Case study

The problem 

The tightening of forced labour regulations has significantly raised compliance expectations for companies operating in, or exporting to, major markets. In the EU, the Forced Labour Regulation will take effect in December 2027, banning the import, export, and sale of any goods linked to forced labour. In the United States, the Uyghur Forced Labor Prevention Act (UFLPA) has been in force since 2022 and establishes a presumption that products connected to the Xinjiang region or related entities involve forced labour, unless companies can prove otherwise. To avoid blocked shipments, financial losses, and reputational damage, global companies are increasingly strengthening their supply chain traceability and due diligence management systems.

The impact

Our analysis provided the client with a clear, evidence-based overview of forced labour risks across their supply chain. By translating complex data into a prioritised risk profile, we helped them transition from reactive compliance to proactive mitigation.

The sector-specific recommendations equipped the client with a practical roadmap for responsible supplier management, including structured engagement topics for dialogue with suppliers. The client is now better positioned to meet increasing transparency requirements and align with heightened human rights due diligence expectations under EU and U.S. regulations, while avoiding costly reputational and supply chain disruptions.

At Löning – Human Rights & Responsible Business GmbH, we tailor human rights analysis, contextual expertise, and practical response strategies to support organisations to understand facts, assess risks and act with confidence to mitigate supply chain risks.

 

Mariana Rezende

Mariana Rezende
Managing Consultant

mariana@loening.org

Our approach

A client in the heavy machinery sector requested Löning’s support to gain clarity on potential forced labour risks within part of their supply chain. They sought support in understanding the level of risk, evaluating any exposure, and identifying appropriate next steps.

To help the client assess and mitigate potential risk, Löning implemented a tailored end-to-end due diligence process with the following steps:

Defining the risk scope: We clarified which suppliers and tiers to focus on and set the depth of research, i.e. mapping vertical links (ownership structures, N-tier connections) and horizontal links (sister companies, stakeholder affiliations) relevant to the potential risk.

Aligning the methodology: We designed a research approach aligned with the context of the investigation – prioritising data sources, setting timeframes, and specifying the linguistic and cultural contexts for research.

Data collection and AI-supported screening: We collaborated with specialised intelligence partners for supplier data and applied advanced AI screening tools to detect potential forced labour indicators across the supplier network.

In-house supplier analysis and expert validation: Our analysts carried out an in-depth assessment of supplier networks, examining potential risk signals across ownership structures, business relationships, and geographical context. Geospatial analysis was used where relevant, and key insights were validated with independent regional experts.

Risk assessment: Using a severity-likelihood framework, we categorised each supplier’s risk level and identify priority areas requiring mitigation action.

Actionable recommendation: Finally, we delivered clear mitigation guidance tailored to the client’s leverage, organisational capacities, and strategic priorities. Recommendations were directed to sourcing, risk management, and senior leadership to support informed decision-making.