Canada probes Nike, Dynasty Gold over alleged use of forced labor in China

By Ismail Shakil and Divya Rajagopal

OTTAWA (Reuters) – Canada’s corporate ethics watchdog launched separate investigations into Nike (NYSE:) Canada and Dynasty Gold to probe allegations that they used or benefited from forced Uyghur labor in their supply chains and operations in China.

The investigations were launched on Tuesday after an initial assessment of complaints about the overseas operations of 13 Canadian companies filed by a coalition of 28 civil society organizations in June 2022.

A report by the U.N. human rights chief said last year that China’s treatment of Uyghurs, a mainly Muslim ethnic minority that numbers around 10 million in Xinjiang, in the country’s far west, may constitute crimes against humanity.

Beijing has repeatedly denied the use of forced labour against Uyghurs, a position the Chinese embassy in Ottawa reiterated in a statement on Tuesday that added the rights of workers of all ethnic groups in Xinjiang were duly protected.

This is the first such investigation launched by the Canadian agency since it launched its complaint mechanism in 2021. No other Canadian agencies in the past has launched investigations of this kind.

Complaints against the other 11 companies were still being assessed, with reports expected in the coming weeks, according to a statement from the Canadian Ombudsperson for Responsible Enterprise (CORE).

Nike Canada and Dynasty Gold are alleged to have or have had supply chains or operations in China identified as using or benefiting from the use of Uyghur forced labor, the Ombudsperson said in the statement.

Dynasty Gold said in an emailed response that the allegations were “totally unfounded”.

“While there are factual inaccuracies in their latest report, we’ll continue to participate (in discussions),” Nike said on Wednesday in response to a Reuters’ query.

“I have not pre-judged the outcome of the investigations. We will await the results and we will publish final reports with my recommendations,” Ombudsperson Sheri Meyerhoffer said in the statement, adding that the watchdog is “very concerned” about how these companies have chosen to respond to these allegations.

CORE was launched in 2017 to monitor and investigate human rights abuses mainly by Canadian garment, mining and oil and gas companies operating abroad.

CORE has no legal powers to prosecute and if companies are found guilty, the watchdog said it could refer the findings to a parliamentary committee for further action.

In the last couple of years, several large U.S. and Canadian multinational companies have been accused of using Uyghur forced labor either directly or in their supply chains.

Earlier this year Reuters reported that a bipartisan group of U.S. representatives called on the U.S. Securities and Exchange Commission to halt the initial public offering of Chinese-founded fast fashion firm Shein until it clarified that it does not use forced labor.

The initial assessment into Nike details supply relationships with Chinese companies identified as using or benefiting from the use of Uyghur forced labor. In March, an activist shareholder called on Nike to offer more transparency on the working conditions of its supply chain.

Nike maintains that it no longer has any ties with these companies and provided the watchdog information on its due diligence practices, according to the watchdog’s statement.

The complaint against Dynasty Gold is that it benefited from the use of Uyghur forced labor at a mine in China in which the company holds a majority interest. In a statement last year, Dynasty said it does not have operational control over the mine and that these allegations arose after it left the region.