Bill S-211: Are you ready for the new requirements?

Bill S-211 marks a significant step in Canada addressing forced and child labour in supply chains. This legislation introduces new compliance requirements for certain entities and emphasizes greater transparency, accountability, and proactive reporting.

The scope of the Act goes beyond legal obligations, encouraging your business to voluntarily report actions to mitigate reputational risks. New clarifications have also been introduced regarding reporting thresholds, definitions, and mandatory disclosures. These updates provide direction for entities navigating their obligations under Bill S-211.

If your business is preparing its compliance strategy, here’s what you need to know about who needs to report, what is required, and how to meet the expectations of this important legislation.

Who will be affected?

The Act applies to reporting entities, which include corporations, trusts, partnerships, and other organizations that meet specific criteria:

1. Assets: At least $20 million (excluding intangible assets such intellectual property, securities, or goodwill).
2. Revenue: At least $40 million.
3. Employees: An average of 250 or more during at least one of the two most recent financial years.

Entities engaged solely in distribution or sales are exempt from the Act’s reporting requirements. However, even exempt organizations are encouraged to voluntarily report their efforts to address forced and child labour, as failing to act could expose your business to reputational and operational risks.

For additional clarification, consult the Bill S-11 Fact Sheet.

Calculating quantitative threshold

Entities must meet specific quantitative thresholds outlined in the Act. The Act clarifies that intangible assets, such as intellectual property, securities, and goodwill, are excluded from the calculation of total assets.

Who has to report?

Under Section 11 of the Act, reporting requirements apply to entities that:

1. Produce goods in Canada or elsewhere or import goods into Canada.
2. Exclusions: Entities engaged solely in distribution or sales are not required to report unless they also import the goods they distribute or sell.
3. Voluntary reporting: Even if not legally required, entities are encouraged to report. Proactive reporting can help mitigate reputational risks tied to inaction on forced and child labour.

What are goods?

The Act defines goods as tangible, physical property involved in trade and commerce. Exclusions include:

• Real property
• Electricity
• Software services
• Insurance plans

What are the penalties for non-compliance?

Non-compliance with Bill S-211 carries significant penalties, including:

• Fines: Up to $250,000 for failure to meet reporting obligations.
• Director liability: Directors and officers who knowingly authorize or permit non-compliance may be held personally liable.

These penalties highlight the importance of implementing robust compliance measures and ensuring accurate reporting.

How does Bill S-211 align with ESG pillars?

The Act ties directly into the social and governance aspects of ESG. By addressing forced and child labour risks, organizations demonstrate their commitment to ethical supply chains and corporate accountability. Businesses that actively align their operations with ESG principals often experience improved stakeholder trust, enhanced brand reputation, and better access to investment opportunities.

What needs to be reported?

Entities must include the seven mandatory items required by the Act in their reports. Recent updates have clarified additional expectations for disclosure, which include the following:

Supply chain transparency

Entities are now required to identify the source countries or regions of origin for all goods and services used in their supply chains. A supply chain encompasses all suppliers and service providers involved in business activities, from raw material to final products, both Canada and abroad — the expectation is for entities to show annual improvements in this area.

Risk identification

Reports must include an assessment of the risks of forced and child labour within the supply chain. It’s important to note that entities are not required to disclose actual or known cases of forced or child labour — only identified risks. If no cases are identified, the entity can state that remediation measures were not applicable in its reporting.

Training

Entities must provide details about training efforts related to addressing forced and child labour. Reports should outline the content, duration, and assessment methods of your employees training, as well as the number, groups, and levels of employees who received it. This information demonstrates your business’s commitment to equipping employees with the knowledge to mitigate risks.

Effectiveness assessment

Reports should explain how entities asses the effectiveness of their efforts to ensure that forced and child labour are not used in their supply chains. It’s not necessary to disclose your results of these assessments — the focus should remain on the methods and processes employed to measure effectiveness.

Steps taken

Entities must highlight the concrete actions or changes made to their business activities to prevent or reduce the risk of forced of child labour. Future-oriented statements or plans should not be included — only actual steps you’ve taken during the reporting period are required.

How to address very minor dealings

The Act excludes certain transactions deemed very minor dealings from its reporting requirements. According to the legislation, entities are not required to report if their dealings with forced or child labour are deemed negligible. However, the Act does not provide further clarification on what qualifies as a very minor dealing.

Entities must make their own determinations and document how conclusions were reached if they rely on this exemption to avoid reporting. 

Signing and attesting the report

Annual reports must include a signed attestation. Updates to signing requirements include:

1. The attestation must now feature a wet ink or electronic signature.
2. A typed name accompanied by a denotation of being signed is not sufficient.

These changes will notably impact publicly listed businesses that often rely on typed names for different filings.

Preparing your business for Bill S-211

Bill S-211 introduces a strict new set of rules to prevent human rights abuses by reducing the risk of forced labour and child labour in supply chains. It also encourages businesses to accelerate their ESG strategies by performing due diligence across all tiers of their supply chain, ensuring practices align with their standards and values.

For more information on how to navigate these new requirements or strengthen your compliance approach, reach out to an experienced advisor or explore resources to support your ESG strategy.