Canadian Boards of Directors Prioritize Human Trafficking & Slavery Due Diligence

Canadian Boards of Directors Prioritize Human Trafficking & Slavery Due Diligence

While human trafficking and slavery requirements are expanding around the world, Canada has been slow to implement mandatory disclosure-based reporting requirements. Still, Canadian businesses are developing their own motivations to perform due diligence.

As part of the North American selling region, Canadians are heavy consumers. A 2016 report estimated businesses import $34 billion worth of high-risk products every year, a 31 percent increase over 2012. That total is likely much larger now.

The same report highlighted the disparity between action and demand. Although there are no mandatory due diligence requirements, 84 percent of Canadians feel frustrated by how difficult it is to determine the labor background of the products they consume. Mandatory reporting would allow them to review the practices of companies they purchase from.

U.S. & Investor Influence in Canadian Boardrooms

Although most companies are under no legal obligation to do so, boards of directors are recognizing the importance of engaging broad stakeholder concerns as they relate to sustainability, including modern slavery. Many U.S.-based companies have influenced the Canadian business landscape through public statements that expound upon the benefits of voluntary action. Significant publications include a letter to CEOs from Blackrock CEO Larry Fink, and Business Roundtable’s Statement on the Purpose of a Corporation.

Canadian C-suites aren’t only being influenced by their American counterparts; investors have taken it upon themselves to signal their interests to both their board and federal representatives. In 2018, a group of 129 investors managing a collective 2.3 trillion CAD in assets published a statement highlighting the need for disclosure-based modern slavery requirements.

Federal Government Taking Aim at Modern Slavery

The Canadian government seems to have responded to these external influences. On September 4, 2019, it launched a six-year, $75 million CAD strategy to influence ethical behavior in global supply chains, a plan similar to federal requirements in regions such as the UK and U.S. Earlier in the year, it also committed to forced labor provisions as part of the revised U.S.-Mexico-Canada (USMCA) agreement, with more likely on the way.

Meanwhile, the Supreme Court of Canada has changed the way businesses look at supply chain negligence. In late February, it allowed a lawsuit filed by three Eritrea refugees against Vancouver-based mining company Nevsun Resources to stand trial. While it is alleged company executives knew the plaintiffs, along with 1,000 more, had been forced into labor by a local sub-contractor, a similar case filed by Guatemalan refugees against Tahoe Resources was thrown out just three years ago.

This highlights that a shift in thinking is taking place in both enforcement and judicial systems regarding the culpability of Canadian businesses not taking action in their supply chains. And C-suites are becoming well-versed on what this means for them, the shareholders they represent and the brands they’re charged to protect.

Leveraging Data to Drive Business Growth

As a result of these shifts, business leaders are recognizing data-driven performance insights can enhance business profits, and leveraging data automation technology to build transparency through their extended enterprise. Organizations such as the UN Global Compact and the Global Reporting Initiative (GRI) have also identified technology as a key success factor for companies performing due diligence, building defensible, evidence-based disclosures and ultimately, influencing meaningful change in global sourcing environments.

The Assent Compliance Platform and the Social Responsibility Alliance (SRA)’s Slavery & Trafficking Risk Template (STRT) help companies navigate this evolving business landscape, aggregating suppliers by risk level and enabling them to focus resources on the actions that have positive results, both here and abroad. Notably, many of the executives that signed Business Roundtable’s commitment lead companies that leverage Assent’s platform technology to acquire supply chain data, helping them maintain their position as business leaders through a complex, uncertain time.

For more information about how Assent can help your C-Suite build transparency throughout your supply chain and protect investor interests, talk to our experts at info@assentcompliance.com.

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