Canada to probe complaint Nike, Dynasty Gold uses Uyghur forced labour

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The federal government agency responsible for monitoring human rights abuses arising from Canadian companies’ operations abroad will investigate Nike Canada Corp. and Dynasty Gold Corp., a junior gold miner, for allegedly benefiting from the use of Uyghur forced labour in their supply chains and operations in China.

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The Canadian Ombudsperson for Responsible Enterprise (CORE) said neither company provided a satisfactory response to the allegations of forced labour made against them. As such, the ombudsperson, Sherri Meyerhoffer, decided investigations through independent fact-finding were warranted.

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“I have decided to launch investigations into these complaints in order to get the facts and recommend the appropriate actions,” Meyerhoffer said in a news release. “I have not pre-judged the outcome of the investigations. We will await the results and we will publish final reports with my recommendations.”

The complaints against Nike and Dynasty were filed on June 21 last year by a coalition of 28 civil society organizations.

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The complaint against Nike alleges the company has not taken concrete steps to ensure its supply chain doesn’t depend upon forced labour. The complaint alleges that Nike has links with Qingdao Taekwang Shoes Co. Ltd., Haoyuanpeng Clothing Manufacturing Co. Ltd., Esquel Textile Co. Ltd., Qingdao Jifa Group, Huafu Fashion Co. Ltd., and Texhong Textile Group.

Nike has rebuffed the claims, saying audits and investigations at each of the factories found no links to forced labour.

The report said Nike had initially declined to meet with the CORE for an initial assessment. The company instead provided a response, which it believed addressed the allegations. However, when the company was provided with a draft of the initial assessment report for comments, it contacted the CORE for an assessment meeting, which the CORE declined since it had a timeline to maintain.

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The company also did not “confirm their intention to participate in mediation” with the CORE, which could have potentially prevented an investigation. Meyerhoffer, however, said at a press conference on July 11 that the “door is never closed” and that Nike or Dynasty can “come back and do a mediation.”

After an initial assessment, the CORE said that with respect to operations at Haoyuanpeng and Qingdao, sufficient evidence is not available to “either confirm or dismiss the allegations at this stage.” With regards to Huafu and Texhong, CORE quoted a study from Sheffield Hallam University that identifies a supply chain risk warranting investigation.

“Given the high-risk context, there is a need for enhanced human rights due diligence to identify, prevent and mitigate the human rights-related risks of Nike’s operations,” the CORE said in its assessment.

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It added that the company “has not provided a satisfactory response or remedy to the allegations in the complaint, nor satisfactorily demonstrated that it conducts human rights due diligence.”

Nike wasn’t immediately available for a response to CORE’s report.

The complaint against Dynasty alleges its mining operations in northwest Xinjiang use Uyghur forced labour. In response, the miner said it doesn’t have any operational control of the mine.

The CORE said that claim would need to be assessed. “In order to address the allegations raised in the complaint and Dynasty’s position that it does not have operational control over the mine … the ombud has decided to launch an investigation using independent fact-finding,” the CORE said in its report.

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Like Nike, Dynasty also decided against participating in the CORE’s assessment.

“With respect to Dynasty Gold, they have engaged barely at all except for the last minute to give a brief statement,” Meyerhoffer said, adding that she was concerned about the way in which the companies had chosen to respond to the CORE.

Aside from the two companies, Meyerhoffer is building initial assessment reports on complaints filed against a dozen other firms, most of which are from the garment sector, with a couple from mining.

The ombudsperson said that CORE has the power to launch an investigation if a Canadian company does not engage with it, but that it isn’t what the CORE prefers.

“We would rather have their participation,” she said. “But if they don’t participate, we also have the power to indicate … that they are not acting in good faith and to recommend the minister of international development to withdraw existing trade services or deny future trade services and also to deny … funding.”

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The CORE doesn’t have the authority to summon witnesses, neither will it take legal actions against the companies. But Meyerhoffer hopes the reports and recommendations her organization publishes influences company investors and government departments.

The CORE will await the results of its investigation and then provide recommendations, if required.

“I have the authority to make recommended to remedy harms resulting from human rights abuses and to prevent them from happening again,” she said. “If I make recommendations, we will follow up on them and report whether or not they are implemented.”

• Email: nkarim@postmedia.com | Twitter: naimonthefield

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