Introduction to Part I
Introducing the Fighting Against Forced Labour and Child Labour in Supply Chains Act
Canadaâs contribution to the growing international repertoire of modern slavery legislation, the (âthe Actâ), came into effect on January 1st, 2024. This legislation aims to prevent Canadian companies from maintaining supply chains that are contaminated by forced or child labour. The Act contains lengthy definitions of both forced labour and child labour in its . In short, it defines forced labour as the provision or offer of the provision of labour or services under a reasonable expectation that failing to do so would threaten the workerâs safety or the safety of someone they know, or that meets the definition provided by the . The Actâs definition of forced labour can be summarized as applying to the provision or offer of provision of labour or services by persons less than 18 years old that would occur in Canada and break the law, occurs in unsafe circumstances, interferes with their schooling, or satisfies the criteria of the .
The Act has two primary functions: (i) creating a Canadian reporting scheme for forced and child labour in supply chains, and (ii) amending the . The Actâs reporting scheme requires all qualifying entities that produce, sell, distribute, or import to report annually on their efforts to detect and combat the use of forced and child labour in their supply chains. Some penalties are applied to entities that fail to report or report inaccurately. The amendment to the Customs Tariff allows the import of goods implicated in forced and child labour to be prohibited by regulation. has since been implemented.
Movement towards the eventual adoption of the Act began in 2018, when the House of Commons Committee on Foreign Affairs and International Development released on child labour in supply chains. In 2019, the federal government announced that it broadly agreed with the report and its recommendations. With the MP John McKay as a sponsor, Senator Miville DeChĂȘne introduced in 2021. Bill S-211 was eventually passed into law by Parliament, received royal assent, and entered into force as the Act at the beginning of 2024.
Across the six-year span between the committee report and the Act entering into force, six bills attempting to implement the reportâs recommendations were introduced in Parliament that never made it past the third reading stage. These included , introduced as a private memberâs bill by the MP John McKay in the House of Commons on 13 December 2018; , introduced as a Senate public bill by Senator Julie MivilleâDechĂȘne on 5 February 2020 (not to be confused with the other Bill S-211 who became the current Act); and , introduced by Senator MivilleâDechĂȘne on 29 October 2020. Each of these bills died on the Order Paper and none were considered in committee. Three other bills introduced in the 44th Parliament, 1st Session, had similar objectives and were similarly unsuccessful.
Understanding the Act
Given the novelty of the Act and the requirements that it imposes on some Canadian businesses, we set out to arrive at and share a deeper understand of the legislation, its effects, and its strengths and weaknesses. Our research was guided by four key questions: First, what national and international legal environment did the Act develop in? Second, what is the current assessment across practitioners and academics of the evolving landscape of modern slavery legislation and its different forms? Third, what makes the Act such a widely criticized compromise? Finally, what does the current debate suggest about potential future legislative or jurisprudential developments in Canadaâs modern slavery law?
We answer each of these questions in this two-part report. Part I addresses the first and second questions outlined above, and we answer the third and fourth questions in Part II. Our hope is that this brief report can assist academics, lawyers, and businesspeople as they attempt to understand the implications of the Act for their field of work.
The Act in Transnational Context
The Act was enacted amid a global conversation about how to combat modern slavery that has been ongoing for at least a century and that has recently gained renewed attention in Western countries. Understanding the Act therefore requires an awareness of the international conventions and organizations, domestic court decisions, foreign legislation, and legal commentary among which the Act is situated.
International conventions and organizations
International conventions and organizations have long shaped the global conversation on modern slavery. For example, the Act refers to the ; the ; and the . More recently, international organizations have been critical in providing definitions and estimates of the prevalence of forced labour and child labour. For example, estimated that 50 million victims of modern slavery abuses existed in 2021, of whom 28 million were victims of forced labour, and of these, 17 million were forced labour victims contributing to the private economy connected to global supply chains. With respect to child labour in particular, the same report estimated 3 million victims. In contrast, estimated the number of victims of child labour to be approximately 160 million. These widely varying estimates reflect the complexity involved in efforts to define and respond to the various abuses that constitute modern slavery.
Domestic Court Decisions
The Supreme Court of Canadaâs 2020 decision in (âNevsunâ) has made the international component of modern slavery law even more relevant for Canadian legal actors than it already was. In that case, Eritrean victims of forced labour convinced a majority of justices to allow them to proceed with a claim against Nevsun Resources Ltd for alleged breaches of customary international law. Although the underlying dispute was eventually settled outside of the courtroom, the decision in Nevsun was groundbreaking because it established that customary international law usually forms part of Canadaâs common law. We discuss the implications of this case in detail in Part II.
Foreign legislation
Canadaâs Parliament was far from the first legislature to enact a modern slavery law. Over the last decade, certain jurisdictions have implemented legislation to curb the presence of modern slavery by imposing obligations upon enterprises to address the presence of modern slavery within their supply chains. Beginning in , and followed by the and , transparency (or âdisclosureâ) legislations responded to the belief that, given the complex nature of modern supply chains, recognition of modern slaveryâs contribution to their business operations would entice corporations to alter practices and inform consumers to shift buying habits. Primarily targeting large companies operating in each nationâs market, these legislations require that entities produce reports on the presence of modern slavery in their supply chain. However, as critics continue to emphasize, non-compliance with reporting obligations created by transparency legislation usually does not entail more than a fine.
An alternative approach, mandatory human rights due diligence legislation (âdue diligence legislationâ), has been adopted in , , , , and . Aligned with the intentions of international human rights treaties and guidelines, this approach requires businesses operating in respective countriesâ markets to search for and prevent human rights violations in supply chains and business operations. Such legislations generally target large corporations due to the number of employees or revenue often outlined by their respective criteria. While consequences for non-compliance vary between legislations, most laws stipulate penalties for failures to report on practices and conduct reforms. However limited, these penalties are designed to be costly so that they are not ignored by entities subject to the legislation.
Against the background of the legislative frameworks described above, which represent the most significant statutory developments to confront modern slavery, import bans and tariffs are a common complementary regulatory instrument. For example, while the United States lacks a federal transparency or due diligence modern slavery law, the Tariff Act of 1930 prohibits the import of foreign goods derived from forced labour. Section 3 of the American of 2021 therefore operates under 19 U.S.C. § 1307 to prohibit the import of all goods from the Xinjiang region of China on the presumption that they are products of forced labour. The tendency to include import bans as a complementary measure can be seen in Canadaâs decision to amend the Customs Tariff through the Act in addition to its establishment of a reporting scheme.
Legal commentary
Given the persistence of the problem of human rights and modern slavery abuses across global value chains, it is no surprise that the recently adopted laws continue to be met with substantive criticism. The next section briefly maps the key contentions in this debate.
Legal Commentary on Modern Slavery Legislation
The majority of interventions to the debate can be divided into two categories. First, authors are critical of the limitations to transparency legislations as typically applied. A second group of commentators scrutinize the overwhelming reliance on transparency as a regulatory tool by pointing out the shortcomings of transparency legislation relative to due diligence legislation.
Transparency and its discontents
Many commentators point to the limitations of transparency legislation and highlight the weakness in enforcement, the limited scope, and its failures to address the root causes of modern slavery.
Jurisdictions that have enacted transparency legislation have been heavily criticized for failing to effectively enforce the reporting obligations set out by those statutes. , for example, criticize the Australian modern slavery transparency law for failing to set out penalties for breaches of its reporting requirements. Enforcement is nevertheless insufficient even where penalty mechanisms do exist. Reports by and by the (âthe BHRRCâ) point out that a large share of companies falling within the scope of the UKâs transparency legislation have not been complying with it but have faced no consequences. , writing in relation to the recent Canadian law, identify the risks of a lack of enforcement, vague requirements, and the prospects of rampant non-compliance as the key failures underpinning the ineffectiveness of a law which continues the well-known trajectory of existing â and, widely criticized â transparency legislation. We should note, however, that concerns about enforcement are not unique to reporting obligations. report that compliance with modern slavery obligations is also an issue in France as regards the 2017 Loi de vigilance.
Transparency legislations are frequently critiqued for limiting their own efficacy by adopting a restricted scope in terms of what entities are subject to the reporting obligations and with respect to the issues that must feature in reports. points out that transparency legislation rarely applies to all businesses, thereby limiting oversight to only some sections of the economy. Furthermore, expresses concern that the narrow scope of transparency legislation prevents it from extending reporting obligations to businesses in sectors that might contain the highest modern slavery risk. highlights the hyper-fixation of transparency legislation on modern slavery defined as forced and child labour, recognizing it as a missed opportunity to examine other relevant human rights and climate impacts of businesses. The is similarly critical of limiting the scope of issues that companies must report on because it fears that restricting reporting topics will cause labour issues adjacent to modern slavery to go unaddressed. and note that due diligence legislation might be better suited ultimately to address a broader array of considerations than is the case under persisting transparency legislation. Nevertheless, they also observe that the burden created by due diligence obligations often causes due diligence legislation, like transparency legislation, to apply only to large businesses, something which has been highlighted in of the 2024 EU Corporate Sustainability Due Diligence Directive.
A serious concern voiced by many commentators pertains to the alleged failure of transparency legislation to address the root causes of modern slavery. For example, explain that child labour is driven by urgent needs in the immediate family and detail concerns that transparency legislation will not be maximally effective when (as is often the case) it does not address those needs. similarly criticize reporting obligations for failing to alter the organization and commercial dynamics that lead companies to allow modern slavery risks in their supply chains. These shortcomings are unrelated to how transparency legislation and due diligence legislation exert different forms of pressure to reform on businesses. and note that, in contrast to transparency legislation, due diligence legislation often calls for some form of compensation for victims.
Criticisms of transparency legislation as inferior to due diligence legislation
Many writers have expressed a preference for due diligence legislation over transparency legislation. , for example, praise due diligence legislation for forcing companies to rigorously examine their practices and supply chains, requiring policy changes, and providing sanctions against companies that do not exert considerable effort to reduce their exposure to modern slavery risk. Relatedly, other commentators identify several shortcomings of transparency legislation through either explicit or implicit comparison with due diligence legislation. Such shortcomings of transparency legislation include a lack of sufficiently stringent standards for reporting, the possibility of companies complying with reporting obligations without making any policy changes, a limited array of legal consequences, and the creation of an illusion of change.
Relative to the standards required under due diligence legislation, transparency legislation often lays out very weak expectations for what details required reports should contain. The reports that UK transparency legislation suggests rather than requires companies to include several key considerations in their reports, which has resulted in many reports being quite general and uninformative. shares such concerns about the depth of analysis displayed in reports and criticizes the mandated form as well as the enforcement of reporting as âsuperficialâ. Furthermore, even where reporting obligations contain more detailed content requirements, note that authorities implementing transparency laws often fail to follow up regarding reports. These failures stand in stark contrast to âs description of a successful exercise of due diligence in which a company that had identified a human rights violation in its supply chain engaged in intensive and frequent cooperation with the foreign supplier until the issue was resolved.
Whereas due diligence legislation requires that companies change their policies to meet a standard established by statute, transparency legislation allows companies to comply without altering their behaviour. point out that companies will comply with transparency legislation by meeting their reporting obligations and doing nothing more. This low bar for compliance, as explains, means that companies can report on whether they exercise due diligence (or even report having flashy but ineffective policies) rather than actually exercising appropriate due diligence. The âs report on the UK experience with transparency legislation shows that companies who can meet their obligations without changing their practices will do exactly that.
Allowing companies to comply with reporting requirements without changing their behaviours is particularly problematic given that the legal consequences established by transparency legislations are typically less strict and diverse than those under due diligence legislation. As previously mentioned, some transparency legislations lack any penalties whatsoever. points out that where transparency legislation does provide penalties for violating reporting obligations, it may not provide a mechanism to penalize failures to address modern slavery identified through reporting. Accordingly, the suggests that the UKâs transparency legislation should be replaced with something emulating European standards and that provides sanctions for more than just failures in reporting.
Due diligence standards operate by forcing companies to seek out and remedy modern slavery in their supply chains. Some commentators argue that transparency legislation has the opposite effect because reporting obligations do not incentivize companies to analyze or mitigate their exposure to modern slavery. voices these concerns by describing transparency legislation as potentially amounting to âwindow dressingâ. This sentiment is shared by , who argue that efforts to meet reporting obligations can âmaskâ modern slavery by giving the appearance of effective monitoring when there is none. go furthest with this line of critique by implying that the decision to implement transparency legislation instead of due diligence legislation amounts to a decision to remain complicit in modern slavery.
Interim Conclusion
The Fighting Against Forced Labour and Child Labour in Supply Chains Act is Canadaâs contribution to growing international efforts to combat modern slavery. Developed as a compromise after six years of parliamentary impasse, the Act creates an obligation for certain entities to report annually on their exposure and response to modern slavery risks in their supply chains.
The Act emerged in a context of established international agreements and evolving court decisions and foreign legislation. Our brief review of foreign modern slavery legislation shows that the Act can be described as âtransparency legislationâ. Similar approaches have been followed in California, the UK, and Australia. An alternative approach, which we call âdue diligence legislationâ, requires companies to seek out and remedy modern slavery risks in their supply chains. Several European countries and the European Union have followed this second approach.
Legal commentators who discuss modern slavery legislation express a strong preference for due diligence legislation over transparency legislation. Critics of transparency legislation as typically implemented have highlighted failures to enforce reporting obligations, limitations in the scope of legislative instruments, and the inability of a reporting-driven approach to remedy the root causes of modern slavery. Authors also note that, relative to due diligence legislation, transparency legislation has weak standards, allows companies to comply without changing their policies, comprehends limited legal sanctions, and creates a potentially harmful illusion of change.