EU Forced Labour Regulation: What You Need to Know & How to Prepare
On 12 December 2024, the EU announced the Forced Labour Regulation (FLR), which bans the sale of products made with forced labour within the EU market. Effective in 2027, this regulation targets businesses that sell or import products into the EU and further pushes for transparency and ethical supply chains. Here’s a concise summary of the regulation and how you can prepare.
Here are 6 things every business dealing with the EU needs to know:
The regulation, if properly enforced, will prompt companies to eradicate forced labor from their operations and supply chains. It will complement the adoption, earlier in 2024, of the EU Corporate Sustainability Due Diligence Directive which requires big companies to set up meaningful due diligence processes throughout their supply chain to identify, prevent, mitigate, and remedy environmental damages and human rights abuses according to a risk-based approach.
1. Ban on Products Made with Forced Labour
The regulation prohibits selling or exporting any product made using forced labour in or from the EU market. It applies to all products and components, including those sold online to EU consumers, covering every industry and geographic origin.
2. Clear Definition of Forced Labour
Aligned with the International Labour Organization’s definition, forced labour is any work or service obtained through threat or coercion, where the individual has not volunteered.
3. Covers the Entire Product Life Cycle
The ban extends to all stages of a product’s life cycle—production, manufacturing, harvesting, or extraction—if forced labour is involved at any stage.
4. No Additional Due Diligence, But Guidance Coming
While the regulation doesn’t impose new due diligence requirements, the European Commission will issue guidelines within 18 months to assist companies in addressing forced labour risks across complex supply chains.
5. Risk-Based Enforcement
Investigations will be prioritized based on factors like the scale of forced labour, product volume, and supply chain complexity, with authorities focusing on both EU and non-EU violations.
6. Penalties for Non-Compliance
Companies found in violation could face fines or penalties, especially if they obstruct investigations. Penalties must be effective and proportionate to the violation’s severity.
How to Prepare for the new EU Forced Labour Regulation:
With several years to prepare, you can effectively mitigate these risks. In summary, it’s essential to implement best practices through manageable steps, while recognising the profound social impact and reputational benefits of such efforts.
Some steps you may want to think about in addition to the Modern Slavery Act 2018 are:
1. Enhancing Supply Chain Transparency Beyond Tier 1
2. Incorporating Survivor Voices in Assessments (ask us how!)
3. Establishing Robust Remediation and Grievance Mechanisms
Our Ethical Business Advisory team has many years of experience assisting corporations in these steps and providing survivor-informed guidance to ensure your policies and procedures have a credible impact.