Modern Slavery & Corporate Due Diligence in Canada - I’ve Reported, What’s Next?
On May 31, nearly all organizations producing or importing goods into the Canadian marketplace were required to submit reports detailing efforts made to prevent forced and child labour in their supply chains.
Preceded by nearly a decade of parliamentary debate and legislative action, the 2023 passage of Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act, introduced to Canada its first mandatory regime for private sector reporting on forced and child labour in supply chains.
And though the scope of this legislation is wide sweeping – estimated to capture thousands of companies operating in Canada – the impacts of the legislation may fall short of the government’s expectations.
The text of S-211 provides a framework for reporting, but really only establishes a name-and-shame data collection regime. Of course, there are other bodies that investigate instances of slavery including the Canadian Ombudsperson for Responsible Enterprise, but with thousands of organizations required to submit reports and no significant resourcing increase given to Public Safety Canada to review the reports, S-211 fails to provide an effective solution to a complex global problem.
But the federal government has committed to do more. Budget 2024 reaffirmed the federal government’s commitment to introduce legislation in 2024 “to eradicate forced labour from Canadian supply chains and to strengthen the import ban on goods produced with forced labour.”
But what would this legislation look like?
Although Canada has not conducted any wide-sweeping public consultation on their domestic approach, we can look to the work already done by many likeminded jurisdictions including the United States, United Kingdom, Australia, Germany and most recently, the European Union.
In May of this year, the European Commission adopted a proposal creating a Corporate Sustainability Due Diligence Directive (CSDDD). Applying to organizations with over 1000 employees and over EUR 450 million in net turnover, the CSDDD would compel companies to identify and address potential and actual adverse human rights and environmental impacts in their own operations as well as the operations of their subsidiaries and value chain partners. The directive also requires the largest companies to adopt a climate plan aligned with the EU’s commitment to net-zero by 2050.
The United States government has taken a narrower approach directed solely at organizations operating in China through the Uyghur Forced Labor Prevention Act (the bill). Signed into law in 2021, the bill requires that any company importing goods from the Xinjiang region of China need to certify that those goods were not produced using forced labor in order to avoid penalties.
In nearly every jurisdiction where measures have been taken – from reporting to mandated certification to import bans – the burden of proof is placed on the reporting entity. It can be expected that this approach will be replicated in Canada.
We also know that the Canadian approach will consider the largest organizations, perhaps looking at the EU example in terms of scope, and that the government is considering the possibility of import bans like those considered in the U.S., and with a keen parliamentary interest in the treatment of persons in China and Russia one can imagine that that consideration will be top of mind.
Practical implementation requires consideration.
Beyond considering how such legislation would affect our existing trade relationships, the government must consider timelines and resourcing requirements for reporting entities. As companies operating and reporting in other global jurisdictions know, accurate reporting takes time. When companies are required to provide unique reporting on the same topic in each jurisdiction, compliance requirements become a multi-year process. If the federal government wants to be successful, it must consider the global and private sector environment prior to implementation.
And of course, looming over all of this is the question of the next federal election.
The next federal election is expected in October 2025, leaving the current Liberal government with just 26 weeks of parliamentary sitting left with which they can advance their legislative agenda. For context on the speed at which our parliamentary process moves, we are on week 15 of debate for the legislation to implement the government’s 2023 Fall Economic Statement. New legislation will require a significant parliamentary lift and multi-partisan support to advance in time, and if not, the government will have to answer to its track record on this issue at the polls.