Organizations worldwide must comply with supply chain transparency and traceability laws to succeed in international trade. These laws are critical for ensuring that all parts of the supply chain adhere to ethical and legal standards, covering areas such as human rights, environmental sustainability, anti-slavery, and anti-child labor practices. The penalties for non-compliance can be severe, including hefty fines, legal sanctions, and exclusion from lucrative markets.
Having a transparent and traceable supply chain is not just a legal requirement but a fundamental aspect of ensuring the ongoing success and competitiveness of your organization in the global market.
Supply Chain Laws Around the World
- ILO Convention 29 (Forced Labour Convention) is crucial for companies globally as it mandates the elimination of forced labor in all its forms. Compliance with this convention is integral to supply chain transparency and traceability, ensuring that all components of a company’s supply chain are free from forced labor practices.This adherence not only safeguards a company’s reputation but also aligns it with international human rights standards, reducing the risk of legal penalties and exclusion from global markets. Convention 29 has been ratified by 181 out of 187 ILO member states.
- ILO Convention 105, (Abolition of Forced Labour Convention), aims to eradicate all forms of forced or compulsory labor. This convention, adopted in 1957, has been ratified by 176 countries. It prohibits forced labor as a means of political coercion, economic punishment, labor discipline, and discrimination. By committing to this convention, countries pledge to eliminate forced labor practices, thereby supporting human rights and ethical labor standards globally.Ensuring supply chain transparency and traceability helps businesses comply with these international standards and fosters a fair and ethical trade environment
- The OECD Due Diligence Guidance relates to supply chain transparency and traceability by ensuring responsible sourcing practices in the mineral supply chains, with a focus on human rights and environmental sustainability. This guidance helps businesses identify and address risks in their supply chains, promoting ethical practices and compliance with international standards.
- Australia Imported Food Traceability Scheme: This scheme requires importers of certain high-risk foods to be able to trace the food back to its origin.
- Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010). The ACL prohibits misleading or deceptive conduct in relation to the supply of goods and services. This is relevant if a company makes claims about their products (e.g., ethically sourced, sustainable) but lacks transparency about their supply chain practices, potentially misleading consumers.
- Australian Modern Slavery Act (2018). Requires large businesses and other entities to report on the risks of modern slavery in their operations and supply chains, and actions taken to address those risks.
- China Mandatory National Standard for Traceability Management of Key Areas (GB/T 20878-2014): This standard establishes a framework for traceability systems in key sectors, including food, medicine, and agricultural products.
- India Child Labour (Prohibition and Regulation) Amendment Act: This law prohibits the employment of children under 14 in any occupation and of adolescents (14-18 years) in hazardous occupations. Although not specific to supply chains, it impacts industries relying on child labor.
- Japan Act on the Promotion of Food Business Operators’ Self-Governance (2018): This act encourages food businesses to implement voluntary traceability systems.
- New Zealand Anti-Slavery Modern Slavery Act (2018): Requires large entities operating in or from New Zealand to report on efforts to address modern slavery in their operations and supply chains. Tracking of labor practices is essential for compliance.
- Philippine Anti-Child Labor Law: The law mandates the prohibition of child labor and requires companies to conduct due diligence to ensure no child labor is involved in their supply chains.
- South Korean Act on the Protection of Children and Youth Against Sexual Offenses: South Korea’s law includes provisions that affect supply chains by imposing strict penalties for exploiting children in any form of labor, aligning with broader international efforts to combat child labor.
- Thai Labour Protection Act: This act includes regulations that aim to improve working conditions and protect workers’ rights in supply chains, with specific provisions against child labor and forced labor.
- EU Corporate Sustainability Due Diligence Directive (CSDDD) (2024): This directive requires large companies (over 1,000 employees and €450 million turnover) to identify and address environmental and human rights risks in their supply chains.
- EU Medical Device Regulation (MDR) (2017): The MDR includes requirements for manufacturers of medical devices to implement traceability systems to allow for identification, verification, and location of devices throughout the supply chain.
- EU REACH Regulation (Registration, Evaluation, Authorization and Restriction of Chemicals) (2006): This regulation requires companies to register and track the use of certain chemicals throughout the supply chain, promoting responsible chemical management.
- EU RoHS Directive (Restriction of Hazardous Substances) (2002/95/EC): This EU directive restricts the use of certain hazardous substances in electrical and electronic equipment (EEE). Compliance often involves traceability systems to ensure restricted materials are not used.
- The EU Conflict Minerals Regulation (Regulation (EU) 2017/821) came into force on January 1, 2021. It aims to ensure that EU importers of tin, tantalum, tungsten, and gold (3TG) from conflict-affected and high-risk areas (CAHRAs) meet international responsible sourcing standards set by the Organisation for Economic Co-operation and Development (OECD).
- The European Union Deforestation Regulation 2023/1115 (EUDR) (2023): Requires companies to establish and implement due diligence systems to ensure that their supply chains are free from deforestation and forest degradation risks.
- Austria Federal Act on Supply Chain Responsibility in the Garment and Textile Sector (2021): This law focuses on the garment and textile sector, requiring companies to take measures to prevent human rights violations, including modern slavery, in their supply chains.
- Belgian Vigilance Proposal (2021): Imposes mandatory due diligence obligations for businesses operating in Belgium (including foreign owned businesses), covering supply and value chains and extending to human rights, labor rights, and environmental standards.
- Denmark Act on Sustainable Value Chains (2022): This law requires large companies headquartered or operating in Denmark to conduct due diligence on human rights and environmental impacts throughout their supply chains, often involving mapping and traceability.
- French Corporate Duty of Vigilance Law (2017): Applies to companies with more than 5,000 employees in France or more than 10,000 employees globally, requiring them to establish, publish, and implement a Compliance Plan to identify and mitigate risks throughout the supply chain.
- German Supply Chain Due Diligence Act (2023): Extends to companies with 1,000 or more employees, requiring them to take measures to respect human rights and the environment within their supply chains.
- Netherlands / Dutch Responsible and Sustainable International Business Conduct Act (2023): Enforces due diligence on value chains to recognize human rights, labor rights, and environmental violations in foreign trade.
- Norwegian Transparency Act (2021): Mandates companies to conduct due diligence on human rights and working conditions in their supply chains and report annually.
- Swiss Code of Obligations (2022): Includes supply chain due diligence and transparency obligations for Switzerland-based companies in relation to minerals and metals from conflict-affected areas and child labor.
- UK Modern Slavery Act (2015): Requires businesses to report on steps taken to ensure slavery and human trafficking are not present in their supply chains.
- Turkish Regulation on Pharmaceutical Establishments and Products in Pharmaceutical Establishments (2022): Covers the entire pharmaceutical supply chain in Turkey, including manufacturers, importers, exporters, wholesalers, pharmacies, and hospitals.
- The UAE’s Anti-Human Trafficking Law (Law 51 of 2006) criminalizes human trafficking and forced labor and creates a legal framework that discourages such practices within companies operating in the UAE (including their sourcing practices throughout the supply chain).
- Canadas Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff (2024) – Requires Canadian companies to report on measures taken to prevent forced labor and child labor in their supply chains and includes amendments to the Customs Tariff to enforce these provisions.
- Canada’s Extractive Sector Transparency Measures Act (ESTMA): This act requires extractive entities active in Canada to publicly disclose, on an annual basis, specific payments made to all governments in Canada and abroad.
- Canadas Fighting Against Forced Labour and Child Labour in Supply Chains Act (2020): Prohibits the importation of goods produced wholly or in part by forced or child labor. Requires companies to submit annual reports on their due diligence efforts.
- The California Extractive Sector Transparency Measures Act (2014) requires companies involved in the extraction of oil, gas, and minerals to publicly disclose payments made to governments. This includes taxes, royalties, fees, and other financial transactions. The act aims to enhance supply chain transparency and traceability by ensuring that companies report these payments, thereby promoting accountability and reducing the risk of corruption. Compliance with this act helps ensure ethical practices and fosters trust in the supply chains of the extractive sector.
- California Assembly Bill 1693 (2022): This law requires large retailers and manufacturers selling certain apparel products in California to disclose information about their efforts to eradicate forced labor in their supply chains, often involving supply chain mapping for transparency.
- California Transparency in Supply Chains Act (2010, California, USA): Requires large retailers and manufacturers to disclose efforts to eliminate slavery and human trafficking from their direct supply chains.
- New York Fashion Sustainability and Social Accountability Act (proposed) – Applies to apparel and footwear companies with global revenues of at least $100 million, requiring them to map 50% of their supply chains and identify social and environmental impacts.
- USA Federal Dodd-Frank Wall Street Reform and Consumer Protection Act (2010): Section 1502 of this act requires companies to disclose their use of conflict minerals from the Democratic Republic of Congo and surrounding countries.
- USA Federal Food Safety Modernization Act (FSMA) (2011): This act requires certain food facilities to implement traceability plans to track food products through their supply chain during a foodborne illness outbreak.
- USA Federal Requirements for Additional Traceability Records for Certain Foods (2023): Requires enhanced record-keeping and due diligence for certain foods to improve traceability throughout the supply chain.
- USA Federal Uyghur Forced Labor Prevention Act (2021): Prohibits the importation of goods made with forced labor from the Xinjiang region of China and requires due diligence to ensure no forced labor is involved.
- Argentina Labor and Environmental Regulations: Argentina imposes stringent labor and environmental regulations on companies, although it does not have specific laws dedicated solely to supply chain transparency. Companies must adhere to these regulations and comply with international standards set by the OECD and the United Nations Global Compact to ensure ethical business practices.
- Brazil Federal Constitution: Contains social rights and humanitarian clauses that support supply chain transparency and due diligence to prevent labor abuses.
- Brazil Law No. 12.987/2014: This law mandates traceability systems for animal products throughout the supply chain.
- Colombian Human Rights Due Diligence Laws: These laws require companies to prevent human rights violations in their supply chains, including compliance with labor laws and environmental regulations. Companies must ensure that their suppliers adhere to these legal standards to maintain transparency and accountability.
