The European Commission and the European External Action Service (EEAS) published a guidance to help companies address the risk of forced labor in their operations and supply chains. The Guidance lays out the practical aspects of due diligence, and outlines international standards on responsible business conduct and due diligence that can help combat forced labor.
Issued on 12 July 2021, the Guidance aims to enhance businesses’ capacity to eradicate forced labor from their value chains by providing practical advice on how to identify, prevent, mitigate, and address its risk.
The document highlights estimates that 25 million people are in forced labor globally, of which 16 million are exploited in the private sector, 4.8 million are in forced sexual exploitation, and 4 million in forced labor imposed by state authorities, with women and girls disproportionately affected. The Guidance emphasizes the EU’s commitment to combating forced labor and to “decent work,” including by ensuring responsible business conduct by European companies.
Launching the Guidance, Josep Borrell, High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the Commission for a Stronger Europe in the World, identified forced labor as “not only a serious violation of human rights but also a leading cause of poverty and an obstacle to economic development.” He stressed that the Guidance will help EU companies ensure that “their activities do not contribute to forced labour practices in any sector, region or country.”
As a reference, the Guidance uses the Organisation for Economic Co-operation and Development (OECD) due diligence framework, which consists of six steps:
- Embed responsible business conduct into the company’s policies and management systems;
- Identify and assess actual or potential adverse impacts in the company’s operations, supply chains, and business relationships;
- Cease, prevent, and mitigate adverse impacts;
- Track implementation and results;
- Communicate how impacts are addressed; and
- Provide for or cooperate in remediation, when appropriate.
The Guidance then sets out a range of specific considerations for forced labor, including:
- Policies and management systems should be tailored to the risk of forced labor;
- Risk factors for forced labor, commonly referred to as “red flags,” to be considered when scoping supply and value chains as part of due diligence;
- Considerations when carrying out in-depth risk assessments of specific high-risk suppliers or supply chain segments;
- Considerations when taking action to address risks of forced labor;
- Considerations when dealing with risks of state-sponsored forced labor;
- Considerations for responsible disengagement;
- Considerations for remediation; and
- Cross-cutting considerations for conducting responsible business conduct due diligence, such as considerations when applying gender-responsive due diligence, considerations relating to discrimination of ethnic or religious minorities, and considerations when dealing with forced labor risk associated with raw materials of unknown or high-risk origin.
The Guidance delivers on one of the pillars of the EU trade strategy, which seeks to promote responsible and sustainable value chains, and bridges the time until legislation on Sustainable Corporate Governance is put in place. This legislation is expected to introduce a mandatory due diligence duty requiring EU companies to identify, prevent, mitigate, and account for sustainability impacts in their operations and supply chains.
EU trade policy promotes efforts that contribute to the elimination of forced labor. For example, EU trade agreements include binding commitments to ratify and effectively implement International Labour Organization (ILO) Conventions, including those on forced labor. [Publication: Guidance on Due Diligence for EU Businesses to Address the Risk of Forced Labour in Their Operations and Supply Chains] [European Commission Press Release]