A Drive Towards Sustainable Supply Chains
On May 3, 2023, the Canadian Parliament passed Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff (Act). This builds on the Extractive Sector Transparency Measures Act 2014 which Canada introduced to impose transparency on the mining industry supply chain into the country.
Both pieces of legislation apply to what we would term non-SME companies –
(a) an entity that is listed on a stock exchange in Canada;
(b) an entity that has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years: (i) it has at least $20 million in assets,
(ii) it has generated at least $40 million in revenue,
(iii) it employs an average of at least 250 employees; and
(c) any other prescribed entity.
In Europe, there are existing supply chain requirements in France and Germany, and these will be strengthened across the EU when the European Commission’s proposed legislation imposing corporate sustainability duties is introduced. The Corporate Sustainability Due Diligence Directive (CSDD). On June 1, 2023 the EU Parliament voted to place additional requirements on the original proposal from the Commission. The Parliament and the Council of Ministers are currently working to achieve agreement on the final wording. It is expected that the new legislation will go further than requiring vendor questionnaires and audits, and make obligatory proactive steps to prevent human rights and environmental violations throughout the impacted supply chains. It will apply to non-SMEs (defined very similarly to the Canadian definition) and require non-SMEs to –
- Identify actual or potential negative impacts on human rights and the environment and implement corrective actions where they exist.
- Integrate due diligence into company policies and management systems.
- Establish a communications and complaints process available to everyone in the supply chain, in particular, employees.
- Provide an annual report on the company’s progress in implementing the required measures.
- Monitor, control and improve the effectiveness of these measures.
In addition, organisations with a turnover of more than €150 million must plan and communicate their emission reduction targets and their contribution to meeting the Paris Climate Agreement.
A previous blog written by Antaris outlined the impact of mining on some of the poorest communities in the developing world. This includes sources of the materials required for “sustainable” industries in the developed world. We can’t have electric vehicles without cobalt and lithium. While the developed world sets more meaningful targets for eliminating fossil fuels, the new supply line legislation should ensure that real improvements are also made in the lives of those involved at the bottom of the supply chain and that the environmental destruction of their homelands is stopped and reversed. Hopefully these legislative measures will have a significant impact on what is now a major issue.
➢ Government of Canada – Fighting Against Forced Labour and Child Labour in Supply Chains Act https://laws.justice.gc.ca/eng/acts/F-10.6/
➢ Canada Modern Slavery Act (frdm.co)
➢ https://www.ebu.ch/case-studies/open/legal-policy/the-future-of-eu-sustainability regulation-ii-the-corporate-sustainability-due-diligence-directive-csddd
➢ The European Green Deal https://commission.europa.eu/strategy-and policy/priorities-2019-2024/european-green-deal_en
For a reminder of some of the issues involved:
➢ For Your Phone and EV, a Cobalt Supply Chain to a Hell on Earth Yale Environment 360 – By Jocelyn C. Zuckerman March 30, 2023
➢ How ‘modern-day slavery’ in the Congo powers the rechargeable battery economy: Terry Gross on NPR
➢ The dangers of cobalt mining in the Congo: Harvard School of Public Health
➢ ‘Here it is better not to be born’: Cobalt mining for Big Tech is driving child labor, deaths in the Congo: Louise Boyle writing in the Independent February 2023