Managing Sustainability‐Related Human Rights Risks: The Role of Multilevel Governance and Institutional Accountability

ABSTRACT Sustainability‐related human rights risks, including forced labour, labour exploitation and other forms of human rights abuse, remain persistent challenges across countries, particularly where corporate accountability and national institutional frameworks are weak. Drawing on institutional theory, this study examines whether informal institutions (i.e., corporate ethical behaviour and board governance efficacy) and formal institutions (i.e., national governance quality) are associated with sustainability‐related human rights exploitation risks. Using a longitudinal cross‐national dataset covering 167 countries across the 2014, 2016 and 2018 waves, the study analyses two dimensions of human rights risk: exploitation prevalence and structural vulnerability to exploitation. Fixed‐effects regressions and two‐stage least squares robustness specifications show that corporate ethical behaviour, board governance efficacy and national governance quality are negatively and significantly associated with sustainability‐related human rights risks. Additional analyses indicate that the associations between corporate ethical behaviour, board governance efficacy and lower human rights risks are more pronounced in countries with stronger national governance quality. In contexts with weak national governance, voluntary corporate actions may be insufficient to support substantive human rights–related outcomes. The findings extend institutional theory by showing that sustainability‐related human rights risks are shaped not by isolated governance mechanisms alone but by the broader alignment between country‐level corporate governance environments and national institutional systems. The study contributes to debates on sustainability governance, human rights accountability and ESG regulation and offers implications for policymakers, regulators and organisations seeking to strengthen institutional accountability, address human rights exploitation risks and support progress towards SDGs 8, 12 and 16.