Hot off the press. A Report released late last week by World Vision Canada concludes that Canadian consumers are unwittingly buying goods made by child and forced labourers deep in the supply chains of Canadian companies. According to the Report, Canadian businesses regularly import goods from countries with high-rates of child and forced labour, particularly in the following sectors: clothing, retail, food, and electronics.

Legislation coming to Canada?

Among a number of recommendations made, the Report calls for the federal government to enact legislation to require companies doing business in Canada to report annually on the measures they take to ensure their supply chain partners are not using child or forced labour to make products eventually sold in Canada. The United Kingdom (Modern Slavery Act) and California (Transparency in Supply Chains Act) already have similar legislation in place and the United States Congress is currently reviewing a proposed federal law along the same lines for companies operating in the U.S.

The Report follows Canada’s recent ratification of the International Labour Organization’s Convention 138 on child labour, which proclaims that the minimum age for work should be 15.

The Canadian media has covered the Report’s findings (see below for links), adding pressure on the current government to take action in this area. Federal Minister of Employment, Workforce Development and Labour, the Honourable MaryAnn Mihychuk, stated that she is actively reviewing legislative options.

Sustainable business practices – no turning back

As I wrote in the Guardian in 2015, while voluntary corporate initiatives to combat forced labour and trafficking in corporate supply chains have been the prevailing model for the past two decades, the landscape of social responsibility is quickly shifting toward mandatory legal regulation.

Responsible corporations know that sustainable practices and robust compliance programs are not only good for the communities in which they operate, but also for longer term business prospects.

Mandatory reporting on non-financial corporate practices requires all corporate players to take notice and action, this ultimately helps level the playing field. The trend is clear. We are moving away from voluntary CSR toward mandatory social reporting for global corporations. Canada will likely enact reporting requirements in this area, and it may, in fact, represent a first step towards increased legislative requirements, ultimately backed up by government enforcement and serious liability for violations.

Global supply chain litigation on the rise

Mandatory reporting is not the only story in this space. As we discussed in an earlier article on this blog, against the backdrop of hardening and expanding international business and human rights standards and norms, there is increasingly a risk of litigation being commenced against Canadian companies for overseas human rights violations. Canadian courts are showing a new willingness to consider novel legal claims relating to violations in global supply chains in light of the modern commercial realities of the global economy.

Get ahead of the curve

While there is no “one size fits all” solution, active respect for core human rights, a comprehensive global assessment and heat map of direct and indirect risks, and effective due diligence processes are increasingly essential for large and small businesses alike in minimizing financial, legal, and brand/reputation risk. The necessary first step is a legal compliance analysis of current supply chain activities and operations, followed by the implementation of human rights policies and supplier codes of conduct, and swift action to investigate and remedy problem areas.

The Report by the numbers

  • 52% of the companies reviewed do not provide any public reporting on their efforts to prevent child labour in their supply chains;
  • 828 Canadian-headquartered companies reviewed have supply chains running through countries with high incidences of child labour;
  • 87% of Canadians surveyed support supply chain transparency & reporting legislation similar to that in the UK and California; and
  • 168 million children are estimated to be involved in child labour worldwide.

Upcoming supply chain transparency webinar

For further information on the movement toward social transparency legislation, please join the UN Global Compact webinar, How the Modern Slavery Act is Changing the Face of Supply Chain Management, on June 16, 2016.