The Canadian Parliament has recently announced the enactment of Bill S-211, also known as "The Fighting Against Forced Labour and Child Labour in Supply Chains Act". This legislation aims to prevent and reduce the risks of forced labour and child labour in supply chains, with immediate implications for Canadian businesses and importers.
Bill S-211 presents a proposal to establish a public reporting framework that would require various government institutions and private sector entities to submit annual reports. These reports would outline the measures taken in the previous fiscal year to prevent and mitigate the use of forced labour and child labour in the production of goods, both domestically and internationally, by the entity or goods imported into Canada by the entity.
Depending on the size and complexity of an entity’s supply chain, adhering to the proposed legislation could be quite burdensome. Using technology like Greenstone’s SupplierPortal to collect, manage and report the data required for this type of regulation enables businesses to streamline processes, ensure compliance and engage supply chains in sustainability and ESG initiatives.
Who is Required to Report under Bill S-211?
Reporting obligations apply to various entities, including: Canadian federal government institutions, departments, and Crown corporations, along with their subsidiaries. Additionally, the reporting obligations extend to private sector entities meeting the following criteria:
1. Involved in producing, selling, or distributing goods within Canada or elsewhere.
2. Importing goods produced outside of Canada.
3. Exercising control over an entity engaged in the activities mentioned in points (1) or (2).
Control is broadly defined and encompasses direct or indirect control or common control in any manner.
Entity refers to corporations, trusts, partnerships, or other unincorporated organisations meeting any of the following conditions:
a) Listed on a Canadian stock exchange.
b) Having a place of business, conducting business, or possessing assets in Canada, and, based on consolidated financial statements, the entity satisfies at least two of the following criteria for one of its two most recent financial years:
- Possessing at least C$20 million in assets.
- Generating at least C$40 million in revenue.
- Employing an average of at least 250 employees.
c) Falling under other prescribed regulations, which are yet to be enacted.
Key information to report
The private sector annual reports mandated by Bill S-211 require the inclusion of the following information for each entity covered by the report, subject to approval by the entity's governing body:
1. Structure, activities, and supply chains of the entity.
2. Policies and due diligence processes regarding forced labour and child labour.
3. Identification of business areas and supply chains carrying risks of forced labour or child labour, along with steps taken to assess and manage those risks.
4. Measures implemented to remediate instances of forced labour or child labour.
5. Efforts to mitigate the loss of income to vulnerable families resulting from actions taken to eliminate forced labour or child labour from the entity's activities and supply chains.
6. Training provided to employees regarding forced labour and child labour.
7. The entity's assessment of effectiveness in ensuring the absence of forced labour and child labour in its business and supply chains.
8. Similar content requirements apply to reporting obligations for government institutions.
Child labour refers to labour or services provided or offered to be provided by individuals under 18 years of age under circumstances contrary to Canadian laws, mentally, physically, socially, or morally dangerous to them, interfering with their schooling, or constituting the worst forms of child labour as defined in Article 3 of the Worst Forms of Child Labour Convention, 1999.
Forced labour refers to labour or services provided or offered to be provided by individuals under circumstances where they reasonably believe their safety or the safety of someone known to them would be threatened if they refuse to provide or offer the labour or service. It also includes forced or compulsory labour as defined in Article 2 of the Forced Labour Convention, 1930.
The bill expands the existing import ban under Canada's Customs Tariff to include goods that are "mined, manufactured or produced wholly or in part" with "child labour," in addition to goods produced with "forced labour" and "prison labour," which are already prohibited.
Initiation of Reporting Requirements
Bill S-211 passed the Senate on April 28, 2022, and has also passed third reading in the House of Commons on May 3, 2023. The Fighting Against Forced Labour and Child Labour in Supply Chains Act, as outlined in Bill S-211, will come into effect on January 1 of the year following its receipt of Royal Assent. In the case of receiving Royal Assent in 2023, the law will take effect on January 1, 2024, with the first report deadline for reporting entities set for May 31, 2024, with the expectation for reports to be submitted to the Minister of Public Safety and Emergency Preparedness by May 31 each year.
Entities or individuals failing to comply with the obligations outlined in the Fighting Against Forced Labour and Child Labour in Supply Chains Act or providing false or misleading statements or information to the Minister, such as in an annual report, may face summary conviction with fines up to $250,000.
In conclusion, integrating supply chain transparency into an organisation's Environmental, Social, and Governance (ESG) framework is crucial for both good business practice and adherence to pending legislation. Companies must establish effective governance structures to identify and mitigate risks, particularly related to forced labour and child labour. For companies meeting the reporting entity thresholds outlined earlier, it is advisable to assess and enhance their supply chain due diligence and monitoring practices in preparation for the reporting requirements set to commence in May 2024.
How technology can help
Greenstone works with its clients to build long-term supplier management processes that address and reduce risk, both now and in the future. We recognise that clients are on a journey and therefore the requirements change over time, particularly as a result of external factors such as regulation.
Greenstone’s SupplierPortal is a flexible solution meaning that content can easily be customised, response frequencies can be set for suppliers, and importantly automated analysis and notifications continually drive up-to-date information. There are also customisable risk flags to automatically identify risks and automated action plans to resolve them. The ability to have two-way communication with your suppliers through the solution enables risk to be addressed efficiently and suppliers to be engaged at scale.