Forced labour remains a critical issue, affecting over 17 million people in the private sector globally, generating an estimated $64 billion in profits annually at the expense of worker human rights. To combat this, on November 19, 2024, the European Union officially adopted a regulation banning products made with forced labour from its Single Market. The EU Forced Labour Ban seeks to address forced labour globally by targeting products and supply chains associated with exploitative practices.
Key provisions of the regulation
Scope: The ban applies to all products—whether produced within the EU or imported—that have been wholly or partially made using forced labour. It also includes products intended for export from the EU.
Enforcement mechanisms: National authorities will lead investigations into suspected violations for goods produced locally, while the European Commission will oversee cases involving international supply chains. Measures include bans, withdrawals from the market and mandated disposal of offending products. Decisions made by one EU state will be enforceable across all member states.
Support tools: The EU will establish a centralized database to flag high-risk regions, industries and products. Guidelines will be issued within 18 months to help businesses identify forced labour risks and implement effective due diligence practices.
Compliance and accountability: Companies will not face additional due diligence obligations but must comply with existing Corporate Sustainability Due Diligence Directive (CSDDD) requirements, ensuring robust monitoring and response frameworks in their supply chains.
Timeline
The regulation is set to come into effect in late 2027 or early 2028, providing businesses with three years to adapt their operations and align supply chains with the new rules.
Why this matters
Global impact: The EU’s move adds significant pressure to companies to eradicate forced labour from their supply chains across the globe.
Complementary legislation: This regulation builds on the CSDDD, which mandates companies to proactively address human rights abuses and environmental harm.
Steps for supply chain leaders
The EU Forced Labour Regulation underscores the growing emphasis on ethical supply chains and corporate accountability. Businesses operating in or with the EU should act decisively to align with these evolving standards to avoid disruptions and contribute to global efforts against forced labour. Key steps companies can take to understand forced labour risk and address issues include:
Map supply chains: Identify areas of potential risk, especially involving suppliers in regions flagged for forced labour practices, as well as upstream suppliers beyond Tier 1.
Strengthen due diligence systems: Enhance software and company processes to improve supply chain transparency, meet EU expectations and prepare for enforcement.
Engage stakeholders: Collaborate with suppliers, industry groups and legal experts to ensure compliance and share best practices.
Stay updated: Monitor forthcoming EU guidelines and adapt strategies accordingly.
Sphera’s Supply Chain Transparency Software suite provides all the tools companies need to identify potential risk, map upstream supply chain, monitor in real time and assess suppliers on human rights and forced labour.
