Canada Probes Nike Over Forced Uyghur Labor Allegations
The Canadian Ombudsperson for Responsible Enterprise, better known as the CORE, has opened a fact-finding investigation into Nike Canada’s alleged ties with businesses that have profited from forced Uyghur labor in China.
It’s a first for the complaint mechanism, which was established by the Canadian government in 2019 to hold the country’s garment, mining, and oil and gas companies accountable for possible human rights abuses in their overseas operations.
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Speaking at a press conference on Tuesday, Sheri Meyerhoffer, who has headed the CORE since its inception, said that her office decided to launch a formal probe following the completion of an initial assessment report, which details potential supply relationships between Nike Canada and six Chinese companies: Changji Esquel Textile Co., Huafu Fashion, Haoyuanpeng Garment Group, Texhong Textile Group, Qingdao Jifa Huajin Garment Co. and Qingdao Taekwang Shoes. Both Changji Esquel Textile Co. and Huafu Fashion’s Aksu Huafu Textiles subsidiary are on the Uyghur Forced Labor Prevention Act Entity List in the United States.
The assessment followed a complaint—one of more than a dozen that the CORE has deemed admissible over the past year—by a coalition of 28 organizations, including Stop Uyghur Genocide Canada, the Uyghur Refugee Relief Fund and the Uyghur Rights Advocacy Project, which provided as evidence a 2020 report by the Australian Strategic Policy Institute (ASPI), a Canberra-based think tank, and a 2021 report by Sheffield Hallam University’s Helena Kennedy Centre for International Justice in England.
The complainants said that Nike Canada failed to respond to a 2021 letter asking it to ensure that it’s not benefiting from forced Uyghur labor, “cut off relations” with Qingdao Taekwang Shoes and others, and take “reasonable steps to ensure beyond a reasonable doubt that none of its materials are sourced from Xinjiang.”
Nike Inc., Nike Canada’s parent company, told the CORE that it does not source materials or products from the Xinjiang Uyghur Autonomous Region and that it conducts ongoing due diligence with its suppliers to identify potential forced labor risks related to the employment of Uyghurs and other ethnic minorities in other parts of China.
The Just Do It firm also denied relationships with three of the companies cited in the ASPI report: Changji Esquel Textile Co., Haoyuanpeng Garment Group and Qingdao Jifa Huajin Garment Co. Regarding Qingdao Taekwang Shoes, it said that the supplier no longer employs anyone from Xinjiang.
But the CORE, which is also looking at allegations into a Canadian gold mining company with ties to the region, said it found “conflicts” in available information that may warrant further examination. The assessment pointed to bills of lading from a Vietnamese factory owned by Changji Esquel Textile Co.’s parent company, Hong Kong’s Esquel Group, noting that despite the absence of forced labor allegations in that facility, the “complex nature of garment supply chains may warrant investigation of the relationship between Nike and Esquel.”
And while the sportswear maker has provided its statement on forced labor, human trafficking and modern slavery, it has supplied “limited detail” about the nature and scope of its human rights due diligence process, including whether it uses fiber tracing technology, the CORE said. Nike, it said, also declined to meet with the office for an initial assessment meeting, maintaining that all the allegations have been addressed. The Adidas rival, upon receiving a draft of the initial assessment report, later requested a meeting and the opportunity to provide a written submission. The CORE said it turned this down because it would have pushed back the timing of the report’s release.
“Nike has responded to [the] CORE’s inquiries,” a spokesperson told Sourcing Journal. “While there are factual inaccuracies in their latest report, we’ll continue to participate as these are important multi-stakeholder discussions, and Nike is deeply committed to ethical and responsible manufacturing, which includes both supply chain due diligence and traceability programs.”
Nike, in comments appended to the initial assessment report, reiterated its previous statements while adding that neither it nor any of its finished goods suppliers sources from Esquel Group.
Speaking at the press conference, Meyerhoffer said that the Air Jordan maker declined to participate in a mediation process, though it left a door open for future engagement. This, along with the lack of a satisfactory response, the gravity of the allegations and the fact that the complaint has not been reviewed in any other forum, led the office to decide to pursue the matter using what she said will be a “range of investigative methods.”
“I have not prejudged the outcome of the investigations,” Meyerhoffer said. “We will await the results and then publish final reports with my recommendations to the companies. We will also make recommendations to the minister of international trade if appropriate. I have the authority to make recommendations to remedy harms resulting from human rights abuses and to prevent them from happening again. If I make recommendations, we will follow up on them and report whether or not they are implemented.”
The CORE’s investigation marks the second time in recent months that Nike is being scrutinized for its labor practices. In March, a group of 20 garment-sector unions representing workers in Nike’s supply chains in Cambodia, India, Indonesia, Pakistan and Sri Lanka filed an international labor complaint with the Organisation for Economic Co-operation and Development in Washington, D.C., accusing the sportswear giant of violating the inter-governmental organization’s guidelines for responsible business conduct by multinational enterprises.
They alleged that the company has not only contributed to “severe human rights impacts” at the factories it contracts but it also does not address and remediate them as required by guidelines. The complaint also claimed that Nike failed to engage with worker unions despite their requests for dialogue and the OECD’s own recommendations. It said that the Oregon-headquartered firm pours money into buyback schemes to “falsely inflate” its stock price rather than compensate workers or invest in safety or productivity schemes.
“With the money that Nike has made from stock buybacks, they could have paid workers 2,000 times than what we are asking,” Anannya Bhattacharjee, international coordinator at the Asia Floor Wage Alliance, a garment worker advocacy group, said at the time.
Bhattacharjee had harsher words at a recent press conference on Capitol Hill, where she helped Illinois Democratic representative Jesús “Chuy” García unveil a bill that would stop corporations from buying back their own shares.
“Nike sells its products with advertisements that place their swoosh logo next to the word ‘equality.’ Nike even has an ad campaign called ‘until we all win,’” she said. “But who is winning when Nike turns its back on economic devastation for women who make its clothing and chooses instead to funnel billions of dollars to its wealthiest investors in the form of stock buybacks?”
Nike did not respond to requests for comment about the OECD complaint and stock buyback bill.
Canada has been tightening its forced labor laws. In May, it passed its first reporting legislation for modern slavery and child labor, which will go into effect next January. Previously, such information was voluntary. It, the United States and Mexico have also committed to forming a united front against forced labor via the United States-Mexico-Canada Agreement.
“Canadians have strong values when it comes to respecting human rights and Canada’s responsible business abroad strategy is clear,” Meyerhoffer said, adding that the CORE will roll out the other investigations in the coming weeks. “Canadian companies are expected to respect Canadian standards for human rights and environmental protection when they work outside of Canada. It is the CORE’s mission to resolve complaints in a fair and unbiased manner in order to help those impacted and to strengthen responsible business practices.”
