Guidance on
EU Forced Labor Regulation
Adopted in response to growing concerns about human rights abuses in global supply chains, this regulation aims to hold companies accountable for ensuring that their products are free from forced labor at every stage of production.
Companies will have 36 months to perform comprehensive due diligence on their supply chains, ensuring that they have identified and assessed any risks of forced labor. They need to have established robust procedures for mapping and maintaining transparency across their supply chains, including detailed records of their suppliers and the labor practices involved. Companies must also have implemented regular monitoring mechanisms to ensure compliance with the regulation. Additionally, businesses should have remediation plans in place to address any instances of forced labor and be prepared to maintain and submit documentation of their compliance efforts to regulatory authorities. Failure to meet these requirements by the effective date could result in significant penalties, including fines and restrictions on the importation of goods into the EU market.
The EU will enforce the new Forced Labor Regulation by blocking the entry of goods produced using forced labor into the European market. Customs authorities will be empowered to scrutinize and investigate shipments based on risk assessments and intelligence reports. If there is reasonable suspicion that goods have been manufactured or sourced using forced labor, the authorities will have the authority to detain and inspect the shipments. Companies will be required to provide evidence demonstrating that their products are free from forced labor practices. In cases where forced labor is confirmed, the goods will be denied entry and potentially confiscated. This rigorous enforcement mechanism aims to ensure that no products tainted by forced labor reach European consumers, thus upholding human rights and ethical standards within the global supply chain.
Risk Assessment
Companies are required to conduct thorough due diligence on their supply chains. This involves identifying and assessing the risks of forced labor at various stages of production, from raw materials to finished goods. Businesses must implement robust risk assessment procedures and regularly update them to reflect changing circumstances.
FRDM automates the due diligence process, allowing companies to conduct thorough risk assessments efficiently. The platform continuously monitors suppliers for potential forced labor risks and alerts companies to any changes or new threats in real time.
Supply Chain Transparency
Transparency is a cornerstone of the regulation. Companies must map their supply chains and maintain detailed records of their suppliers. This includes obtaining information about the origin of raw materials, production processes, and the labor practices of their suppliers.
FRDM provides tools for detailed mapping of supply chains, helping companies trace the origin of materials and understand the labor practices of each supplier. This transparency is crucial for identifying and mitigating risks associated with forced labor.
Auditing and Monitoring
Regular monitoring of suppliers is essential to ensure compliance. Companies must establish mechanisms to constantly assess risk of their suppliers and sub-suppliers, either through third-party systems or internal teams.
With FRDM, companies can schedule and manage regular audits of their suppliers. The platform offers robust compliance monitoring features, ensuring that suppliers adhere to ethical labor practices and that any issues are promptly addressed.
Remediation
In cases where forced labor is identified, companies are required to take immediate action to rectify the situation. This includes developing and implementing remediation plans in collaboration with affected workers and relevant stakeholders. Remediation efforts should aim to eliminate forced labor practices and provide support to impacted workers.
FRDM supports companies in developing and implementing remediation plans. In the event that forced labor is detected, the platform provides guidance on corrective actions and facilitates collaboration with stakeholders to rectify the situation and support affected workers.
Reporting and Documentation
Companies must maintain comprehensive documentation of their due diligence efforts, risk assessments, audits, and remediation activities. This documentation should be readily available for review by regulatory authorities. Additionally, companies may be required to submit periodic reports detailing their compliance efforts and the steps taken to address forced labor risks.
FRDM helps companies maintain detailed records of all due diligence, risk assessments, audits, and remediation activities. The platform generates comprehensive reports that can be easily submitted to regulatory authorities, ensuring companies meet documentation and reporting requirements of the EU Forced Labor Regulation.
Moreover, businesses that proactively address forced labor risks and demonstrate their commitment to ethical practices can enhance their reputation and gain a competitive edge. Consumers and investors increasingly prioritize companies that uphold high ethical standards, making compliance not only a legal obligation but also a strategic advantage.
