Regulatory Enforcement in Action

Rising UFLPA Enforcement: Thousands of Cars Detained Over a Single Component

An electrical component containing materials potentially sourced from western China has caused U.S. border authorities to detain thousands of vehicles manufactured by Volkswagen under the UFLPA. Volkswagen self-reported when it discovered the forced labor risk and is working with authorities to investigate the matter.

Until the matter is resolved and any non-compliant components are replaced, the shipment of vehicles will not be allowed into the U.S. market.

Delta Air Lines Sued for Alleged Greenwashing

Delta Air Lines faces a class-action lawsuit challenging the authenticity of its carbon neutrality claims. This lawsuit highlights the broader issue of the reliability of carbon offsets, rather than specific deficiencies in Delta’s practices.

The case underscores the growing market demand for defensible due diligence in sustainability reporting. Companies using offsets risk reputational damage and legal action without solid proof of their environmental impact.

Widespread PFAS Litigation: Manufacturers & Users Targeted

More than 6,400 PFAS-related lawsuits that were filed in U.S. courts from 2005 to 2022 primarily targeted manufacturers and users of these synthetic chemicals.

This highlights the critical need for companies to manage PFAS risks proactively, understanding the potential for significant legal, financial, and reputational damages. Companies are urged to adopt comprehensive strategies to mitigate PFAS exposure and ensure regulatory compliance to safeguard against such extensive legal challenges.

Global Lawsuit Impact: Ansell Faces Forced Labor Allegations

Ansell, an Australian company, is embroiled in a U.S. lawsuit due to forced labor practices at a Malaysian glove supplier. This case underscores the dire consequences of supplier non-compliance, including legal repercussions, reputational harm, and financial loss.

Brands with international operations must ensure thorough due diligence to prevent similar risks and uphold ethical supply chain standards.

Child Labor Allegations at Hyundai’s Alabama Supplier

Hyundai faces severe scrutiny due to allegations of child labor at a supplier’s factory in Alabama, prompting an investigation by the Alabama and U.S. Departments of Labor.

This incident challenges the notion that “low-risk” regions ensure ethical sourcing, highlighting the critical importance of thorough supplier vetting. Even a single instance of unethical practices in the supply chain can lead to significant reputational damage for manufacturers.

Forced Labor Allegations Prompt Legal Action Against Dyson

Dyson faces legal challenges over allegations of forced labor in its supply chain. This situation underscores the importance of rigorous supply chain oversight, as failure to identify and address unethical practices can lead to severe legal repercussions, market access restrictions, and substantial financial consequences.

PFAS Requirements Continue to Evolve in the EU & North America

Multiple U.S. states have updated restrictions and reporting requirements for PFAS in products in the past few months. In addition, France and Denmark have proposed bans in several product categories. The U.S. EPA has added seven PFAS for annual Toxic Release Inventory (TRI) reporting, and Canada is forecasted to add 250 new substances to the Canadian Environmental Protection Act (CEPA).

CBAM: Crackdown on Carbon Data Quality

The Carbon Border Adjustment Mechanism (CBAM) has entered its next phase, requiring primary embedded emissions data from manufacturing installations. Any company with products entering the EU will require a process for engaging their supply chain to request emissions data to support CBAM compliance.

EU Forced Labor Regulation Adopted

EU Parliament has adopted the EU Forced Labor Regulation, which applies to all economic operators placing goods on the EU market. It is expected to come into force in 2027. The regulation prohibits the sale, import, and export of goods made with forced labor, including in online stores.

Congress Calls for “Supercharged Enforcement” of the UFLPA

U.S. congress is demanding amplified enforcement of forced labor prohibitions in automotive parts coming from China and related entities. This renewed scrutiny follows a 2024 report from the U.S. Senate Committee on Finance. In addition, the U.S. Department of Homeland Security made the largest ever one-time expansion of the UFLPA Entity List, adding 26 Chinese companies.

CS3D: Mandatory Human Rights & Environmental Due Diligence in the EU

The EU Corporate Sustainability Due Diligence Directive (CS3D) was approved by the EU Parliament. Large EU companies and foreign companies doing business in the EU must conduct supply chain due diligence on environmental and human rights risks in their operations and value chain. The CS3D includes a reporting obligation and imposes civil liability on companies that fail to conduct due diligence.

Impact of TSCA’s PFAS Reporting Rule on Manufacturers

The TSCA PFAS reporting rule, effective as of October 11, 2023, requires extensive reporting from most manufacturers between November 2024 and May 2025. With “article importers” also in scope of new requirements, the impact will be widespread.

Non-compliance risks include supply chain obsolescence, like losing access to key materials, and potential loss of insurance or a rise in premiums. Proactive supply chain assessment for PFAS is crucial to avoid regulatory enforcement and maintain operational continuity.

Proposition 65 Overhaul: California’s New Short-Form Warning Requirements

California’s OEHHA has proposed revisions to Proposition 65’s short-form warning that would require in-scope companies to name at least one chemical on product labels. Published on October 27, 2023, the proposal addresses “overwarning” issues. Businesses would have two years to comply with the new requirements, significantly impacting labeling strategies to avoid litigation. This change would aim to enhance label effectiveness and consumer awareness.

REACH’s New Restrictions: Microplastics & Formaldehyde

Under REACH, new restrictions targeting intentionally-added microplastics and formaldehyde are set to be enforced. From 2027 to 2035, synthetic polymer microparticles will be in scope of reporting requirements and restrictions, affecting industries from cosmetics to detergents. Industrial products must start labeling from October 17, 2025. Formaldehyde restrictions begin August 6, 2026, first impacting vehicles, furniture, and wood products. These changes signify a major shift, with widespread implications across various sectors.

EU’s New Sanctions on Russian Oil, Iron & Steel

The EU is set to implement new sanctions on Russian oil, iron, and steel products. This move demands rigorous scrutiny of supply chains for materials originating from Russia, escalating the need for responsible sourcing and impacting companies worldwide. It also suggests that a proactive approach to responsible mineral sourcing is increasingly valuable, preparing businesses to weather geopolitical volatility, incoming regulatory demands, and stakeholder scrutiny.

EU Authorities to Increase REACH & RoHS Enforcement

Authorities in the EU are cracking down on REACH and RoHS enforcement, particularly for electrical and electronic products. This action follows the release of an ECHA report finding that 52% of electrical products on the EU market were not REACH compliant, and that 49% of products in scope of RoHS were non-compliant. Manufacturers should take a proactive approach to supplier engagement to collect all necessary compliance documentation.