Canadian industries are resisting the scheduled launch of the Modern Slavery Act in the country in January, which aims to combat forced labor and child labor in supply chains, as clothing and mining trade groups have said the government has failed to clarify the details of the law's requirements.

The law, which was passed in May, seeks to push companies to provide greater transparency regarding their supply chains to avoid what critics say amounts to modern slavery. The new measure will take effect on January 1, 2024.

However, lobbying groups including mining companies and garment manufacturers warn that the noticeable lack of clarity surrounding the rules could lead to unwanted penalties and prevent vital goods from entering Canada.

The Canadian mining industry was originally among the early supporters of the government initiative, which aims to put Canada on par with Australia and the United Kingdom, which implemented similar laws in 2017 and 2015, respectively.

Ben Chalmers, Vice President of the Canadian Mining Association, said in a recent interview: "We are not arguing or opposing the principle of what this bill seeks to achieve, or the details of what this legislation includes."

Under the new law, companies that violate it face penalties of up to $250,000, reflecting an increased focus from global investors on ethical and social governance issues.

A survey conducted by consulting firm KPMG in December 2022 of 200 Canadian companies regarding ESG performance showed that only 50% of companies disclosed their management approach and performance regarding respect for human rights. Automotive, energy, and transportation companies were the most transparent in disclosing their standards on human rights issues.

A spokesperson for Canada's newly appointed Minister of Public Safety said that the department is "working urgently" to implement the law by January and that companies must submit their first reports by May 31, 2024, or earlier.

Bob Kirk, the executive director of the Canadian Apparel Federation, told Reuters that an extension is in everyone's best interest as there is no clarity on what exactly those "rules" are.

Kirk also added that the law amends the Canadian Customs Act to prohibit goods made from child labor; however, there is no clarity on how this will be enforced.

Real Concern:

John McKay, a Canadian Liberal MP who moved the bill, expressed his concerns about the implementation.

McKay told Reuters, "It is the federal government's duty to be ready to receive submissions and provide guidance on what the filing should contain." "I don't think the government is ready yet."

He added that there has been a lack of reports and procedural guidelines, which he said are indicators that the government is not prepared to meet the rollout date in January. However, he expects most affected Canadian companies to comply with the new rules.

In May, the Canadian Corporate Ethics Monitor began an investigation into Nike and Dynasty Gold Corp regarding allegations that the two companies benefited from forced labor in the Xinjiang region of China within their supply chains.

Both companies have denied using forced labor in their supply chains. The government investigation is still ongoing.

Law firms have begun advising their clients to prepare their paperwork regarding their supply of goods from various parts of the world, but they are also concerned about client expectations from the government.