A giant Trojan horse statue holding EU and Canadian flags in its mouth in Toronto on Nov. 4, 2013.Mark Blinch/Reuters
Barnali Choudhury is a professor of law at Osgoode Hall Law School and director of the Nathanson Centre on Transnational Human Rights, Crime & Security.
In recent weeks, the international community has been involved in a flurry of activity in shaping corporate responsibility for sustainability.
For example, at the United Nations Forum on Business and Human Rights, governments, businesses and community groups made progress on refining corporate responsibility for human-rights impacts alongside environmental ones.
Most recently, the Council of the European Union and the European Parliament reached a deal that will oblige companies to engage in human rights and environmental due diligence. This is part of their efforts of moving toward a green economy and meeting the UN sustainable development goals.
Despite these commendable efforts, corporate abuse of human rights and the environment remains a critical issue. In response to the urgency of the matter and the absence of global regulations to curb the misconduct of multinational corporations, several jurisdictions have taken matters into their own hands.
The EU’s soon to be introduced due-diligence directive is the latest example of governments trying to address the issue at the domestic level. And Germany, Norway, the Netherlands, France and Switzerland are just a few of the countries that have already introduced various types of due-diligence obligations that require companies to take measures to mitigate their impacts on human rights and/or the environment.
However, Canada’s response takes a more circumscribed route. Instead of aligning with global efforts to comprehensively define human rights and environmental responsibilities for companies, it has chosen to focus narrowly on forced labour and child-labour issues.
The Fighting Against Forced Labour and Child Labour in Supply Chains Act, also known as the Modern Slavery Act, will come into force in January. It will oblige Canadian companies to report on forced labour and child-labour issues in their companies and penalize them for non-reporting.
While issues of forced labour and child labour are undoubtedly important, Canada’s approach lags behind the broader strides being made internationally. It also fails to address the numerous areas beyond labour in which companies can commit abuses. This is particularly noticeable in relation to climate change, an area in which companies are likely to have the most severe impacts.
Even with Canada’s failure to act, some Canadian companies may soon find themselves obliged to undertake human-rights and environmental due diligence. The EU’s due-diligence directive will be applicable to companies outside the EU with specific turnovers or that are in the supply chains of EU companies. This will require Canadian companies that meet these requirements to engage in due diligence as defined by EU standards.
But Canada’s hesitance to introduce its own due-diligence legislation represents a missed opportunity for leadership; it could have ensured that Canadian companies identify, respect and mitigate human-rights and environmental issues that are important to Canadians.
By not establishing unique standards for Canadian companies, the government has chosen to follow rather than shape the evolving landscape of corporate responsibility. Even if Canada decides to enact due-diligence legislation in the future, it will be constrained by rules already set by the EU and other countries, limiting its ability to craft bespoke regulations tailored to Canadian businesses. This risks Canada being relegated to mere rule-taker rather than rule maker.
In 2021, the government committed to introduce legislation ensuring that Canadian businesses operating abroad do not contribute to human-rights abuses. Despite the introduction of the Modern Slavery Act, victims of corporate abuse at the hands of Canadian companies are left waiting for the government to fulfill its commitment.
The world is forging ahead in defining the expected conduct for companies; Canada’s approach risks leaving it behind.