In Chains: The Need for Supply Chain Transparency

New legislation aims to eliminate material suppliers bidding on the backs of slave labour.

As unbelievable as it may seem, look around you right now and likely something you touch or use daily is partially or wholly the product of forced labour. It’s telling that in 2020, the Canadian mineral extraction company Nevsun Resouces opted for a landmark settlement rather than face three workers in a Canadian court who alleged torture, slavery and crimes against humanity during construction of Nevsun’s extraction facility in Eritrea. This case, along with growing waves of evidence, alerted the Canadian government to significant (and costly for businesses) gaps in its legislation, gaps it aims to fill with the newly passed Bill S-211, Fighting Against Forced Labour and Child Labour in Supply Chains Act, an Act that will directly impact the Canadian architecture and design industry by introducing stringent supply chain transparency and reporting requirements aimed at rooting out modern slavery and sexual exploitation of children and adults. Abhorrent as it is to contemplate, the International Labour Organisation reports modern slavery is presently endemic to the construction of the built environment globally and Canadian firms are no exception. Given the lack of response to industry queries in researching this article, neither, it appears, are they ready for the changes Bill S-211 will wreak when it comes into force.

Photo by Johannes Pokorn on Unsplash

Intense Scrutiny Coming Soon to a Supplier Near You

Imagine a new supplier coming to your office and impressing you with the look and feel of new upholstery swatches at prices per square foot that are quite simply unbeatable. But before signing be aware. Coming into force January 1, 2024, the new legislation affects all entities meeting certain criteria in size, revenue, and presence in Canada, warns Dentons, a global legal practice. The Act places a responsibility on companies to actively assess, report, and reduce the risk of forced and child labour in their supply chains, with hefty penalties for non-compliance. For Canadian designers and the product makers they work with, understanding this legislation’s impact is key to ensuring ethical sourcing and maintaining their brands’ reputations.

The urgency of this new legislation is underscored by the alarming rise in global forced labour, with a reported 27.6 million individuals trapped in 2022, up by 2.7 million since 2016. This surge, according to the International Labour Organization and Walk Free, is largely due to the far-reaching impacts of the pandemic, political instability, and hazardous migration. And while the Canadian government’s actions are intended to leverage public reporting and sanctions for greater transparency, critics of the new legislation question whether it goes far enough. “Bill S-211 offers us a starting point,” says Kam Phung, assistant professor of Business & Society at the Beedie School of Business, Simon Fraser University. “But if we want to have a serious chance of addressing forced labour and other forms of human exploitation, we need legislation that goes beyond disclosure (i.e., transparency and reporting) and requires real action from business to both remedy any human rights violations and change the practices that they embrace in the first place that enables modern slavery to thrive, such as business models centred around the lowest cost or policies/practices favouring the lowest bidder.”

More broadly, academics point to the inadequacies of earlier supply chain transparency laws, such as those enacted in California, the U.K. and Australia to argue that these laws often result in superficial reporting focusing more on procedural aspects rather than the actual outcomes of anti-slavery efforts. Such a shallow approach has failed to eradicate forced labour and exploitation from prevailing business models, underlining the need for a more robust, outcome-focused approach.

As Canada’s Act aligns closely with these earlier transparency models, its potential effectiveness in addressing modern slavery in the supply chain is up for scrutiny. “The prospects for addressing the key flaws of the global production system – including forced labour and slavery, or environmental destruction – seem increasingly limited due to the shortcomings of the audit system,” said Genevieve LeBaron of Simon Fraser University and Jane Lister of the University of British Columbia, in an article published in Review of International Political Economy.

The professors argue that audits, despite their popularity, often serve to reinforce private interests over public good, rather than driving tangible improvements. The audit system’s weaknesses, rooted in design, power relations, and implementation, stabilize, legitimize and reinforce endemic supply chain problems, while providing an illusion of certainty and control. This, they say, helps companies fend off more stringent forms of regulation.

Canada’s new legislation, despite being a worthy step in combating modern slavery, may fall short in addressing the crux of the issue. The legislation, largely focused on corporate transparency and reporting rife with conflicted interests, lacks elements critical to this fight, such as imposing a broad due-diligence obligation on companies to actively detect, prevent, and mitigate forced labour, establishing grievance mechanisms involving workers and unions at every chain link, offering a clear civil remedy for victims, and creating a public supervisory agency. Furthermore, the Act’s potential inability to address the international scale of the problem is concerning, with six G20 nations, including key sources of Canadian imports, topping the list of countries with high incidences of modern slavery.

Simply, Canada’s domestically focused law may be insufficient, and critics argue for a more comprehensive, globally oriented, and proactive approach to effectively combat this pervasive cross-border issue. As Phung reminds us, “When designing projects, we need to think full scope and be cognizant of the social impact of whatever is being built. Imagine who will be bringing your projects to life at all stages of development and the supply chain as well as the work conditions that they will face.”

What’s In It for Business Besides a Clean Conscience

In terms of opportunities, a deliberate commitment to eradicating forced labour from supply chains can significantly enhance a firm’s reputation. Clients, investors, and the public are becoming more aware and concerned about the ethics of labour practices. Adopting a transparent, proactive approach can position a firm as a leader in social responsibility, potentially attracting more business and positively impacting the bottom line. Moreover, firms that prioritize ethical supply chains can pre-emptively mitigate the legal risks of non-compliance.

As laws like Canada’s Modern Slavery Act evolve and become more stringent, firms with established ethical protocols will be ahead of the curve, saving potentially significant costs associated with legal penalties and necessary restructuring. Reputational damage is a major concern. The discovery of forced labour within a firm’s supply chain can lead to negative press coverage, client loss, and a drop in share value for public companies. The damage can be long-lasting, tarnishing the company’s brand image. Non-compliance can also invite negative publicity, further damaging reputations. Finally, unethical supply chain practices can contribute to operational risks. The reliance on forced labour often correlates with substandard working conditions and practices, which can impact product quality and lead to delays, jeopardizing client relationships and contracts.

While the route to ensuring supply chain transparency and ethical labour practices may initially seem challenging, the long-term benefits of risk mitigation, improved reputation, and legal compliance make it a strategic choice for Canadian designers and architects in a competitive global market. It is essential to remember that transparency and commitment to ethical practices are no longer just optional: in Canada, they’re the law.

Bulent Akman is an Integrated Communications & Academic Writing consultant based in Warsaw, Poland where he teaches academic writing; audiovisual publishing; and writing for design purposes.


13 Questions Now

If Canadian designers and architects are serious about combating modern slavery in their supply chains, here are key questions to ask suppliers in order of ease of implementation and verification:

  1. Are employees trained to self-audit?
  2. What’s your auditing and certification expense?
  3. What’s the role of auditing firms in your supply chain?
  4. How are auditors paid to avoid conflicts of interest?
  5. How are audits structured to spot labour standard violations?
  6. How do you detect labour violations in non-audited suppliers?
  7. Are you developing alternatives to supply chain monitoring?
  8. Who helps develop these alternative monitoring methods?
  9. Can you publicly share your worker condition improvements?
  10. Is there oversight for your auditors ensuring accountability?
  11. Do you comply with human rights due diligence laws?
  12. Do you report labour issues?
  13. Can you make audit reports public for better scrutiny?

These questions can guide designers and architects in determining the ethical commitment of their suppliers, promoting transparency and fostering improvements in worker conditions.