High Liner Cuts Ties: Bill S-211 on the Horizon
Bill S-211, a law aimed at enhancing transparency and promoting better practices among businesses and government institutions, is set to soon take effect. Officially named the Fighting Against Forced Labour and Child Labour in Supply Chains Act, it will be in force from January 1st, 2024.
The law is in response to escalating concerns about human rights and the need for transparency of supply chains. It requires the disclosure of specific details and actions companies and government agencies have taken in the previous financial year to help combat and mitigate forced labor. Businesses and agencies subject to the reporting requirements must comply by May 31st, 2024, or they may face potential financial penalties.
What the law does not prescribe are the measures a company should undertake if evidence of forced labor within their supply chains have been identified. A recent Globe and Mail article reported that the Canadian seafood company High Liner Foods, cut ties with a supplier after a team of journalists uncovered the use of forced labor in its supply chain. The forced-labour investigation was conducted by The Outlaw Ocean Project.
There are international norms, however, that companies can administer that include:
Conducting a thorough investigation: to better understand the extent and nature of the issue.
Stakeholder engagement: including suppliers, local authorities, and human rights organizations.
Implementing corrective action plans: to address and remediate the identified issues.
Severing ties with suppliers: where abuses are confirmed and can’t be remedied.
(Additional information from the United Nations Guiding Principles on Business and Human Rights can be reviewed here).
With the impending legislation requiring greater due diligence and transparency, the likelihood of uncovering forced labor and child labor rises sharply within Canada’s supply chains. This is particularly true when a company examines all levels of suppliers and processes involved in the production and distribution of a product.
Consider the following in the context of the seafood industry, which generally has four tiers that require due diligence:
Tier 1 Suppliers (Direct Suppliers):
Companies that provide processed and packaged seafood products directly to retailers, restaurants, or consumers. These include seafood processing firms that prepare and package fish and shellfish, undertaking tasks such as filleting, cooking, freezing, and packaging seafood for sale.
Tier 2 Suppliers (Intermediate Suppliers/Processors):
Entities that supply Tier 1 companies with partially processed seafood or key ingredients. For example, a company specializing in the initial processing of seafood, like shucking shellfish, gutting fish, or producing fish meal, which are then sent to Tier 1 firms for further processing and packaging.
Tier 3 Suppliers (Basic Processors or Producers):
Suppliers typically engaged in the early stages of seafood production, including fish farms that raise fish and shellfish or small-scale fishing outfits that supply fresh catches. Their products are sent to Tier 2 suppliers for initial processing or directly to Tier 1 suppliers for more complex processing.
Tier 4 Suppliers (Raw Material Suppliers):
In the seafood sector, these suppliers are involved in providing the foundational elements necessary for production. They might include providers of fish feed for aquaculture, companies supplying fishing gear like nets and traps, or hatcheries.
In this context, High Liner Foods is categorized as a Tier 1 supplier. As such, it bears direct responsibility for the quality and safety of its products. Under regulations like Bill S-211, which mandate reporting on the risk of forced and child labor in supply chains, High Liner is required to maintain oversight and ethical standards not only within its own operations but also throughout its supply chain, including Tier 2 suppliers and below.
This level of transparency and due diligence is extensive and crucial for both companies and government entities. And although compliance is a driver, entities can also view this as an opportunity to enact meaningful improvements in their supply chains, which can ultimately enhance global labor practices. Also, a voluntary disclosure typically offers more credibility and enhances public perception compared to an external investigation, such as the one conducted by The Outlaw Ocean Project.
Prior to the first reporting deadline, companies should consider the following steps:
Risk Assessment: Conducting a comprehensive review of the supply chain to identify potential risks related to forced and child labor, encompassing all tiers, not solely direct suppliers.
Due Diligence Processes: Developing or enhancing due diligence mechanisms to monitor and manage the identified risks, which includes establishing systems for consistent monitoring and reassessment.
Policies and Procedures: Formulating clear policies and protocols that define the organization's stance against forced and child labor, outlining actions to be taken in case such issues are identified.
Training and Awareness: Ensuring that the relevant workforce, including management, is educated and cognizant of the issues surrounding forced and child labor, as well as the company's related policies and procedures.
Engagement with Suppliers: Communicating with suppliers to convey the company's expectations and requirements concerning labor practices, possibly requiring suppliers to adhere to specific labor standards or to conduct their own reporting on such practices.
Remediation Plans: Creating strategies for remediation when forced or child labor is detected, including measures to address the immediate situation and prevent its recurrence.
Record-Keeping and Documentation: Maintaining detailed records of all actions taken, from risk assessments and due diligence to supplier interactions and any incidents of non-compliance or remediation efforts. This documentation is vital for the reporting process.
Drafting the Report: Compiling a report that delineates the company's efforts and discoveries related to forced and child labor in the supply chain. This document should be thorough, candid, and adhere to the stipulations of Bill S-211.
Internal Review and Verification: Conducting an internal audit of the report and the processes and data it is based on before submission to ensure its accuracy and integrity.
Plan for Continuous Improvement: Developing an ongoing strategy to enhance the monitoring and management of supply chain practices concerning forced and child labor.
As the implementation date of Bill S-211 quickly approaches, companies should ready themselves for heightened accountability and transparency. With initial preparations underway, companies stand to gain not only a more sustainable business model but also the assurance that comes from a steadfast commitment to human rights.
