February 1, 2024, HRW

BYD, GM, Tesla, Toyota, VW Risk Using Tainted Aluminum

(New York) – Global carmakers, including General Motors, Tesla, BYD, Toyota, and Volkswagen, are failing to minimize the risk of Uyghur forced labor being used in their aluminum supply chains, Human Rights Watch said in a report released today.

The 99-page report, “Asleep at the Wheel: Car Companies’ Complicity in Forced Labor in China,” finds that some carmakers have succumbed to Chinese government pressure to apply weaker human rights and responsible sourcing standards at their Chinese joint ventures than in their global operations, increasing the risk of exposure to forced labor in Xinjiang. Most have done too little to map their aluminum supply chains and identify links to forced labor.

“Car companies simply don’t know the extent of their links to forced labor in Xinjiang in their aluminum supply chains,” said Jim Wormington, senior researcher and advocate for corporate accountability at Human Rights Watch. “Consumers should know their cars might contain materials linked to forced labor or other abuses in Xinjiang.”

The link between Xinjiang, a region in northwestern China, the aluminum industry, and forced labor is the Chinese government-backed labor transfer programs, which coerce Uyghurs and other Turkic Muslims into jobs in Xinjiang and other regions.

Human Rights Watch reviewed online Chinese state media articles, company reports, and government statements and found credible evidence that aluminum producers in Xinjiang are participating in labor transfers. Human Rights Watch also uncovered evidence that fossil fuel companies that supply coal to aluminum producers in Xinjiang have received labor transfer workers at their coal mines. Xinjiang’s aluminum smelters depend on the region’s abundant and highly polluting coal supplies to fuel the energy-intensive process of aluminum production.

In 2023, domestic and foreign manufacturers in China produced and exported more cars than any other country. Since 2017, the Chinese government has committed crimes against humanity in Xinjiang, including arbitrary detention, enforced disappearances, and cultural and religious persecution, and has subjected Uyghurs and other Turkic Muslim communities to forced labor inside and outside Xinjiang.

The Chinese government has sought to make Xinjiang an industrial hub even as it expanded abuses against Uyghurs. Xinjiang’s aluminum production has grown from approximately one million tons in 2010 to six million tons in 2022. More than 15 percent of the aluminum produced in China, or 9 percent of global supply, now comes from the region. Aluminum is used in dozens of automotive parts, from engine blocks and vehicle frames to wheels and electric battery foils, which are both used by manufacturers in China and exported to global carmakers.

Most of Xinjiang’s aluminum is shipped out of the region and mixed with other metals to make aluminum alloys in other parts of China, including for the car industry. Once an aluminum ingot has been melted and mixed with other materials, it is impossible to determine whether or how much of it came from Xinjiang, enabling tainted aluminum to enter domestic and global supply chains undetected.

Aluminum ingots from Xinjiang are bought and sold by commodities traders, further obscuring the links between Xinjiang and supply chains. Glencore, a global commodities trader, told Human Rights Watch it purchases aluminum from a Xinjiang-based smelter for sale to domestic customers in China but stated that “we recognize the risks of forced labor associated with Xinjiang” and said it had conducted due diligence at the supplier’s facilities in Xinjiang.

Car companies have a responsibility under the United Nations Guiding Principles on Business and Human Rights to identify, prevent, and mitigate the presence of forced labor and other human rights abuses in their supply chains. The high level of repression and surveillance in Xinjiang, including threats to workers and auditors, makes it impossible for companies to credibly investigate allegations of forced labor and consider potential remediation. Car companies should instead map their supply chains and disengage from any supplier found to source parts or materials from Xinjiang.

Some carmakers contend that because they do not operate or control their Chinese joint ventures, they are less able to address the joint ventures’ supply chain links to Xinjiang. Volkswagen, which holds 50 percent of the equity in its joint venture with SAIC, a Chinese carmaker, told Human Rights Watch it is not legally responsible for human rights impacts in their joint venture’s supply chain under Germany’s supply chain law because the law only covers subsidiaries in which companies have “decisive influence.”

German government guidance, however, sets out a range of criteria for determining whether a company has “decisive influence,” including “whether the subsidiary manufactures and exploits the same products or provides the same services as the parent company.” SAIC-Volkswagen manufactures cars for the Chinese market under the Volkswagen brand. The law also applies to Volkswagen’s direct suppliers, which could include SAIC-Volkswagen.

Companies in joint ventures also have a responsibility under the UN Guiding Principles to use their leverage to address the risk of forced labor in the joint venture’s supply chain. Volkswagen said that the company “assumes responsibility … to use its leverage over its Chinese joint ventures to address the risk of human rights abuses.” But when asked about potential links between SAIC-Volkswagen and an aluminum producer in Xinjiang, Volkswagen responded: “We have no transparency about the supplier relationships of the non-controlled shareholding SAIC-Volkswagen.” Volkswagen did say that its directly controlled operations outside China had prioritized supply chain mapping for aluminum parts, but acknowledged it had “blind spots” over the origin of the aluminum in its cars.

General Motors, Toyota, and the Chinese car company BYD did not respond to questions about oversight of Chinese joint ventures, supply chain mapping, or the origin of their aluminum. General Motors instead said, “GM is committed to conducting due diligence and working collaboratively with industry partners, stakeholders, and organizations to address any potential risks related to forced labor in our supply chain.”

Tesla, which builds cars for China’s domestic market and for export at its Shanghai Gigafactory, said that it had “in several cases” mapped its aluminum supply chain and had not found evidence of forced labor. However, the company did not specify how much of the aluminum in its cars remains of unknown origin.

Car industry staff and responsible sourcing experts, who spoke on condition of anonymity, said the threat of Chinese government retaliation deterred companies from talking to their China-based suppliers and joint ventures about their potential links to forced labor in Xinjiang. The Chinese government has initiated criminal investigations targeting companies or individuals that help businesses investigate their potential links to human rights abuses in China, including forced labor in Xinjiang.

The Chinese government’s hostility to scrutiny underscores the need for other governments to pay more attention to companies’ respect for human rights in China. Several jurisdictions, including the United States and the European Union, have enacted or are planning laws banning the import of products linked to forced labor. Governments should also pass laws requiring companies to disclose their supply chains and identify potential links to human rights abuses.

“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.”