Canada's new modern slavery legislation, the Fighting Against Forced Labour and Child
Labour in Supply Chains Act (Act), requires reporting
entities to submit to the government and publish public reports
about the measures they have taken to address and prevent forced
and child labour in their supply chains during their previous
fiscal year. The Act comes into force on January 1, 2024, and the
initial report (Report) is due by May 31, 2024 — or earlier
for certain federally incorporated entities that provide their
annual financial statements to shareholders before May 31 of each
year.
To learn more about the developments surrounding this issue, see
our previous bulletins: Blakes Bulletin: Parliament Passes Bill S-211:
The New Forced Labour and Supply Chain Reporting Law and
Blakes Bulletin: Complying With Canada's
Forced and Child Labour in Supply Chains Act: Are You
Ready?
On December 20, 2023, the Government of Canada (Government) finally
released its guidance document designed to assist entities in
preparing and submitting their Reports (Guidance). In addition, the Government
released a mandatory online questionnaire that must be completed in
addition to the Report (
Questionnaire).
The Guidance:
- Explains the reporting process
- Describes which entities are subject to the Act and have reporting obligations
- Outlines what type of information will satisfy the content requirements of the Report
- Describes where information from another jurisdiction's reporting obligations may be acceptable for Canadian reporting
Part One of this two-part bulletin series provides an overview of the reporting process directed by the Guidance and the Questionnaire. Part Two will be released in January and will discuss some of the substantive implications arising from the Guidance and Questionnaire.
Overview of the Process
The Guidance directs that reporting entities must complete the following steps prior to the May 31, 2024 reporting deadline:
- Prepare a Report
- Receive approval for the Report from the appropriate governing body or bodies with the legal authority to bind the entity or entities subject to the Report
- Complete the Questionnaire
- Upload the completed Report with the Questionnaire
- Publish the Report on the entity or entities' website
- For entities incorporated under the Canada Business Corporations Act or any other federal act, the Report must be provided to each shareholder along with the entity's annual financial statements
The first step in the process requires reporting entities to
prepare a Report that meets all requirements of the Act. Please see
our October 2023 Blakes Bulletin here for an overview of the content and
approval requirements. Where the Report is a joint Report on behalf
of multiple entities, such as subsidiaries, the Report must
identify each entity. The Report must not exceed 10 pages in length
(or 20 pages for Reports provided in both of Canada's official
languages) and must be a PDF file that does not exceed 100
megabytes (MB) in size.
Once the Report is complete, the Guidance confirms that the Report
must be approved by the entity's Board or other governing body.
In the case of a joint Report, it must be approved by the Board of
each identity identified in the Report or the Board that controls
each entity included in the Report.
The Guidance confirms that a signed attestation from a Board member
or other governing body must also be included in the Report. The
Guidance states that the following form of attestation should be
used:
In accordance with the requirements of the Act, and in particular
section 11 thereof, I attest that I have reviewed the information
contained in the report for the entity or entities listed above.
Based on my knowledge, and having exercised reasonable diligence, I
attest that the information in the report is true, accurate and
complete in all material respects for the purposes of the Act, for
the reporting year listed above
Notably, a member of the Board is to attest that reasonable
diligence was exercised to confirm the accuracy and completeness of
the Report. Accordingly, reporting entities should factor in
conducting and documenting their due diligence to support the
Board's approval and attestation of the Report.
Once entities' Reports have received the required approval and
contain the signed attestation statement, the third step in the
process requires every reporting entity to complete the online
Questionnaire found
here. It consists of mandatory and optional questions. The
mandatory questions include identifying information about the
entity and the information necessary to comply with the Act. Where
the mandatory questions relate to compliance with the Act's
requirements, they are followed by optional open-ended questions
which provide an opportunity to supplement the answers to the
mandatory questions. The Questionnaire is very detailed and
covers:
- Reporting obligations in other jurisdictions
- The sector in which the entity operates
- The steps an entity has taken in the previous financial year to prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods in Canada or elsewhere by the entity or of goods imported into Canada
- The nature and extent of an entity's due diligence process
- The risks identified in a supply chain, including requesting specifics relating to various aspects of the entity's supply chain and activities (i.e., the sector, types of products, location, use of subcontracted labour)
- The particular sector where, if applicable, an entity has identified risks of forced or child labour
- Remediation measures taken by the entity in response to forced or child labour identified in its activities and supply chains, if any
- The nature and extent of any training
- How the entity will assess its effectiveness in ensuring that forced and child labour are not being used in its activities and supply chains
The fourth step in the process requires entities to upload a
copy of their Report. Once the Questionnaire is complete, the last
screen contains a box to drag and drop the Report or upload it.
Once the entity submits the Report and Questionnaire to the
Government, it will receive a message confirming the
submission.
The final step in the process is to publish the Report in a
prominent place on the entity's website. Only the Report, not
the Questionnaire, needs to be published. The Guidance confirms
that the entities may exercise their discretion in determining the
most appropriate place to publish the Report, but it must be
visible and readily accessible to the public. Additionally,
entities that are incorporated under the Canadian Business
Corporations Act or any other act of Parliament are required
to provide a copy of its Report to each shareholder along with a
copy of its annual financial statements.
The reporting process directed by the Guidance creates the most
onerous administrative process for reporting compared to similar
disclosure-based regimes based in Australia and the United Kingdom.
Moreover, the requirement for a Board member to attest to having
carried out due diligence regarding the accuracy and completeness
of the Report emphasizes the need for underlying processes to
support the approval and attestation required for the Report.
Companies need to be aware of the Guidance as they assess the
application of these reporting requirements to their businesses and
prepare to submit their initial Report and Questionnaire. In Part
Two of this bulletin series, which will be released in January, we
will discuss the Guidance as it relates to the Report contents and
the substantive implications for reporting entities.
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