Canada's Modern Slavery Reporting: Two Years On
Two years into Canada's Modern Slavery Act, companies are filing reports and building policies — but real supply chain impact, remediation, and corrective action remain critically rare.
The Numbers: More Mature, But Fewer Filers
Canada's Fighting Against Forced Labour and Child Labour in Supply Chains Act came into force on January 1, 2024, and completed its second reporting cycle on May 31, 2025. In year one, 5,650 commercial entities submitted reports by the deadline — a strong initial wave. By year two, that number fell significantly: Public Safety Canada received just 4,313 reports before the deadline, down from 5,795 total in 2024. FRDM AI notes that this drop from roughly 5,650 submissions represents a meaningful decline, likely tied to updated scoping guidance that clarified entities solely involved in distributing or selling goods are exempt from reporting. Of those who did file in 2025, 642 reports came from U.S.-based companies and 216 from other countries, reflecting Canada's deep cross-border commercial ties. Over 700 companies reported they are already subject to other modern slavery laws — including the UK Modern Slavery Act, the California Transparency in Supply Chains Act, and the Australian Modern Slavery Act. The decline in filings, rather than signaling progress, suggests ongoing confusion about who is in-scope and what obligations actually require. For compliance, legal, and procurement teams, the filing drop is a warning signal. It does not mean risks have diminished — it means awareness gaps and readiness challenges persist. Companies that understand their obligations, and have the tools to map their supplier networks, are better positioned to determine whether they must file and what quality of reporting is expected.
Companies are building the foundation of compliance — but translating policies into measurable supply chain impact is where most still fall short.
The 2025 data shows meaningful year-over-year improvement in foundational compliance activity. Some 84.1% of entities reported having policies and due diligence processes related to forced or child labour, up from 71.3% in 2024. Training also jumped significantly — 61.7% of entities reported providing employee training in 2025, compared to just 43.7% the prior year. About 51% reported measuring program effectiveness using KPIs, audits, and supplier engagement. On risk identification, 44% of companies said they had identified forced or child labour risks in parts of their supply chain, while 39% said they had begun the process but still had gaps. Top identified risk factors were raw materials and commodities, followed by sector or industry of operation, tier-one suppliers, and factory locations. Many companies acknowledged limited visibility beyond tier-one suppliers, and into temporary and migrant labour — exactly the workers most exposed to exploitation. But the gap between reporting activity and real-world impact is stark. Just 34% of companies said they take steps to mitigate identified risk, only 29% track results, and just 26% engage in remediation. Most critically, only 5% reported identifying issues and taking corrective action. If nearly all companies claim zero incidents yet half have not completed a full risk assessment, something does not add up. The 2025 data makes clear that companies have largely figured out how to report — but not yet how to act.
Regulators have prioritized education over enforcement so far, but this grace period will not last indefinitely.
In both the first and second reporting cycles, Public Safety Canada focused its implementation strategy on stakeholder engagement, raising awareness, and improving report quality — not penalizing non-compliance. In 2025, no orders were made and no charges were laid against any person or entity under the Act. The government's stated goal was to encourage meaningful action by improving the quality of reporting, not to punish companies still finding their footing. FRDM AI notes plainly: regulators have focused on education, not enforcement, and no fines or orders have been issued yet — but this grace period will not last. The Act carries penalties of up to C$250,000 for failures to prepare or publish a report, refusing to assist an investigation, or disobeying a corrective order. As reporting matures and benchmarks are established, enforcement attention is expected to sharpen. Companies that have treated the first two cycles as a learning exercise should treat the next cycle as a moment of genuine accountability.
The shift from checkbox compliance to real supply chain visibility requires deeper data, consistent measurement, and technology built for the task.
FRDM AI's analysis of the 2025 data points to three practical actions companies should take now. First, they need to measure what matters — converting policies into performance data by tracking KPIs, audit results, training outcomes, and supplier improvements over time. Simply having a policy is no longer sufficient; demonstrating its impact is what year three and beyond will demand. Second, companies should build and test grievance mechanisms before they are needed. Only a small fraction of reporting entities have functioning remediation processes in place, and technology can help log, manage, and close cases transparently. Third, organizations operating across multiple jurisdictions should use a supplier risk management platform to standardize data and due diligence across Canada, the UK, Australia, and California — reducing redundant work and ensuring consistency across all applicable frameworks. The 2025 data paints a clear picture: companies have started the journey, but most are still reporting activity, not impact. Real progress requires deeper visibility, consistent measurement, and credible remediation. Modern slavery compliance is no longer just a legal requirement — it is a leadership opportunity to build transparent, ethical, and resilient supply chains that protect people and strengthen business.
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