Do we have the will to withstand the fallout from human rights regulation?

I always say that we don’t do simple on Dial P for Procurement. This week’s topic is a perfect example. Listen here: Intent v. Effect of Uyghur Forced Labor Regulation

Most 'feel good' policies seem like a great idea at a high level. It isn’t until you dig into the details that the problems become visible.

For instance… the plight of the Uyghurs in the Xinjiang Autonomous Region of China.

A Simple Explanation:

• The Uyghurs are a mostly Muslim Turkic ethnic group. There have been many allegations of forced labor and subsequent investigations into potential human rights violations.
• Forced labor is bad, and Western companies – especially those with ESG programs – are naturally opposed to having their supply chains rely upon any form of modern slavery.
• The Uyghur Forced Labor Prevention Act (UFLPA), which took effect on June 21, 2022 will stop forced labor in Xinjiang by requiring exporters working in the region to prove that their goods were ethically produced.
• Sounds good, right?

Let's try again - A Real Explanation:

• Xinjiang provides 41% of the world’s manufacturing capacity for polysilicon, a critical material for making solar panels. Large shipments of panels have already been seized by U.S. Customs for violating the UFLPA. Without Xinjiang’s production capacity, U.S. customers could see 10 gigawatts or more of supplies delayed in 2022 (equivalent to nearly half of what the U.S. installed last year). Solar panel costs have already risen by 30% to 40%. [Source ]
• In 2020, companies like Apple, Nike, and Coca-Cola?spoke with congress and gave feedback about the UFLPA that the Business & Human Rights Centre characterizes as trying to weaken the bill because its “ambitious requirements” would increase the cost and complexity of their supply chains. All three companies have ESG policies in place. [Source ]
• Red dates associated with the practice of “intercropping” (a practice where who crops are grown in the same area) with Xinjiang cotton, have been found in Asian supermarkets in the Washington D.C. area (of all places). [Source ]
• On August 31st, United Nations High Commissioner for Human Rights, Michelle Bachelet, released a report generally supporting what Western governments and human rights groups have claimed for years is taking place in Xinjiang. She released the report with just 2 minutes left in her four-year term and does not intend to seek a second term. It is unknown who will take her place. China still holds a seat on the 47-member UN Human Rights Council, the group that will review the report and recommend next steps. [Source ]

Real is what it is. If we believe that there are human rights violations taking place, we can’t look the other way and we can’t take an overly broad approach to policy enforcement and implementation. We certainly can't claim that our companies are good corporate citizens. Looking good and being good are two very different things.

The Permanent Mission of the People’s Republic of China to the United Nations Office at Geneva made the following statement in response to the United Nations report.:

“At present, Xinjiang enjoys social stability, economic development, cultural prosperity and religious harmony. People of all ethnic groups in Xinjiang are living a happy life in peace and contentment. It is the greatest human rights protection and the best human rights practice.”

That defiant positioning, plus their attempts to prevent the United Nations report from being released, do not align with Western mores, and huge questions remain:

• Can the Western world bring their operational practices into alignment with their statements and posturing with regard to human rights?
• Is it feasible to ensure Xinjiang-sourced products are not found in a company's supply chain?
• Will the United Nations stand up and demand that China stop their treatment of the Uyghurs in Xinjiang? Will their demand have any teeth?
• Are global procurement and supply chain professionals willing to stand on the wall and hold the line against human rights abuses - in Xinjiang and elsewhere?

We’re all waiting to find out. Listen to this week’s episode of Dial P for Procurement and then share your point of view here or in any of the other social media posts about the podcast.

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