Canada's Forced Labour Act for the fashion industry: Understanding Bill S-211
In a bid to align with the United States and harmonize obligations within the United States-Mexico-Canada Agreement (USMCA), Canada has enacted its own Forced Labour Act. This legislation, officially known as Bill S-211, is set to come into effect from January 1st, 2024. The law aims to foster a fair-trade environment among the three countries by enforcing ethical labor practices across all supply chains and industries, particularly the fashion industry procurement chain.
What are the obligations?
Under Bill S-211, every entity, including corporations, SMEs, government agencies, NGOs, and trade unions, is required to submit an annual report to the Minister of Public Safety and Emergency Preparedness. The report, due on or before May 31 (starting from May 31st, 2024) of each year, outlines the steps the entity has taken during its previous financial year to prevent and reduce the risk of forced labor or child labor being used at any stage of goods production. This requirement extends to goods produced both domestically and abroad by the entity, as well as goods imported into Canada by the entity. This requirement directly concerns fashion garment and footwear brands.
What must be reported?
This report details measures taken against forced and child labor in goods production, purchase, or distribution. It covers the institution's structure, activities, supply chains, policies, risk assessment, remediation measures, employee training, and effectiveness assessment. Institutions can revise reports, which should be publicly available, including on their websites.
What are the sanctions for non-compliance?
To ensure adherence to the Act, an official appointed by the Minister can conduct an inspection if there's suspicion of non-compliance. This official has the authority to scrutinize any document, computer system, or data at the business location. In case of non-compliance, the Act imposes criminal penalties. This includes individual criminal liability for officers and directors of the company. Furthermore, the company might be burdened with a substantial fine of up to $250,000 for violations such as failing to comply with reporting obligations, not publishing the report on the company's website, deliberately providing false or misleading information, or refusing to cooperate.
Canada is expected to take further measures in the months ahead to curb the use and import of products produced by forced labor.
What should fashion brands do to comply with the Canadian Forced Labour Act?
The first priority for you, as a brand, is to understand your supply chain social compliance, starting from your strategical suppliers. The sooner you start collecting social audits from garment or footwear factories to dying, washing processes, trims fabric mills, yarn producers until the farmer: T1, T2, T3 suppliers and beyond, the better positioned you will be to fulfill due diligence obligations and prepare the report required by the Canadian authorities.
How can ProductDNA® help your business?
ProductDNA® can assist fashion brands businesses in this endeavor by helping you collect factory audit reports and any other documents related to due diligence approaches at a glance. Whether you are a garment, home textile or footwear brand, you can define your own key performance indicators to measure risks and set priorities. You can assess risks at both country level and at granular level per production facility to take informed actions. ProductDNA® comes with a clear dashboard, providing an overview of the supply chain social compliance performance. Data is exportable and usable in the needed report. Additionally, the data is ready to use to digitally communicate social claims to consumers.
The enactment of Bill S-211 is a significant step towards ensuring ethical labor practices in supply chains. By understanding the obligations under this new law, fashion industry businesses can ensure compliance and contribute towards a fairer and more equitable trade environment.
Social Due Diligence initiatives are no longer a “nice-to-have”. This, Uyghur Forced Labor Prevention Act (UFLPA), the German Due Diligence Act, Åpenhetslovenand other regulations are reaching their next deadline also January 1st, 2024.
Get in touch if you need a solution for your compliance needs.