Forced Labour and Increasing Supply Chain Scrutiny: Long-awaited Guidance Released on Canada's Forced Labour Reporting Requirements

On May, 3, 2023, the Canadian Parliament passed a supply chain transparency law, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Act).[1] Among other amendments to Canada's import laws, notably, the Act introduces a forced labour diligence public reporting requirement that will apply to both private sector entities and government institutions. The first reporting deadline approaching, with reports due by May 31, 2024.

Government institutions and private sector organizations that meet the definition of "entity" under the Act will have to:

1. Prepare a public report that is to be uploaded to a government registry and also posted on the entity's website; and
2. Respond to an online questionnaire that aligns with the various supplementary information specified in the Act.

The public annual reports filed by private sector entities must include the steps the organization took during the previous financial year to prevent and reduce the risk that forced labour or child labour is used or in the entity's supply chains. The report must also include the following information in respect of each applicable reporting entity:

• the entity's structure, activities and supply chains;
• its policies and due diligence processes in relation to forced labour and child labour;
• the parts of its business and supply chains that carry a risk of forced labour or child labour being used and the steps taken to assess and manage that risk;
• any measures taken to remediate any forced labour or child labour;
• any measures taken to remediate the loss of income to the most vulnerable families that results from any measure taken to eliminate the use of forced labour or child labour in its activities and supply chains;
• the training provided to employees on forced labour and child labour; and
• how the entity assesses its effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains.[2]

At the end of December 2023, Public Safety Canada issued guidance that provides details on the reporting requirements introduced in the Act. The guidance addresses the following:

• Application of the Act and determining whether an organization has reporting obligations;
• The reporting process, including the mandatory online questionnaire;
• Contents and required format of the report (e.g., language requirements, length, file size, attestation wording); and
• Characteristics of compliant responses and best practices.

Companies that have reporting obligations should begin preparing their report and questionnaire responses. While reports are due by May 31, 2024 at the latest, each company report must be attested to and approved by the governing body of the organization (e.g., the board of directors), which may entail timing constraints related to meeting schedules and director availability. Entities incorporated under a federal statute, such as the Canada Business Corporations Act, must also distribute the report to shareholders with the company's annual financial statements, which means that practical deadlines for some businesses may fall earlier than May.

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