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Which Companies Could be Subject to Bill S-211?

Bill S-211, recently passed by the Canadian Parliament, aims to prevent and reduce forced and child labor in supply chains. It imposes new reporting obligations on certain Canadian and foreign companies and entities. This federal law could therefore have major implications for your company.

Presentation of Bill S-211, or the Federal Forced Labour and Child Labour Act

Visit Bill S-211 was adopted by the Canadian Parliament on May 3, 2023. The main aim of this legislation, which came into force on January 1, 2024, is to combat forced labor and child labor, particularly in supply chains. To achieve this, it imposes a greater transparency of the latter.

In more specific terms, Bill S-211 requires certain federal institutions, private sector entities and companies listed on the Canadian Stock Exchange to report on the measures they are taking to prevent and alleviate forced and child labor in their supply chains.

Please note that if your company is affected, the deadline for compliance is May 31, 2024. We can help.

Objectives of Bill S-211

Law S-211 takes concrete steps to eradicate forced labor. It introduces transparency obligations for companies, which must now provide a report containing detailed information on their efforts to prevent and minimize the use of forced labor in their supply chains.

The law also aims to make companies more accountable by introducing penalties for non-compliance. These sanctions could include fines, as well as bans on importing goods produced using forced labor.

The new Bill S-211 will significantly affect the way Canadian companies, potentially including yours, manage their supply chains. It will also encourage the review and acceleration of ESG strategies. Of course, our ESG team can help you navigate these mechanisms and integrate them into your protocols to ensure compliance.

Lastly, Bill S-211 also has an impact on the
Customs Tariff
by prohibiting the import of products manufactured using forced labor.

Law S-211 also aims to eradicate child labor, in addition to forced labor. To do so, it introduces transparency obligations similar to those concerning forced labor. Companies must therefore describe their efforts to prevent and minimize the employment of children in their supply chains. There are also similar penalties for non-compliance, including fines and import bans. Support mechanisms are also in place to help companies meet these obligations, including resources and training to identify and manage the risks associated with child exploitation.

The
transparency
in supply chains is a major challenge for Bill S-211. Indeed, it is, it requires companies to provide accurate information on their supply chains to prevent and minimize the use of forced and child labor. This transparency obligation is reflected in the implementation of due diligence process robust. These processes must identify, prevent and mitigate the risks of forced labor and child labor throughout the supply chain. They must also provide for remediation mechanisms in the event of such practices being detected. This may involve an in-depth analysis of the various production stages, a risk assessment and the implementation of appropriate corrective measures.

Implications for companies

Which companies could be subject to the law?

Among the companies affected are those whose activities are :

  • The production, sale or distribution of goods in Canada or elsewhere;
  • Importing goods produced outside Canada;
  • Control of an entity producing or importing goods.

There is also a financial criterion not to be overlooked, because when an entity, in consolidation with its group of companies, meets two of the following three criteria, it falls within the scope of this law:

  • The entity has assets worth at least $20 million;
  • The entity generated revenues of at least $40 million; and
  • On average, the entity employs at least 250 people.

Reporting obligations on forced labor and child labor

Visit law S-211 requires companies to report on the risks of forced labor and child labor in their supply chains, including actions taken to prevent and mitigate these risks. The organizations concerned must submit a report by May 31 of each yearfrom 2024.

The required report must provide details of each entity concerned, including its structure, business activities and supply chains, as well as its due diligence policies and processes regarding forced labor and child labor. It must describe the areas at risk in its commercial and supply chains, the assessments of these risks, the measures taken to manage them, and the actions taken to remedy the use of forced or child labor. The law aims to increase industry awareness and transparency, and encourage companies to improve their practices.

Entities subject to this law must publish their reports, including on their website, and present them to shareholders if they are incorporated under the Canadian federal system. A centralized electronic register, accessible to the public and containing all reports, will eventually be created by the Minister.

Penalties for non-compliance with Act S-211

Failure to comply with Act S-211 can result in severe penalties. The maximum fine 250,000 for non-compliance with the obligation to prepare and present an annual report. $. Companies can also makeinvestigated of the Canada Border Services Agency (CBSA), which has significant powers to enforce this law. It is therefore possible for the CBSA to detain goods at the border or impose financial penalties.s. The law also gives the government the power to enter company premises without a warrant, and to search for and seize objects and documents to verify compliance with the law.

Support measures for businesses

To help companies comply with Bill S-211, the Canadian government has put in place several support measures:

  • Educational resources will be available to help companies understand their obligations under the law, including explanatory guides and training sessions.
  • A legal advisory service has been set up to advise companies on how to comply with the law.
  • A financial assistance fund has been set up to help small and medium-sized enterprises (SMEs) implement the measures needed to comply with the law.

The aim of these measures is to support companies in their transition to more responsible and transparent supply chains. In any case, don’t hesitate to contact our team so that we can support you in this transition.

The impact of Bill S-211 on various industries

THE FASHION INDUSTRY AND ITS SUPPLY CHAINS

L’
fashion industry
is particularly concerned by Bill S-211 because of the complexity and globalization of its supply chains. This industry, which includes the manufacture of clothing, footwear and accessories, often involves production processes spread across several countries, making it more difficult to monitor working conditions. The use of third-party subcontractors or suppliers, often located in countries with weak labor regulations, increases the risk of forced and child labor. Under Bill S-211, Canadian fashion companies are required to be more transparent and ethical in the management of their supply chains.

THE FOOD INDUSTRY AND ITS SUPPLY CHAINS

The food industry, by its very nature, has diversified and global supply chains, which can lead to risks of forced labor or violations of children’s rights. Companies in this sector, from agricultural production to food processing and distribution, are therefore directly concerned by Bill S-211. They will have to ensure the compliance of their supply chains, including the origin of raw materials, working conditions in processing plants and the practices of their suppliers. Particular attention should be paid to imported products, as the risk of forced and child labor may be higher in certain regions.

The impact of the law on the ESG strategies of Canadian companies

This law encourages Canadian entities to integrate ESG criteria, particularly social criteria, into the evaluation of their supply chains. It aims to encourage organizations to adopt a responsible approach and exert their influence to promote sustainable and ethical development, far beyond mere charitable or corporate responsibility actions. With the introduction of strict rules, companies must now place ESG factors at the heart of their strategy, carrying out thorough due diligence to identify and manage labor-related risks in their supply chains. This initiative reflects society’s commitment to sustainability and responsibility, encouraging even those entities lagging behind in terms of corporate social responsibility to adopt robust ESG strategies and ensure effective oversight by their boards to contribute positively to society.

The future of Bill S-211

NEXT STEPS IN THE IMPLEMENTATION OF BILL S-211

The implementation of Bill S-211 calls for a number of actions. Reporting entities should start preparing their reports following the guidelines provided by the government, in anticipation of the May 31, 2024 deadline. These reports should detail their efforts to combat forced and child labor in their supply chains.

It is likely that the government will closely monitor companies’ compliance with Bill S-211. This will include unannounced inspections and verification of submitted reports.

POSSIBLE AMENDMENTS AND IMPROVEMENTS TO LAW S-211

Improvements could be made to Bill S-211 to enhance its effectiveness. One of the main criticisms concerns the lack of concrete sanctions in the event of non-compliance with the law’s obligations. It could therefore be envisaged to introduce fines or trade sanctions for offending entities and companies.

Another suggestion would be to broaden the scope of the law to include a greater number of companies, especially small and medium-sized enterprises, which can also contribute to the problem of forced and child labor.

Finally, the law could be improved by imposing stricter transparency and disclosurerequirements, to ensure that companies don’t just meet a formal obligation, but make a genuine commitment to combating forced and child labor.

More questions? We’ve got the answer.

How does this law resemble other international laws on forced labor and child labor?

French law on duty of care

France’s Duty of Vigilance Act, adopted in 2017, applies to French-based parent companies and ordering companies with more than 5,000 employees in France or more than 10,000 employees worldwide. This law requires these companies to draw up and implement a vigilance plan to prevent human rights and environmental abuses in their activities and those of their subsidiaries, subcontractors and suppliers. The vigilance plan must include risk mapping, procedures for assessing subsidiaries and suppliers, risk mitigation actions and procedures for monitoring the measures implemented. Failure to comply can result in civil penalties. The French law goes further than Bill S-211 by imposing a duty of vigilance, while the Canadian law focuses mainly on transparency.

California's Supply Chain Transparency Act (SB 657)

The California Transparency in Supply Chains Act (SB 657) is an important piece of legislation for companies operating in California or doing business with California companies. Adopted in 2010, this law aims to combat forced labor and human trafficking by requiring companies to disclose their efforts to eliminate these practices from their supply chains.

Unlike some other legislation focusing on corporate responsibility, such as France’s “duty of vigilance” law, California’s law focuses specifically on transparency. The companies concerned must provide detailed information on their actions to eliminate forced labor from their supply chains. This can include measures such as regular audits, training for suppliers, specific contractual clauses and mechanisms for reporting violations.

Although California law does not provide for direct penalties for non-compliance, it does emphasize public disclosure of corporate practices. This can have a significant impact on a company’s reputation and brand, particularly in an environment where consumers are increasingly aware of the importance of ethics and corporate social responsibility.

The British Modern Slavery Act

The UK’s Modern SlaveryAct was passed in 2015 to tackle modern slavery, including forced and child labor, within corporate supply chains.

This law requires companies with over £36 million in sales operating in the UK to publish an annual report detailing the actions taken to prevent modern slavery in their operations and supply chains.

It also introduces severe penalties for offences linked to modern slavery, including human trafficking.

Like Bill S-211, the UK law aims to increase transparency in supply chains. However, they differ in terms of application thresholds and penalties.

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