Modern Slavery, part two | S2 EP9

Part two of our series on Modern Slavery looks at what Canada is doing to tackle this global issue. After several years on the docket, will Bill S-211 finally become law in 2022? How does it compare to regimes in Europe, the US and Australia? And what’s this about new Bill C-262, that would mandate prevention of human rights impacts abroad? We talk to Alison FitzGerald, Partner in our Ottawa office, and Meaghan Farrell, Associate, also in our Ottawa office, about what all this means for those affected.

For more information:

• Fighting modern slavery and corruption in supply chains: do proposed measures in Canada account for the challenges facing emerging markets?
• Canada enacts legislation to fight modern slavery in supply chains

CPD credits: This episode qualifies for 0.67 hours of Substantive credit in Ontario and 0.67 hours of Substantive credit in British Columbia.

Transcript

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Transcript:
Andrew McCoomb  00:10
Welcome to Disputed, a Norton Rose Fulbright podcast. This is part two of our series on modern slavery legislation, focusing specifically on what Canada is doing to tackle this global problem. If you work in compliance, reporting or otherwise manage supply chain logistics, then you've probably heard of Bill S-211, Canada's draft modern slavery law that has been on the docket now for several years. If passed, the Bill will apply to any Canadian linked entity that produces, sells or distributes goods anywhere in the world, or imports goods into Canada with certain threshold criteria.

Ailsa Bloomer  00:45
After stumbling on several parliamentary roadblocks the last few years, will 2022 be the year that Canada finally has its own Modern Slavery Act? What is this going to mean in practice for the entities that were just described? And where will it put Canada on the international spectrum of supply chain reporting requirements? Also, once this Bill receives Royal Assent, how much further is Parliament going to go? We say this because in March, for example, a second Bill was introduced that would require companies to actively prevent human rights abuses abroad.

Andrew McCoomb  01:20
To talk us through these questions, we welcome back Alison FitzGerald, partner in our Ottawa office who practices international arbitration and advises on economic sanctions, business ethics and anti-corruption issues. Alison was a previous guest in our episode on international parent company liability, a topic which crosses over into today's discussion. Joining Alison, is Meaghan Farrell, an associate and a corporate team who advises businesses on human rights and ESG compliance matters.

Andrew McCoomb  01:57
Alison, Meaghan, welcome to the podcast. So let's jump right in. First, how close is Canada to having its own Modern Slavery Act?

Alison FitzGerald  02:07
I would say we're very close. Bill S-211, as it's now named, I think will pass by the end of this year. It's already passed through every stage of reading in the Senate. It's passed through two levels of reading in the house and it's now in committee with the Foreign Affairs Committee. I anticipate that it'll move fairly quickly through the committee report stage and be back into third reading I would expect in the fall. The main question is whether it'll receive Royal Assent by the end of this year, or whether it might receive Royal Assent next year. And there's a fairly significant impact to that, because it'll determine whether or not the reporting obligation is in effect already, as of May next year, or whether they'll roll it forward by a year.

Andrew McCoomb  02:58
Is it-- Is it fair to say that that sounds like it is a foregone conclusion that legislation in some form is going to get passed, it's just a question of how soon, how imminent?

Alison FitzGerald  03:10
I think so, yes, I mean, there's this legislation has taken several different forms and Bills that have been introduced during past sessions, during the past several years. And for various reasons, those Bills have died on order papers, but this one is moving forward. It has broad support across all parties in-- in Parliament. The only real question that's been raised in debate, certainly in the house, is whether or not it goes far enough in terms of the obligations that are imposed.

Ailsa Bloomer  03:45
So on that point, then what-- what is it going to look like?

Meaghan Farrell  03:49
The main purpose is to promote transparency in the supply chain. So businesses that meet certain criteria are going to have to put out a report that assesses the risk of modern slavery in their supply chain, as well as what they're doing to mitigate and reduce that risk. So it's going to apply to businesses that either a) are listed on a public stock exchange in Canada or b) have a place of business in Canada, do business in Canada, or have assets in Canada. It's not intended to apply to small businesses, so you're only going to have to report under Category B, if you also meet two out of three of either having $20 million dollars in assets, $40 million in revenue, or--, and/or 250 employees in your past two financial years.

Alison FitzGerald  04:39
There's one further category as well that I would flag, an entity that doesn't otherwise fit within that description could be prescribed by regulation. So if the government has some concern that it hasn't caught that the corporate population that it's looking to catch and is concerned about from a reporting perspective, then you could see that the Minister of Public Safety actually designate certain categories of-- of entities by regulation.

Ailsa Bloomer  05:09
Where then does it sit on the international spectrum? Let's say we have the UK Modern Slavery Act at one end, and maybe France’s Duty of Vigilance the other way, where will the Canadian law sit in that spectrum?

Alison FitzGerald  05:22
I would put us somewhere in the middle of the spectrum, but it depends on what piece of the Bill you're looking at as well, some of them go further in terms of what they are prescribing as a requirement, the Duty of Vigilance law, and in France is it goes further in terms of a duty of due diligence. This Bill is framed as a reporting Bill or a Bill containing a reporting obligation. But if you look at what companies are required to report on, you're required to report on matters that in themselves would require, for example, a risk assessment to have been undertaken. And some measure of due diligence undertaken or the report will be, we've taken no steps of a matter that would investigate these risks within our supply chain and I can't see any Canadian company wanting to be the company that is publishing that on its website. So the reporting obligation itself might actually go some distance to encourage companies to actually take steps in the nature of investigating what risks are present within their supply chains, and to start managing them in a way, shy of an obligation and then in the sense of what exists within the Duty of Vigilance, but I think it could push the direction in a more proactive sense in Canada.

Ailsa Bloomer  06:50
And I just want to dig a bit deeper on this difference that you have between the two styles of Modern Slavery laws, because I just want to pause and basically ask about Bill 262. And tell me if I'm completely off-track with it. But there was, at the end of March, a Bill that had its first reading in the Canadian Senate, the title of the Bill, I think, was a corporate responsibility to protect human rights, and that created various mandatory due diligence requirements. So, I kind of want to ask a little bit about your thoughts on that piece of draft legislation and how it will affect what's going on with S-211?

Alison FitzGerald  07:33
Yeah, it's an interesting question. I think, and I don't know what the fate of this particular Bill will be, whether the tabling of this Bill will drive some of the discussions in respect of Bill S-211. And perhaps encourage some broadening of the scope of S-211. The scope of what's been tabled as a private member's Bill, does take a broader look at human rights, as opposed to a narrower focus on forced labour and child labour. One of the things that surprised me a little bit about what is not in Bill S-211, is that it doesn't discuss human trafficking, for example. And yet, that's clearly something that's a part of the Minister of Labour's mandate in this government. And there's an investigation that's underway, as I understand it, under the Ministry of Labour into risks with respect to forced labour, child labour, and human trafficking in Canadian government procurement. So, whether or not some of the Human Rights flavour to this further Bill would influence the content of Bill S-211, or whether it will be a mechanism that continues to push a more aggressive approach in legislating some of these concerns in Canada, I think it remains to be seen, I can't see both of these Bills moving forward, in the sense that it would potentially create an incoherent regime as opposed to a robust single regime that can be administered in a sensible and transparent way.

Andrew McCoomb  09:13
So if-- if we can look at maybe some of the specifics of Bill 211, maybe let's start with its teeth. What are the mechanisms in the Bill to ensure compliance?

Meaghan Farrell  09:25
There are fairly large fines, so fines of up to $250,000, and there is also an element of Director Officer and Agent liability. I think kind of something important to clarify there is that it, those types of fines are imposed where a company doesn't issue a report, where the report doesn't contain all of the required information or if there's false or misleading statements made, that it's not intended, like no one's going to be facing liability for not eliminating all risks of modern slavery and their supply chain in one go, it's really if you're not properly reporting that risk, or if you're misrepresenting that risk.

Andrew McCoomb  10:09
So it's as though the mechanism to ensure compliance with the overall goal of eradicating slavery from the supply chain is a combination of those penalties, if people don't comply with the regime. And then the regime itself is meant to sort of daylight bad practices to ensure that the market kind of solves for people.

Meaghan Farrell  10:31
You see that to in the Senate debates, or the Senate speeches in the House of Commons speeches, so far, the real teeth is supposed to be in the naming and shaming elements. So the idea that Canadian consumers would make different decisions, if they had this information readily available to them.

Alison FitzGerald  10:50
I think what we might see here, on that point, is something similar to what has happened as I understand it in France, where you've got civil society organizations stepping in to fill a void in the Duty of Vigilance, to identify companies based on, for example, searches conducted of their websites to determine what is being reported, what's not being reported. So civil society organizations are kind of creating that kind of shaming list, if you will, or at the very least a tracking list to determine how seriously regulated entities are taking the obligations. I could see something similar happening here in Canada, where an NGO may step in and-- and start looking at what entities are likely to be caught by the legislation and then start looking at what they're reporting, how they're reporting, et cetera.

Ailsa Bloomer  11:44
And if naming and shaming is-- is the primary threat what potential civil liability risk does that create?

Alison FitzGerald  11:55
Well, I think companies have to be very careful about what it is that they're going to say in these reports and have to be in a position to back it up. I think they're at risk of misrepresenting what they're doing to the public. You can imagine with a publicly traded company, if investors are investing in the company, on the basis of the statements made in their report, as an increasing number of investors are doing, they’re investing in accordance with ESG priorities, they're investing specifically in companies that are holding themselves out as not engaging in certain practices, including using forced labour or slave labour. They're looking at the entire profile of a company and their ethical conduct in a broad way, and investing accordingly. So I could-- I could see shareholder suits if it subsequently comes to light that a company's reporting on its risk assessments, a company's reporting on the diligence conducted, turned out to be false. This is-- this is looking at supply chain in a way that companies may not necessarily have considered their supply chain in the past, at least not to this level of detail. And so what I can see officers and directors inquiring into within their companies, is whether or not you're organized in a way to be able to reliably pull the sort of information that they're going to need to pull and-- and prepare and reduce into the form of a report that can be published in which they can have confidence and stand by. And so I think there'll be a bit of a reverse engineering process to figure out what are the first steps we need to take to put ourselves in a position in which we can sign off on these reports, and have them published in-- in the public domain. I can also see officers and directors turning to their insurers to see well, we have a product that will cover us, in the event that something goes wrong, in the event there is a-- a gap in their you know, compliance structure or internal controls. I-- I can see them very much being concerned about that, and-- and rightly so.

Andrew McCoomb  14:22
And it's an interesting exercise. I mean, Meaghan, I think you said it really well. This is sort of about naming and shaming, and-- and especially when we're talking about public companies, by making this a disclosure obligation you're arming the rebels with the information that they need to replace leaders of companies who don't take these obligations seriously. So, when it comes to, you know, mounting an activist campaign to oust a board that doesn't care about what's happening in the supply chain, I mean it, this is all directed around the idea that out of sight out of mind doesn't work anymore for what you're doing abroad and you need to take a genuine interest in what's happening, lest you be taken to task for it by the people who invest in your company.

Alison FitzGerald  15:08
Yeah, I think that's absolutely right. One thing that I can see also happening in-- in reaction to this is that what's not always transparent when questions are raised with respect to the potential presence of forced labour, or child labour, or some kind of risk of human rights violation in someone's supply chain is that large companies in particular will tell you well, it's one thing to get to our tier one suppliers and to ask the questions that we need to ask to understand whether or not at that level, that there is a problem in our supply chain. It's another thing to get to tier two suppliers, to drill down to that level, and even companies that can get to that level, getting down to the level, for example, of a tier three supplier, you know, do you have a problem at the level of someone, you know, picking cotton in a field, you know, are your workers properly engaged? Do you have a risk of miners working in conditions that they shouldn't be working, and it can be very challenging, and there aren't a lot of tools right now available to companies across all industry sectors to be able to engage in this kind of robust scrutiny across their entire supply chain. I just raise that because I think it's, there is a complexity to this, that isn't always appreciated, it's very easy to say, no one wants children, you know, working in horrendous conditions as a part of their supply chain, and no one wants someone to be forced, you know, to be working on a garment that's then going to show up at a retail store in Canada. It's another thing to be able to drill down in order to satisfy yourself at every level in your supply chain, that the risk is not there, or if it is there, it's being managed properly.

Ailsa Bloomer  17:08
And even if you can ask the question, if you can get to the tier three suppliers, there's no guarantee of a truthful answer. And to what extent is the onus on you to verify the accuracy of the information that you got? And it's a really interesting comment that Stuart made in our part one recording was given the difficulty for multinational corporations in drilling down to their tier three suppliers, that are often in developing economies that perhaps don't have the same level of protect worker protections as-- as developed economies do. The risk is so great that they might just end up transferring all their supply chain activities to-- to Canada or to other developed countries. It's interesting. Another interesting element of the Bill, I want to ask you about is search and seizure powers that it provides for. Can you explain what those are? And what the significance of them is?

Alison FitzGerald  18:08
I mean, it-- it's an interesting--, it's an interesting question and the extent of the search and seizure powers in the Bill, in light of the modesty, you could say, is the obligation, is-- is a little bit odd, you know, what is it that would bring the Minister to designate persons, perhaps the RCMP, to carry out a search and seizure of someone's home. And the powers extend to a dwelling place. So this isn't just a dawn raid of a business's head office to look at whether or not they have a draft in place of the report that was due by May 31 in that financial year, but there are extensive powers, search powers as well as seizure powers, including the ability to enter someone's home, to take photographs or make recordings or sketches of anything in place. I'm not entirely sure why the breadth of those powers has been granted in light of the nature of the obligation. Unless this is set up in a forward-looking manner to accommodate the addition of further obligations that might be stronger, that might bring us further in the direction of the French legislation or Dutch legislation.

Ailsa Bloomer  19:39
I think is a really interesting mismatch, you know, as you say, if they-- if this is about, you know, primarily reporting obligations that, relatively speaking are quite modest, why the extent of these search and seizure powers? Do you think it's possible that any use of these powers could lead to any charter type claims or constitutional actions?

Alison FitzGerald  20:05
I think absolutely, you could, in part because of the sort of mismatch, or apparent mismatch in any event between the scope of the powers and the nature of the obligation, you'd have to wonder on what basis that the RCMP, for example, would be seeking an Ex-Parte Warrant to search someone's house in connection with an alleged failure to satisfy a reporting obligation. And I think this potentially takes on further significance in the context of where we are post-pandemic, with so many people continuing to work from home that many, many individuals may be subject to agile work arrangements, they would have documentation potentially, in their homes, they would be working from an entity-issued lap-laptop, for example. You could in theory, if there were a basis on which it would make sense to search someone's home for evidence of failure to report on what the entity has done.

Andrew McCoomb  21:16
I gather as well, that in the process of being amended over time, the-- the Bill we're talking about has been amended to include expanded reporting requirements for government institutions. Can you give us a sense of why those amendments would have been made and why Canadian businesses should be mindful of them?

Meaghan Farrell  21:42
Well, it seems there have been, there are kind of two primary reasons why government institutions were included this time. So primarily, because there's the idea that the federal government has a duty to be consistent. So if you're going to apply this set of standards to the private sector, it's not unreasonable to expect that the federal government is going to take the same steps. And then as well, as we saw with orders of medical supplies during the pandemic, the federal government also runs the risk of themselves, of importing goods made with forced labour.

Ailsa Bloomer  22:18
It’s interesting, because in the UK, Stuart was saying in our previous episode that the UK had, has made a similar expansion to the National Health Service. Now, as I say, it's the same reasons as Canada, you know sourcing medical supplies and not-- not knowing what is in the supply chain for sourcing those products. Is there any significance of these additional government reporting requirements for the private sector? I'm thinking specifically of public-private, combined ventures?

Alison FitzGerald  22:49
I think there could be certainly, I mean, there could be reporting by government institutions that implicate Canadian businesses in a way that could shed light on the practices of a Canadian business to the extent they are a part of a risk that-- that's been flagged, then that could train scrutiny on that Canadian business. You know, it's entirely possible that that Canadian business would not be caught by the definition of entity in the Act, or in the Bill as it currently is. But then query what that-- what that organization would need to do if it was flagged as a risk to government procurement of goods. Again, it would present potential liable--, I would think liability risks to the company, again, even if they're not defined as an entity here but going back to the earlier discussion of what public companies are facing in terms of the appetite of investors and what they're looking for in the companies they're investing in.

Ailsa Bloomer  23:58
And then also, I think, for government procurement contracts, even though the-- the Bill at the moment doesn't apply to small businesses as Meaghan noted, if you're the government and you're tendering for some work, you're not going to look at those small businesses, if they don't have the appropriate procedures in place for the governing body to comply with this requirements under the Act.

Alison FitzGerald  24:18
Well, I think what you'll see is in government contracting, there will be-- there will be requirements passed through in all of their contracts, right? They're going to attempt to manage their risk, I would think through the contracting chain.

Andrew McCoomb  24:32
So Alison, when you were last on this podcast, we talked about parent companies being liable for conduct by their foreign subsidiaries, particularly when it comes to human rights abuses as part of their supply chain operation. So what effect if any, do you think modern slavery legislation will have on parent company liability risks and might we see statutory causes of action or other kinds of liability for parent companies develop under modern slavery laws?

Alison FitzGerald  25:00
I would say yes to that last question. And in part, you can already see the-- the model of what that might look like in this new private member's Bill 262, because it actually contains a proposed cause that would set up a private right of action with respect to the obligations in the Bill. So that's certainly something that is being debated in Parliament. I'm not sure how close we are yet to that, I can't--, I can't see that being added to Bill S-211 before the end of this year, although I think it's something that could move forward, eventually. On the-- on the parent company liability side, though, I think where the cross-section will be in the short term, is that some of the cases over which Canadian courts have taken jurisdiction, presenting claims by foreign plaintiffs, have turned on policies and representations that have been made by parent companies seated here in Canada in respect of their foreign operations, right, and including in respect of companies in their supply chain. And those-- those representations, those assertions on behalf of the Canadian company of their policies and the requirement to abide by those policies, including in the foreign jurisdiction in terms of how a mining project is being carried out, or in terms of how an infrastructure project is developing. They've been the basis or part of the basis on which Canadian courts have seized jurisdiction over foreign plaintiff claims when-- when things go wrong abroad. So I can see this reporting obligation in Bill S-211 potentially presenting some risk, again, to companies with respect to what risks they are identifying whether those map to risks that are in a position to materialize in the real world. And then I can see foreign plaintiffs looking at the reports that these entities are publishing on an annual basis and seeing whether there's something in the report on the basis of which they can rely, in order to bring a claim, a civil claim against the Canadian company here in Canada. So I, you know, it potentially becomes a little bit circular. And I think one of the things that we had talked about in the last podcast on parent company liability is that, you know, these-- these compliance policies adopted by Canadian companies in the nature of ESG, there are  chain, what the expectation is of ethical business conduct, of respectable business conduct, of business conduct, that is consistent with how we expect to be treated here in Canada, and would like to convey to how an operation abroad is going to conduct itself within their supply chain. But they-- they present risk, there's it's a direct line back up to the Canadian company. And I don't think there's any way of avoiding that. And I don't think Canadian companies should shy away from it. But it comes back to one of the points we-- we began with here is that Officers and Directors of Canadian entities that are going to be subject to this legislation, do need to be careful and diligent in assessing the risk of forced labour in their supply chain and child labour in their supply chain, and careful about how that risk is articulated and careful about how any due diligence that's conducted is articulated in the reports, in a way to ensure that they're complying with the spirit of the Bill, and they're moving forward with their own agenda to conduct themselves ethically without necessarily inviting foreign plaintiff claims.

Ailsa Bloomer  29:27
And I mean, not to still fixate on Bill 262 because I know it's not the one that we're expecting to come into law, imminently, but it is interesting to note in there that there's a five year limitation period as well. So it's an amendment of the standard two year limitation period to five year for certain claims. And also it looks like the people who could bring a claim under that Bill, it's an expansion of the of those that might have standing right, that's what it looks to me. So you've got an increased pool of potential claimants and an increased limitation period, but this is the-- this is not the Bill that is coming or so that we expect to come into force imminently. So it's at the moment just an academic point, I guess.

Alison FitzGerald  30:14
Well, it's one of the reasons why this Bill won't pass. It's too broad. It goes too far. And frankly, it appears punitive in a way that I don't think Parliament has any way of legislating at this stage. I think there is an appetite, to work with Canadian companies in order to bring everyone forward to a similar standard. And again, I think it's one of the reasons why the government has said they're going to walk the talk, they're going to ensure that government institutions also comply with the view of raising up the general standard of ethical business conduct in Canada and ensuring that Canadians are not inadvertently, for example, importing goods, or engaged in the production of goods, using forced labour or child labour in a way that we would find unacceptable here within Canada.

Andrew McCoomb  31:10
Are there any industries that you guys think are gonna get hit harder than others by this kind of law?

Alison FitzGerald  31:17
Well, there are already some that are, I think, more exposed, and already are more of a focus of inquiry, like the textile sector, right. And it's not because there's anything inherently evil about the textile sector, but in terms of how clothing is made, supply chains are all over the world. Right down to you know, the cotton that's grown in a field, the spinning of the cotton that's picked, it's combing, it's processing, the knitting of fabric, the assembly, there are parts of supply chain that are moved all around the world, and in order for garments to be made affordably, largely for purchase here in the Western market, and many of those steps in the supply chain are going to be seated in low cost jurisdictions.

Meaghan Farrell  32:13
The extractive industry as well. We do already have the Extractive Sector Transparency Act, and probably also agriculture and seafood.

Andrew McCoomb  32:22
And it's interesting talking about extractives, what I think but mining is being relative to the tech sector, given how many mine components find their way into a cell phone or another electronic device, I mean, like you guys were talking about in second tier and third tier elements of a supply chain. It's not just an assembly factory putting the pieces together, but it's how those components come out of the ground and turn into the sub components that turn into chips, that to turn into phones, that turn into you know, et cetera, et cetera, et cetera. So there is such a big cascading effect from channel industries, like you're talking about.

Alison FitzGerald  33:03
I think that's right. But I you know, you could have-- you could--, you could--, you could have a fairly easy answer to that question of, okay, well, who's what industries are going to be most impacted? What industries may have the greatest risk, right, so the criteria in the Bill will sweep in any number of entities, some of those industry sectors will likely present very little risk. And so the reporting obligation won’t-- won't present much burden. But there are certain industry sectors that are known to again in part of where they operate in the world and whether they're heavy reliers on manual labour as opposed to some kind of machination. They're at a higher risk as a result of the industry that they're in. So if you were to take a look at the jurisdiction of the Canadian Ombudsperson for Responsible Enterprise, the CORE that was set up a few years ago now. The CORE was set up with an initial jurisdiction over a handful of industry sectors, namely the garment sector, mining and oil and gas. I could see over time the CORE’s jurisdiction to mean the CORE project is successful and is seen to be successful, that will likely expand but I think, given that those industry sectors have already been identified for the CORE, to receive complaints as well as to investigate in terms of understanding risks of violations of human rights in supply chain and those industry sectors. You could probably see a crossover of that in terms of the industry sectors that are going to be most closely scrutinized with respect to their reporting under Bill S-211.

Ailsa Bloomer  34:57
That's also why the absence of human trafficking in the Bill is also interesting because that would be another area that would catch other-- to other sectors other--. For example, Stuart was talking about the financial sector and the human trafficking element being particularly significant to banks, who then have to monitor, well, are there lots of bank accounts being opened up on one day in this area, or this small amount is going backwards and forwards that are indicative of humans being trafficked. So I guess the absence of that wording in the Canadian Act is-- is interesting and significant.

Alison FitzGerald  35:30
Yeah, I think that's right. I, as I mentioned before, I'm-- I'm a bit surprised that human trafficking has not made its way into the Bill. Maybe it will be at some point in the future. But I mean, it's clearly a subject that the Canadian government is looking into, and is alive to, with respect to the risk it poses to supply chain.

Andrew McCoomb  35:58
So for our listeners who are thinking about this legislation coming on-- online, what are your practical tips for them to get ready for it coming into force.

Meaghan Farrell  36:08
Some businesses already have these in place or are working on putting them in place, but we're seeing more and more human rights or anti-modern slavery policies. A lot of other companies are developing checklists to use with downstream suppliers. And Alison already mentioned this actually, in the context of government RFPs but we have been seeing a few companies coming to us looking for kind of template, anti-modern slavery provisions to work into contracts with third downstream contractors or suppliers. So for instance, like representations that a supplier does not and will not engage in modern slavery practices, as well as like covenants even that a supplier will provide the purchaser with all information they need to comply with their own modern slavery requirements. And that they’ll undertake to get that same information from their own downstream suppliers. So probably going to see more and more of that if this Bill goes into force.

Ailsa Bloomer  37:12
How affected do you think having an indemnity provision in your contract with the supplier to the effect that if we've asked you about forced labour issues, and you give us an-- information and we have made a statement based on that information, that turns out to create a liability for us, you're gonna indemnify us for that liability. How effective do you think that kind of provision might be?

Meaghan Farrell  37:34
I mean, I suppose I think it’d be as effective as any other indemnity you would have in a downstream contract. But I do think it would be held for the purpose of your own reporting requirements to say, okay, this is something we've done to mitigate this risk in our supply chain.

Alison FitzGerald  37:50
And I think that indemnity clauses are useful because they can address some of the financial risk of a company relying on a representation that turns out not to be true. They typically don't really address reputational risk, right? What's the reputational damage of it turning out that you have a poison pill of sorts in your supply chain? I think one of the-- one of the steps that Canadian companies need to take at least those that assess that the Bill is likely to apply to them, that they will have a reporting obligation. So if they haven't conducted a risk-- a risk assessment with respect to the risk of forced labour or child labour in their supply chains, then that is the first step I think they should be taking. You can only manage so much through contractual clauses. And I'm seeing a lot of language in various contracts as well, seeking representations or even attestations with respect to whether or not there's, you know, child labour or forced labour used within a suppliers chain. But I think, you know, that's, that's a bit of a Band-Aid, what really is required here is for companies to actually conduct their own risk assessment. And that requires active engagement, that requires a dedication of resources, this is going to cost companies that particularly initially, and then I think there will have to be a sort of cyclical refresh of the risk assessment anytime there is a material change in their supply chain. And I think, you know, once they set up a system that allows them to monitor material changes that might introduce a risk that has not previously been caught, and that might be through imposing a regular reporting obligation on the suppliers, at the very least their-- their tier one suppliers. Then it helps to share the burden a little bit as well on the entities that ultimately have to report here in Canada. For multinationals that already have this obligation and other jurisdictions, I think they're going to have an advantage because they've already had to figure it out. And even if you know, the obligations are a little different, they might--, they might consider they have a lesser obligation here in Canada if they had a positive due diligence obligations someplace else. But most of these pieces of legislation require either the guts or the reporting or both. The reporting is a fairly easy piece, if you've already undertaken the guts of the operation to carry out a robust risk assessment, to carry out proactive due diligence of what's happening within your supply chain.

Ailsa Bloomer  40:41
That's something that Abi McGregor said in our previous episode about multinational corporations complying with various modern slavery regimes, and basically the answer being, you know, put yourself at the highest and most demanding regime, and you'll fall in line with all the others.

Alison FitzGerald  40:59
That's taking the gold standard approach, which is what many companies do with respect to anti-bribery legislation. They'll identify what is the highest bar that we have to meet and all the jurisdictions in which we face some legal exposure. And that's, that's what we're going to adopt internally as the standard for conduct within our company. 

Ailsa Bloomer  41:19
Alison, Meaghan, thank you very much.
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