In Part 11 of my series, I addressed steps that Canadian businesses can take to identify and to assess the risk that there is modern slavery in the business and/or its supply chains. The next step addresses how a business can operationalize its commitment not to utilize forced labour or child labour1 within business operations and supply chains in order to ensure long-term success and sustainability.
1. Supplier Code of Conduct
The first step for a Canadian business is to clearly articulate what it expects of its suppliers. The Supplier Code of Conduct should set forth required minimum standards and behaviours in terms of human rights, health and safety, business conduct and compliance with anti-corruption and other applicable laws and regulations.
It may also be appropriate, depending on the business and its approach to ESG, to align the Supplier Code of Conduct to international norms and instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Internal training and education of employees of the business is critical to the success of these efforts to combat these human rights abuses in the business and its supply chains.
2. Supplier Training and Education
Businesses must take the time and effort to communicate their expectations to suppliers and to provide training on how to identify and to address potential or ongoing forced labour, child labour, modern slavery, human trafficking and worker exploitation in the business or its supply chains. Training should also address what the supplier should do if it suspects or identifies forced labour being utilized in the supply chain.
The Supplier Code of Conduct should articulate the steps and measures that suppliers must take to monitor and report on compliance with the Code and the steps expected and remedial action to be taken to address non-compliant conduct.
3. Contractual Documentation
Contractual documentation to be entered into between the business and its suppliers is essential to the efforts of the business to operationalize its commitment to prohibit the use of forced labour or child labour in its operations and supply chains.
The contractual provisions will create enforceable obligations of suppliers as to the standards of the business articulated in the Supplier Code of Conduct, as well as reporting, supplier audits and inspections, and remediation of adverse human rights impacts. The business will want to include provisions that flow down the supply chain to sub-contactors and sub-suppliers.
4. Supplier Audits and Inspections
The Supplier Code of Conduct will provide for Supplier audits and inspections. These can be a very effective tool for businesses to get objective and timely visibility and verification of what is actually occurring at the supplier's worksites, factories, production and distribution facilities. While these audits and inspections have been very challenging since the outbreak of the Covid-19 pandemic, due to government restrictions on travel and other factors, they should still be an important component of the Supplier Code of Conduct.
To optimize the success of the efforts of your business in addressing forced labour and other human rights abuses, the four action items above should be developed with a view to making them bespoke to your business, its approach to ESG, its operations and its supply chains. And don't underestimate the ROI of the engagement of your employees in these efforts. Providing them with ongoing education and training on how to identify and address potential and actual risks of forced labour, child labour and modern slavery is essential.
More in this series
For further information, please read the first eleven 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, compliance and supply chain issues, please contact the author Stephen Pike.
[1] According to the International Labour Organization, the term "child labour" is often defined as work or service that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development. It refers to work that is mentally, physically, socially or morally dangerous and harmful to children; and/or interferes with their schooling by: depriving them of the opportunity to attend school; obliging them to leave school prematurely; or requiring them to attempt to combine school attendance with excessively long and heavy work.