Recent allegations from Human Rights Watch against large car companies indicate remaining commercial and reputational risks of global supply chain operations, especially in China.
HR Policy Global’s take: HRPA Members must actively strategize their supply chain due diligence plans as the scrutiny from NGOs and governments increases.
The big picture: A recent Human Rights Watch report accuses several of the largest car manufacturers of using aluminium produced by Uyghur forced labor in the Xinjiang province. The report highlights significant risks to the companies' global supply chain due diligence efforts.
- The auditing process is becoming increasingly difficult. The report criticizes Volkswagen for not sufficiently tracing the source of its aluminum, after VW’s own audit of its Xinjiang facility in 2023 found no evidence of human rights abuses. However, tracing lower-tier suppliers is a considerable challenge for a large company like Volkswagen, and options for independent labor auditing in China are extremely limited.
- NGOs are demanding more transparency from companies. Despite reassurances from companies that they have carried out due diligence and found no evidence of forced labor, the report criticizes them for not disclosing what percentage of their aluminum supply they have traced to the smelter level or the origins of that supply.
- A stricter and conflicting legislative environment for global employers. While the Uyghur Forced Labor Prevention Act is currently in effect in the U.S., the EU is discussing new laws that would ban the import or export of products linked to forced labor. Additionally, China could enact retaliatory measures, further escalating the challenges global companies face.
Actions you can take:
- Stay informed about the global supply chain legislation in key jurisdictions, as more developments are expected this year.
- Assess your company’s current internal labor auditing process and determine whether to include tier-2 and tier-3 suppliers.
- Partner with other departments such as investor relations, media relations, and government relations to respond promptly and appropriately to any potential allegations.