Beyond Paper Promises: Building a Substantive Compliance Programme for Canada's forced labour and child labour legislation

The arrival of the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Act) in Canada on January 1, 2024, marked a significant step towards eradicating exploitative practices within Canadian businesses and their global supply chains. At its core, the Act mandates reporting obligations on designated entities, requiring them to detail the measures they have taken to prevent and reduce the risk of forced labour and child labour within their operations. While simply having a policy and a cursory website statement might seem like a sufficient response, such a surface-level approach falls short of true compliance and responsible sourcing. Companies must move beyond token gestures and build a substantive compliance programme that demonstrates genuine commitment to ethical supply chains.

The Act's Expectations: Transparency and Proactive Action

The Act's reporting requirements are designed to promote transparency and accountability within Canadian and some non-Canadian businesses. By requiring entities to publicly disclose their efforts to combat forced labour and child labour, the Act incentivises them to take concrete action. A robust compliance programme goes beyond mere reporting; it establishes a framework for identifying risks, implementing effective mitigation strategies, and continuously improving efforts to ensure ethical sourcing throughout the supply chain.

Beyond the Minimum: Why Going Deeper Matters

Several reasons compel businesses to move beyond a minimalist approach to compliance under the Act:

• Reputational Risks: Consumers and investors are increasingly demanding transparency and accountability from the companies with whom they interact. A superficial compliance programme with minimal action can backfire, leading to reputational damage and potential consumer boycotts.
• The Power of Proactive Action: A well-designed compliance programme allows businesses to identify and address potential issues within their supply chains before they escalate. This proactive approach minimises the risk of forced labour and child labour occurring in the first place, protecting the company's reputation and potentially preventing legal repercussions.
• Building Long-Term Sustainability: A commitment to ethical sourcing fosters stronger relationships with suppliers who share similar values. This can lead to long-term supply chain stability and potentially open doors to new markets where ethical sourcing is a priority.

Building a Strong Foundation: Key Elements of a Substantive Compliance Programme

Here's what differentiates a surface-level compliance programme from a truly robust one:

• Risk Assessment as the cornerstone: The foundation of a substantive programme lies in a comprehensive risk assessment that goes beyond a basic checklist. This assessment should delve into the specific risks associated with the countries, sectors, and types of goods sourced by the company. Engaging with experts, industry associations, and NGOs specialising in forced labour and child labour issues can offer valuable insights for a robust risk assessment.
• Supplier Engagement and Collaboration: Building strong relationships with suppliers is crucial for effective risk mitigation. A substantive compliance programme goes beyond simply mandating a code of conduct. It involves ongoing engagement with suppliers to ensure their understanding of the Act's requirements, providing resources and support to improve their compliance practices, and conducting regular audits to verify adherence to the code of conduct.
• Capacity Building and Training: Employees at all levels of the organisation play a vital role in identifying and addressing potential forced labour and child labour issues. The compliance programme should include comprehensive training for employees to raise awareness about the Act, equip them with the knowledge to identify potential red flags within the supply chain, and establish clear reporting procedures for suspected forced labour or child labour.
• Transparency and Communication: Credibility in the eyes of consumers, investors, and other stakeholders hinges on transparency. A company committed to ethical sourcing will publicly communicate its efforts beyond mere legal compliance. This can involve regular reporting on progress made through annual reports, website disclosures, and engagement with stakeholders.

Moving Beyond Compliance: Towards a Culture of Ethical Sourcing

The ultimate goal of building a substantive compliance programme goes beyond simply fulfilling legal requirements. It's about fostering a culture of ethical sourcing within the company. By integrating these principles into all aspects of its operations, a business can not only comply with the Act but also become a leader in responsible supply chain management. This commitment ultimately contributes to a global movement towards eradicating forced labour and child labour, creating a more just and sustainable marketplace for all.

Challenges and Considerations

Building and maintaining a substantive compliance programme requires ongoing dedication and resources. Challenges such as mapping complex global supply chains, identifying reliable sources of information in high-risk regions, and ensuring ongoing engagement with suppliers require consistent effort.

However, these challenges are not insurmountable. Collaborating with industry peers, engaging with NGOs and experts, and leveraging technology solutions for supply chain mapping and risk monitoring can all contribute to building a more efficient and effective compliance programme.

The Road Ahead: A Catalyst for Change

The advent of Canada's Fighting Against Forced Labour and Child Labour in Supply Chains Act marks a turning point in the fight against these exploitative practices. Businesses that go beyond a minimalist approach of a policy and a quick report on their website.