Concerns about ‘Made in China’

Human rights organisations are concerned about China. Their concerns focus, in particular, on the treatment of muslim Uighurs in the Xinjiang region. Union Investment has intensified its engagement activities in relation to this issue.

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Paramilitary police patrol Urumqi in China’s autonomous Xinjiang region after a flare-up of ethnic tensions.

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Forced labour in industrial production

The Australian Strategic Policy Institute (ASPI) estimates that the Chinese government transferred at least 80,000 Uighur workers from Xinjiang to 27 factories in eastern China between 2017 and 2019 under so-called ‘poverty alleviation and resettlement programmes’. The findings of the ASPI report, which has drawn significant international attention, are based primarily on analyses of supplier relationships that are documented by publicly accessible data. The factories in question could feature in the supply chains of more than 80 well-known global brands that may be unwittingly involved in human rights violations.

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Uighur Turks protesting against the oppression of their ethnic group in China outside the Chinese Consulate-General in Istanbul in February 2021

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Engagement to combat forced labour in China

The engagement process is designed for the long term. Activities and results are monitored and evaluated at regular intervals.

Engagement to combat forced labour in China

The engagement process is designed for the long term. Activities and results are monitored and evaluated at regular intervals.

Against this backdrop, Union Investment initiated an engagement process in the autumn of 2020 and contacted the relevant companies in writing. The letter asked these companies to provide a detailed statement in response to specific concerns. In principle, almost all companies have procurement policies in place that are designed to prevent the use of forced labour, including in their supply chain. “But the multi-layered nature of business relationships in supply chains can make it difficult to identify where and to what extent human rights are being violated,” says Leonard. “It is also important to remember that sovereign states interpret and apply internationally accepted human rights in different ways and that companies are required to comply with national laws.” It is possible that some of the companies approached by Union Investment had, until this point, been unaware that they may be complicit in any wrongdoing. “Regardless, our aim is to systematically minimise risk in the interest of the assets entrusted to us for management. We therefore want to create full transparency about involvement in human rights violations and urge companies to terminate any questionable business relationships.”

Bringing light into the dark

 

Supply chains are not always transparent. This is especially true if they stretch across the globe. Nevertheless, we want to promote openness with regard to social standards and human rights. This is why we have asked companies to take a stance on the oppression of Uighurs. Their responses show that companies are aware of the plight of this ethnic group. They also signal willingness to take additional action to ensure that no human rights violations take place in their supply chain. Companies reported that they regularly inspect working conditions on site. Breaches of agreed human rights policies by suppliers can result in the termination of the business relationship. Some of the companies we contacted have terminated their relationships with suppliers from the Xinjiang region in order to ensure that they no longer source any raw materials or finished goods that may have been produced by forced labour. Other companies were able to provide credible evidence that none of the suspicious suppliers named in the ASPI report form part of their supply chain. Our hopes for bringing light into the dark rest in particular on companies that are seeking and finding solutions that will actively improve the protection of human rights in their supply chain, and that report on their work in a transparent manner. We want to support companies on this journey and will therefore continue to maintain a constructive dialogue with them. Our goal is to uphold human rights around the world and to minimise the risks to which the assets we manage are exposed.

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