Volkswagen's Controversial Xinjiang Audit Sparks Investor Concerns

An audit of Volkswagen's site in Xinjiang, China, failed to meet international standards according to an FT report. Confidential worker interviews were live-streamed, and only managers were questioned. Despite finding no forced labor, the auditors were not accredited, prompting investors to demand further checks.

An audit commissioned by Volkswagen into its jointly owned site in Xinjiang, China, failed to meet key aspects of the international standard the German carmaker's auditor said it had set for the process, the Financial Times reported on Thursday. Confidential interviews with workers were reportedly live-streamed to a law firm's headquarters in Shenzhen, southern China. Furthermore, only managers were asked questions related to forced labor.

Investors demanded last year that the carmaker conduct an independent audit of labor conditions at the site in the Xinjiang region, where rights groups have documented abuses, including mass forced labor in detention camps. Beijing denies such allegations. Volkswagen did not immediately respond to Reuters for comment but told the FT that the SA8000 standard was used as a "basis" rather than a full guideline.

The audit report, a summary of which was released late last year, found no signs of forced labor. However, the auditors acknowledged the challenges of data collection in China. Volkswagen announced that the auditing company, Loening Human Rights & Responsible Business GmbH, applied the SA8000 standard, assessing eight key areas including child labor, forced labor, health, and safety.

Nevertheless, the FT reported that neither Loening nor the Chinese law firm Liangma were accredited to carry out SA8000 audits, according to a list by Social Accountability International. Loening and the lawyers involved declined to comment. The carmaker clarified in December that no official SA8000 certification was received, though alternative ethical guidelines were followed. The lack of accreditation has caused some VW investors to demand further checks.

The audit report has also been obtained by Germany's Der Spiegel and ZDF.

(With inputs from agencies.)