The EU Forced Labour Regulation: What Swiss Companies Need to Know Now

The FLR does not exist in isolation. It is part of a wider EU effort to embed human rights due diligence into how business is done, sitting alongside for instance the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Battery Regulation (EUBR), and the EU Conflict Minerals Regulation (EUCMR). All of these draw on the same intellectual foundation: the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, long-standing voluntary frameworks now being converted into binding law.

This agenda is not just an EU phenomenon. Switzerland has its own Federal Act on Sustainable Governance ("NUFG") stating reporting and supply chain due diligence obligations, and Swiss firms with EU operations already navigate CSDDD-adjacent expectations. The FLR adds a distinct and, in some ways, sharper edge.

Unlike CSDDD or CSRD, the FLR is not a disclosure regime - it is a market access regulation. Its logic is simple: if forced labour is found anywhere in a product's production, that product can be barred from entering or exiting the EU market.

There is no minimum share of forced labour content required for a product to fall within scope - a single non-compliant component in an otherwise clean product is enough. Consequences can include forced withdrawal from the market, mandatory disposal or destruction of goods, and financial penalties, making forced labour a fundamental business risk, not just a concern for the sustainability function.

The guidelines set out a clear, five-phase investigative process, moving from initial screening through to enforcement at the EU border:

A recurring theme throughout is that non-cooperation with information requests will weigh heavily against a company. The European Commission (for forced labour outside the EU) and national authorities (for cases within the EU) will apply a risk-based approach, prioritising cases by the scale and severity of alleged forced labour, the volume of affected products on the EU market, and the significance of the implicated component, with state-imposed forced labour treated as a priority category. Importers are identified as likely targets, given that they will often be the first part of the supply chain that falls within EU jurisdiction.

• Due diligence is the de facto standard of defence. The guidelines build heavily on the OECD's six-step due diligence framework, and credible, product-level evidence is what authorities will expect when assessing a "substantiated concern."
• Evidence must be granular. Authorities may request documentation including corporate policies, supply chain maps, bills of materials, purchase orders, worker interviews, and remediation records - general policy statements will not suffice.
• Potential financial penalties for non-compliance could be considerable, illustrated in the guidelines as follows:

• Interplay with other regimes is explicit. Compliance efforts under CSDDD can help demonstrate FLR readiness, reinforcing the case for an integrated approach.

Rather than treating the FLR as a stand-alone exercise, forward-looking companies are mapping it onto the same OECD six-step architecture that underpins other regulations including CSDDD:

Designed this way, a single management system can address multiple regulatory triggers at once - reducing duplication of effort across legal, procurement, customs, and sustainability functions, and lowering the overall cost of compliance.

Priorities include:

• identifying which products and components carry elevated risk;
• mapping value chains deep enough to substantiate the origin of labour-intensive inputs;
• strengthening readiness in the importer-of-record role;
• tightening document discipline; and
• building cross-functional ownership.

A clear investigation-response playbook - defining who leads, how external counsel is engaged, and how commercial decisions are escalated - is no longer optional preparation; it is a practical necessity.

The FLR compresses a complex, multi-jurisdictional compliance challenge into a hard commercial reality: get it wrong, and products risk not reaching the market. For Swiss-based companies already managing NUFG obligations and watching CSDDD developments, the question is not "do we need to act" but rather "how do we sequence and integrate this work efficiently."

We'd welcome the opportunity to discuss how FLR applies to your specific supply chain footprint.