THE STANDING SENATE COMMITTEE ON HUMAN RIGHTS
EVIDENCE
OTTAWA, Monday, March 21, 2022
The Standing Senate Committee on Human Rights met with videoconference this day at 5:02 p.m. [ET] to study Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff.
Senator Salma Ataullahjan (Chair) in the chair.
[English]
The Chair: Good evening. I am Salma Ataullahjan, senator from Toronto and chair of this committee. Today is our third meeting on Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff.
I would like to introduce our first panel of witnesses. From the Retail Council of Canada, or RCC, we have Jason McLinton, Vice President, Grocery Division and Regulatory Affairs; from Equifruit we have Jennie Coleman, President; and we have Stephen Pike, Lawyer, Gowling WLG.
[Translation]
Jason McLinton, Vice President, Grocery Division and Regulatory Affairs, Retail Council of Canada:
I thank the committee members for the opportunity to discuss with you Bill S-211 today.
Allow me to give you a quick overview of the Retail Council of Canada.
The retail industry is the biggest private employer in Canada; more than 2 million Canadians work in our industry. Recognized as the voice of Canada’s retailers, RCC represents over 45,000 merchants of all kinds, including department stores, specialty stores, discount stores, independent stores, online shops and food retailers.
[English]
Retailers support the purpose of Bill S-211, fighting against forced labour and child labour, and ensuring that Canadian supply chains do not contribute to these global human rights abuses. Supply chain transparency legislation is a relatively new policy tool to promote responsible business conduct in this area. As Canada looks to introduce legislation to address the issue, RCC supports the proposed approach in Bill S-211. It will establish a legislative foundation that will allow Canada’s efforts to evolve as experience is gained.
Canadian retailers are committed to sourcing responsibly. Driven by a commitment to continuous improvement, they take steps throughout their operations to prevent and reduce risks to human rights abuses. This is challenging work. Global supply chains are complex, to say the least. A retailer’s visibility into their supply chains varies depending on their business model, including whether they sell their own brand products or carry other brands and products purchased through importers and distributors.
We appreciate Senator Miville-Dechêne’s dedication and the collaborative spirit with which she has developed the proposed legislation, including several significant amendments from the previous iteration of the bill. In particular, RCC supports the new provisions that would require the government to report as well.
Our recommendations are intended to promote compliance and to ensure the legislation can be effectively implemented by retailers who operate in Canada.
First, with regards to report contents, RCC agrees that the key components of the report should be outlined in the legislation and that these requirements should broadly require entities to share information on their sourcing practices in this regard. The section in the legislation that covers report contents would benefit from a clear indication that reporting on a business’s structure is intended to be a general description and does not apply to confidential or competitively sensitive information. An amendment to the reporting requirements on risk, issues identified and the remediation actions for them should be prescribed by regulation rather than in the legislation. It will be critical to ensure that strong compliance programs are in fact rewarded through the reporting requirements. Identifying an issue and taking action as a result demonstrates effective policies and compliance efforts. It will also be important for reporting requirements to reflect where there is greater control over supply chains.
Second, the legislation should focus on larger businesses as a first step. This is particularly important as companies are facing unprecedented supply chain challenges and focusing on recovery from the COVID-19 pandemic, extreme weather events and global unrest. To this end, RCC recommends that an $80 million revenue threshold be applied, which is more in line with international precedents in the U.K. and Australia. Furthermore, we recommend refining the definition of “entity” in order to clarify that a franchisor and not every individual franchisee is covered and must report to clearly exempt logistic and transportation providers and to add a regulation-making authority to allow for other such clarifications if required.
With regards to compliance, RCC recommends adopting an education-first approach with a request to provide provision, which is in line with the spirit and intent of the legislation. Penalties should be focused on wilful non-compliance or intentional provision of false information. With regards to implementation timelines, RCC recommends that the coming into force period be established by regulation and that industry is provided a minimum of two years for implementation in order to provide sufficient time for the development of guidance materials by the government and subsequent preparation by the entities.
Finally, complementary action from government will be critical, including resources for industry, such as country‑specific analyses and a repository of factories or suppliers associated with forced or child labour. In closing, RCC members strongly support the overall objective of the proposed legislation and encourage further collaborative actions to address these challenging issues.
[Translation]
It would be my pleasure to answer your questions.
[English]
Stephen Pike, Lawyer, Gowling WLG (Canada) LLP, as an individual: Good afternoon, senators. It’s an honour to have the opportunity to speak to you this afternoon regarding Bill S-211, Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act. My evidence today represents my own views, and I’m here as an individual, not representing my law firm, clients or any third parties.
I’m a business lawyer based in Toronto and advise clients predominantly in the consumer products sector, clients with headquarters in Canada, the United States, Europe and Asia. I have worked for many years on issues pertaining to forced labour and child labour in supply chains, including advising clients, writing, as well as speaking and presenting to businesses, and business and legal organizations.
In my view, there are three critical factors that support moving forward in the Senate with Bill S-211: urgency, progress and opportunity. Let me address each of these briefly.
There are two dimensions to the urgency to proceed with Bill S-211. The first is the growing gap between Canada’s laws and the laws of many of our biggest trading partners. As our trading partners have enacted legislation to require businesses to report on human rights risks in their supply chains and laws requiring businesses to carry out mandatory human rights due diligence, our legislative cupboard is empty. Our efforts are lagging, and with the new proposed EU directive, we may fall even further behind.
The second dimension of urgency is the continuing and expanding exploitation of millions and millions of adults and children who are trapped in forced labour and child labour around the globe.
Sadly, last year the International Labour Organization and UNICEF published a report that the number of children in child labour rose to 160 million, an increase of 8.4 million children over four years. That’s equivalent to almost the entire population of the province of Quebec. Time is not on our side.
The second factor is progress. Given the urgency, it’s time to act now and make progress. In my view, Bill S-211 is a reasonable, appropriate and evolutionary first step forward, using supply chain transparency reporting to draw attention to these critical issues and to catalyze actions to address these human rights abuses. Given the urgency to deliver progress in this fight and given the traction that Bill S-211 has developed, I can see the Senate recognizing that Bill S-211 is an appropriate first step for Canada.
While there may be other options, such as mandatory human rights due diligence legislation, given the years that it has taken for any legislation related to forced labour and child labour in supply chains to have proceeded this far in the parliamentary process, casting it aside and starting anew — for a number of reasons — could potentially add years to the timeline for the passage of needed legislation. Surely Bill S-211, as a first step forward, would provide a solid foundation for any additional legislative or regulatory actions.
The third factor is opportunity. As Bill S-211 states in its title, this is a fight against forced labour and child labour in supply chains. However, Bill S-211 becoming law and the required posting of annual reports by Canadian businesses will not be the end of this fight; it is only the beginning.
I see Bill S-211 as being fully aligned with the growing demands on businesses from investors, lenders, consumers and other stakeholders for environmental, social and governance — or ESG — reporting and more transparency as to ESG risks and how businesses are managing them, including the oversight of ESG risk management by boards of directors.
The deployment and utilization by investors, lenders, consumers and other stakeholders of the information in the annual reports to be posted and filed under Bill S-211 have enormous potential to drive positive change for Canadian business and hopefully for those trapped in forced labour and child labour at the other end of so many supply chains.
Let me conclude by humbly suggesting that it is time to take the opportunity to make progress on these urgent issues. Thank you.
The Chair: Thank you. Ms. Coleman, the floor is yours.
[Translation]
Jennie Coleman, President, Equifruit: Honourable senators, thank you very much for this opportunity to share with you Equifruit’s history, to raise your awareness of issues that we are facing and that exist in our industry, and to express our support for Bill S-211.
[English]
I am the president of Equifruit, a Canadian importer and marketer of fair trade fruit, mainly bananas.
The banana industry in North America is dominated by players established over a century ago, whose founding business model was based on paying essentially nothing for land, often through political machinations, and paltry sums for labour to produce fruit that would sell more cheaply and thus become more popular than apples, the reigning fruit champion at the time. And succeed they did, and to this day we Canadians eat 15 kilos of bananas per capita per year, a far lead on the poor apple, which comes in second at 10 kilos per capita per year.
Bananas are also the cheapest fruit in our basket. According to Statistics Canada, the average retail price in February was 74 cents a pound, about a third of the price per pound of apples.
Now, the world didn’t need another banana company to satisfy the demand for cheap fruit. Instead, Equifruit aims to disrupt the banana industry, with a focus on creating a fairer distribution of value along the supply chain, particularly at origin, where small producers and plantation workers live precariously in generational poverty.
While we at Equifruit are paid to bring bananas from point A to point B, our main challenge is to change Canadian mindsets on bananas, to get Canadians thinking about where this fruit is grown, by whom, and under what conditions. This can make for awkward conversations and it can make a lot of people uncomfortable.
From our start, all of Equifruit’s fruit has been certified by Fairtrade International, with its attending price, social premium and responsible production frameworks, including the prohibition of child and forced labour.
Though we are happy to see more and more retail partners and consumers choosing Equifruit’s alternative, fair trade bananas have less than 2% market share in Canada. So what do we do about the other 98%?
The notion of cheap bananas is so ingrained in North American consumer culture that retailers often use bananas to cultivate price perception of their stores. While the prices of other goods have been allowed to rise with inflation, banana pricing has been stuck in a counter-inflationary time capsule. The average retail price of bananas in January of 1995 was 62 cents per pound. In 2022 dollars, this would be $1.05 per pound, and yet we often see bananas priced at even lower than 1995 prices.
This has disastrous consequences upstream and leads producers to look for ways to cut costs to meet unsustainable downward price pressure. And who is the most vulnerable in that whole supply chain? What corners can be most easily cut to satisfy our need for cheap bananas? Because this is when we learn that bananas don’t all taste so sweet, that bridging the gap between those low, low prices at retail and the sustainable cost of production — sustainable economically, socially and environmentally — there are people and children who subsidize our favourite fruit through their exploited labour and abusive working conditions.
To give a few examples, the U.S. Department of Labor’s 2020 List of Goods Produced by Child Labor or Forced Labor includes bananas. A recent report on labour conditions in the Guatemalan banana industry found that 85% of production takes place on non-unionized farms supplying the major banana companies, where labourers work under slave-like conditions, 68-hour average workweeks, for US$1.05 per hour.
This isn’t pencil-pushing. This is hours and hours of hard physical labour where workers report high levels of verbal and sexual harassment with few workplace safety precautions. Canada imports 40% of its bananas from Guatemala, and we wonder why there’s a migration crisis on the southern U.S. border.
It’s also documented that migrant workers on banana plantations from Haiti to the Dominican Republic, Nicaragua to Costa Rica, and Venezuela to Ecuador, are the victims of forced labour. Such is their desperation for work.
But instead of condemning these appalling supply chain practices, or even asking questions about how bananas can still be so cheap, we celebrate these cheap prices.
One western Canadian grocery chain has signs up over their banana section that read, “Always lowest guaranteed. We can’t guarantee your kids won’t monkey around, but we can guarantee we have the lowest price on bananas.” Their price per pound is 66 cents. As a national grocery store chain advertises on huge in‑store billboards, “Paying too much for bananas is bananas.” Their price per pound is 56 cents.
Bananas are an easy product to talk supply chains about, and we all have a relationship with them. They are very accessible, because they are essentially a raw material from the time they leave the plantation to the time you put them in your shopping basket. There’s no transformation and no complicated recipe. It would thus be easy to say “what you see is what you get,” but this is precisely why Equifruit supports Bill S-211, because what we see only tells part of the story.
Low prices should be a big red flag that something is amiss. But if red flags are ignored, then a reporting framework, such as that proposed in this legislation, is an excellent starting point for Canadian companies to dig a little deeper, ask questions, and make changes to their supply chain. Hopefully together we can ensure that kids aren’t part of those supply chains and can be left to do what kids do best: monkey around.
The Chair: Thank you to all the witnesses for your opening remarks and for being here and helping us to move our study forward.
As is our previous practice, I would like to remind each senator before we start the questions that you have five minutes. That’s for the question and for the answer. I think we are all familiar with Zoom now. We have lived with Zoom for two years, so we know what to do with the raised hand, and I will recognize you.
We will start with questions from the deputy chair.
Senator Bernard: Let me say thank you to each of the witnesses. I have a question for each of you. I’m not sure if we’ll get through all of them in the time allotted. If not, I’ll go on the second round.
I’m going to start with you, Ms. Coleman. Thank you for the very compelling testimony you’ve given. But beyond ensuring the absence of forced labour or child labour, what other social and environmental factors do you consider in your operations, and how might that change some of the narrative that you’ve highlighted?
Ms. Coleman: Thank you for the question. Equifruit works within the parameters or the framework of our certification, Fairtrade International. I don’t speak for Fairtrade, but I can explain to you how that works. Essentially, both buyers and sellers have responsibilities in the transaction. So a buyer like Equifruit must respect a Fairtrade Minimum Price. It’s a price which has been set in conjunction with producers to represent the cost of sustainable production.
In addition to that, we contribute what’s called a Fairtrade social premium. This is an additional amount that is used by the cooperatives or workers on plantations that we source from to either invest in community development projects or, in the case of cooperatives of small producers, to make improvements to the infrastructure or capacity building of their cooperatives.
This price is based on an agreement that, on the production side, producers will have followed standards to make sure that economic, social and environmental standards have been respected. So if we think about economic standards, we’re thinking about things like formalizing employment. This is a very, very easy way for forced labour to occur when a worker on a plantation doesn’t have a written contract that is matched with anything that is in the administration of the farm.
When you are not in the formal economy, then your pay can be anything that is determined by the farm owner. Under Fairtrade rules, for example, each worker would need a written contract with working conditions, hours and pay that would match something that was easily available in the farm administration’s office. That’s just one example of economic sustainability.
So we talked about prohibition of child and forced labour. There are also rules around gender equity and workplace health and safety. If we look at environmental rules, Fairtrade isn’t an organic certification. It covers both organic and conventional production. So most of what Equifruit imports is organic, but we do have Fairtrade conventional bananas as well. But there is a list of pesticides and hazardous materials which sets out how production can happen — which ones on the red list can never be used under any circumstances, which ones can be used under very proscribed circumstances — and in that case this also becomes a worker health and safety issue.
One of the problems in large-scale banana production is the lack of worker protection. This is worker protection on the use of pesticides. It’s well documented. You just have to Google “bananas” and “pesticides” to know that this has had really terrible consequences on worker health. So Fairtrade doesn’t want us through this framework to be buying bananas for which somebody else has gotten sick.
I could speak all night about the Fairtrade framework, but I think that gives you a little bit of an idea.
Senator Bernard: Thank you.
Senator Miville-Dechêne: Thank you for your testimony. I will address my first question to Mr. McLinton.
You said that the measures taken to remediate any forced labour and child labour, which is included in the bill I’m sponsoring, does not appear in either the U.K. or the Australian legislation.
I’m a bit surprised by this, because the Australian legislation says that the reporting entity has to report through a due diligence and remediation process. How do I understand the difference between your reading of my bill and my reading of the Australian bill?
Mr. McLinton: Thank you for the question, senator. I should probably clarify that if that’s how that came across, that was not the intent. That is not my understanding that it does not appear in either of those pieces of legislation, which I’m not the expert on.
What we are proposing is that those components of the report are developed by regulation as it warrants further discussion with industry in order to promote the idea that identifying any risks and taking any corrective measures is in fact a good thing. If I gave the impression that I thought that didn’t appear in other bits of legislation, allow me to clarify that giving that impression was not my intent.
Senator Miville-Dechêne: Why should it be in the regulation? We state in the law that remediation is important. It means not leaving the people you throw out of the company if there’s a forced labour case; it means helping them out afterward. Why should we put that in regulation? It is pretty basic in every law about transparency and struggling to end forced labour.
Mr. McLinton: Yes. To clarify, we fully support the direction the bill is taking. Our members and I believe this requires additional consultation because it carries the possibility of misperception; there could be a misperception that if a risk has been identified or if a corrective measure has been taken, it’s taken as proof that something isn’t working in the supply chain whereas, in fact, the opposite is true. It is a very good thing to identify risks. It is a very good thing to take remedial action.
We believe that it would require a little bit more consultation with industry so that the report is framed in such a way that it encourages that type of reporting.
Senator Miville-Dechêne: Thank you for your clarification.
Mr. Pike, some business people have said that this law is too severe, that too many companies are included, that it should only be aimed at very large companies and that reporting requirements are complicated.
You are in the business of advising companies, Mr. Pike. Is that true?
Mr. Pike: Thank you for the question, senator. It’s very difficult to take positions where we are generalizing for every business and industry, whether they be big or small. Certainly while we see in other legislation, like Germany’s Act on Corporate Due Diligence in Supply Chains (Supply Chain Due Diligence Act) with a staged coming into force that is dependent upon the size of the company, the information here is very subjective with respect to the particular company, where it operates and how it operates.
I don’t feel that you can really generalize for all businesses. I think the reports will be very bespoke to each business.
I will just add that I’ve read at least one report from every single Canadian company that’s filed under the California Transparency in Supply Chains Act, the U.K. Modern Slavery Act and the Australia Modern Slavery Act, and they are very different; they are very bespoke to those businesses.
It’s very hard to simply agree with the statement that it’s too hard, it’s too difficult, or the level of revenue is too low or too high. Thank you.
Senator Miville-Dechêne: Thank you. So it’s feasible, in a word.
Senator Boyer: I want to thank all of the witnesses for being here today. It’s really important to hear all of your viewpoints. I will never eat a banana again without thinking about what you’ve said today, Ms. Coleman. That’s very important.
I have a question for Mr. McLinton. In reviewing your profile on the Retail Council of Canada website, I noticed that there’s mention of your volunteer involvement with the Women’s Initiative for Safer Environments, and I am particularly curious about how your volunteer work has informed your understanding of the inner workings of Canadian retail in relation to women. Relying on the understanding and your expertise in this area, what specific advantages could an annual reporting scheme, such as what is proposed under Bill S-211, do to protect Indigenous-owned industries and specifically female Indigenous industries?
Mr. McLinton: Thank you for your question, senator. I honestly didn’t think I’d get a question about my personal profile, so thank you for that.
Yes, it’s a subject that is near and dear to my heart and to people who are close to me. That’s something I enjoy doing in my spare time, and it’s very meaningful to me.
I don’t know that I would be in a position to comment on your question. I would be in a position to comment, for example, on how Bill S-211 would impact the retail sector as a whole. For example, in our case, it’s the writing of the reports themselves that would be new. A lot of our members do corporate social responsibility reports. A lot of our members are very active in those areas, but it would be putting the reports together in this type of format that would be new to them.
So I could speak to that as a whole, but I don’t know that I would be the one to speak to anything beyond the retail sector as a whole.
Senator Boyer: Okay. So would you be okay speaking on anything gender specific?
Mr. McLinton: I can speak on behalf of the retail sector.
Senator Boyer: Okay, thank you. If you would go ahead, I would appreciate it.
Mr. McLinton: In terms of what would be new under —
Senator Boyer: Yes, under Bill S-211, under the annual reporting scheme, what would be —
Mr. McLinton: It would be the writing of the reports. Our members are very active in this area, but it would be the writing of the reports in this specific format and content that would be new to them.
Senator Boyer: All right. Thanks very much.
Senator Bernard: My next question, then, would be for Mr. Pike. Could you tell us how Bill S-211 compares to supply chain transparency legislation in other jurisdictions? More importantly, what lessons from other jurisdictions could be used to possibly strengthen this bill?
Mr. Pike: Thank you for the question, senator. I’ll give you my own personal views on this.
There are a number of things in the bill that have really taken a position that is much broader, such as the inclusion of federal government entities in terms of reporting so that both the private sector and the public sector can share what they’re doing in terms of addressing forced labour and child labour in supply chains.
Second, I would say that the inclusion of the ban on child labour and the ban on the importation of goods made with child labour is different than any other transparency legislation in that it is actually taking an active role in preventing the flow of goods into a country. That is quite novel and very important in terms of the fight against child labour in supply chains.
The other thing that I think is different is that the penalties that would be imposed on failure to file returns or reports, or failure to adequately comply with the legislation, are very important, as well. That’s a significant difference that brings a lot of rigour to compliance, and businesses will certainly understand that.
I think those are the three biggest differences from other transparency in supply chain acts.
Senator Bernard: Thank you.
I have a question for Mr. McLinton. In your view, what would be the benefits and drawbacks of creating a framework for voluntary reporting by smaller companies that are not subject to mandatory reporting requirements under this bill?
Mr. McLinton: Thank you for the question, senator.
Look, it’s been a challenging couple of years, as we all know, and retailers operating in this country have been subject to all the things that we all know about. Today some of the witnesses have mentioned inflation and extreme supply chain challenges. When you think about recovering from COVID-19 generally but also extreme weather events and even what’s happening right now with regards to the CP Rail work stoppage, it is a very difficult and challenging environment to be operating in. So for smaller businesses, I think the way to go for them is an education and outreach approach, and I think government can play a significant role there.
One of the drawbacks right now would be that it’s a very difficult time to be operating in Canada. We need to be mindful of that and take an approach that is more about education and outreach with smaller- and medium-sized enterprises.
Senator Bernard: Thank you.
Senator Hartling: Thank you to the witnesses for being here this evening. It’s very interesting. I’m going to go back to the bananas now. Thank you for your presentation. You’ve left me thinking a lot about this question.
I’m wondering about two things, Ms. Coleman, and thinking about the whole question about advertising and how people today are looking for the best prices, because we know with inflation things are going way up. In your company or other companies, are you aware of any advertising or awareness that’s helping to let the Canadian population know about where these cheap bananas are coming from?
Second, would this Bill S-211 help create awareness so that we’re not buying and getting bananas so cheap and not knowing where they’re coming from? I’m curious about the question about the bananas.
Ms. Coleman: Thank you for the question.
It can feel a little bit lonely out there. The main people who are beating the banana drum, so to speak, are Equifruit. We’re a small company. We are determined to make change, and we’re determined to be a loud voice for this change, but there isn’t another NGO or advocacy group that is out there doing this work for us. In fact, it’s sometimes a bit of an awkward situation where we are in a dual position of both being the advocate and the commercial partner. Sometimes it’s hard to go into a meeting and tell a retail buyer what they’ve been doing for the last 30 or 40 years is highly problematic but still come and work with us; we’re great people. It’s very tricky.
In our marketing, we try to take the tension out of the topic. We always loop back to the fact that we are representing farmers. We want farmers to be paid fairly, and for plantation workers to be paid fairly. We usually start with a crazy hook like we are the only banana to binge-watch or the only banana on 5G. Then, of course, people are like, “What? How could this banana be on 5G?” Then the copy underneath will say something like, “We can freak out about next-generation technologies, but spending 30 seconds learning about how farmers should be paid fairly, let’s make it quick. This is the only banana you should buy.”
We hope, through that, people will go and learn more. Why is this the only banana, and what’s going on? Are farmers not being paid fairly? It’s very tricky on a fruit where you don’t have a lot of label space to communicate that information. This is our organic bananas, and we have these messages around our band.
The second part of your question was on whether this legislation would make a difference to the way people bought bananas. This is a very, very good start. I think we’ve been behind in Canada. Equifruit is the only Canadian member of the World Banana Forum, which is a multi-stakeholder group of industry players based out of a secretariat at the FAO, the Food and Agriculture Organization of the United Nations in Rome. Most other members from consumption countries like Canada are Europeans, and when they find out that we don’t have any modern slavery legislation on the books, people are taken aback and appalled. How can this be, when this is, as we’ve discussed, advanced in many, many European jurisdictions?
This legislation is a terrific first step to getting us to think differently about our supply chains and asking people to, as I said in my opening remarks, dig a little bit deeper to find out where their fruit has come from.
Senator Hartling: Thank you very much.
Ms. Coleman: My pleasure.
[Translation]
Senator Gerba: Thank you, witnesses, for joining us today. This is highly relevant information. I will address Ms. Coleman.
Your story about the banana really affected me on a personal level, as I am very attached to the banana, having come from a country that is among the biggest producers in the world, Cameroon.
It really affected me. What especially affected me was learning that only 2% of bananas are fair trade and organic certified. Is that indeed what you said?
Ms. Coleman: Yes. Here in Canada, fair trade bananas don’t even account for 2% of the market.
Senator Gerba: I also come from a sector that makes extensive use of fair and organic trade. I have worked a lot with women who produce shea butter in Burkina Faso. To make a long story short, where I lived before, my company launched the first shea butter certification in the world. My question concerns the certification process. Do you think this legislation could require businesses to get a fair trade certification, which would help establish some sort of traceability of the products’ acquisition process, even the production process? In the case of shea butter, we established traceability from the harvesting of shea nuts all the way to our production plant in Burkina Faso, and then a separate certification from production in Burkina Faso to Canada. So we are talking about documented traceability, and we have to show every year that we always use the same procedure. Do you think that mechanism could improve the bill by adding something to the certification that would require businesses that produce or purchase to be accountable and to keep their documentation up to date?
Ms. Coleman: Thank you for this question. Congratulations on your work with shea butter. I really admire that. If I have understood correctly, this bill is specifically targeting transparency in our supply chains.
So fair trade certification is helping us achieve complete transparency in our supply chain. We import containers of bananas, we work with small producers and small producers’ cooperatives. For the 960 containers that come from our cooperative in Peru, 40 or 60 producers often contribute to the total, even if we are talking about only two or eight containers.
So yes, I believe that when we know directly who produced the goods, it is no longer a matter of generality; we are talking about a human being. That individual does work for which compensation must be provided and for which a fair price must be paid. So I fully support anything that can improve the traceability of our products.
Senator Gerba: Could we — Go ahead.
Ms. Coleman: At the beginning of your question, you asked whether there would be more demand for a product with that traceability, if I understood correctly. I don’t think we are struggling to find producers who want to work with us.
If you had the choice between selling your product to Equifruit, which will pay you a fair price that is sustainable for production, or sell your crop to a third party, which will sell it to a large banana company that will offer $4 a case one week, $6 the next, $2 the week after that, who will you choose? So it is not an issue for us to find partners who want to work with us; there really is a large demand. That is why I said, during my remarks, that our challenge at Equifruit is really changing people’s way of thinking. Perhaps paying a bit more at the grocery store to have a clean and transparent supply chain is not such a high price to pay.
Senator Gerba: Thank you.
Ms. Coleman: Thank you.
[English]
Senator Miville-Dechêne: My first question is for Mr. Pike. There has been a lot of talk in the hearings here about a due diligence bill that would be stronger and more efficient to combat forced labour and child labour. Obviously, I’m not against any due diligence law, but because you’re an expert on this question, I would like you to tell us about the complexity of due diligence laws, maybe through the Swiss example. In your speech you said let’s move in the Parliament, but I’d like you to speak a little bit about the complexity of those bills.
Mr. Pike: Thank you for the question, senator. I can speak for a minute about the Swiss Responsible Business Initiative. That was initiated in Switzerland by a number of different civil society organizations, and the goal was to impose a mandatory due diligence process requiring Swiss businesses to identify actual and potential impacts based on internationally recognized human rights with the UN Guiding Principles. It took about four and a half years from the initiation of that initiative to get to a vote that, under Swiss law, was required to be approved by a double majority of Swiss voters in a national referendum.
I’ll just make a comment about the way the law was structured. Under this structure, it would make Swiss businesses liable for adverse human rights impacts and environmental misconduct of companies they controlled. That was the starting point — that they were responsible for those human rights impacts and those affected by the impacts would have access to Swiss courts. The onus was on Swiss businesses to prove that they’ve taken all due care to prevent these adverse impacts or that the adverse impacts would have occurred even if the requisite care had been taken. That’s what I call the reverse onus and it was potentially punitive to Swiss companies. It failed to achieve the double majority in the referendum in November 2020. Instead, a counter proposal came into law, which was essentially supply chain transparency reporting with very limited mandatory due diligence, and only with respect to conflict minerals and certain aspects of child labour.
My comment on that is that after four and a half years, they were back to the starting point. This supply chain due diligence legislation can be more complicated than simple reporting because of what it does; for those who may not be familiar with it, it’s more than just due diligence. The European due diligence legislation carries with it a statutory duty of care and statutory liability for the companies that are subject to the law. While in North America, in my opinion, when we talk about due diligence, we’re thinking of inquiries, audits and investigations to confirm a certain set of facts. The European human rights due diligence and environmental due diligence includes that but also includes a duty of care to identify, prevent, mitigate and remediate human rights abuses that are found. It goes far beyond a simple investigation for carrying out due diligence; it includes liability. Thank you.
Senator Miville-Dechêne: Thank you. I have a short question for Mr. McLinton. You said two things about the bill that I’m sponsoring, and I will once more try to correct what I think was not exact. You’re saying that what you would like is a bill that only punishes businesses that knowingly report false information or where there is willful non-compliance, but that’s exactly what Bill S-211 is doing. We’re not punishing people who report. If the report was not complete, we are saying there would be penalties for people not reporting and penalties for boards lying, which is exactly what you’re saying. Are we in agreement on that?
Mr. McLinton: Thank you for your question, senator. Yes, we are in agreement. This is why we have these types of hearings — so we can have a discussion and get clarification around this.
What we’re suggesting is that the legislation takes a compliance-promotion-first approach. When I look at the sections on administration and enforcement, there are sections on entering a place, inspections and warrants, and things like that. What we’re suggesting is that there be provisions on a duty to provide information as a first step rather than going immediately into entering a premise, fines, and that sort of thing. We’re in agreement. We just think this legislation would benefit from that additional step.
If I may, as a reminder, we and other witnesses have been talking a lot about legislation that’s being introduced globally in this area. We recognize that Canada intends to legislate in this area. As Canada looks to do that, we think that the approach taken in Bill S-211 is the correct approach.
Senator Miville-Dechêne: Thank you.
The Chair: My first question is for Ms. Coleman. To what extent is forced labour and child labour used in banana production, and in which parts of the world is it more prevalent?
Ms. Coleman: Thank you for your question, Madam Chair. To be honest, I don’t have a clear statistic on what percentage of production would be thanks to child or forced labour. I think that it’s hard to measure that when nobody will actually admit to these practices, so I’m afraid I can’t give you a clear answer on that.
The Chair: Specifically in the U.K., when you go shopping, they have big signs with most of the products indicating “fair trade.” They identify them.
What is the reason for that lack of awareness here in Canada? I know with young people it’s different. My daughters will look at things and they don’t mind paying a little more as long as it’s fair trade.
What do we do to make the public aware of the benefits of fair trade and how it helps people?
Ms. Coleman: Well, join my team, it sounds like.
In Europe, there has been a much greater citizen movement to promote and ask for fair trade goods. I don’t know whether this is a legacy of those countries’ colonial past and they are trying in some way to make amends for past wrongs, but that consumer pressure has pressured retailers to basically do the right thing.
With respect to the U.K. example, in the U.K., one out of three bananas is bought and sold on fair trade terms. That’s a huge market share, and that has happened because of consumer pressure, which has raised awareness among retailers there, and some big-name players, such as Sainsbury’s, Waitrose and The Co-operative Group, have made commitments — and long‑standing ones now; these happened in the 2006 to 2009 time frame — to source all of their bananas, organic and conventional, on fair trade terms. They just don’t want to be associated with those ugly supply chains.
We see other examples of retailers working together. In Germany, there is a group of very high-profile stores — not mom-and-pop stores — who about two years ago came together to work on a voluntary framework to ensure living wages in their banana supply chains. This work has just been approved by the anti-cartel, I guess — or not cartel. Oh, I’ve got a mental blank. It’s when you work together to fix prices — the word will come back to me in a moment. It’s to say that this can go ahead, that this is not anti-competition because those retailers are looking at their business practices. They are not agreeing on prices at origin but looking more deeply into their supply chains.
There’s another Dutch initiative by retailers of the same kind, and I think our challenge here in Canada is raising awareness of these issues which haven’t been on the front burner. As I mentioned in my introductory comments, it’s almost retail law not to increase the price of bananas. Bananas are seen to be what is called a KVI, or a known value item, which consumers buy on such a frequent basis that they will remember the price from store to store.
Other examples of KVIs are eggs, milk, bread, chicken breasts and Heinz ketchup. There are a number of these items, and so retailers are loath to be the first to increase prices on this very public commodity, the banana.
What we have seen is that people buy bananas on colour. They don’t actually buy them on price, or very few people do. We had a partner in Toronto, Longo’s, who did a full switch to fair trade, as we’ve seen U.K. or European retailers do. They increased the price, and we saw no dip in volume. Before the switch to fair trade conventional bananas, Longo’s had been selling bananas at 69 cents a pound. After the switch, they moved the price to 99 cents a pound.
Now, from a percentage basis, that is a very great increase, but for an actual increase, we Canadians, as I said, eat 15 kilos of bananas per year per capita. That’s 33 pounds, so we can all do the math on that: 33 pounds times 30 cents more per pound comes out to less than $10 per year. It comes out to less than $1.50 more per month, and less than 20 cents more per week. Twenty cents more per week for a clean supply chain — it’s not out of reach.
The Chair: Thank you. I shop at Longo’s, and 99 cents to me seemed like a normal price, so thank you for pointing that out.
Mr. Pike, I would like to ask you a question, and this might be a difficult one. We might not have an answer for it. I know that I don’t have an answer for this.
When we talk about child labour, there are certain social factors that we have to take into consideration, and this is a discussion that some senators have had over here. In my case, I’m from Pakistan where there is child labour, but sometimes it means a family getting fed or a family not getting fed.
Because I’m from Pakistan, I keep an eye on what’s happening there, and I know some business people and some artists have started schools for these children. They pay the children what they would make if they were out working; they pay them to go to school. But not every country can do that.
So when people ask me, “Have you considered what happens to the family if we say, ‘no, we do not want anything that is made by children?’” I don’t have an answer, Mr. Pike. I don’t know. Can you help me? Do you have any views on that? If any of the other witnesses do, we do have a little bit of time, so please feel free to jump in.
Mr. Pike: Thank you for the question, senator. Do I have an answer to that in terms of a solution? No, I don’t, nor do I think that I’m in a position to impose my views in terms of how to address this issue in any country.
I think it will depend on the history, the culture and society in those jurisdictions, and I don’t think that I’m able to provide an answer that would be suitable.
The Chair: Thank you. I feel the same way when I’m asked this question. It’s a question that we have been asked.
[Translation]
Senator Gerba: I had a comment for Ms. Coleman. Coming back to fair trade certification, just to answer the chair’s question, I would say that there is a lot of awareness in Quebec. For instance, when we started out, 20 years ago, no one was talking about fair trade certification, as in the case of fair trade coffee.
Today, I am learning a lot about fair trade bananas and shea butter. There is now a demand. The consumer is demanding that businesses pay a fair price, and as long as there is a demand, businesses will be forced to meet this fairness challenge, and therefore pay the producers a higher price. For example, we are seeing this more and more in Quebec with markets like TAU and Avril, which used to be a small merchants and have now become major distribution banners for organic certified products.
It would be good if we could get organized to make sure this bill has that kind of a dimension, but I don’t know how this could be integrated. Perhaps Mr. Pike could tell us how businesses could be forced to contribute to the establishment of a fair trade certification, so that we could ensure that businesses pay a fair price, do not employ children, do not force children to work and, in terms of society, establish mechanisms for sharing and redistribution, and for contributing to society’s well-being.
I will once again use the example of shea butter. Thanks to fair trade certification, we have been able to help producers access a health organization, for example. That health organization helps children who are sick, and makes it possible to get medication at the pharmacy and to take children to the doctor’s for free. That helps give back to society and have the social involvement that helps ensure children do what they’re supposed to do, go to school or play, as you said.
Ms. Coleman: Do you want me to comment?
Senator Gerba: I was asking whether you have comments to make on how this could be done. Mr. Pike, can you tell us how this could be integrated in a way that is not too restrictive for companies, which could add a social aspect to the bill?
Ms. Coleman: I will make a very short comment before I yield the floor to Mr. Pike.
I would say that change is slow, which is always the case. Yes, there is a demand, but the institutions, organizations and businesses with the most power also move extremely slowly.
For example, one of the largest grocery chains in Canada has a responsible procurement framework where it notes its purchase priorities. The first priority is for products to be local; the second is that, if the product is not available locally or does not come from local production, it should be purchased from a fair trade business.
However, that is a document on one level. There are 18 other levels, and then there is the banana buyer who has been buying in the same way for literally 40 years, who has nothing in their performance review that encourages them to prioritize fair trade purchases or other things and told us outright that we will have to wait for them to retire. So this is big machinery.
Senator Gerba: This is why it is important to integrate this element into the bill.
Ms. Coleman: Exactly.
Senator Gerba: If this was integrated into a bill, could that force businesses to relax their purchasing process in order to integrate the new elements?
The bill will become a law at that point. Mr. Pike, can you tell us if this is feasible in legal terms?
[English]
Mr. Pike: Thank you for the question, senator. Whether it’s feasible to integrate that component into Bill S-211, I think it would be very difficult. I’m not aware of federal legislation that incorporates social factors such as that into a regulatory environment, for example, for food.
Interestingly, I spoke at the annual Canadian Food Law and Policy Conference at the University of Toronto law school a couple of years ago. My presentation was all about modern slavery in food supply chains. While I applauded the work of Health Canada with the Safe Food for Canadians Act and the work of our regulators keeping our food supply safe, I posed the question: What about at the other end of the supply chain? Who’s keeping those people safe and dealing with their well‑being? I didn’t get an answer to that question, but I think in this act it would be very difficult to bring in legislation requiring compliance with certain standards for substances that are already currently regulated by the federal government.
Senator Miville-Dechêne: There is provincial jurisdiction and there are complicated factors that would make introducing certification difficult in that particular bill. But thank you for the question.
[Translation]
Senator Gerba, your discussion with the president of Equifruit was truly passionate. It is really really interesting to listen to you.
Thank you, everyone.
[English]
The Chair: Thank you.
Mr. Pike, I wonder if my daughter sat in that class you taught. She took law through U of T.
Since you all have been such excellent witnesses, I’m going to throw one last question at all three of you.
Let’s imagine you were queen or king for the day. What steps would you take to promote ethical procurement and trade practices? I’ll start with you, Ms. Coleman.
Ms. Coleman: If I were queen for a day; oh, my goodness. I think that probably we believe in certification because there’s a third party auditing our processes and those of our producers, and this means that we’re not marking our own homework. If we put out a corporate social responsibility, or CSR, report that says we’re the greatest and we’re doing everything, and somebody challenges me on that, I stand by the strength of the audit process of our certification.
I know that this legislation, as we’ve just said, is not a certification process, but I think that any mechanism that requires more than just lip service, fairwashing or greenwashing, or any of those other cycles, is a very solid step in the right direction.
Mr. Pike: It’s going to take me quite a while to come up with what my wishes are as king. However, let me say the following.
A few years ago I initiated a project in the Canadian Corporate Counsel Association, which is part of the Canadian Bar Association, to develop model business principles for Canadian companies to combat forced labour, labour trafficking and harmful or illegal child labour.
The number one principle — and as king I would want all companies to adopt this — was for companies to adopt a prohibition on using forced labour and child labour in its operations or its supply chain. Number one, the tone at the top, as one might say, would be to adopt that principle and then implement it throughout the business and its supply chains.
For number two, I look at laws relating to ethical procurement, especially for governments such as in the United States with the federal acquisition regulation that prohibits the use of forced, indentured or prison labour in the fulfilment of federal government contracts. It’s not a policy and it’s not a protocol; it’s law.
I think that having legislation such as Bill S-211 is very important in bringing forward ethical procurement because that transparency is something that can be easily understood by a wide variety of stakeholders. We would want to see more businesses adopting prohibitions on the use of forced labour and child labour.
I think we will see more ethical procurement as there’s more transparency into what businesses are doing. Thank you.
Mr. McLinton: Thank you, senator. That is such a good question. I think it allows folks to think outside of the box, and think more creatively about what could be done to address these important issues.
If I were ruler for the day, I suppose I could have two wishes in terms of increasing ethical trade practices.
The first one would be ensuring that government works with its international partners in terms of intelligence gathering, and then sharing that with the business community. Businesses have information through their own supply chains, but it’s really through this collaborative effort with government and then governments collaborating with their international partners to share information about challenging suppliers, challenging factories and things like that, that can be identified and shared. That would be my first wish.
My second one would be around consumer education. I think consumers are very, very savvy. They are more and more demanding that their products are ethically sourced. We are seeing things like demand for organic products increasing, animal welfare and environmental practices. So consumers are demanding these things, and I think that anything further with regard to educating the consumer so that they can make informed choices for themselves and their families would only be for the good.
The Chair: Thank you very much.
I want to take this opportunity, Mr. McLinton, Mr. Pike and Ms. Coleman, to thank you for being such excellent witnesses. I thank you for your testimony. Your assistance with our study is much appreciated.
Senators, our next meeting will be Monday, March 28.
(The committee adjourned.)