Board Rooms and C-Suites Are No Longer Insulated From Supply Chain Risk
By Rebecca Brocato | 23 June 2026
minutes to read.
Supply chain compliance has traditionally been viewed as an operational concern, something handled by sourcing teams, logistics managers, and legal counsel. Boards set strategy and approved budgets. Supply chain risk was someone else's problem
That is no longer the world we live in.
I’ve spent my career at the nexus of geoeconomics and corporate accountability. I’ve never seen a regulatory environment move this fast, or this consequentially. It is a new era, and the top of the organizational chart is accountable.
New regulations and trade deals are codifying supply chain risk mitigation and augmenting existing legal and regulatory regimes, that themselves are being used in novel and more comprehensive ways with durable bipartisan support.
Liability is now personal
The Department of Justice is increasingly using the False Claims Act (FCA) to prosecute trade fraud, a law dating back to 1863 that is now being deployed more robustly than ever. In FY 2025, the U.S. government recovered more than $6.8 billion in FCA settlements.
What makes this especially relevant to executives: in trade fraud cases under the FCA, when the DOJ is involved, the CEO or CFO can be held accountable for financial penalties and, in some circumstances, potential criminal liability, even if they were not the ones making the decisions that led to the problem. And the cases are triggered closer to home than most executives assume, with whistleblowers most commonly being current or former employees who observed practices they believed misrepresented declarations to the government.
Violations the FCA is actively targeting include transshipment (routing goods through third countries to conceal their true origin), country-of-origin misrepresentation, undervaluation, and product misclassification. As new free trade agreements create duty benefits, the risk of false origin claims to access those benefits has grown, adding a new layer of FCA exposure that did not exist at this scale before. Recent settlements have ranged from $4.9 million to $54.4 million, and in one case, the whistleblower alone received $9.75 million.
Regulatory frameworks are closing every exit
If the liability picture weren't enough, the regulatory architecture is being deliberately designed to eliminate geographic workarounds. For several years, companies facing U.S. enforcement actions could redirect detained shipments to Canada, the UK, or European markets. That gap is closing fast.
Recent U.S. trade agreements with Malaysia and Cambodia now include mutual recognition of Withhold Release Orders (WROs). Canada and Mexico have implemented forced labor import bans with equivalent provisions. Thailand, Vietnam, and Indonesia are following. The pattern is unmistakable: overlapping enforcement jurisdictions are being constructed specifically to prevent companies from routing prohibited goods around barriers.
Meanwhile, the EU Forced Labour Regulation (EUFLR) takes effect in December 2027. Products found to have been made with forced labor will be subject to withdrawal from the market and destruction orders, even where they have already reached retail shelves. And on March 12, 2026, the U.S. Trade Representative opened Section 301 investigations into 60 trading partners, covering every major manufacturing economy, to determine whether those governments are adequately blocking forced-labor goods from reaching their markets.
Whether it's forced labor, evasion of antidumping duties, or illegal transshipments to hide the true origin of a raw material or a finished product, the expectation of transparency and traceability in the supply chain must be acknowledged as a non-negotiable requirement.
Origin verification is now market access infrastructure
Origin verification has become must-have market access infrastructure. This is no longer a sustainability add-on. The companies treating it as an ESG initiative or a reporting exercise are misreading the risk.
What our 2026 Supply Chain Intelligence Report makes clear is that the data is hard, surprising, and tied directly to business survival. Prohibited-cotton risk climbed from 64% of brands in 2024 to 90% in 2025. That reversal happened despite high traceability adoption rates of 87% in the U.S. and 94% in the UK.
That’s the critical point: companies invested in traceability, believed they had visibility, and still had a systemic risk problem. Because traceability documents what suppliers say. Only independent, defensible origin verification confirms what’s true. The U.S. government understands this too. CBP operates a network of laboratories with origin verification capability, including isotopic analysis, meaning the agency can independently test products at the border without relying on importer declarations. Similar science-based approaches are emerging in the EU.
For boards evaluating market access in the U.S., EU, and UK, the implication is direct, companies that cannot produce verified, science-based evidence of origin will increasingly find themselves on the wrong side of import enforcement, consumer trust, and partner requirements. This isn't enforcement risk sitting at the edge of your business. It's sitting at the gate.
The commercial and reputational stakes are equally high
Beyond the legal exposure, the commercial consequences of getting this wrong are accelerating. Our research found that in the U.S., 37% of brands have already faced regulatory or compliance challenges, 34% experienced lawsuits, and 32% lost partnerships. In the UK, 80% faced regulatory challenges and 65% cannot currently meet their own sustainability goals.
And consumers are watching. Our research found that 60% of consumers actively avoid products with untrustworthy origins – the single most powerful purchase deterrent we identified, exceeding concerns about price or quality. Marketing claims rank last in consumer trust at just 3%. Scientific traceability to origin ranks second at 23%, behind only government regulation. Brand trust built over decades can be undone by a single supply chain exposure.
Questions every board should be asking right now
If you're walking into your next board meeting or executive review, these are the questions that should be on the table:
- Can we verify, with independent evidence, where our raw materials actually originate – not just what our suppliers declare? Supplier declarations are relied upon by 84% of UK companies, yet they cannot detect substitution or mislabeling once materials enter the supply chain.
- Do we have visibility beyond Tier 2? Substitution most commonly occurs further down the supply chain at the yarn spinners or raw material processors. If your traceability stops at the fabric mill, you have a gap. With regulatory agencies, trade associations, and the media publishing extensive guidance, not knowing what sits below Tier 2 is becoming increasingly difficult to defend.
- Have we stress-tested our origin claims against UFLPA, EUFLR, and Section 301 exposure? If CBP issues a WRO against a region you source from, how quickly can you produce clear and convincing evidence of compliance? You only have 30 days to prove.
- Is our verification programmatic, or reactive? One-time testing creates a moment-in-time snapshot. Programmatic, ongoing testing changes supplier incentive structures and provides the continuous visibility needed to catch issues before they escalate.
- Does our board have documented evidence sufficient to defend against a False Claims Act allegation? If the answer is uncertain, that uncertainty is itself a material risk.
The window is narrowing
The companies that will be best positioned when enforcement tightens further are those investing now, before pressure forces reactive adoption. Programmatic material verification, built on forensic science rather than documentation alone, allows brands to identify problematic suppliers, build a defensible position against forced labor scrutiny, and credibly attest to origin claims with evidence that holds up under investigations, audits, and court scrutiny.
Supply chains are being judged on the strength of what can be proven. The question for every board is simple: can you stand behind your products with evidence, or with paperwork
Those are not the same thing.
Disclaimer: The information provided in this document does not and is not intended to constitute legal advice. Instead, all information presented here is for general informational purposes only. Counsel should be consulted with respect to any particular legal situation.
Rebecca Brocato
Rebecca Brocato is Chief Government Affairs Officer - Americas at Oritain, based in Washington D.C. She has over two decades of experience at the highest levels of U.S. foreign and national security policy, international trade, and economic statecraft. Prior to joining Oritain she was Special Assistant to the President and Senior Director for Legislative Affairs at the National Security Council.
