In recent months, a storm of scrutiny has engulfed Volkswagen, particularly concerning its operations in Xinjiang, China—a region under intense international focus for alleged human rights abuses. The catalyst for this scrutiny was a leaked social audit that raised significant questions about the company’s commitment to ethical labor practices. Lawmakers across the globe have now turned their attention to Volkswagen, urging the automaker to divest from its joint venture in Xinjiang, where systemic issues related to forced labor have been reported.
The controversy erupted after the release of a report from the Jamestown Foundation, a Washington-based defense policy think tank. This report, authored by Adrian Zenz, a prominent scholar known for his research on the treatment of Uyghurs and other minorities in Xinjiang, alleged that Volkswagen’s audit was fundamentally flawed. According to Zenz, the audit’s methodology and execution fell short of international standards, thereby failing to adequately assess the risks of forced labor. Notably, the auditors were Chinese individuals with questionable experience in conducting such assessments, and the audit relied on closed-ended questions that lacked context, raising concerns about the validity of the findings.
In December 2023, Volkswagen publicly defended its position, stating that its Environmental, Social, and Governance (ESG) audit found “no indications of any use of forced labor” at its Xinjiang facility. However, the company did not release the full audit document, which limited transparency. The Inter-Parliamentary Alliance on China (IPAC), comprising lawmakers from over 20 countries, responded by calling for Volkswagen to withdraw from the region altogether, citing the impossibility of meaningful human rights due diligence there. Their call was echoed by the U.S. Congressional-Executive Commission on China, which described the audit’s conclusions as “extremely troubling.”
Volkswagen’s joint venture with the state-owned SAIC has been operational for nearly a decade, and it is the controlling shareholder in the Xinjiang plant. The automaker initiated the ESG audit following pressure from investors who raised concerns about human rights at a shareholder meeting in May 2023. This was a direct response to MSCI, an index provider, marking Volkswagen with a red flag for allegations of forced labor—a designation later changed to an orange flag after the company’s December statement.
Critics argue that the audit’s findings are insufficient to assure stakeholders of Volkswagen’s ethical practices. Zenz pointed out that the audit was conducted in an environment where employee anonymity could not be guaranteed, a significant factor in an area where fear of state repercussions is prevalent. Employees were reportedly informed collectively about the audit, and their interviews were live-streamed, which likely deterred honest responses, particularly among ethnic minorities who might fear retaliation.
Moreover, the report emphasized that the only individuals questioned about forced labor were managers, raising further doubts about the audit’s comprehensiveness. Questions about how employees secured their positions—whether through intermediaries or state agencies—went unasked. This omission is critical, as it suggests a lack of inquiry into the very processes that could expose workers to coercive labor practices.
The implications of Volkswagen’s situation extend beyond the company itself. As highlighted by Sabrina Sohail from Campaign for Uyghurs, Volkswagen’s presence in Xinjiang makes it complicit in the broader system of state-imposed forced labor. Xinjiang is notorious for operating the world’s largest system of such labor, employing tactics that include coercive labor transfers disguised as poverty alleviation initiatives. Zenz and others warn that if companies like Volkswagen continue to utilize questionable audits to placate investors, it undermines the entire accountability system established by international labor standards.
In light of these revelations, Volkswagen’s assertion that its audit adhered to the SA8000 standard—a benchmark for assessing social accountability—has come under fire. Critics, including Judy Gearhart, a former director at Social Accountability International, have pointed out that the SA8000 standard was not designed to evaluate state-imposed forced labor, further complicating Volkswagen’s claims.
The unfolding narrative is a stark reminder of the complexities at the intersection of global supply chains and human rights. As international lawmakers and advocacy groups continue to apply pressure, the onus is on Volkswagen to provide transparency and accountability regarding its operations in Xinjiang. The stakes are high, not only for the company’s reputation but for the broader ethical implications of corporate behavior in regions fraught with human rights challenges.
