Breaking the Chain
How to Prepare for the EU's Forced Labour Regulation
Insights
The European Union’s Forced Labour Regulation (FLR), adopted on 19 November 2024, bans the sale, import, and export of goods produced through forced labour across all 27 EU Member States. Goods found to have forced labour in their supply chains may be withdrawn, destroyed, or barred from the EU market.
The regulation applies to all companies, regardless of size, industry, or location, and covers both physical and online sales targeting EU consumers.
Regulators will expect that companies have strong due diligence processes as part of their overall management systems to identify, mitigate, and remediate forced labour risks. Before launching a full investigation, regulators will request information on the business’s due diligence processes. Demonstrating effective due diligence can lead regulators to decide not to initiate a full investigation into potential violations of the forced labour prohibition.
The EU’s Forced Labour regulation -what do businesses need to know?
The FLR officially applies from 14 December 2027. From this date, any product linked to forced labour at any stage of production – from raw material extraction to final manufacturing – will be barred from the EU market.
To understand the impact of the FLR, it is important to place it in the wider context of what forced labour entails. The International Labour Organisation (ILO) defines forced labour as “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.”
Forced labour is a form of modern slavery which, while not having a universally agreed-upon definition, includes conditions of exploitation that a person cannot leave. In the context of labour, these terms are often used interchangeably. The scale of forced labour and modern slavery is significant. The Walk Free Foundation’s Global Slavery Index estimates that 50 million people were living in modern slavery in 2021, with 28 million in forced labour. Women, children, migrant workers, and minority groups are disproportionately affected.
Despite its prevalence, forced labour is not always easy to detect. Coercion can be subtle, and workers may fear reprisals or may not recognise that their conditions are unlawful. At the business level, opaque supply chains and cost-cutting efforts can obscure risks, particularly in sectors where informality is common or there is weak oversight. These risks can be further exacerbated by states’ inadequate enforcement of laws.
The ILO lists 11 indicators of forced labour – such as restriction of movement, isolation, and withholding of wages – which can help identify victims and instances of forced labour. These indicators may manifest in ways not immediately obvious to businesses. For example:
- Subcontractors – supplier subcontracting chains can be complex and opaque, making it difficult for businesses to know the true conditions under which workers are employed, with cost-cutting pressures sometimes increasing the risk of forced labour.
- Hidden roles – workers in informal or unregulated positions, such as waste pickers or seasonal labourers, are often overlooked by oversight mechanisms and therefore highly vulnerable.
- Undervalued roles – women in informal or gendered roles face disproportionate risks of exploitation that conventional monitoring systems frequently miss.
Forced labour can also be systematically enabled or imposed by state authorities, under the guise of poverty alleviation, security measures, or labour transfer programmes.
The compliance issue – why businesses must act now on forced labour
Under the EU FLR, each EU Member State must designate competent authorities – i.e. a state regulator – to oversee compliance. If forced labour is confirmed, authorities may order products to be withdrawn, destroyed, or recycled. Goods may only be reintroduced once the forced labour link has been fully eliminated.
It is important to note that the EU FLR does not impose new due diligence obligations beyond existing EU and national laws. However, before launching an investigation into a potential incidence of forced labour, authorities will request information on the economic operator’s due diligence efforts, which is in line with the UN Guiding Principles on Business & Human Rights (UNGPs).
If a company can show at an early stage that it has strong due diligence processes in place, regulators may decide there is no need to open a full investigation at that point – though authorities can return to the case later if additional concerns arise, highlighting the importance of ongoing risk management. Evidence of proactive mitigation may protect companies from investigation. This means companies should embed forced labour risk management into ESG and human rights frameworks, building strong and effective systems that:
- Identify and assess forced labour risks across supply chains.
- Implement policies and procedures to prevent risk of forced labour.
- Establish grievance and remediation mechanisms aligned with UNGPs.
- Continuously monitor and improve practices to ensure compliance and protect workers.
Global regulatory trends in forced labour
With this step, the EU joins other major economies that have also taken measures to address forced labour in supply chains. The United States implemented the Uyghur Forced Labor Prevention Act in 2022, Mexico’s ban on imports produced wholly or partly through forced labour came into effect in 2023, and Canada’s Forced and Child Labour in Supply Chains Act followed in 2024.
Taken together, these developments highlight a clear global trend: companies must ensure their supply chains are free from forced labour or risk losing access to key markets.
Need help understanding your risk?
We have a team of human rights leaders passionate about supporting organisations on addressing forced labour risks in their supply chains.
Loading…
