Legal Considerations in Responsible Investment

U.S. Senate Re-introduces the Uyghur Forced Labor Prevention Act

Last week, the Uyghur Forced Labor Prevention Act (the “Act”), which seeks to bar the import of certain goods produced with forced labor from the Xinjiang region of China into the U.S., was re-introduced in the Senate. The Grant & Eisenhofer ESG Institute has, and will continue to, monitor the status of the Act.

For years, Uyghurs, a Muslim minority group that is located predominantly in China’s Xinjiang Province, have been the targets of unfettered discrimination and bigotry, in many cases being forced into detention camps. There, they are victims of forced labor in factories which are inextricably tied to the supply chains of renowned global brands such as Apple, Coca-Cola, and Nike. On September 22, 2020, the House of Representatives passed the Act by an overwhelming margin of 406 to 3. The Act did not pass the Senate before the 116th Congress concluded. On January 27, 2021, in a show of bipartisan support, Senators Marco Rubio (R-FL) and Jeff Merkley (D-OR) reintroduced the Act.

If enacted into law, the Act will prohibit the import of certain categories of goods produced with forced labor from the Xinjiang region into the United States; require that the president of the United States submit an annual report to Congress identifying each foreign person, including any Chinese government official, who is at all involved with forced labor in the Xinjiang region; impose sanctions on such individuals identified in the president’s report, which may include blocking any transactions in property interests in the U.S. and banning them from entry into the U.S.; and require U.S. companies to disclose to the SEC any links they may have to Xinjiang. Describing the impetus behind the Act, Senator Merkley stated, “For years, the Chinese government has been committing genocide in Xinjiang, subjecting Uyghurs and other predominantly Muslim ethnic minorities to torture, imprisonment, forced labor and pressure to abandon their religious and cultural practices.”

While the 116th Congress had, for the most part, welcomed the bill as a strategic effort to hold U.S. corporations accountable for human rights violations, brand-name companies such as those mentioned above, as well as Calvin Klein, and Campbell Soup, have spent millions of dollars lobbying to weaken some of the bill’s provisions. Their goals include extending compliance deadlines and disclosing supply chain information only to congressional committees, thereby keeping that data from the public.. While these companies continue to tout their ethical and responsible manufacturing and international labor standards, they have now made clear that they view the pending legislation as posing an imminent threat to the viability of their supply chains. The recent lobbying efforts of these corporations stand in obvious contravention to their public promises and assurances of responsible corporate behavior. This latest example of corporate lobbying offers two salient reminders: first, that the supply chains of so many U.S. companies we depend upon for everyday comforts and conveniences are fraught with forced labor; and second, that such corporations have much work to do to reach an acceptable level of corporate responsibility.

Combating forced labor abroad is a principal goal of the Grant & Eisenhofer ESG Institute. Recently, the Institute successfully petitioned the United States Customs and Border Patrol to block the importation of goods containing palm oil produced by FGV holdings.