How the EU Forced Labour Regulation could become the new driver of HRDD
The future of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) is again uncertain. Last week, the Parliament rejected the mandate to take the weakened compromise directly to trilogue negotiations. However, with the Council and Commission already backing lighter versions, the final law is still likely to be significantly watered down, severely limiting its potential to drive responsible business practices across the EU.
While this seems like a setback for corporate accountability in Europe, at 2impact we believe that another piece of legislation may, in practice, become a powerful driver of human rights due diligence: the EU Forced Labour Regulation (FLR), which was adopted in 2024 and will apply from 2027.
In this blog we explain what the FLR is and what it means for companies.
What is the FLR, and what is forced labour?
Unlike the CSDDD, the FLR doesn’t directly require companies to conduct due diligence. Instead, the regulation is product-based: goods made with forced labour will be banned from entering or circulating within the EU market. This means that if authorities find, through an investigation, that a product has been made using forced labour anywhere along the value chain, they can ban it from the EU market, require its withdrawal, or mandate its disposal. This can have severe financial consequences for companies.
To understand what might trigger an investigation, it’s useful to look at how forced labour is defined. The FLR uses the ILO’s definition of forced labour: work or service extracted under the menace of any penalty and for which the person has not offered themselves voluntarily. The ILO’s indicators of forced labour include withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime. These show that forced labour, beyond overt coercion, can also take more subtle forms such as recruitment debt, threats of dismissal, or forced overtime, and that it intersects with many other labour rights issues.
Products like cocoa, coffee, cotton, garments, electronics, and metals such as gold and cobalt are among the many goods on the US Department of Labor’s list of forced labour products, illustrating the scale of the problem. The FLR will apply not only to imported goods but also to those exported from the EU. This means that European exporters will also need to ensure that goods produced within Europe are free from forced labour before they are placed on external markets.
Because the FLR applies to all products, all sectors, and all companies placing or exporting goods on the EU market, it has the potential to reach far more businesses than the CSDDD ever could.
What this means for companies
Similar legislation in other jurisdictions shows that the FLR can have tangible effects. Taiwanese bicycle manufacturer Giant, for example, recently faced a US import ban after an investigation by Customs and Border Protection identified five indicators of forced labour in its operations.
In the absence of a formal due diligence obligation, conducting human rights due diligence becomes a form of risk management under the FLR. Companies that can demonstrate credible efforts to trace their supply chains, assess risks, and prevent or mitigate forced labour will be far better placed to respond to investigations and avoid business disruption at the border.
Even though the regulatory landscape has shifted, the direction of travel remains clear. Companies that invest now in robust human rights due diligence processes will not only be prepared for future regulation but also protect business continuity and reputation today.
At 2impact, we help companies develop and strengthen their human rights due diligence processes, from assessing and monitoring forced labour risks in supply chains to taking action to mitigate or eliminate them.
Learn more about our human rights due diligence and responsible procurement services, and discover how we can help your company take the next step.
This blog was written bij Lisanne Hekman. Want to know more? Please contact Lisanne.
