What are the Risks?

Since 2017, the government of the People's Republic of China has placed an estimated 1.8 million predominantly Turkic and Muslim-majority peoples, including Uyghurs, Kazakhs, Kyrgyz, and Hui, in detention camps, prisons, and state-imposed labor-transfer programs to factories across the Xinjiang Autonomous Uyghur Region in China (Uyghur Region). This state-sponsored detention underpins systems of repression, in which business enterprises are involved, including wide-spread forced labor of people in and from the Uyghur Region who have been involuntarily moved and forced to work in business enterprises across China; and mass surveillance of people in and from the Uyghur Region, through the use of technology developed and sold to authorities and businesses in China by domestic and international companies.

How is Uyghur Forced Labor or State-imposed Forced Labor Different? 

Forced labor imposed by state authorities, as in the Uyghur Region, must be distinguished from forced labor imposed by private actors resulting from market forces to lower supply chain costs in the race to the bottom. The International Labor Organization (ILO), Walk Free, and the International Organization for Migration (IOM) estimate that almost four million people are in state-imposed forced labor around the world, which includes China, Turkmenistan, Eritrea, and North Korea. State-imposed forced labor is a violation of the ILO Convention 1957 No. 105 that specifically prohibits the use of forced labor: as punishment for the expression of political views; for the purposes of economic development; as a means of labor discipline; as a punishment for participation in strikes; as a means of racial, religious, or other discrimination. 

In cases of state-imposed forced labor, there is a lack of leverage, including the inability to increase leverage to effect change due to the role of state control and the systemic nature of the forced labor systems, which also means that the violation is irremediable while it is ongoing. 

How are Businesses Connected?

The Uyghur Region is deeply connected to value chains across industries, including textiles, agricultural production, electronics, mining, renewable energy including solar, and automotive. Under the UN Guiding Principles on Business and Human Rights, all companies are expected to conduct effective human rights due diligence to ensure that they are not causing, contributing to, or directly linked to human rights abuses. Where human rights harms cannot be mitigated, prevented, or ceased, steps need to be taken to end business relationships responsibly.

How can Investors Respond? 

Institutional investors of all sizes can potentially be linked to egregious human rights abuses through their investments in companies with operations, investments, partnerships, and other business relationships in or connected to the Uyghur Region. Investors are responsible for considering risks throughout the totality of the investment lifecycle, including prior to investment decision-making, during investment decision-making, and throughout investment stewardship. Additionally, investors are responsible for ensuring their portfolio companies undertake human rights due diligence to prevent, mitigate, and address potential and significant operational, financial, and reputational risks associated with negative human rights impacts, including throughout the value chain.