Supply Chain Due Diligence: Why UK Companies Can No Longer Afford to Look Away

From USTR Section 301 forced labour investigations to the EU Corporate Sustainability Due Diligence Directive — the regulatory and commercial case for Human Rights Due Diligence has never been stronger, or more urgent.

The United Kingdom has been named in a new wave of US Section 301 investigations targeting 60 economies for failing to impose and effectively enforce a prohibition on the importation of goods produced with forced labour. Initiated on 12 March 2026, this investigation sits alongside the separate excess capacity probes launched the day before – and both carry the same hard deadline: 15 April 2026 for written comments to USTR.

For many UK businesses, the instinct will be to treat this as a government-level problem – something for Whitehall to manage in trade negotiations. That instinct is wrong. The reality is that supply chain due diligence has become a first-order commercial, legal, and reputational obligation for British companies of all sizes. The USTR investigation is one signal among many. The regulatory environment is shifting simultaneously from multiple directions, and businesses that wait for findings before acting will find themselves behind the curve in ways that are costly to reverse.

Supply chain due diligence is no longer a compliance checkbox. It is a strategic business function – as central to managing risk as financial auditing or insurance. The question is not whether your supply chain contains risk. It almost certainly does. The question is whether you know where it is and what you are doing about it.

The Regulatory Landscape: Multiple Pressure Points Converging

1. USTR Section 301 — Forced Labour (March 2026)

USTR has initiated Section 301 investigations against 60 economies, including the UK, for failing to prohibit the importation of goods produced with forced labour. Unlike the excess capacity investigations – which methodically detailed each country’s surplus – this notice takes a more general approach, applying to all 60 economies on the basis of a shared failure to enforce import bans equivalent to the US standard.

The ILO estimates 28 million people are currently in forced labour globally, generating $63.9 billion in annual profits for those who exploit them. US law has prohibited goods produced with forced labour for nearly 100 years. Washington’s position is that trading partners who allow such goods into their markets create an artificial competitive advantage – and USTR intends to act on that position.

For UK businesses, the immediate concern is not simply whether the UK government will be found in breach. It is whether your supply chain – through inputs sourced from any of the 60 investigated economies – contains goods produced with forced labour that could attract US enforcement action, additional duties, or withhold-and-release orders at US ports.

2. EU Corporate Sustainability Due Diligence Directive (CS3D)

The EU’s CS3D entered into force in 2024 and creates mandatory human rights and environmental due diligence obligations for large companies operating in or supplying into the EU market. While the UK is no longer an EU member, British companies with EU operations, subsidiaries, or significant EU customer bases will be within scope. The Directive requires companies to identify, prevent, mitigate, and account for actual and potential adverse impacts in their own operations and supply chains – covering forced labour, child labour, unsafe working conditions, and environmental harm.

For UK businesses with EU market exposure, CS3D compliance is not optional. It is a market access requirement.

3. UK Modern Slavery Act 2015 — A Floor, Not a Ceiling

The UK Modern Slavery Act requires businesses with a turnover above £36 million to publish an annual statement on the steps taken to ensure modern slavery is not present in their operations or supply chains. The Act was groundbreaking when enacted, but the USTR investigation raises an important question: does transparency reporting meet the bar of ‘effectively enforced forced labour import prohibition’ that Washington is looking for?

The answer, candidly, is that it may not. The Modern Slavery Act imposes disclosure obligations, not enforcement obligations. A company can publish a statement confirming it has taken no steps and face no direct legal consequence. The gap between a transparency framework and an enforceable import ban is precisely the gap USTR is investigating. UK businesses should treat the Modern Slavery Act as a minimum floor — and their HRDD programme as the structure built on top of it.

4. ESG Investor and Customer Expectations

Beyond regulatory compliance, supply chain due diligence has become a commercial expectation. Major institutional investors, UK pension funds, and global corporate customers now routinely require evidence of HRDD as a condition of investment or procurement. The Principles for Responsible Investment (PRI), the UN Global Compact, and UK Stewardship Code all embed human rights expectations into their frameworks. Businesses that cannot evidence their supply chain due diligence are increasingly disadvantaged in procurement competitions, investor relations, and insurance underwriting.

What Is Human Rights Due Diligence?

Human Rights Due Diligence (HRDD) is the process by which a business identifies, prevents, mitigates, and accounts for actual and potential adverse human rights impacts in its own operations and supply chain. It is rooted in the UN Guiding Principles on Business and Human Rights (UNGPs), adopted in 2011, and has since been embedded in a growing body of national and regional legislation.

HRDD is distinct from a one-time audit. It is a continuous process that covers six core elements:

HRDD Element	What It Requires
Policy commitment	A clear, board-level commitment to respect human rights, covering the company’s own operations and supply chain relationships
Risk assessment	Identifying where in the supply chain human rights risks are most likely to occur – by country, sector, commodity, and business relationship
Integration into business processes	Embedding HRDD findings into procurement decisions, supplier contracts, due diligence questionnaires, and business partner assessments
Monitoring	Ongoing tracking of HRDD performance across the supply chain – not a one-time exercise
Communication	Transparent reporting to stakeholders on how human rights risks are being managed
Remediation	Having effective mechanisms to address harm when it occurs – including grievance mechanisms accessible to affected workers

HRDD is not simply about avoiding the worst actors. It is about systematically understanding where risk exists in your supply chain, acting proportionately to address it, and being able to demonstrate that process to regulators, customers, and investors when asked.

High-Risk Sectors and Commodities for UK Supply Chains

The US Department of Labor’s TVPRA List identifies 134 products produced with forced labour or child labour in specific countries. For UK businesses, the following sectors and commodity chains carry the highest concentration of HRDD risk and are most likely to be relevant to USTR enforcement attention:

Sector / Commodity	Key Risk Countries (from USTR 60-country list)
Garments, textiles & apparel	Bangladesh, Cambodia, Vietnam, India, China, Pakistan
Electronics & semiconductors	China, Vietnam, Malaysia, Taiwan (inputs including critical minerals)
Critical minerals (cobalt, lithium, rare earths)	China (processing), DRC inputs into Chinese supply chains
Solar modules & panels	China (Xinjiang polysilicon supply chain)
Agricultural products & food	Brazil (beef, soy), India, Indonesia (palm oil), Thailand (seafood)
Rubber & tyres	Thailand, Vietnam, Malaysia, Indonesia
Steel & aluminium	China, India, Vietnam, Mexico
Pharmaceuticals & chemicals	India, China (active pharmaceutical ingredients)
Palm oil & derivatives	Indonesia, Malaysia
Fishing & seafood	Thailand, Vietnam, Indonesia, India

Transshipment and Input Risk A UK company does not need to source directly from a high-risk country to carry risk. Forced labour taints the entire supply chain in which it exists. A UK manufacturer sourcing steel components from a European supplier whose steel originates from Chinese mills, or a UK retailer sourcing garments from a Turkish manufacturer using Uzbek cotton, carries forced labour risk — even if there is no direct contractual relationship with the original producer. This is precisely the risk that USTR enforcement actions target.

The USTR Comment Process: What UK Businesses Should Do

The Section 301 investigation into forced labour practices provides a formal channel for UK businesses and trade associations to put evidence before USTR. The consultation mechanism is a genuine opportunity — not a formality. USTR has been explicit that it will consider evidence of meaningful action taken by investigated economies and their businesses.

UK companies and trade associations can submit comments on:

Whether the UK is in the process of establishing forced labour import prohibitions and whether meaningful enforcement steps have been taken
The extent to which UK businesses have implemented HRDD frameworks that go beyond Modern Slavery Act transparency requirements
Evidence that specific sectors or supply chains have taken effective steps to identify and eliminate forced labour inputs
Arguments against specific tariff or import restriction remedies where they would harm legitimate UK commerce
Quantitative economic evidence of the impact on UK-US trade if import restrictions were imposed

Key Deadlines — Both Investigations Converge on 15 April 2026 Written comments: 15 April 2026 at 11:59 pm EST — Docket USTR-2026-0133 Hearing requests: 15 April 2026 — Docket USTR-2026-0134 Public hearings: 28 April – 1 May 2026 Post-hearing rebuttal: approximately 8 May 2026 All submissions via: https://comments.ustr.gov/s/

What Good HRDD Looks Like in Practice

Businesses often ask what level of due diligence is sufficient. The honest answer is that it is proportionate to risk — more extensive scrutiny is expected where risks are higher. The following represents the standard that regulators, investors, and sophisticated customers increasingly expect:

Map your supply chain. Know who your tier-1 suppliers are, and make a genuine effort to understand tier-2 and tier-3 — particularly for high-risk commodities. You cannot manage risk you cannot see.
Conduct a country and sector risk assessment using ILO, US Department of Labor TVPRA, and Global Slavery Index data. Prioritise your HRDD effort based on where risks are highest.
Use supplier questionnaires and codes of conduct that go beyond boilerplate. Ask specific questions about recruitment practices, wages, working hours, migrant labour, and sub-contracting.
Conduct or commission on-site audits for highest-risk relationships — particularly in high-risk countries for high-risk commodities.
Embed HRDD in procurement decisions. Price negotiations that systematically squeeze suppliers below viable margins create conditions for labour exploitation. Procurement teams need to understand HRDD as part of their role.
Establish a grievance mechanism accessible to workers in your supply chain — not just your own employees. This is a UNGPs requirement and an increasingly standard expectation under CS3D.
Document everything. A well-evidenced HRDD programme that is imperfect but documented and improving is far stronger than one that claims perfection but cannot be substantiated.

The question is not whether your supply chain is perfect. It is whether you have a credible, documented, and improving process to identify and address risk. Regulators, courts, investors, and customers all make this distinction. Those who do the work will be in a stronger position – commercially, legally, and reputationally – than those who do not.