Determining whether issuers have links to modern slavery could get easier when new federal legislation takes effect next year.
On May 11, the Fighting Against Forced Labour and Child Labour in Supply Chains Act received royal assent.
“Boards of directors, this time next year, need to sign off on whether there is any modern slavery in their supply chains,” said Milla Craig, president and CEO of Montreal-based ESG consulting firm Millani Inc. Craig was speaking on a panel at the Responsible Investment Association’s (RIA) 2023 conference in Toronto on Wednesday.
Beginning in 2024, reports will be due annually on May 31 to the minister of public safety and emergency preparedness. Firms listed on Canadian exchanges must publicly report on how they’re preventing and reducing the risk of forced labour in their supply chains. Among others, the bill applies to importers and to firms who produce, sell or distribute goods in Canada.
The legislation does not mean issuers have to change their supply chains, law firm Osler wrote in a blog post. The post added that the government is using the reputational risk of association with modern slavery as a tool to modify behaviour.
The goal of the act is “to try to help prevent forced labour within supply chains; however, the way in which [the federal government is] doing it is through further transparency,” said panellist Vanessa Allen, vice-president of ESG research and engagement with TD Asset Management.
“I think it’s a good beginning, at least,” Craig said, adding that so far, the new law has “had a huge impact on the board of director community in Canada.”
Failure to comply carries a maximum fine of $250,000.
Investment Executive and sister publication Advisor.ca were media sponsors of the RIA Conference.