In May 2023, the Canadian Parliament took a significant step toward combating forced labor and child labor within global supply chains by passing Bill S-211, also known as the Modern Slavery Act. This legislation reflects Canada’s commitment to ethical business practices and social responsibility. With the Act set to take effect on January 1, 2024, and a crucial reporting deadline of May 31, 2024, it’s imperative for businesses to understand its implications and act swiftly to ensure compliance.

What is the Modern Slavery Act?

The Modern Slavery Act, encapsulated in Bill S-211, aims to reduce the prevalence of forced labor and child labor in supply chains used by Canadian businesses. It emphasizes the importance of the “social” component of Environmental, Social, and Governance (ESG) criteria and seeks to promote ethical and responsible supply chain management practices.

Why was the Modern Slavery Act created?

The Act was created to align with Canada’s international commitment to combat forced labor and child labor. By imposing reporting obligations on government institutions and entities involved in producing, purchasing, or distributing goods, the Act seeks to enhance transparency and accountability in supply chains. It underscores the need for businesses to actively address the risks of modern slavery within their operations and among their suppliers.

Who has to comply with the Modern Slavery Act?

The Act applies to a broad range of entities, including corporations, trusts, partnerships, or other unincorporated organizations that engage in producing, selling, or distributing goods in Canada or elsewhere. Additionally, these entities must meet specific financial criteria, such as having $20 million or more in assets, $40 million or more in revenue, or employing 250 or more individuals.

How will the Modern Slavery Act affect businesses?

Businesses subject to the Modern Slavery Act must adhere to stringent reporting requirements aimed at identifying and addressing risks of forced labor and child labor in their supply chains. Failure to comply with these rules can result in substantial penalties, including fines of up to $250,000 and potential criminal prosecution for directors and officers of affected entities. It’s essential for businesses to take these compliance obligations seriously and prioritize the implementation of robust risk management measures.

What do you need to do to comply?

To comply with the Modern Slavery Act, businesses must complete a mandatory questionnaire and develop an annual supply chain risk report. These documents must be submitted to the Minister of Public Safety and Emergency Preparedness by the May 31 reporting deadline each year. The report should outline the entity’s efforts to prevent or reduce the risk of forced and child labor in its supply chain, including policies, due diligence processes, training programs, remediation measures, and assessments of effectiveness.

How do you prepare for Bill S-211?

Preparing for Bill S-211 requires proactive measures to ensure compliance and foster a culture of ethical supply chain management. One critical aspect of preparation is implementing comprehensive Third-Party Risk Management (TPRM) and Supplier Risk Management (SRM) strategies. Solutions like Craft offer valuable insights into supplier risk, enabling businesses to identify and mitigate potential risks of forced and child labor in their supply chains.

Unlike relying solely on supplier questionnaires, solutions like Craft provide continuous monitoring of suppliers, generating alerts on any material changes that may indicate increased risk. By leveraging these insights, businesses can make informed decisions and take prompt action to address potential issues, thereby safeguarding their reputation and complying with Bill S-211.

Action Plan for Compliance with the Canadian Modern Slavery Act:

  1. Conduct a Supply Chain Mapping and Risk Assessment:
    • Identify all tiers of your supply chain, including direct suppliers and subcontractors.
    • Assess each tier for potential risks of forced labor and child labor, considering geographical locations, industries, and labor practices.
    • Prioritize high-risk areas and suppliers for further due diligence.
  2. Implement Enhanced Due Diligence Procedures:
    • Develop a comprehensive due diligence process to evaluate suppliers’ compliance with labor standards and human rights.
    • Request relevant documentation from suppliers, such as policies, certifications, and audits related to forced labor and child labor.
    • Utilize third-party risk management solutions to continuously monitor suppliers for any changes in risk levels.
  3. Establish Policies and Procedures:
    • Develop and implement policies prohibiting the use of forced labor and child labor in your operations and supply chain.
    • Establish clear procedures for reporting and addressing instances of forced labor or child labor identified within the supply chain.
    • Ensure that these policies and procedures are communicated effectively to employees, suppliers, and other relevant stakeholders.
  4. Collect and Maintain Relevant Data:
    • Gather data on the activities and supply chains of your organization, including structures, locations, and relevant stakeholders.
    • Document policies and due diligence processes related to forced labor and child labor, along with any measures taken to address identified risks.
    • Maintain records of training provided to employees on forced labor and child labor issues, as well as assessments of its effectiveness.
  5. Prepare the Annual Supply Chain Risk Report:
    • Compile all necessary data and information to complete the annual supply chain risk report required by the Modern Slavery Act.
    • Ensure that the report addresses all specified areas, including efforts to prevent or reduce the risk of forced labor and child labor, policies and due diligence processes, remediation measures, and employee training.
    • Obtain approval from the entity’s governing body, such as the board of directors, before submitting the report to the Minister of Public Safety.
  6. Publish the Report and Maintain Transparency:
    • Make the supply chain risk report publicly available on your website in a prominent location.
    • Ensure that the report is also accessible through an electronic registry on Public Safety Canada’s website.
    • Demonstrate a commitment to transparency and accountability by providing stakeholders with access to relevant information regarding the company’s efforts to combat forced labor and child labor.

By following this action plan, companies can enhance their compliance with the Modern Slavery Act, mitigate risks within their supply chains, and contribute to the global effort to eradicate forced labor and child labor.

How can Craft help?

Craft’s supplier risk management solutions are designed to streamline compliance and enhance reporting. With our platform:

  • Identify risky suppliers with in-depth company profiles and easily scalable due diligence
  • Continuously monitor your supplier network for changes and potential violations
  • Document your efforts for proof of compliance
  • Collaborate and share information across teams for faster risk mitigation

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Related Regulations

For an overview of regulations affecting the global supply chain, visit our compliance hub.

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