Note: This article is an edited translation of the original opinion piece by Markus Löning, published on ESG.Table on 27 March 2026.
European companies have spent years treating forced labour as a reporting obligation or a reputational concern. That framing is now outdated and the businesses that haven’t noticed or taken action are at risk of falling behind.
Three converging developments are changing the stakes. The United States has significantly intensified enforcement of existing forced labour trade rules. The European Union is building its own border enforcement regime. And financial markets are beginning to price forced labour exposure as operational risk, not just a sustainability checkbox. Together, these shifts mean that goods can be stopped, contracts lost, and supply chains interrupted, at any time.
US enforcement puts product origins under the microscope
The US has been using the Uyghur Forced Labour Prevention Act (UFLPA) and the Tariff Act of 1930 to detain shipments at the border. Since 2022, the US has detained around 10,000 shipments under the UFLPA and the Tariff Act of 1930 — a clear signal that goods produced with forced labour will face consequences at the border.
Critically, exposure is not limited to goods coming directly from China. Sourcing from Cambodia, Thailand, Malaysia, Vietnam, Mexico or Canada can equally trigger scrutiny if forced labour risks exist upstream. What matters is not the last country of export, but where the goods and their components actually originate.
Further push from the EU
The EU Forced Labour Regulation (EUFLR) enters into force on 14 December 2027. It gives authorities the power to investigate products suspected of being made with forced labour and to remove them from the EU market entirely. For companies that haven’t started preparing, that deadline is not as distant as it sounds. Supply chain mapping, supplier engagement, traceability systems, and documentation packages – these are structural shifts that take years to embed properly, rather than months.
All of which brings senior management to an uncomfortable question they need to face squarely: how long would it realistically take to identify the highest-risk suppliers, negotiate corrective action, or find alternatives if forced to? For most companies, an honest answer to that question reveals how much ground they still need to cover.
Where existing due diligence falls short
Many companies already have human rights due diligence processes in place. The problem is that most of them weren’t designed with forced labour enforcement in mind.
A compliance framework built around first-tier suppliers and annual questionnaires won’t hold up when customs authorities ask for evidence. What’s needed is a genuinely risk-based approach: one that identifies where risks are actually elevated — by region, product category, raw material or processing step — and concentrates resources there. A broad but shallow approach consistently underperforms a targeted one.
Three practical elements matter most.
First, prioritised risk management: not every supplier relationship carries the same risk, and treating them all the same is a poor use of limited resources.
Second, verifiable mitigation: supplier declarations and generic codes of conduct are not enough where real risks exist. Credible mitigation means better traceability, deeper supplier engagement, targeted auditing, and — critically — a genuine understanding of labour and political conditions in sourcing countries. Without that context, even well-intentioned due diligence remains superficial.
Third, documentation: companies need to be able to show what risks they identified, how they prioritised them, what steps they took, and how they followed up over time. If authorities open an investigation, that documentation becomes the first line of defence.
Risk prevention goes a long way
Good prevention systems reduce risk, they don’t eliminate it. Companies should also be prepared for the scenario where goods are detained or investigated. Under the EUFLR, companies will have just 30 days to respond once an investigation is underway. Companies that haven’t prepared will find themselves scrambling to free up blocked goods under time pressure.
The five priorities of preparation should include:
- Clear internal roles and responsibilities
- Escalation paths and decision-making procedures
- Legal and communications coordination
- Access to specialist research and human rights expertise
- Scenario testing before it becomes necessary
The burden of proof may formally rest with authorities, but operationally, the advantage goes to companies that can respond quickly and substantively.
Concrete advantage requires expert judgement
Traceability tools and supply chain data capabilities have improved substantially. Companies today have access to options that simply didn’t exist five years ago. But forced labour risks are highly context-specific, and data can surface signals but can’t interpret them. Country knowledge, labour expertise and human rights analysis remain essential. Anyone selling a purely technological solution to this problem is oversimplifying it.
The companies that invest in preparation now will carry a concrete advantage: the ability to move goods across borders smoothly, demonstrate compliance quickly when asked, and avoid the disruption their less-prepared competitors will face. In the years ahead, customs clearance and supply chain credibility may become far more significant competitive factors than most companies currently assume.
Companies that move now will be in a stronger position operationally, legally and commercially than those that wait for enforcement to find them.
If you’re assessing your exposure or unsure where to start, we’d be glad to talk. Reach out directly at markus@loening.org.