S-211: are you Ready to Meet Your Clients’ Demands?

The impact of S-211 on your business

For decades, a supply chain was nothing more than organizational management. It was about optimizing costs, reducing delays and securing stock levels. Since January 1, 2024,following the adoption of the Fighting Against Forced Labour and Child Labour in Supply Chains Act (S.C. 2023, c. 9), hereafter “S-211,” it has also become an area of legal and strategic responsibility.

This regulatory paradigm shift stems from a harsh human situation which cannot be simply ignored.

According to the International Labour Organization, 27.6 million people are victims of forced labour worldwide, including 3.3 million children. Such practices generate an estimated US$236 billion in illicit profits each year. These issues may seem far removed from your day-to operations. And yet, they directly affect local SMEs because we are talking about men, women and children who could, in fact, be making some of the products you buy, distribute or transform. That’s why taking action matters, not only to comply with legislation, but also to have a positive impact wherever we can. 

S-211 does not require companies to achieve an impossible level of perfection. Rather, it asks them to demonstrate that they understand the risks present in their supply chain, that they have put measures in place to mitigate them and that they are able to report on them publicly. In other words,  a company is no longer assessed solely on what it controls internally. It is also assessed on the practices of its suppliers, their subcontractors and the upstream producers of raw materials.

Hidden risks: tracking the supply chain

Most businesses know their direct suppliers well. But beyond this first tier, visibility deteriorates rapidly. Barely 42% of organizations have a real understanding of their tier 2 and tier 3 suppliers, which is precisely where the risks are highest.

What are known as conflict minerals provide a striking illustration of this reality. Tin, tantalum, tungsten and gold are used to manufacture a variety of electronic components found in almost all digital devices. However, these minerals may originate from areas where serious human rights violations have been documented, particularly in the African Great Lakes region. Even though technology companies do not source directly from mines, the very structure of their supply chains often leaves them exposed. From the extraction site to the final assembly, there may be four, five or even six intermediaries.

In the Conflict Minerals Reports it filed with the U.S. Securities and Exchange Commission, Apple acknowledges that it does not source its raw materials directly. The company must therefore rely on external audits, traceability programs and due diligence processes to identify risks and guide its decisions.

The Uyghurs for Sale report, published by the Australian Strategic Policy Institute, highlighted another aspect of the problem. Between 2017 and 2019, more than 80,000 members of the Uyghur minority were reportedly transferred to Chinese industrial facilities under conditions strongly suspected of being forced labour. Several multinationals found themselves associated with these practices without having had any direct contact with the sites in question. This did not, however, protect them from reputational and regulatory consequences.

Why this affects Québec SMEs

Your organization may have fewer than 250 employees. It may not generate $40 million in revenue or hold $20 million in assets. In other words, your business is probably not directly subject to the law. Nonetheless, you would be wrong in assuming that it isn’t affected by the issue. 

Large corporations required to comply with the law need their suppliers to follow suit. A client that must prove the traceability of its supply chain will demand the same from its partners, regardless of their size. Otherwise, it will turn to other suppliers.

In other words, this has become more than a regulatory issue, it is now also a commercial one. A clothing manufacturer supplying an international brand will, for example, have to demonstrate that its weavers, zipper suppliers or button manufacturers have themselves been properly assessed. Similarly, an SME manufacturer importing components for local assembly will need to be able to answer specific questions about their origin.

The risks are very real. On the one hand, businesses subject to the law may face a fine for non-compliance of up to $250,000 and, most importantly, major consequences that could have a lasting impact on business relationships. On the other hand, organizations run an increased risk of being excluded from the procurement process by clients that can no longer continue to work with partners whose supply chains cannot be traced.

The right approach to a responsible supply chain

To meet these requirements, some organizations are attempting to map their entire supply chain. While the intention is commendable, this approach often proves costly, complex and difficult to maintain over time, particularly for SMEs.

The most advanced companies are taking a different approach: they focus on high-risk areas, rely on third-party audits where certain links in the chain are beyond their direct control, and document their progress from year to year. This is precisely what S-211 promotes: not perfection, but a structured and progressive approach.

Beyond compliance, however, there is a more fundamentally important reason to act. Every measure taken to improve the traceability of a supply chain sends a clear message to suppliers: forced labour and child exploitation are unacceptable, regardless of the location. By taking strong action, you are also assuming your share of responsibility toward future generations.

Solutions do exist

Complying with S-211 (or preparing for its indirect impact) requires expertise that few organizations possess in-house. ESG Strategic Advisory specialists can support you at every stage of this process.

1. Compliance assessment: they will analyze your current situation with respect to S-211 criteria, identify gaps and make phased recommendations for the short-, medium- and long-term.
2. Mapping suppliers: they will help you implement a targeted approach to identify and evaluate your suppliers according to their ESG risk level.
3. Analysis of third-party audits: they will review existing reports to assess their reliability, identify warning signs and prioritize corrective measures.
4. Responsible procurement policies: they will work with you to develop codes of conduct, assessment grids and contractual clauses tailored to your business environment.
5. Drafting and validating the annual report: they will provide support in preparing the document to be submitted by May 31 each year, ensuring a level of transparency that strengthens your credibility without unduly exposing your organization.

Companies that initiate this process now will be better positioned to meet their clients’ requirements, access new markets and demonstrate, year after year, their ability to act responsibly.

Contact our ESG Strategic Advisory specialists today to schedule a no-obligation exploratory meeting. 

Sources:

• International Labour Organization (ILO), Walk Free and International Organization for Migration (IOM) — 2022 Global Estimates of Modern Slavery: Forced Labour and Forced Marriage.
• International Labour Organization (ILO) — Profits and poverty: The economics of forced labour, March 2024.
• McKinsey & Company — Supply Chain Risk Pulse, 2025.
• S&P Global — Tracing trouble: How companies are confronting conflict minerals risks
• Conflict Minerals Report 2024, filed with the U.S. Securities and Exchange Commission (SEC), Form SD, fiscal year 2024.
• Australian Strategic Policy Institute (ASPI) – Uyghurs for Sale report (80,000 individuals transferred), 2020.
• Fighting Against Forced Labour and Child Labour in Supply Chains Act (S.C. 2023, c. 9)