The Role of Automated Vendor Compliance in the Fight Against Forced Labour

If your organisation operates under Bill S-211, known as the Fighting Against Forced Labour and Child Labour in Supply Chains Act, it must take proactive steps to eliminate forced and child labour risks within its vendor network. However, complex global supply chains, fragmented vendor data, and inconsistent due diligence processes make compliance challenging.

To comply with Bill S-211, your organisation needs a centralised, automated approach to vendor compliance - one that standardises due diligence, continuously monitors vendor risks, and maintains a clear audit trail. By replacing manual processes with structured compliance workflows, your organisation can reduce regulatory risk, improve vendor oversight, and demonstrate a genuine commitment to ethical business practices.

In this article, we explore why manual vendor and contract processes fall short under the Forced Labour Act and how automation helps your organisation safeguard compliance.

What is the Fighting Against Forced Labour and Child Labour in Supply Chains Act?

The Fighting Against Forced Labour and Child Labour in Supply Chains Act is a Canadian federal law aimed at combating modern slavery practices, such as forced and child labour, within supply chains.

The Act imposes reporting obligations on government institutions and certain private entities operating in Canada to ensure transparency and accountability regarding their efforts to address these issues.

It applies to government institutions involved in the production, purchase, or distribution of goods, as well as private entities that meet specific criteria, including:

• Corporations, trusts, partnerships, or other unincorporated organisations listed on a Canadian stock exchange
• Entities with a place of business or assets in Canada
• Businesses meeting at least two of the following conditions:
  • At least $20 million in assets
  • At least $40 million in annual revenue
  • An average of at least 250 employees

Under the Act, both government institutions and applicable private entities are required to submit annual reports by 31st May, detailing the steps taken to prevent and reduce the risk of forced or child labour in their supply chains.

These reports must outline your organisation's due diligence processes, which include:

• Assessing and managing risks related to forced and child labour
• Implementing policies to address these risks
• Taking remediation measures when issues are identified
• Providing employee training
• Evaluating the effectiveness of prevention efforts

The Act places a strong emphasis on due diligence, requiring your organisation to implement robust processes to identify, assess, and mitigate risks associated with forced and child labour.

This includes conducting thorough risk assessments, implementing policies and procedures to address identified risks, and taking prompt remediation actions when instances of non-compliance are discovered.

Consequences of Non-Compliance

Failing to comply with the Fighting Against Forced Labour and Child Labour in Supply Chains Act can lead to severe legal, financial, and reputational consequences.

• Legal Penalties: Your organisation can face fines of up to C$250,000 for non-compliance or providing false information, posing a significant risk if you operate on tight margins
• Financial Costs: Beyond fines, your business may incur legal fees, court costs, and expensive remediation efforts if forced or child labour is found in your supply chain.
• Reputational Damage: Non-compliance can lead to consumer backlash, loss of trust, and brand boycotts, impacting long-term profitability and market standing.

Shein's Forced Labour Controversy

A recent example highlighting the severe consequences of non-compliance is the case of Shein, a global fast-fashion retailer. In 2024, the company discovered two instances of child labour within its supply chain. This revelation sparked widespread criticism and placed the brand under intense scrutiny from regulators, human rights organisations, and consumers.

In response, Shein launched an internal investigation and enhanced its monitoring mechanisms, including forming a dedicated team to oversee supply chain partners and increasing unannounced audits. Despite these efforts, the company's reputation suffered significantly, with calls for stricter oversight and ethical sourcing becoming a focal point for consumer advocacy groups.

This incident underscores the importance of robust due diligence, proactive compliance measures, and real-time monitoring in supply chain management. Failing to implement comprehensive risk management strategies exposes your organisation to severe financial losses, legal action, and lasting reputational harm.

Why Manual Vendor and Contract Processes Fall Short Under the Forced Labour Act

Many businesses rely on spreadsheets, email chains, and disconnected systems to manage vendor compliance, leading to:

• Inconsistent risk assessments – Vendors may be reviewed on an ad-hoc basis, leaving gaps in due diligence.
• Lack of visibility – Information about vendor labour practices, certifications, and policies are often scattered across teams, making it difficult to monitor compliance in real-time.
• Reactive, manual processes – Tracking vendor compliance often relies on periodic reviews, meaning forced labour risks may go undetected for months.

To overcome these challenges, your organisation should consider automating vendor compliance processes with a Vendor and Contract Lifecycle Management (VCLM) platform. A VCLM solution centralises all vendor data, automates due diligence workflows, and provides real-time monitoring of compliance risks.

Automating Forced Labour Compliance with a VCLM Platform

By automating vendor management and due diligence processes, your organisation can mitigate the risks associated with manual or ineffective compliance procedures. A proactive, structured approach to regulatory compliance with a VCLM platform:

• Standardises vendor onboarding and risk assessments: Customisable questionnaires ensure consistent data collection on vendors' labour practices, certifications, and policies, reducing administrative burden and ensuring accurate reporting.
• Centralises vendor documentation: A secure vendor and contract repository ensures compliance teams always have access to the latest policies, certifications, and risk assessments, making audits seamless and stress-free.
• Automates due diligence workflows: Approvals, reminders, and risk escalations are automated, ensuring your compliance team never misses a deadline or critical step in the compliance process.
• Leverages ESG workflows and custom fields: Create structured ESG workflows tailored to your compliance needs, ensuring all relevant social responsibility data is captured and monitored for ongoing compliance.
• Uses AI-powered summaries for contract analysis: AI-driven contract intelligence enables your compliance team to instantly identify forced labour clauses within vendor agreements, eliminating manual contract review and significantly improving efficiency.
• Monitors vendor risks in real-time: Third-party risk intelligence suites provide continuous monitoring, flagging potential compliance violations as they happen, allowing your organisation to take immediate corrective action.
• Provides clear audit trails: Every interaction, approval, and policy update is automatically logged, providing a transparent and easily accessible compliance record for regulatory reviews.

Watch our video: Getting Started with Vendor ESG Due Diligence

By integrating these features, your organisation can drastically reduce administrative burdens, improve compliance oversight, and ensure regulatory requirements are met with minimal manual effort.

Wrap-Up

Adhering to modern slavery laws like the Fighting Against Forced Labour and Child Labour in Supply Chains Act is crucial for maintaining ethical business practices, mitigating risks, and upholding your organisation's reputation. Non-compliance can have severe consequences, including substantial fines, legal repercussions, and irreparable damage to your brand and consumer trust.

Take the first step towards ensuring ethical and responsible supply chain practices by scheduling a demo with Gatekeeper's experts. Discover how our platform can empower your organisation to navigate the complexities of vendor management, mitigate risks, and demonstrate a steadfast commitment to combating forced and child labour.