Understanding Canada’s Fighting Against Forced and Child Labour in Supply Chains Act
In an era where transparency and corporate responsibility have become paramount, Canada has taken a significant step forward with the introduction of the new Fighting Against Forced and Child Labour in Supply Chains Act. This legislation mandates that certain Canadian entities provide detailed, board-approved reports outlining their efforts to prevent and mitigate forced and child labor within their supply chains.
The Act not only introduces new penalties for companies and officers who fail to comply with these reporting requirements or provide misleading information, but it also necessitates that these entities prioritize supply chain due diligence and maintain comprehensive records to support their reports and minimize supply chain risks.
Whether you’re a Canadian public company, a private business meeting certain size thresholds or an entity importing goods into Canada, understanding the details of this new Canadian modern slavery act is essential. Here we examine:
- What the Fighting Against Forced and Child Labour in Supply Chains Act is
- The Act’s implications for Canadian companies and those doing business in Canada
- Advice on how to navigate the new modern slavery act effectively
What is the Canadian modern slavery legislation?
Canada’s new Forced and Child Labour in Supply Chains Act requires covered Canadian entities to release board-approved reports detailing their efforts to prevent and mitigate forced labor and child labor in their supply chains.
It also includes new penalties for companies and officers that fail to make these reports or if the reports include misleading statements. Accordingly, covered companies will need to prioritize supply chain due diligence and assemble supporting records to prepare accurate reports and minimize supply chain risks.
Entities covered by the Act include Canadian public companies and other Canadian private businesses that meet certain size thresholds, as well as entities that import goods into Canada, including many US and EU companies that are involved with the importation of goods into Canada, or that control another entity doing business in Canada.
For the purposes of this Act, covered entities are defined as a corporation or unincorporated organization that:
- Is listed on a stock exchange in Canada;
- Has a place of business in Canada, does business in Canada or has assets in Canada and has met at least two of the following conditions in at least one of the last two financial years:
- Had at least C$20 million in assets;
- Generated at least C$40 million in revenue; and
- Employed an average of at least 250 employees
The Act is an essential piece of legislation to address modern slavery in Canadian supply chains
The Fighting Against Forced and Child Labour in Supply Chains Act addresses the urgent need for ethical practices within supply chains and constitutes a significant expansion of the existing supply chain transparency and supervision requirements in Canada. It also follows a recent ban implemented by Canada in 2021 on import goods that were mined, manufactured or produced by forced labor as detailed in the United States–Mexico-Canada Agreement ("USMCA") Implementation Act.
What does the Fighting Against Forced and Child Labour in Supply Chains Act mean for companies?
The Act has significant implications for companies. It mandates detailed reporting on actions taken to prevent child or forced labor in supply chains. Companies must assess risks, implement remediation measures, and provide employee training. By complying, companies demonstrate social responsibility and contribute to a fairer business environment. Transparency and accountability are key aspects of the Act, promoting ethical practices globally.
- Organizational structure, activities, and supply chains: Describing the structure and operations of each entity, including their supply chains.
- Policies and due diligence processes: Outlining the policies and processes related to forced and child labor adopted by these entities.
- Risk assessment and management: Identifying aspects of business and supply chains that pose a risk of forced or child labor and explaining the steps taken to assess and manage that risk.
- Remediation measures: Detailing actions taken to address instances of forced or child labor.
- Addressing income loss: Describing measures to compensate vulnerable families affected by efforts to eliminate labor abuses.
- Employee training: Highlighting any training provided to employees regarding forced and child labor.
- Effectiveness evaluation: Explaining how the organization assesses its success in preventing the use of forced and child labor.
How to embrace ethical practices in your supply chain
The introduction of the Fighting Against Forced and Child Labour in Supply Chains Act marks a pivotal moment in Canada’s commitment to ethical business practices. This legislation not only mandates transparency in supply chains but also holds companies accountable for their actions. It is another clear signal that governments are taking supply chain due diligence seriously, and the era of failing to see misdeeds in the supply chain is over.
With the passage of this Canadian modern slavery legislation and others, including the Uyghur Forced Labour Prevention Act, the United Kingdom’s 2015 Modern Slavery Act, Australia’s 2018 Modern Slavery Act and the German 2023 Supply Chain Act, companies are being compelled to give their supply chain due care. They must assess risks, implement remediation measures, and provide comprehensive training to their employees. By doing so, they not only comply with the law but also contribute to a fairer and more ethical business environment.
For many organizations, technology is playing a staring role in mitigating supply chain risks with the ability to effectively conduct due diligence and manage new requirements in a centralized platform.
Features like monitoring powered by AI, detailed audit trails and the ability to store third-party information in a single location facilitate a proactive response to current and forthcoming legislation.
Ensure ethical practices and stay ahead of global supply chain regulations like Canada’s Fighting Against Forced and Child Labour in Supply Chains Act with Diligent One Platform.
