GM, Tesla, BYD, Toyota & VW at risk of forced labour in Chinese Aluminium supply chains

Global carmakers including GM, Tesla, BYD, Toyota and Volkswagen are failing to minimise the risk of Uyghur forced labour being used in aluminium sourcing.

“China is a dominant player in the global car industry and governments need to ensure that companies building cars or sourcing parts in China are not tainted by the government’s repression in Xinjiang,” Wormington said. “Doing business in China should not mean having to use or benefit from forced labor.”

According to the UN Guiding Principles on Business and Human Rights, automakers are obligated to detect, stop, and lessen the incidence of forced labour and other violations of human rights in their supply chains. Companies find it unable to conduct a credible investigation into claims of forced labour and to explore possible remediation because of the high level of repression and surveillance in Xinjiang, including threats against workers and auditors. Instead, automakers must map out their supply chains and cut ties with any vendor found to be sourcing components or materials from Xinjiang.

According to a Human Rights Watch report, some automakers “have succumbed to Chinese government pressure to apply weaker human rights and responsible sourcing standards” at their Chinese joint ventures compared to their global operations, increasing the risk of exposure to forced labour in Xinjiang. Most OEMs, on the other hand, have done too little to map their aluminium supply chains and identify the risks of forced labour.

Car companies “don’t know the extent of their links to forced labour in Xinjiang in their aluminium supply chains”, 

The Uyghur people, who are primarily Turkic Muslims living in Xinjiang, an autonomous region in northwest China, have long faced persecution from the Chinese government. Human Rights Watch stated that the labour transfer plans supported by the Chinese government, which compel Uyghurs and other Turkic Muslims into work in Xinjiang and other regions, are the link between the region, the aluminium industry, and forced labour. “Significant evidence that aluminium producers in Xinjiang are participating in labour transfers,” the international organisation declared. Approximately 10% of the world’s aluminium is generated in the Xinjiang Uyghur Autonomous Region (XUAR), while automobile manufacturers utilise about 18% of the aluminium that is consumed worldwide. Despite being used in a wide variety of automotive parts for both ICE and EVs, the material is especially crucial for EVs because of its low weight.

But once aluminium has been melted down or combined with other metals, it may be hard to trace its origins, which makes it conceivable for contaminated material to sneak into supply chains.

The US Senate Committee on Finance requested an investigation of the use of forced labour in the automotive supply chain in the XUAR in letters to Ford, GM, Honda, Mercedes-Benz, Stellantis, Tesla, Toyota,and VW Group in December 2022. The Uyghur Forced Labour Prevention Act (UFLPA) of the United States went into effect that same year, outlawing the importation of items produced in the area using forced labour.

Volkswagen(VW):-

Through joint ventures (JVs), three automakers—GM, Toyota, and VW—operate in China. SAIC VW Automotive, Volkswagen’s 50:50 joint venture with Chinese automaker SAIC, is based in the capital city of Ürümchi, Xinjiang. However, VW informed HRW that SAIC VW Automotive is simply a distribution centre and does not procure raw materials from the area.

VW informed Automotive Logistics through a spokesman that the company takes its human rights obligations “very seriously worldwide, including in China.” The automaker carefully follows the UN Guiding Principles on Business and Human Rights, which are a component of the company’s Code of Conduct, according to the spokesperson’s statement. The spokesman went on to say that VW has monitoring procedures in place, a rigorous supplier selection process, and a risk management system for exercising due diligence when obtaining raw materials. Sustainable procurement measures already apply to suppliers in the People’s Republic of China that VW directly commissions. If VW learns of any allegations, it says it will look into them through its Supply Chain Grievance Mechanism, and major violations like forced labour may result in contract termination.

VW informed HRW that because SAIC has operational control over the JV and the German supply chain regulation only applies to subsidiaries with “decisive influence,” the firm is not legally liable for human rights violations in the Chinese joint venture’s supply chain. Nonetheless, the HRW contended that in accordance with the UN Guiding Principles, businesses must utilise their negotiating power in a joint venture to guarantee the avoidance and reduction of the risk of forced labour.

“We have no transparency about the supplier relationships of the non-controlled shareholding SAIC VW,” the automaker said in an interview with Human Rights Watch.

General Motors(GM):-

Once aluminium has been melted down or mixed with other metals, it can be impossible to determine where it came from.

“GM is committed to conducting due diligence and working collaboratively with industry partners, stakeholders, and organisations to address any potential risks related to forced labour in our supply chain,” General Motors stated in response to Human Rights Watch’s inquiries concerning the oversight of Chinese joint ventures, their supply chain mapping, and the origin of their aluminium.

The automaker employs around 58,000 people in China and has 10 joint ventures in addition to two fully owned international businesses. The SUV Yukon full-size model will be sold in China this year, the automaker’s truck and SUV brand GMC announced in January. However, a GM representative informed Automotive Logistics at the time that the SUVs will not be assembled in China, but rather at GM’s Arlington, Texas assembly plant.

Toyota and BYD did not respond to Human Rights Watch or to Automotive Logistics

Tesla:-

Although the OEM does not use joint ventures to operate in China, Tesla’s Shanghai Gigafactory produces automobiles for both the country’s internal market and export.

The business informed Human Rights Watch that, “driven in part by global trade regulations to combat forced labour,” it had increased supply chain mapping for aluminium. According to Tesla, it has “in several cases” traced its supply chain all the way back to the mine and had not discovered any indications of forced labour. However, the business did not say how much of the aluminium in its vehicles is still unidentified and hence might have Chinese origins.

Recommendations to OEMs:-

The HRW has made many recommendations to automotive companies, to help them mitigate the risk of having forced labour in their supply chains:

• Companies should take measures to meet responsibilities under the UN Guiding Principles on Business and Human Rights to do this, and unless due diligence is possible in Xinjiang, should immediately disengage from any direct supplier in the region.
• OEMs should work with suppliers to identify alternative aluminium sources, including through renegotiating supply contracts and adjusting pricing if necessary.
• Suppliers and sub-suppliers to “responsibly disengage” from companies that produce or source aluminium in the region within the next 12 months.
• Require suppliers, including commodities traders, to disclose the source of their aluminum, including the location of the smelters that produced it.
• Require suppliers and sub-suppliers to, within a specified period not to exceed 12 months, responsibly disengage from companies that produce or source aluminum within Xinjiang.
• Work with suppliers to identify alternative aluminum sources, including through renegotiating supply contracts and adjusting pricing if necessary.
• When discussing and responding to forced labor risks, work with suppliers to develop procedures to respond to threats, risks, or actual instances of retaliation from the Chinese government or other actors against the company, its suppliers, or their staff.
• Responsibly disengage from any supplier unwilling to take the above steps.
• Map aluminium supply chains to the level of smelters, alumina refineries, and bauxite mines. 
• Ensure that the company’s joint ventures implement supply chain mapping, disclosure, disengagement, and due diligence measures.
• Avoid reliance on certification initiatives, including the Aluminium Stewardship Initiative, as an indicator of whether suppliers are sourcing responsibly and addressing the risk of links to forced labor in Xinjiang.
• Do not conduct or commission audits in Xinjiang unless the human rights situation improves to such an extent that it is possible for auditors to have unfettered access to the region and freedom to conduct interviews with workers without risk of retaliation against workers or auditors. 
• Establish and maintain an effective and accessible grievance mechanism that nongovernmental organizations can access to raise concerns about human rights abuses in the company’s supply chain, including forced labor in Xinjiang. Even if located and managed outside China, any such grievance mechanism should have procedures in place to address the risk of retaliation against complainants or other actors by the Chinese government.
• Establish ambitious, measurable, science-based targets for sourcing aluminum, inside and outside China, from renewable energy sources, consistent with limiting global warming to 1.5 degrees Celsius in line with the Paris Climate Agreement.