Preparing for Bill S-211 – Canada’s modern slavery act – The Intelligent Miner

Written by Michelle Hohn, Lloyd Lipsett and Luc Zandvliet By…

Written by Michelle Hohn, Lloyd Lipsett and Luc Zandvliet

By now, most of the Intelligent Miner’s audience will be well-aware of the anticipated January 1, 2024 in-force date of Bill S-211 – Fighting Against Forced Labour and Child Labour in Supply Chains Act (Canada’s Modern Slavery Act).

This requires disclosure on the measures taken by certain government institutions and private-sector entities the previous year to prevent and reduce the risk of forced labour or child labour directly in their business activities or in their supply chains, in Canada or globally.

According to the definitions and thresholds, this new legislation imposes an annual reporting obligation on most producing mining companies.

Bill S-211 essentially catches Canada up to similar legislation and Modern Slavery Acts in the UK (2015) and Australia (2018) with respect to increased accountability, transparency, and an obligation to produce a statement or report disclosing whether forced labour or child labour is used in supply chains.

In Canada’s version of the law, the definition of supply chains also includes the distribution of goods or products imported into Canada.

Reports must include information about an entity’s business structure, activities and supply chains as well as the following detail in relation to forced or child labour:

  • Policies and due diligence processes; 
  • Parts of business and supply chains that carry risk and the steps taken to assess and manage that risk; 
  • Any remediation measures taken as well as any measures taken to remediate the loss of income to the most vulnerable families who would result from remediation measures; 
  • Related training provided to employees; 
  • And, how the entity assesses its effectiveness in ensuring that forced or child labour are not being used in its business and supply chains.

Final reports must be approved by the entity’s governing body (or bodies in the case of joint ownership), be publicly accessible, and submitted to the Minister of Public Safety and Emergency Preparedness on, or before, May 31st of each year.

The reporting structure itself is at this time flexible/not prescribed. However, as with any new bill, things may change over time.

How can Canadian mining companies prepare?

MICHELLE HOHN: The introduction of Bill S-211 fits within a global pattern of increased legislation of business responsibilities related to human rights. We have been beyond ‘building the business case’ or asking if human rights are applicable to companies or should be considered material topics for some time, and are now experiencing a shift into a space of how to demonstrate alignment with regulatory and stakeholder expectations.

LUC ZANDVLIET: While this is a Canadian first in the mandatory reporting on human rights, the new legislation’s focus on child and forced labour has a narrower scope that covers a small subset of the spectrum of human rights risks that a company can be connected to in its supply chain.

Many companies may wish to use this opportunity to consider the gap between the entry point of the new Canadian legal requirements versus a more complete interpretation of the UN Guiding Principles on Business and Human Rights (UNGPs) and other international standards for business and human rights.

LLOYD LIPSETT: Agreed. While the new legislation may be a ‘lever’ to demonstrate that a company has a management system in place for a specific aspect of supply chain due diligence, this should open a door to allow for the company to start developing a more comprehensive process of human rights due diligence.

In this regard, it is instructive that the new due diligence requirements being promoted in the European Union have a broader focus on the full range of human rights, as well as environmental and sustainability issues.

MICHELLE HOHN: Speaking of levers, one of the most distinguishing features about Bill S-211 over other social performance requirements is the specificity around liability, penalties, and fines for non-compliance.

While sign-off on the report is at the governing body/board level, liability, penalties, and fines (up to CAD$250K) extend beyond directors to officers, and potentially even key personnel who may be directly linked to activities or oversight relating to child labour or forced labour at operations or in supply chains.

This really ‘ups the awareness ante’ for directors and executive officers, who now have an increased vested interest in knowing precisely what their companies are doing in this regard and the supporting information that must go into the report.

LUC ZANDVLIET: Exactly, it’s going to come down to what methodological questions company directors, officers and their legal counsel will need to have answered and addressed in order to have a level of comfort in their supply chain activities and practices before signing-off.

LLOYD LIPSETT: Yes, they will need to start asking questions like: how can we be sure that our sites/operations have done their due diligence beyond their first tier of contractors and suppliers? And, are we confident that they understand the definitions and indicators of modern slavery? And what should we do if there are red flags?

Inaugural reports will be based on a company’s past information and practices, which may have some gaps in terms of their due diligence on these issues. This implies that some companies will need to ‘up their game’ to be able to report on continuous improvement in subsequent reports.

Boat on calm waters
Canadian mining companies that are quite human rights fluent will find the transition to reporting smoother sailing than those that are not. Image: Unsplash

MICHELLE HOHN: Key personnel at mining companies are already starting to consider the first reporting deadline, which, if I may use a boating analogy, are starting to manifest in three generalised scenarios:

  1. Smooth sailing – while this requirement will be a ‘first’ for everyone, there are Canadian mining companies that are quite human rights fluent: they have a human rights policy, conduct human rights due diligence and/or impact assessments aligned with international standards, human rights mitigation is integrated into management systems (including remedy/having a robust grievance mechanism in place), and they have been reporting human rights progress for some time. Their training programs include human rights content, they likely have a supplier code of conduct, and may have already expanded their due diligence and practice to include deeper dives into their supply chains. These companies and governing bodies have a relatively high degree of confidence in the assessment/mitigation or elimination of risk, and/or a defined path to increasing this knowledge through an evolving, ongoing practice to meet reporting requirements.
  2. A bit of chop – these companies have a human rights policy and have perhaps done some due diligence or know some of their actual and potential adverse human rights impacts as part of a larger enterprise-wide risk management assessment. They may do some training on what forced and child labour is and have some basic systems in place. However, they haven’t expanded much beyond that. This group may be in for a bit of a rough ride when it comes to formulating a report, while feeling wavering degrees of confidence in on-the-ground practices or lack of sign-off comfort on the S-211 requirements.
  3. Haven’t Left the Dock – unfortunately, there will be a certain percentage of companies that have no clue about where they stand on their human rights journey. Because reporting will be for the previous year, these company reports may be limited to disclosure of their business operations, an examination of general country and perhaps sector risk, with the remainder a candid gap analysis, planned human rights due diligence work, and goals for 2024 and beyond.

LUC ZANDVLIET: That raises a good point: it’s the doing that informs reporting – particularly after year one. Companies need to know what they plan to do between report one and two, as well as beyond.

There needs to be a strategy in place that emphasises an ongoing process that’s based on continuous improvement, that goes beyond the first tier of contractors and suppliers and provides appropriate remediation where modern slavery risks and impacts are identified.

Companies need to formulate their action plans and next steps to get beyond generalised country risk databases and understand the specific salient issues that are associated with their supply chains. Organisations require a series of approaches for what to ask, how to ask it, who asks it, and how to interpret that feedback.

LLOYD LIPSETT: It’s really going to come down to how the reporting requirements of the law are going to drive improved practices at an operational level and through cooperation and engagement with different actors in a company’s supply chains.

While reporting and sign-off must be done in the C-suites, the due diligence that underpins good reporting will be done on the ground. If the law’s objectives are to be met, companies will need to integrate a ‘boots on the ground’ focus to their compliance efforts.

In summary…

While the Canadian mining sector was an early supporter of the initiative, the Mining Association of Canada is one of the industry groups that asked for increased clarity and an extension to achieve that clarity prior to implementation.

However, unless we hear differently in the next two weeks, no change to the enforcement date is anticipated. This means that the law comes into force in January, 2024.

Bill S-211 is a game-changer in terms of introducing legal requirements for human rights due diligence for Canadian businesses. While this is focused on an important sub-set of human rights issues related to modern slavery in supply chains, this legislation should challenge companies to develop stronger approaches to due diligence for potential human rights risks throughout their operations and value chains.

Some Canadian mining companies already have strong experience and comprehensive approaches to human rights due diligence.

It’s now time for the rest of the industry to up their game.

If you’d like to continue the conversation, you can connect with Michelle, Luc, or Lloyd through their respective web contact pages or on LinkedIn.

About the authors:

Michelle Hohn
Michelle is the President and lead project manager of sustainability advisory firm Akashic Communications Corp. Akashic has supported Canadian mining companies with social performance strategy and sustainability/ESG reporting, stakeholder engagement, human rights due diligence and impact assessments, and the alignment of governance policies with best practice for responsible business conduct for 25+ years.

Luc Zandvliet
Luc is the Director of Triple R Alliance, a collective of social performance and human rights experts, and is the Social Performance Practice lead. His main technical expertise is engagement, grievance mechanisms, and social performance management systems. Luc has authored various guidelines and tools for the Canadian Government and industry organizations like PDAC and IPIECA, and a book on company-community relations

Lloyd Lipsett
Lloyd is is the Human Rights Practice Lead at Triple R Alliance. He is an international human rights lawyer with over 25 years experience working with leading companies, governments, national human rights institutions, civil society organizations and indigenous peoples. He has developed a niche in conducting human rights due diligence processes (HRDD) and human rights impact assessments (HRIA) and developing independent human rights grievance mechanisms in challenging contexts around the world. He is currently based in Tanzania.

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