Volkswagen: Addressing Uyghur Forced Labor Issues

(Berlin) – Volkswagen AG should tell shareholders at its annual general meeting on May 29, 2024, how it plans to eliminate Uighur forced labor from its operations and supply chain, Human Rights Watch and the European Center for Constitutional and Human Rights (ECCHR) said today.

Since 2017, the Chinese government Crimes against humanity In the northwestern Xinjiang region, forced labor is imposed on Uighurs and other Turkic ethnic groups. aluminum and others Key Materials Raw materials used in car manufacturing are produced in Xinjiang by companies linked to the government’s forced labor scheme.

“Volkswagen’s ‘In China, for China’ strategy should not mean engaging in forced labor,” Jim WarmingtonSenior researcher and corporate responsibility advocate at Human Rights Watch. “Shareholders should call on Volkswagen to ensure that it takes strong steps to address forced Uyghur labor in its supply chain.”

Volkswagen, which produces cars in China through joint ventures with Chinese automakers, failed to adequately investigate potential links between its supply chain in China and forced labor. The audit was seriously flawed The Xinjiang plant, a subsidiary of Volkswagen’s joint venture with Chinese state-owned automaker SAIC, is operating. The Chinese government’s widespread surveillance and repression in Xinjiang means the audit cannot Reliably verify that facilities in the region are free of forced labor.

public sell One third of Volkswagen’s cars are sold in China. Volkswagen CEO Oliver Blume said on April 24 describe China is the company’s “second home market.” Bloom also announced the company’s latest “In China, for China” strategy, which includes expanding cooperation with Chinese automakers, reducing manufacturing costs, and setting ambitious sales targets.

public explain In December 2023, an audit overseen by Germany’s former human rights commissioner, Markus Löning, found “no signs” of forced labor at a Xinjiang joint venture factory used to road test cars assembled elsewhere in China. admitHowever, the audit was based on reviewing documents rather than interviewing workers, which he said could be “dangerous.” He also said: “Even if they (workers) knew something, they couldn’t say it in the interview.”

After the audit results were released, the German newspaper Handelsblatt published an article on February 14 Allegedly Contractors at SAIC Volkswagen’s Xinjiang subsidiary used Uighur forced labor during the construction of a test track in Xinjiang that was completed in 2019. replyVolkswagen said the test tracks were not included in its 2023 audit of its Xinjiang plants, but “so far we have found no signs of human rights violations in connection with the testing sites.”

Volkswagen also said February The company is “currently in negotiations with its non-controlling joint venture, SAIC Volkswagen, regarding the future direction of the joint venture in Xinjiang Province. Various options are currently being examined in depth.” Shareholders should ask Volkswagen about the outcome of these negotiations and urge the company to terminate its joint venture operations in Xinjiang.

Production Key Materials Volkswagen’s factories producing cars in Xinjiang also run the risk that products or materials sourced by its factories in China and around the world are linked to forced labor. For example, nearly 10% of the world’s aluminum is Production In Xinjiang, aluminum is shipped out, melted down, and made into products and parts used by automakers and other industries. Xinjiang’s aluminum producers, as well as the coal mines and coal-fired power plants that supply them, are involved in Forced labor transfera form of state-enforced labor.

In June 2023, the ECCHR filed a complaint with the German Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA), the German government’s oversight body for the country’s supply chain The complaint alleges that Volkswagen, BMW and Mercedes-Benz failed to take appropriate steps to identify and prevent the risk of state-imposed forced labor in their supply chains, in violation of their obligations under the law. BAFA has not yet publicly responded to the complaint.

In January, Volkswagen told U.S. Customs officials that a small electronic component was produced by a subcontractor that was listed by U.S. authorities in December 2023 as a company linked to Uighur forced labor. Seizure Volkswagen replaced the vehicles that had the part. Human Rights Watch asked Volkswagen on May 22 whether it had removed the part from vehicles sold outside the United States, but did not receive a response. A May report by the U.S. Senate Finance Committee found that Volkswagen had previously investigated the sub-supplier in 2020 and 2022 but found no connection to the supply chain.

The groups said Volkswagen had poorly monitored the supply chains of its Chinese joint ventures, including SAIC Volkswagen, which primarily produce cars for the Chinese market. Volkswagen argued that it had no legal obligation under German supply chain law to address human rights issues in SAIC Volkswagen’s supply chain because its joint venture agreement handed operational control to SAIC.

In November 2023, Volkswagen told Human Rights Watch that the company “accepts responsibility… to use its influence in its joint ventures in China to address risks of human rights violations.” But when asked about potential links between SAIC Volkswagen and an aluminum producer in Xinjiang, Volkswagen responded: “We have no knowledge of supplier relationships with our non-controlling shareholder SAIC Volkswagen.”

Volkswagen Updates China Strategy Volkswagen continues to rely on joint ventures and has partnerships with SAIC Motor and Chinese electric vehicle maker Xpeng Motors. The ECHR complaint argues that vehicles produced by the joint ventures should be considered part of Volkswagen’s supply chain and therefore fall within the scope of due diligence obligations under the German Supply Chain Act. Human Rights Watch asked Volkswagen on May 22 what steps it would take to ensure that strict human rights and responsible sourcing standards apply to all current and future joint ventures in China, but did not receive a response.

“Volkswagen cannot simply ignore its Chinese joint ventures when it is fully aware of the risks of forced labor,” said Chloé Bailey, senior legal counsel at the European Center for Human Rights in Supply Chains. “Shareholders should ask how Volkswagen is responding to the increased scrutiny of its operations in China and what steps it is taking to meet its obligations under the German Supply Chain Act.”