Canada Forced Labour and Child Labour in Supply Chains Act
URGENT UPDATE - Canadian Parliament passed a new law earlier this year entitled "Fighting Against Forced Labour and Child Labour in Supply Chains Act," (Canada S-211) which became law in Canada on May 11, 2023. This Act aims to prevent and reduce the risk of forced and child labor in supply chains and imposes reporting obligations on certain entities. There are penalties for non-compliance.
Here’s what you’ll want to know to comply:
To which companies does it apply?
Government Institutions: This includes any government institution involved in producing, purchasing, or distributing goods in Canada or elsewhere.
Private-sector Entities: This includes corporations, trusts, partnerships, or other unincorporated organizations producing goods in Canada or elsewhere or importing goods produced outside Canada that:
(a) is listed on a stock exchange in Canada;
(b) has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years:
(i) it has at least CAD$20 million in assets,
(ii) it has generated at least CAD$40 million in revenue, and
(iii) it employs an average of at least 250 employees; or
Other entities prescribed by regulations.
Does any of that apply to your company? Let us guide you through the process!
What Specific Steps are Required?
Annual Reporting: Every entity must, on or before May 31 of each year, report on the steps the entity has taken during its previous financial year to prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity. This includes:
its structure, activities and supply chains;
its policies and its due diligence processes in relation to forced labour and child labour;
the parts of its business and supply chains that carry a risk of forced labour or child labour being used and the steps it has taken to assess and manage that risk;
any measures taken to remediate any forced labour or child labour;
any measures taken to remediate the loss of income to the most vulnerable families that results from any measure taken to eliminate the use of forced labour or child labour in its activities and supply chains;
the training provided to employees on forced labour and child labour; and
how the entity assesses its effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains.
Public Accessibility: The reports must be made publicly accessible, including publication on websites.
Approval and Attestation: Reports must be approved by the governing body of the entity, with signatures from members of the governing body.
What is the Timeline?
The Act specifies that annual reports must be submitted to the Minister by May 31 of each year starting May 31, 2024.
What are Penalties for Non-Compliance?
Every individual or entity that does not adhere to the act's stipulations is subject to an offense, with potential fines up to $250,000, unless they can demonstrate due diligence, especially in cases involving agents or individuals representing an entity. This includes, but is not limited to, neglecting to submit required annual or revised reports or not adhering to any compliance orders issued under the law.
The government has expressed its determination to ensure accountability at the director and officer level for these disclosures. Under the Act, any director, officer, agent, or mandatary involved in directing, authorizing, consenting to, passively allowing, or actively participating in an infringement is considered complicit and guilty, facing potential penalties. This holds true regardless of whether the entity they represent faces prosecution or receives a conviction.
Recommendations
If you determine that the law applies to you and you already conduct due diligence throughout your supply chain using best practices, plan to compile these into a report that aligns with the Canadian regulation.
If you determine that the law applies to you and you do not conduct best practices due diligence throughout your supply chain, quickly develop a plan to do so in time for the May 31 reporting deadline.
Snaplinc Consulting Support
At Snaplinc Consulting we can streamline your journey towards compliance with expertise in sustainability and supply chain management. We offer services like gap analysis, policy development, supply chain auditing, training, and reporting assistance. The May 31 deadline is critical, and non-compliance poses risks of hefty fines and reputational damage. Prompt action is not only a legal necessity but also an ethical commitment, enhancing your brand's integrity.
Conclusion
Bill S-211 heralds a significant shift in supply chain accountability in Canada. Our consultancy is ready to ensure your seamless transition to compliance, fortifying your business against risks and fostering ethical global supply chain practices. Contact us for tailored guidance and join us in building a sustainable, responsible business landscape.
For more questions or to request a discovery call, contact us below and/or directly schedule a meeting.
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