German carmaker Volkswagen AG (DE:VOW) received a clean chit from an independent audit firm, stating that they saw “no signs of forced labour” in its Xinjiang, China factory. The Xinjiang province has long been accused of abuses against the Uyghur community in its detention camps. Volkswagen has a plant in Xinjiang in partnership with Chinese carmaker SAIC Motors.
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Forced Labour Charges Cleared
Volkswagen has wound down significant operations at the said plant post-pandemic. Currently, the plant employs only 197 workers, down drastically from 650 employed earlier. Volkswagen claims that only a quarter of the total workforce is Uyghur.
The audit was conducted by Loening Human Rights & Responsible Business, a German human rights due diligence firm, along with two Chinese lawyers from a firm in Shenzhen. Although the auditors were allowed to conduct their inspection freely, the audit firm did caution that “the situation in China and Xinjiang and the challenges in collecting data for audits are well known.”
The employees have little to do, including handling technical commissioning and deliveries, the firm added. Even so, employees are paid above-average salaries, the audit firm reported. Reports have claimed that Volkswagen’s existence in China is only to have a presence in the region and avoid any backlash or boycott.
Since 2022, the global automobile company has been accused of using forced labour by investors and human rights groups. Additionally, Global index provider MSCI put a red flag on Volkswagen’s Xinjiang plant following the accusations. This compelled several investors to sell off their VOW shares as it contrasted the ESG standards. The audit firm’s clean chit could propel MSCI to reconsider its stance on the plant and remove the red flag, pushing investors to buy the shares again.
Is Volkswagen Stock Expected to Rise?
On TipRanks, the Volkswagen share price forecast of €138.80 implies 16.2% upside potential from current levels. VOW stock has a Moderate Buy consensus rating based on seven Buys versus three Hold ratings received during the last three months. Year-to-date, VOW shares have lost 17.8%.
