Forced Labour In Supply Chains: Key Updates For 2026 Reporting

Introduction and How to Use This Document

The Fighting Against Forced Labour and Child Labour in Supply Chains Act (the "Act") came into effect on January 1, 2024. This legislation requires covered entities¹ to prepare and publish a report addressing certain enumerated actions they are taking to prevent and reduce the risk of forced labour and child labour (the "Report") in their supply chains.

The Canadian government, specifically Public Safety Canada ("PSC"), publishes and updates its guidance (the "PSC Guidance") on its interpretation of the Act and the content it expects to see in the Report. It has also issued a questionnaire (the "PSC Questionnaire") that covered entities will need to complete when submitting their Report, which can be previewed on the "Submit a report" page of the PSC website. Entities that have previously submitted Reports may also receive a entity-specific link to the questionnaire from PSC that can be used to submit their 2026 Report.

We have prepared this Guide to support covered entities and provide insight into the reporting requirements. It also provides guidance on the types of policies, procedures, and measures that could be considered to bolster an entity's initiatives to mitigate the risk of forced and child labour in its supply chain and could be referred to when addressing the reporting requirements under the Act.

This Guide has been prepared for the exclusive use of McCarthy Tétrault clients. It is intended to serve as a starting point for discussions regarding potential contents of the Report. It is not intended to present comprehensive legal advice regarding the obligations set out in the Act or supplant the PSC Guidance. Furthermore, additional guidance, regulations or legislation put forth by PSC may impact the guidance provided in this document. Accordingly, it is highly recommended that additional legal advice be sought before completing and filing the Report to ensure that it reflects the most recent information and guidance available from the Canadian government.

Entities should carefully consider their responses when completing the Report and PSC Questionnaire to ensure that they are accurate and complete. This is particularly important in light of the fact that the Report will be publicly available to investors and other stakeholders and that penalties that may be imposed for making false or misleading statements, including penalties for directors, officers and agents of entities who direct, authorize, assent to, acquiesced in or participated in such activity. As noted further below, the Report must be approved by the entity's board of directors and a member of the board must attest to the Report's truthfulness, accuracy and completeness. Accordingly, it is important not to embellish or overcommit in the Report. Where claims are made, they should be supported. For example, all policies and procedures described in the Report should be properly documented. Reports should also be written in plain and simple language.

Section 11 of the Act specifies eight topics or categories of information required to be included in the Report. In this Guide we address each one along with requirements regarding attestation and approval of the Report. Note that the PSC Guidance indicates that Reports must be less than 100 MB to be uploaded to PSC's portal.

Summary of Updates for 2026 Reporting Cycle

Since the last reporting cycle, PSC's updated guidance (i) reframes its enforcement position on solely selling and distributing (by removing the clear commitment that PSC would "not seek enforcement action in those instances"), and (ii) explains that "very minor dealings" can be understood to mean production or importation activities that are "incidental, low-volume, or not central to its core business".

The updated guidance also introduces small adjustments relating to the substance of the Report; for example, in the "Assessing Effectiveness" section, the guidance now states that entities should set goals to ensure that there is year-on-year progress, and that the Report should demonstrate the short, medium, and long-term plans to achieve such goals. The references to "services" and "service providers" in the "Structure, activities, and supply chains" section have also been removed, leaving the focus on "goods" and "suppliers". Covered entities are therefore spared the work of seeking updated figures in connection with services for that section of their Report when they prepare to file their 2026 Report. Please refer to our client alert for more details: Important Updates to Public Safety Canada Guidance Ahead of 2026 Supply Chains Act Reporting Cycle.

In 2025, the Government of the United Kingdom, the Government of Australia, and the Government of Canada also released a multi-jurisdictional reporting template, seeking to reduce the administrative burden for entities that are subject to reporting obligations in two or more of those jurisdictions. For more details, please refer to our client alert: Supply Chains Act Alert: Canada, UK, and Australia Jointly Release New Multi-Jurisdictional Modern Slavery Reporting Template.

Addressing the Report Requirements

1. The steps the entity has taken during its previous financial year to prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity.

We recommend taking a broad approach as to what to include in this section. It does not need to be limited to significant initiatives or steps taken. Developments that arose through standard business operations (for example, onboarding suppliers from jurisdictions that appear to be low risk from a child labour perspective) may be appropriate to mention. As the response to this requirement will be company specific, further discussions may be required to determine what items may be appropriate to highlight in this section.

Question 1 under the Annual Report section of the PSC Questionnaire provides a number of examples of measures an entity may have been taken that are responsive to this requirement. Alongside selecting the relevant measures, entities may provide additional information describing an entity's activities over the past year that touch on preventing or reducing the risk of forced labour or child labour in their supply chain. Examples of additional information to be included according to the PSC Guidance include:

• Whether the actions were applied broadly or to specific parts of the entity's activities and supply chains;
• Which issues the actions aimed to address (e.g., whether the action addressed forced labour or child labour);
• Which groups the actions were directed towards (e.g., which supply chain partners or stakeholders the entity engaged with);
• Details of the actions taken (e.g., which policies and processes were implemented, how they were implemented and for what purpose);
• Who in the organization is responsible for identifying, assessing and responding to risks, and the governance structure that provides senior level oversight; and
• How the organization engages with external stakeholders such as industry initiatives, NGO, trade unions, or government agencies on preventing supply chain risks.

2. The entity's structure, activities and supply chains.

In response to this requirement, entities should include a thorough overview of their business and the scope of their supply chains.

Note that this could include both the procurement of goods for production purposes as well as for consumption by the business, such as office supplies. If related to the entity's supply chain, it may also include information on subsidiaries and affiliates that are not themselves subject to the reporting obligation under the Act. Note that in 2025, PSC updated its reporting guidance to remove "services" and "services providers" from its description of what should be discussed in this section.

The PSC clarifies that entities ought to provide a complete overview and should therefore not omit information about aspects of their structure, activities and supply chains they have assessed as carrying no risk of forced labour or child labour.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.