The European Commission has, in September 2022, proposed a prohibition on products made using forced labour from the EU market. This could mean that any company, whether they are in the EU or not, will have to ensure that all their products are free from forced labour if they wish to import, or export them on the EU market. The proposed ban will have big implications for companies looking to do business on the EU market, and it will also compliment the incoming EU corporate sustainability due diligence directive (Due Diligence Directive) in ways that will be explored below.
The Forced Labour Ban
Products will be banned from the EU market where forced labour has been used “at any stage of their production, manufacture, harvest and extraction”. Companies will need to demonstrate that the product in question was not made using forced labour, or that it is no longer present, and any use of forced labour has been remedied. Products will be investigated by a competent authority designated by member states whare there is substantiated concern or well-founded suspicion of forced labour in the production of any product sold, or due to be sold, on the EU market.
Where forced labour has been identified in the production of a product, the product in question will be prohibited from the EU market, both in terms of import and export. If the product is already on the EU market, it will need to be removed, and the company will be responsible for disposing of that product.
Due Diligence Directive
The Due Diligence Directive will require that both EU and some non-EU companies perform sustainability and human rights due diligence across their supply chains. The exact scope of which companies will be covered by the directive is yet to be decided. The proposal in February 2022 had the following scope:
- For EU companies: All EU limited liability companies with over 500 employees and over EUR 150 million in net worldwide turnover. Or, if the company is in a high impact sector, where the company has over 250 employees and over EUR 40 million in net worldwide turnover.
- For Non-EU companies: The same as EU companies where the net turnover was generated in the EU, and where the company is active in the EU.
However, in November 2022, the EU Parliament’s Committee of Legal Affairs proposed some amendments to the scope and obligations of the directive (Lara Wolters Report). For example, the scope would be widened by reducing the employee and turnover thresholds. Similarly, the obligations will extend to requiring that companies remedy any harm they cause, and to improve access to justice for victims. You can read more about this report here.
How both proposals complement each other
The proposed forced labour ban, along with the proposed Due Diligence Directive, demonstrates a significant shift in the legal landscape towards further accountability and transparency for companies in terms of steps they are taking to address both environmental, and human rights issues. The two proposed laws complement each other in ways that could have a serious and positive impact in terms of addressing the prevalent global issue of modern slavery.
The Due Diligence Directive and the Forced Labour ban will both tackle forced labour and other human rights violations, but in different ways. The Due Diligence Directive will mean that companies will have to be proactive in identifying, and publicly communicating, any actual or potential human rights impacts, and take steps to prevent, mitigate, or bring to an end these impacts. The Lara Wolters Report similarly proposes that companies will have to demonstrate their obligations under the Due Diligence Directive. Therefore, the due diligence directive is better positioned than the forced labour ban to prevent human rights impacts before they happen, through implementing a robust due diligence strategy that will require that companies and those across the supply chain are actively preventing and avoiding forced labour.
In contrast, the forced labour ban serves more as a tool to end forced labour once it has occurred by getting companies to address the use of forced labour in their products following substantiated concerns. Where integrating due diligence may not be able to capture every instance of forced labour, the forced labour ban may be able to address these instances. Therefore, the forced labour ban could act as a final line of defence. Where companies have perhaps not been as robust as they should be in performing due diligence, or where, in some cases, a complex supply chain has meant that forced labour was difficult to identify, the forced labour ban can be used as a mechanism to further prevent the use of forced labour and modern slavery.
The two proposed regulations are distinct in their approach, they are both seeking to tackle forced labour but from different angles. What this ultimately means is that they will complement each other in the sense that, where the due diligence directive may not address all instances of forced labour, the forced labour ban could pick up the cases that fall through the net. Tackling forced labour using this approach means that the EU could have a very robust, and broadly applicable system for addressing forced labour and modern slavery. It remains to be seen how this will work in practice, but in theory the two proposals could have a profoundly positive effect.
How can Ardea International help?
Ardea International understands that businesses have to ensure that they establish robust due diligence procedures. We support our clients by helping them identify how to manage human rights impacts and risks, ensuring they meet legal compliance obligations and integrate best practices into their policies and procedures.
Ardea International has developed a number of effective compliance solutions, including a human rights and environmental disclosure legal register. The legal compliance due diligence register allows businesses to track incoming legislation as well as current laws they may be subject to. We can also assess your business’s compliance with human rights regulations, including preparedness to comply with new legislation. In addition, Ardea can examine your business’ due diligence procedures and provide priority steps to improve performance.
We have an upcoming workshop on Developing an environmental and human rights mandatory due diligence framework. This course will equip you with an understanding of the key legislative developments and how to develop a due diligence framework to implement in the business.
We also have a range of free and paid resources on our website and we hope that you will enjoy browsing!
Sign up for our quarterly news bulletin and receive the occasional communication from us about pertinent issues.
You can also get in touch with us at: email@example.com
We are a specialist sustainability, business and human rights consultancy with expertise in modern slavery.
If you’d like to know more about this report, or other reports we create, give us a call on: +44 (0) 1273 491423 or drop us a
Fieldview • 21 Staples • Barn
Henfield • West Sussex • BN5 9PP
T +44 (0) 1273 491423
Contact us to see how we can support you.