For two decades, supply chain transparency has largely been a voluntary exercise. Audit reports, supplier codes of conduct and corporate sustainability pledges have made up the bulk of brands’ efforts to push a more ecological and socially aware agenda, but times have changed.
With European Union directives such as the Corporate Sustainability Due Diligence Directive, or CSDDD, and the Forced Labor Regulation, or FLR, going into effect in 2027, brands are being forced to shift to a new paradigm of active accountability, according to Jasmin Malik Chua, Sourcing Journal’s climate and labor editor, who moderated a discussion about what human rights due diligence looks like in 2026 at the Sourcing Journal Fall Summit on Sept. 29.
New legal and regulatory standards mean brands are “really entering a new era” when it comes to compliance, according to Shawn MacDonald, CEO of Verité, an advisory, research and advocacy group. “For so long, if company wasn’t a really well-known household name that might get the attention of an editor at The New York Times to get on the front page, or by an attack by a particular advocacy group, they could essentially assume that they wouldn’t get into much trouble.”
Now, though, there are “a proliferation of import prohibitions…for goods made with forced labor,” and that means “we have a threat calculus that’s deeper, wider, more legal and more financial.” Companies are being held to account for their procurement practices like never before.
“If you get caught by U.S. Customs and Border Protection now, it’s essentially millions and millions of dollars in remedy,” he added, referencing violations of the Uyghur Forced Labor Prevention Act, which took effect in 2022.
The EU will begin enforcing its own forced labor import ban next year, and with 60 economies targeted by the Trump administration’s Section 301 investigation and subsequent tariff penalty based on allegations of lax import regulation, MacDonald believes they will adopt similar provisions. That spells greater risk for companies selling into global markets.
The executive believes that with increased adoption of AI by enforcement agencies, companies could become “susceptible to being spotlighted” and scrutinized. Advocacy groups, unions and other due diligence bodies are only advancing in their capabilities and capacity to root out wrongdoing. Brands that invest in mapping their supply chains and ensuring compliance will be better positioned to weather these shifts.
Asked whether, in this new regulatory era, brands could recognize the benefits of treating worker organizations as strategic compliance partners, Kelly M. Fay Rodríguez, executive director of the Competence Center for Human Rights Due Diligence and former U.S. Special Representative for International Labor Affairs at the State Department, said, “As a proper optimist, I think companies are going to get it.”
“If you want to protect your supply chain, you’re going to engage unions. Period,” she added. State and local, national and global union federations represent workers across global value chains, and even in locales that prohibit unions or engage in union-busting, there are labor actors that brands can partner with to ensure freedom of association, she said.
IndustriAll Global Union Federation and UNI Global Union Federation, which both represent workers in the fashion industry, are invaluable resources for brands, she added. “They know the risks that exist in countries around the world, from manufacturing fabrics to stitching to dyeing, to shipping, selling goods at the storefronts, and they can be crucial stakeholders for you for companies that want to avoid the chaos, that want to avoid the unpredictability of enforcement, and/or simply want more sustainable supply chains,” Rodríguez said. “They want more resilient and profitable supply chains.”
Brands would do well to engage as many resources as they can wrangle to aid in their efforts to achieve and maintain compliance, according to Marissa Brock, senior director of policy at Sourcemap Inc. But if they’re feeling behind, it’s not too late.
“One would hope that brands have been conducting these due diligence processes now for years. But let’s say that they have not. Some have not. There really is quite a bit of time now to get these processes in place,” she said. Full application and compliance for the CSDDD, for example, takes effect in 2029, and reporting requirements begin in 2030. Full enforcement of the FLR begins earlier, in December 2027, but there’s still more than a year of runway for firms that are proactive.
“Advice that I frequently give to a lot of the companies that we work with is that there are a lot of pieces of legislation now that have overlapping requirements, not just on the human rights side, but on the environmental risk side as well. The goal should be to find the path of least resistance in terms of data collection to make sure that you are collecting that data in as efficient a way as possible,” Brock said.
Streamlining the process of coalescing supply chain insights will help brands not just with the regulations coming down the pike, but those that will inevitably follow.
“The more cumbersome you make that data collection process, the less likely your company is to really adopt those processes, and then the less compliant you will be,” Brock said. “So, that really is the advice that I would I would share: Start as soon as humanly possible.”