Business & Human Rights 2025 Comparisons

The Canadian government has not yet developed a national action plan (NAP) on business and human rights as contemplated and encouraged by the UN Working Group on Business and Human Rights.

In 2022, Canada introduced the 2022 RBC Strategy, a five-year strategy that contains measures to support Canadian companies in integrating leading responsible business practices and to position Canada to advance policies and practices within the international responsible business conduct ecosystem. (For further detail, see 2.2.7 Soft Law on Business and Human Rights).

To date, Canada has not introduced mandatory human rights due diligence legislation. However, such legislation has been under consideration at the federal level for a number of years.

The previous Canadian Parliament, led by a minority Liberal government, included among its priorities a commitment to enact broader human rights due diligence legislation by 2024 to ensure that Canadian businesses operating abroad do not contribute to human rights abuses and violations. The federal government undertook consultations on how to develop mandatory human rights due diligence legislation in October 2023.

A 2021report by the Standing Committee on Foreign Affairs and International Development on the mandate of the Canadian Ombudsperson for Responsible Enterprise (CORE) recommended that the Canadian government introduce legislation requiring Canadian corporations to conduct human rights due diligence to identify, prevent, mitigate, and account for any potential adverse human rights, environmental and gendered impacts they may cause throughout their supply chains and operations.

A report published in September 2023 by the Standing Committee on International Trade, entitled “Canadian Mining and Mineral Exploration Firms Operating Abroad: Impact of the Natural Environment and Human Rights”, recommended that the “[g]overnment of Canada, in consultation with relevant stakeholders, consider new or modified strategies, policies and other measures that would further promote and enhance […] responsible business conduct in the foreign operations of Canadian firms”. In its response to the report, the Canadian government emphasised that the government initiatives in this area are ongoing and that the government is committed to, among other things, “developing effective measures to enhance Canadian companies’ due diligence”.

It is not yet clear if the newly elected Liberal minority government (which, under a new Prime Minister, replaces the previous Liberal minority government) will prioritise mandatory human rights due diligence legislation as part of its mandate. However, it is anticipated that mandatory human rights legislation will continue to be discussed and promoted in the next Parliament by the government and/or through Senate and private member legislative initiatives.

In accordance with Canada’s obligations under the Canada–United States–Mexico Agreement (CUSMA), on 1 July 2020, amendments to Canada’s Customs Tariff and the Schedule to the Customs Tariff took effect. These amendments prohibited “goods mined, manufactured or produced wholly or in part” by forced or compulsory labour (regardless of country of origin) from being imported into Canada.

On 1 January 2024, the import prohibition was expanded to apply to goods mined or manufactured by child labour (regardless of country of origin), with the coming into force of the Supply Chains Act. Compliance with this import prohibition requires companies importing goods into Canada to conduct ongoing due diligence and review of their supply chains to ensure the absence of forced labour at each step of production.

This initiative forms part of the government’s efforts to strengthen compliance with international human and labour rights in supply chains. It also aligns with Canada’s ongoing commitments under CUSMA.

Strengthening Enforcement of Import Ban – Measures Under Consideration

In the autumn of 2024, the Canadian government undertook consultations to consider potential new measures to strengthen the enforcement of Canada’s ban on the import of goods produced by forced labour, in alignment with Mexico and the USA. These consultations, as well as the public consultations held earlier in October 2023 on the eradication of forced labour from the country’s supply chains through mandatory human rights due diligence and other measures, form part of the government’s broader effort to strengthen compliance with international human and labour rights in supply chains.

A number of measures are currently being considered by the Canadian government to strengthen Canada’s ban on imports of goods from forced labour. One such measure is the publication of a list – informed by ILO indicators and other sources – of “goods at risk of forced labour”. The list would identify those goods and their origin countries with a prevalent risk of being produced by forced labour and would likely take a similar form to the US Bureau of International Labor’s List of Goods Produced by Forced Labor or Child Labor.

The Canadian government is also considering amending legislation to require importers to provide evidence in order to rebut a presumption that goods from a “goods at risk of forced labour” list have been manufactured using forced labour or child labour. The creation of such a “reverse onus” on importers for various categories of goods from specific countries would significantly expand Canada’s anti-forced labour regime and the due diligence and supply chain traceability requirements. A precedent for such a reverse onus requirement is found in the regulations currently in force in the USA under the Uyghur Forced Labor Prevention Act, which creates a reverse onus on goods sourced from the Xinjiang Uygur Autonomous Region of China.

Penalties for Non-Compliance

Penalties for non-compliance under the Customs Act may include fines of up to CAD500,000, imprisonment for up to five years in jail, or both.

Supply Chain Transparency Legislation

On 1 January 2024, the Supply Chains Act came into force. The Supply Chains Act is Canada’s first legislation aimed at preventing and reducing the risk of forced and child labour in supply chains of Canadian companies operating globally.

Reporting obligations

The Supply Chains Act requires certain entities and government institutions to publicly report on the steps taken during the previous financial year to prevent and reduce the risk that forced or child labour is used at any step of the production of goods in Canada or elsewhere by the business or at any step of the production of goods imported into Canada by the business. The Supply Chains Act establishes an ongoing annual reporting obligation, with reports due on or before May 31st of each year.

Penalties and enforcement

The Minister of Public Safety is responsible for the enforcement of the Supply Chains Act. In November 2024, the Department of Public Safety and Emergency Preparedness published its most recent iteration of guidance on its interpretation of the Supply Chains Act and what is expected of entities and government institutions in preparing reports. The guidance imposes an additional requirement on reporting entities to complete and submit a questionnaire.

Pursuant to the Supply Chains Act, failure to comply with the reporting obligation or the accessibility requirement is an offence and will lead to a fine of not more than CAD250,000. Any person or entity that provides false or misleading statements will be guilty of an offence and liable for a fine of not more than CAD250,000.

Director liability

Directors are subject to personal liability if the entities they serve do not comply with the Supply Chains Act’s reporting obligations. Such liability includes a fine of up to CAD250,000 for an individual director. Any director, officer, agent or mandatary that directed, authorised, assented to, acquiesced in, or participated in an offence is a party to and guilty of an offence under the Supply Chains Act and is liable on conviction to the punishment, regardless of whether the person or entity that committed the offence has been prosecuted or convicted.

Ongoing consultations and enforcement approach

Throughout 2024, the Department of Public Safety and Emergency Preparedness conducted ongoing informal consultation with Canadian lawyers who are advising companies on their compliance obligations under the new reporting framework created by the Supply Chains Act. A variety of questions and concerns have been raised by companies and their lawyers concerning ambiguities in the Supply Chains Act and the guidance provided by the Department of of Public Safety and Emergency Preparedness. In the face of these legal questions and concerns, public safety officials have stressed the early focus of government efforts on education and awareness-raising, rather than on enforcement of the Supply Chains Act in the early stages of its coming into force.

Disclosure Under Canadian Securities Laws

Mandatory disclosures

Under Canadian securities laws, public companies must disclose all information, including information about environmental and social issues that are material to an investor (ie, information that – if omitted or misstated – would likely influence a reasonable investor’s decision to buy, sell or hold a security). The Toronto Stock Exchange (TSX) and TSX Venture Exchange further require that material information is immediately disclosed in accordance with their timely disclosure policies. Other than environmental and social matters determined to be material, a reporting issuer is not required to disclose environmental and social issues in its public disclosures record under securities regulation.

Voluntary disclosures and potential consequences

Companies (including public companies) often choose to report ESG information on a voluntary basis beyond what is required by securities laws, so as to meet the evolving expectations of stakeholders or to meet the requirements of an industry association or other multi-stakeholder initiative. Where public companies make such voluntary disclosures in relation to social issues, such disclosures are subject to applicable securities laws concerning misrepresentations under the statutory civil liability regime for secondary market disclosures.

Certain industry associations, such as the Mining Association of Canada, require members to report on their corporate social responsibility performance.

The Canadian Parliament passed the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) Act in 2021, requiring government action to ensure laws are consistent with UNDRIP, to implement a plan to achieve UNDRIP’s objectives, and to report on progress. Further to this law, in 2023, the Canadian federal government launched the 2023–28 Action Plan (the “Action Plan”) to implement UNDRIP.

The Action Plan “outlines a whole government roadmap for advancing reconciliation with Indigenous Peoples through a renewed, nation-to-nation, government-to-government, and Inuit-Crown relationship based on recognition of rights, respect, co-operation, and partnership as the foundation for transformative change”. The Action Plan is intended to be a living document that will continue to be developed in consultation with Inuit, Métis, and First Nations communities.

In addition to the federal government, two other Canadian jurisdictions have passed UNDRIP legislation. In 2019, British Columbia became the first jurisdiction in the world to pass legislation incorporating UNDRIP as law through the Declaration on the Rights of Indigenous Peoples Act (the “BC DRIPA”).

In 2023, the Northwest Territories enacted UNDRIP legislation with the United Nations Declaration on the Rights of Indigenous Peoples Implementation Act (the “NWT DRIPA”).

All three pieces of legislation set out a process approach to developing laws and policies to give effect to UNDRIP principles in domestic law. Canada’s relationship with UNDRIP – specifically, its effect on the interpretation of Canadian law – remains an evolving and complex issue. It looks set continue to develop through legislation and court cases across all Canadian federal, provincial and territorial jurisdictions.

UN Arms Trade Treaty

Canada became a state party to the ATT after enacting legislation to amend the Export and Import Permits Act (SC 2018, c 26) to meet its ATT obligation. Canadian companies engaged in international trade in defence goods or defence technology, either directly or indirectly, are subject to export controls to help protect against the serious adverse human rights impacts of illicit cross-border arms flows.

A core component of Canada’s commitment under the ATT is to ensure export permits are not granted where there is a “substantial risk” that granting the permit will contribute to, among other things:

• a serious violation of international humanitarian law or international human rights law;
• serious acts of gender-based violence; or
• serious acts of violence against women and children.

Where a “substantial risk” of adverse human rights impacts cannot be mitigated, the Minister of Foreign Affairs must deny the permit application.

Extractive Sector Transparency Measures Act

In 2015, the Extractive Sector Transparency Measures Act (ESTMA) came into force, which creates a regime for mandatory reporting of certain payments made to governments in Canada and abroad. Its aim is to increase transparency and deter corruption in the oil, gas and mining space. (Quebec has similar legislation – namely, the Act Respecting Transparency Measures in the Mining, Oil and Gas Industries.) Under the ESTMA, all reporting companies are required to report on an annual basis all payments made to governments in Canada and abroad. This legislation is aligned with similar legislation in the EU and the UK.

In June 2024, the federal government passed amendments to the Competition Act to explicitly prohibit deceptive environmental claims (ie, “greenwashing”). The Competition Act now includes provisions that require environmental claims to be based on “adequate and proper tests”. These amendments underscore a broader concern that the ESG information in sustainability reports may not always be reliable or substantiated.

Responsible Business Conduct Abroad Strategy

As mentioned in 1.1 Business and Human Rights: A Summary and 2.2.7 Soft Law on Business and Human Rights, in 2022, Canada introduced the 2022 RBC Strategy. The 2022 RBC Strategy contains measures to support Canadian companies in integrating leading responsible business practices and to position Canada to advance policies and practices within the international responsible business conduct ecosystem.

The 2022 RBC Strategy builds on earlier government strategies, which were then framed as corporate social responsibility initiatives. The stated goal of the 2022 RBC Strategy is to ensure that “Canadian companies recognise the value of and implement responsible business practices, meeting or exceeding widely recognised international standards, guidelines and frameworks”.

The 2022 RBC Strategy is based on three pillars:

• building awareness about responsible business conduct and its value to Canadian businesses;
• increasing corporate uptake of due diligence practice and ensuring accountability – this includes facilitating access to remedy and dispute resolution through Canada’s Nation Contact Point (NCP) and the CORE (see 4.3 Grievance Mechanisms); and
• positioning Canada to contribute to the global “ecosystem” of responsible business conduct norms.

The 2022 RBC Strategy clearly communicates the Canadian government’s expectation for Canadian businesses to not only comply with local laws of the states in which they operate, but to adopt internationally recognised best practices and internationally respected guidelines on responsible business conduct (eg, the UNGPs and the OECD Guidelines). 

The 2022 RBC Strategy does not mandate human rights and environmental due diligence and largely takes a voluntary approach to the implementation by Canadian companies of international responsible business conduct (and business and human rights) standards, but it does advance due diligence as a core component of Canada’s approach to responsible business conduct. Canadian companies are expected to take steps towards fulfilling due diligence responsibilities in line with the UNGPs. However, much of this framework remains voluntary.

Canada’s 2022 RBC Strategy is an example of “soft law” that seeks to encourage compliance, not through binding domestic legislation, but by also linking trade-related government advocacy support for companies operating overseas with whether those companies are meeting or exceeding internationally recognised standards such as the UNGPs and the OECD Guidelines. Trade Commissioner Services (TCS), which provides a variety of support for Canadian companies operating in other countries, could be withdrawn where businesses fail “to comply with Canada’s responsible business conduct laws, policies and standards”.

Responsible Business Conduct Due Diligence Standard

As noted in the 2022 RBC Strategy, the Canadian government is working with the Canadian General Standards Board to develop a Responsible Business Conduct Due Diligence Standard. This standard has not been released and it remains unclear how responsible business conduct due diligence will be defined. It is uncertain whether this new standard will lay out expectations that companies engage in due diligence in relation to a broad range of human rights impacts, consistent with the UNGPs, or if it will be limited to certain violations of human rights such as forced labour and child labour – thereby aligning it with Canada’s import ban and supply chain transparency legislation.

Federal Procurement Policy

The Canadian government has taken several steps to incorporate its business and human rights expectations into federal procurement policy.

Canada has implemented procurement-related requirements for suppliers contracting with the Canadian federal government. All clothing and textile suppliers contracting with the federal government are required to self-certify that they, and their direct Canadian and foreign suppliers, conduct their business in accordance with the eight fundamental human and labour rights contained in the ILO conventions binding on member states.

Since the launch of this policy in 2018, all new apparel procurement contracts entered into with the Canadian government include the ethical procurement certification.

The Code of Conduct for Procurement is mandatory for all Canadian government procurements and requires that suppliers not engage in any form of human and labour rights abuses.

The Canadian federal government’s central purchaser, Public Services and Procurement Canada (PSPC), includes anti-forced labour clauses in all standing offers and supply arrangements as well as service contracts. Under the anti-forced labour clauses, suppliers must not provide, deliver or sell goods or services to Canada that have been produced wholly or in part by forced labour.

The PSPC is planning to implement in 2025 a departmental policy on ethical procurement, which will form the basis for the PSPC’s ethical procurement initiatives, training programmes, and tools for suppliers. A human rights due diligence framework with specific guidance for suppliers is also under development by the PSPC.

Export Credit Agency

The Canadian government has incorporated its business and human rights expectations into the decision-making processes of its export credit agency, Export Development Canada (EDC). EDC has implemented an internal, risk-based human rights due diligence process when partnering with Canadian companies operating abroad. EDC has a standalone human rights policy supported by its Due Diligence Guideline: Human Rights, which sets out EDC’s approach to identifying and addressing the human rights impacts of its customers’ operations.

Canada has committed to enact further legislation to mitigate and prevent the risk of forced labour and child labour in the global supply chains of Canadian businesses and ensure that Canadian businesses operating abroad do not contribute to human rights abuses and violations.

With a new Liberal government following elections in April 2025, the timing of any advancing legislation in this area remains unclear. However, it remains likely that the Canadian government will continue to pursue business and human rights-related legislative initiatives motivated by international and domestic pressures.