Mike Chisholm: New laws may muddy the waters on stamping out child and forced labour

: On a global stage, Canada has a relatively clean reputation when it comes to ensuring fair wages and safe working conditions for its labour force. But as the federal government rolls out its new forced and child labour reporting act later this month, the cracks in our globally-intertwined supply chains will likely expose some dirt.

Under the new act, which came into effect earlier this year, Canadian businesses with $20M in assets or more are required to investigate their supply chains more thoroughly and report any potential links to forced or child labour.While the call for transparency and corporate accountability in supply chains is justified,

Canadian consumers should be aware the optics around a company’s reported involvement in unethical labour practices may not be as they seem. Importers and exporters that meet the new criteria, will now be expected to report publicly on their websites if they’ve come across any potential link to forced labour in their supply chain.

While this is necessary due diligence and not an admission of guilt — misunderstanding of this public reporting requirement may dissuade ethical consumers from buying from businesses that make such disclosures. It's important to understand that as Canadian businesses engage in this new level of due diligence, we can expect many — even those striving to engage in ethical work operations — to come across a connection to forced or child labour in their supply chain.

The reality is, the global supply chain is a vast and complex network made up of opaque layers of subcontractors. Moreover, for many Canadian businesses, particularly smaller ones, tracing every link back to its source can be a near impossible task. I’ve seen companies go as far as to visit the factories they intend to work with overseas to assess conditions on the ground only to later discover reports of child or forced labour, which were not visible on site visits.

It's important to note that under the new legislation companies may be fined up to $250K, not for being found guilty of using forced or child labour, but for failing to file the right paperwork that reports on potential issues. While the intention of eradicating or even dissuading the practice of having children or anyone go to work against their will, particularly in dangerous situations, is noble, the reality is the issue is incredibly hard to police on a global scale.

Just in March, the US federal appeals courts excused Apple, Tesla, Microsoft and Google, from being liable for forced and child labor allegations in Africa where the cobalt mining industry is rife with child labour. In a unanimous ruling, the judge upheld a previous ruling, stating that while it might be true that if Apple, for example, stopped making products with cobalt, it would purchase less of the metal from Umicore, which, in turn might purchase less from Glencore, which in turn might purchase less from CMKK and so on — ultimately, the long chain of contingencies in the tech giant’s supply chain created speculation, not traceable harm.

While I believe it’s important that Canada follows the lead of other countries like the US and Europe in trying to create more transparency in supply chains, it’s equally important for consumers to knowhow Canadian businesses — many of which are already striving to operate ethically — may be affected by the process.

Rather than burdening these businesses with investigating and reporting potential ties, we should support them in undertaking the due diligence and attempting to detangle a messy supply chain that is fraught with unethical practices.

Companies will need to invest in compliance departments, legal counsel, and possibly third-party auditors to meet these new demands, which is a hefty investment. The government should allocate funds for such purposes.

It's crucial for consumers to differentiate between companies making honest efforts to be transparent and those willfully engaging in unethical practices.As someone who’s worked in global supply chain and logistics for decades, I’m acutely aware of the intricate and often opaque systems business must navigate to move goods from one region to the next.

The introduction of Canda’s Forced and Child Labour Reporting Act represents a significant step towards acknowledging the need for a more ethical global trade system. Still, the process of fixing the systemic issues is complex and we should not unfairly penalize businesses that are striving to do the right thing.

This article originally appeared in the Globe and Mail.