Canada’s 2025 forced labor supply chain report: Key lessons for compliance & traceability
Canada has released its second annual report under the Fighting Against Forced Labour and Child Labour in Supply Chains Act, covering the 2025 reporting cycle. The results provide an important barometer of corporate preparedness for human rights due diligence, and a clear signal for organisations operating globally.
High policy adoption, but limited depth
The overwhelming majority of reporting organisations state that they have embedded responsible-business conduct policies (96.9%) and put forced-labour policies in place (83%). This suggests strong awareness and uptake of formal frameworks.
However, only 50% assess the effectiveness of those policies, dropping to 15.6% among government institutions. This gap between policy and performance remains a structural challenge across ESG domains. In forced labor risk management, it translates directly into blind spots where violations may persist undetected.
Raw materials and early-stage supply chains are the highest-risk zone
Entities most frequently identified raw materials and commodities as the highest-risk point in their supply chains. This aligns with well-documented human rights vulnerabilities in mining, agriculture, textiles, and other extraction-heavy industries.
Notably, entities also reported challenges beyond direct suppliers, recognising the importance of tier-two and upstream visibility.
For many organisations, this remains the hardest part of due diligence, and the one with the greatest impact on vulnerable workers.
Few organisations report actual remediation
91% of organisations stated that remediation did not apply to them, because they had not identified any forced labor or child labor incidents. Only 5% reported remediation actions.
In high-risk industries and sourcing countries, the absence of identified cases often points not to an absence of risk, but to insufficient detection.
Real progress requires not only policies and risk statements, but credible systems capable of uncovering abuses and responding meaningfully when they occur.
Enforcement in its infancy
No orders or prosecutions were recorded during the reporting period. This is unsurprising given that the Act only came into force in 2024, but it underscores the early stage of implementation. Over time, enforcement signals will be critical to drive more than procedural compliance.
What this means for business leaders
Canada’s findings mirror a global pattern: progress on policy and awareness, combined with limited visibility and weak remediation. For organisations operating across jurisdictions — including those preparing for emerging EU and US frameworks — the key lessons should be the following:
1. Move beyond disclosure toward verification.
Policies alone are insufficient. Investors, regulators, and civil society stakeholders expect evidence of implementation and impact.
2. Prioritise upstream traceability.
Forced labor risk is concentrated where transparency is weakest.
Technology-enabled traceability, supplier mapping, and on-the-ground intelligence are becoming mandatory tools.
3. Treat remediation capacity as a core compliance capability.
Remediation should not be rare. It should be
proactive, operationalized, and measurable.
4. Prepare for the convergence of environmental and human rights due diligence.
Material flow transparency is already required in sustainability regulation. Human rights due diligence will increasingly track alongside resource traceability frameworks, particularly in raw-materials-intensive sectors.
As regulatory regimes evolve, organisations will be judged not by statements of intent but by verifiable action, upstream visibility, and effective remediation. Those who build credible systems now across risk screening, supplier engagement, traceability, and incident response will be positioned not just to comply, but to compete.
