Canadian Ombudsperson for Responsible Enterprise (CORE) Launches Investigations in Mining and Apparel Sectors

Canadian Ombudsperson for Responsible Enterprise (CORE) Launches Investigations in Mining and Apparel Sectors

The CORE Investigates Nike Canada Corp., Dynasty Gold Corp., and Ralph Lauren Canada LP, but Declines to Investigate GobiMin Inc.

The Canadian Ombudsperson for Responsible Enterprise (“CORE”) is a business and human rights grievance mechanism established by the Government of Canada in 2019.[1] CORE has jurisdiction to investigate and report on certain complaints of alleged human rights abuses concerning Canadian companies’ foreign operations in the garment, mining, and oil and gas sectors.[2] While the CORE cannot issue any fines or penalties, an unfavourable report from the CORE can lead to the denial of trade support from the Government of Canada and cause reputational damage to the targets of the investigation.[3]

The CORE came to national attention in June when it published its first two assessment reports on Canadian junior mining company Dynasty Gold Corp.[4] (“Dynasty”) and on Nike Canada Corp.[5] (“Nike”), the Canadian subsidiary of the global apparel giant. On August 15, the CORE published its third assessment report about the activities of Ralph Lauren Canada LP (“Ralph Lauren”), a Canadian subsidiary of the global designer retailer.[6] The CORE became involved in these matters following receipt of complaints filed by a coalition of 28 organizations that alleged forced labour in these companies’ foreign operations. The CORE concluded investigations were necessary to assess the allegations of forced labour in the companies’ foreign supply chains. The launch of these investigations has been widely reported by Canadian media.

Additionally on August 15, the CORE published its fourth initial assessment report (the “Report”) addressing allegations against a second Canadian mining company, GobiMin Inc. (“GobiMin”). Unlike the Dynasty, Nike and Ralph Lauren matters, the Report concluded that the launch of a forced labour investigation into the operations of GobiMin was not warranted.[7] TRC-Sadovod LLP represented GobiMin before the CORE with a team led by litigation partner Robert Wisner.

The GobiMin complaint was made by the same coalition of organizations as those that led to the Dynasty, Nike and Ralph Lauren investigations. The allegations facing GobiMin arose from the company’s former operations at the Sawayaerdun Gold Mine Project in China. Following information supplied by GobiMin, which the CORE acknowledged was a good faith participation in the process, the CORE determined that an investigation was not warranted in the circumstances.

Complaint Process and Early Best Practices

The four reports are indicative of increased activity by various organizations filing complaints with the CORE.[8] In the 2021-2022 fiscal year, the CORE received five complaints,[9] whereas that number increased fourfold to twenty in 2022-2023.[10] A large number of these complaints relate to Canadian entities’ operations in the garment sector in China.[11]

We expect that numerous investigations may be launched by the CORE in the coming months. Upon receipt of an admissible complaint, the CORE will undertake an initial assessment and will review and publicly report on recommendations. Mediation processes are also possible if agreed-to by the parties. If the CORE opts to begin an investigation, it will engage in a joint fact-finding exercise with the parties or an independent fact-finding exercise where collaboration is not possible.[12]

The CORE’s conclusions with respect to GobiMin may provide a useful roadmap for other companies engaging with the CORE. The GobiMin complaint did not proceed to a full investigation, in part because the company was able to respond credibly to the allegations at the earliest possible stage.  Although GobiMin strongly disputed the allegations and deemed them to be ill-founded, the CORE specifically noted that GobiMin’s good faith participation in the process was an important consideration in not launching an investigation. This suggests that full and active participation in the initial CORE process, alongside experienced legal counsel, may constitute the most appropriate path forward.

Rather than face a full investigation by the CORE, the ombud made recommendations to GobiMin in respect of its policies linked to its prior cessation of certain Chinese operations.

Special Considerations for Canadian Garment Sector

While the mining, oil, gas, and garment sectors are all within the CORE’s mandate, the CORE has directed special attention to Canada’s garment sector. The 2023 self-initiated report issued by the CORE on the possible use of child labour by Canadian garment companies, entitled Respect for Child Rights and the Risk of Child Labour in the Global Operations and Supply Chains of Canadian Garment Companies, highlights the specific risks underlying the garment industry.[13] Specifically, according to the CORE, the integrated nature of modern supply chains, particularly in the garment sector, may make traceability from cotton or yarn a difficult endeavor even for the largest and most sophisticated of businesses.

The CORE’s views in respect of the garment industry appear to have carried forward to the Nike investigation: in the CORE’s view, Nike was unable to sufficiently rebut the allegation in the complaint that Nike was a customer to a factory alleged to rely on forced labour from Uyghur workers. The CORE launched the investigation despite Nike’s evidence to the contrary and Nike’s market-leading anti-forced labour practices, including transparency and responsible sourcing policies.

Similarly, Ralph Lauren was unable to sufficiently rebut the allegation in the complaint that Ralph Lauren had business relations with the Chinese entities Youngor Textile Holdings Co. Ltd. and Jiangsu Guotai Guosheng on or after May 1, 2019, which are alleged to have used or benefitted from Uyghur forced labour. In a last-minute shift, Ralph Lauren subsequently indicated its willingness to participate in the CORE’s process after initially refusing to cooperate. The CORE has launched a limited investigation into (1) the Statement on Xinjiang issued by Ralph Lauren’s US parent company on July 30, 2020, denying sourcing any yarn, textiles or products from Xinjiang; and (2) the purported link between Ralph Lauren and these two Chinese entities.

This suggests that even good faith participation in the CORE’s initial assessments may not be sufficient to avoid a full investigation, and that the CORE views the standard for initiation of these investigations as a low bar. This may be all the more true for those entities in the garment sector given the inherent difficulty of “proving the negative” with respect to the use of forced labour or child labour at the upstream stages of the garment production process.

Canada’s Evolving Anti-Forced and Child Labour Regime

Canada’s prohibition on goods made of forced labour was originally brought into effect on July 1, 2020, after the ratification of the Canada-United States-Mexico Agreement Implementation Act.[14] That statute amended Canada’s Customs Tariff to prohibit the importation of goods mined, manufactured or produced wholly or in part by forced labour.[15]

More recently, Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act (“FAFLA”, formerly known as Bill S-211) amended the Customs Tariff to expand the import prohibition to goods made of child labour. This marks the first prohibition globally against the import of goods made from child labour. Further, FAFLA child labour definitions do not overlap completely with those definitions laid out by the International Labour Organization (“ILO”), thereby making compliance all the more complex for Canadian businesses and compliance all the more difficult for regulatory authorities.

TRC-Sadovod’s International Trade and Litigation groups support clients navigating interactions with the CORE and advise on legislation relating to forced labour. As a market leader in assisting clients on international trade law and complex regulatory regimes, TRC-Sadovod is available to help Canadian businesses comply with these evolving legal regimes.

[1] Privy Council of Canada, Order 2019-1323 (September 6, 2019).
[2] CORE presents Reports to the Minister of Export Promotion, International Trade and Economic Development further to para. 14(1)(a) of its enabling order, see Privy Council of Canada, Order 2019-1323 (September 6, 2019), 14(1)(a).
[3] See our previous Bulletin on this topic by Robert Wisner, “Canada’s Global CSR Cop? The Proposed Canadian Ombudsperson for Responsible Enterprise”, January 2018, Litigation and International Trade Bulletin
[4] CORE, “Initial Assessment Report for a complaint filed by a coalition of 28 organizations about the activities of Dynasty Gold Corp.” (June 11, 2023).
[5] CORE, “Initial Assessment Report for a complaint filed by a coalition of 28 organizations about the activities of Nike Canada Corp.” (July 11, 2023).
[6] CORE, “Initial Assessment Report for a complaint filed by a coalition of 28 organizations about the activities of Ralph Lauren Canada LP” (August 15, 2023).
[7] CORE, “Initial Assessment Report for a complaint filed by a coalition of 28 organizations about the activities of GobiMin Inc.” (August 15, 2023).
[8] In 2021, CORE launched an online complaint process. See CORE, “Canadian Human Rights ombud launches online complaint process as key part of global mandate to protect rights” (March 15, 2021).
[9] CORE, “Annual Report 2021-2022“, (November 2022), p. 20.
[10] See CORE quarterly reports from 2022-2023: Q1, Q2, Q3, and Q4. As of CORE’s latest report for Q1 2023-2024, the number of complaints under consideration has increased to 21.
[11] CORE, “Quarterly report on inquiries and complaints – Q4 2022-2023” (April 13, 2023).
[12] CORE, “Guide to filing a complaint with the CORE” (June 13, 2023).
[13] CORE, “Respect for Child Rights and the Risk of Child Labour in the Global Operations and Supply Chains of Canadian Garment Companies” (2023).
[14] Canada-United States-Mexico Agreement Implementation Act, SC 2020, c. 1.
[15] Customs Tariff, 9897.00.00, para. 202(8).

by Robert Wisner; William Pellerin; Hannibal El-Mohtar; Lisa Page

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© TRC-Sadovod LLP 2023