BERLIN — While investors have welcomed Volkswagen’s decision to audit its jointly-owned factory in Xinjiang, China, some are questioning how it will be run and whether it will be enough to eliminate the risk of forced labor in the supply chain.
Deka, Union Investment and the Dachverband Kritische Aktionaere (an umbrella organization of critical shareholders), among others, called on VW at its annual general meeting last month to order an audit of the Urumqi plant in Xinjiang, where it assembles cars for sale. country.
The United Nations and human rights groups estimate that more than a million people, mostly Uyghurs and other Muslim minorities, have been held in a vast system of camps in Xinjiang in recent years and used for low-paid and forced labor.
China denies any human rights abuses in the western region.
Volkswagen’s China chief visited the factory earlier this year and said he saw no signs of forced labour, but some investors have demanded an external audit, and Union Investment warned Volkswagen in May that it would be stripped of its sustainability funds if it did not do so by a deadline . a month.
On Wednesday, CEO Oliver Blume committed to organizing an independent audit this year, but it is not yet known who will conduct it, how extensive it will be or how the results will be shared.
Volkswagen previously said that its joint venture partner operating at the SAIC factory must agree to the audit.
According to Blume, the two companies have a “fruitful exchange”.
A Volkswagen spokesman declined to say Thursday whether SAIC had demanded the terms of the audit.
“This audit must be carried out without delay so that Volkswagen can remain investable,” said Janne Werning of Union Investment, adding that it must be carried out by a reputable firm and the results shared in full publicly.
Ingo Speich, Volkswagen’s top 20 shareholder and Deka’s head of sustainability and corporate governance, praised the decision to proceed with the audit as a “clear signal towards creating transparency”, but said a reputable firm should conduct the audit.
However, the comprehensive action against Chinese consulting and due diligence companies – some of which refuse to audit in Xinjiang because it makes it difficult to establish reliable reports there – raises the question of how reliable the result will be, the Umbrella Organization of Critical Shareholders said.
“Germany’s export control office urgently needs to clarify whether it considers measures such as external controls in authoritarian states appropriate and effective,” said associate director Tilman Massa.
This office oversees and enforces a German law introduced this year that requires major companies to establish due diligence procedures to prevent human rights and environmental abuses in their global supply chains.
The audit does not dampen legal action brought against the automaker on Wednesday by the Berlin-based rights group ECCHR, which is demanding more evidence about how Volkswagen monitors the risk of forced labor not only at its plants but at any suppliers or sub-suppliers it is connected to. with each other. to Xinjiang.
“No worker can speak freely without putting themselves and their families at risk,” said a spokesman for the human rights organization World Uyghur Congress. “We have serious doubts about how Volkswagen intends to conduct an independent investigation.”
