CANADA Law and Practice Contributed by: Sarah Gingrich, Sean Stevens, Marie-Josée Neveu and Tracy Hooey, Fasken
(FCLA) entered force in January 2024. The FCLA requires covered entities to file annual reports addressing the risk of forced or child labour in their supply chains, both in Canada and inter - nationally. The reports must also address the company’s related due diligence processes and employee training, if any. Covered entities include companies listed on a Canadian stock exchange or doing business in Canada that meet at least two of the following three thresholds for at least one of the last two financial years: at least (i) CAD20 million in assets, (ii) CAD40 mil - lion in revenue, and/or (iii) 250 employees. Regarding corporate transparency, several Canadian corporate statutes (see 1.1 Forms of Corporate/Business Organisations ) now require the disclosure of information regarding individu - als with significant control over privately owned companies. For example, the CBCA requires the identification of any person owning or controlling 25% or more of the company’s shares, whether individually or together with related persons. This has been the case since 2019. However, in 2024 the CBCA was amended to add a federal register of individuals with such significant con - trol, parts of which register are publicly available. The aim of the disclosure is to assist authori - ties in fighting money laundering, tax evasion and similar illegal activities, and the legislation includes whistle-blower protections. Penalties for non-compliance include a maximum fine of CAD1 million. For further discussion, including recent develop - ments in ESG or sustainability reporting, see 2.2 ESG Considerations . 2.2 ESG Considerations ESG reporting in Canada remains fluid as pub - lic companies continue to consider how best to approach ESG disclosure and build reliable
internal systems to address evolving stakehold - ers’ demands. Key issues in ESG reporting in Canada have recently included: • board oversight, where boards are taking a more active role in ESG oversight, with increasing involvement from audit commit - tees; • executive compensation, where some com - panies are incorporating ESG metrics into their short-term executive compensation decisions; • reporting frameworks, where sustainability reports are becoming a key tool for ESG dis - closure and with companies referencing one or more frameworks in their reporting; • assurance, where companies are increasingly obtaining third-party assurance (typically lim - ited assurance) for specific ESG disclosures; • greenhouse gas (GHG) reporting, where some companies are addressing GHG emissions reduction targets; • indigenous engagement, where some Cana - dian public companies are disclosing policies focused on engagement and reconciliation, particularly companies in Canada’s resources and finance sectors (see also 2.1 Hot Topics in Corporate Governance ); • forced labour and child labour, where Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act has recently entered force; and • shareholder proposals, where Canada’s financial services industry receives the most ESG-related shareholder proposals. Relatedly, the authors have begun witnessing the ESG disclosure of Canadian public compa - nies shift from employing “ESG” terminology to broader “sustainability” terminology.
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