Volkswagen, bmw and Mercedes-Benz are facing allegations in connection with the human rights situation in the Chinese Uyghur province of Xinjiang. According to its own statements, the European Center for Constitutional and Human Rights (ECCHR) filed a complaint against the three car companies with the Federal Office of Economics and Export Control (BAFA).
ECCHR announced on Wednesday that the companies had not yet proven that they were reacting appropriately to the risk of forced labor in supplier factories in the Uyghur region. The complaint is supported by the World Congress of Uyghurs and the Association of Critical Shareholders.
Penalty is based on annual sales
Since the beginning of the year, companies have been in Germany legally obliged to improve the protection of the environment and human rights along global supply chains. Companies that produce abroad or have parts manufactured there must take responsibility for production processes and working conditions at their suppliers. Penalties range from a fine of up to 2 percent of annual global sales to being barred from government contracts for up to three years.
Volkswagen was surprised by the ECCHR complaint. They will look at them and then comment on them, said a spokesman. Mercedes-Benz said it takes such reports very seriously, but is not directly active in the Uyghur region. The group is in contact with its suppliers and urges them to clarify any concerns. In the event that allegations were found to be valid and verifiable, appropriate action would be taken to ensure compliance with responsible sourcing standards. BMW said that no statements could be made about the complaint because the carmaker did not have it. Compliance with environmental and social standards in the supply chain is fundamentally an integral part of the corporate culture of the group.
Volkswagen prepares independent investigation
Volkswagen in particular was recently the focus of critics. The car company runs a factory in Xinjiang together with its Chinese partner SAIC, where cars are assembled. After protests on the sidelines of the general meeting and accusations from investors, the Wolfsburg-based company is preparing an independent investigation into the plant. One is “in good talks” with SAIC to examine the possibilities for an independent audit.
Volkswagen has repeatedly stated that it is not involved in human rights violations. There have long been allegations of crimes against humanity from the region. All three complaints claimed that Xinjiang’s raw materials, such as copper, lithium and aluminum, posed a particularly “high risk” of being linked to forced labour.
European companies operating in Xinjiang are now facing domestic and international political and regulatory pressures as a number of stakeholders are suing Xinjiang-made products in European courts. The USA have already imposed an import ban on products from the area, the Financial Times reports.
The EU is planning an even stricter supply chain law than what is already in force in Germany. For example, the German law does not cover the financial sector and initially only applies to companies with 3,000 or more employees, and from next year 1,000 or more.