Prepare your business for the EU Forced Labor Regulation - the new EU legislation against forced labor. Here we go through what you can do, step by step, from supply chain mapping and strengthened due diligence processes, to implementation and follow-up. A battery of measures to help your company comply with the new EU legislation.
What is the EU Forced Labor Regulation (FLR)?
The EU Forced Labor Regulation (FLR) is a new EU regulation to tackle forced labor and human rights abuses in global supply chains. Specifically, it aims to ban products that can be linked to such activities.
When will the FLR Apply and Who is Covered by the Law?
The EU Forced Labour Regulation is planned to apply across the EU from the end of 2027, covering all companies, regardless of the type of sale. It will not matter whether the sale takes place physically, online or in any other form.
If you want to read more about the implications of the EU Forced Labor Regulation, we recommend our other article: What is the EU Forced Labor Regulation?
Why do Businesses Need to Prepare for the FLR?
If all goes according to plan, the EU Forced Labor Regulation will enter into force in a relatively short time. In other words, there are good reasons to start acting now to ensure compliance.
This is particularly urgent given that the aim is to target global supply chains. If your company is in any way part of these, there is every reason to act now to identify and minimize any risk.
Consequences of not Complying with the FLR
As the EU Forced Labor Regulation is designed, companies become responsible for poor working conditions throughout their supply chain, from the extraction of raw materials to final production. The consequences of failing to comply include everything from withdrawing their product from the market, replacing components and scrapping the product.
The exact consequences of non-compliance may differ depending on how it is implemented at national level. It is up to each Member State to designate the authority responsible for this.
Step by step - How to Comply with EU law Against Forced Labor
To ensure compliance with the upcoming EU ban on forced labour, companies need to carefully identify and manage risks in their supply chain. Let's take a look at how you can work proactively and strategically to get your company ready for the EU Forced Labour Regulation - step by step.
- Step 1: Supply chain mapping and risks
Map your supply chain by identifying high-risk areas. This mapping can be done in several ways, such as geopolitical analysis, sector-specific risk assessments and collection of data on working conditions.
One recommendation is to also use supplier surveys, third-party audits and risk analysis tools to get a clear picture of potential problem areas linked to the EU Forced Labor Regulation. - Step 2: Strengthen due diligence processes for suppliers
An effective policy should include clear requirements on traceability, working conditions and codes of conduct for suppliers.
One tip is to take inspiration from actors that have already implemented structured supplier audits and contractual commitments to ensure compliance. For example, some companies have introduced requirements for labor certifications and third-party audits to mitigate risks. - Step 3: Create transparency and reporting under FLR and CSRD
Transparency and reporting are essential to both meet the legal requirements linked to the EU Forced Labor Regulation and to build trust. As a company, you should align your reporting with CSRD and other sustainability standards, for example, and openly communicate what measures you are taking to combat forced labor.
The CSDDD also addresses forced labor, requiring due diligence of the supply chain to identify and prevent human rights impacts, of which forced labor is a part.
A tip is to regularly publish supply chain insights to demonstrate commitment and avoid potential accusations of irresponsibility. - Step 4: Implementing measures and training against forced labor
To prevent risks linked to the EU Forced Labor Regulation, companies should implement stricter sourcing requirements and work closely with their suppliers to ensure compliance with ethical guidelines.
Training is also key - both employees and suppliers need to understand the risks of forced labor and how to identify them. By spreading awareness and creating a responsible culture, you can reduce the risk of irregularities occurring in the supply chain. - Step 5: Continuous monitoring and risk management
Work on continuous risk management through regular audits, supplier visits and cooperation with third-party organizations that can conduct external audits.
Establishing a system of continuous monitoring ensures that the measures are not just a one-off action, but part of a long-term strategy to eliminate the risk of forced labor. This is crucial to ensure compliance with the EU Forced Labor Regulation.
How to Avoid Legal Risks and Build Trust
As a business, it is important to act now to avoid legal and financial risks linked to the EU Forced Labor Regulation. By implementing effective supplier analysis tools, strengthening due diligence processes and collaborating with experts, your company can ensure compliance with the new EU rules while preventing damage to trust. Starting with a supply chain mapping today is an important first step towards a more sustainable and ethical business model.
Read more about the EU Forced Labor Regulation
We recommend you read our second article on this topic, where we go through the most important things to know about the new regulation. Among other things, we describe the nature of the ban, how it relates to the CSDDD, how the change will be implemented and the consequences of the legislation.
Read more in our blog What does the EU Forced Labor Regulation mean?
