Introduction  

In recent years, there has been a growing global focus on supply chain transparency, evident in the emergence of various legislations worldwide such as the UK Modern Slavery Act (2015) and the Australian Modern Slavery Act (2018). These laws signal a shift towards promoting responsible business conduct. Canada’s Bill S-211, known as the «Fighting Against Forced Labour and Child Labour in Supply Chains Act,» represents a significant advancement in this direction. Enacted on January 1st, 2024, the Act mandates reporting obligations for specific government and private-sector entities in Canada, requiring them to disclose risks related to forced and child labour. 

Compliance Requirements  

The Act defines an entity as any corporation, trust, partnership, or other unincorporated organization that is either; a) listed on the stock exchange in Canada; or b) has a place of business, does business, or has assets in Canada that also meets at least two of the following conditions for at least one of its two most recent financial years:   

i. it has at least $20 million (CAD) in assets,   

ii. It has generated at least $40 million (CAD) in revenue, and   

iii. It employs an average of at least 250 employees.  

However, not all entities are considered “reporting entities”. An entity is required to report to the act if they are; a) producing, selling, or distributing goods in Canada or elsewhere; b) importing into Canada goods produced outside of Canada; or c) controlling an entity engaged in any activity described in a) or b).   

 There is currently no threshold for the minimum value of goods that an entity must produce, sell, distribute, or import to comply.  

   

Reporting Requirements  

Once an entity has determined if it falls under the Act’s compliance umbrella, it is obliged to document and report the measures taken to reduce the risks associated with forced and child labour in its operations and supply chains. This includes details about an entity’s supply chain structure and activities, governance and due diligence processes, requirements for identifying and responding to forced and child labour risks, actions to reduce and remedy such risks, internal and external training, and the entity’s process for assessing effectiveness. Reporting involves submitting a report and completing a questionnaire on Public Safety Canada’s website. The questionnaire can be used to guide your report and is currently available for viewing on the Public Safety Canada website. The report must also be published in a prominent place on the reporting entity’s website. Reports are due annually by May 31st, covering activities from the previous financial year.   

Inspection and Enforcement  

The Act is unique from other modern slavery acts in that it imposes fines for non-compliance. However, the goal of the Act is currently not to punish companies for finding instances of forced and child labour, but rather to encourage transparency about the current state of forced and child labour risk management in their operations and supply chain. Fines up to $250,000 are imposed for; 1) failure to produce, publish, or make available an annual report, 2) knowingly making false or misleading statements, or 3) failure to give reasonable assistance.   

In conclusion, Canada’s «Fighting Against Forced Labour and Child Labour in Supply Chains Act» marks a significant advancement in promoting transparency and accountability in business operations while protecting vulnerable populations worldwide. By mandating reporting obligations for select entities and enforcing fines for non-compliance, the legislation demonstrates the Canadian government’s commitment to addressing the risks of forced and child labour within supply chains.  

What Should Organizations Do To Prepare?  

As businesses prepare to comply with these new regulatory requirements, CEMAsys recommends the following steps to navigate the landscape effectively: 

  1. Determine Eligibility: Assess whether your organization meets the criteria outlined by the Act for reporting eligibility. Even if your organization isn’t directly covered, consider the implications if your customers are, particularly if you serve Canadian companies. 
  1. Contracts and Relationships: Review contractual agreements and supplier relationships to ensure they contain appropriate risk mitigation and enforcement provisions.  
  1. Supplier Assessment: Evaluate your list of suppliers, identifying gaps and preparing for supply chain mapping beyond direct suppliers. Conduct risk assessments, especially in high-risk regions for forced and child labour. 
  1. Risk Preparedness: Develop protocols for addressing instances of forced and child labour in your operations or supply chain. Anticipate the potential discovery of exploitation and outline appropriate response measures. 
  1. Corporate Governance Audit: Review existing policies and procedures related to forced and child labour prevention and remediation. Assess compliance monitoring, disclosure management, and protocols for addressing violations. 
  1. Training and Reporting: Ensure ongoing employee and supplier training programs address forced and child labour issues. Evaluate the effectiveness of whistleblower policies for reporting potential violations and incidents. 

By taking proactive steps to address forced and child labour risks, businesses can not only comply with legal obligations but also contribute to a more ethical and responsible global business environment.