A recently enacted bill has Canada set to join the growing list of countries targeting modern slavery across supply chains, following in the steps of the UK and Australia.
The S-211 bill, which will enter into force in January 2024, will require a host of companies to report on their measures to address and prevent forced and child labor in the production, selling, distribution, and import of goods within and into Canada.
Contrary to the UK and Australian Modern Slavery Acts, Canada’s new bill allows monetary fines of up to $250,000 on entities that fail to submit reports, or knowingly make false or misleading statements. It’s also the first Act to consider the grievance mechanisms to remedy the loss of income to the most vulnerable families, should they suffer from corporate action to eliminate modern slavery.
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What Are the Requirements and Who Needs to Report
The Canadian Act requires companies to publish an annual report describing their corporate policies and due diligence related to forced labor and child labor and to include assessments of modern slavery risks within its operations and supply chain. They should also outline the effectiveness of said policies and measures. First reports are expected by May 31, 2024.
Who falls in scope? The general requirement is to be listed on a Canadian stock exchange or be a privately held entity with connections to Canada that meets the established thresholds related to revenue or the number of employees. (See graph below). Thousands of companies are likely impacted, given there are currently over 1,600 listings on the Toronto Stock Exchange and over 17,000 Canadian businesses have 250+ employees.
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Reporting obligations apply to various organizations, including Canadian federal government institutions, along with private sector entities meeting the following criteria:
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Four Key Recommendations to Prepare for Upcoming Disclosures
- Collect information for reporting. Companies should start to collect detailed information on their business structure and approach to modern slavery.
- Thorough supply chain mapping and risk assessments. Strengthened monitoring and human rights due diligence is required. Companies should develop an understanding of the locations at high risk of forced and child labor.
- Improve remedy and mitigation measures. There’s an opportunity to revise the existing approach to modern slavery and build policy consensus to demonstrate commitment and action in addressing human rights impacts.
- Engage internal staff. Develop training and education for all employees on the risks of modern slavery.
Independently of whether companies are in the scope of the S-211 bill or other emerging regulations, they should be motivated to make their supply chains more transparent. Reporting concrete managerial action concerning forced and child labor makes it likely that the company is taking steps that are capable of combating modern slavery and improving employees’ working conditions in the supply chain.
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EcoVadis Ratings provides inputs for the refinement of your current due diligence and disclosure practices as well as guidance and benchmarks for companies wishing to address and report on modern slavery more comprehensively and with higher levels of transparency. Get in touch with any questions.
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