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Fighting against forced labour with Bill S-211

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May 6, 2024 in Legislation
By Avetta

As part of Canada’s continued efforts to combat forced labour, Bill S-211 – the Fighting Against Forced Labour and Child Labour in Supply Chains Act – came into effect on Jan 1, 2024. Now, many Canadian businesses face a pivotal deadline of May 31 to submit their inaugural detailed reports, outlining measures to combat forced labour, prison labour, and child labour within their supply chains.

The Act requires mandatory reporting for businesses (and other entities) that meet the criteria for inclusion. Noncompliance could result in fines of up to $250,000. What’s more, unlike other global supply chain due diligence laws, Bill S-211 holds business leaders personally liable for any company offenses.

“Ultimately, the government is signalling that there will be no passing of the buck,” says Katie Martin, director of sustainability for Avetta, a global company with operations across Canada, dedicated to helping clients and suppliers assess supply chain ESG (Environmental, Social, and Governance) maturity, track progress, and grow their sustainability impact. “Now, the buck stops at the top.”

Photo courtesy of Avetta/Adobe Stock Images.

Why is Bill S-211 so crucial?
“Coming out of the pandemic, employment data shows a three to four-times increase in the use of forced labour and child labour within supply chains that are connected to Canada and the U.S.,” says Martin, who has more than a decade of experience with designing, implementing, and assessing ESG and sustainability programs for both Fortune 500s and start-ups at scale across a variety of sectors.

She points to a recent report by Walk Free, indicating 50 million more people are engaged in forced labour than five years ago. In addition, UNICEF and the International Labour Organization recently warned that progress to end child labour has stalled for the first time in 20 years.

The problem: the harmful effects of the pandemic have not been distributed equally. Income shocks and school closures disproportionately affect poor people, mainly because they lack an income cushion and don’t have access to benefits like health insurance and unemployment benefits. And climate-driven migration is increasing the number of vulnerable workers.

“Canada’s commitment to Bill S-211 is part of a global effort to combat exploitative labour,” Martin says.

Who does Bill S-211 apply to?
The short answer, according to Martin: essentially any company of a significant size in Canada that produces goods, as well as anyone importing goods produced outside of Canada.

Regardless of whether it is domestic or international, a business must produce a report if it meets at least two of the following criteria:

  • It possesses Can$20 million in assets.
  • It generates Can$40 million in revenue.
  • It employs at least 250 workers.

What are the reporting obligations?
Businesses must report annually, detailing the organization’s activities, and the policies and procedures in place, to prevent forced labour within their workforce, including contractors.

The difficulty lies in the complexity of the global supply chains that many Canadian companies have, Martin explains. “You have to look at all of the goods you’re importing and all of the vendors that you work with – even the businesses that perform your groundskeeping or manage your HVAC units. You need to know what their policies and procedures are to make sure that you are not de facto employing forced labour or child labour through these contractors.”

Once you’ve gathered all your data and compiled a report, “you need to bring it to your governing body – your board or your C-suite – to review and attest to the validity of the information,” Martin advises. “They have legal obligations and responsibilities under this Act.”

Once the report has been approved, it must be submitted to the Canadian legislature, and posted in PDF form in a publicly accessible place on the business’s website.

Martin says companies with multiple legal entities can ease the administrative burden by opting for joint reporting, so long as their risk profiles and mitigation strategies are aligned.

How can I defend against the risk of forced labour in my supply chain?

Martin recommends the following four-step process:

  1. Map your supply chain, looking closely at the supplier types and regions most at risk for modern-day slavery and forced labour within your industry. “You have to understand the signals and signs of forced labour in your supply chain,” says Martin. “Those are highly variable, but typically anyone who is coming in significantly under average in terms of either time to produce or cost should be looked at more closely.”Similarly, if you’re importing goods from areas of the world that are flagged (on various database and analysis systems like the Global Slavery Index) as having high rates of forced labour and child labour, you will need to investigate suppliers from those areas more thoroughly.
  2. Get your whole team on board. “A big piece of this is going to be about educating your internal stakeholders so they know what the forced labour risks look like specifically for your organization, and how they can report potential instances,” Martin says.
  3. Develop a series of questions for suppliers that address the risk they bring based on the services they’re providing.
  4. Communicate with potentially problematic suppliers. That doesn’t necessarily mean severing your connection with them. “Immediately terminating business connections can push vulnerable people into even more exploitative conditions,” Martin says. “Instead, you need to determine the best way to mitigate that risk, which could include children have appropriate PPE for the job, don’t operate heavy or dangerous machinery, and attend school for at least five hours a day.”

Can I handle it myself?

“Many of our client partners have already been doing some level of due diligence in this space internally,” Martin says. “But it’s usually one person managing a system of spreadsheets and complex supply chain relationship management with their suppliers.”

Given the level of rigour and focus required by Bill S-211, and the fact that it is now a compliance requirement, Martin would “not recommend handling internally unless you have a fully built-out team with expertise in forced labour risk.” At least for the first year or two, “you will likely require some external investment in new, scalable tools and initial risk mapping.”

Martin believes the enhanced supplier vetting, auditing and monitoring required by Bill S-211 is best managed through the supplier relationship management (SRM) tools of a multi-enterprise platform.

For example, Avetta’s cloud-based platform facilitates collaboration between businesses, suppliers and third-party partners, giving its clients a window into their entire supplier base. “We have the ability to scale and communicate with suppliers and a series of best practice due diligence questions that cover the supplier’s specific material risk components,” Martin says.

The company also collaborates with industry associations and non-governmental organizations (NGOs) to help partners stay ahead of developing global challenges and risks across the ESG landscape. “We then report back on where your primary risks lie and how you can work with your vendors to shore up those challenges.”

But, points out Martin, although the compliance requirements of Bill S-211 may be the main driver for vetting your suppliers more closely, it’s certainly not the only reason. Not only will you be doing the right thing, you will be de-risking your supply chain, and “building out strong, comprehensive, and up-to-date business practices capable of taking your organization into the future.”

Assess supply chain risks here and receive an initial report of where your company’s current operational risks lie.

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