December 12th 2024 was a landmark day for the millions of people around the world who work within the global food system – the EU passed a law prohibiting products made with forced labour from being placed on the EU market or exported from the EU. The new rules will become fully effective three years after the law was passed (on December 12th 2027) and will apply to all industry sectors and all products, including food, regardless of their origin.
The Forced Labour Regulation (FLR) comes in the wake of new EU rules on deforestation and sustainability due diligence. Together, they form part of a trend among lawmakers to shift responsibility onto businesses for policing what happens within their supply chains.
The FLR also serves to emphasise how the UK has begun to lag behind in how it protects workers from exploitation. This year marks the 10th anniversary since the UK Modern Slavery Act 2015 was passed into law (UK law refers to modern slavery rather than forced labour, although they essentially relate to the same thing). At the time, provisions in the Act were seen as ground-breaking in giving law enforcement agencies the tools to tackle modern slavery offences, including a maximum life sentence for perpetrators and enhanced protection for victims.
Yet experts believe the Act has not aged well. An independent review published in 2019 cited low rates of prosecution and conviction, and weak supply chain oversight as reasons why the UK was “falling behind internationally” in its efforts to tackle, prevent and disrupt modern slavery. A more recent House of Lords report published in October last year reached a similar conclusion. “The UK is falling behind other countries and victims are paying the price,” said chair of the Modern Slavery Act 2015 committee, Baroness O’Grady of Upper Holloway. The Labour government has signalled its intention to reform the UK’s approach to modern slavery, although details have not yet been forthcoming.
Food supply chains are considered highly exposed to risks of forced labour due to a heavy reliance on transient, often migrant labour, especially in the farming and fisheries sectors, and the long, labyrinthine nature of supply chains that makes it hard for consumer-facing businesses to monitor what is happening back at source.
So what does the EU’s new law mean for food businesses and how should they respond?
Modern problem
“When people think of slavery they often think of times of yore,” says Dominic Watkins, global head of consumer sector and partner at DWF. “Unfortunately, that’s not the reality. There are still people in servitude in various ways around the world, including the UK.”
The International Labour Organisation (ILO) estimates that globally there are around 27.6 million people in a situation of forced labour, of whom 3.3 million are children. Forced labour, as defined by the ILO, is “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily”. It refers to situations in which people are coerced to work either through the use of violence or intimidation, or by more indirect means such as manipulated debt, retention of identity papers or threats of denunciation to the immigration authorities.
‘Tick-box exercise’
The Modern Slavery Act 2015 introduced a requirement on businesses with an annual turnover of more than £36m to report annually on the steps, if any, they have taken to ensure modern slavery is not taking place in their organisation and supply chains. But experts say the legislation is light on detail and does not mandate what should be reported in company statements, while there is barely any monitoring of their content. As a result, the independent review found a number of companies who approached their obligations “as a mere tick-box exercise”, and cited estimates that around 40% of eligible companies were not complying with the legislation at all.
Watkins says food businesses who are complying with the UK Act “to the best of their ability” should already be broadly compliant with the new EU law. The main difference is that the FLR has the ability to hit businesses where it really hurts – in their pocket. The law gives national authorities the power to prohibit products associated with forced labour from being placed on the market with immediate effect and, for products already on the market, to be withdrawn and disposed of.
Beyond the risk of reputational damage, the potential cost of mass withdrawals and the associated supply chain disruption should give businesses cause to take the new rules seriously. “If you're merely paying lip service to your obligations then there's a risk the FRL will come back to bite you,” says Watkins.
Reducing the risk
For businesses like caterers and restaurants, far removed from the production end of the supply chain, Watkins says that having a clear policy on forced labour and ensuring suppliers are meeting that standard is a key first step to staying on the right side of the law.
Beyond that, there are a number of ways businesses can engage with their supply chains to ensure they are doing as much as possible to minimise the risk to workers. At a Westminster Legal Policy forum, held in December, on the next steps for tackling modern slavery in the UK, Nestlé UK & Ireland’s responsible sourcing manager, Robin Sundaram, noted how for a company of Nestlé’s size there is always a risk of modern slavery within supply chains that indirectly employs hundreds of thousands of people.
He explained how the business has partnered with modern slavery NGO, Unseen, to adopt a three-pronged approach to tackling the risk, based around education, investigation and elimination. The education element involves ongoing training for Nestlé’s own employees, including procurement colleagues, as well as its suppliers to build awareness around modern slavery and the red flags to look out for. Nestlé has also signed up to Unseen’s online portal, through which it receives alerts when potential instances of modern slavery within its supply chain are identified. Sundaram added that Nestlé is looking at how in future, within the tender process, it could require suppliers to undertake Unseen’s training programme as part of its efforts to eliminate, as far as possible, the risk from modern slavery.
Speaking at the same event, Sian Lea from the NGO Anti Slavery International, noted how power imbalances between buyers and suppliers are an important driver of modern slavery. All too often costs get shifted down the supply chain, with workers often bearing the brunt. She called for a shift towards longer-term relationships between buyers and suppliers, and a move away from risky purchasing practices such as last minute order cancellations.
Questions of diligence
For businesses, the extent of the impact from the EU’s new regime will depend on how the law is put into practice (a guidance document is expected to be published within the next 18 months). Recent events suggest the European Commission has become preoccupied with minimising the burden of new regulation on businesses. In February, it adopted an Omnibus package to significantly water down the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D). If adopted, the changes will put significantly less emphasis on the need for businesses to consider supply chain partners beyond their direct suppliers as part of their due diligence.
This doesn’t easily square with the FLR, where due diligence obligations apply to the entire life cycle of a product. “Maybe they will reopen the FLR and reduce the obligation there, but if they do it rather begs the question, why have it in the first place?” says Watkins.
Natascha Gaut, a partner within DWF’s global regulatory, compliance and investigations team, says the future impact of the FRL on businesses will become clearer once enforcement decisions begin to come through in member states. “What actually happens in reality and what the law says are two different things,” she notes. “It’s definitely one to watch.”
If you have any questions about points raised above, or how this may affect your business, please get in touch with the authors below.
This article was originally prepared by Nick Hughes, together with Footprint Media Group and is also available here.
