The corporate ethics watchdog of Canada on Tuesday (July 11) launched separate investigations into Nike Canada and Dynasty Gold to probe allegations that the two companies used or benefitted from forced labor in their operations in China.

According to a report by the news agency Reuters on Wednesday, the investigations were launched after an initial assessment of complaints about the overseas operations of 13 Canadian companies filed by a coalition of civil society organizations in June last year.

 A statement from the Canadian Ombudsperson for Responsible Enterprise (CORE) said that Nike Canada and Dynasty Gold were alleged to have had supply chains or operations in China identified as using or benefitting from the use of Uyghur forced labor. 

The statement said complaints against the other 11 companies were being assessed and the reports were expected in the coming weeks. Ombudsperson Sheri Meyerhoffer said in the statement that he has not pre-judged the outcome of the investigations. “We will await the results and we will publish final reports with my recommendations,” Meyerhoffer said, adding the watchdog was very concerned about how these companies had chosen to respond to the allegations. 

The complaints against Nike, Dynasty Gold

The report said that the initial assessment of Nike Canada showed supply relationships with Chinese companies identified as using or benefiting from the use of Uyghur forced labour.

Nike maintained that it no longer had any ties with these companies and provided the watchdog information on its due diligence practices. In March, an activist shareholder called on the footwear and sporting equipment giant to offer more transparency on the working conditions of its supply chain.

On the other hand, the complaint against Dynasty Gold is that it benefited from the use of Uyghur forced labor at a mine in China in which the company holds a majority interest. Last year, the company said it did not have operational control over the mine and the allegations arose after it left the region. And speaking to Reuters on Wednesday, Dynasty Gold said that the allegations were unfounded. 

A first-of-its-kind probe

CORE, which was launched in 2017, monitors and investigates human rights abuses mainly by Canadian garment, mining oil and gas companies that operate overseas. The agency has no legal powers to prosecute. If companies are found guilty, CORE said it could refer findings to a parliamentary committee for further action. 

On Tuesday, the Chinese embassy in Ottawa reiterated that Beijing has repeatedly denied the use of forced labor against Uyghurs and that the rights of workers of all ethnic groups in Xinjiang were duly protected. This is the first such investigation by CORE since it launched its complaint mechanism in 2021. The report said that no other agencies in Canada in the past launched investigations of this kind.