The EU forced labour regulation: Will it make a difference?

Forced labour remains one of the most severe and persistent human rights issues of our time. While most countries have made significant progress in addressing slavery and forced labour practices, no country is entirely free from incidents. According to Walk Free [1], an estimated 50 million people were living in modern slavery on any given day in 2021. Given developments since then, it is unlikely that this number has declined significantly.

The European Union Forced Labour Regulation (EU FLR) makes it abundantly clear that products made with forced labour are not welcome on the EU market. Article 3 states that:

While this is an important step in the fight against forced labour, the principle itself is hardly new to companies operating within the EU market. Human rights standards, modern slavery regulations, and human rights due diligence expectations have been in place for years. In our work with companies across a range of sectors, the risk of forced labour is widely recognised as a salient or material issue within supply chains. So, what changes does the EU FLR actually bring?

Obligation of result

Unlike the Corporate Sustainability Due Diligence Directive (CSDDD), the EU FLR imposes an obligation of result rather than requiring businesses to follow a prescribed due diligence process.

This means that whenever the lead competent authority determines that products have been made in violation of Article 3, it must, without delay, adopt a decision to:

1. Prohibit the products from being placed on or made available to the EU market, or exported from it.
2. Order the economic operators subject to the investigation to withdraw products already on the market and remove related online content or listings.
3. Order those operators to dispose of non-compliant products or, where only certain replaceable parts of a product violate Article 3, dispose of those parts only.

In other words, if a violation of the regulation is identified, market access may be restricted, resulting in direct financial and operational consequences for the company involved. But how will authorities determine that such a violation has occurred?

Burden of proof

As stated in the regulation, and confirmed by the European Commission's recent implementation guidelines, the burden of proof for establishing a violation of the forced labour ban lies with the lead competent authority of a Member State or, in the case of potential violations outside the EU, with the Commission itself.

To do so, authorities must provide credible evidence that:

(i) forced labour was used to make the products under investigation; and

(ii) the economic operators under investigation made those products available on the EU market or exported them from the EU [2].

Determining whether a specific product, or component of a product, has been made available on the EU market can already be challenging. Providing credible evidence that forced labour was used in the production of those specific products is even more difficult.

Supply chain challenges

Identifying forced labour within supply chains is challenging due to its hidden and often illegal nature [3]. Linking the issue to specific products is even harder. For decades, research institutions, non-governmental organisations (NGOs), and human rights defenders have sought to establish these links, often with limited success. Companies face the same difficulties.

Through our work mapping and assessing upstream supply chains, we have consistently found that the greatest risks, including those relating to forced labour, are often located in the lower tiers of the supply chain. Whether in the harvesting, extraction or processing of raw materials, obtaining the level of transparency needed to adequately address these challenges remains a major obstacle. Recent geopolitical developments, particularly those relating to critical minerals, have only added to this complexity. However, this challenge is not limited to any single sector.

For example, according to a 2023 benchmarking report by Know The Chain [4], more than three quarters of benchmarked companies in the apparel and footwear sector source from at least one country considered to be at high risk of forced labour. Yet only 8% disclosed details of forced labour risks identified across different supply chain tiers.

No company placing products on the EU market would openly accept the use of forced labour in the production of its goods. Most multinational companies already have some form of zero-tolerance policy relating to forced labour. That said, the level of effort invested in ensuring those commitments are upheld throughout the supply chain varies considerably.

Even among companies considered leaders within their sectors, complete supply chain visibility remains elusive. How, then, will authorities assess the adequacy of companies' efforts?

Investigative process

The investigative and enforcement process under the EU FLR is clearly set out in the regulation. Following an initial assessment of submissions or other relevant sources indicating a potential violation, authorities will conduct a preliminary phase to validate the available information. Based on this assessment, they will determine whether there is a substantiated concern that justifies a formal investigation.

There is little doubt that a formal investigation could have a significant impact on business operations. Companies under investigation may be required to share information about their products, purchasing practices, supplier networks, and risk management processes. In addition, they may face reputational risks as other stakeholders are likely to be consulted during the investigation.

From a company's perspective, the preliminary phase is therefore a crucial opportunity to provide authorities with evidence of the measures taken to identify, prevent, mitigate, end or remediate risks of forced labour within its operations and supply chains [5].

This raises an important question: how can companies best prepare?

Back to due diligence

Although the regulation does not mandate a specific due diligence process, it clearly recognises due diligence as an important tool for addressing forced labour risks. More importantly, authorities will take companies' due diligence efforts into account during the preliminary phase of an investigation.

If, based on the information provided by the company, authorities determine that there is no substantiated concern, or that the circumstances giving rise to the concern have been addressed, they will not proceed with a formal investigation.

Having a robust human rights due diligence process in place is therefore critical. It enables companies to provide the information authorities need to make this assessment. Guidance on due diligence is provided in the Commission's recently published implementation guidelines.

Although due diligence expectations may be more detailed under other EU regulations, within the framework of the EU FLR the commercial consequences of getting it wrong are arguably more immediate and direct.

So, does it make a difference?

Yes. The EU Forced Labour Regulation marks a significant shift from policy expectations to market enforcement, increasing the business risks associated with forced labour in global supply chains.

Although it will be a significant challenge for the Commission and competent authorities to provide credible evidence that forced labour was used in the production of a specific product, the regulation reinforces the need for companies to implement robust human rights due diligence processes.

By introducing the possibility of product bans, withdrawals and restrictions on market access, the EU FLR creates direct commercial consequences for companies that fail to identify and address forced labour risks in their value chains.

When read alongside other EU legislation, including the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive, the EU Battery Regulation and the EU Deforestation Regulation, the direction of travel becomes clear. Companies are increasingly expected to understand their supply chains, identify human rights risks and demonstrate that effective action has been taken.

Implementing a robust human rights and environmental due diligence process is therefore no longer simply a sustainability objective. It is becoming a business necessity, supporting not only compliance but also business continuity, supply chain resilience and long-term market access.

The EU Forced Labour Regulation entered into force on 13 December 2024, and its requirements will apply to all businesses from 14 December 2027.