & safety and mental‑health supports, effective grievance channels, and remediation.

Demand for data enrichment work has surged dramatically with the rapid development and expansion of AI technology. This work encompasses collecting, curating, annotating, and labeling data, as well as providing model training and evaluation — all of which are critical activities that improve how data functions in technological systems.

However, the workers performing these tasks currently operate under different employment models, according to from Article One Advisors, a corporate human rights advisory firm. Some workers are in-house employees at major AI developers, others work for business process outsourcing (BPO) companies, and many are independent contractors on gig platforms on which they bid for tasks and get paid per piece.

Human rights issues in data enrichment work

Data enrichment workers sit at the sharp end of the AI economy, yet many struggle to earn a stable, decent income. In particular, pay for gig workers often falls short of a living wage because tasks are sporadic, payments can be delayed, and compensation is frequently piece‑rate. Because work flows through , fees and margins get skimmed at each layer and shrink take‑home pay — another area of exploitation for today’s digital labor workforce.

In addition, another human rights issue at work is their right to rest, leisure, and family life and, in some places, even breaching guidance from the International Labour Organization (ILO) or local labor laws. Buyer purchasing practices with aggressive deadlines are a significant upstream driver of this overtime pressure.

National labor protections vary widely, and platform workers in particular often fall through regulatory gaps.

For many, the work itself carries health risks. Labeling and moderation can require repeated exposure to violent or graphic content, with well‑documented mental‑health impacts. Yet safeguards are uneven. Indeed, workers may lack protected breaks, task rotation, mental‑health support, adequate insurance, or the option to switch assignments. Even when content is not graphic, strain shows up as ergonomic problems, stress, and disrupted sleep.

When harm occurs, remedy can be hard to access. Platform-based work setups often provide no clear, trusted point of contact, and reports of retaliation deter complaints. Effective operational grievance mechanisms can be missing, and this leaves workers without credible paths to redress.

Finally, national labor protections vary widely, and platform workers in particular often fall through regulatory gaps. Because work is individualized and online, forming unions or works councils is harder. This weakens workers’ collective voice just where and when it is most needed to identify risks, negotiate improvements, and secure remedies.

Due diligence for companies buying data enrichment services is essential

When companies procure data enrichment services, they must recognize that respecting human rights extends throughout the entire value chain and not just with themselves and their direct suppliers. Companies creating trusted partnerships with their suppliers helps to identify issues before they become harmful and create mutual accountability for the humans behind the algorithms.

Article One Advisors’ Lloyd explains that the mandatory baseline starts with human rights due diligence, and can be found in areas such as:

• • • Risk identification and assessment — The first step for companies is to identify and assess risksĚýby understanding their suppliers’ model. This means knowing which groups of workers are full-time employees, contracted workers, or platform-based gig workers. Each model carries different risk profiles.
    • Subcontractor ecosystem mapping — Tracing the subcontracting chainĚýto see how many layers exist between the supplier and the workers is essential. Fees and pressures compound at each tier of the value chain, says Lloyd.
    • Documentation of worker protections in Tier 2 and Tier 3 suppliers — Assessing and promoting worker protections for every layer of the value chain — which includes making sure the wage structures are clearly defined and equitable, health and safety measures are adequate, and protections for exposure to harmful content and effective grievance mechanisms exist — are baseline elements of human rights due diligence.
    • Examination of company’s own practices — Finally, it is necessary for companies to ensure that their own procurement standards and contracts are not reinforcing human rights harms. This includes companies confirming that their contract terms, timelines, and payment schedules are not inadvertently forcing suppliers to cut corners.

Responsible contracting and remedy mechanisms

Companies as buyers of data enrichment services also must instill shared responsibility in owning worker outcomes among themselves, BPOs, platforms, and model developers. Comprehensive, clear human-rights standards, living-income benchmarks, and shared responsibility are essential elements of good purchasing practices. More specifically, these require fair rates for work, predictable volume expectations, and realistic timelines to make sure suppliers do not push excessive hours. In addition, budgets should include cost-sharing for audits, key risk management measures (such as mental health support), and occupational health and safety controls.

Smart remediation turns harmful situations into improved conditions by providing back-pay for underpayment, medical and psychosocial care after exposure to harmful content, contract adjustments to remove perverse incentives, and time-bound corrective action plans co-designed with worker input. As a last resort when buyer and supplier need to part ways, a responsible exit is planned with notice, transition support, and no sudden contract termination that strands workers.

Similarly, grievance mechanisms for platform workers — who are often dispersed across geographics, classified as independent contractors, and lack line managers or union channels — need to be contractually documented. Effective grievance redressal needs to include confidential mechanisms and remediation processes, in-platform dispute tools, independent individuals to investigate complaints, multilingual facilitation, and joint buyer-supplier escalation paths to bridge gaps in labor-law protection and deliver credible remedies at scale, Lloyd notes.

Promoting quality through worker well-being

Protecting data enrichment workers is not only an ethical imperative but also essential for AI quality itself. When workers face excessive hours, inadequate pay, or harmful content exposure without proper support, the resulting stress and burnout directly impact data quality outcomes. Companies must recognize that responsibility for worker well-being and quality data outcomes extend throughout the entire value chain and does not solely rest with BPOs providers alone.

You can find more about the challenges companies and their workers face from forced labor in their supply chain here