ESG Enforcement Tracker

Key facts:

The US Senate Finance Committee concluded its investigations into the supply chain of car manufacturers with potential links to Chinese entities in the Xinjiang region of China, where forced labour and inhuman conditions are widely reported.

In December 2022, Senate Finance Committee Chair Ron Wyden sent an initial round of questions to eight major car manufacturers. The requests were prompted in part by a report by researchers at the Helena Kennedy Centre for International Justice at Sheffield Hallam University, which found links between Chinese companies operating in Xinjiang and the suppliers of car manufacturers importing parts from them. In March 2023, a further round of letters was sent to suppliers of these companies.

The Committee considered that the responses from the car manufacturers failed to provide specific details about how the corporations oversaw their supply chains to ensure no goods made with forced labour were used in vehicles imported into the US. The Uyghur Forced Labor Prevention Act (UFLPA) imposes a rebuttable presumption that goods mined or manufactured, wholly or in part, in Xinjiang were produced with forced labour and are therefore prohibited from importation.

In February 2024, Volkswagen Group of America, Inc. confirmed public reports that vehicles VW AG produced for the US market contained a component manufactured by a company added to the UFPLA Entity List in December 2023. Inclusion on the UFLPA Entity List carries a presumption that the company’s components were made with forced labour. In May 2024, BMW and Jaguar Land Rover disclosed to the Committee that they also imported components presumptively made with forced labour.

In May 2024, the Committee issued a report on its findings. The Committee determined that:

1. BMW manufactured and imported vehicles containing parts presumptively made with forced labour;
2. Jaguar Land Rover imported parts presumptively made with forced labour; and

VW AG manufactured vehicles for the US market with parts presumptively made with forced labour and has ongoing business ties to manufacturing in the Xinjiang Uyghur Autonomous Region.

The Committee also found:

• Questionnaires, self-reporting and audits of direct suppliers were insufficient to proactively identify forced labour exposure in supply chains, particularly in China.
• Reliance on only the UFLPA Entity List and tools that scan for publicly available information related to critical media of Chinese government-owned or supported companies was not a sufficient means to identify forced labour within supply chains.
• Credible human rights audits could not be conducted in Xinjiang.

The Committee made a number of recommendations to strengthen enforcement, including:

• The Department of Homeland Security (DHS) Forced Labor Enforcement Task Force to speed up work to identify facilities in Xinjiang using forced labour for these to be added to the UFLPA Entity List.
• The DHS to update the list of high-priority sectors for UFLPA enforcement.
• The Customs Border Protection to improve information-sharing regarding enforcement of UFLPA; and to provide clearer guidance about what kinds of audits are necessary to detect forced labour in supply chains and comply with federal laws.