A live webinar “179D Tax Deduction made Bigger and Better,” 30 talking points in 30 minutes, Tuesday, September 20 at 9 am EST presented by Stuart Kaplow and Nancy Hudes on behalf of ESG Legal Solutions, LLC. The webinar is complimentary but you must register here.
We have blogged repeatedly that “the elimination of all forms of forced and compulsory labor” is a key element, if not singularly the most important principle of a business’s practices. That point was driven home with the release last Wednesday, by The United Nations Human Rights Office assessment of human rights concerns in China’s Xinjiang Uyghur Autonomous Region.
Released on her last day at the post, following a May fact finding trip to China, UN High Commissioner of Human Rights, Michelle Bachelet, said immediately after that trip, “allegations of patterns of torture, or ill treatment, including forced medical treatment and adverse conditions of detention, are credible, as are allegations of individual incidents of sexual and gender-based violence.”
In a strongly worded assessment at the end of the report, the UN body said that the extent of arbitrary detentions against Uyghurs and others, in the context of “restrictions and deprivation more generally of fundamental rights, enjoyed individually and collectively, may constitute international crimes, in particular crimes against humanity.” [Emphasis in original]
The report is downright scary, but an important read.
“The lawful rights and interests of workers of all ethnic groups in Xinjiang are protected and there is no such thing as ‘forced labour’,” China said in a rebuttal to the assessment, adding that there had been no “massive violation of rights”.
In the few days since the release of the damning assessment we have had an uptick in inquiries from U.S. businesses seeking to buttress their own anti forced labor and anti slavery policies.
Often when businesses have considered modern slavery they have not included forced labor imposed by state authorities. But as we suggested in a recent post, Do Something about Slavery in Your Business Supply Chain, such no longer passes muster in 2022, and such is not limited to Great Britain and Australia where modern slavery business practice disclosures are regulated by those governments and mandate including forced labor imposed by state authorities in those business practices.
A widely cited report by the Australian Strategic Policy Institute revealed that tens of thousands of ethnic Uyghurs were relocated to work in conditions suggestive of forced labor in factories across China. “Under conditions that strongly suggest forced labor, Uyghurs are working in factories that are in the supply chains of at least 83 well-known global brands in the technology, clothing, and automotive sectors, including Apple, BMW, Gap, Huawei, Nike, Samsung, Sony, and Volkswagen,” the think tank said in the introduction to its online report.
Media reports describe that Tesla was criticized and removed from one ESG index and scored lower on other ESG ratings in part because it opened a showroom on December 31, 2021, in Urumqi the capital of the Xinjiang Uyghur autonomous region.
Among the recommendations in the UN rights report, is for China to take “prompt steps” to release all individuals arbitrarily imprisoned in Xinjiang, whether in camps or any other detention center. And while China is all but certainly not going to conform its behavior in response to the report, government and business reactions will make continued bad behavior costly.
Homeland Security Secretary Alejandro Mayorkas recently made clear, “the United States will not tolerate modern day slavery in our supply chains,” and just last week enforcing the Uyghur Forced Labor Prevention Act U.S. Customs and Border Protection agents again blocked the import of solar panels, detaining a shipment containing silica-based products made by Xinjiang Uyghur autonomous region based Hoshine Silicon Industry Co. Ltd., or its subsidiaries.
Increasingly we are being asked to assist companies in adopting policies and practices that remove modern slavery from their business supply chain, as well as assisting companies that have received a questionnaire from an upstream business they supply. This is much more than simply having an anti slavery policy on a business website, and while the elimination of all forms of forced and compulsory labor is a key element of the S in ESG, the reputational risks for doing business in the Xinjiang Uyghur autonomous region are real, and for many, this moral imperative has become a priority.