Social Audits Fail to Identify State-Imposed Forced Labour

Audit of SAIC-Volkswagen plant demonstrates due diligence is not possible in the Uyghur Region

March 12, 2024

For Immediate Release
Contact: Inquiries to signatories may be sent via contact@enduyghurforcedlabour.org

Audit of SAIC-Volkswagen plant demonstrates due diligence is not possible in the Uyghur Region

62 groups call on consultancies, auditors, certification bodies, and other service providers to immediately cease providing services in the Xinjiang Uyghur Autonomous Region (Uyghur Region). Social audits and certification schemes are not designed to identify the egregious human rights abuses that are perpetrated as part of state-imposed forced labour programmes or in furtherance of them. They are not an appropriate preventive measure, or evidence of compliance with forced labour regulations.

Despite this, in June 2023, Volkswagen announced an audit of SAIC-Volkswagen (Xinjiang) Automotive Co., Ltd., a plant operated by a subsidiary of the joint venture between Chinese state-owned SAIC Motor Corp. Ltd. and Volkswagen Group, in Urumchi, the capital of the Uyghur Region. On December 5, 2023, Volkswagen shared that Löning-Human Rights & Responsible Business GmbH (Löning), a German based management consultancy, facilitated the audit of the plant. The audit was carried out by an unnamed Shenzhen-based law firm, which Löning accompanied on-site.

Many Uyghur and human rights groups condemned Volkwagen’s audit on the basis that, due to the widespread repression in the Uyghur Region and the Chinese government’s state-imposed forced labour programmes, there are no valid means to verify that any workplace in the Uyghur Region is free of forced labour or to prevent the use of forced labour in these workplaces in line with human rights due diligence. Further, the necessary elements for an effective audit are not present:

Worker interviews, which are essential to the methodology of any labour or human rights investigation, cannot generate reliable information in a circumstance where workers cannot speak candidly to factory auditors about forced labour or other human rights issues without placing themselves and their families at risk of retaliation.
There are widespread restrictions and repression of fundamental freedoms and of human rights defenders, and civic space has been shut down. Uyghurs live in a constant atmosphere of fear; even the slightest infraction of the Chinese government’s arbitrary rules can lead to internment, as human rights organisations and the United Nations have extensively documented.
The human rights abuses occurring in the Uyghur Region are bolstered by a pervasive, technology-enabled system of surveillance, through extensive digital and personal surveillance systems. Uyghurs are monitored around the clock, even in private. Any audit occuring in the Region could not be conducted without being surveilled by the Chinese government, and therefore few workers will want to speak to auditors, or at least about the reality of their lived experiences.
The Chinese government is systematically curtailing the independence of international audit firms. Auditors have complained of extreme surveillance, including the use of facial recognition and tracking of physical and digital movements. Multiple audit firms ceased operating in the Uyghur Region years ago due to the repressive environment and fear of reprisal for both auditors and workers.

In an interview in the Financial Times, Löning staff spoke about the concerns with the project and made clear no staff was involved. Further, the founder and managing director, Markus Löning, explicitly cited the limitation of worker interviews, a key component of social audits, in this context: “[T]he main basis for the audit had been a review of documentation relating to the 197 employees at the plant rather than interviews adding that this could be ‘dangerous’. ‘Even if they would be aware of something, they cannot say that in an interview.’” The audit was conducted notwithstanding these limitations and, unsurprisingly, found no evidence of forced labour.

Markus Löning’s statement that it was “not commenting on the ‘symbolism’ of VW’s presence in Xinjiang”, demonstrates a lack of understanding of the egregious human rights abuses occurring in the Uyghur Region; the state-imposed forced labour programmes must not be looked at in isolation from the broader abuses, including mass arbitrary detention, surveillance, and forced separation of families. According to the UN High Commissioner for Human Rights 2022 report, “the extent of arbitrary and discriminatory detention” of Uyghurs and other Turkic and Muslim-majority peoples, within the context of other restrictions and deprivation, “may constitute international crimes, in particular crimes against humanity.” Uyghur forced labour, therefore, should be understood as a key tool by which the government is inflicting its persecution against Uyghur and other Turkic and Muslim-majority people. The situation within individual workplaces, and the risks of corporate contribution to the persecution in the Uyghur Region, must be assessed within this broader context.

Volkswagen was directly asked about the credibility of the findings from the audit by the Association of Ethical Shareholders Germany, Society for Threatened Peoples Germany, and World Uyghur Congress. Volkswagen failed to provide further details about the audit. In February 2024, new evidence emerged “of the use of forced labour in the construction of a test track in Turpan, [Uyghur Region], which is operated by a subsidiary of the joint venture of SAIC and Volkswagen.” In response to the allegations, Volkswagen said “[it] is currently in talks with the non-controlled joint venture SAIC-Volkswagen about the future direction of business activities in [the Uyghur Region]. Different scenarios are being considered intensively”.

Cutting ties to the Uyghur Region will have a tangible impact on forced labour and is essential to ending the crimes against humanity taking place. Disengagement is also in line with the UN Guiding Principles on Business and Human Rights (UNGPs). The recent guidance by the UN Office of the High Commissioner for Human Rights states, “Although the UNGPs stipulate that businesses should seek to exercise leverage where they are contributing or linked to such harms, it may be the case that business enterprises have little, if any, leverage with governments involved in carrying out egregious violations. Where sufficient leverage is lacking, those enterprises that are at risk of being involved in gross human rights abuses will need to rapidly come to a decision about [disengagement]”.

All auditing firms (and accreditation bodies)

Should immediately stop conducting labour audits in the Uyghur Region and urge companies to end all operations and supply chain links to the Uyghur Region to prevent exposure to state-imposed forced labour.
Should clearly state that social audits are not designed to identify state-imposed forced labour and must not be used to demonstrate an absence of Uyghur forced labour.

All companies

Should not commission audits in the Uyghur Region or accept audits from suppliers as proof that a product is free from Uyghur forced labour.
Should exit the Uyghur Region at every level of their supply chains and cease doing business with suppliers implicated in Uyghur forced labour
- Stop sourcing any raw materials, inputs, or finished products from the Uyghur Region.
- Prohibit any supplier factories located outside of the Uyghur Region from using Uyghurs or Turkic or Muslim workers supplied through the Chinese government’s forced labour transfer scheme.

Governments

Should not deem labour audits or certifications conducted in the Uyghur Region as credible, and reject them as evidence of compliance with supply chain and forced labour regulations.
In the design and/or implementation of legislation pertaining to due diligence and/or forced labour, should prohibit the use of audits and certifications as proof alone of meaningful human rights due diligence in context where there is a risk of state-imposed forced labour such as in the Uyghur Region.
Should enact and robustly enforce import control legislation banning imports of goods made with forced labour. This legislation must include appropriate mechanisms to address state-imposed forced labour, such as the ability to restrict the importation of goods from a region or specific product groups.

Signed: