Canadian Agency Report Highlights Risk of Child Labour in the Global Apparel Supply Chain
As Bill S-211 (the Fighting Against Forced Labour and Child Labour in Supply Chains Act) continues through the legislative process, the Canadian Ombudsperson for Responsible Enterprise (“CORE”) recently released its report on child labour in the apparel supply chain, entitled Respect for Child Rights and the Risk of Child Labour in the Global Operations and Supply Chains of Canadian Garment Companies (the “Report”).The Report makes various findings and recommendations relating to Canadian garment companies’ obligations in eliminating child labour from their supply chains.
Companies operating in the apparel sector should review the Report closely as they prepare for the expected coming into force of Bill S-211, which requires firms to submit public reports on the measures and diligence processes they have implemented to prevent and reduce the risk that forced labour or child labour is being used in throughout their supply chains. Notably, the legislation also prohibits the importation and distribution of goods made in whole or in part from child labour, adding to the existing ban relating to forced labour products.
The CORE is a federally-established business and human rights ombud institution, with non-judicial dispute resolution powers aimed at addressing alleged human rights abuses resulting from the operations of specific Canadian enterprises. These include companies operating in the garment, mining, and oil and gas sectors. The CORE has an investigative mandate and can make remedial recommendations to private companies, but its determinations are otherwise non-binding.
Genesis and Substance of the Report
As highlighted in the Report, it is estimated that in 2020 there were 160 million child laborers, accounting for one in ten children worldwide and, for the first time in 20 years, there was a significant increase in child labor, with children between the ages of five and 11 accounting for more than half of those 160 million child laborers. It further noted that 79 million children - aged five to seventeen - are engaged in hazardous work (“work that may harm their health, safety or morals”), an increase of 6.5 million since 2016.
The Report stems from a study undertaken by the CORE in 2022, in which data was collected from interviews with 10 Canadian garment companies and 5 civil society organizations. The stated objective of the Report was to “…better understand the measures taken by Canadian garment companies to strengthen respect for child rights and address the risk of child labour in their global operations and supply chains…and the opportunities and challenges that they face”
While the Report outlines a number of findings specific to the responses it received over the course of its interviews with participating Canadian garment companies, most significant are the recommendations it makes – some of which if implemented could have substantial implications for the broader Canadian garment industry. Most notable are the following:
1. Incorporate more stringent reporting requirements into Bill S-211
As currently drafted, Bill S-211 imposes obligations on a broad swath of entities having connections to Canada to report on the measures taken to prevent and reduce the risk that forced labour or child labour is used by them or in their supply chains. The CORE Report recommends that these reporting requirements be augmented to require that covered businesses report on the steps taken to prevent and reduce the risk that child labour is used at each level of the supply chain, including specifically the garment, fabric, fiber, and raw materials production levels.
This would significantly increase the reporting burden presently contemplated in Bill S-211, requiring that Canadian garment companies conduct audit and other diligence activities well beyond the level of their immediate suppliers. As supply chain processes in the apparel sector are usually comprised of dozens (sometimes hundreds) of constituent content manufacturers, often from disparate geographic areas, it will be a material undertaking for businesses to establish workable processes to verify the each level of the supply chain. To the extent that this compliance recommendation is put into effect, it will be important for the CORE and the Minister of Public Safety and Emergency Preparedness (in respect of Bill S-211) to support industry by establishing instructive guidance on how the concept of “verification” will be interpreted.
2. Adopt mandatory human rights and environmental due diligence legislation
The Report also recommends that the Federal government institute mandatory human rights and environmental due diligence (“HREDD”) legislation, that would require Canadian garment companies to adopt effective HREDD practices to address human rights risks in their supply chain. The CORE once again envisions that these HREDD practices would apply at all levels of the supply chain – from raw material production to garment production.
As a practical matter, though there is a bill before Parliament that could implement similar due diligence requirements (Bill C-262, which we discuss further below), it is at early stages of the legislative process. Consequently, there is limited prospect that this particular element of the Report would be implemented at the Federal level any time soon.
3. Adopt industry standards requiring reporting at all levels of the supply chain
Related to the first two recommendations, the Report also takes the position that Canadian garment companies should voluntarily adopt standards that contemplate reporting and evaluation of human rights risks at each level of their supply chains.
4. Expanded approaches to child labour remediation
The Report notes that many respondents in the Canadian garment industry adopt a “zero tolerance” approach to child labour in their supply chains, indicating that a confirmed instance of the use of child labour within their supply chain would result in immediate termination of the business relationship. The CORE takes the position that these “zero tolerance” policies are not aligned with what it considers to be industry best practice, preferring instead that entities pursue effective child labour remediation mechanisms (with termination of the relationship being a last-resort option).
Notably, the Report provides little specificity as to what an “effective child labour remediation mechanism” might consist of, other than various preventive measures. The Report indicates that CORE will engage relevant experts to develop industry guidance in this respect.
Complementary Legislative Measures
As noted above, the release of the Report precedes the anticipated passage of Bill S-211, which will impose reporting obligations and expand the current import ban against forced labour products to goods made in whole or in part from child labour. Specifically, Bill S-211 will require companies, including those in the garment sector, to publicly disclose the steps they take to prevent and reduce the risk of child labour and forced labour in their supply chains. McCarthy Tetrault’s four-part guidance on how companies should be preparing for and addressing measures targeting forced labour and child labour in the supply chain, including Bill S-211 (which is discussed in Part IV), can be viewed here:
- Part I – The Forced Labour Crisis (October 2021)
- Part II - Canada’s Response to Forced Labour (November 2021)
- Part III - What Companies Should be Doing Now (November 2021)
- Part IV - Forced Labour and Modern Slavery Update – Canadian Firms Now Facing Greater Scrutiny of Their Supply Chains (October 2022)
A related bill that we mentioned above and also discussed in our prior guidance is Bill C-262 (the Corporate Responsibility to Protect Human Rights Act), which was proposed as a private member’s bill in 2022. If passed, this broadly-drafted law would require Canadian garment companies to establish processes to prevent, address and remedy adverse human rights impacts writ large (including child labour) within their supply chains, and would provide a private right of action for those who allege harm from the failure of companies to do so. Note that this bill remains at the early stages of the legislative process, and has not progressed since its first reading at the House of Commons in March, 2022.
Finally, as we have discussed previously, the Canadian Customs Tariff was amended in July of 2020 to prohibit the importation of goods that are produced wholly or in part by forced labour. Since then, the Canada Border Services Agency has been working to establish the legal framework that will pave the way for active enforcement of this import ban. The passage of Bill S-211 will add a prohibition on the importation of goods that are produced wholly or in part by child labour to the Customs Tariff. This impacts distributors, retailers and other purchasers in Canada even if they are not an importer. As a consequence of the implementation of this new import ban, the possession, purchase, sale, exchange or other acquisition or disposal of these imported products in Canada will also be prohibited under the Customs Act. Further, anyone who finds or has goods in their possession and who “believes on reasonable grounds” that the importation of those goods may be prohibited, is required to “forthwith” report those goods to a Canada Border Services Agency officer.
Taken together, these measures – viewed in conjunction with CORE’s activities and the publication of the Report – are reflective of the degree to which addressing the risk of human rights abuses in Canadian companies’ supply chains is a political priority. Companies active in the apparel industry should be prepared for increasing scrutiny of their supply chains by government regulators as they continue to pursue measures such as those outlined above.