The corporate ethics watchdog in Canada initiated independent investigations into Nike Canada (NKE.N) and Dynasty Gold (DYG.V) on Tuesday. These investigations aim to examine allegations that the companies either utilized or benefited from forced Uyghur labor in their supply chains and operations within China.
The decision to launch these investigations follows an initial assessment of complaints filed by a coalition of 28 civil society organizations in June 2022. The complaints specifically targeted the overseas operations of 13 Canadian companies.
The investigations will delve into the allegations made against Nike Canada and Dynasty Gold to ascertain the truth and ensure adherence to ethical practices. Further updates will be provided as the investigations progress.
According to a report by the U.N. human rights chief, China’s treatment of Uyghurs, a predominantly Muslim ethnic minority with a population of approximately 10 million in Xinjiang, has raised concerns of potential crimes against humanity. These actions have taken place in the far west region of China. Beijing, however, has consistently denied allegations of forced labor being imposed on Uyghurs.
This investigation by the Canadian agency marks the first of its kind since the establishment of its complaint mechanism in 2021. Previously, no other Canadian agencies had launched investigations of a similar nature.
The Canadian Ombudsperson for Responsible Enterprise (CORE) has stated that the assessment of complaints against the remaining 11 companies is still ongoing, and reports regarding these complaints are anticipated in the following weeks.
Regarding Nike Canada and Dynasty Gold, they are specifically accused of having or having had supply chains or operations in China that are alleged to have used or benefited from the utilization of forced labor involving Uyghurs. This information was outlined in the statement provided by the Ombudsperson.
Dynasty Gold responded to the allegations, stating that they are “totally unfounded” in an emailed response.
On the other hand, Nike Canada did not immediately provide a response to Reuters’ requests for comment.
The Ombudsperson, Sheri Meyerhoffer, emphasized that the outcome of the investigations has not been predetermined, and the final reports with recommendations will be published once the investigations are complete. Meyerhoffer expressed concern about the companies’ response to the allegations.
CORE, launched in 2017, monitors and investigates human rights abuses primarily by Canadian companies in the garment, mining, and oil and gas sectors operating abroad. While CORE lacks legal powers to prosecute, if companies are found guilty, it can refer the findings to a parliamentary committee for further action.
In recent years, several large U.S. and Canadian multinational companies have faced accusations of using Uyghur forced labor directly or in their supply chains. Earlier this year, a group of bipartisan U.S. representatives urged the U.S. Securities and Exchange Commission to halt the initial public offering of the Chinese-founded fast fashion firm Shein until it clarified its stance on forced labor.
The Chinese embassy in Ottawa has not responded to Reuters’ request for comment.
The initial assessment of Nike’s case highlights supply relationships with Chinese companies alleged to have used or benefited from Uyghur forced labor. In March, an activist shareholder urged Nike to enhance transparency regarding the working conditions in its supply chain.
Nike asserts that it no longer maintains any connections with these companies and has provided information on their due diligence practices to the watchdog, according to the statement from the Ombudsperson.
The complaint against Dynasty Gold alleges that the company benefited from Uyghur forced labor at a mine in China where it holds a majority interest. In a previous statement, Dynasty Gold stated that it does not have operational control over the mine and that the allegations emerged after it exited the region.