Canada’s Anti-Forced-Labour Act Highlights the Crucial Need For Supply Chain Transparency

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Canada’s Anti-Forced-Labour Act Highlights the Crucial Need For Supply Chain Transparency

In 2023, World Vision Canada released a Supply Chain Risk Report, which noted that almost $48 billion in ‘risky goods’ – kinds of products for which there were well-documented cases of worker exploitation in the supply chain – were imported into Canada. The report notes that this is a nearly 30% increase since 2016 and cites ‘Three Cs’ as the main culprits: COVID-19, conflict and climate change. The Canadian Government has since taken action, and on January 1, 2024, Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act (also known as Bill S-211) took effect.

The new legislation amends Canada’s Customs Tariff, allowing the Canada Border Services Agency to seize imported goods that are made using forced or child labour at the border. Additionally, Bill S-211 aims to increase transparency by requiring firms that meet certain criteria to explain how they’re preventing and reducing the risk of forced and child labour in their supply chains. Since May 31, 2024, subject entities are required submit reports to Public Safety Canada, detailing steps their firm took in the previous financial year to address the risk of child or forced labour in their supply chains. Failure to comply could result in fines of up to $250,000 CAD.

The reports are available to the public via an online catalogue, and are intended to increase transparency and be easily digestible by the public, with Public Safety Canada recommending that they not exceed 10 pages in length. Under Bill S-211, reporting entities are encouraged – but not required – to describe future plans to address child and forced labour. Failing to take further action, however, could open firms up to additional risks, such as potential breach of contract claims or the possibility that imported goods are banned from entering Canada.

Canada is just one of many jurisdictions increasing scrutiny of human rights abuses in supply chains. Most notably, the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), which was finally passed earlier this year, puts pressure on firms to conduct substantial human rights due diligence within their supply chains. These bills are timely, given recent allegations of child labour in certain perfume and automotive supply chains.

In order to prepare for and comply with emerging regulations and protect against further risks, organizations must increase visibility and traceability across their supply chains, taking holistic approaches to human rights assessments in the supply chain. As such, firms should consider supply chain sustainability software to improve visibility, effectively manage supplier data and evaluate threats to their supply chains. For more information on specific vendors, see Verdantix Smart Innovators: Supply Chain Sustainability Software.

Jessica Pransky

Principal Analyst

Jessica is a Principal Analyst in the Verdantix ESG & Sustainability practice, which she joined in 2022. Her current research agenda covers ESG reporting and data management software, ESG solutions for investors, and risk in ESG and sustainability. Prior to joining Verdantix, Jessica worked at Ramboll, focusing on ESG risk and opportunity identification for mergers and acquisitions, as well as EHS due diligence. Jessica has previously held roles evaluating water resource allocation for a state municipality and ensuring EHS compliance for GE Aviation. She holds a BS from Tufts University and an MEng from Johns Hopkins University focused on environmental engineering, as well as an MBA from Boston University.