A new law has Canadian companies looking for forced labour in their businesses. The results are concerning

OTTAWA — Canadian firms are finding reasons to be concerned after a private member’s bill forced them to go looking for forced labour in their supply chains and release the results publicly.

In Spring 2023, Liberal MP John McKay’s private member’s bill, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, passed through the House of Commons. The bill requires companies over a certain size to report publicly on where they believe there is a risk of forced labour in their supply chains and what they are doing about it.

Companies across the country have started filing those statements and acknowledging there are risks they need to better investigate.

Grocery giant Loblaws has already filed their report on the issue. While their statement makes it clear they have not found any specific examples of forced labour, the company acknowledged it needs to keep looking.

The company is launching what it believes is a first of its kind study of broccoli and cauliflower farms in North America to see if there are issues.

“This work will provide the enterprise with valuable insights, including a deep understanding of potential human rights impacts and their underlying causes, improved supply chain visibility, and recommended actions to address and remediate any potential negative impacts,” reads the company’s report.

Loblaws isn’t the only grocer that has recognized it may have an issue. Empire, which owns the Sobeys, Safeway, FreshCo, Foodland, Longo’s and IGA brands, said it is looking to more to ensure the palm oil it uses in products comes from sustainable sources.

Palm oil production has been linked to both child and forced labour, as well as issues around deforestation. In their filing, Empire said they are aiming to have 100 per cent of the palm oil used by their in-house brands come from certified sustainable sources.

Currently, the company said 70 per cent of the palm oil used in its Longo’s private label is sustainable and 88 per cent in the Sobeys brands is certified sustainable.

Forced labour in supply chains is often hidden deep in a company’s products, where specific components or materials that go into the finished products are made using forced labour. In other cases, companies outsource their labour to other firms or deduct fees or force overtime on workers.

Grocery firms aren’t the only companies taking a look at their supply chains. Clothing brand Lululemon said it is taking a hard look at the role of migrant workers in some of the companies it uses.

“We have identified foreign migrant workers as an at-risk group in specific sourcing locations, including Japan, Jordan, Korea, Taiwan, and Thailand,” the company said. “In these locations, we are working with suppliers and their subcontractors to align with our Foreign Migrant Worker Standard, which sets out minimum requirements.”

Migrant workers often have to pay recruitment fees or travel costs for jobs that become a debt that is then garnished from their wages.

Lululemon and other companies will require that migrant workers pay no fees. Lululemon intervened in one other case to ensure a supplier paid a worker for their full hours and the company said they received two more complaints late last year.

Amazon, with its global supply chain, had issues with a supplier in Saudi Arabia leading to payments from the company to hundreds of workers.

“As of February 2024, we have reimbursed more than 700 workers across all our third-party licensed temporary labour agencies in Saudi Arabia, totaling more than $1.9 million USD in reimbursed recruitment fees and related costs,” reads the firm’s statement.

McKay said he is still seeking data about how many companies should have filed statements and how many actually did, but he notes from what he has seen about 38 per cent of companies acknowledged there was some risk of forced labour.

He said he hopes companies becoming aware is the first step to solving the problem.

“If the legislation does nothing else but raise the awareness of companies than we’ve accomplished something because they are best positioned to clean up their supply chains and do it efficiently,” he said.

McKay has announced his retirement, but said he would ultimately like to see responsibility for these reports transferred to the Canadian Ombudsperson for Responsible Enterprise, a government agency charged with reviewing complaints about Canadian companies work outside of the country.

He said that agency would need some more distance from government and more teeth to enforce the rules, but he believes it could become a clearing house for the reports.

McKay said he also intends to table legislation that would require companies to take a reverse onus approach to goods from certain areas where forced labour is considered high risk, like the Xinjiang region of China.

Several companies, including the Hudson’s Bay Company, mentioned in their filings that they do not take cotton from the Xinjiang region or from Uzbekistan and Turkmenistan because of the risk.

Several U.S. legislators recently wrote a letter to trade minister Mary Ng raising concerns that Canada needed tougher rules and better enforcement. The letter specifically cited goods that U.S. officials rejected over forced labour concerns being rerouted through Canada.

McKay said beyond the moral imperative there is a real trade risk to Canada if the issue isn’t addressed.

“If Americans come to the fixed position that Canada’s nothing other than sieve for slave products and other stuff that’s inadmissible to the United States, this will be to be really serious.”

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