Since 2010, a wave of home state modern slavery legislation with extraterritorial effect has been enacted in many Western countries (Mares, 2018). This legislation seeks to increase the obligations of MNCs in relation to supply chain governance through the mechanism of disclosure (Phillips, LeBaron & Wallin, 2018). Companies are required to publicly disclose information pertaining to activities in their supply chain, specifically labour standards. Examples of disclosure legislation include the California Transparency in Supply Chains Act 2010, the United Kingdom (U.K.) Modern Slavery Act 2015, the French Corporate Duty of Vigilance Law 2017 and the Australian Modern Slavery Act 2018. Canada has also proposed disclosure legislation, having jointly agreed with the U.K., United States, Australia and New Zealand to encourage businesses to address modern slavery in supply chains (U.S. Department of State, 2018). Bill C-423, cited as the Modern Slavery Act, was introduced into parliament in December 2018 by the liberal government after Canada’s Standing Committee on Foreign Affairs and International Development recommended legislation similar to the California and U.K. Acts (Canada House of Commons, 2018). The Bill did not make it past its first reading and eventually Bill S-211, which almost exactly mirrors its predecessor, was introduced in February 2020.
Although disclosure laws vary in design, they all require companies to report on their CSR activities. This mode of governance has been coined “CSR as mandated by the government” and represents a shift away from the traditional voluntary CSR model (Phillips, LeBaron & Wallin, 2018). The legislation relies on the economic leverage of MNCs to weigh positively on labour standards throughout the supply chain (Phillips, LeBaron & Wallin, 2018). The aim is for the disclosure to guide consumer purchasing thereby enabling greater accountability. Policymakers and industry actors have hailed this legislation a game-changer in the fight against modern slavery but this is debatable (Mares, 2018). Disclosure laws can be divided into two groups, weaker transparency legislation and more stringent due diligence legislation. Companies subject to due diligence legislation such as the French Vigilance Law must identify and address actual or potential human rights and environmental abuses in their supply chain activities to reduce or prevent their negative impact (Nolan, 2018). In contrast, transparency legislation such as the California and U.K. Acts simply require companies to comply with the requirement of reporting. It does not mandate businesses to undertake steps to address modern slavery in their supply chains. Companies regulated by the U.K. Act can report that “no such steps” were taken and still be in compliance with the Act (LeBaron & Rühmkorf, 2017, p. 21). Transparency laws have therefore not engendered a serious corporate effort to combat their target human rights violations (Nolan, 2018).
Some researchers have argued that transparency CSR was used in the U.K. as a strategy to deflect more stringent due diligence legislation modelled after the U.K. Bribery Act 2010 LeBaron & Rühmkorf, 2019). However, transparency legislation can also be viewed as strategic choice. The basic tenets of contract and corporate law ensures that MNCs have limited liability for production related incidents in host countries. MNCs are separate legal entities from their suppliers and consequently there is no vicarious liability of MNCs for crimes or torts committed by their suppliers (LeBaron & Rühmkorf, 2019). Attempting to regulate lead firms by means of coercive laws for their indirect involvement in supply chain labour violations causes friction with these legal doctrines and triggers political sensitivities about national sovereignty (Mares, 2018). Transparency legislation avoids challenges from these legal principles because they do not hold the lead firm liable for harm caused in affiliate operations (Mares, 2018). Thus, instead of transparency laws being viewed as a weak substitute for more stringent legislation, they can be seen as successfully manoeuvring the legal barriers traditionally associated with transnational supply chains and prompting MNCs not to avoid their involvement in the situation.
Canada’s proposed legislation falls into this latter transparency group. It is therefore imperative to determine whether this legislation will encourage “cosmetic compliance” or meaningfully steer corporate conduct in the area of labour standards in global supply chains (Nolan, 2018). This brief aims to investigate Canada’s modern slavery legislation using a typology formulated to analyse the law’s design, stringency and enforceability.
The typology used in this brief isolates and interrogates the most significant areas and legal concepts that arise from Canada’s proposed modern slavery legislation. The purpose of this is to fully grasp how the provisions of this legislation will be operationalized. The categories of the typology are: a. the type of legislation; b. the material scope; c. the personal scope; d. the definition of value chain; e. the statutory duty under the legislation; f. reporting requirements; g. whether the legislation mandates a separate registry; h. auditing requirements; i. the statutory repercussion for breach of duty; j. impact on other forms of liability.
Bill S-211 (The Bill) can be described as ad hoc disclosure legislation. It is ad hoc meaning that it is not embedded in any other existing reporting mechanism such a consumer protection or financial reporting act (Salminen & Rajavuori, 2019). The Bill took the form of transparency legislation similar to that of the U.K.
This project is supported by the LIUNA Enrico Henry Mancinelli Professor in Global Labour Issues at McMaster University, held by Judy Fudge, and by funding from the Social Sciences and Humanities Research Council.