Structure, activities and supply chains

The Act defines activities as all pursuits undertaken by an entity related to producing, selling, distributing, or importing goods. When reporting activities, entities may include details on:

• Production, manufacturing, growing, extracting, processing, sale, or distribution of goods in Canada and abroad, including types and volumes
• Importation of goods into Canada, including types and volumes imported and origin locations
• Operating locations (countries or regions)

Entities should also describe the activities of any entities they control that have reporting obligations under the Act. Guidance on the Act's application provides more information. The supply chain consists of suppliers of goods and services that contribute to producing the entity's final product, from raw material sourcing through to the end product. It includes direct and indirect suppliers and service providers in Canada and abroad. It does not include end users or customers purchasing the products or services.

When describing supply chains, entities should identify the source countries or regions of goods and services used at each stage as completely as possible.

Entities should provide a comprehensive overview of their structure, activities, and supply chains, not omitting any aspects they believe carry no forced or child labor risks.

Policies and due diligence processes

The OECD Due Diligence Guidance for Responsible Business Conduct outlines a due diligence process for companies to identify and address potential negative impacts of their activities across the supply chain. This process involves embedding responsible business conduct into policies, identifying and assessing adverse impacts, ceasing or mitigating them, tracking results, communicating actions taken, and enabling remediation when needed.

Identification of Forced labor and child labor risks

The Act requires entities to identify parts of their operations and supply chains that could involve forced labor or child labor, either in the entity's own activities or those of its controlled entities and direct or indirect suppliers. This identification does not require proving that forced labor or child labor has actually occurred. Rather, entities should demonstrate consideration of how their activities and supply chains may potentially cause, contribute to, or be linked to forced labor or child labor risks.  

No industries or supply chains are assumed to be risk-free regarding forced labor and child labor. The purpose is not to certify an entity as "risk-free," but to show steps taken to identify and address risks. This transparency aims to encourage progress, not penalize entities that find risks.  

Entities should avoid disclosing commercially sensitive details or specific cases that raise legal or privacy issues. The questionnaire allows entities to identify general risk areas related to sectors, industries, countries, or regions. Additional details are encouraged, such as risks tied to certain products or supply chain steps. Entities may volunteer anonymized case studies, but individual privacy should be protected.

The questionnaire also allows entities to describe their risk assessment and management processes, either for each risk or in general terms. Controlled entities should also be addressed. Explanations could cover supply chain mapping, formal risk assessments, and mitigation strategies. The goal is transparency into systematic efforts to identify, assess, and manage forced labor and child labor risks.

Remediation measures

Remediation and remedy refer to the processes and outcomes that counteract adverse impacts. In business and human rights contexts, including forced labor and child labor, remediation may involve various measures aimed at rectifying human rights harms. Appropriate remedies depend on the situation. For more on remediation, see the UN Guiding Principles on Business and Human Rights and additional resources.

Entities should also describe measures taken by controlled entities, if applicable. The purpose is to encourage transparency, not to disclose sensitive information or discuss specific cases in problematic ways. If entities assess they have no risk of forced or child labor, stating this suffices. Alternatively, entities can indicate no remediation measures were taken, if none were.

Remediation of loss of income

Efforts to prevent and reduce forced labor and child labor may unintentionally lead to loss of income for vulnerable families. Requirement (e) refers to any measures taken to compensate for the loss of income experienced by the most vulnerable families resulting from actions to eliminate forced labor or child labor in the entity's activities and supply chains.  

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If an entity controls other entities, it must also describe the income loss remediation measures those controlled entities have implemented, if applicable.

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As with requirement (d), if entities determine that vulnerable families have not lost income due to the entity's actions to eliminate forced labor and child labor risks, or if the entity has not taken any measures in this area, stating this in the report sufficiently addresses the requirement.

Training

Training on forced labor and child labor can take various forms, from formal courses to awareness activities. When reporting on such training, entities may provide details including:

• Whether the training is mandatory or optional
• Whether it covers all employees or specific departments/branches
• Which employee groups receive it (e.g. management)
• Training content and topics (forced labor, child labor, or both)
• Who developed the training (internal or external organization)
• Length of training
• Any assessments given
• Number of employees trained currently or in future
• Additional relevant information

Assessing Effectiveness

To meet the reporting requirements, entities must describe the policies, procedures, and other measures they have implemented to track and measure their effectiveness in identifying and reducing risks of forced labor and child labor. Simply stating the results of assessments is insufficient. Entities must detail their processes for conducting assessments.

Alternatively, entities may indicate they have not taken any actions to evaluate their performance in mitigating forced labor and child labor risks. Including this in their report satisfies the requirement.

If an entity controls other entities, it must also depict how these subsidiaries assess their effectiveness in guaranteeing forced labor and child labor are absent from their business operations and supply chains.