Investors Under Pressure on Uyghur Forced Labor

The risk of complicity in abuses against the Uyghur population highlights the need for investors to focus on supply chain transparency.

“In the Xinjiang region of western China, a crackdown on what the Chinese government describes as separatist terrorism has escalated into one of the most drastic campaigns of state repression seen in modern times…

There is little doubt that many investors remain exposed to Uyghur forced labour…

The myriad ways in which Xinjiang is entwined in supply chains across multiple sectors, as well as China’s considerable economic and political leverage, puts both investors and corporates in a difficult position as they seek to raise concerns with Chinese business partners…

“Engaging with Chinese companies is a tough one because Chinese companies are in a very delicate position themselves and no one wants to put a company in a position where they are going to fall foul of their own laws,” says Anita Dorett, director of the Investor Alliance for Human Rights.

Beijing passed a law last year that provides for retaliatory sanctions against entities it deems to discriminate against Chinese companies, and also makes it illegal to co-operate in enforcing foreign sanctions against Chinese companies. This could mean that a Chinese company may be violating local law if it helps a foreign investor or business partner investigate its supply chain.

The Investor Alliance is helping to co-ordinate investor efforts to engage with companies that have value chains connected to abuses against the Uyghur population. At least 52 institutional investors have joined the engagement effort – but the majority have chosen to remain anonymous.

“It’s still important to have those conversations,” says Dorett. “I think Chinese companies need to hear that investors are concerned about these issues and are asking the questions.”…

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