How to Help Your Company Act Ethically
Advice for my friends, when a conflict of laws masks an ethical quandary.
Of all the harm that has been wrought from the programs of social control and ethnic elimination targeting the Uyghurs in China, it is hard to say that the plight of the Western firm ranks all that high. But nevertheless, it’s been top of mind for me (and I suspect some others) lately, given a pair of newsworthy developments which have brought the question of the corporate relationship to forced Uyghur labor back to the fore.
China made news last month by opening an “investigation” and threatening to add a major Western apparel company to its Unreliable Entities List, a sanction that would carry substantial commercial ramifications for the company, its employees, and its portfolio of well-known global brands. The company’s alleged fault is complying with U.S. law—namely the U.S. forced labor import ban, which makes it illegal to import goods made wholly or in part with forced labor. As a friend (outside the field) put it: “Wait, China has an anti- anti-slave labor law? Crazy.” Alas, it does and it is.
The other development was from the week prior. In this case, a company that is invested in a Chinese enterprise that exists in Xinjiang and has a plurality of Uyghur employees did what I suspect many companies in similar circumstances might try to do. It sought to absolve itself of potential complicity in forced labor by commissioning a so-called “social audit” of the facility. From a commercial standpoint, the gambit worked—a “red flag” placed on the company’s stock by a socially-conscious investment ratings agency was removed. From an ethical standpoint, not so much. The audit report leaked.
As developments like these are wont to do, they had the effect of refocusing public attention (at least temporarily) on the problem of forced Uyghur labor in Chinese supply chains. Where goes public attention, so goes public discourse, and many takes followed, nearly all of them some variation on how difficult and unfortunate the situation is.
And while this isn’t “difficult” or “unfortunate” in the same manner (let alone degree) as the life of any Uyghur living anywhere in the world in 2024 (even right here in Washington DC), it is nonetheless a fair description. So in this essay, I want to take a slightly different approach and write from a more personal vantage.
Many readers of this newsletter have roles in businesses that require them to mind and address connections between their enterprise and forced labor in the supply chain. I am lucky to call many of them friends. And so this week, I want to write to my friends, to offer some advice. These are not easy challenges for any company to navigate successfully, and I fear these developments augur difficulty for other companies who might be similarly situated, down the line.
The issue of forced Uyghur labor is not, as another leading attorney in this space earnestly surmised to me, likely to up and disappear. In fact, the evidence suggests quite the opposite. Since China announced the closure of the Xinjiang re-education through labor camps in 2023, scholarship indicates that the Chinese Communist Party has scaled up massively the programs of labor transfer which result in Uyghurs being shunted across the country to one productive environment or another, under the menace of penalty that few could resist. State planning documents indicate that coercive employment and “poverty alleviation” programs are poised to continue through at least 2025.
While public evidence regarding the details of such transfers has so far been thin, information has a funny quality of wanting to be known. Recall that there was a point in time before the world knew that China had constructed physical camps—replete with guard towers and barbed wire—to house its program of reeducation through labor in Xinjiang. But China’s concealment of the camps eventually broke, through its own documentation of the same. If the scholarship on the increased scope and scale of labor transfers is correct, then damning data on the concealment of labor transfers might eventually follow suit.
Were that to happen, one could imagine a scenario where many more Chinese companies are implicated as participants in the social programs of concern than is presently known. And if that happens, the close economic ties of many Western firms to Chinese supply chains mean that many more companies could find themselves confronting a thorny question of business ethics: what if forced Uyghur labor is a bigger and more direct problem for us than we realized?
This is a fact pattern that every company with a supply chain running through China would do well to consider: what if one or more of our Chinese affiliates—be they related entities, or unrelated suppliers, trusted partners in a joint venture, or powerful, market leading firms in their own right—have become quiet participants these infamous social programs, by receiving a state-sponsored transfer of Uyghur workers? What if this transpired through an offer from the State that the affiliate could not refuse. What would your company do? Speaking more personally, if you’re in a role that would require you to weigh in on such matters, what would you do?
One answer to this question, of course, is that your company would seek to navigate a thorny conflict of laws. The challenge facing a company trapped between a U.S. law like the UFLPA and Chinese law like the Provisions on the Unreliable Entity List is conventionally framed as such. And to a certain extent, it is. China’s Ministry of Foreign Commerce asserts that it will “conduct the investigation pursuant to law,” before helpfully adding that “honest and law-abiding foreign entities have nothing to worry about.” Reassuring! When confronting a conflict of laws, your company, like all companies, will endeavor to comply with the law in all jurisdictions where it does business. But uncommonly for a conflict of laws, this fact pattern also presents a difficult question of business ethics.
Business ethics is like normal ethics, except harder, because money is at stake. That’s not a dig, it’s a fact. Nothing poses a greater threat to your Kantian moral imperative, your deontology, or your Golden Rule than having it impinge on a commercial decision right here in the real world. In the era of mass cheap e-commerce, don’t we all struggle to harmonize our conscience and our consumption? Doing ethics is hard when you also need (or just really want) to conduct an transaction involving an exchange of value for money.
But remember that corporate personhood, unlike human personhood, is a legal fiction. Businesses don’t have consciences, and they can’t engage in moral reasoning. Only the people working within them can. And so, to my friends confronting this challenge, I would extend two pieces of counsel, the best I can offer.
First, understand that your most dependable text for navigating challenges of international business ethics—that is, the U.N. Guiding Principles on Business & Human Rights—is of virtually no use here. Second, beware the reality distorting effect of converging political speech and economic necessity. Listen instead to the stories of Uyghur survivors. If you follow this advice, your task will not necessarily be any easier. But by Jove, you may manage to keep your bearings.
So what’s a company confronting an international ethical dilemma to do? For many in the business community, the answer comes down to What Would John [Ruggie] Do?Mr. Ruggie was a greatly respected professor of Human Rights and International Affairs at the Harvard Kennedy School, who passed away in 2021 at the age of 76. He is widely considered to be the father of the field of business & human rights, and his most enduring work is the so-called U.N. Guiding Principles on Business & Human Rights (“UNGPs” for short). It is the bible of international business ethics.
The UNGP's are beloved for their parsimonious & coherent framing, which is seen as fairly allocating responsibility for the defense of human rights between states and businesses. Under the UNGP framework, it is first states that have an obligation to protect human rights. Then Companies have an obligation to respect human rights. And last, when violations occur (as they invariably do), there is a concomitant corporate obligation to help ensure a remedy. States protect, corporates respect & remedy. There’s a lot of wisdom embedded in that mantra.
Because the UNGPs are regarded as the definitive guide on how to navigate business ethics, it is both difficult and important to recognize that they are completely out of their depth in the funhouse-hall of mirrors distortion presented by this particular instance of state-sponsored forced labor.
It’s not that the UNGPs don’t anticipate that states might take steps that are harmful to human rights—they do. There’s a UNGP for how businesses can support human rights in areas where states are in active conflict (that’s Principle 7), and another that addresses the risks of human rights abuses in state-owned enterprises (Principle 4). The problem with the UNGPs is much more fundamental.
Written during the heyday of the globalist era of 2011, they don’t contemplate a world in which one particular state could so flagrantly violate international norms and law applicable to human rights, so effectively deny any moral ramifications associated with the same, and simultaneously be so integrated in the international community and global economy that it obliterates the corporate capacity to hold up their end of the bargain, as well as the ability of many other states to recognize that this has occurred. The UNGPs understand none of this.
For example, when addressing the risk of human rights abuses perpetrated by state-owned enterprises, UNGP 4 posits that when a state owns an enterprise, it’s actually in a better position to help ensure laws and policies respecting human rights are implemented. If an SOE is alleged to have abused human rights, the UNGPs unironically propose that the governing State should conduct its own human rights due diligence to ferret out the problem. Do tell.
The UNGPs’ inability to cognize the moral inversion at play is perhaps no where more evident than in third prong of the UNGPs, which articulates the corporate obligation to provide a remedy for abuse. The “foundational principle” here is UNGP 25, which explains that States have to make sure abuse victims within their territory have access to an effective remedy. The remaining principles (26 through 31) just describe the corporate obligation to promote justice through such channels. The notion that a State could violate human rights while disavowing knowledge of the same seems not to have been been considered.
Unfortunately, it is difficult for a company to ensure respect for human rights—let alone remediate their violation—when operating in an environment where the state maintains a stranglehold against acknowledging that there exist any individual rights susceptible to harm. As Neo famously learned in The Matrix: “Do not try to bend the spoon human rights. That's impossible. Instead, only try to realize the truth: there is no spoon are no rights.”
Which brings me to my first piece of advice. If your company were to discover that a hitherto unrecognized contingent of Uyghur workers has been state-transferred to your affiliate, do not turn to the U.N. Guiding Principles on Business and Human Rights for help. They may be useful elsewhere, but not here.
Even the provisions that might still seem helpful—like those addressed to the corporate obligation to respect human rights—are dangerous to read out of sync with the full picture. After all, how will you assess whether your affiliate has caused or contributed to adverse human rights impacts? Will you conduct human rights due diligence? Will you hire a third party to tell you what they see? Do you expect to reach a different result than those who have gone before?
If you try to conduct an audit within a repressive state-controlled environment, to assess the incidence of forced labor perpetrated by a state actor, you are not likely to be successful. Business ethics is always hard. But it’s harder still when the governing authorities are intent on rebranding good and evil, right and wrong. Which brings me to my second word of caution.
If your corporation is to avoid succumbing to the economic incentive that exists not to see the problem, that will take a tremendous amount of deliberate effort. This is especially true if one influential state actor is taking steps to prosecute you in an effort to defend its distorted narrative, and the other state actor is advancing a radically contrary point of view. Pretty soon, you’re likely to feel like you’re trapped in a Tim Burton-directed geopolitical nightmare drama about the Hegelian dialectic. You’ll know you’ve ended up here if you start having conversations with leadership about whether maybe the U.S. and China are both wrong, and the truth is somewhere in the middle. Yeah, that’s it. Maybe it’s complicated, and the truth is in the middle.
My friends, if your conversations take this pathway, my advice is to listen to Uyghur voices. Here’s an easy place to start: this piece from the BBC in March 2021 contains actual footage of a 19 year old Uyghur girl being coopted by state officials into a labor transfer program, who seem to be cocksure of the nobility of their cause. Click the link and scroll down about three paragraphs to the first video. This is what the programs of state sponsored labor transfer consisted of, in the original telling by Chinese state media.
For me, the story of a Uyghur with whom I recently connected lingers. This person, located in the United States, recounted through tears the last time they spoke with their mother. Their mother had placed a video call, crying and desperate, sitting on her bathroom floor to avoid being visible to security cameras directed at her apartment. She said wanted to see her child’s face one last time. They spoke for about a minute. And were never able to speak again.
Or another true story of a relatively lucky Uyghur with whom I recently connected. One who managed to escape China for Brazil, traverse the Darién Gap and Latin America by foot with spouse and multiple small children in tow, arrive at the Southern border alive and seek asylum in the United States. This individual had settled into their new life in the DMV (DC-Maryland-Virginia) area when they got a phone call from their parents, back in China. They answered the call, and an officer of the state took the line instead. Where exactly in the DMV are you living, they were asked. What is your address? And then, which school are your children enrolled in? Before helpfully reassuring, if you ever want to speak to your parents, little sibling, just call me.