It only takes one unethical supplier to damage your brand, and even for those with the best intentions, sadly, modern slavery and forced labor remains a huge issue for Canadian companies.

Whatever their size, forced labor is a growing risk for businesses in a globalised environment. And it’s a serious one that needs attention and action if they are not to be complicit in allowing it to prosper.

So, with 87% of Executives rating reputation risk as more important than other strategic risks (Deloitte) and expectations and pressures on companies to tackle forced labor increasing, the International Day for the Abolition of Slavery provides a global focus on eradicating contemporary forms of slavery in supply chains.

How real is the risk of forced labor?

While the world may seem to be a different place, where slavery feels like a topic that should be confined to the history books, the stark reality is that slavery has not gone away, and the situation is not improving.

Modern slavery is a broad term, and while the most common form is forced labor, there are many wider abuses that include failure to pay the minimum wage, depriving workers of facilities to wash, rest, eat and drink, demanding excessive hours, domestic servitude, harassment, assault and unpaid wages.

Some of the key statistics that give pause for serious thought…

• 50 million people worldwide in modern slavery; 28 million of which were in forced labor (ILO)
• An increase of 2.7 million in forced labor between 2016 and 2021 (ILO)
• In a 2016 estimate, 17,000 people living in conditions of modern slavery on any given day in Canada (Salvationist.ca)
• Upper-middle income or high-income countries account for more than half of forced labor (ILO)
• 158 goods from 77 countries are listed by the Bureau of International Labor Affairs (ILAB) which has reason to believe are produced by child labor or forced labor

Global supply chain networks heighten risk of forced labor

With supply chains now spanning an increasingly interconnected global network, a very real consequence is the heightened risk and exposure to poor working conditions and compliance gaps. Unfortunately, this makes it more likely that unethical practices can go undetected.

Even for big, well-known brands, no business is immune:

• In 2021, at least 82 global brands in the technology, clothing and automotive sectors were linked to forced Uighur labor in a report published by the Australian Strategic Policy Institute.
• In 2021, a retail giant was accused of bringing more than 100 shipments of clothing into Canada from a Chinese factory suspected of secretly using North Korean forced labor.
• In 2020, Canada’s supreme court ruled that a Vancouver-based mining company could be sued for alleged human rights abuses overseas including allegations of modern slavery.
• In 2020, Channel 4 program Dispatches in the UK filmed children under 13 working on farms in Guatemala linked to Starbucks and Nespresso.

Is forced labor being given the attention it needs?

Companies have generally been slow to act. And despite awareness of the risks of forced labor increasing, it isn’t translating into effective practices to reduce it. Currently, there is no legal obligation to take any steps to make sure that modern slavery is not taking place.

There are still many companies who are failing to identify obvious risks or are simply making vague assurances. This is set to change in 2023 in Canada as a result of the introduction of Bill S-211, an Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff (the Bill). It aims for greater transparency by requiring businesses with any connection to Canada to disclose the measures actively taken to reduce the risk of forced or child labor within their supply networks.

Bill S-211 (proposed) will affect companies that sell, produce, distribute or import goods (or control an entity that does so) and either:

• are listed on a Canadian stock exchange, or meet two out of the three following criteria:
  • $20 million in assets
  • $40 million in annual revenue
  • 250 employees

The key requirements proposed under Bill S-211 are:

• Companies producing, selling or distributing goods in Canada or elsewhere or importing into Canada goods produced outside Canada; or controlling an entity engaged in any activity in either.
• An obligation to report yearly on:
  • Its structure, activities and supply chains
  • Policies and due diligence processes in relation to forced labor and child labor
  • Measures taken to remediate any forced labor and child labor
  • Measures taken to remediate the loss of income to the most vulnerable families that results from any measure taken to eradicate the use of forced labor and child labor in its activities and supply chains
  • Training employees on forced labor and child labor
  • How the company assesses its effectiveness to make sure that forced labor and child labor are not being used in its business and supply chains

Promises and statements of good intent are not enough

Recognizing, addressing and taking action against unethical practices and forced labor should be a key priority for businesses of all sizes. And to do this effectively, data visibility is crucial to have a coherent approach to establish ‘one true view’ of the risks.

The fact that complex supply chains make it difficult to oversee who is working where and under what conditions is not a plausible excuse.

As Denis Sanchez, VP of Operational Excellence, Alcumus Canada, explains: “Supply chain managers are at the forefront of the battle to root out all forms of modern slavery from large, interconnected supply chains, through strategic and judicious supplier selection, collaboration and development, as well as by working closely together with in country industry and trade organizations and NGOs. With 50 million people living in conditions of modern slavery, it takes all of our joint efforts to come together to eradicate this practice”.

Does your business have full visibility across the supply chain?

Having visibility ensures that business do not work with suppliers that fall below the required ethical standards.

In developing effective anti-slavery initiatives and good practice, businesses need to place tackling forced labor at the heart of their activities by:

• Demonstrating a commitment to tackling forced labor
• Taking proactive measures in their operations and supply chains to reduce the risk of forced labor
• Investing in programs that address specific goods or sectors where forced labor or exploitation has been found
• Proactively managing incidences where they occur
• Supporting employees and suppliers to protect and prevent against exploitation

Key questions to ask your suppliers

Have you mapped your supply chain? This will help to understand whether a company is focused on combatting forced labor.

What does your supply chain look like? This will help to know where your suppliers' products and services are sourced from and what workers' rights look like in different countries.

How are you managing forced labor risks? This will provide an insight into whether a supplier has a forced labor and/or human trafficking policy, any consequences for non-compliance and if their employees receive training on forced labor.

What are the working conditions of your workers? This will help to understand if the supplier's employees are treated fairly and working in safe conditions.

Businesses need to take action

These alarming practices have no place in the 21st century. And although forced labor is clearly not a challenge that can be eradicated overnight, businesses need to take action to protect victims and make sure they actively audit, investigate and reduce exploitation.

Where businesses fall short, then the risks they face of non-compliance as well as reputational and financial damage is not a myth but a real reality.