VW audits Xinjiang plant as rights group pressures car makers

By Victoria Waldersee and Jan Schwartz

BERLIN (Reuters) -Germany’s top carmakers were challenged by a Berlin-based rights group on Wednesday over the extent of their due diligence to prevent forced labour in their supply chain, as Volkswagen (ETR:) said it would conduct an audit at its plant in Xinjiang.

Volkswagen, BMW and Mercedes-Benz were accused of providing insufficient proof that their efforts to track their suppliers in Xinjiang, China, complied with Germany’s new supply chain law, according to the European Center for Constitutional and Human Rights (ECCHR).

Volkswagen said it was surprised by the allegations and was examining the complaint, filed by ECCHR with Germany’s export control office BAFA.

The carmaker has a plant in Xinjiang’s capital which does not produce vehicles but runs quality checks on cars for sale in the region.

Its China chief visited the plant earlier this year and said he saw no signs of forced labour, but the company has come under heavy pressure from investors and activists to do further due diligence.

At its Capital Markets Day on Wednesday, Chief Executive Oliver Blume said the company would commission an external independent audit of the plant this year.

SUPPLY CHAIN LAW

Since January 1, 2023, companies in Germany above a certain size must establish due diligence procedures, including an annual risk analysis, that prevent human rights and environmental abuses within their global supply chains.

UN experts and rights groups estimate over a million people, mainly Uyghurs and other Muslim minorities, have been detained in recent years in a vast system of camps in China’s western Xinjiang region. Researchers and rights groups say the camps have been used as a source for low paid and coercive labour.

China denies all accusations of abuse.

While BMW and Mercedes-Benz do not have their own plants in Xinjiang, researchers at Sheffield Hallam University and others have documented links between the carmakers’ suppliers and companies with operations in or near the region.

Mercedes-Benz and BMW said they had not received the ECCHR complaint.

“We are in contact with our suppliers and whenever concerns are raised, we push suppliers for clarification,” Mercedes-Benz added.

BMW said it holds suppliers to social and environmental standards which include requiring they take preventative measures as required by law.