The Canadian legal landscape is changing and companies will need to adjust their operations to comply with new legislation. Companies now have a dual obligation, stemming from two recently enacted laws, to essentially do better. Both pieces of legislation reflect principles of sustainability in business operations.
The first is the passing of Bill S2-11, to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Anti-Slavery Act), addressed in our recent Sustainable Supply Chain Blog. It is scheduled to come into force January 1, 2024.
The Anti -Slavery Act imposes reporting obligations on businesses producing goods in Canada or elsewhere or importing goods produced outside of Canada. The goal of the Act is to combat forced and child labour. Government institutions dealing in goods, whether in Canada or abroad, are also bound by reporting standards. Although not all businesses are required to report, it is good business sense to aware of the threshold for when your business does come under the obligation. The following businesses would be required to report:
1. Those listed on a stock exchange in Canada; or
2. Those doing business in Canada, or having assets or a place of business in Canada and meet at least two of the following conditions (in the two most recent financial years):
a. Has at least $20 million in assets;
b. Has generated at least $40 million in revenue; or
c. Employs an average of at least 250 employees.
Those qualifying under the above criteria will need to make a report by May 31st each year regarding, amongst other things, its activities, policies, supply chains and measures taken to address forced or child labour. Corporations will need to deliver the report to each shareholder and obtain governing body approval. Violations of the Anti-Slavery Act and failure to comply could be fined for up to $250,000, including fines for any person that makes misleading or false statements.
Companies that do not fall within the reporting requirements should still take note and adjust their operations accordingly. For one thing, consumer and investor interest demands that companies operate in a responsible manner. The cases of market backlash on companies who have violated corporate responsibility principles are too many to count. Furthermore, companies who do not look ahead, lose out on competitive advantage in the long term. Those who focus on innovation and value building ultimately gain more market share compared to competition who maintain the status quo.
The second major development that occurred in Canada, is the passing of the newly amended Canadian Environmental Protection Act (EPA) on May 30, 2023. It was a long coming piece of legislation that honours Canada’s commitment to a United Nations resolution recognizing the right to a clean, healthy and sustainable environment.
A healthy environment has been described by David Boyd, the UN Special Rapporteur on Human Rights and the Environment, as follows [1]:
It means people have a right to breathe clean air, they have a right to a safe and sufficient supply of water, to healthy and sustainably produced food, to healthy ecosystems and biodiversity, and non-toxic environments where people can live, work, study and play, and a safe climate.
Whereas the Canadian government now has two years to develop an implementation framework, the scope of this right could be further expanded by the courts. It is expected that climate activists and environmental interest groups will rely on the EPA to advance claims against polluters and companies causing harm to the environment.
The winds of change are coming and business can either proactively lead by example or the market will, in due time, force change upon them.
[1] Mia Rabson, “Right to healthy environment will need defining after becoming law, Ottawa says” (28 April 2022), online: The Canadian Press /globalnews.ca/news/8795717/healthy-environment-cepa-amendment/.
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