October 30, 2024
Amid Public Safety Canada’s publication of its first annual report on Canada’s Supply Chains Act, Torys counsel Steven Slavens spoke with Forward Law Review to discuss the findings of the report and reflect on how this mandatory reporting presents opportunities for Canadian companies, particularly when it comes to entering the EU market.
The Supply Chains Act (formally the Fighting Against Forced Labour and Child Labour in Supply Chains Act) was implemented on January 1, 2024 and requires all government organizations and large companies in Canada to “report on their efforts to identify and mitigate the risk of forced or child labour in their supply chains.”
“I think it’s interesting to see that when it comes to identifying risks of forced labour and child labour in their supply chains, government institutions were trailing behind the business community by a significant margin,” Steven told Forward Law Review.
The report showed that more than 38% of businesses had reported on their supply chain activities and over 39% had started the reporting process, compared to only 17% of government institutions that had reported their activities. It also showed that more than 44% of government institutions had not yet begun the process.
“I would expect that both government institutions and private sector entities will improve on those numbers next year,” Steven said.
Layered on top of Canada’s Supply Chains Act is the EU Corporate Sustainability Due Diligence Directive, which was enacted in July 2024 and adds even more mandatory human rights due diligence and reporting regulations for companies. Preparing for this reporting will help both Canadian and U.S. companies when it comes to selling into the EU, Steven said.
“One of the key challenges many organizations faced was identifying who in their company had knowledge and documentation related to their organization’s efforts to avoid forced and child labour in their supply chains and to support other initiative in support of human rights,” he said.
“A lot of the knowledge in these organizations was spread among different stakeholders—legal, compliance, HR, procurement, audit—and there had never been such an acute need to put all of those stakeholders in conversation with each other.”
Steven also noted that while the EU legislation is broader in scope, “setting up the internal communication channels and the processes required for ensuring accuracy of their reports will go a long way toward preparing Canadian and U.S. organizations for EU reporting.”
Thorough reporting could even be a marketing opportunity for some companies, Steven added. “For responsible organizations, there’s a marketing opportunity to be had and potential differentiator in the marketplace. Investors that take these issues seriously will look for companies who take these issues seriously. These reports are marketing tools as well as compliance artifacts.”
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