Canada Initiates Consultations and Proposes New Measures to Strengthen Anti-Modern Slavery Efforts

The Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”) came into force on January 1, 2024, implementing enhanced reporting requirements for certain entities to combat forced labour and child labour. See our January 2024 and March 2024 updates on the Act and its reporting obligations.

On October 16, 2024, the Government of Canada announced the launch of a public consultation process seeking stakeholder feedback on the government’s latest proposed measures to combat forced labour and child labour. The consultations, which were open until November 15, 2024, were launched shortly after the Minister of Public Safety (the “Minister”) submitted its first annual report (the “2024 Report”) to Parliament. The 2024 Report summarizes Public Safety Canada’s findings regarding the first year of forced labour and child labour reporting under the Act.

Background

The stated purpose of the Act is to implement Canada’s international commitment to contribute to the fight against forced labour and child labour by imposing reporting obligations on any entity that produces, sells or distributes goods in Canada or elsewhere, any entity that imports into Canada goods produced outside Canada, and any entity that controls (directly or indirectly) another entity engaged in such producing, selling, distributing or importing. Entities subject to the Act must prepare annual reports that are published prominently on their website and filed with the Minister no later than May 31 of each calendar year. 

The Minister published guidance in respect of the reporting obligations under the Act on December 20, 2023 and updated guidance on March 7, 2024 (collectively, the “Guidance”).

Consultations and Proposed Measures

The consultations invited stakeholder feedback on the following potential measures proposed by the government (collectively, the “Proposed Measures”):

The Proposed Measures align with the government’s commitment to strengthen its anti-modern slavery regime and are intended to supplement the existing forced labour measures, including the prohibition on importing goods mined, manufactured or produced with forced labour or child labour, and the reporting obligations under the Act. The Proposed Measures appear to be focused on forced labour and do not explicitly address child labour.

The Proposed Measures do not contain concrete implementation steps and there remains ambiguity around how they will monitored. Importantly: 

• There is no detailed discussion on the “minimum traceability” process required of importers, and the breadth of this obligation is unclear.
• There is no detailed explanation on how to determine if a good is at risk of forced labour and subject to publication on the list.
• There is uncertainty about opportunities for stakeholders to discuss goods proposed for inclusion on the list before publication. 

The 2024 Report

The 2024 Report focuses on the 5,795 reports submitted by entities before the 2024 filing deadline in respect of their reporting obligation for the 2023 fiscal year. The 2024 Report was developed by analyzing data collected through the questionnaires required to be submitted by entities when completing their annual reports. Below is a summary of the key findings highlighted in the 2024 Report.

Risk of Forced Labour and Child Labour

The 2024 Report clarifies that identifying a risk of forced labour or child labour in an entity’s supply chain means recognizing a possibility, not a certainty, of such practices. Nearly 80% of private entities acknowledged these risks, compared to about 55% of government institutions that were subject to the Act’s reporting requirements. The most common risk of forced labour or child labour identified was related to raw materials or commodities.

Government and Private Sector Discrepancies

The 2024 Report indicates that the private sector is ahead of the government in addressing forced labour and child labour risks. Over 70% of entities reported having policies and due diligence processes, compared to only about 47% of government institutions. Similarly, around 44% of entities reported offering training on forced labour and child labour, compared to 18% of government institutions. 

Corrective Measures and Enforcement

No enforcement actions were taken by the Minister or Public Safety Canada in respect of the first year of reporting under the Act. Instead, they focused on education and encouraging compliance as opposed to strict enforcement. It remains to be seen if and how the Minister and Public Safety Canada may shift towards enforcement measures for the upcoming 2024 reporting period in light of evolving guidance and interpretation of the Act.

Potential Changes to the Guidance 

The Minister and Public Safety Canada have been engaged in stakeholder discussions to update and improve the Guidance. Despite the release of the Guidance before the 2024 filing deadline, the Minister and Public Safety Canada continue to consider issues such as how the Act applies to foreign companies that have an ownership interest in a Canadian subsidiary, the scope and definition of “goods”, how “control” is interpreted in various business structures and contexts, reporting obligations for entities not producing or importing goods into Canada, and what portions of an entity’s supply chain must be reported on. 

Looking Forward

The launch of consultations by the Minister and Public Safety Canada provide an opportunity for entities to engage and provide feedback on the Proposed Measures. As the next cycle of reporting begins, companies should consult with legal counsel to determine whether they are subject to the reporting obligations, and, if so, ensure they meet those obligations. Companies that import goods into Canada should also consult with legal counsel to determine how their business may be affected by the Proposed Measures.