Ottawa’s corporate ethics watchdog has dropped its review of Hugo Boss’s Canadian arm following the withdrawal of a complaint alleging its supply chain used and benefited from Uyghur forced labor.
The move comes nearly two years after a coalition of 28 organizations, including Stop Uyghur Genocide Canada, the Uyghur Refugee Relief Fund and the Uyghur Rights Advocacy Project, accused the luxury purveyor of conducting business with Changji Esquel Textile Co., a yarn manufacturer that an Australian Strategic Policy Institute investigation linked to mass labor transfers, and Texhong Textile Group, which a Sheffield Hallam University report connected with the exploitation of Uyghurs and other Muslim minorities in China’s Xinjiang Uyghur Autonomous Region. Changji Esquel Textile Co. was later placed on both the U.S. Department of Commerce’s Entity List and the Uyghur Forced Labor Prevention Act Entity List.
The complainants said they had asked Hugo Boss Canada in December 2021 to cut off relations with Esquel and take “reasonable steps” to ensure that none of its materials are sourced in the controversial province. When the company reportedly didn’t respond, they turned to the Canadian Ombudsperson for Responsible Enterprise, better known as the CORE, with a formal complaint.
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In August, the CORE opened a fact-finding probe, noting that Hugo Boss Canada did not provide a “substantive response” to the complaint. The information raised by the two reports, together with bills of lading that tied Hugo Boss with overseas subsidiaries of Esquel Group, Changi Esquel Textile Co.’s parent firm, also suggested that “there may be grounds to warrant an investigation,” it said at the time.
A spokesperson from Hugo Boss told Sourcing Journal following the CORE’s announcement that it does not source any goods that originate from Xinjiang and that the agency based its decision to investigate Hugo Boss Canada on the “incorrect fact” that it might still be ordering products from other Esquel entities outside of China. The representative also said that Hugo Boss was already winding down its relationship with Esquel in 2020 and 2021 and no longer traded with the company as of 2022.
The CORE said that executives from Hugo Boss Canada ultimately “engaged in good faith and expressed an interest in resolving the complaint” through its informal mediation services. Between November and March, all parties, including the complainants, executed a non-disclosure agreement and “engaged in direct discussions.”
On March 4, the complainants told the CORE that Hugo Boss Canada had “provided a satisfactory response or remedy” to the allegations in the complaint and wished to rescind their filing. By May 7, the CORE had closed the dispute without a formal investigation and a recommendation that Hugo Boss continue to “maintain a comprehensive approach to fulfill its responsibility” to respect human rights per the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises on Responsible Conduct.
“We are very pleased that the complaint was withdrawn as a result of our due diligence efforts,” a Hugo Boss spokesperson told Sourcing Journal. “Through an open dialogue with the complainants, we were able to showcase that Hugo Boss has implemented a comprehensive risk management system to monitor compliance with human rights throughout our value chain.”
Complaints against the Canadian branches of Guess, Levi Strauss & Co., Ralph Lauren, Nike, Diesel, Walmart and Zara, filed by the same consortium of nonprofits, remain open.
“Problem-solving through dialogue and information sharing by parties who make reasonable efforts to engage in good faith can also produce tangible results in advancing and protecting human rights,” said ombudsperson Sheri Meyerhoffer, who has spearheaded the CORE since its inception in 2019. “The CORE looks forward to helping resolve more complaints through this mutually beneficial process.”