Making Canada’s new supply chains act work for you

Canada’s new modern slavery legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (MSA) went into effect at the start of 2024, with reporting required by the end of March 2024. The turnaround was tight for in-scope companies, who had to report on forced and child labour risks within their supply chain, as well as any mitigation actions taken. To ensure a smooth and successful reporting process in 2025, companies should begin taking proactive steps now.  

The MSA is one of many international regulations that businesses must follow to operate a successful business. Governments, investors, and consumers alike are more interested than ever in how commodities come to be and are keen to buy sustainable and ethically-made products.   

Canadian companies, and companies operating within Canada, should use compliance to the MSA as a start to think about their bigger sustainability and governance landscape. While non-compliance to the MSA can carry hefty fines – up to CAD$250,000 – the legislation stops short of obliging companies to take formal action against forced and child labour. However, it does require companies to publish their reporting publicly, leaving the fate of company reputation to attentive and invested consumers.   

If organizations are open to finding the operational advantages inherent in fully understanding their supply chains, MSA compliance is a great stepping stone to transparent supply chains that keep both regulators and consumers happy. 

What is the MSA, or the Fighting Against Forced Labour and Child Labour in Supply Chains Act?  

The MSA is formally known as the Fighting Against Forced Labour and Child Labour in Supply Chains Act, and is Canada’s latest legislative bid to fulfill its international commitment to reducing forced and child labour. The Act obliges in-scope Canadian organizations and organizations operating within Canada to compile and submit an annual comprehensive report on working conditions within their supply chain to the government, the organization’s board, and to the general public. This report must be submitted before May 31st.  

Figure 1 – In-scope company requirements for Canadian MSA 

Organizations must report on the steps the entity has taken during its previous financial year to prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity. They also must report on their internal structure, as well as their activities and their supply chains, requiring an in-depth knowledge of each segment of the value network. Furthermore, they must report their forced and child labour policies, their training provided internally, the segments of the business and supply chain that are at risk of using forced and child labour, and any mitigation actions taken in the face of these risks or knowledge of potential human rights abuses and how they assess the effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains. Finally, the organization must include any steps taken to compensate “the most vulnerable families” who are impacted by the elimination of forced or child labour.  

In short, Canada is formalizing the supply chain investigation, risk assessment, and reporting that some organizations aren’t so eager to execute.  

How to create a compliant supply chain 

What companies are missing is that compliance to the MSA can greatly help organizations understand their risks, gain first-mover advantage, and maintain compliance to other, more stringent global regulations.  

Figure 2 – Cause and effect of understanding risk across your supply chain 

To start, you need to gain a full understanding of your end-to-end supply chain. You won’t be able to fully address your forced and child labour risks without knowing how your supply chain operates. However, it can be difficult to gain visibility into global supply chains. That’s why implementing a tool such as Everstream’s Explore, which automatically pulls in real-time risk data, is key to creating a comprehensive map of your value network. Don’t just send your suppliers a standard questionnaire and hope they’re telling the truth. Instead, get accurate, up-to-date information about your suppliers’ working practices, and start mitigating risks early to get ahead of potential issues.  

These tools can also help shape your relationship with your suppliers, giving you the information you need to ask them for key changes, or, if necessary, switch to other third-party providers with better labour practices. 

The MSA only requires companies to report their activities surrounding forced and child labour. However, if your company is found to have used forced or child labour, it’s likely that they will be liable for fines in the context of other global regulations or suffer damage to their reputation.

Greater supply chain implications 

The MSA is one of many global regulations on modern slavery that has come into effect in the past few years. Examples of such legislations include the US’s Uyghur Forced Labor Protection Act, the EU’s Corporate Sustainability Due Diligence Directive, and Australia’s Modern Slavery Act. Clearly, Canada is not the only country bound by international obligations or concerned with lessening human rights abuses in imported, exported, or traded goods.   

So, if your company finds evidence of forced or child labour, it’s time to take serious action, even if the MSA doesn’t necessarily require it. Digging around your suppliers’ working practices and insisting on only using third parties with zero or negligible risk of modern slavery will become the new norm. Don’t let your company be the last to make changes for the better.  

Next steps to be better prepared in 2025  

If you don’t already have full visibility into your supply chain, it’s time to get your supply chain management tools together. Having an end-to-end view, with accurate and real-time data will help you prepare accurate reports for the MSA. It’ll also help you spot potential problems early on, so you can deal with them quickly and efficiently.  

Once you have supply chain data gathering and compliant reporting in place, make sure you’re tracking any mitigation actions you’re taking. Remember, the MSA requires companies to document any forced or child labour-adjacent activities. Furthermore, recording what works and what doesn’t, can help your organization optimize your general supply chain mitigation and management.  

Finally, keep iterating. Supply chain management isn’t a one-time deal, and you can’t just set it up and never think about it again. Every year, when it comes time to submit your MSA report, take note of what worked in the past year and what didn’t, and adjust accordingly.  

In conclusion, if your company is in scope for Canada’s new supply chain act, use it as a stepping stone to greater supply chain visibility. Finding the right tools to help you will be key to comprehensive reporting and keeping compliant. The MSA may not require immediate action, but it will give your organization the tools it needs to mitigate against forced and child labour, benefitting your operations and your reputation.  

Solutions such as Everstream allow companies to: 

• Monitor supplier forced and child labour violations and start ad-hoc risk analysis based on the push incident notification.  
• Automate their supply chain risk assessments, giving your team less manual data analysis and more time to make educated decisions. Optimizing this process early will give your company a competitive edge when it comes to selecting suppliers, transportation routes, and more.  
• Streamline your due diligence requirements by mapping your supply chain and highlighting emerging risks that could impact your company’s compliance status, to facilitate strategic decision-making.