{"id":21592,"date":"2024-11-28T08:42:28","date_gmt":"2024-11-28T13:42:28","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=21592"},"modified":"2025-07-11T12:03:36","modified_gmt":"2025-07-11T16:03:36","slug":"canadas-modern-slavery-act-update-guidance-from-public-safety-canada","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/esg-and-carbon-finance\/canadas-modern-slavery-act-update-guidance-from-public-safety-canada\/","title":{"rendered":"Canada\u2019s Modern Slavery Act: Update Guidance from Public Safety Canada"},"content":{"rendered":"\n

On November 15, 2024, Public Safety Canada (\u201cPSC<\/strong>\u201d) published its latest guidance to help businesses navigate Canada\u2019s Fighting Against Forced Labour and Child Labour in Supply Chains Act<\/em> (the \u201cAct<\/strong>\u201d). This third edition builds on earlier versions released in December 20, 2023, and March 5, 2024, which was discussed in prior MT Biosphere newsletters (available in our December 2023 newsletter<\/a> and our March 2024 newsletter<\/a>). Drawing from its analysis of reports submitted earlier this year, PSC\u2019s updated guidance aims to better support organizations preparing their next round of disclosures, due by May 31, 2025.<\/p>\n\n\n\n

The Revised Guidance provides clarification to help businesses comply with the Act and strengthen their supply chain transparency.<\/p>\n\n\n\n

An \u201centity\u201d under the Act should report only if it is involved in the production or importation of goods<\/h2>\n\n\n\n

The Revised Guidance reaffirms PSC\u2019s past interpretation that the Act only imposes a reporting obligation on \u201centities\u201d involved in: <\/p>\n\n\n\n

    \n
  1. the production of goods in Canada or elsewhere;<\/li>\n\n\n\n
  2. the importation of goods produced outside Canada; or<\/span><\/li>\n\n\n\n
  3. controlling another entity that performs the activities described under (a) or (b).<\/li>\n<\/ol>\n\n\n\n

    This interpretation is grounded in Section 11 of the Act, which limits reporting to steps taken to prevent or reduce forced and child labour in the production<\/strong> of goods in Canada or elsewhere by the entity, or of goods imported<\/strong> in Canada by the entity. The Revised Guidance now explicitly clarifies that entities engaged solely in distribution or sales are not required to report and will not face enforcement action under the Act.<\/p>\n\n\n\n

    However, PSC has indicated on its summary of the Revised Guidance that reports prepared using previous versions of the online guidance will be accepted in the 2025 reporting year.  Additionally, while not mandatory, organizations may choose to voluntarily file an annual report under the Act. Doing so could highlight their leadership in addressing forced and child labour, showcasing their integrity and commitment to responsible business practices.<\/p>\n\n\n\n

    Voluntary reporting can provide tangible benefits, such as improving ESG scores, lowering the cost of capital, enhancing reputation, and creating a competitive edge. It is an opportunity for businesses to demonstrate their role as responsible corporate citizens and attract customers, partners, and opportunities that value ethical operations.<\/p>\n\n\n\n

    Clarification on the meaning of \u201cgoods\u201d produced or imported<\/h2>\n\n\n\n

    The Revised Guidance clarifies the types of goods targeted by the Act when it states that reporting obligations apply only to entities which produce goods in Canada or import goods to Canada. According to PSC, only tangible physical property that is the subject of trade and commerce is targeted by the Act. Through the Revised Guidance, PSC confirms that certain types of property are explicitly excluded from the definition of \u201cgoods\u201d such as real property, electricity, software services, and insurance plans.<\/p>\n\n\n\n

    Clarification on the meaning of \u201chaving assets in Canada\u201d<\/h2>\n\n\n\n

    The Revised Guidance also clarifies the meaning of the expression \u201chaving assets in Canada\u201d which is used in the application threshold tests of the Act contained in paragraph (b) of the definition of \u201centity\u201d and makes it clear that an organization should not include intangible assets such as intellectual property, securities and goodwill in its assessment, when determining whether it has assets in Canada.<\/p>\n\n\n\n

    This means that a parent company whose sole assets in Canada would be the shares of its Canadian subsidiary would not be considered as having \u201cassets in Canada.\u201d<\/p>\n\n\n\n

    This is a departure from the December 2023 online guidance published by PSC which considered that assets were property owned by a person or business such as investments and intangibles such as goodwill.<\/p>\n\n\n\n

    Clarifying the seven items of disclosure required under the Act<\/h2>\n\n\n\n

    The Revised Guidance also provides additional information as to what is expected from reporting entities under the seven mandatory items of disclosure required under Section 11(3) of the Act. This additional information establishes recommendations rather than prescriptions, as can be inferred from the repeated use in the Revised Guidance of phrases such as \u201centities may include.\u201d<\/p>\n\n\n\n

    Important additional information provided in the Revised Guidance includes the fact that:<\/p>\n\n\n\n