What does the Canadian modern slavery act entail?
The new act requires that entities producing, selling, or distributing goods in Canada or importing goods into Canada file an annual report on the steps they take to prevent and reduce the risk of forced labor in their supply chains. Under the act, an entity is defined as a company that is listed on the Canadian stock exchange, has a place of business in Canada, does business in Canada, or has assets in Canada. If a company is not listed in Canada, it also must meet two of the following three criteria, based on its consolidated financial statements for the past two years:
- Have at least $20 million in assets
- Generate at least $40 million in revenue
- Employ at least 250 people
Much like other modern slavery legislation, the Canadian act requires companies to report on:
- The business’s structure, activities, and supply chains
- Policies and due diligence processes relating to forced labor and child labor
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Parts of business and supply chains that carry a risk of forced labor or child labor and the steps taken to assess and manage that risk
- Any measures taken to remediate any forced labor or child labor
- Any measures taken to remediate the loss of income by the most vulnerable families that results from any measure taken to eliminate the use of forced labor or child labor in activities and supply chains
- Training provided to employees on forced labor and child labor
- How the entity assesses effectiveness in ensuring that forced labor and child labor are not used in its business and supply chains
Once reports are complete, they must receive approval from the appropriate governing body or bodies who have the legal authority to bind the entity or entities. After approval, companies must submit their reports to Public Safety Canada. Entities must also complete an online questionnaire that reflects the information in the submitted report.
How does this act compare to existing legislation?
Like other countries that have passed modern slavery legislation, Canada does not dictate how to obtain the data required in the report. That means companies must develop their own strategies to report on company structure, modern slavery due diligence processes and policies, and the measures they’re taking to remediate any instances of forced labor abuses.
Similar to legislation in the U.K. and Australia, the Canadian act requires companies to post a statement prominently on their websites that describes the steps they have taken to address modern slavery in their supply chains.
Though specific details differ slightly, all three countries require some level of supplier due diligence, supply chain mapping, and reporting. In addition, they require companies to create and implement robust policies and procedures to remediate and mitigate the risk of forced labor in the supply chain.
Which organizations are in scope for other modern slavery laws?
Existing modern slavery legislation differs on the revenue and size threshold of in-scope entities:
- The U.K.’s Modern Slavery Act 2015 applies to all businesses that are in (or partly in) the U.K. and have an annual turnover of £36 million (about $46 million USD) or more.
- California’s anti-human trafficking law affects retail and manufacturing companies doing business in California with annual worldwide gross receipts of at least $100 million.
- Australia’s Modern Slavery Act 2018 applies to Australian-based entities and entities that carry on business in Australia with a consolidated revenue of at least $100 million.
With the addition of the Canadian act, organizations with a global presence could be affected by all four sets of laws. Luckily, the overlap in required data offers the opportunity for companies to create a single modern slavery and forced labor program to satisfy the requirements of each current law and also address future requirements.
What are best practices for compliance with these regulations?
Companies should create a comprehensive compliance program that includes employees at all levels. This plan could involve implementing companywide training to identify modern slavery in the supply chain, adding requirements about modern slavery to purchase orders and supplier agreements, and making it clear to suppliers that forced labor will not be tolerated.
Despite the changing regulatory landscape, companies can manage these requirements more effectively by crafting programs based on the most stringent aspects of the laws. Then, when new requirements emerge, most of the necessary processes and procedures can already be in place, allowing companies to adapt more easily.
