SHIFT Happens: Canada’s Modern Slavery Act Mandates New Disclosure Requirements in Corporate Supply Chains
On May 3, 2023, the Canadian Parliament passed Bill S-211, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, otherwise known as the Modern Slavery Act. This Act, aimed at combating forced labor and child labor in corporate supply chains, will come into effect on January 1, 2024.
Once the Act receives royal assent it will introduce new reporting obligations on Canadian entities that meet the threshold, as outlined below. More specifically, the reporting requirement includes an annual public report indicating efforts to identify and prevent forced labor and child labor1. It also amends the Customs Tariff to prohibit the importation of goods associated with these two human rights violations.
The first annual report will be required to be filed and published on or before May 31, 2024.
Who does this impact?
The Modern Slavery Act aims to prevent Canadian consumers from unintentionally supporting slavery by pressuring Canadian companies to assess their supply chains. This legislation is precedent-setting in Canada, following countries like Australia, France, the UK and Germany, each having enacted their own modern slavery laws. The Act applies to any private-sector entity that is listed on a Canadian stock exchange or has a place of business, assets, or conducts business in Canada, provided they meet at least two of the following criteria:
· have a minimum of $20 million in assets;
· have a minimum of $40 million in annual sales; or
· have at least 250 employees.
What does this mean for Canadian Business?
The Modern Slavery Act has received strong support across political parties in the House of Commons. The first report required under the Act is due by 31 May 2024. Entities subject to the Act should begin preparing now. Organizations will need to act quickly if they want to establish a compliance process before their first report is due. Even if an organization is not currently subject to the Act, these risks should be considered as part of their broader sustainability strategy and accounted for through their environment, social and governance (ESG) performance and disclosure.
How can Shift Critical help?
Impacted organizations should review their supply chain human rights due diligence and ensure proper governance structures are in place to identify and mitigate risks. This involves, for example, a supply chain review and risk assessment to understand the extent to which child labor or forced labor exists within their sphere of influence.
The experience level of the Shift Critical team is unmatched when considering corporate sustainability strategy development, ESG performance disclosure and human rights due diligence/risk assessment. Our team is ideally positioned to assist with solutions and tools that can easily build reports and manage your sustainability-related needs. This includes implementing governance measures to identify, mitigate and prevent human rights risk across your operations and supply chain.
More specifically, our team of Human Rights experts can help you with:
1. Conducting human rights due diligence to identify parts of your business and supply chains that carry a risk of forced labor or child labor.
2. Made-for-purpose policy development and implementation (e.g., Sustainability Policy, Human Rights Policy, Supplier Code of Conduct; etc.) to ensure your employees and suppliers are aware of their obligations to reduce the risk of forced and child labor.
3. Board of Director and Executive Leadership Training on the Act to support their ability to meet reporting obligations.
4. Advising on how to meet ESG reporting and compliance obligations under the Act, including development of the Supply Chain Risk Report.
