Development bank accused of lending millions to companies allegedly linked to forced labor in Xinjiang

But new research suggests the organization, which operates under the World Bank Group, has been providing hundreds of millions of dollars in loans to companies that may be relying on forced labor from CNN Business was granted exclusive, advance access to the report, which was led by the Helena Kennedy Centre for International Justice at Sheffield Hallam University in the United Kingdom and published by the Atlantic Council, a Washington-based think tank.The Helena Kennedy Center for International Justice researches modern day slavery, gender-based violence and hate crime and has previously published reports alleging the use of forced labor in Xinjiang to produce cotton and solar panels. They say the four named companies are not the only businesses receiving IFC funds in the region.”I think it’s clear that the IFC needs to divest from all their investments in the Uyghur region,” said report author Laura Murphy, a professor in Human Rights and Contemporary Slavery at Sheffield Hallam University, who added that it is “incumbent on the IFC based on their own standards that they ensure that their clients are not involved in forced labor.”In a statement, an IFC spokesperson told CNN the corporation has “strong environment, social and governance (ESG) standards” that are diligently applied during the life of the investment and are considered a model for development finance worldwide.”We do not tolerate discrimination or forced labor under any circumstances,” the spokesperson said. “Whenever such serious allegations are brought to our attention, we work to verify and address them with our clients with urgency.”Beijing responded to the report on Thursday, saying it was “false” and “full of lies and groundless accusations.””It is understood that the organization has no staff in Xinjiang. There was no field investigation, no real research, no evidence to back up the report,” Foreign Ministry spokesperson Wang Wenbin said in a briefing. “The Chinese government attaches great importance to the protection of human rights and workers’ rights and interests. For some time now, certain countries have been hyping up social lies and extending their reach to multilateral development institutions,” Wang added. CNN sought comment from the four Chinese companies named in the report but did not receive a response. The report’s authors also said they attempted to contact them but did not receive a response. Some companies, investors and other organizations have pulled out of the region because of the difficulties in auditing activity there. Many international auditors will no longer certify products made in Xinjiang, and the Fair Labor Association — a Washington-based non-profit whose members include multinational corporations and Ivy League universities — has banned its members from sourcing from Xinjiang due to an inability to gather accurate information, or to verify if workers there are under duress.”The underlying problem in the Uyghur region is the political repression is so great, we’re of the view that no company can do adequate human rights due diligence,” said Sophie Richardson, China Director of Human Rights Watch. “Where [a company] can’t do adequate human rights due diligence, it should withdraw.”Foreign governments have also been piling pressure on companies. 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In December, White House Press Secretary Jen Psaki said that the United States would not continue do “business as usual” and participate in the “fanfare” of the Games because of the “ongoing genocide and crimes against humanity in Xinjiang.”But activists also point out that governments that work with the IFC should also review their funding plans. The United States, after all, has plowed more than $23 billion over the last 20 years into the World Bank Group, and as of June 2021 was the largest IFC shareholder with a stake of about 21%. That funding has increased during the pandemic: In March 2020, the World Bank Group announced that the US government authorized a $5.5 billion capital increase for the IFC as part of the Coronavirus Aid, Relief, and Economic Security Act.In a statement to CNN, the US Treasury Department said that it “works closely with other parts of the United States government to strongly condemn and respond to the atrocities taking place in Xinjiang.”It said the government had pressed multilateral development banks (MDBs) — including the IFC — to strengthen their safeguards so projects “do not inadvertently support companies that participate in or benefit from forced labor.”The statement added: “The US has been — and will continue to be -— a lead voice on this issue in all the MDBs and will continue working with other shareholder countries to make companies with alleged linkages to forced labor practices ineligible for MDB investments.”