According to the International Labour Organization (ILO), forced labour is defined as “all work or service extracted from any person under the menace of penalty and for which the person has not offered himself voluntarily.” This can involve coercion through threats, violence, debt bondage, withholding identity documents, or other forms of exploitation.
In other words:
“Forced labour involves any work or service that a person is compelled to perform against their will, typically under threat of punishment or harm”
As forced labour concerns continue rising, businesses face increasing pressure from regulators, investors, and the public to carefully review their supply chains and address these practices. An example of this is the EU Forced Labour Regulation (EUFLR).
Formally adopted by the EU Council in December 2024, the EU Forced Labour Regulation aims to ban the import, sale, and export of products made with forced labour. The EUFLR requires and encourages the prevention of forced labour (including child labour) in all stages of a product’s life cycle, including and not limited to:
Notably, the EUFLR:
The EUFLR builds upon the EU’s broader legislative efforts to enhance supply chain transparency, promote responsible business conduct, and uphold human rights. This collection of initiatives includes the Corporate Sustainability Due Diligence Directive (CSDDD), which requires companies to establish and maintain robust due diligence measures to safeguard human rights, as well as the EU Deforestation Regulation (EUDR), which aims to prevent the placement of products linked to deforestation and forest degradation on the EU market.
Unlike more targeted legislation, such as the EUDR, the EUFLR adopts a global and far-reaching approach by banning all products linked to forced labour—regardless of industry or geographical origin—from being placed on, sold in, or exported from the EU market.
While the EUFLR itself does not create entirely new due diligence obligations, it emphasizes the critical need for solid, existing frameworks and processes around human rights due diligence to ensure compliance.
In other words:
“Having proper value chain due diligence practices in place that follow OECD requirements will form a solid basis for complying with EUFLR and would be the recommended first step in preparing for EUFLR”
The EUFLR applies to all companies (referred to as “economic operators”), irrespective of:
As long as a company places products on the EU market or exports products from the EU, it falls under the regulation. This also includes goods sold through distance sales (e.g, online platforms).
It is good to note that the European Commission will issue guidelines on due diligence in relation to detecting and preventing forced labour, which should also take into account the size and economic resources of economic operators
Definition of ‘economic operator’: any natural or legal person or association of persons placing or making available products on the Union market or exporting products.
While the EUFLR does not impose additional standalone due diligence obligations on companies, it complements existing due diligence requirements that (amongst others) the CSRD and the CSDDD also refer to: ILO Forced Labour Conventions; UN Guiding Principles on Business and Human Rights; OECD Guidelines for Multinational Enterprises and the OECD Due Diligence Guidelines.
Roles/Obligations under the EUFLR:
Investigations into suspected non-compliance can be initiated by national authorities or the EU Commission. The process typically involves:
Possible Sanctions:
We help our clients to turn topics such as the EUFLR from a regulatory burden into an opportunity for businesses to enhance their social impact and supply chain resilience. Here’s what we offer:
By proactively implementing robust due diligence measures, your organisation can stay ahead of the EU Forced Labour Regulation, and also lay the groundwork for compliance with related legislation such as the CSRD and CSDDD.Grant Thornton stands ready to help you navigate this evolving landscape, aligning compliance goals with broader business objectives and societal impact.
Please contact one of our experts. They are here to help you out.
