EU legislation to end forced labour in supply chains

Sian Lea, Business and Human Rights Manager at Anti-Slavery International, discusses emerging EU legislation and explores what it could mean for workers worldwide, including agricultural workers in southern Spain.

September 2024
 

Earlier in 2024, the EU made history by approving two pieces of legislation that could have a tremendous impact on the lives of an estimated 21 million people in forced labour worldwide. 

The laws will put a responsibility on businesses to address, mitigate and remediate forced labour in their value chains, or otherwise face what could be very serious financial consequences. With these laws, workers around the world will have improved routes to justice for the human rights abuses they experience. Many will benefit from mandated business practice changes from the top to bottom of the supply chain they work within. Their concerns will, according to the legislation, have to be considered and addressed. 

As the EU is the world’s largest trading bloc, the laws will set a global precedent. The UK, however, continues to lag behind progress that could meaningfully improve the lives of the people who make the products we use every day.

Case study: what impact could the laws have upon agricultural workers in Spain?

Ethical Consumer has previously reported on the endemic human rights abuses experienced by agricultural workers in the south of Spain who are picking the strawberries and tomatoes that end up on UK supermarket shelves.

Until now, despite the comprehensive and compelling documentation of the exploitation, little seems to have changed. The human rights violations, including forced labour, harsh treatment and union busting, have sustained. No companies have adopted the recommendations outlined in Ethical Consumer’s report, despite being linked to the abuse. And the victims of harm rarely receive any form of redress, and if they do it's typically sought at farm level, rather than from the companies at the top of the chain who arguably benefit most from those products. 

In three years’ time, with the enforcement of these new EU laws, this would change. However, the UK is letting down this global progress and potential impact, by refusing to keep pace with global business and human rights developments – such as these laws.

What are the laws? 

1) The Corporate Sustainability Due Diligence Directive (CSDDD)

What is the CSDDD?

CSDDD will place an obligation on businesses (of a certain size) to conduct human rights and environmental due diligence of most of their value chain (including raw materials, production, transportation and disposal). Due diligence is the act of identifying, preventing, mitigating and remedying adverse human rights and environmental impacts caused by, contributed to or linked to a company operating in the EU. It takes from soft law like the United National Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises on Responsible Businesses Conduct.

It is crucial to note that the law extends beyond forced labour and considers enabling human rights like freedom of association and harms on the spectrum of exploitation like excessive hours and unsafe working conditions. 

The law is grounded in an understanding that companies at the top of the value chain can have considerable power to improve working conditions throughout the chain.

When will it pass?

After years of debate and developments, the CSDDD law was officially passed in July 2024.

When will it take effect?

The transposition to Member State legal frameworks should be completed by mid-2027, however, there is a staggered application process depending on the size of the businesses.

For example, three years from now, companies headquartered in the EU with more than 5000 employees and a net worldwide turnover of over 1500 million EUR will fall under scope. The following year this will extend to companies with over 3000 employees and a turnover of over 900 million EUR. And the following year, it will extend to companies with more than 1000 employees and a turnover of over 450 million EUR. 

The same conditions are relevant for non-EU headquartered companies, provided the turnover is based on their EU sales.

What does this mean for workers?

Under CSDDD, companies will have to dig into their supply chains, speak with workers, address harms (and risks thereof) and change business practices from the top of the supply chain down to farm level. If companies fail to uphold this obligation and as a consequence someone is harmed, that person would have a route to take those companies to court.

2) Forced Labour Regulation (FLR)

What is the FLR?

The FLR will prohibit the sale, import and export of goods made with forced labour from the EU market. 

Economic operators relying on, and in fact profiting from forced labour, will face serious financial consequences with their products being held at the border or being removed from EU market shelves unless they address and rectify forced labour in their supply chains. 

CSDDD and the FLR work in tandem: the former requires companies to proactively look for and address all human rights risks to prevent harm, and the FLR targets instances where proactive preventative measures aren’t able to protect workers from forced labour, thereby ensuring harm is swiftly addressed.

When will it pass?

The European Parliament, as one of the three key institutions within the EU, has approved the law. The final sign-off, which is typically ceremonial, will come later in 2024 with the Council of the European Union’s vote.

When will it take effect?

With a regulation, there is no need for Member States to adopt the law within their own legal frameworks, as is the case with CSDDD. However, there is still a lag period to set up all of the systems to enforce the law (such as a risk database and the mechanism for receiving complaints). The law will apply to companies three years from the date it is passed.

What does this mean for workers?

Under the FLR, strawberries from Spain for example, could be withheld from supermarket shelves unless it can be shown that any forced labour linked with the strawberries has been resolved. Supermarkets would be compelled to act swiftly, or otherwise risk a big dip in sales. 

The quick action ensures that workers are remediated for the harm they experienced without having to go up against a big company in court. Workers or their representatives would be able to submit information confidentially to the authorities who then take a call as to whether they investigate and/or ban a product. Part of resolving forced labour as a precondition to lifting a ban may mean, for example, repaying unpaid wages and reimbursing illegitimate recruitment fees. While we wait on further guidance from the EU on how complaints and information submissions will work, we have the opportunity to continue advocating for them to be strong and devised as to protect worker rights throughout the process.

What about the UK?

Unfortunately, no such progress has been made in the UK. As it stands, large UK companies have a legal requirement to publish a modern slavery statement on their website. 

The content of these statements and whether the companies actually change business practice to address forced labour, is of no relevance under the law. Research has found that reporting is often superficial and poor in key areas such as due diligence. And the most recent research on legal compliance (2021 by the Business and Human Rights Resource Centre) found that 40% of companies did not even comply with the very low bar the law sets out by failing to publish a Modern Slavery Statement.

With increasing developments aiming to rein in corporate profiteering from abuse globally, the UK stands to become a dumping ground for forced labour and a safe haven for companies that want to side-step legal responsibility for human rights and the environment. 

While strawberries from Spain could be withheld from the EU market, and EU supermarkets are then forced to address exploitation, the positive impact will be hindered by the exploitation that can continue in value chains to the UK. This sends a message to workers around the world that the UK government isn’t prepared to prioritise their welfare.

We need the UK to step up and take action so that workers can be protected and global progress towards ending forced labour can accelerate.