How Enterprises Can Mitigate Forced Labor Risks in Their Supply Chain

Forced labor remains one of the most pressing challenges facing global supply chains. As sourcing and production stretch across continents and jurisdictions, the risk of unknowingly engaging with suppliers that rely on exploitative labor practices has grown significantly. Compounding the issue is increased regulatory scrutiny and evolving legislation aimed at holding companies accountable for unethical labor practices—not just within their own operations but across every tier of their supplier network.

This changing landscape means that enterprises can no longer afford to treat forced labor as a distant concern. Instead, it must become a central pillar of supply chain strategy, risk management, and due diligence. In 2024 alone, the U.S. Customs and Border Protection detained thousands of shipments under the Uyghur Forced Labor Prevention Act (UFLPA), spotlighting the urgency for businesses to gain greater control and visibility over their sourcing channels.

This blog explores key areas where enterprises can reduce their exposure to forced labor risks—and what practical steps they can take now to ensure compliance, build trust, and protect their reputation.

Understanding the Scope of Forced Labor Risk

Forced labor often occurs in the lower tiers of the supply chain—far beyond the reach of many traditional supplier audits. It is especially prevalent in sectors such as apparel, agriculture, electronics, and mining, where production is labor-intensive and difficult to trace.

A critical first step is to understand where these vulnerabilities exist. This involves mapping not only direct suppliers but also sub-suppliers and raw material sources. According to the U.S. Customs and Border Protection, high-risk regions and commodities should be prioritized for more detailed scrutiny and documentation.

Strengthening Supplier Due Diligence

Traditional audits, while useful, often fail to detect hidden forced labor practices. Enterprises must go beyond checklists and questionnaires to develop more robust due diligence frameworks. This includes:

• Conducting unannounced or third-party audits in high-risk regions
  
• Requiring supplier declarations and certifications related to labor practices
  
• Embedding forced labor compliance into procurement contracts and onboarding processes
  

As highlighted by BSR, effective due diligence should be integrated into broader business efforts. This means not only identifying and prioritizing forced labor risks based on geography, industry, or product type, but also developing tailored strategies in collaboration with suppliers. By addressing labor concerns in context - rather than through blanket approaches - companies can foster long-term improvements while remaining aligned with both regulatory expectations and operational realities.

Leveraging Technology for Transparency

New technologies make it easier to monitor, verify, and trace labor conditions across global supplier networks. Platforms that aggregate supplier data, track audit outcomes, and flag anomalies are helping procurement teams gain real-time insight into potential risks.

For example, AI-driven tools can scan supplier documentation, monitor regulatory watchlists, and identify discrepancies that may indicate non-compliance. Digital traceability solutions, including blockchain, can record immutable records of supplier certifications and chain-of-custody documents.

As reported by the Financial Times, companies are increasingly leveraging AI and machine learning to achieve end-to-end supply chain visibility and compliance. These technologies enable businesses to monitor labor conditions more closely, allowing for proactive intervention before violations occur.

Aligning with Regulatory Requirements

Governments around the world are expanding due diligence expectations. In the U.S., the UFLPA effectively bans the import of goods made with forced labor from the Xinjiang region of China. The European Union is advancing similar legislation that will require companies to map and remediate human rights risks throughout their supply chain.

Enterprises must stay ahead of these changes by tracking regulatory developments, documenting sourcing decisions, and maintaining audit-ready records. Transparency is key—regulators expect companies to prove the absence of forced labor, not just deny its presence.

Organizations that proactively align with these expectations can reduce enforcement risk and maintain market access. A recent analysis by Pillsbury outlines best practices for demonstrating compliance through data collection, supplier engagement, and documentation protocols.

Fostering Ethical Supplier Partnerships

The most sustainable way to eliminate forced labor risk is to build long-term relationships with suppliers who share your commitment to ethical sourcing. This may include providing training, offering support for corrective actions, or incentivizing performance through preferred vendor status.

Collaboration - rather than punishment - can lead to meaningful progress. By helping suppliers improve their practices rather than severing ties at the first sign of risk, companies can foster systemic improvements across their entire value chain.

As supply chains evolve in complexity and regulation tightens, companies that integrate ethical sourcing into their operations and culture will be better equipped to thrive.

How Tradeverifyd Supports Forced Labor Risk Mitigation

Tradeverifyd helps enterprises proactively manage forced labor exposure through real-time supplier monitoring, third-party risk insights, and customizable due diligence tools. From onboarding verification to ongoing compliance alerts, the platform empowers procurement and compliance teams to:

• Identify high-risk regions and suppliers
  
• Centralize supplier documentation and attestations
  
• Monitor changes to regulations and enforcement trends
  
• Respond quickly to emerging risk indicators
  

By turning supply chain visibility into actionable intelligence, Tradeverifyd helps businesses stay compliant, minimize reputational exposure, and demonstrate ethical leadership.

Build a Safer, Smarter Supply Chain

Request a demo to see how Tradeverifyd supports labor risk mitigation and transparent sourcing across complex supplier networks.