Forced Labour and Child Labour in Canada’s Supply Chains: What You Need to Know About Bill S-211
This two-part blog series will break down what we know so far about Canada’s forthcoming modern slavery legislation. This first blog provides an overview of the bill, who it applies to and the reporting requirements. In part two, we will dive deeper into how you can best prepare if you are required to submit a report.
Is your organization ready to report on their Supply Chain Risks when Canada’s Bill S-211 is passed?
It is estimated that over 49.6 million people around the world live in modern slavery, with 27 million of those people trapped in forced labour and human trafficking. Slavery exists in many different forms, but modern slavery is defined by Anti Slavery International as the forced, tricked or coerced exploitation of an individual by others, for personal or commercial gain. The most common forms of modern slavery that could be found in your supply chain today are forced labour, debt bondage, child slavery, and descent-based slavery. Slavery affects every country and it is a terrifying truth that no supply chain is protected from the presence of child labour and forced labour.
The complexity of globalized supply chains has made it challenging for businesses to identify exploitation and forced labour. Over the past few years, Canada has been implementing an increasing number of measures relating to modern slavery. While the issues underlying the regulations aren’t new, there are implications for organizations with international supply chains.
One pending measure that may come into effect in 2024 is the “Canadian Modern Slavery Bill”, or Bill S-211. Bill S-211 (the Act) will enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and amend the Customs Tariff. The main purpose of this Act is to ensure transparency within Canadian supply chains. This will require certain corporations to report on steps taken to prevent and reduce forced labour and child labour in their supply chain.
Modelled under similar legislations in California, the UK and Australia, Canada’s bill passed the upper chamber last year and is awaiting royal assent. The Act could become law as early as March 2023. If it is passed anytime within 2023, then the earliest it can come into effect is January 1st, 2024, and the first report will be due in May 2024.
Who does this Act apply to?
This Act applies to anyone on the Canadian stock exchange, federal institutions, ministries, Crown corporations, and anyone who meets two of the three requirements in one of the two most recent financial years:
- Has at least 20 million CAD in assets
- Has generated at least 40 million CAD in revenue
- Has at least 250 employees
Companies will also need to submit a report if they meet the above-mentioned criteria and produces, sells or distributes goods, imports goods in Canada, and/or manages a company that participates in these activities. The provisions are drafted broadly and there is no minimum threshold for the production, sale, distribution or import of goods that trigger a reporting obligation.
What is required in the Supply Chain Risk Reporting Requirements?
Full details of the required scope and format of the report have yet to be released, but we do know that reporting requirements will be largely the same for both government institutions and private entities. Any corporation that falls under the requirements will need to produce a report by May 31st of each year to be made publicly available and submitted to the Minister of Public Safety and Emergency Preparedness. Corporations may submit single or joint reports for related entities and CBCA corporations must make their report available to all shareholders along with their annual financial statements.
From what we know so far, reports will need to include the following information:
- Structure and activities of the entity and its supply chains
- Policies, procedures and steps taken to avoid forced and/or child labour
- Disclose high-risk areas of the supply chain and steps taken to mitigate risks
- Measures taken to remediate loss of income from forced and/or child labour
- Training provided to employees regarding forced and/or child labour
- Methods of measurement to ensure steps for risk management are effective
A summary offence is built into the act which means entities who fail to file and publicize their annual Supply Chain Risk Report will be subject to a fine of up to CAD 250,000.
Although measures taken against modern slavery have been a long time coming, Reeve believes that this is a significant first step for businesses to learn about the risks and opportunities in their supply chains. Similar to established legislation in California, Australia and the United Kingdom, Canada’s Act will place emphasis on reporting obligations. Conversely, other countries including France, Germany and the Netherlands are focusing on mandatory Human Rights Due Diligence, enforcing a duty on entities to prevent human rights violations in their supply chains. The impact of Canada’s chosen approach remains to be seen, however, it is undeniable that it will create momentum for businesses and consumers to purchase more responsibly.
Check back in the next few weeks for the second part of this series on Canada’s forthcoming legislation. We will be diving deeper into this topic and will be providing you with tips on how your organization can prepare for the passing of this Act. Let us know what your thoughts are below, and whether your corporation is ready to report on its supply chain.