A Safer Canadian Supply Chain: Canada Raises its ESG Standards to Fight Forced and Child Labour

The Government of Canada, Department of Public Safety, recently established Bill S-211 (the “Act”), enacting the Fighting Against Forced Labour and Child Labour in Supply Chains Act and amending the Customs Tariff. The Act received Royal Assent on May 11, 2023, with an expected effective date of January 1, 2024.

This new human rights legislation requires certain Canadian companies, or companies with Canadian affiliations and government agencies, to conduct comprehensive ESG reporting to reduce the risk of forced labour and child labour in their Canadian supply chain.

In this article, we outline and discuss Bill S-211’s main details and how Veriforce can help customers comply with this critical initiative.

Who Must Improve Their ESG Reporting?

The Act applies to government agencies, any corporation, trust, partnership or other unincorporated organization whose activities include the following:

1. Producing, selling or distributing goods in Canada or elsewhere
2. Importing goods into Canada
3. Controlling an entity engaged in any of the activities listed above.

Additionally, that company must either be listed on a stock exchange in Canada or have a place of business in Canada, do business in Canada or have assets in Canada and meet two of the following three criteria for at least one of its two most recent financial years:

• $20 million or more in assets
• $40 million or more in revenue
• 250 or more employees

Furthermore, the Act applies to any entity that is controlling an entity engaged in any activity described above.

How Have Canada’s ESG Standards Changed?

The Act will require affected businesses to significantly improve their annual reporting requirements, including annual report submissions to the Minister of Public Safety on or before May 31, starting in 2024. This reporting must include all of the following:

• References to any activities undertaken during the previous financial year. For example, if a company’s financial year follows the calendar year, then a report due on May 31, 2024, would cover the activities from January 1, 2023 and December 31, 2023.
• The steps taken during the previous year to prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods in Canada or elsewhere by the company or of good imported into Canada by the company.
• The company’s structure, activities, and supply chains.
• Policies and due diligence processes in relation to forced labour and child labour.
• The parts of its business and supply chains that carry a risk of forced labour or child labour being used and the steps it has taken to assess and manage that risk.
• Any measures taken to remediate any forced labour or child labour.
• Any measures taken to remediate the loss of income to the most vulnerable families that result from any measure taken to eliminate the use of forced labour or child labour in its activities and supply chains.
• The training provided to employees on forced labour and child labour.
• How the company assesses its effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains.

In addition to submitting the report to the Minister, the company must make it available to the public, including by publishing it in a prominent place on its website.

In the case of companies incorporated under the Canada Business Corporations Act  or under any other Act of Parliament, the report must also be distributed to each shareholder, along with its annual financial statements.

For additional support, refer to the “Guidance for Entities” section of this document about preparing reports.

For more details and resources, refer to 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

Keeping Every Canadian Supply Chain Safe Requires the Best ESG Solutions

At Veriforce, we are thrilled to work with our customers to combat forced and child labour, both in Canada and around the globe. We’ve established a dedicated team of experts to help guide affected businesses through every process step and equip them with tools tailored to their needs. We recognize that different companies face diverse legislation and industry requirements around ESG and other jurisdiction-specific requirements, necessitating solutions explicitly configured to their business.

If you are required to submit annual reports, contact your Veriforce Customer Success team for guidance and ESG tools to give you visibility into your entire supply chain. We can take you through our updated ESG reporting questions to ensure you have the information necessary to create your report.

Contact us today to learn more.