Volkswagen's audit of Xinjiang plant fails to meet international standard, report

An independent audit commissioned by Volkswagen to assess labour conditions at its joint venture facility in Xinjiang, China, has come under scrutiny for failing to adhere to key aspects of the international standard the company claimed to have followed, according to a recent report by the Financial Times.

The audit, conducted in 2023, was intended to address concerns raised by investors regarding potential forced labour practices at the site, which is co-owned by SAIC in a region where human rights organisations have documented widespread abuses, including mass detention and forced labour. The Chinese government has consistently denied these allegations.

Upon obtaining the full audit report, the Financial Times uncovered several discrepancies between the actual process and the standards Volkswagen had publicly committed to upholding. One of the most significant issues was the manner in which worker interviews were conducted. Contrary to the requirement for confidentiality, these interviews were reportedly live-streamed to a law firm's headquarters in Shenzhen, potentially compromising the workers' ability to speak freely without fear of repercussions.

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The audit's methodology appeared to be flawed in its approach to investigating forced labour concerns. The report indicates that only managerial staff were questioned about issues related to forced labour, raising doubts about the comprehensiveness and accuracy of the findings.

Volkswagen had previously stated that the audit was conducted in accordance with the SA8000 standard, a widely recognised benchmark for assessing workplace conditions across eight key areas, including child labour, forced labour, and health and safety.

According to the Financial Times, when asked for a comment the company clarified that the SA8000 standard was used only as a "basis" for the audit, rather than being fully implemented.

Adding to the concerns surrounding the audit's credibility, the Financial Times discovered that neither Loening Human Rights & Responsible Business GmbH, the German firm hired by Volkswagen to conduct the audit, nor Liangma, the Chinese law firm involved in the process, were accredited to perform SA8000 audits according to Social Accountability International, which is the body responsible for setting these standards.

When the summary of the audit report was released in late 2023, it concluded that there were no signs of forced labour at the Xinjiang facility. However, the auditors acknowledged the well-known challenges associated with data collection in China, particularly in the context of worker interviews.

The revelations about the audit's shortcomings have prompted mixed reactions. Several senior staff members at Loening have reportedly distanced themselves from the audit, while some of Volkswagen's investors have responded cautiously to the results, urging the automaker to conduct further investigations into the plant's operations.

In response to these findings, Volkswagen has maintained that despite not receiving an official SA8000 certification, they implemented "alternative ethical guidelines and management reviews" to ensure adherence to appropriate standards. However, the discrepancies highlighted by the Financial Times report raise significant questions about the thoroughness and reliability of the audit process.

The full audit report has also been obtained by other media outlets, including Germany's Der Spiegel and ZDF, suggesting that this issue may continue to attract attention and scrutiny in the coming weeks. As the situation unfolds, it remains to be seen how Volkswagen will address these concerns and what steps, if any, the company will take to conduct a more comprehensive and transparent assessment of its operations in Xinjiang.