Legislation aimed at improving supply-chain transparency nearing enactment
Canada’s soon-to-be enacted supply-chain transparency law, which is aimed at curbing forced and child labour, will force companies to confront the reality that these human rights abuses can occur closer to home than they may assume, says Sabrina Bandali, partner at Bennett Jones LLP.
Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff, currently awaits third reading in the House of Commons. The bill institutes a reporting requirement under which corporations and governmental institutions must communicate annually what they are doing to prevent or mitigate the risk of forced labour or child labour in their supply chains.
“This isn’t just a far-away problem,” says Bandali, an expert in international trade and investment law matters. “Forced labour occurs in all sorts of supply chains, including supply chains that are in North America.”
“You don't have to look very far to see the headlines that we've seen over the last several years about human rights concerns, forced labour concerns, and child labour concerns that can pop up, sometimes in parts of the world that are close to home,” she says. “That may surprise people.”
For the legislation to apply, private-sector organizations must be listed on a stock exchange in Canada or have a nexus to Canada: either having assets, a place of business, or be doing business in Canada. In addition to that, the company must meet two of three criteria: at least $20 million in assets, $40 million in revenue, or 250 employees.
“It's a low enough threshold that we would expect a large swath of companies to have obligations arising under the bill,” says Bandali. She adds that it is notable that the requirement includes governmental institutions.
“It is a unique feature of this iteration of supply-chain transparency legislation that it actually includes government institutions. It's a positive sign that, in introducing these obligations for private companies, government is also requiring its own institutions to also make reports. I think it's important, especially, that government institutions are walking the talk, as well.”
The new law will broaden companies’ perspectives about the responsibilities they have over their supply chains, says Bandali. It could also shift their view of the extent to which they can rely on tools such as contracts and supplier codes of conduct to fulfill them, she says.
“There's no question in my mind that this bill is a starting point,” says Bandali. “It's not an endpoint, in terms of what we all need to be doing to address forced labour and child labour in the supply chain. One of the things that I think is really important about it, and that shouldn't be underestimated, is the power when people have to describe what they're doing and make that information publicly available.”
Once companies report on their efforts to mitigate forced and child labour, the minister will publish that information publicly. As members of the public and consumers, people will be able to look up companies from whom they may purchase, or with whom they might to business, and find out what they are doing to prevent the products they offer being tainted by forced or child labour, she says.
“It puts a lot of information in people's hands about something that, up until now, there's been a lot of difficulty for people to know with any certainty.”
The legislation also creates liability for directors and officers, related to the truthfulness of a company’s reports and whether upper management authorized the commission of an offence.
On Jan. 24, World Vision Canada announced that the value of Canadian imports that may involve child or forced labour amounts to $48 billion. According to the Supply Chain Risk Report 2023, the percentage of imported goods connected to child or forced labour has surged by 50 percent in the last decade and 30 percent in the last five years.
Climate change, conflict, COVID-19, and the rising cost of living are intensifying the problem, and the number of child labourers worldwide has increased for the first time in 20 years, with 160 million children involved, including 79 million doing jobs that are “dirty, dangerous, and degrading,” World Vision Canada said.