It is estimated that Canada imports $20 billion worth of products at risk of modern slavery annually.
Around the world, supply chain due diligence regulations are being proposed or enacted to force large companies and organizations to address supply chain issues. Increasingly, mandatory environmental, social and corporate governance (ESG) reporting regulations require specific information regarding due diligence around ethical supply chains. This due diligence addresses risks such as forced labour and child labour, environmental degradation and deforestation.
In Canada, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Modern Slavery Act) came into force on January 1, 2024 with the first reports due to be filed with May 31, 2024. The Modern Slavery Act requires annual reporting by certain government organizations and large entities on due diligence activities related to the prevention of forced and child labour in supply chains.
The Modern Slavery Act aims to “increase industry awareness and transparency and drive businesses to improve practices.” If you would like to know more about whether your company is captured by the Act and your reporting obligations, we discuss these in our blog Guidance Released on Modern Slavery Act Reporting.
The risk of modern slavery is potentially present in the supply chains of industries such as agriculture, fashion and electronics, or any manufactured or consumer good made outside of Canada. Proactively advancing supply chain due diligence and disclosure is essential for satisfying Modern Slavery Act reporting requirements in Canada.
To prepare for reporting, it is critical for companies to identify and mitigate the associated legal risks, including regulatory enforcement, commercial litigation and seizure of goods with a focus on the standards, duties and obligations set out in the Modern Slavery Act. As legal requirements for supply chain due diligence evolve, so do the sources and velocity of legal risk.
By conducting due diligence processes, companies are better able to identify risk and make decisions that to limit purchasing products potentially made through forced labour or child labour.
What is supply chain due diligence?
Supply chain due diligence is a process by which a business seeks to identify, mitigate, manage and prevent related adverse impacts and risks from their operations. If applicable, organizations disclose these risks and mitigation efforts under listed entities continuous disclosure obligations.
What actions should a corporation take now?
Action Area |
Objects & Goals |
Action Items & Next Steps |
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| Policies & Processes
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Must have corporate policies and processes that prevent and reduce the risk of forced labour or child labour |
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| Mapping & Risk
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Develop clear understanding of the parts of the business and supply chains that carry a risk of forced labour or child labour |
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| Training
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Ensure training for employees and suppliers related to forced labour and child labour: legal requirements, risks, policies and processes |
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| Verification
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Approach to verification of corporate due diligence activities to ensure forced labour and child labour are not being used in its business and supply chains |
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| Reporting
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Annual public reporting on supply chain due diligence activities to satisfy legal requirements |
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The MLT Aikins ESG practice group supports organizations in identifying, mitigating and managing legal risk related to supply chain due diligence and disclosure.
Contact us today to meet the deadline!
Engage our ESG team as soon as possible to allow sufficient time to assess your reporting obligations, evaluate your current governance structure and prepare for the first report, due May 2024.
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Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.