The UK Government has issued guidance to UK companies with business links in Xinjiang, where human rights violations are reportedly taking place in Uyghur “re-education camps”. The guidance, announced by Dominic Raab in a Parliamentary statement on 12 January 2021, aims to ensure that UK companies are not complicit in, nor profiting from, human rights violations in Xinjiang. In this post we consider what the guidance means for UK businesses.
Who does the guidance apply to?
The guidance is aimed at UK businesses that:
- directly or indirectly provide goods and services to authorities in the Xinjiang area;
- are engaged in joint research and development activities in the fields of surveillance, biometrics or tracing technology; or
- have supply chain links with Xinjiang.
What does the guidance say?
The guidance “strongly recommends” that such companies “conduct careful and robust due diligence” to ensure their operations do not directly or indirectly contribute to human rights violations taking place in Xinjiang. However, it acknowledges that carrying out due diligence in Xinjiang will be difficult due to limits on access, the fact that workers are unlikely to be able to speak freely, and the extent and severity of the human rights violations that are reportedly occurring.
The guidance therefore encourages companies to go beyond the requirements of the Modern Slavery Act 2015, under which large companies must simply be transparent about their efforts to investigate and address modern slavery-related risks. The risk for companies failing to carry out the recommended due diligence, and taking steps to mitigate any risks, is a reputational one. However, the guidance – which adds to mounting pressure from civil society – sends a clear message to companies that the Government expects them to play an active role in preventing or mitigating human rights violations within their supply chains, even if they are not required to do so by law.
The UK is not the only jurisdiction to have introduced such guidance: the US has issued a “Xinjiang Supply Chain Business Advisory” highlighting human rights-related risks for companies doing business in Xinjiang, while Canada has introduced a requirement for Canadian companies to produce “Xinjiang Integrity Declarations”. Businesses with operations in Xinjiang may also be affected by sanctions, such as those introduced in the UK, the EU and the US.
What should companies do next?
As with any human rights due diligence, companies that follow the guidance will be expected to take a proportionate approach in light of their size and the nature of their business operations.
Many companies will already be familiar with the concept of human rights due diligence, perhaps as a result of efforts to comply with the UN Guiding Principles or OECD Guidelines for Multinational Enterprises, even where not legally required to do so. For those less familiar with the concept, there is an increasing volume of resources available, including the UN’s Interpretative Guide on the UN Guiding Principles, the OECD Due Diligence Guidance for Responsible Business Conduct, and our own Human Rights Due Diligence Toolkit, which can be used to help clients address human rights risk in the context of transactions.
Some companies – particularly those operating in ‘higher risk’ sectors such as garment production – have chosen to publish “Xinjiang Due Diligence Statements” setting out what they are doing to identify and address human rights risks in their supply chains. Companies opting to produce such statements should of course ensure that these statements are realistic and accurately reflect the commitments made by the company.
See our Sustainability Regulatory Horizon report for more on business and human rights and other sustainability issues.