Is the supply chain socially unsustainable? Products can no longer be sold in Europe

With the publication, on 26 June 2026, of the Guidelines on the European Regulation prohibiting products made with forced labour (EU Regulation 2024/3015), social sustainability has acquired tangible relevance as a condition for accessing the European market. From 14 December 2027, any product made, even in part, using forced labour may neither be placed on the EU market nor exported from it. Geographical distance, the use of subcontractors or the adoption of formally compliant due diligence procedures will not prevent this consequence. Although the Regulation does not introduce new general due diligence obligations, it makes genuine knowledge of the supply chain—extending beyond first-tier suppliers—and an assessment of whether prices, delivery times and production models are compatible with lawful working conditions essential from both an organisational and evidentiary standpoint.

From reputational risk to a market rule

Article 3 of the Regulation prohibits economic operators from placing or making available on the EU market, or exporting, products made with forced labour. The rules will apply generally from 14 December 2027 and cover all products, regardless of the sector, their origin or the size of the operator. It is sufficient for forced labour to have been used, even partially, at any stage in the extraction, harvesting, production, manufacture, working or processing of a product. The unlawful component is not neutralised by its geographical or contractual distance from the brand placing the product on the European market.

An autonomous definition of forced labour

The Regulation refers to ILO Convention No. 29: forced labour means all work or service exacted from a person under the menace of a penalty and for which that person has not offered themselves voluntarily . The assessment therefore requires verification both of the person’s genuine freedom of choice and of the absence of any form of coercion. The concept of “penalty” may encompass conduct such as violence or threats, the withholding of documents or wages, imposed debts, threats of being reported to immigration authorities, loss of accommodation, restrictions on movement and abuse of vulnerability.

The Guidelines refer to the indicators developed by the ILO and invite authorities and businesses to interpret the facts within their context. Excessive working hours, severely inadequate pay, safety violations and degrading accommodation are relevant warning signs. Taken in isolation, however, they may indicate severe exploitation without meeting the definition of forced labour. They carry greater weight when accompanied by circumstances that prevent workers from refusing to perform the work or from leaving their jobs. Even a formally accepted contract loses significance for the purposes of the assessment if consent was obtained through deception or if, in practice, the person cannot withdraw it without suffering disproportionate consequences.

Caution is therefore required when equating forced labour with unlawful labour intermediation and labour exploitation under Article 603-bis of the Italian Criminal Code. The Italian offence centres on exploitation and taking advantage of a person’s state of need; the combination of involuntariness and coercion that is central to the ILO definition is not necessarily present in every case. There is nevertheless considerable overlap, particularly in the most serious situations, although the two categories retain distinct requirements.

Due diligence and the product ban

The relationship with the Corporate Sustainability Due Diligence Directive (CSDDD) helps clarify the structure of the system. The CSDDD regulates the organisation and conduct of large companies falling within its scope, requiring them to implement a risk-based process to identify and address adverse human rights and environmental impacts. The EU Forced Labour Regulation, by contrast, governs products’ access to the market and applies to all economic operators, without general size thresholds. The former regulates the preventive process; the latter safeguards the outcome.

Article 1(3) makes clear that the Regulation does not alter due diligence obligations already established by EU or national law. The Guidelines nevertheless propose a voluntary process inspired by the OECD model. Adopting an appropriate internal procedure is not sufficient to permit the sale of a product made with forced labour. Effective due diligence remains essential, however, to prevent the risk, map the supply chain and manage interactions with the competent authority.

The opacity of supply chains

Complex supply chains illustrate the scope of the Regulation particularly clearly. Multiple layers of subcontracting, pressure on prices and delivery times, the use of intermediaries and the distance between the contracting company and the actual place of production may create opaque areas in which exploitative conditions can take hold. Cases that have emerged in different production settings show that a contract with a first-tier supplier reveals little if that supplier lacks the capacity required to fulfil the orders received or systematically transfers production to undeclared facilities.

Within this regulatory framework, relocating production does not alter the risk. For the purposes of the European prohibition, what matters is the use of forced labour, wherever it may have occurred.

A company that manufactures outside the European Union therefore remains exposed when it imports, distributes or sells the product on the European market. Choosing to relocate production without conducting adequate checks does not, in itself, breach the Regulation, which does not create a general offence of failure to conduct due diligence. It does, however, deprive the company of the tools needed to reconstruct the supply chain, respond to the authority’s requests and demonstrate the product’s actual origin.

The Guidelines emphasise the importance of mapping the various tiers of the supply chain, identifying production sites, reviewing purchasing policies, conducting audits, engaging workers and adopting corrective action plans. This does not mean turning businesses into investigative authorities, but it does require them to move beyond a merely paper-based system of checks: prices incompatible with labour costs, unrealistic delivery times and recurrent subcontracting are warning signs that a credible sustainability system cannot ignore.

The regulation, public prosecutors and Article 34 of the Anti-Mafia Code

The European procedure remains separate from national criminal investigations. The administrative determination of a link between a product and forced labour does not require a prior criminal conviction and may proceed in parallel with investigations into the offences set out in Articles 600, 601 or 603-bis of the Italian Criminal Code. A conviction for unlawful labour intermediation and exploitation constitutes relevant evidence, but is neither a necessary condition nor automatic proof of forced labour under the European Regulation. The assessment must focus on the facts and on whether they fall within the ILO definition.

The same facts could also result in the imposition of judicial administration under Article 34 of Legislative Decree No. 159/2011. This measure is not a criminal penalty and does not require a finding of corporate liability. It applies when the unrestricted operation of a business facilitates the activities of individuals involved, among other things, in labour exploitation. In complex supply chains, serious and systematic shortcomings in controls may be relevant in two respects: they signal a governance problem and, at the same time, may have enabled unlawful practices to enter the production system.

The three instruments therefore appear to pursue complementary objectives:

• the Regulation prevents the product from circulating;
• criminal proceedings determine individual liability and, where the relevant conditions are met, corporate liability under Legislative Decree No. 231/2001;
• judicial administration brings the facilitating conduct to an end and restores the business to legality.

Each instrument requires its own specific conditions to be carefully verified. Ignored warnings, sham controls or commercial decisions incompatible with lawful production may nevertheless acquire significant evidentiary weight.

The investigation procedure

The procedure is entrusted to the “lead competent authority”, identified under Article 15 of the Regulation based on the location in which forced labour is suspected to have occurred.

Where the conduct took place outside the European Union, the European Commission has competence; where the risk is located within the territory of a Member State, the investigation is conducted by the national authority designated by that State. An Italian company importing products manufactured in a third country will therefore be subject to an investigation led by the Commission, whereas the use of forced labour in Italy will fall within the competence of the Italian authority. The Regulation does not directly identify this authority, leaving its designation to each Member State and providing for coordination with labour inspectorates, customs authorities, judicial authorities and law-enforcement bodies.

It should be remembered that the investigation focuses on the products and their connection with forced labour, rather than on a general assessment of the company’s compliance with the law.

Consequences for businesses

Once an infringement has been established, Article 20 requires the prohibition of the placement or making available of the products on the market and of their export, as well as the withdrawal of products already distributed and their disposal or, where possible, the disposal of the component concerned. These measures must be distinguished from the financial penalties provided for by Article 37. The latter apply to failure to comply with the authority’s decision—such as continuing sales or failing to withdraw the products—rather than directly to the product’s initial non-compliance. The financial damage may nevertheless be immediate, compounded by reputational harm, which can be particularly severe for brands built on intangible value and consumer trust.

Sustainability as supply chain responsibility

The Guidelines’ most significant contribution lies in the clarity with which they link social sustainability to the actual organisation of production, which, through the Regulation, affects whether a product may be marketed. The regulatory framework clearly emphasises the central role of governance in translating a sustainable approach to business into practice, together with the need for an integrated approach to compliance. Procurement, compliance, logistics, customs, sustainability, internal audit and supervisory bodies must share information and escalation criteria. Traceability must extend beyond the first contract, while pricing policies must take into account the conditions required for lawful production.

This approach does not require companies to indiscriminately abandon suppliers exposed to higher risks. The Guidelines leave room for prevention and remediation, partly because sudden disengagement may make workers even more vulnerable. Companies must be capable of exercising leverage over their business partners, agreeing credible corrective action plans and, where exploitation cannot be eliminated, planning a responsible exit. Compliance thus takes on a broader meaning than merely protecting the company from penalties, supporting an economic model that does not benefit from the invisibility of those who make its products.

With the EU Forced Labour Regulation, companies’ sustainability claims will be put to the test. It is within the supply chain that the consistency of corporate decisions—and the legitimacy of the product itself—will be measured.