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In response to the UN Guiding Principles on Business and Human Rights from 2011, several governments are enacting laws against exploitation in global supply chains. Such a legislative proposal is problematic in several respects. The authors aim to discuss these problems from an ethical perspective to provide a theoretical basis for law-setting and management decisions.

The paper studies the question based on an ethical framework with a libertarian focus.

From the perspective of a property rights-based ethics such a proposal prohibits voluntary exchanges and, thereby, a fundamental human right. From a utilitarian perspective it diminishes the utility of the parties of a potential exchange, because they cannot engage an exchange that they want to make. Moreover, it does not only shift an original state task to companies, but also tries to enforce specific values which are not shared all over the world, in third countries. In addition, it creates considerable restrictions on foreign procurement markets for domestic companies, which counteract the actual objective of the law.

The research provides managers with a moral compass regarding their supply chain decisions based on property rights ethics and utilitarian considerations. Based on that, they can weigh the arguments and make an informed decision. The paper is limited to these approaches that are often neglected in the public debate.

The authors’ comprehensive discussion from the perspective of libertarian ethics can be helpful for managers in their decision-making.

Supply chain acts have important social implications for people in developing countries as well as companies and consumers in Western countries. This study offers a comprehensive discussion from the perspective of libertarian ethics and can be helpful for entrepreneurs and managers in their decision-making.

The paper intends to encourage researchers from different disciplines to discuss the ethics of supply chain acts and to reflect governmental plans to transform the UN Guiding Principles in national law. It provides managers with a moral compass regarding their supply chain decisions based on property rights ethics and utilitarian considerations. Based on that, they can weigh the arguments and make an informed decision.