Notes on pending supply chain transparency legislation.

Canada is committed to fighting forced and child labour by implementing legislation that specifically addresses the lack of transparency in supply chains – a move that will have a direct impact on some Canadian importers.

Bill S-211 (officially known as An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff) is currently before Parliament and is expected to pass; once passed, it will take effect on January 1 of the year following royal assent.

The Bill will require certain companies and government departments to annually report on steps taken to combat/prevent and reduce the risk of forced and child labour in their supply chains; this includes details on production, and where produced, purchased, or distributed. The Bill covers specific details to be included in these reports, and the penalties for non-compliance.

The Canadian Apparel Federation recently hosted a webinar with Benedict Wray, Senior Associate from Borden Ladner Gervais LLP (BLG) to discuss this legislation; our overview is below.

Who is obligated to report?

  • Government institutions producing, purchasing, or distributing goods in Canada or elsewhere, and
  • Private entities listed on the Canadian stock exchange, who have a connection to Canada or do business in Canada, or who import or produce goods in Canada (or elsewhere). These entities must meet two of three financial benchmarks that include assets, revenue, and employee count.

What are the mandatory requirements?

Each business is to report on:

  • Its structure, activities, and supply chains,
  • Its policies and due diligence related to forced and child labour,
  • The parts of its business and supply chains that carry a risk of forced or child labour, and the steps taken to manage that risk,
  • Measures taken to remediate forced or child labour,
  • Measures taken to remediate the loss of income to the most vulnerable families resulting from measures taken to eliminate the use of forced or child labour in its activities and supply chains,
  • The relevant training provided to its employees, and
  • How it assesses the effectiveness of its policies.

Reports are to be made publicly available, published prominently on the company’s website, and filed with the Minister responsible for this legislation; failure to do so can result in a fine of up to $250,000.

Canadian businesses and importers can prepare for these new requirements by conducting their own due diligence, vetting suppliers, being aware of the origins of their products and their components and ensuring that goods are coming from a safe and ethical environment with no forced or child labour practices.

BLG’s blog has more information on this complex topic. We recommend consulting a lawyer for specific legal advice.

Disclaimer

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