The Ombudsperson Sheri Meyerhoffer launched a probe following an allegation in independent reports that Guess Canada has supply relationships with three Chinese companies that are said to be using or benefitting from the use of Uyghur forced labour.
Canada’s corporate ethics watchdog CORE published the initial assessment report detailing the allegation, after the complaint was filed by a coalition of 28 Canadian organisations on 21 June 2022 about the activities of Guess Canada.
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However, CORE shared that Guess Canada has denied the allegation, claiming that CORE did not provide “credible evidence” and the Chinese companies identified through the reports are not present on its supplier list.
CORE elaborated that Guess Canada also expressed reservations about CORE’s jurisdiction as it said the company does not operate “abroad” and asserted that it had provided all information, reiterating its commitment to eliminate forced labour in its supply chain.
What is the complaint about?
According to the complaint, Guess Canada has business relationships or supply chain links with Shandong Zoucheng Guosheng, Luthai Textile Co. Ltd., and Xinjiang Zhongtai Group, with the complaint linking all of these companies with Uyghur forced labour.
To support the allegations, the complainants referred to the findings documented in a report by the Australian Strategic Policy Institute, “Uyghurs for sale,” alleging that in November 2019, a satellite factory of Shandong Zoucheng Guosheng claimed that it “brought over 3,500 jobs to Xinjiang.”
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By GlobalDataBased on a government report, CORE pointed out that these jobs were “set to be the biggest Xinjiang Aid [i.e., labour transfer] project in Kashgar Prefecture.”
CORE noted that Texworld USA, a US-based international business platform identified Shandong’s parent company, Jiangsu, as a supplier to Guess (Guess Inc. and its subsidiaries, including Guess Canada).
The complainants also mentioned a report by Sheffield Hallam University, called ‘Laundering Cotton,’ claiming that Luthai Textile Co, Ltd. had reportedly “absorbed” a large number of “surplus labourers” from rural areas and participated in vocational training programmes.
The report states that according to Chinese media, Luthai has been engaged in labour transfer programmes for many years.
CORE added that training conducted by its subsidiary, Xinjiang Luthai Fengshou, is characterised as “conducted in a centralised and closed militarised management mode,” suggesting compulsory or forced labour.
Additionally, the complainants referred to the findings documented in a report by the Helen Kennedy Center for International Justice, “Built on Repression,” alleging that Xinjiang Zhongtai Group is “an avid participant in state-sponsored labour transfer programmes and publicises its engagements regularly.”
The Chinese media claimed there is a high risk of Uyghur forced labour at Zhongtai and that one of its subsidiaries, Aral Fulida, is a supply chain partner of Guess (Guess Inc. and its subsidiaries, including Guess Canada).
In fact, CORE said that in a letter dated 12 November 2021 the complainants indicated they asked Guess Canada to conduct human rights due diligence (HRDD) to ensure Guess Canada did not benefit from Uyghur forced labour, and specifically asked the company to cut off relations with Jiangsu.
According to the complainants, Guess Canada did not reply to their inquiry and stated they found no record of receiving this letter.
CORE has claimed there is no indication that Guess Canada has taken any concrete steps to ensure beyond a reasonable doubt that forced labour is not implicated in its supply chain.
Initial Assessment Report by CORE summary
On 20 July 2022 CORE decided there was sufficient information for the complainants to form a reasonable belief that each of its three admissibility criteria was met.
CORE said during the initial assessment meeting on 18 November 2022, the complainants expressed their willingness to participate in early resolution or mediation including agreeing to terms of confidentiality.
The complainants told CORE they were willing to work towards a systemic resolution that did not name Guess Canada and would find solutions to address the possible use of Uyghur forced labour and would help Canadian garment companies to undertake appropriate HRDD in this high-risk context.
As a suggestion, the complainants shared with CORE that given the complexity of tracing the origin of textiles, particularly from Xinjiang, it is preferable that garment companies use fibre tracing technology to map the supply chain from fibre to retail.
Guess Canada Corporation’s response to the complaint
CORE shared that through a series of letters and emails by Guess Canada, the retailer asserted that certain information and documents it provided to CORE during the complaint process were confidential and/or were communicated to CORE in confidence and therefore, should not be disclosed to the complainants or anyone until CORE made a ruling and the retailer had an opportunity to review, consider and reply.
However, CORE said Guess Canada failed to indicate on what basis the remainder of the material was confidential which led the Canadian watchdog to not reference the company’s information, documents, and submissions in the preparation of its initial assessment report.
Guess Canada told CORE that in 2019, because of existing monitoring, risk management, and due diligence processes, and in line with the requirements of the Uyghur Forced Labor Prevention Act in the US, Guess (Guess Inc. and its subsidiaries, including Guess Canada) ceased all business relationships with Tier 1 vendors in Xinjiang and forbids working with any company based in that region.
CORE said Guess Inc formalised its policy to not contract vendors or suppliers in Xinjiang in September 2020, with Tier 1 suppliers also forbidden from sourcing materials from Xinjiang and training provided to ensure vendors comply with this requirement.
What happens now?
The Canadian corporate ethics watchdog will proceed with an investigation using independent fact-finding, adding that mediation is available at any stage of the complaint process at the Ombud’s discretion and with the agreement of the parties.
CORE noted that while Guess Canada has responded to the complaint and denied the allegations, its response does not appear to consider fully the “complex nature of the garment supply chain, discount risks at the lower tiers of its supply chain and creates a gap in the available information that warrants an investigation.”
Guess Canada and Chinese entities Luthai Textile Co. Ltd. and Xinjiang Zhongtai Group did not respond to Just Style’s request for comment at the time of going to press, while Jiangsu Guotai Guosheng could not be reached.
This year, CORE launched a series of investigations and published initial assessment reports after fashion brands Zara, Ralph Lauren, Hugo Boss and Diesel were accused of having connections to Uyghur forced labour.
Starting in 2024, Canada’s “Fighting Against Forced Labour and Child Labour in Supply Chains Act” will require brands, retailers and importers to identify and prevent human rights violations within their supplier networks.
