Photo by Benoit Debaix on Unsplash
May 24, 2023
Authors
Key Points
- Canada recently released new legislation to combat modern slavery across supply chains.
- These developments represent an opportunity for business to demonstrate their commitment to addressing human rights impacts in line with the UNGPs.
- BSR’s anti-trafficking team provides four key recommendations for business to prepare for upcoming disclosures.
On May 11, 2023, Canada became the latest country to adopt legislation targeting modern slavery across corporate supply chains, following in the steps of the UK and Australia. The S-211 bill, “Fighting Against Forced Labor and Child Labor in Supply Chains Act,” which will enter into force in January 2024, will require companies to disclose measures to prevent and address violations linked to any step of the production, distribution, and import of goods within and into Canada.
Key Provisions
The Canadian Act requires companies to publish an annual report, of which the first is due before May 31, 2024. The Act applies to a similar scope of companies as the UK and Australian Acts, with general requirements for the company to have connections to Canada and establishing thresholds related to revenue and the number of employees.
Companies will have to provide information on corporate policies and due diligence related to forced labor and child labor, an assessment of risks within the business and its supply chain, and measures taken to remediate violations. The new Act requires companies to report on efforts to remediate the potential impacts on income to the most vulnerable families due to corporate action to eliminate forced labor and child labor— the first Act to consider these types of potential impacts. Finally, reporting disclosures will also need to outline the effectiveness of anti-slavery corporate policies.
Contrary to the UK and Australian Modern Slavery Acts, Canada’s S-211 bill presents the possibility of imposing pecuniary fines of up to CA$250,000 (around US$186,000) on businesses that fail to submit a report, obstruct an official in related investigations, or knowingly make a false or misleading statement. If the government determines that a particular entity is not in compliance with the Act, they may order corrective measures.
While the law has been principally criticized for not imposing victims’ compensation on a company that may have caused, contributed, or is directly linked to their exploitation, the Act expands the existing Customs Tariff to explicitly prohibit imports made with child labor, defining the term more broadly and raising the age to 18—with various caveats.
Recommendations for Business
- Collect information for reporting. As companies are mandated to present their first modern slavery report no later than May 2024, businesses should start to collect more detailed information on their business structure, approach to modern slavery, and their risk profile—both across operations and in Canada—including specific policies and processes related to this region.
- Strengthen monitoring and evaluation of human rights due diligence. Even though sanctions do not relate to the substance of the information disclosed, companies should expect heightened scrutiny on their reporting, especially as it relates to supply chain mapping, prevention, and due diligence for risks of forced and child labor.
- Enhance remedy and mitigation measures. As the Act requires detailed information on the effectiveness of forced labor risk mitigation, companies have an opportunity to revise their approach to remediation as a pillar of the UNGPs. Measuring efforts also requires companies to establish KPIs tailored to evaluating anti-slavery action.
- Engage the Board. As the statement will have to be approved by the board of directors, building internal consensus on the importance of corporate modern slavery policy is critical.
The law will expand modern slavery reporting requirements to a host of new companies and reinforce policy efforts to address modern slavery across private sector by creating a level playing field for transparency. While no single company can address the scale of today’s modern slavery, these policy developments represent an opportunity for business to demonstrate their commitment and action in addressing human rights impacts in line with the framework of the UNGPs.
BSR’s anti-trafficking team advises business from across sectors on due diligence and management of forced labor risks. Please get in touch with any questions.
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