Model Legislation for Mandatory Human Rights and Environmental Due Diligence
The Corporate Respect for Human Rights and the Environment Abroad Act
Many Canadian corporations operating around the world have been linked to human rights abuses including killings, torture, violence against women, and environmental damage. Canada needs a law that requires companies to take stock of how they may be contributing to human rights and environmental abuses, fix any problems they find, and prevent future harm. People who have been negatively impacted by the company’s actions would be empowered to seek justice in court. This is called mandatory human rights and environmental due diligence legislation. The CNCA’s model law provides lawmakers with a blueprint for writing into Canadian law the corporate duty to respect human rights and the environment.
In response to reports of serious harms linked to the global operations and supply chains of Canadian companies, the Canadian Network on Corporate Accountability (CNCA) developed model human rights and environmental due diligence legislation for adoption in Canada. (These harms have been frequently reported in relation to Canadian companies’ own operations and their business with other firms, for instance suppliers who produce goods that the company imports to Canada.) The CNCA’s model looks to make legally enforceable an expectation that has existed for a long time: that corporations respect human rights and the environment abroad. This document answers some of the most frequently asked questions about the CNCA’s proposed model legislation.
A bill recently introduced in Parliament, Bill C-262, contains all the elements of the CNCA’s model legislation that are described here.
1. Why do we need such a law in Canada?
Despite knowing for decades that Canadian companies and supply chains are contributing to human rights abuse and environmental damage abroad, the Canadian government continues to rely on voluntary measures to encourage responsible business conduct. Experience shows these measures are ineffective. As companies continue to profit from abuses they either cause in their own operations or contribute to through their supply chains, it is increasingly clear that many will only change their behaviour if required to do so by law.
2. What is human rights and environmental due diligence?
Human rights due diligence is a process undertaken by a company to prevent and address harmful impacts on people and communities throughout its operations and supply chains. It involves carefully assessing the risk of harm, doing what’s needed to minimize the risk and remedy any existing harm, and accounting for the steps taken. To do this effectively, a firm needs to engage in environmental due diligence to address any ecological harm that would put people’s rights at risk — including the right to a safe, healthy and sustainable environment. As the law proposed by CNCA would explicitly protect this right, we refer to it as a human rights and environmental due diligence law.
3. What would the law require that companies do?
The law would require companies to prevent and remedy human rights abuse by developing and implementing effective due diligence procedures. These would have to address the human rights impacts outside Canada of the company’s own activities, those of its affiliates, and those of other firms it does business with. This would include harms caused by the company’s subcontractors and suppliers, for instance in producing goods that the company imports to Canada. Companies would have to consult with rights-holders and report annually on these steps.
4. How would this legislation help people harmed by Canadian companies overseas and prevent further abuse?
The law would establish an explicit right for people harmed by Canadian companies abroad to seek remedy by filing a civil lawsuit in Canadian courts. The court could order the company to cease harmful activities and/or compensate the victims. The possibility of legal action would provide a powerful incentive for companies to make sure people aren’t harmed in the first place. Furthermore, the requirement to consult on an ongoing basis with rights-holders would also create a strong impetus for firms to identify risks and take effective preventative action.
5. What companies would be covered by the CNCA’s model law?
The CNCA’s model legislation would apply to companies that are incorporated in Canada, have a place of business in Canada, or sell goods or services in Canada and have a physical presence or otherwise carry out business in Canada. The CNCA’s model would allow for small businesses in low-risk sectors to be exempted through regulations.
6. Do other countries have similar laws?
France, Germany and Norway have adopted laws that impose human rights due diligence requirements on companies. The French “duty of vigilance” law was the first law of this kind to come into force. It requires companies to establish, implement and report on an annual vigilance plan, which must include steps to prevent harm. The law also provides for harmed individuals to bring a civil lawsuit to seek damages from a company that has failed to comply with its obligations. Several other countries, and the EU, are currently advancing mHREDD laws. You can learn more about examples from Europe with this table from the European Coalition for Corporate Justice.
7. Can’t people harmed by Canadian companies abroad already seek justice in Canadian courts?
People can and have filed lawsuits in Canada seeking to hold Canadian companies to account for human rights abuse abroad. There are significant barriers, however, to pursuing this kind of litigation. Victims may face years of legal battle just to establish that the case should be heard in Canada. Courts are generally reluctant to hold a Canadian parent company liable for harms caused by a subsidiary company through which it operates overseas. The law proposed by the CNCA would remove these barriers, making it easier for victims to access justice.
8. Do they have any other recourse to seek remedy in Canada?
The Canadian government has two complaints and mediation offices that people affected by Canadian firms’ activities abroad can appeal to. In theory, either of these offices could oversee mediation in which the firm voluntarily agrees to take remedial action. In practice, this has been a rare outcome in cases handled by the National Contact Point (NCP), which has been in place for over two decades. Communities and workers have found that complaints to the NCP have yielded no improvement to their situation, and have sometimes even made it worse. The newer office, of the Canadian Ombudsperson for Responsible Enterprise, has not been provided with the basic minimum powers required to do its job. Impacted communities have been advised to approach the office with caution, if at all.
9. How would the law be enforced?
The CNCA’s model law would establish a right for those who suffer harm to file a civil lawsuit in a Canadian court. The court could order the firm to cease its harmful activities, pay compensation to the victims, or take any other actions needed to prevent or remedy harm, arising from its own activities or those of its subsidiaries, subcontractors or affiliates. An interested person or party (e.g. an organization) would be able to seek a similar court order if a Canadian company failed to adequately develop, implement and/or report on its due diligence procedures. A company could seek to defend itself against such an order by demonstrating that it implemented effective due diligence procedures.
10. Under this law, would Canadian companies be criminally prosecuted for human rights abuses linked to their overseas operations?
No. The requirement that companies prevent human rights abuse would be enforced through civil lawsuits in Canada. These could be filed by people affected by the business activities and relationships of Canadian companies, or by other interested parties on their behalf, such as partner organizations. Some human rights violations amount to a criminal offence. Nothing in the legislation would prevent a victim of crime from seeking criminal law enforcement. Prosecution for corporate crimes, especially transnational corporate crimes, remains challenging and rare. This legislation will not address those challenges.
11. How is the CNCA’s model legislation different than “modern slavery” legislation being discussed in the Senate?
The proposed modern slavery reporting law for Canada (Bill S-211) does not require companies to stop using child or forced labour or to conduct human rights due diligence. If passed, Bill S-211 would only require companies to report on what steps, if any, they have taken to prevent and reduce the risk of forced or child labour in their supply chains. Supply chain legislation should focus on preventing and remedying harm, not just reporting. Bill S -211 is flawed because it would only apply to a small minority of companies, it ignores some of the most egregious human rights abuses, and it has an ill-placed focus on reporting. (See the CNCA’s analysis here.)
In contrast, the CNCA’s model legislation would require companies to prevent human rights violations, including those caused by environmental damage, throughout their global operations and supply chains. It accomplishes this by requiring companies to develop and implement adequate human rights due diligence procedures, consult with rights-holders, and report annually.
12. How would this legislation complement a strengthened Canadian Ombudsperson for Responsible Enterprise?
People harmed by Canadian companies should have access to both effective out-of-court mechanisms and access to courts. Complaint processes through an effective ombudsperson can be quicker, cheaper and provide impacted communities with more agency, but the ombudsperson’s recommendations for remedy are not binding for companies. The law proposed by the CNCA would complement this out-of-court ombudsperson by requiring companies to prevent human rights abuse and environmental damage in the first place, and by helping people harmed by Canadian companies, their subsidiaries and/or subcontractors to access justice in Canadian courts.
13. Why doesn’t the law apply to human rights and environmental impacts caused by corporations inside Canada?
Business-related abuses occur both inside Canada and outside of Canada, and impacted people in Canada can also face challenges in accessing remedy and preventing harm. This is particularly the case for First Nations communities, environmental defenders and migrant workers. The challenges can differ in nature and scale as compared to impacted people seeking remedy for harms that occur outside of Canada.
The Canadian constitution grants the federal, provincial and territorial governments legal jurisdiction to regulate different activities. A law aimed at the overseas abuses of Canadian companies fits into the federal division of these powers. It is likely that a federal law that requires companies to undertake human rights and environmental due diligence inside Canada would be subject to a constitutional challenge—slowing down its coming into force and/or derailing its development entirely.
The CNCA’s draft model mandatory human rights and environmental due diligence law
May 2021
Introduction
For over a decade, Canadian companies have been expected to respect human rights throughout their global operations. [2] The model human rights and environmental due diligence legislation developed by the Canadian Network on Corporate Accountability (CNCA) would make that expectation an enforceable requirement.
The purpose of the model legislation is to prevent, address, and remedy adverse human rights impacts connected to the overseas business activities of Canadian-linked companies. The law would create an obligation on companies to prevent harm and to implement human rights due diligence procedures. It also provides for liability – and access to remedy – if a company fails to fulfill those obligations.
Such a law is urgently needed in Canada. Far too often, companies are failing to deliver on their responsibility to respect human rights.
Ten years after the unanimous endorsement of the United Nations Guiding Principles on Business and Human Rights (UNGPs), there continue to be widespread reports of serious human rights abuses and environmental damage linked to the overseas activities of Canadian companies and supply chains. Communities and workers who suffer harm are often unable to access justice and remedy. Human rights and environmental defenders who stand up to powerful corporations frequently face violence, intimidation or criminalization. The risks and vulnerabilities they face have worsened with the global COVID-19 health crisis.
At present, companies can avoid fulfilling their responsibility to respect human rights because binding rules don’t exist, aren’t enforced, or because companies structure their global operations to avoid liability. [3] This legislation would change that.
Canada’s failure to regulate and ensure access to remedy for harms associated with Canadian business activity overseas is inconsistent with Canada’s international human rights Obligations. [4]
The Corporate Respect for Human Rights and the Environment Abroad Act would help respond to all three pillars of the United Nations Protect, Respect and Remedy Framework. [5]
Further, this legislation would help Canada catch up to growing international momentum towards comprehensive human rights due diligence laws. This momentum stems from the recognition by other advanced economies that voluntary measures alone are inadequate, and that meaningful measures to address corporate malfeasance are essential for long term prosperity and sustainability.
Several European jurisdictions have passed, or are considering, comprehensive human rights due diligence legislation – most notably France’s 2017 Devoir de vigilance legislation, and the 2021 resolution of the European Commission outlining its forthcoming human rights due diligence legislation. [6]
The time has come for Canada to establish enforceable rules through legislation. This Act provides the government with a blueprint with which to do so, through three pillars:
- establishing a corporate duty to prevent and to avoid adverse human rights impacts;
- establishing a corporate duty to develop, implement and report on adequate human rights and environmental due diligence procedures; and
- ensuring access to remedy and enforcement of HREDD obligations.
Following is a summary of each of these pillars.
Pillar 1: Establishing a corporate duty to prevent and to avoid adverse human rights impacts
The Corporate Respect for Human Rights and the Environment Abroad Act (Corporate Respect for Human Rights Act) would establish a corporate duty to prevent adverse human rights impacts and environmental damage outside Canada, throughout their business relationships.
EXTRACT FROM THE MODEL LEGISLATION
Duties to Avoid, Prevent and Address [7]
Every entity has a duty to: (1) 1. Avoid causing adverse human rights impacts outside Canada through its own activities, and through the activities of its affiliates; and to address such impacts when they occur; AND 2. Prevent adverse human rights impacts outside Canada that are directly linked to its operations, products or services by its business relationships; and to address such impacts when they occur. (2) Where an entity contravenes (the above section), it is liable for any injury that results from its contravention, whether it be caused by its own act or omis- sion or that of its affiliate or a person with whom it has a business relationship.
As a result, companies would be required to ensure they themselves – along with their affiliates (e.g. controlled subsidiaries) [8] – avoid causing adverse human rights impacts in their overseas operations. In addition, companies would be required to take steps to prevent adverse human rights impacts caused or contributed to by their business relationships (e.g. their subcontractors or suppliers). They would be required to address any impacts they failed to avoid or prevent.
In other words, a company would need to proactively ensure it is neither encouraging human rights abuse or environmental damage in its supply chains, nor turning a blind eye to negligent or harmful practices of its business relationships. Companies would no longer be able to avoid their responsibility to respect human rights by outsourcing, operating through subsidiaries or by remaining willfully blind to the human rights impacts of their supply chains.
What companies would the law apply to?
The Corporate Respect for Human Rights Act would apply to 1) companies domiciled in Canada; and 2) companies that sell goods or services in Canada if they also have a physical connection to Canada. [9]
The UNGPs make clear that companies of all sizes and from all sectors have a responsibility to respect human rights. [10] The Act does not have a size threshold. Instead, it provides that regulations may exempt certain companies (based on revenue, number of employees or sector) from the application of the Act and/or the obligation to report annually. This approach, which relies on sector-specific size thresholds rather than a single size threshold, recognizes the particularities of the Canadian economy (e.g. predominance in the global extractives sector, junior mining exploration companies often being small in size yet with potential to cause serious adverse human rights impacts) while also recognizing that it would be reasonable to exempt small businesses from some low-risk sectors from all or part of the law’s application.
What rights would be protected?
Human rights are interrelated, interdependent and indivisible. [11] For example, it is impossible to effectively prevent forced labour without also protecting other human rights, such as the right to non-discrimination or to organize collectively. The violation of one right often contributes to the violation of another.
As a result, the Corporate Respect for Human Rights Act is not limited in scope to a specific human right. The Act articulates companies’ responsibility to respect all human rights. Human rights are defined in the Act by reference to internationally-recognized human rights instruments. These include the nine core international human rights treaties, the eight core international labour conventions and the United Nations Declaration on the Rights of Indigenous Peoples. [12] The Act makes specific reference to the human right to a healthy, safe and sustainable environment.
Pillar 2: Establishing a corporate duty to develop, implement and report on adequate human rights and environmental due diligence procedures
The purpose of human rights due diligence is to prevent and avoid adverse human rights impacts. The Corporate Respect for Human Rights Act would require companies to develop and implement adequate human rights due diligence procedures, consult with rights-holders in the development and implementation of these procedures, and report annually. Companies would need to develop and implement due diligence procedures with respect to their own activities, as well as with respect to their affiliates and business relationships. [13]
WHAT IS CORPORATE HUMAN RIGHTS DUE DILIGENCE?
The Office of the United Nations High Commission on Human Rights describes human rights due diligence as “a way for enterprises to proactively manage potential and actual adverse human rights impacts with which they are involved… The prevention of adverse impacts on people is the main purpose of human rights due diligence. It concerns risks to people, not risks to business. It should be ongoing, as the risks to human rights may change over time; and be informed by meaningful stakeholder engagement, in particular with affected stakeholders, human rights defenders, trade unions and grassroots organizations. Risks to human rights defenders and other critical voices need to be considered.” (emphasis added) [14]
The Act enumerates the minimum due diligence procedures that a company is required to undertake while also making reference to the extensive due diligence guidance that has been developed to assist companies in fulfilling their responsibilities. [15] The Act provides that further direction may be articulated through regulations – such as with respect to auditing procedures; applicable standards applying to specific sectors, or to entities of particular sizes. The Act provides that regulations will be subject to committee review in both Houses of Parliament.
EXTRACT FROM THE MODEL LEGISLATION
Due diligence procedures shall include:
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Identifying and assessing real and potential adverse impacts;
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Ceasing and remedying existing adverse impacts;
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Mitigating risks of adverse impacts;
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Monitoring the implementation and effectiveness of the measures adopted to address adverse human rights impacts;
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A mechanism to provide an alert to the entity of possible adverse effects on or risks to human rights;
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Documenting due diligence efforts.
Pillar 3: Ensuring access to remedy and enforcement of HREDD obligations
The legislation would establish meaningful consequences for failure to prevent serious human rights impacts and failure to undertake adequate due diligence. It would also assist impacted communities and workers to access effective remedy in Canadian courts. It does this through two mechanisms:
- civil liability for harms and/or, failure to do due diligence, and
- a commissioner empowered to enforce the production of due diligence reports.
If a company, its subsidiary, subcontractor or supplier causes a serious adverse human rights impact, the company could be sued in a Canadian court. The court could order an injunction, payment for damages/losses, punitive damages, rehabilitation or specific performance, legal costs, or a combination thereof. Impacted communities could file a motion for the company to be ineligible for future government supports, or for existing supports to be withdrawn. [16]
EXTRACT FROM THE MODEL LEGISLATION
Failure to Avoid, Prevent and Address Adverse Human Rights Impacts
Any person who has suffered loss or damage as a result of conduct that contravenes any provision of this Act or the regulations may, in any court of competent jurisdiction, bring an action for relief.
Defence: A company could seek to avoid a court order by establishing they have developed and implemented effective due diligence procedures to prevent harm. The Act sets out factors for the court to consider in making this determination. [17] These factors would incentivize companies to undertake effective due diligence procedures.
Additionally, the legislation provides that interested parties – such as civil society organizations – could file suit against a company in Canadian court if the company failed to develop and implement adequate due diligence procedures.
Finally, the legislation contemplates the creation of a commissioner role to enforce the publication of annual reports. The Commissioner would maintain a website where these “human rights risks” reports would be published.
The Commissioner would ensure that the reports include content relating to all of the required business relationships and under all of the required headings. [18] Companies who failed to publish comprehensive reports could be fined up to $250,000. Interested parties would be able to submit commentary to these company reports and request the commentary be published on the Commissioner website.
How civil liability helps prevent harm and ensure access to remedy
Risk management is an important business practice taken very seriously by corporate management, governance bodies and investors. When anti-bribery and corruption legislation began to be introduced around the world, many corporations moved to significantly more robust corruption risk identification and mitigation strategies. In the same way, establishing civil liability in Canada for human and environmental harms primarily acts as a concrete incentive for a business to internalize its responsibility to prevent harm, and to put adequate procedures in place. The expected response to this legislation is that companies will enhance their attention to such risks of harm, and change their behaviour without communities needing to regularly seek recourse in Canadian courts.
When companies are aware that they could be held liable, management, boards and investors are incentivized to pay attention to such risks, and to ensure steps are taken to prevent adverse human rights impacts. The requirement to consult with rights-holders on an ongoing basis means that significant risks are more likely to be identified, and companies alerted early if the mitigation measures are not adequate. The provision in the legislation that can defend against liability by demonstrating adequate due diligence, enhances the incentive to ensure such diligence is undertaken.
All of these factors help ensure that communities and workers aren’t harmed in the first place. They would also help ensure access to remedy if harm does occur. Remedying adverse impacts is part of the legislation’s outlined due diligence procedures. If companies fail to offer remedy on their own, they can be ordered to do so by the court.
Endnotes for the Executive Summary
- The draft model legislation is the product of extensive research and engagement, within and outside of Canada. It provides a blueprint for the Government of Canada. The draft text may be updated to reflect ever-evolving international best practices. We wish to thank all those who offered their time, advice, and expertise – in particular the members of the expert advisory group and legislative drafting team.
- See, for example, Canada’s Corporate Social Responsibility Strategy at https://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/csr-strat-rse.aspx?lang=eng
- This can be done by outsourcing production, using complex supply chains and subsidiaries, or turning a blind eye to the human rights practices of their business relationships. Worse still, some companies use their influence to ensure that laws that would protect human rights and the environment are not passed, are watered down, or are not enforced. No Canadian legislation currently articulates a company’s obligation to avoid, address and prevent human rights abuse. Furthermore, barriers continue to exist for foreign plaintiffs seeking to access Canadian courts.
- This has attracted the attention of several United Nations International Treaty Monitoring Bodies. See for example https://cnca-rcrce.ca/2017/01/31/international-human-rights-authorities-call-for-extractive-sector-ombudsperson/
- These include the state duty to protect against human rights violations (including by non-state actors such as Canadian companies); the corporate responsibility to respect human rights (and the role of human rights due diligence in fulfilling that responsibility) and the right of impacted people to have effective access to remedy.
- See the European Coalition on Corporate Justice’s Comparative table: Corporate due diligence laws and legislative proposals in Europe available at: https://corporatejustice.org/publications/comparative-table-due-diligence-proposals-europe/.
- The UNGPs make a distinction between a company’s responsibility to avoid versus its responsibility to prevent adverse human rights impacts. This is set out in Pillar 2, at Principle 13: The responsibility to respect human rights requires that business enterprises: Avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur; Seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts. This distinction is maintained in the Corporate Respect for Human Rights Act.
- See the definition section of the model legislation – Part 2, sections 2 and 3 – for more on the definitions of affiliates, subsidiaries, and control.
- This is set out in Part V, section 1, of the model legislation: “Entities: (1) An entity is subject to this Act if the entity: i. Is domiciled or ordinarily resident in Canada; or ii. Sells goods or services in Canada and the entity has a resident agent, representative, warehouse, office or place where it carries on its business in any jurisdiction in Canada; AND The entity is not exempted from application of this Act by the regulations.
- Internationally recognized guidelines, including the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the OECD Due Diligence Guidance for Responsible Business Conduct (OECD Guidance for RBC) clearly stipulate that such laws should apply to all companies, regardless of size, sector, or where the company operates.
- This is clearly stipulated in the UN Declaration of Human Rights and in the UNGPs.
- The complete list is at Part IV section 8 of the model legislation.
- The model legislation, at the definitions section 2 (3) sets out that “business relationship” includes an entity’s relationships with business partners, entities throughout its value or supply chain, and any other non-State or State entity directly linked to its business operations, products or services. For greater clarity, and without limiting the generality of the foregoing, relationships with state and non-state security forces, and home-based workers are “business relationships” for purposes of this Act.”
- See their website for more: https://www.ohchr.org/EN/Issues/Business/Pages/CorporateHRDueDiligence.aspx
- For example, from the United Nations and the OECD Guidelines for MNEs. Further, Canada’s National Contact Point for the OECD Guidelines, Global Affairs Canada’s Responsible Business Conduct Unit and the Canadian Ombudsperson for Responsible Enterprise are all tasked with supporting and advising companies regarding this guidance.
- Section 27 outlines that this could include “eligibility for support, subsidy, promotion or protection by any or all government agencies or departments” and it provides that the court could order the withdrawal of support or disallowance of future support for a stipulated period, or until specified conditions are met
- In determining whether an entity exercised effective due diligence the court may consider the extent of adherence to relevant standards of conduct (set in regulations or outlined in the entity’s public communications); whether the impact was or should have been identified as a risk in due diligence procedures, adequacy of steps taken (having regard to company’s size), history of adverse impacts (and any subsequent due diligence procedure improvements), any incentives the company created for improving human rights standards in its supply chains. See section 25 for more.
- Investigatory powers pursuant to the Inquiries Act would be required to fulfill this aspect of the Commissioner’s mandate.
The Corporate Respect for Human Rights and the Environment Abroad Act
Model legislation for mandatory human rights and environmental due diligence
By the Canadian Network on Corporate Accountability
Note: This model legislation, first published in May 2021, is the product of extensive research and engagement, within and outside of Canada. It provides a blueprint for the Government of Canada. The model is being released as a draft text in recognition that it may be updated to reflect ever-evolving international best practices. We wish to thank all those who offered their time, advice, and expertise – in particular the members of the CNCA’s expert advisory group, Above Ground and lead drafter Erin Simpson, Landings LLP.
Preamble
Whereas business entities may cause adverse human rights impacts through their own activities, or through their business relationships;
Whereas the realities of global supply chains, cross-border trade, investment, communications and movement of people are such that Canadian business entities may cause adverse human rights impacts outside Canada;
Whereas, at present, accountability and remedy in such cases is often elusive, and where legal remedy is obtained, it frequently does not meet the international standard of “adequate, effective and prompt reparation for harm suffered”;
Whereas the right to remedy is a core tenet of the international human rights system, and the need for victims to have access to an effective remedy is recognized in the UN Guiding Principles on Business and Human Rights (UNGPs);
Whereas undertaking human rights due diligence can assist business enterprises to proactively manage potential and adverse human rights impacts, and can assist enterprises in fulfilling their responsibility to respect human rights;
Whereas the prevention of adverse impacts is the main purpose of human rights due diligence;
Whereas ensuring the legal accountability of business enterprises and access to effective remedy for persons affected by such abuses is a vital part of a State’s duty to protect against business-related human rights abuse;
And whereas effective State-based judicial mechanisms are at the core of ensuring access to remedy;
Now, therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
PART I: INTERPRETATION
1. Interpretation:
- Nothing in this Act should be interpreted to preclude the Attorney General of Canada from prosecuting any entity or individual associated with any entity for any offence under the Criminal Code of Canada or any other Act of any province or jurisdiction in Canada.
2. Definitions
- “Activities” includes actions and omissions
- An entity is an “affiliate” of an entity if:
(i) It is a subsidiary of the entity; or
(ii) both are subsidiaries of the same entity; or
(iii) each of them is controlled by the same person. - “business relationship” includes an entity’s relationships with business partners, entities throughout its value or supply chain, and any other non-State or State entity directly linked to its business operations, products or services. For greater clarity, and without limiting the generality of the foregoing, relationships with state and non-state security forces, and home-based workers are “business relationships” for purposes of this Act.
- “entity” means a corporation or a trust, or partnership. For greater clarity, a not-for-profit, charity, or trade union is not an “entity” for purposes of this Act.
- An entity is a “subsidiary” of an entity if
(i) It is controlled by
1. That entity;
2. That entity and one or more entities each of which is controlled by that entity; or
3. Two or more entities, each of which is controlled by that entity; or
(ii) It is a subsidiary of an entity that is a subsidiary of that entity. - “Commissioner” is the Commissioner provided for in Part XI.
- “Interested person” means:
(i) a person who is directly affected, or
(ii) a person who:- has a genuine interest in the issues arising in the case;
- presents a reasonable means of the case being brought forward;
- does not have a conflict of interest in the outcome of the case.
- “Minister” means the Minister of Justice.
- “Person” means legal person or natural person.
3. Control
- An entity is controlled by a person or another entity if
i. Twenty percent or more of the voting interests in the entity are held by or for the benefit of that person or entity, directly or indirectly; or
ii. The person or entity ordinarily directs or instructs the conduct of the entity, directly or indirectly; or
iii. The person or entity is, alone or in combination with another entity, empowered through voting interests, or based on agreement with another party, to elect at least thirty percent of the board of directors of the entity, directly or indirectly; or
iv. The person or entity has the power to cause direction of the management and policies of the entity, directly or indirectly; or
v. The person or entity determines the salary or bonus structure for executives or employees of the entity, directly or indirectly; or
vi. The person or entity otherwise controls the entity in fact, directly or indirectly;
vii. The person or entity publicly represents itself as being responsible for or in control of the entity.
PART II: ENABLING AUTHORITIES
4. Except as otherwise provided, the Minister of Justice is responsible for the administration of this Act.
5. The Governor in Council may make any regulation that is referred to in this Act or that prescribes any matter whose prescription is referred to in this Act.
6. The Minister shall cause a copy of each proposed regulation made under this Act to be laid before each House of Parliament, and each House shall refer the proposed regulation to the appropriate Committee of that House.
PART III: PURPOSES
7. The purpose of this Act is to prevent, address, and remedy adverse human rights impacts connected to the overseas business activities of entities under this Act.
PART IV: GENERAL PROVISIONS
8. Adverse Human Rights Impacts
- An adverse human rights impact occurs when an action removes or reduces the ability of an individual to enjoy their human rights.
- Subject to any further additions in the regulations under this Act, “human rights” includes:
(i) human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment;
(ii) the rights set out in:- The nine core human rights treaties:
- the International Covenant on Civil and Political Rights (ICCPR);
- the International Covenant on Economic, Social and Cultural Rights (ICESCR);
- the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD);
- the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW);
- the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (UNCAT);
- Convention on the Rights of the Child (CRC);
- Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (CMW);
- Convention on the Rights of Persons With Disabilities (CRPD);
- the International Convention for the Protection of All Persons from Enforced Disappearance (CED);
- The United Nations Declaration on the Rights of Indigenous Peoples;
- International Labour Organization Convention 169, the Indigenous and Tribal Peoples Convention;
- The UN Declaration on the Right and Responsibility of Individuals, Groups and Organs of Society to Promote and Protect Universally Recognized Human Rights and Fundamental Freedoms;
- The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions;
- The 8 core international Labour Organization Conventions:
- the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87);
- the Right to Organise and Collective Bargaining Convention, 1949 (No. 98);
- the Forced Labour Convention, 1930 (No. 29);
- the Abolition of Forced Labour Convention, 1957 (No. 105);
- the Minimum Age Convention, 1973 (No. 138);
- the Worst Forms of Child Labour Convention, 1999 (No. 182);
- the Equal Remuneration Convention, 1951 (No. 100);
- the Discrimination (Employment and Occupation) Convention, 1958 (No. 111);
- The nine core human rights treaties:
- The regulations under this Act may provide any further international human rights instruments encompassed by “human rights” for the purposes of this Act.
PART V: APPLICATION
9. Entities:
- An entity is subject to this Act if the entity:
(i) Is domiciled or ordinarily resident in Canada; or
(ii) Sells goods or services in Canada and the entity has a resident agent, representative, warehouse, office or place where it carries on its business in any jurisdiction in Canada; AND
(iii) The entity is not exempted from application of this Act by the regulations; - All entities are “reporting entities” unless exempted in the regulations;
- The regulations may exempt entities from application of this Act by sector, revenue, or number of employees.
10. Conflict of Laws:
- Subject to any exception established herein or by regulation, this Act contains overriding mandatory rules that apply to the overseas business activities of entities irrespective of the rules of Canadian private international law, whether they be found in the common law or established by an Act of a province or Canada.
- Any provision of an agreement or arrangement that contravenes a rule under this Act, or provides inferior rights and protections than those established herein is absolutely null.
- Notwithstanding subsections 1 and 2, nothing in this section shall be construed as affecting any obligation that an entity owes under any domestic or foreign law, contract, or arrangement that holds it to a higher standard than the rules of this Act and its regulations.
PART VI: COMMISSIONER
Appointment of Commissioner
11. Within three months of the coming into force of this Act, the Governor in Council shall appoint an officer to be known as the Commissioner for Human Rights Protection in Business, who shall be responsible for the administration and enforcement of this Act.
12. The Commissioner has all the power of a Commissioner appointed under the Inquiries Act.
13. The Commissioner holds office during good behaviour for a term of five years, but may be removed for cause by the Governor in Council.
14. The Commissioner, on the expiration of a first term of office, is eligible to be re-appointed for one further term not exceeding five years. For greater clarity, the Commissioner is eligible for only one re-appointment.
15. The Commissioner shall rank as and have all the powers of a deputy head of a department, shall engage exclusively in the duties of the office of Commissioner under this Act or any other Act of Parliament and shall not hold any other office under Her Majesty for reward or engage in any other employment for reward.
16. The Commissioner shall have expertise and experience in human rights and have knowledge of international best practices in human rights-based approaches and gender-sensitive analysis.
Compensation of Commissioner
17. The Commissioner shall be paid a salary, fixed by Parliament, equal to the salary of a puisne judge of the Federal Court, and is entitled to be paid reasonable travel and living expenses incurred in the performance of duties under this Act or any other Act of Parliament.
18. The provisions of the Public Service Superannuation Act, other than those relating to tenure of office, apply to the Commissioner, except that a person appointed as Commissioner from outside the public service, as defined in the Public Service Superannuation Act, may, by notice in writing given to the President of the Treasury Board not more than sixty days after the date of appointment, elect to participate in the pension plan provided in the Diplomatic Service (Special) Superannuation Act, in which case the provisions of that Act, other than those relating to tenure of office, apply to the Commissioner from the date of appointment and the provisions of the Public Service Superannuation Act do not apply.
Staff
19. Such officers and employees as are necessary to enable the Commissioner to perform the duties and functions of the Commissioner under this Act or any other Act of Parliament shall be appointed in accordance with the Public Service Employment Act.
20. The Commissioner may engage on a temporary basis the services of persons having technical or specialized knowledge of any matter relating to the work of the Commissioner to advise and assist the Commissioner and the officers and employees, in the performance of their duties and functions under this Act or any other Act of Parliament and, with the approval of the Treasury Board, may fix and pay the remuneration and expenses of such persons.
Delegation
21. The Commissioner may authorize any person to exercise or perform, subject to such restrictions or limitations as the Commissioner may specify, any of the powers, duties or functions of the Commissioner under this Act of Parliament.
22. The Commissioner is authorized to exercise the powers and perform the functions of the Treasury Board that relate to human resources management within the meaning of paras 7(1)(b) and of the Financial Administration Act.
23. The Commissioner shall publish procedures and policies governing the handling of applications to investigate, investigations, and the making of Notices under s. 36.
24. Information-gathering in foreign jurisdictions;
- Where the law of a foreign state does not prohibit it, the Commissioner may gather information in furtherance of his or her investigation, outside Canada;
- Where an investigation requires the Commissioner to gather information or meet with individuals in a foreign jurisdiction, he or she will inform the foreign government of his or her meeting and information-gathering activities;
- In gathering information in foreign jurisdictions, the Commissioner shall endeavour to enter into mutual assistance agreements, letters rogatory, or other like legal agreement, with local authorities;
- For greater clarity, the Commissioner shall not participate in law enforcement activities in any foreign jurisdiction.
PART VII: OBLIGATIONS
Duties to Avoid, Prevent and Address
25. (1) Every entity has a duty to:
i) Avoid causing adverse human rights impacts outside Canada through its own activities, and through the activities of its affiliates; and to address such impacts when they occur; AND
ii) Prevent adverse human rights impacts outside Canada that are directly linked to its operations, products or services by its business relationships; and to address such impacts when they occur;
(2) Where an entity contravenes s. 25 (1), it is liable for any injury that results from its contravention, whether it be caused by its own act or omission or that of its affiliate or a person with whom it has a business relationship.
Due Diligence Procedures
26. Subject to any provision in the regulations under this Act, due diligence means taking reasonable measures to:
- Avoid causing adverse human rights impacts outside Canada through its own activities, and through the activities of its affiliates, and to address such impacts when they occur; AND
- Prevent adverse human rights impacts outside Canada that are directly linked to its operations, products or services by its business relationships, and to address such impacts when they occur.
27. Due diligence procedures shall include:
- Identifying and assessing real and potential adverse impacts;
- Ceasing and remedying existing adverse impacts;
- Mitigating risks of adverse impacts;
- Monitoring the implementation and effectiveness of the measures adopted to address adverse human rights impacts;
- A mechanism to provide an alert to the entity of possible adverse effects on or risks to human rights;
- Documenting due diligence efforts.
28. Every entity shall develop and implement due diligence procedures with respect to itself, its affiliates, and its business relationships.
29. In developing and implementing due diligence procedures, entities shall:
- have regard to the intersection of sex and gender with other identity factors that include race, national and ethnic origin, Indigenous origin or identity, age, sexual orientation, socio-economic condition, place of residence and disability;
- consult with the relevant stakeholders, including any relevant:
(i) trade unions;
(ii) affected communities;
(iii) workers; - have reference to the practice of competent international bodies; and to:
(i) the Rio Declaration on Environment and Development;
(ii) the UN Guiding Principles on Business and Human Rights;
(iii) the Report of the Independent Expert on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment, John H. Knox, “Mapping Report”, UN Human Rights Council;
(iv) the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention).
30. The regulations may provide
- Any specific requirements in due diligence procedures, including auditing procedures; and
- Any applicable standards and guidance to assist in assessing the adequacy of due diligence procedures, including standards applying to specific sectors, or to entities of particular sizes.
Due Diligence Reporting
31. Every reporting entity must publish a due diligence report annually;
- Subject to any further requirements in the regulations, due diligence reports shall list the affiliates and business relationships affected by the due diligence obligation arising under s. 26.
32. The regulations shall specify the required headings in due diligence reports.
33. The due diligence report shall be published in any annual reports of the entity, and on a website dedicated to this task and maintained by the Commissioner, and shall be called “human rights risk reports”;
- Any interested person or persons may, in accordance with procedures published by the Commissioner, submit commentary on due diligence reports published under this Act. Comments under this section shall be published on the website.
PART VIII: AUDIT AND ENFORCEMENT
34. On application from an interested person, or on its own initiative, the Commissioner shall inquire into a reporting entity’s compliance with s. 31 whenever there is reason to suspect
- that a reporting entity has not published a due diligence report, or has not complied with the requirements under regulations made under s. 32; OR
- that a reporting entity’s list of affiliates or business relationships provided pursuant to s. 31(1) is not comprehensive for the purposes of s. 26.
35. For purposes of verifying compliance with this Act, the Commissioner has all the powers conferred on a commissioner by sections 4 and 5 of the Inquiries Act and that may be conferred on a commissioner under section 11 thereof.
36. If, on the basis of information obtained, the Commissioner is of the opinion that
- a reporting entity has not published a due diligence report per, s. 31, or including the headings specified in the regulations per s. 32; OR
- that a reporting entity’s list of affiliates or business relationships provided pursuant to s. 31(1) is not comprehensive for the purposes of s. 26
the Commissioner may issue a Notice.
37. The Notice shall:
- specify the name of the entity;
- detail the basis of the Notice, and specify how the entity can bring its reporting into compliance with the requirements of ss. 31 and regulations under s. 32;
- indicate a timeline for the entity to bring its reporting into compliance with the requirements of ss. 31 and regulations under s. 32;
- specify the amount, if any, of an Administrative Monetary Penalty owing if the entity does not bring its reporting into compliance with the requirements of ss. 31 and regulations under s. 32 on the timeline indicated;
- inform the entity of its right to contest the Notice, or the Penalty, in writing, and any procedure to be followed to exercise that right;
- inform the entity of the manner of paying the penalty set out in the notice; and
- inform the entity that if they do not pay the penalty or exercise their right to contest under part (5) they will be considered to have failed to comply and be liable for the penalty set out in the notice.
38. For greater clarity, the Notice shall not include any opinion on the accuracy or adequacy of due diligence procedures in a report.
39. The Minister may make regulations
- respecting the determination of, or the method of determining, the amount payable as the Administrative Monetary Penalty;
- respecting the service of Notices required or authorized under this Part, including the manner and proof of service and the circumstances under which documents are deemed to be served;
- respecting the procedures to be followed in contesting a Notice or Penalty under s. 37 (5).
40. The amount that may be determined under any regulations made under s. 39 as the penalty for a violation may not exceed $250,000.
PART IX: PRIVATE RIGHT OF ACTION
41. Nothing in this Part should be interpreted so as to preclude new or ongoing civil actions in relation to the activities of an entity.
Failure to Avoid, Prevent and Address Adverse Human Rights Impacts
42. Any person who has suffered an injury as a result of an entity’s contravention of s. 25 (1), may, in a court of competent jurisdiction, bring an action against the entity for relief by way of:
- injunction, including rehabilitation at the expense of the entity;
- recovery of damages or losses;
- aggravated and/or punitive damages;
- an amount to fully or partially compensate for the costs that the person incurs in connection with the matter and proceedings under this section;
- any combination of the above, or any order that a court considers appropriate in the circumstances.
43. If an entity fails to develop or implement adequate due diligence procedures, any interested person may apply to a court of competent jurisdiction to make any order against the entity that it considers appropriate in the circumstances, including an order providing for relief by way of:
- injunction, including rehabilitation at the expense of the entity;
- recovery of damages or losses;
- aggravated and/or punitive damages;
- an amount to fully or partially compensate for the costs that the person incurs in connection with the matter and proceedings under this section; or
- any combination of the above, or any order that a court considers appropriate in the circumstances.
Defence
44. In any action under s. 42, it is a defence for the entity to prove that it exercised effective due diligence to prevent the adverse human rights impact(s) alleged.
Factors to Consider
45. In determining whether an entity exercised effective due diligence for purposes of s. 44, the court may consider
Extent of adherence to any relevant standards of conduct set out in the regulations;
- Extent of adherence to any relevant standards of conduct set out in the entity’s public communications;
- Whether the adverse human rights impact was, or should reasonably have been, identified as a risk in the entity’s due diligence procedures; and the adequacy of any steps taken to minimize the risk of the adverse human rights impact, having regard to the size of the entity;
- Any history of adverse human rights abuses in the entity’s business operations;
Any steps taken by the entity to improve its due diligence procedures; - In the case of business relationships in an entity’s supply chain, any incentives the entity has created for improving human rights standards;
- Other factors as defined in the regulations.
Public Support
46. If, on an action under s. 42, or on application under s. 43, a court is satisfied that
- A person has suffered loss or damage as a result of conduct that contravenes any provision of this Act or the regulations; OR
- An entity has failed to develop and implement adequate due diligence procedures;
A party may additionally make a motion for an order regarding the entity’s eligibility for support, subsidy, promotion or protection by any or all government agencies or departments. The court may order that any or all government agencies or departments:
i. Withdraw any existing support or subsidy, and terminate any promotion or protection of the entity for a stipulated period, or until specified conditions are met;
ii. Disallow any future support, subsidy, promotion or protection for a stipulated period or until specified conditions are met.
47. On a motion under s. 46, any affected government agency may appear.
Jurisdiction
48. A Canadian court has jurisdiction to hear and determine an action or application brought under this Part in the following cases:
- the Defendant is domiciled or ordinarily resident in the court’s jurisdiction;
- the Defendant has submitted to the court’s jurisdiction;
- the Defendant has entered an agreement that grants the court jurisdiction over the action; or
- there is a real and substantial connection between the court’s jurisdiction and the facts on which the action against the Defendant is based.
49. An entity is ordinarily resident in the court’s jurisdiction, for the purposes of this Part, only if:
- it has or is required by law to have a registered office or business address in the court’s jurisdiction;
- pursuant to law, it
i. has registered an address in the court’s jurisdiction at which process may be served generally; or
ii. has nominated an agent in the court’s jurisdiction upon whom process may be served generally; - it has an agent, representative, warehouse, or place of business in the court’s jurisdiction; or
- its central management is exercised in the court’s jurisdiction.
50. Without limiting the right of the Plaintiff to prove other circumstances that constitute a real and substantial connection, a real and substantial connection is presumed to exist if the action:
- concerns actual and not virtual business carried out in the court’s jurisdiction over a sustained period;
- concerns a multi-jurisdictional tort or fault where more than a minor element of it was committed in the court’s jurisdiction; or
- concerns obligations that are connected to a contract made in the court’s jurisdiction or governed by its laws;
- concerns restitutionary obligations that, to a substantial extent, arose in the court’s jurisdiction.
51. Once a court has jurisdiction under s. 48, it shall not decline to exercise jurisdiction on the ground that the dispute should be decided in a court of another State or an arbitral forum.
- This section shall not affect the rules on jurisdiction related to:
i) subject matter or to the value of the claim; or
ii) on the internal allocation of jurisdiction among the courts of Canada.
Limitation
52. No action may be brought under subsection s. 42 after five years from
- the day on which the adverse impact was discovered; or
- the day on which criminal proceedings, under this Act or other, in any jurisdiction in Canada were finally disposed of
whichever is the later.
53. No application may be brought under s. 43 after two years from
- the day on which the procedures in question were, or ought to have been, published.
54. A limitation or prescription period under this Act is suspended
- during any period in which the person that suffered the loss or damage is incapable of beginning the action because of any physical, mental or psychological condition;
- during any period in which the person that suffered the loss or damage is unable to ascertain the involvement of the entity or its identity;
- in respect of an action based on a sexual assault; or
- for any other reasons for suspension under the common law.
Parallel litigation
55. The provisions of this Act apply notwithstanding any proceedings on the same adverse impact, or on a related adverse impact, in a state other than Canada.
56. The provisions of this Act apply notwithstanding any ruling or order by a court in a state other than Canada.
Court of Competent Jurisdiction
57. “Court” in this Part refers to a court of competent jurisdiction, including a provincial Superior Court and Federal Court.
Campaigns
Pass a Due Diligence Law
We campaign for a mandatory human rights and environmental due diligence law to hold Canadian companies accountable for their actions abroad.
Empower the C.O.R.E.
Canada’s Ombudsperson for Responsible Enterprise should be transparent and efficient, and have the power to compel witnesses and documents.
Make Canada Accountable
Canada’s financial, political and diplomatic support should not to corporations involved with human rights and environmental abuse.
