What Canada’s Forced Labour Reporting Law (S-211) Means for Supply Chain Risk Management

Eight Best Practices for Assessing the Risk of Forced Labour in Your Supply Chain

The Act will come into effect on January 1 in the year following its royal assent, so now is the time to prepare to report on your supply chain practices. Consider these eight best practice recommendations to make the process easier:

1. Pre-Screen New Suppliers Against ESG Measures

Evaluate new suppliers on their environmental, social and governance (ESG) positions – including labour practices – by reviewing recent business and reputational insights, legal filings, ESG scores, sanctions and other related intelligence. Consolidate all insights into a single supplier profile that can be accessed by all teams in the organization, versus juggling multiple different sources of information. Also, align intelligence gathering with broader RFx management processes for more holistic supplier reviews.

2. Build Forced Labour Provisions into Supplier Contracts

Ensure enforcement of forced labour and child labour restrictions by building provisions into supplier contracts and tracking the supplier’s reporting progress over time. Instead of treating the contracting process separately, integrate it into your supplier risk assessment process. Do this by centralizing all contract distribution, discussion, retention and review processes and leveraging workflow throughout the supplier contract lifecycle.

3. Calculate Inherent Risk Exposure

Assess suppliers for threats to your organization by capturing, tracking and quantifying inherent risks. Calculate inherent risk based on criteria including:

• Criticality to business performance and operations
• Location(s) and related legal or regulatory considerations
• Level of reliance on fourth parties
• Exposure to operational or client-facing processes
• Reputation

From this inherent risk assessment, your team can automatically tier and profile suppliers; set appropriate levels of further diligence; and determine the scope of ongoing assessments.

4. Inventory All Suppliers to Build Comprehensive Profiles and Maps

Building and maintaining a centralized supplier database is essential to ensuring an effective supplier risk management (SRM) program and meeting the Act’s reporting requirements. The database should include comprehensive supplier profiles and provide role-based access to company contacts, demographics, 4th-party and Nth-party connections, and risk intelligence. This starts with any profiled risk data and external risk information captured during the RFx stage. This will also enable you to identify relationships between your organization and third, fourth and Nth parties to discover dependencies and assess any related exposure.

5. Conduct Targeted Due Diligence Assessments

Instead of emailing suppliers with spreadsheet-based questionnaires asking for labour practice attestations, automate the process with a centralized and targeted web-based assessment. This enables you to centrally review and approve all assessment responses. It also enables you automatically register risks or reject responses and request additional input or evidence. Consider conducting assessments using a supplier risk management solution that it is backed by workflow, task management, and built-in remediation recommendations and reporting – all of which make it easier to meet reporting requirements and deadlines.

6. Remediate Findings

The Act requires organizations to report on measures taken to remediate any forced labour or child labour in their supply chains. Using the results of supplier assessments from step 5, you can make recommendations to the supplier, ask for policy clarifications, and be prepared to report any labour violations to authorities. Supplier risk management solutions will include built-in remediation suggestions for suppliers. It’s important to follow through on this step, since it is essential for mandated reporting.

7. Continuously Monitor Suppliers

Assessments are critical to gaining an insider’s view into a company’s labour practices. However, a lot can happen between annual report submissions. That’s why it is important to validate annual due diligence assessment results with continuous insights into reputational information, adverse media and negative news, regulatory and legal actions, sanctions and more. You can then correlate intelligence from continuous monitoring with periodic assessment results for more unified risk reporting. As noted in step 1, consolidating all intelligence into a “single pane of glass” will optimize your risk analysis efforts.

8. Report

Store and distribute supplier labour policy documents, assessment results, monitoring findings, and remediations for dialog and attestation at the time of reporting. Supplier risk management solutions provide role-based access, enabling you to extend visibility to external auditors who may be examining your due diligence processes and consulting on annual reporting requirements.

Next Steps: Preparing for the Fighting Against Forced Labour and Child Labour in Supply Chains Act

The Prevalent Third-Party Risk Management Platform enables you to address forced labour, child labour and modern slavery risks by automating survey-based assessments of supplier labour controls and validating the results with continuous external monitoring of their real-world practices. With Prevalent, you can:

• Integrate RFx, contracting and due diligence processes into a single solution to address risks across the supplier lifecycle
• Build a central supplier inventory and calculate the inherent risks that suppliers introduce to your environment
• Assess and continuously monitor suppliers for forced labour, child labour and other types of supply chain risks in a single solution
• Deliver automated remediation recommendations to suppliers to reduce residual risk exposure
• Measure suppliers against contractual key performance indicators (KPIs) and key risk indicators (KRIs)
• Leverage templates to simplify regulatory audit reporting to multiple internal and external stakeholders

For more on how Prevalent's S-211 compliance solution can help mitigate forced labour and modern slavery risks in your supply chain, schedule a personalized demonstration today.