Risk Management and Crisis Response Blog

UN Special Rapporteur raises concerns about Canada’s current approach to human rights due diligence for Canadian companies: What can businesses expect moving forward?

Nov 1, 2023 4 MIN READ
Authors
John M. Valley

Partner, Corporate, Toronto

Malcolm Aboud

Counsel, Disputes, Toronto

Ankita Gupta

Associate, Disputes, Toronto

Madeleine Worndl

Articling Student, Toronto

Buildings

As highlighted in a recent statement [PDF] by the United Nations Special Rapporteur on Contemporary Forms of Modern Slavery (UNSR), Canada’s record of white-collar crime enforcement remains the subject of criticism domestically and internationally. The UNSR statement raised a number of concerns about Canada’s efforts to prevent and address contemporary forms of slavery within its territory and abroad, and Canada’s current approach to human rights due diligence for Canadian companies, including Canada’s new modern slavery statute, Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Modern Slavery Act).

The current landscape in Canada

The UNSR acknowledged the passage of the Modern Slavery Act earlier this year, which comes into force on January 1, 2024. The statute imposes a reporting obligation on a broad range of entities – both public and private – that have a place of business, do business or have assets in Canada, in each case subject to certain financial thresholds, if they engage in specified activities relating to the sale, production, or distribution of “goods” in Canada or elsewhere, import goods into Canada, or control an entity that does so. The statute sets out certain minimum requirements for topics to be addressed in the report, and requires that the report be approved by the entity’s board of directors, filed with the applicable Minister, and prominently displayed on the organization’s website. The Act imposes penalties for non-compliance, which may be imposed either on the company or personally on directors and officers of the organization. We have discussed the requirements of the statute in more detail here.

The UNSR Statement

The UNSR statement observed that, despite the passage of the Modern Slavery Act, limitations remain in Canada’s legislation and enforcement governing modern slavery and human rights. In particular, the UNSR found that a monitoring mechanism is required to prevent entities subject to self-reporting obligations from concealing or omitting relevant information and that, despite the reporting obligation, the legislation does not require Canadian businesses to implement human rights due diligence or measures to prevent, address, and remedy abuses once identified.

The UNSR also recommended an expanded mandate for the Office of the Canadian Ombudsman for Responsible Enterprise (CORE) – an ombudsperson established in 2018 to review complaints about possible human rights abuses in the garment, mining, and oil and gas sectors – and recommended increased transparency and effectiveness for the National Contact Point for Responsible Business Conduct (NCP). In particular, the UNSR criticized the CORE’s inability to compel documents and testimony, compel companies to cooperate or impose consequences on businesses for non-compliance, as well as its mandate being limited to certain sectors.

The UNSR concluded: “Clear monitoring frameworks need to be in place, and Canada must do more to implement these measures to address modern slavery…I urge the [Canadian] Government to bring forward legislation requiring Canadian companies to implement mandatory human rights due diligence, and expand the independence, powers, and mandate of the CORE.”

Key takeaways

The UNSR’s criticisms do not have universal consensus. Others have argued that such voluntary reporting regimes can provide greater flexibility and facilitate the development of common norms for businesses to promote better practices through transparency. See, for example, here and here. As observed [PDF] by the UNSR’s immediate predecessor, many global corporations have modelled voluntary corporate compliance systems on non-legally binding guidance such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, despite those international instruments not being legally binding.

However, according to the UNSR’s statement, the Canadian government has informed the UN that it is in the process of considering due diligence legislation to complement the existing requirements of the Modern Slavery Act. Supply chain due diligence requirements have been imposed in other jurisdictions such as in Europe at both the national and European Union level, including the Corporate Sustainability Due Diligence Directive. It now appears that Canadian companies may soon also face formalized obligations to conduct such diligence.

Regardless, companies should prioritize compliance diligence throughout their supply chains as a best practice to mitigate the risks associated with not only human rights issues, but all forms of economic crime. Canada also may soon face additional obligations under the proposed treaty on the activities of transnational corporations and other business enterprises put forward by several states. If adopted by Canada in its current form, Canada would be required to adopt laws to ensure the practice of human rights due diligence by businesses, including the publication of regular human rights impact assessments by businesses, and to establish and facilitate access to additional remedies for victims of human rights abuses, such as by ensuring no limitation period applies in respect of human rights abuses.

The continued debate regarding how to regulate and enforce modern slavery and human rights obligations, along with the Canadian government’s statements to the UNSR and the likelihood of further legislative and enforcement developments, make clear that businesses operating in or otherwise connected with Canada should continue monitoring these issues.