Following news that the European Council has voted to adopt regulation that would ban the sale within the EU of products that have been made using forced labour,  Lucy Blake, Partner and Co-Chair of Human Rights and Global Strategy at Jenner & Block says:

"The new regulations  will affect the obligations of all companies selling goods in, or exporting goods from, the EU. Two key features of the new regulations are as follows”. 

"First, the regulations define a “product made with forced labour” as one where forced labour is used at any stage in the supply chain - in whole or in part in extraction, harvest, production or manufacture. This would therefore not only encompass the point at which a product is exported or made available for sale, but all prior stages in the product lifecycle.” 

"Second, companies that operate globally will need to take into account the scope of both the new EU regulation, and the US forced labour legislation that passed in 2022 (known as the Uyghur Forced Labor Prevention Act, or ‘UFLPA’) and ensure that they have policies and procedures in place that are compliant with both. For example, whereas the UFLPA focuses solely on goods sourced from the Xinjiang Uyghur Autonomous Region of China (‘Xinjiang’) or by certain designated entities; the Forced Labour Ban applies to products made with forced labour anywhere in the world.  Additionally, the UFLPA placed the burden on companies to prove that any goods manufactured in whole or in part in Xinjiang, China, are not made with forced labour; whereas the EU Forced Labour Ban places the burden on the lead competent authority to make the determination." 

“The new regulations form part of a package of global ESG and human rights legislation designed to drive good corporate governance by compelling companies to identify, assess, prevent, and mitigate adverse human rights and environmental impacts in their supply chains.”

“It can often be challenging for companies to get an accurate picture of their supply chains, particularly if they have large corporate structures and operate in countries with high levels of corruption.  Businesses have never been more in the spotlight not only for their profits but also their behaviors. Those that exaggerate their credentials, even unintentionally, can face regulatory fines, litigation and suffer extensive reputational damage.  Companies should be transparent about what they do and do not know to enable customers to make informed choices and to expose the challenges.”