Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner. Facebook Messenger An icon of the facebook messenger app logo. Facebook An icon of a facebook f logo. Facebook Messenger An icon of the Twitter app logo. LinkedIn An icon of the LinkedIn logo. WhatsApp Messenger An icon of the Whatsapp messenger app logo. Email An icon of an mail envelope. Copy link A decentered black square over a white square.

Canada proposes new law to tackle forced and child labour

© Shutterstock / HTWEPost Thumbnail

Canada is following several other countries in proposing a supply chain due diligence law to mitigate and prevent the use of forced and child labour in corporate value chains. While it has many similarities with a proposed directive in the European Union, it requires more frequent reporting, with defined penalties for non-compliance.

  • Under the new proposed law, entities operating in Canada will have to assess, address and report on risks child and labour risks in their supply chain.
  • It could penalise companies for failure to produce a supply chain risk report or provide misleading statements.
  • It comes amid efforts by other countries to address ESG responsibilities relating to human rights breaches in value chains.

Fighting against forced labour and child labour in Supply Chains Act

Canada is proposing to enact a law to show its international commitment to contribute to the fight against forced and child labour. It will require entities that produce, distribute or import goods in Canada to report on the measures they plan to take to mitigate and prevent the risks related to adverse human rights impacts in their supply chains.

The Act also proposes changes to the customs tariff, allowing the government to limit trade in such goods. Initially intended for large corporations, it will also apply to certain government institutions. They will have to compile an annual report on the measures taken to prevent and reduce the risks of forced and child labour in their supply chain.

Several countries already have supply chain due diligence laws in place. The UK and Australia have adopted versions of the Modern Slavery Act, while the US requires listed companies to disclose their use of conflict materials from certain countries.

The US-Mexico-Canada agreement has fully enforceable labour standards and laws on forced and child labour. Importing goods from the Xinjiang Uyghur autonomous region of China is subject to compliance with forced labour standards under the Uyghur Forced Labor Prevention Act of the US.

EU proposed directive

The EU is also proposing rules requiring companies to report on adverse human rights and environmental impacts in their operations and supply chains. While France and Germany already enacted supply chain due diligence laws, several other Member States have pending proposals, which may now be superseded by the EU law.

While enhancing corporate social responsibility, the EU directive seeks to make environmental factors and human rights the focus of corporate supply chain management. It also requires companies to create a due diligence policy, detailing their approach and code of conduct.

Updates to the due diligence policy will be required every two years, or in the event of a significant change. A “prevent action plan” is recommended, along with legal agreements with all value chain partners to comply with the due diligence policy. 

The directive recommends engaging with partners, rather than terminating relationships, as the preferred way of dealing with violations of corporate policy. This is suggested with a view to preventing further adverse impacts, especially when dealing with small and medium-sized companies.

The EU directive will mainly apply to large companies, with over 500 employees and €150 million in turnover. It will also apply to small and medium-sized enterprises that generate 50% of their turnover in sectors that have been cited for abuses in forced and child labour, such as textiles and clothing, food and beverages, agriculture, mining and metals, and oil and gas.

Imposing penalties will be subject to rules set by individual Member States, with a provision that they are “effective, proportionate and dissuasive”.

Canada’s law follows EU directive with a few differences

The proposed Canadian law is similar to the EU directive in many respects, although it requires entities to report on an annual basis, rather than every 24 months.

The size of the entity covered also varies, with any company listed on a stock exchange in Canada, is covered by corporate regulation or has business in the country that generates C$40 million in sales, has at least C$20 million in assets and employs at least 250 people.

Entities found not to follow stated policies may be asked to take corrective measures. An entity found to make misleading or false statements could be fined up to C$250,000. 

Canada’s supply chain due diligence laws go beyond preventing lawsuits

A recognition of the importance of adverse human rights and environmental impacts from forced and child labour is driving more countries to enact supply chain due diligence laws. As these laws come into effect, companies and their value chains not in compliance could be exposed to lawsuits from human rights groups, and at risk of suffering reputational damage.

A report from World Vision published in 2017 highlighted Canada’s exposure to child and forced labour. Over a four-year period between 2012 and 2016, Canada’s imports of goods deemed to be at risk increased by 31%. Most of these were related to textiles and garments, and food products. 

In the second reading of the bill in the Canadian Senate in December 2021, Senator Julie Miville-Dechêne of the Independent Senators Group told the Senate: “Forced labour and child labour have long permeated our everyday consumption. Generally, it is not the Canadian companies that are directly involved, but rather their subcontractors as well as their suppliers of raw materials and agricultural products. Therein lies the main risk: supply chains.”

The third reading of the bill took place on 30 November 2022, which is the final stage before members must decide whether they will convert it into law. After it receives royal assent, the act will come into force as law on 1 January 2023.

More from SG Voice

Latest Posts