Friday is reporting deadline for forced and child labour in supply chains legislation
"This legislation is transparency legislation," says Melanie Cole, partner at Aird & Berlis LLP and chair of the firm’s ESG & Sustainability group. As Bill S-211 comes into effect, health and safety professionals in Canada who also have social governance, corporate responsibility, or compliance in their portfolios must grapple with its requirements and implications. The bill, which aims to enhance transparency around forced and child labour in supply chains, presents unique challenges and responsibilities for organizations.
Understanding the requirements
Bill S-211 mandates that entities disclose their efforts to prevent, and address forced or child labour within their supply chains. "From a reporting perspective, it's really only requiring entities who are required to report to report on what they did or did not do," explains Cole. Unlike legislation in other jurisdictions that demands specific actions, Canada's approach focuses on transparency.
Organizations must report annually on the measures they have taken, or not taken, to mitigate the risk of forced or child labour. This reporting must be approved by the entity's governing body, adding a layer of accountability.
Challenges in reporting
One of the significant challenges entities face is understanding whether they fall under the scope of the legislation. "The legislation is meant to capture a wider range of entities than you may expect," notes Cole. This broad scope has surprised many multinational companies with Canadian subsidiaries, who realize their entire global operations might need to be reported.
Additionally, the lack of robust supply chain monitoring systems has posed a problem for many companies. "A lot of companies don't necessarily have robust supply chain monitoring in place," says Cole. As a result, their reports might not reflect a proactive stance against forced or child labor, leading to potential reputational risks.
Consequences of non-compliance
Failing to comply with Bill S-211 carries significant penalties. "It's an offence under the Act if you are required to report and you do not," warns Cole. Companies that fail to report or provide false or misleading information can face fines of up to $250,000. Furthermore, the report must be approved by the board, not just management, ensuring high-level oversight.
Despite these stringent requirements, Cole believes the initial focus of Public Safety Canada, the federal ministry overseeing the legislation, will be on raising awareness and ensuring compliance rather than strict enforcement. "At least at first, they're not going to be...throwing around $250,000 fines," she suggests, indicating a period of adjustment and learning for organizations.
Best practices for compliance
To navigate these new requirements successfully, Cole advises companies to seek expertise if needed. "Talk to somebody who has the expertise in looking at this and interpreting it," she recommends. Given the broad and somewhat vague nature of the legislation, professional guidance can help ensure accurate and comprehensive reporting.
Cole also warns against trying to make reports look good. "It's really important just to be honest to say what you've done and what you haven't done," she advises. Accurate reporting, even if it reveals gaps, can protect a company's reputation and provide a baseline for future improvements.
For companies looking to go beyond the basic requirements, Cole suggests implementing best practices such as supplier codes of conduct and due diligence processes. While not mandated by Bill S-211, these measures can enhance a company's reputation and align with broader ESG goals.
Looking ahead
The first year of Bill S-211 will be a learning period for many organizations. As companies adapt to the new reporting requirements, there will likely be increased scrutiny from NGOs and other stakeholders. "It will be interesting to see what happens once this information is out there and what people are going to do with it," Cole reflects.
Bill S-211 represents a significant step towards greater transparency in supply chains. For health and safety professionals, understanding and complying with this legislation is crucial. By seeking expert advice, maintaining honest reporting, and potentially adopting additional best practices, organizations can navigate these new requirements effectively and uphold their commitment to ethical supply chains.
