Your Nepali customer or buyer is asking for ESG information. Here is what the regulatory environment requires — and what they need from you.
Nepal is a significant exporter of carpets, pashmina, garments, and handicrafts to EU and US markets. Nepali SME exporters face ESG requirements from international buyers subject to CSRD, CSDDD, and the UK Modern Slavery Act. Nepal's domestic framework includes the Department of Industry environmental standards and the Securities Board of Nepal (SEBON) corporate governance guidelines. The EU GSP+ preferences available to Nepal create direct linkage between ILO labour standards compliance and market access for Nepali exporters.
Key regulations in Nepal — ESG Supplier Guide
EU CSDDD — Corporate Sustainability Due Diligence Directive
EU companies importing from Nepal — particularly in carpets, pashmina, garments, and handicrafts — will be required under CSDDD to conduct human rights and environmental due diligence across their supply chains. Nepali suppliers will receive questionnaires covering child labour, forced labour, safe working conditions, and environmental management. The carpet and pashmina sectors face particular scrutiny given historical child labour concerns.
UK Modern Slavery Act 2015
UK companies importing Nepali carpets, textiles, and handicrafts must publish annual modern slavery transparency statements. Evidence of child labour-free production, fair wages, and safe working conditions is required from Nepali suppliers. The Goodweave certification scheme is widely recognised by EU and UK buyers as evidence of child-labour-free carpet production.
EU GSP — Generalised Scheme of Preferences (EBA)
Nepal benefits from the EU's Everything But Arms scheme as a Least Developed Country, providing duty-free, quota-free access to the EU market. EBA preferences are conditional on compliance with international human rights and labour standards conventions. Nepali exporters should treat ILO compliance as a market access requirement.
Nepal Labour Act 2017 & Child Labour Prohibition
Nepal's Labour Act 2017 establishes minimum wage, working hours, and occupational safety standards. The Child Labour Act prohibits employment of children under 14 in any work and under 18 in hazardous work. International buyers assess Nepali suppliers against these domestic standards as part of their supply chain due diligence.
What this means for you as a supplier
Nepali exporters supplying EU and UK buyers are not directly regulated by CSRD or CSDDD, but your buyers are. They must assess your labour practices, child labour policies, and environmental management as part of their own compliance. EBA trade preferences create a direct link between ILO compliance and EU market access. The carpet and pashmina sectors face the highest scrutiny — buyers will ask for evidence of child-labour-free production, fair wages, and safe working conditions. Goodweave or equivalent third-party certification significantly strengthens your compliance position.
Key dates
Ongoing
UK Modern Slavery Act — UK buyers require supply chain transparency covering Nepali suppliers
Ongoing
EU EBA preferences — ILO compliance is a condition of duty-free market access
July 2029
CSDDD Phase 1 — largest EU companies must conduct supply chain due diligence including Nepali suppliers
2029
CSDDD Phase 3 — EU companies with ≥1,000 employees; most Nepali exporters' EU buyers will be covered
Carpet and pashmina: certification as compliance evidence
Nepal's hand-knotted carpet industry is one of the country's largest export earners. EU and US buyers in home furnishings and luxury goods conduct detailed supply chain assessments covering child labour, fair wages, and dye chemical safety. The Goodweave certification scheme — which certifies child-labour-free carpet production — is widely recognised by international buyers and significantly reduces the burden of responding to individual buyer questionnaires. Pashmina exporters face similar scrutiny on fibre sourcing, animal welfare, and artisan worker welfare.
Migrant workers: a growing compliance concern
Nepal is one of the world's largest sources of migrant workers, with over 3.5 million Nepalis working abroad — many in Gulf construction and manufacturing. EU and UK buyers are increasingly asking Nepali suppliers about their policies on migrant worker recruitment fees, debt bondage, and passport retention — practices associated with forced labour. Domestic Nepali employers in export sectors should also be prepared to evidence that their own workforce is free from forced labour indicators.
Last reviewed: April 2026. This guide is for general information only and does not constitute legal advice. Regulations change — verify current requirements with a qualified adviser.
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