When enacting human rights due diligence legislation, do it right the first time

On Feb 28, SHARE CEO, Kevin Thomas, spoke before the Senate Standing Committee on Human Rights as an expert on supply chain due diligence legislation.

The Standing Committee is currently reviewing Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act, a Senate public bill (akin to a private members’ bills in the House of Commons).

SHARE’s message to the Senate, and to the Minister of Labour, is that comprehensive legislation is needed. The legislation before the Senate is insufficient, on its own, in addressing the human rights risks that civil society groups and investors – and companies – have identified.

Bill S-211 was proposed by Senator Miville-Dechêne in November 2021 with the purpose of “ Canada’s international commitment to contribute to the fight against modern slavery through the imposition of reporting obligations on entities involved in the production of goods in Canada or elsewhere or in the importation of goods produced outside Canada.”

Since 2017 SHARE has been advocating for legislation that would require companies to identify, prevent, mitigate and account for how they address adverse human rights impacts, including forced and child labour.Over the years, SHARE has published research on this topic, engaged companies and government, and led joint investor action.

“Perfect should not be the enemy of the good, but we should try to get as close as we can to making sure that this is going to be of value to Canadian and international institutions that invest in our Canadian companies. I don’t think that Bill S-211, as it currently stands, will do the trick,” shared Thomas.

On behalf of SHARE, Thomas reiterated our call for the Government of Canada to follow through on its commitment to introduce supply chain legislation. While we are appreciative of Senator Miville-Dechêne’s initiative in introducing Bill S-211, it is not ambitious enough, nor does it keep with global investor expectations and where other jurisdictions are going.

In his testimony, Thomas highlighted three key areas of the Act that would need to be strengthened:

Ensure a comprehensive scope

First, the scope of rights currently considered under Bill S-211 is overly narrow, as it focuses only on forced and child labour.

Although forced and child labour are egregious human rights violations, they are not the only material human rights issues for companies and investors. The proposed framework under S-211 would permit companies to ignore the broader human rights responsibilities set out in international standards, such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines.

For example, the risks that resulted in the horrific Rana Plaza factory collapse in Bangladesh in 2013 that killed more than 1,200 workers would not be covered in Bill S-211.

Require pro-active due diligence

Second, Bill S-211 only requires that companies file reports; it does not create human rights due diligence expectations for businesses. While a company would be required to report on “its policies and its due diligence processes in relation to forced labour and child labour,” there is still a possibility that a company could fulfil this by reporting that it has no such due diligence processes, or by providing extremely vague and unsubstantial disclosures.

Investors know all too well that there are companies that already answer queries on human rights by pointing to vague public statements or boilerplates that don’t provide nearly enough information for investors to assess the quality of the company’s approach to managing human rights risks. Legislation should actually require companies to identify, prevent and mitigate these risks.

Back-up reporting with accountability

Third, Bill S-211’s accountability regime, which imposes modest fines on companies for failing to file reports, should be restructured to better incentivize action. Companies need to be held accountable for adverse human rights impacts in the supply chain. Kevin pointed to the success of the Bangladesh Accord, a legally-binding factory inspection mechanism instituted after the Rana Plaza collapse that requires global brands to conduct due diligence, support improvements and provide remedy in the case of harm. At the same time legislation has to allow that a company has established a robust human rights due diligence system as a defense.

“The objective of the legislation has to be to help companies identify and fix abuses, not to incentivize companies to cut and run if they catch a whiff of a problem because they’re afraid of legal repercussions. We want them to stay and fix the human rights issues which have resulted in their supply chain,” said Thomas.

Thomas concluded his testimony by pointing to the recent mandate letter issued to the Minister of Labour, in which the Prime Minister directs him to develop supply chain legislation. Since Senate public bills like S-211 typically don’t become law and have a difficult legislative path, and given the need to strengthen its approach, SHARE believes that government-sponsored legislation is the best route forward.

“As senators, I’d see a path forward to work with Minister O’Reagan and relevant government departments to address the critical issues you set forth already in Bill S-211 and maybe address its gaps through government-sponsored legislation, which may also get us to a point where we have a different calculation about what’s politically possible and get closer to that perfect if not all the way there.”

SHARE urges the Minister of Labour and other government officials for timely follow through on their commitment to introduce supply chain legislation that keeps with international standards and best practices. Other jurisdictions—including France, the Netherlands, Germany, and soon the whole EU—are moving towards robust human rights due diligence legislation, and SHARE encourages the Government of Canada to take an approach that is aligned with this direction.  The Minister of Labour has released a consultation paper, based on the 2019 consultations.  SHARE has plans to continue dialogue with the Minister of Labour to urge timely and comprehensive action.

To learn more about our ongoing work on human rights engagements, explore our related publications and milestones.

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SHARE engages with companies across sectors to address human rights abuses in their operations and supply chains.

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