Canada’s New Supply Chain Bill Creates Obligations for Retailers

Human rights advocates are applauding Canada’s new supply chain law. Passed this spring after four years of debate, Bill S-211, officially known as the “Fighting Against Forced Labour and Child Labour in Supply Chains Act,” places the responsibility on brands, retailers and importers to identify and prevent forced labor and child labor within their supplier networks.

After complaints that Canada had for too long turned a blind eye to the problem of forced labor in supply chains, Bill S-211 represents significant progress, aligning Canada with a growing global trend of legislation aimed at eradicating modern slavery and promoting social sustainability. The law, which goes into effect Jan. 1, 2024, applies to both domestic and international businesses that meet at least two of these three thresholds: CAD $40 million in gross worldwide revenues; $20 million in assets; or an average of 250 employees or more.

Regardless of their industry, companies that meet these criteria must produce annual reports outlining their due diligence measures to identify and mitigate the risk of modern slavery in their supply chains. These reports must include information about a company’s policies, procedures, risk assessments and remedial actions taken to address any identified issues. To ensure transparency, these reports must be published on a publicly accessible website.

The first reporting deadline under the law is May 31, 2024, a date that’s sure to receive considerable attention in boardrooms because of the law’s unique enforcement structure. Businesses that don’t comply will be subject to fines of up to $250,000, and unlike other global supply chain due diligence laws, Bill S-211 holds business leaders personally liable for any company offenses they directed, authorized or in any way participated in. If that language strikes fear in chief executives, it’s meant to.


Meeting Bill S-211’s Requirements

Complying with the law will pose considerable challenges, especially for brands and retailers that must navigate complex global supply chains of hundreds of suppliers. That requires coordination, accountability and visibility, but thankfully it’s made much more manageable by a multi-enterprise platform, also known by Gartner as a multi-enterprise collaboration network. These cloud-based platforms support collaboration between businesses, their suppliers and their third-party partners, introducing complete visibility into a company’s supplier base, from vendors to factories to raw material providers.

To comply with the law, supply chain managers will need to establish robust systems and processes to identify and address any instances of modern slavery or forced labor within their supply chains. This involves enhanced supplier vetting, auditing and monitoring mechanisms to ensure compliance and ethical practices — all of which can be simplified through the supplier relationship management (SRM) tools of a multi-enterprise platform.

These platforms create a window into an enterprise’s entire supplier base, enabling the traceability that Bill S-211 requires. Through their supply chain mapping functionalities, businesses are granted a fuller understanding of their social and environmental footprint, including where all transformations of raw materials occurred, how much carbon they’re emitting, and whether their downstream suppliers are vetted and accredited. An end-to-end platform like this allows businesses to easily document the chain of custody of every material they use in every product they make, so they can prove that no forced labor was involved at any stage of its creation.

Multi-enterprise platforms also foster collaboration with industry associations and non-governmental organizations (NGOs), which can also prove invaluable in navigating the complexities of supply chain management in light of Bill S-211. TradeBeyond’s multi-enterprise platform even integrates with sustainability databases from business associations and nonprofits like amfori and Worldwide Responsible Accredited Production (WRAP), which monitor and certify the social sustainability of factories and suppliers.

These industry-approved certifications save retailers the enormous effort of having to conduct rigorous audits themselves, and by making critical certification details available in real time, a multi-enterprise platform eliminates the need for supply chain managers to log in to multiple systems, speeding up the sourcing process.

These platforms create other efficiencies as well, for instance by saving retailers and brands time by automating the onboarding process for vendors and factories and ensuring that all new suppliers have read and consented to the company’s terms. This way, from the very earliest stages of working with a supplier, there’s total transparency about your ESG standards and expectations.

This software also enforces a company’s social and environmental standards by preventing merchandisers from booking orders with non-compliant suppliers and preventing shipping departments from booking shipments with these vendors. These are the kinds of safeguards that brands and retailers need in place to prevent lapses that could violate Bill S-211.

There’s no sugarcoating it: Bill S-211 will be a tough adjustment for many businesses, but it’s a necessary one. By implementing responsible sourcing practices with a multi-enterprise platform, businesses can protect their reputation, strengthen consumer trust and contribute to a more sustainable global supply chain ecosystem, while fostering the long-term resilience they need to remain competitive well into the future.  

Rejean Provost is the Team Lead, ESG Strategy for TradeBeyond. He has more than 35 years of experience in retail, merchandising, sourcing, manufacturing and technology related to the apparel and footwear industries.

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