EU Parliament Approves Law To Eradicate Forced Labour In The Supply Chain

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EU Parliament Approves Law To Eradicate Forced Labour In The Supply Chain

On April 23rd, the EU Parliament gave the final approval to prohibit the sale, import and export of goods made using forced labour at any stage of their production, manufacture, harvest or extraction. The new regulation promotes due diligence in line with international guidelines, aiming to eradicate a practice that affects more than 28 million people globally, including over 3 million children.

The EU regulation targets products and components coming from regions with high risk of state-imposed forced labour, such as the Xinjiang Uyghur Autonomous Region, Turkmenistan or Eritrea. In these regions, governments force citizens to work to mobilize labour for economic development, discriminate against ethnic and religious minorities, or punish political dissents. Indeed, the International Labor Organization (ILO) estimates that over $236 billion are generated in illegal profits from forced labour every year, a figure that has increased by over 30% since 2014.

To eradicate this practice, the EU law bans products and components for which forced labour has been used across the supply chain, whether available in the Union market, imported or exported. Based on the information provided by NGOs, international organizations, regional authorities and whistleblowers, European authorities will be allowed to open investigations on products with suspected forced labour in their supply chains, exposing manufacturers to delays and potential fines. 

Alongside other regulations such as the Uyghur Forced Labor Act in the US, the Modern Slavery Act in the UK and Bill S-211 in Canada, the EU rule pressures firms to improve transparency and accountability in their supply chains. However, organizations often face limited visibility and engagement with their suppliers beyond tiers (see Verdantix Best Practices: Improving ESG Performance In The Supply Chain). For example, in February 2023, a New York Times investigation found cases of child labour in US-based factories linked to brands like Ben & Jerry’s, Ford and General Mills. Blind spots in the supply chain hinder organizations’ ESG and sustainability initiatives, and expose firms to reputational, operational and financial risks.

In this context, firms rely on software solutions that map supplier networks to identify potential vulnerabilities in their supplier's sustainability performance. For example, software solutions such as Oritain, Retraced and TrusTrace can ease material and product traceability to improve sustainability data collection and assurance. This way, organizations are better equipped to meet compliance obligations and strengthen operational resilience – and more importantly, to take a step forward in eradicating any forms of forced labour in their supply chains. 

To learn more about how digital tools can help firms improve visibility across their supply chains, see Verdantix Smart Innovators: Supply Chain Sustainability Software and Verdantix Strategic Focus: Traceability In The Supply Chain.

Elisa Molero

Industry Analyst

Elisa Molero is an Industry Analyst in the Verdantix ESG & Sustainability practice. Her current research agenda focuses on emerging solutions and global market trends around supply chain sustainability. Her background is in Economics, Leadership and Governance (BSc, University of Navarra). Prior to joining Verdantix, Elisa worked as a research analyst at the Centre For Economic Performance at the London School of Economics, where she completed a Master’s degree in Global Politics, with Distinction.