On Wednesday, Nov. 25, 2021, Senator Julie Miville-Dechêne introduced Bill S-211 in Canada's Senate. Bill S-211 is "An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff."
To address the lack of transparency in supply chains, like its predecessors, Bill C-423 (2018), Bill S-211 (2020) and Bill S-216 (2020), Bill S-211 would require subject businesses to file and publish annual reports on steps taken to prevent and reduce the risk that forced labour or child labour is used in any step of the production of goods in Canada or elsewhere by the business or of goods imported into Canada by the business. (For further information, see my earlier report on Bill S-216 using the following link: Bill S-216.)
The issue of forced labour and child labour in supply chains has become an increasingly critical risk management issue for Canadian businesses. Pressure on Canadian businesses from investors, lenders, consumers, regulators and other stakeholders regarding ESG issues in Canada and globally, continues to intensify.
On July 1, 2020, as required under the United States-Mexico-Canada Agreement, without much fanfare, Canada banned the importation of goods mined, manufactured or made in whole or in part with forced labour. In 2021, we have seen press report after press report of actual and alleged forced labour goods being imported into Canada. Finally, as reported in the press on Nov. 15, the Canada Border Services Agency announced that it had seized women's and children's apparel in Montreal that is suspected of having been made with forced labour – the only publicly announced seizure of forced labour-made goods in Canada in the seventeen months since the ban came into effect.
On Nov. 10, 2021, the Federal Government announced that deliveries to it of disposable gloves alleged to have been manufactured using forced labour "were being held" pending receipt and review of a report being prepared for the manufacturer by an independent firm that is to conduct a comprehensive audit of the manufacturer's operations.
This comes after the U.S. Customs and Border Protection imposed a highly publicized "Withhold Release Order" in October detaining disposable gloves (made by this manufacturer and others) at the American border. Suffice to say, the introduction of Bill S-211, the fourth Bill introduced in Parliament since 2018 providing for mandatory supply chain disclosure by Canadian companies could not be more opportune.
Bill S-211 has included a number of new significant enhancements
Outlined below, the changes will serve to provide greater clarity and certainty to businesses as well as to broaden the scope of the Bill to offer government institutions an opportunity to join with the private sector and take a leading role in the fight against forced labour and child labour in supply chains.
Bill S-211 can bring enhanced supply chain transparency and easily accessible relevant annual reports to consumers, investors, lenders and other stakeholders in a way that will enhance and drive informed and wilful commercial activity in Canada.
New in Bill S-211
- A More Detailed Definition of Child Labour - including elements that appear in the International Labour Organization's definition of child labour;
- Bill S-211 Applies To Government Institutions - Government institutions that produce, purchase or distribute goods in Canada or elsewhere will have reporting requirements almost identical to those of private sector entities and will be required to provide an annual report and post it on the government institution's website;
- Distributors Must File Reports – In addition to manufacturers and sellers, the reporting obligations of private sector entities also apply to the wholesalers;
- Single Entity Reports or Joint Reports – The Bill now permits entities to file a single report or be a party to a joint report with related entities;
- Broader Scope of Annual Report - The information required to be included in the Annual Report includes information pertaining to the entity's activities, supply chains, due diligence process in relation of forced labour or child labour, as well an assessment by the entity as to its effectiveness in ensuring that forced labour or child labour are not being used in its business and supply chains.
- Annual Report Requires Board of Directors Approval - The Annual Report for private sector entities must be approved by the governing body of the entity or, in the case of a joint report, either by the governing body of each entity included in the report or by the governing body of the entity, if any, that controls each entity included in the report. The approval of the report must be evidenced by, inter alia, the manual signature of one or more members of the governing body of each entity that approved the report.
- Revised Annual Reports are Permitted – An entity may submit a revised report.
- Annual Reports to Shareholders of CBCA Corporations – Corporations incorporated under the Canada Business Corporations Act must provide a copy of the Annual Report to shareholders with the corporation's financial statements.
More in this series
For further information, please read the other parts of our Guide to addressing modern slavery in your business and supply chain for Canadian directors:
How we can help
To find out more about how Gowling WLG can help your business expertly organize and manage due diligence and other governance, risk, compliance and supply chain issues, please contact the author Stephen Pike.