Canada is lacking a coherent policy approach to address business and human rights as well as the risks of modern slavery in corporate supply chains. Closing this gap should be a priority for the Canadian government to keep up with our global peers and maintain competitive advantage for Canadian business.
An important first step would be to develop a national action plan on responsible business and human rights.
Such a plan would bring Canada in line with Britain, Australia and the United States, all of which have either introduced legislation or developed action plans in line with global standards.
There is an increasing expectation that businesses should respect human rights and take concrete, actionable steps (such as due diligence, monitoring and reporting) to prevent human rights abuses in company operations and provide remedies if such abuses take place. Many Canadian companies do substantial work to ensure this happens.
However, there is little or no unifying direction from the federal government.
In 2011, the United Nations Commission on Human Rights adopted the Guiding Principles on Business and Human Rights, which codifies the concept of corporate respect for human rights. The U.S., Britain and several European countries have developed national action plans for implementation of this standard.
In 2015, Britain introduced the Modern Slavery Act, which requires businesses of a certain size to report on how they manage the risk of slavery in their global supply chains. While no particular management approach is prescribed, the act of reporting on how companies take steps to address risks of human trafficking, debt bondage and forced labour drives market pressures to adopt best practices. A similar legislative approach has been adopted in California and will likely soon be adopted in Australia.
But the Canadian government has not yet followed suit.
While human rights and Indigenous rights have been raised by the government as an issue for discussion in the context of the North American Free Trade Agreement negotiations and is regularly addressed in international trade agreements, there is no public policy strategy to address the human rights impacts of Canadian business globally and in line with international standards. The United Nations Working Group on Business and Human Rights recently commented on a lack of coherent policy in Canada on this topic – underscoring the reputational risk of not addressing it squarely.
Promotion of good practices will be a net benefit for Canadian companies as it will set a baseline for behaviour that meets the responsible business and human rights expectations of investors, financiers and customers. These market actors increasingly condition access to capital and markets on sound human rights practices.
There is also an important role for government to promote consistency in setting a standard of acceptable conduct to protect the reputation of Canadian business globally. Since 2009, Canada has had in place a corporate social responsibility strategy for the extractive sector, which is intended to preserve and enhance the reputation of that industry globally. These mechanisms were innovative for their time but are not keeping pace with global developments. The current policy approach is overly focused on the mining sector, ignoring global supply chains that cut across industries.
The current strategy has also failed to address legal uncertainty regarding the remedy of human rights impacts. This has resulted in costly lawsuits being filed in Canada concerning alleged human-rights impacts outside of Canada.
A national strategy should give thought to how the issue of remedy should be dealt with and whether the courts are in fact the right venue to address these issues. The experience of other jurisdictions strongly suggests they are not. Any national action plan would need to grapple with whether new, creative approaches are needed.
Canada has an opportunity to again be a world leader on the topic of responsible business and human rights. A national action plan will put Canada on a path to promote global competitiveness and enhance Canada’s reputation in the field of human rights. It is much needed and long overdue.
This fall, public hearings hosted by the federal government will consider how to deal with the issue of child labour and will inevitably consider the topic of human rights in supply chains.
These hearings will hopefully initiate a dialogue that will move Canada in the right policy direction.
MICHAEL TORRANCE is a lawyer with Norton Rose Fulbright, Toronto.