Time to Add Another ESG Disclosure Priority to the List: Canada’s Forced Labor and Child Labor Supply Chain Reporting Deadline Arrives May 2024
The compliance clock is ticking on Canada’s new S-211 act. US companies doing business in or with Canada need to prepare now to provide the required disclosures on labor practices and programs.
To say 2023 has been a landmark year for news and developments regarding ESG-related regulation and legislation is no understatement. Between the recently finalized cybersecurity disclosure rule, the pending release of the human capital management rule, and the much anticipated (and much delayed) final rule on climate-related disclosure, the US Securities and Exchange Commission has delivered no shortage of new mandates to consider. At the same time, US companies doing business in the EU are working on understanding future reporting obligations under the upcoming Corporate Sustainability Reporting Directive
Amidst all this activity, it’s unsurprising that companies may have missed another ESG reporting regulation on the scene. In many ways, Canada’s S-211, An Act to Enact Fighting Against Forced Labor and Child Labor in Supply Chains and to Amend Customs Tariff, has been flying under the radar in the United States. However, the act received royal assent in Canada and takes effect on January 1, 2024, meaning affected US companies will need to get up to speed fast to ensure compliance with the May 31st, 2024, reporting deadline.
What issues does S-211 address?
As the act’s full name implies, S-211 addresses forced labor and child labor in supply chains. In addition to imposing reporting requirements, the act prohibits importing products into Canada that are “mined, manufactured or produced, in whole or in part by forced labor or child labor.”
Which organizations are in scope?
S-211 reporting requirements apply to companies that produce, sell, or distribute products in Canada, import products into Canada, or have a subsidiary involved in these activities; and are either listed on a Canadian stock exchange, have a place of business in Canada, have Canadian business operations, or has assets in Canada; and meets two out of the following three criteria for one of its two most recent fiscal years:
- CAD $20 million or more in assets (approximately USD $15 million)
- CAD $40 million or more in revenue (approximately USD $30 million)
- 250 or more employees
What needs to be reported?
Under S-211, companies that fall under the reporting scope requirements need to provide information addressing a number of areas each year. These include steps taken to prevent the use of and reduce the risk that forced labor or child labor is used in any way in company production operations in Canada or used in the manufacture of products that are imported into Canada. Companies also need to report on their structure, operations, supply chains, forced labor and child labor policies, and due diligence processes including risk assessments, employee training, and effectiveness assessments.
Companies need to find room on the ESG to-do list for forced labor and child labor disclosures.
S-211 is a robust rule with a rapidly approaching compliance deadline. As noted above, companies under the S-211 reporting scope requirements must report 2023 information by May 31st, 2024. Management and IR teams already working toward meeting the many other new ESG disclosure requirements that apply, or will soon apply, to their organizations will need to ensure they give this new rule adequate time and attention.
Looking for support navigating the many demands of new and evolving ESG disclosure requirements? Riveron can help. Connect with our ESG experts for a comprehensive approach to ESG reporting readiness that will ensure you meet every deadline and satisfy the disclosure expectations of all your critical stakeholders.