The European Union is preparing to significantly expand supply chain due diligence obligations through the new EU Forced Labour Regulation (EUFLR). Beginning in December 2027, companies will be prohibited from selling, importing, or exporting products connected to forced labor anywhere in the production process.

While much of the recent attention has focused on broader sustainability frameworks such as the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Deforestation Regulation (EUDR), the EUFLR may create the most immediate operational challenge for multinational companies. Unlike the CSDDD, which applies only to the largest companies, the EUFLR applies broadly across industries and company sizes. Any organization placing products on the EU market could be impacted.

A Product Ban, Not Just a Reporting Obligation

The regulation takes a market-access approach rather than a disclosure-based approach. If authorities determine that forced labor was used at any stage of a product’s manufacturing, harvesting, extraction, processing, or component production, that product can be banned from the EU market.

The EU definition of forced labor aligns with International Labour Organization (ILO) Convention 29 and includes situations involving coercion, intimidation, debt manipulation, withholding of identification documents, and forced child labor.

For many companies, the challenge will not simply be identifying direct suppliers, but gaining visibility into deeper tiers of the supply chain where labor risks are often harder to detect.

Enforcement Will Be Risk-Based

EU member state authorities will use a risk-based framework to identify potential violations. Investigations may rely on:

• EU risk indicators and guidance expected in June 2026

• A centralized EU forced labor risk database

• Information submitted through EU reporting channels

• Product-specific and sector-specific risk assessments

Authorities are expected to prioritize cases based on the severity of the suspected forced labor issue, the scale of products entering the EU market, and the proportion of the product potentially affected.

Importantly, companies may be required to demonstrate the steps they have taken to identify, prevent, mitigate, and remediate forced labor risks within both their operations and supply chains. Failure to provide sufficient information could itself contribute to enforcement action.

Potential consequences include:

• Product withdrawals

• Import or export bans

• Disposal orders for affected goods

Why Companies Should Start Preparing Now

Although the regulation does not take effect until the end of 2027, many organizations will need significant time to strengthen supply chain visibility, conduct risk assessments, and implement more mature human rights due diligence processes.

The European Commission is expected to release additional implementation guidance in 2026, but companies already aligned with internationally recognized frameworks will likely be in a stronger position. This includes frameworks such as:

• The UN Guiding Principles on Business and Human Rights (UNGPs)

• OECD Due Diligence Guidance for Responsible Business Conduct

• ILO Indicators of Forced Labour

The regulation effectively raises expectations around operational supply chain governance, particularly for companies sourcing from higher-risk regions or industries.

Key Questions Organizations Should Be Asking

As companies assess readiness for the EUFLR, several foundational questions are emerging:

• Have we identified the areas of our supply chain with the highest forced labor risk?

• Do we have documented policies and controls addressing forced labor risks?

• How much visibility do we have beyond Tier 1 suppliers?

• Do we have grievance and remediation mechanisms aligned with international standards?

• Are we regularly reviewing and improving our due diligence processes?

Organizations that have already built systems to comply with regulations such as the EUDR, modern slavery laws, or broader ESG supply chain requirements may be able to leverage existing governance structures as a starting point.

The Bigger Picture

The EUFLR reflects a broader shift in global regulation away from voluntary human rights commitments and toward enforceable supply chain accountability. Companies are increasingly being expected not only to disclose risks, but to actively identify and remediate them.

For multinational companies with complex sourcing networks, the next 18–24 months will likely become a critical window for strengthening supplier oversight, improving traceability, and embedding human rights due diligence into procurement and compliance functions before enforcement begins.