EU Forced Labour Regulation: New guidance released
From 14 December 2027, products made with forced labour can no longer be sold on, or exported from, the EU market. Under the EU Forced Labour Regulation (EU FLR), the message is clear: “Human rights are not for sale.”
Forced labour risks are widespread in global supply chains. Studies estimate that 8.5% of EU companies are exposed to child labour or forced labour risks in their first-tier supply chains. The risk increases significantly further down the value chain, reaching 82.4% in tier-two suppliers and as high as 99.1% by tier three. In practice, this means that companies operating complex, multi-tier supply chains are highly likely to encounter some form of forced labour risk.
The EU FLR introduces new compliance obligations for any company placing products on the EU market or exporting products from the EU. To support implementation, the European Commission has begun releasing guidance and practical tools, including:
A preparedness checklist for SMEs
Free online tools to support supply chain traceability
General guidance on the regulation's requirements
While the regulation will not apply until December 2027, companies should already be preparing. The requirements apply to businesses of all sizes and aim to ensure that products made wholly or partly with forced labour are excluded from the EU market.
Below are some of Ethos' key takeaways from the guidance and practical considerations for companies beginning their compliance journey.
The investigation process
The regulation establishes a risk-based investigation framework, meaning that authorities will focus on products, sectors, and supply chains where the likelihood and severity of forced labour risks are highest, rather than investigating all companies equally.
Competent authorities will typically focus on the company closest to the stage of the value chain where forced labour is suspected. This often includes upstream suppliers, producers, manufacturers, or processors. Where forced labour is suspected outside the EU, importers are likely to become a particular focus of investigations.
Authorities must also consider:
Which company has the greatest leverage to prevent, mitigate, or eliminate forced labour
The company's size and economic resources
The complexity of the supply chain
The severity and likelihood of the identified risks
The investigation process consists of five key stages:
1. Initial assessment - A risk-based evaluation of potential violations based on: i) information submitted to authorities, ii) reports and complaints, and iii) other available sources of information.
2. Preliminary phase - Where appropriate, authorities may initiate dialogue with the company, unless doing so could jeopardise the investigation.
3. Formal investigation - This may include: i) requests for additional information, ii) Interviews and document reviews, and iii) inspections and verification activities, including possible on-site visits.
4. Decision - If forced labour is confirmed, authorities may require: i) prohibition of products from the market, ii) withdrawal of products already on the market, and iii) disposal of affected products
5. Enforcement - Enforcement measures may take place: i) within the EU market, and ii) at EU borders and customs controls.
Due diligence - not legally mandatory, however, one of the most effective tool available
The guidance repeatedly states that formal due diligence is not a legal requirement under the EU FLR. However, the guidance also emphasises that a robust Human Rights Due Diligence (HRDD) process is one of the strongest ways for a company to demonstrate that it has identified and addressed forced labour risks. The recommendations are aligned with the OECD's six-step due diligence framework.
Importantly, due diligence can also serve as evidence during a potential investigation, helping companies demonstrate the actions they have taken to identify and address risks. The guidance further notes that due diligence approaches may differ depending on whether the risk relates to privately imposed forced labour or state-imposed forced labour.
Many businesses may already be undertaking due diligence under other EU legislation, including:
The EU Deforestation Regulation (EUDR)
The EU Battery Regulation (EUBR)
The Corporate Sustainability Due Diligence Directive (CSDDD)
The Conflict Minerals Regulation (CMR)
In such cases, companies can integrate forced labour considerations into their existing due diligence frameworks rather than creating a separate process.
A risk-based approach
The depth of due diligence should be proportionate to:
The company's size and resources
Its connection to the identified risks
The severity and likelihood of the risks
Where it is not feasible to address all risks simultaneously, companies should prioritise the most severe and likely risks first. Once the most significant risks have been addressed, companies should continue addressing the remaining identified risks.
The guidance also highlights that businesses should consider prioritising state-imposed forced labour risks, given their potentially severe nature and elevated likelihood in certain sectors, supply chains, and geographic regions.
Importantly, if a company identifies confirmed forced labour during its due diligence process, particularly during the risk identification and assessment stage (step 2), the product should not be placed on the market, regardless of whether a formal investigation has been initiated or not.
The importance of stakeholder engagement
Meaningful stakeholder engagement is a core element of effective due diligence. Workers and their families are often the primary affected stakeholders, and engagement processes should ensure protection from retaliation, intimidation, or other adverse consequences. Companies should engage relevant stakeholders when identifying risks, assessing impacts, developing corrective actions, and monitoring outcomes.
In higher-risk contexts, particularly where state-imposed forced labour is suspected, direct engagement with workers may not be possible. In such cases, companies should seek information from worker organisations, civil society groups, human rights defenders, independent experts, community representatives, and credible public sources.
Addressing forced labour risks
The guidance outlines several actions companies can take to prevent, mitigate, and eliminate forced labour risks. Prevention remains the primary objective. However, where prevention is not possible, companies should:
Develop and implement corrective action plans
Adapt business practices and purchasing behaviours
Increase leverage to influence suppliers and business partners
Support suppliers in implementing improvements
Disengage from the business relationship as a last resort
Social audits – sufficient or not?
Social audits remain a useful tool, but the guidance makes clear they should not be treated as standalone evidence of compliance. Authorities may consider a wide range of evidence during investigations, including worker testimonies, documentation, photographs, laboratory analysis, public reports, and audit findings.
The guidance highlights several situations where audit results may lack credibility, including where workers cannot speak freely, interviews are conducted in the presence of management, access to facilities is restricted, or auditors cannot independently verify information. These limitations are particularly relevant in regions associated with state-imposed forced labour.
How to get started?
Companies can begin their preparation efforts by taking the following steps:
Map and assess the supply chain, including suppliers, products, components, raw materials, countries of origin, and available forced labour risk information from relevant databases and sources.
Engage and manage suppliers by understanding their risk exposure and existing controls, raising awareness of forced labour risks, communicating expectations, and incorporating requirements into supplier contracts and codes of conduct.
Monitor and review risks on an ongoing basis, including suppliers and products assessed as lower risk, for changes in geography, sector, ownership, sourcing patterns, or other relevant risk factors.
Strengthen due diligence processes by reviewing existing practices, identifying gaps against new guidance, and implementing improvements where needed.
Establish internal governance and capability by assigning clear ownership and responsibilities and providing training to relevant functions, including procurement, sourcing, compliance, sustainability, and operations teams.
One of the greatest implementation challenges will be ensuring that forced labour considerations are embedded throughout procurement decisions, supplier management processes, and internal operations.
How can Ethos support you?
Ethos can support your organisation by:
Establishing stakeholder engagement processes and conducting stakeholder consultations
Developing a HRDD processes
Integrating EU FLR recommendations into existing due diligence frameworks
Delivering employee training and awareness programmes
Conducting risk assessments of operations, suppliers, sectors, and products
Supporting supplier engagement and corrective action planning
Performing social audits with a strong focus on confidentiality, meaningful worker engagement, and effective remediation measures
Preparing for the EU FLR will require a proactive and risk-based approach. Companies that begin strengthening their due diligence processes now will be better positioned to demonstrate compliance, reduce risk, and maintain uninterrupted access to the EU market when the regulation takes effect in December 2027.
Contact Melina Hägerö to know more!
Melina Hägerö
melina.hagero@ethos.se
About Ethos
Ethos is one of the Nordic region’s oldest and leading sustainability-focused consultancies, with over 20 experts covering environmental issues, human rights, and anti-corruption. We help medium to large companies and financial market actors address sustainability challenges—from strategic boardroom decisions to operational policy compliance on the factory floor. Ethos tailors each project to clients' needs, supporting compliance with CSRD, SFDR, EU Taxonomy, and CSDDD regulations while guiding their strategic sustainability journeys.