Some 27.6 million people, including 3.3 million children, are trapped in forced labour around the world. Canadian companies need to know who and what they’re using to create their products and supplies—especially since the risks facing even the most well-intentioned organizations are rising.
The federal government’s new Fighting Against Forced Labour and Child Labour in Supply Chains Act, (formerly known as Bill S-211) imposes disclosure requirements for government institutions and many companies with connections to Canada. The consequences for non-compliance are serious: financial penalties, criminal prosecution and the possibility of being named and shamed by non-governmental organizations. Despite these risks, most entities are unprepared to meet these new requirements.
It’s critical for organizations to start acting now. But it’s also important to remember that forced labour is just one issue in the broader human rights agenda. Creating a plan to comply with the Modern Slavery Act can be an opportunity to take action across these wider issues and strengthen the “S” in your environmental, social and governance (ESG) story.
Broadly speaking, organizations that make, buy or sell physical goods face new obligations and requirements under the Modern Slavery Act. Are you a Canadian-linked entity that met at least two of these conditions in at least one of your two most recent financial years?
Under the new rules, affected entities must publish a report each financial year that discloses the steps they’ve taken to prevent and reduce the risk that forced labour or child labour is used in their operations and supply chains. This report must be approved by your board and published prominently on your website. Additionally, a director must attest in writing that the report is true, accurate and complete.
Obligated entities must file their reporting by May 31, 2024. Those that don’t—or can’t—comply risk reputational damage and substantial financial penalties of $250,000 per offence. Importantly, individual C-suite executives, directors and employees could face the same financial penalties and criminal prosecution.
Analyze the risk of modern slavery and human rights violations across the multiple tiers of your organization’s supply chains. If you source raw materials from relatively low-risk countries, don't stop there. Look for modern slavery risks deeper in your supply chain. Focusing on imported raw or finished goods in particular helps to systematically manage risks in operations, supply chains and relationships.
Identify the human resources gaps in your systems and processes, and then educate and train all stakeholders, including directors, customers, employees, suppliers and investors. This helps avoid perceptions—and the associated reputational risk—that you’re only doing the bare minimum.
Strengthen the “S” in your ESG story by sharing your commitments, the actions you’ve already taken and what you plan to do next to improve human rights in your supply chain. Your disclosures should outline how you’ll meet the general requirements and the seven supplementary reporting requirements.
Develop new policies specific to modern slavery or enhance existing policies to reduce management risk and reflect your entity’s values. This includes procurement and supplier selection policies, practices, monitoring and systems.
Develop worst-case scenarios and identify areas of improvement to mitigate that risk.
These steps can be a powerful starting point on a journey of continuous learning and improvement that helps sustain your ability to identify, address and mitigate risks. Connecting your compliance activities with your organization’s respect for human rights isn’t just the right thing to do—it's an opportunity to demonstrate that your business delivers not only economic returns, but also benefits to broader society. This builds trust with stakeholders and helps transform compliance into a source of long-term value
Reach out to discuss an exposure assessment, where human rights and modern slavery fit in your ESG efforts, your operating model, your policies for suppliers, supply chain and human rights and supply chain transformation and resilience opportunities.
1 “Global Estimates of Modern Slavery: Forced Labour and Forced Marriage,” International Labour Organization, published September 2022
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National ESG Markets Leader and Canadian Platforms Leader, PwC Canada
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Risk and Regulatory Platform Leader, Partner, International Tax, PwC Canada
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