Outlook 2026: contributors examine how recalibrated EU frameworks, product-based regulations and forced labour bans are reshaping corporate accountability, governance and investment decisions across global supply chains.
Forward Law Review asked leading practitioners to explore how EU sustainability regulation is entering an operational phase, with supply chain due diligence, traceability and market access moving to the centre of business and human rights risk.
Here are their predictions for 2026.
Annette Mutschler-Siebert, partner, K&L Gates, Berlin:
Global supply chains remain a central testing ground for the effectiveness of sustainability and human-rights regulation. In this context, recent changes to the EU sustainability framework – mostly focused on simplifying the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) – embody the European Union’s attempt to balance its ambitious sustainability goals with business continuity and the competitiveness of its industry, reflecting a recalibrated policy choice towards selective accountability combined with enhanced implementation discipline for all companies active in the EU.
Looking ahead, sustainability regulation will continue to be shaped by global supply-chain reconfiguration. Geopolitical fragmentation, strategic autonomy and “de-risking” policies suggest that human-rights due diligence will increasingly intersect with trade, industrial policy and security considerations. In this respect, supply-chain resilience, diversification, and transparency will no longer be policy goals only, but economic necessities and also safeguards against human-rights risks in strategic sectors such as critical raw materials, pharmaceuticals, and semiconductors.
In this prospective view, the EU sustainability agenda is moving towards a hybrid governance model: public-law inspired obligations embedded into private contractual architectures (via Codes of Conduct, new GTC, Digital Product Passports etc.), designed to ensure that sustainability requirements remain compatible with long-term competitiveness. The central challenge for post-2026 will be to reconcile corporate accountability with economic resilience, embedding human-rights protection within broader strategies of strategic autonomy and global competitiveness.
Daniel D’Ambrosio, partner in Kirkland & Ellis’s sustainability practice, London:
2026 will see the continued shift from voluntary commitments to serious legal, regulatory and commercial risks in the business and human rights space. A dominant theme for the year will be supply chain traceability as corporates and investors prepare for the impacts of the EU Forced Labour Regulation (FLR). It is no longer about ‘ethical’ or ‘responsible’ sourcing, but market access. In particular, US and European markets and, over time, the UK, Southeast Asia and Latin America, where governments have committed to product or import bans.
Certain products and commodities will be subject to heightened scrutiny under sectoral requirements, such as the EU Deforestation Regulation, EU Batteries Regulation or the EU Ecodesign for Sustainable Products Regulation. ‘Traceability readiness’ will be a key differentiator and an inability to substantiate a chain of custody for specific products or commodities before these hard deadlines come into effect may render opaque supply chains uninvestable. Liability for parent companies and customers at the top of large, complex supply chains in the UK, US and Europe will continue to increase.
As a result of these developments, investors may begin to favour companies that can digitally substantiate their product supply chains over those relying on high-level policy statements.
Christelle Coslin, partner and co-head of global business & human rights at Hogan Lovells, Paris; Liam Naidoo, partner, London; and Christian Ritz, partner, Munich:
In 2025, the framework for supply chain due diligence in the EU was finalised. This cutting of red tape means that 2026 will be the year of operationalisation to address the requirements following from both product-focussed EU regulations such as the Deforestation Regulation, the Battery Regulation, and the Forced Labour Ban (all entering into application from end of 2026 onwards) and the Corporate Sustainability Due Diligence Directive (CSDDD). Its risk-based Tier N approach is best suited to serve as holistic supply chain due diligence framework combining all requirements.
Companies should move from policy to process – mapping salient risks, embedding risk based policies and processes, strengthening grievance mechanisms, and increase supply chain transparency and traceability. Implementation must be global by design. Global supply chains intersect with jurisdictions like the US and emerging Asian markets, where human rights and ESG enforcement are increasing. Divergent standards, increasing civil litigation risk and extraterritorial reach – eg, import bans linked to forced labour – require a holistic, multi-jurisdictional approach to ensure business opportunities.
The message for 2026 is: the compliance bar has been set and supply chain due diligence is a core, ongoing ESG obligation (and indeed is a risk mitigant), requiring integration of human rights due diligence into governance and risk management.
Clare Connellan, co-head of sustainability and responsible business, White & Case, London:
The landscape for business and human rights continues to shift from soft law expectations to enforceable legal obligations, increasingly framed through the lens of organisational resilience.
Instruments such as the Corporate Sustainability Due Diligence Directive, the Corporate Sustainability Reporting Directive and the EU Forced Labour Regulation – despite the rocky road to their final form – are reshaping how companies assess risk, structure supply chains and exercise board oversight.
A key trend is the growing convergence between due diligence, disclosure and liability. Discrepancies between public disclosures, contractual undertakings and operational realities can expose companies to heightened regulatory scrutiny, civil litigation and strategic complaints and investigations. Enforcement priorities continue to focus on labour standards, forced labour risks and sourcing from high-risk areas.
Looking ahead, regulators and courts are expected to focus less on the existence of policies and more on the quality of supply chain risk assessment, decision making and remedy. Boards will be under pressure to demonstrate active oversight of supply chain risks, with human rights embedded into enterprise risk management and governance – reflecting a broader move towards resilience as a core business imperative, rather than a discrete compliance exercise.