Modern Slavery Compliance In Canada: Essential Guidance For The 2026 Reporting Landscape

Canada's modern slavery regime operates through two distinct but interconnected mechanisms: the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Supply Chains Act), which sets reporting requirements, and the import ban on goods produced in whole or in part with forced or child labour. Both aspects are evolving, and as the third reporting cycle approaches, businesses should pay close attention to the shift in expectations and regulatory focus affecting both their annual reporting duties and their import compliance obligations. The upcoming reporting deadline under the Supply Chains Act is May 31, 2026.

Key takeaways

• What are the most critical changes for 2026 compliance? While the Supply Chains Act itself does not prescribe a baseline compliance standard or require goal setting, Public Safety Canada (PSC) in its guidance now expects entities to demonstrate measurable progress year-over-year and set specific short, medium, and long-term goals, moving beyond basic reporting to active due diligence frameworks. Coupled with other developments such as a shifting market baseline, organizations should carefully assess where their existing frameworks fall on the spectrum in planning their due diligence frameworks moving forward.
• How did enforcement escalate in 2025? Parallel to PSC reporting requirements evolving, Canada Border Services Agency (CBSA) detention actions related to forced and child labour jumped to nearly 50 shipments in 2025 compared to minimal enforcement in previous years, while the government committed $617.7 million over five years for enhanced border enforcement capacity.
• What new legislative requirements may affect imports? Bill C-251 proposes presumptive import bans on goods from designated countries and entities, requiring importers to prove supply chain compliance before entry. However, Bill C-251 is not yet in force and remains under parliamentary consideration.
• Which compliance standards now represent market baseline? 96.6 per cent of reporting entities have embedded responsible business conduct into management systems, while 84.1 per cent maintain formal due diligence processes, signaling a shift in market practices.
• When must organizations submit their next reports? The third reporting deadline is May 31, 2026, with PSC launching new assessment tools by March 31, 2026, to evaluate compliance quality.

Quick refresher: Understanding the basics of Canada's modern slavery regime

How the legislation came to be and who must comply

Canada addresses forced and child labour through two key measures: reporting under the Supply Chains Act and an import ban on goods tainted by forced and child labour.

The Supply Chains Act regime emerged from Bill S-211, introduced in November 2021 and receiving royal assent in May 2023. The legislation built on international models, particularly the UK and Australian Modern Slavery Acts, while also expanding customs control approaches begun under the Canada-United States-Mexico Agreement (CUSMA) to align with North American approaches to import regulation and forced labour. Read more about the birth of our Canadian modern slavery legislation in Modern slavery: A comparative overview of Canada's newest legal tools against forced and child labour.

Who must report under the Supply Chains Act: Thresholds and criteria

The Supply Chains Act applies to Canadian entities (and federal government institutions) that meet specific criteria. An entity must report if it:

• Is listed on a Canadian stock exchange; or
• Has a place of business, does business, or holds assets in Canada, and meets two of these three thresholds:
  • C$20 million in assets
  • C$40 million in annual gross revenue
  • 250 or more employees

These thresholds are calculated on a global, consolidated basis including controlled entities (subsidiaries), but excluding parent company metrics. The Supply Chains Act uses a broad definition of "control" that should be applied consistent with accounting standards, with substance taking precedence over form.

Additionally, the entity must:

• Produce goods in Canada or elsewhere;
• Import goods produced outside Canada; or
• Control an entity engaged in these activities.

However, entities whose importing or producing activities constitute "very minor dealings," which includes dealings that are incidental, low-volume, or not central to their core business, may be exempt from reporting.

How Canada's import ban evolved into a trade policy tool

Under Canada's Customs Tariff, goods produced "in whole or in part" with prison, forced or child labour are prohibited from entering Canada. There is no de minimis exception; the ban includes composite goods which contain a prohibited component. The ban therefore has the potential to affect many manufactured goods entering Canada across a wide variety of sectors.

The prison labour ban has existed since the 19^th century. The forced labour ban was introduced by CUSMA in 2020, while the child labour ban was added by the Supply Chains Act in 2023. The legislation adopts and expands International Labour Organization definitions, defining child labour to include work by persons under 18 that would be contrary to Canadian law, interferes with schooling, or is mentally, physically, or morally dangerous. In today's world of tariffs and refocusing of global trade dynamics, these import prohibitions have become another tool of trade policy, as discussed in a February 2026 BLG podcast ("The Tariff Home Companion," episode 6).

Cross-sector risk context: Examples

Documented cases demonstrate that forced labour risks extend across sectors and regions:

Medical supplies: Malaysia supplies 70 per cent of the world's rubber gloves, yet major manufacturers in the sector faced forced labour allegations, leading to $222 million in terminated Canadian contracts. In 2015, surgical instruments used by the UK's National Health Service were linked to child labour in Pakistan, where children as young as 11 were reported working. By 2024, the UK government found over 21 per cent of NHS suppliers at "high risk" of modern slavery.

Manufacturing: U.S. Department of Labor investigations in 2023 and 2024 uncovered child labour in U.S. manufacturing and industrial cleaning sectors, underscoring that these practices occur in traditional Western supply chains.

Agriculture and food production: The agriculture sector's reliance on migrant labour creates vulnerabilities. In 2024, the UN Special Rapporteur on slavery condemned Canada's Temporary Foreign Worker Program as a "breeding ground for contemporary forms of slavery." Globally, well-documented forced labour issues have historically affected food production including seafood processing, fishing operations, cocoa production, and palm oil cultivation.

Textiles and apparel: This sector remains high-risk, with significant portions of raw materials such as cotton grown in high-risk jurisdictions. While many established fashion brands have strengthened supply chain due diligence, newer entrants and fast-fashion players have faced regulatory scrutiny and market access restrictions due to poor human rights and supply chain practices.

These examples highlight that organizations cannot assume safety based on supplier location or sector reputation alone.

Enforcement and penalties

In relation to the import ban, the CBSA has broad powers to examine, detain, and seize suspected goods both at the border and post-importation through Trade Compliance Verification audits. These powers extend to any owner of imported goods, not just the original importer.

Specifically, CBSA may re-determine the tariff classification of goods and, under the Customs Act:

• Examine and detain goods (ps 99 and 101)
• Seize goods (p 101(1))
• Destroy or otherwise dispose of goods (ps 119.1(1) and 142(1))
• Issue ascertained forfeitures (p 124)

Importers facing CBSA action may:

• Challenge the re-determination
• Dispose of the goods
• Abandon the goods
• Export the goods

Under the Supply Chains Act, non-compliance with reporting requirements carries significant penalties. Entities and their directors, officers, agents, and mandataries can face fines of up to $250,000 for:

• Failure to file required reports;
• Filing reports or other documents containing false or misleading statements;
• Other violations of the Supply Chains Act's provisions.

The Supply Chains Act requires annual reporting by May 31 each year, with reports submitted through PSC's online portal and published on entity websites. As of 2026, Canadian organizations are entering the third annual reporting cycle under this regime, with reports due May 31, 2026, covering activities and supply chain measures taken during the 2025 financial year.

What's new for 2026

Several important developments are reshaping the reporting landscape for 2026, including new PSC guidance that clarifies expectations and a collaborative international template to streamline multi-jurisdiction compliance.

New reporting template: PSC's 2025 template for International Reporting on Modern Slavery is a collaborative effort with UK and Australian governments to streamline multi-jurisdiction compliance. The template identifies seven key reporting areas common across Canada, Australia and the UK. The template provides Level 1 (required) and Level 2 (recommended) disclosure standards. For organizations reporting in multiple jurisdictions, this template can reduce administrative burden while improving report quality over time. The template is not restricted to organizations that report in multiple countries. It provides a solid basis for entities reporting only in Canada, since Canada's legislation has the most stringent requirements across the three jurisdictions.

"Very minor dealings" exception clarified: Entities that produce or import goods into Canada, or that control an entity engaged in these activities, may need to report under the Supply Chains Act, unless their activities constitute "very minor dealings." In the updated guidance, PSC clarifies that entities should consider their overall operations in this analysis, including the scale, frequency, and relevance of the activity within their broader operations. The updated guidance adds that an entity's importing or producing activities may qualify as "very minor dealings" if they are "incidental, low-volume, or not central to its core business."

PSC expects entities to demonstrate progress and set goals: While the Supply Chains Act does not legally require entities to demonstrate progress or set specific goals, PSC's updated guidance signals clear expectations for continuous improvement in supply chain visibility wherever applicable, and evolution of risk identification and due diligence processes. PSC also expects entities to set goals to ensure year-on-year progress, and to describe their short, medium, and long-term plans to achieve these goals in their reports.

As explained below, PSC's annual reports on implementation also show that the market baseline compliance level is shifting. Reporting entities should be cautious to evaluate both the legal and reputational risks, and avoid over-committing themselves. They should strive to set realistic, measurable goals when making forward-looking commitments.

Expanded examples of compliant reporting: PSC now provides specific examples of internal policies, risk identification tools or methods, and remediation mechanisms, policies and process which entities may include in their reports. Though not prescriptive, these examples offer insight into the types of policies and measures PSC considers responsive to the Supply Chains Act's reporting requirements.

Increased scrutiny: Each year, PSC reports on the implementation of the Supply Chains Act to Parliament. PSC has indicated that it may also use data collected through the mandatory online questionnaire for analytical purposes. Reporting entities should continue to ensure their disclosures are consistent and accurate year over year, and as between their reports and the questionnaire. PSC is also developing resources to support the reporting process, including an assessment tool for annual reports, expected ahead of this coming reporting cycle.

How is enforcement changing in 2026?

Supply Chains Act reporting enforcement

PSC is developing enhanced tools to evaluate compliance quality and may initiate enforcement of reporting obligations. Additionally, it will be distributing inpidualized questionnaire links to entities that have previously filed reports, allowing for better tracking and management of the reporting process. PSC plans to launch an assessment tool and supporting resources by March 31, 2026, and has indicated it may use data collected through the mandatory online questionnaire for analytical purposes. As such, reporting entities may see increased scrutiny and auditing of their annual reports, potentially coupled with enforcement action in 2026 or future years for non-compliance with reporting requirements.

Import ban and border enforcement

The Canadian government has committed $617.7 million over five years, starting in 2025-26, with $198.3 million ongoing to the CBSA to increase its capacity to detect and intercept illicit goods and defend Canadian industries by enforcing import measures. CBSA enforcement actions have escalated dramatically, with nearly 50 shipments detained in 2025 compared to minimal enforcement in previous years. Nine of those shipments were ultimately denied entry into Canada, demonstrating the real operational risks organizations now face from the import ban. Even for those shipments ultimately released, importers faced months of delays while goods were detained.

Bill C-251: Potential changes to how Canada's import ban works

Bill C-251 (a private member's bill) was introduced in October 2025 and proposes significant changes to Canada's anti-forced labour import regime. If passed, Bill C-251 would amend the Customs Act and Customs Tariff to presumptively ban the import of goods mined, manufactured, or produced (wholly or in part) in certain designated countries or areas, or by certain designated entities.

Such presumptively banned goods would only be permitted to be imported if the importer can assemble the following information to satisfy the CBSA:

• Demonstrates that it has performed the required supply chain monitoring and taken the required supply chain management measures;
• Provides the customs officer with any required certifications or information; and
• Demonstrates that they have exercised all due diligence, as required, to ensure that the goods are not produced, wholly or partially, using forced or child labour.

We note that the CBSA already issues trade advisory notifications to importers in high-risk sectors. If implemented, Bill C-251 would significantly expand the practical impact of those advisories, as well as require organizations to quickly implement the necessary flow-down informational rights, due diligence and monitoring processes to be in a position to rebut the presumption.

As a private member's bill rather than government-sponsored legislation, Bill C-251 faces significant procedural hurdles and may not pass in its current form. However, its introduction demonstrates the Canadian legislators' continued focus on strengthening Canada's anti-forced labour framework and signals potential future policy directions in this area: it's only a few years ago that Bill S-211, also a private member's bill, successfully inspired the current Supply Chains Act regime.

What compliance standards are now considered baseline?

Data-driven insights from Public Safety Canada's 2025 annual report to Parliament reveal the dramatic shift in compliance sophistication across Canadian businesses:

• 96.6 per cent of reporting organizations have embedded responsible business conduct into their policies and management systems
• 83.4 per cent of entities have identified or begun identifying high-risk parts of their supply chains (up from 77.6 per cent in 2024)
• 84.1 per cent have policies and due diligence processes related to forced or child labour (up from 71.3 per cent in 2024)
• 61.7 per cent provide employee training on forced or child labour (up significantly from 43.7 per cent in 2024)

While the Supply Chains Act does not prescribe a specific due diligence standard, market and reputational expectations are steadily shifting. What was considered adequate from a peer and stakeholder perspective in year one will not meet those expectations in year four. Organizations that do not have, at a minimum, a policy addressing forced and child labour risk in relation to suppliers or purchasing, stand out nowadays from a market standards perspective. Organizations that do not evolve with these norms may end up attracting unwanted attention in an increasingly proactive sector, facing reputational rather than legal consequences under the Supply Chains Act. Because reports are publicly accessible, weaknesses and red flags can be scrutinized by stakeholders and used to hold entities publicly accountable.

For importers, enforcement risk also comes from the CBSA's administration of the import ban. Unlike the Supply Chains Act's reporting requirements, the import ban carries direct operational consequences, as goods can be detained, seized, or denied entry regardless of an organization's reporting compliance. Organizations that import goods face dual risks: reputational exposure from inadequate Supply Chains Act reporting and operational disruption from CBSA enforcement of import prohibitions.

Essential compliance framework

Organizations that only meet minimal reporting requirements, without taking proactive steps to identify, prevent, and mitigate risks of forced or child labour, leave themselves vulnerable when a scandal arises. At that point, without proper safeguards in place, the options are often limited and undesirable for crisis response and remediation. They may also open themselves up to legal risk under the Supply Chains Act if they set express goals or commitments in previous years that they failed to implement.

Where goods are seized at the border under the import ban, assembling the information necessary to successfully challenge the detention can be difficult (and, in some cases, may be impossible if the importer has no legal right to request documentation or other evidence from lower-tier suppliers).

A strong compliance program helps to solve both these problems. It can give importers the legal framework to both obtain the necessary evidence to defend a border seizure and provide tools to work with suppliers down the chain, ensuring that goods are not being produced from forced, child or prison labour in the first place.

In the case of Supply Chain Act reporting, it provides a critical early-warning system to detect risks and vulnerabilities down the supply chain, and helps prevent such risks from developing into actual exploitation and a reputational crisis. Even when issues are revealed, a strong compliance framework ensures organizations have the tools they need to mitigate the crisis, and to work with suppliers and sub-suppliers to address and remediate issues, and prevent reoccurrence.

A strong compliance program includes policies, a flow-down contractual framework, risk assessment, investigation/auditing and remediation mechanisms, training, and monitoring. This does not require perfect visibility across every tier of your supply chain from day one: what matters is starting with foundational steps, such as implementing contractual rights into supplier agreements, so organizations have the tools to act when risks emerge.

Six important steps for Canadian organizations updating their compliance programs in 2026

• Conduct supply chain risk assessments focusing on high-risk product categories and geographic regions to the extent this work has not already been done, and refine existing risk assessment models.
• Ensure baseline policies and management systems that cover forced and child labour (now a standard practice among 96.6 per cent of reporting entities) and contractual terms are in place.
• Develop measurable goals and timelines for supply chain transparency improvements with short, medium, and long-term targets, to align with PSC's Guidance.
• Implement employee training programs (now a standard practice among 61.7 per cent of reporting entities).
• Establish due diligence documentation protocols that can support rapid CBSA detention responses.
• Prepare for customs seizures under the import ban by ensuring necessary informational rights to obtain evidence, and begin conducting due diligence down the supply chain.

What have organizations learned from three reporting cycles?

Key insights from three reporting cycles reveal critical success factors:

Assessment timing matters: Determining applicability under the Supply Chains Act requires complex analysis and should begin well before the May 31 deadline, and in fact in advance of the organization's fiscal year-end whenever possible. Financial thresholds, control definitions, and "very minor dealings" assessments must be conducted annually.

Progress demonstration is now expected: Organizations are expected to show year-over-year improvement in their reports. Static or declining compliance efforts increasingly stand out as inadequate compared to sector benchmarks.

Formalities matter: Common filing errors include missing attestations, incorrect file formats, and inadequate board approvals. Late filing carries enforcement risks and is marked publicly in government databases.

The following common errors have been identified by PSC based on reports filed in previous cycles:

• Submitting the questionnaire without a PDF report;
• Marking a report as "revised" when submitting an initial report;
• Submitting a report without proper attestation signed by governing body member;
• Submitting reports in incorrect file formats (must be PDF);
• Including personal information beyond the attestation signatory name.

Preparing for the 2026 reporting cycle

Reporting entities must submit their next report by May 31, 2026.

Critical dates and actions

• Early 2026: Begin drafting reports covering your 2025 fiscal year activities to allow time for board approval and questionnaire completion.
• April 2026: PSC expected to launch new assessment tools for report evaluation.
• May 31, 2026: Final reporting deadline for reports covering 2025 fiscal year activities (late filing carries enforcement risks and public notation).
• Post-May 31, 2026: Begin implementing new policies, training programs, and due diligence measures that will be reported in your next cycle (covering 2026 fiscal year activities).

Organizations should begin strengthening policies, due diligence processes, and supplier oversight sooner rather than later to ensure they can demonstrate meaningful progress in their 2026 reports. Reports must be approved by governing bodies (typically boards of directors) and include proper attestation before submission. Entities should plan to have draft reports ready for their board's regularly scheduled meetings well in advance of the May 31 deadline, rather than requiring special board meetings or rushed approvals that could compromise the quality of board oversight.

As well, note that guidance from PSC is updated periodically.

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