Forced labor compliance has moved to a core business issue for apparel and footwear companies. The risk is no longer limited to one country, one material or one regulation. It is systemic, evolving and increasingly tied to supply chain functionality and brand credibility.
The recent Apparel and Footwear Association (AAFA) webinar, “The Evolving Challenge of Forced Labor Compliance,” outlined how these risks are increasing, and how companies should employ the latest technological supply chain mapping advances to mitigate them. Deanna Javage, solutions consulting manager of supply chain intelligence firm Sayari, highlighted the urgency for using technology to catch risky supply chain patterns and red flags early.
Operational Disruption is Immediate Risk
Aside from the moral issues of using forced labor in materials, the costliest disruption to supply chains is operational.
In today’s enforcement environment, companies must be able to prove what is happening in their supply chains. Laws such as the U.S. Uyghur Forced Labor Prevention Act (UFLPA) and the EU’s forced labor ban have raised the bar, and border detentions, shipment seizures, and market bans are now built into the system.
Goods suspected of forced labor can be stopped by U.S. Customs and Border Protection (CBP), delayed for months or denied entry entirely. This is particularly detrimental for seasonal businesses, as detentions can translate to missed selling windows, excess inventory or pricey rush substitutions.
Supply chains built on exploitation are also fragile. They often depend on hidden subcontractors, compressed timelines and opaque sourcing practices—conditions that can increase quality issues and delivery failures when scrutiny increases.
“By committing to transparency, even when the law doesn’t strictly mandate it, you can maintain a more resilient and defensible brand,” Javage said.
Transshipment and Circumvention Raise the Stakes
The webinar highlighted transshipment as a growing enforcement concern. As scrutiny of high-risk regions like Xinjiang, China has increased, some suppliers have shifted production or routed through third countries to obscure origin. Goods may move through Southeast Asia or other transit hubs, get relabeled, or blended with other materials before entering Western markets.
“One thing we’re seeing is Western organizations shipping through to Indonesia, as that’s an area that hasn’t seemed to have been as heavily enforced,” said Javage. “We’re constantly taking a look at patterns.”
Javage called out ownership as a new pillar of due diligence. “It’s not enough to only take a look at the trade networks. It’s also essential that we take a look at, for example, ownership by or of a Xinjiang-based entity to understand the full picture of exposure of an entity to forced labor practices,” she said.
Regulators also look beyond shipping origin to how goods move and if the route is the most logical. List-based screening captures only a fraction of real risk, and much of today’s exposure sits further up the supply chain where visibility is weakest.
To operationalize supply chain due diligence amid fashion’s high volume and rapid cadence, the webinar stressed technology’s advantage in highlighting red flags.
Javage noted how Sayari could highlight regulatory and sanction flags in tantalum powder, a mineral used in production of buttons and rivets, and the risk of misclassifying tantalum (which is designated as a conflict mineral under U.S. and EU laws) as niobium to evade regulations.
“This supply route of China to the U.S. is geo-politically vulnerable and possibly subject to human rights abuses. Per the tantalum containing goods transshipped to U.S. metals manufacturers through Kazakhstan (with the Hong Kong trading company known for purchasing conflict materials from The Congo), these typological regulations are inherently dynamic and designed for a constantly changing world. And so in order to eradicate forced labor from supply chains, we need to target those typologies themselves to minimize the ability of entities to evade restrictions.”
Financial and Consumer Pressures Increasing
Forced labor exposure is now viewed by investors as a material business risk. Companies that cannot show credible supply chain visibility face higher scrutiny, weaker valuations and even divestment. The assumption that forced labor reduces costs has largely been disproven. In fact, it introduces enforcement penalties and operational inefficiencies, all while eroding long-term value.
On the consumer side, heightened scrutiny and expectations—especially among Gen Z—have shifted. Ethical sourcing is treated as a baseline, and, right or wrong, social media and activist networks amplify supply chain failures quickly, often before facts are fully established. When companies lack visibility or credible answers, reputational damage, aka “the court of public opinion,” can occur regardless of legal outcomes.
Visibility and Data As Strategic Assets
As enforcement becomes more sophisticated, technology and data are tablestakes. Companies need tools that provide visibility beyond tier one, identify risk patterns and monitor changes in real time, yet the process can feel overwhelming for smaller companies or companies just starting their compliance journey.
Javage recommended not trying to “boil the ocean” all at once, but rather taking a phased approach that includes collaborating across teams and departments, unifying efforts, and maximizing the use of available technology and data available. Then prioritizing the risks most critical to your business.
“You might start by taking a look at list-based screening, and then moving on to direct relationships with listed entities, but create a risk approach, so that you really have a clear plan and actionable plan on how to make progress over a continuation of time,” said Javage. “Then you can double click on why this is really important.”
