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February 27, 2024

Major Automakers Accused of Ties to Forced Labor in China

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Feb 1, 2024

Several major automakers including Tesla, Volkswagen, BMW, and General Motors are facing allegations that their supply chains are linked to forced labor involving the oppressed Uyghur ethnic group in China’s Xinjiang region.

Rights Group Report Details Complicity Links

A new report published on February 1st by Human Rights Watch found that global automakers are “entangled with abusive labor transfer and training schemes” within their China-based supply chains. Specifically, the report alleges that manufacturers of components like wiring harnesses, glass, and aluminum sourced from Xinjiang likely utilize Uyghur forced labor within their production.

Xinjiang produces over 45% of the world’s solar-grade polysilicon as well as a significant portion of China’s aluminum. The region has become notorious for its network of detention centers and forced assimilation policies targeting Uyghurs and other Muslim minority groups. Human rights groups estimate over 1 million Uyghurs have been arbitrarily detained. Allegations of torture, forced labor, and other abuses are widespread.

“No car company has an excuse for lack of action,” said Laura Murphy, professor of human rights at Sheffield Hallam University. “If failures continue, the auto sector runs the risk of repeating tobacco and textile industry scandals.”

International Companies Named

The Human Rights Watch report examined the supply chains of 12 major automakers with production sites in China: Volkswagen, General Motors, BMW, Mercedes-Benz, Volvo, Jaguar Land Rover, Tesla, Nissan, SAIC Motor, BYD, Geely, and Changan.

Researchers found all 12 have significant ties to battery suppliers linked to possible forced labor transfers from Xinjiang. Additionally, at least 3 companies source aluminum parts containing material from Xinjiang.

“Automakers are really exposed to forced labor risks because they have really complex supply chains,” said report author Laura Murphy.

Company Components with Forced Labor Risk
Volkswagen Aluminum, Batteries
General Motors Batteries
BMW Batteries
Mercedes-Benz Batteries
Volvo Batteries
Jaguar Land Rover Batteries
Tesla Aluminum, Batteries
BYD Batteries
Geely Batteries
Changan Batteries

Alongside Volkswagen and Tesla, Toyota and major Chinese manufacturers like BYD were determined to have the highest risks within their supply chains.

Swedish electric vehicle maker Polestar, owned by China’s Geely, said it started investigating its suppliers following the report. “We do not tolerate forced labour of any kind in our supply chain,” a spokesperson said. Tesla did not provide comment.

Calls for Increased Supply Chain Scrutiny

Investors, governments, and consumers are increasingly pressuring companies to improve transparency around supply chain labor conditions.

The Uyghur Forced Labor Prevention Act banning imports from Xinjiang took effect January 1st in the United States. However tracking goods to exact factories in the region has proven extremely difficult. China denies all allegations of forced labor.

“Brands bear responsibility to map their supply chains down to ingots, plants, and lacquering workshops and should apply the highest quality assurance checks on metal from Xinjiang,” said Nyrola Elimä, a Uyghur activist and former Chinese prisoner.

While some automakers have pledged to cut direct ties to Xinjiang factories, the level of due diligence further down their manufacturing supply chain remains unclear.

“It is critical for investors to pay attention to forced labor risks in China,” said Anita Dorett, senior program director at non-profit Investor Alliance for Human Rights. Shareholders like Blackrock have pressed automotive companies for increased transparency around labor abuses within both company operations and their supply chain.

What Happens Next?

Increased civil society pressure seems likely in the wake of the Human Rights Watch report. Groups will continue advocating investors and consumers avoid companies with substantial ties to Xinjiang forced labor until transparency and accountability improves.

“Consumers have enormous power to influence company supply chains for the better,” noted professor Murphy.

However disentangling complex automotive supply chains dependent on Chinese manufacturing won’t happen overnight. Major investments around responsible sourcing initiatives are required alongside evolving legislation addressing forced labor imports. Companies able to develop robust traceability systems and cut high-risk Chinese suppliers first will be best positioned for the future.

“It may take two to five years to fully map intricacies of car supply chains, so companies should start investigating now,” said Murphy. “Businesses failing to take action risk influx of investigations, penalties, seizures, and lawsuits.”

How quickly automakers review their existing supplier relationships against an evolving regulatory backdrop around imported forced labor remains the next major development to watch unfold. Companies seen dragging their heels now risk being viewed as complicit later.

“Allegations of forced labor in Xinjiang province are hugely damaging to corporate brands,” said supply chain ethics advisor Max Hoffman. “Proactive companies will enforce responsible sourcing standards vigorously. Lagging automakers must catch up fast before substantial brand and legal damage occurs.”

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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