Canadian Lawyer InHouse

June/July 2021

Legal news and trends for Canadian in-house counsel and c-suite executives

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10 www.canadianlawyermag.com/inhouse MODERN SLAVERY Addressing modern slavery in supply chains should be top of mind In-house counsel can help navigate this increasingly critical legal issue FORCED LABOUR, child labour and human trafficking in Canadian businesses' supply chains is becoming an increasingly critical legal issue. Over the last year, Stephen Pike, a partner at Gowling WLG, has seen companies shift to a greater understanding that "supply chain issues, especially with respect to human rights, have become much more of interest to stakeholders including consumers, investors and asset managers. "During COVID, there has been massive supply chain instability. And, as businesses move toward more stability, there's a big push to ensure these risks are being addressed," says Pike, senior legal adviser to global and Canadian businesses. Many companies in Canada are proactively addressing the issue by moving to greater transparency and providing disclosure on a voluntary basis, but they are looking for a more level playing field in terms of legislation to require such reporting by all companies — or take it a step further with "mandatory human rights due diligence legislation, as we've seen come on stream in France and the Netherlands and is being proposed in the EU this year," Pike says. While Canada doesn't have modern slavery legislation yet, on July 1, through the implementation of the Canada-United States-Mexico Agreement, the importation of goods into Canada made in whole or in part with forced labour was banned. Pike says companies want to ensure they're in compli- ance with the Tariff Act when importing goods into Canada and communicate that to their stakeholders. There's a road map to move forward that includes adopting principles and policies at the board of directors level that prohibit modern slavery (an umbrella term that includes: forced labour, child labour and human-trafficked labour) in the business and its supply chain; conducting risk assess- ments of operations and supply chains with continual monitoring; training employees and maintaining effective communication with suppliers; and developing and implementing a remediation policy. "We're seeing incredible amounts of money going into ESG funds, investors are asking for more disclosure and that's a big driver for companies to provide more information about the human rights issues that may be occurring in their business — even if there is no Canadian modern slavery legislation that would require such disclosure," Pike says, noting that proposed Canadian legislation (Bill S-216) has passed second reading in the Senate. "There's a huge impetus from the investor community." There's also pressure from Canada's trading partners. For example, the United States has regulations prohibiting the use of forced labour and human-trafficked labour in the provision of goods and services in contracts with the federal government and requires companies doing business with it to have to certify that no forced labour or human-trafficked labour was used in the provisions of those services or goods. "That's a huge step forward in the U.S. and that's the law," Pike says. "That puts a huge amount of pressure on companies that want to do business with essentially the single largest consumer in the world." In-house counsel should be looking ahead for regulatory risks such as new or strength- ened regulations coming into force; be aware of reputational risks by keeping up with trends in class actions, shareholder activism and requirements of lenders and investors in terms of reporting; and be attuned to operational risks and supply chain instability that could arise out of actions of suppliers, import controls, political issues or trade restrictions. "These issues are becoming more and more important every day," Pike says. "But in-house counsel are in a great position to help their organizations." As an international, sector-focused law firm with more than 1,500 legal professionals around the world, Gowling WLG is here to help you overcome your complex business challenges. Our legal teams are in tune with your world, your sector and your goals. "Supply chain issues, especially with respect to human rights, have become much more of interest to stakeholders including consumers, investors and asset managers." Stephen Pike, Partner, Gowling WLG

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