German companies are increasingly said to be looking at Uzbekistan as a potential market, encouraged by the Federal Ministry for Economic Cooperation and Development and the German textile sector.
The report titled ‘Human rights due diligence: risk assessment for German companies in Uzbekistan’s textile sector’ evaluates how these companies conduct human rights due diligence to comply with supply chain laws.
It examines how well companies are meeting their due diligence responsibilities and what changes are needed to ensure compliance with German and EU laws and accepted standards for responsible business conduct.
Founder and director of the Uzbek Forum for Human Rights Umida Niyazova said: “Rights violations, including illegal land grabbing, arbitrary state interference in cotton production contracts and mandatory production quotas, reveal the lack of protection for those involved in cotton production in Uzbekistan. “
The report also warns that some companies supply the cotton to a number of German brands via producers in Türkiye or elsewhere.
“Effective and thorough human rights due diligence is therefore critical to protecting brand integrity.”
With the privatization of cotton production, Uzbekistan has introduced ‘cluster’ models that integrate agriculture, processing and production. Yet issues such as forced contracts, limited land ownership for farmers and poor working conditions still appear to prevail.
These include potential forced labor during harvest due to government quotas presented as “forecasts,” restrictions on union organizing, land insecurity, government interference, and exploitation of farmers.
Companies face the expectation that they will conduct risk-based due diligence to identify and mitigate human rights risks in their supply chains.
Report author Ben Vanpeperstraete said: “Companies’ public communications do not provide confidence that they are adequately assessing or addressing risks, especially when it comes to sourcing from Uzbekistan. Our research identified an overly broad approach to human rights due diligence, rather than a tailored approach that reflects the Uzbek context, which continues to pose significant compliance risks.”
Key observations:
– Despite reforms in Uzbekistan abolishing state-imposed systematic forced labor, residual risks remain.
– The risk of forced labor and other human rights violations within the Uzbek cotton industry remains significant.
– Revelations by companies indicate a lack of recognition of forced labor or other rights violations as risks when sourcing from Uzbekistan; there is also a lack of information about efforts to detect, prevent, address and correct such problems.
– Companies are expected to implement a human rights-oriented approach to due diligence, taking into account national circumstances, especially with regard to restrictions on trade union formation, freedom of expression and civil society activities, including independent oversight.
– Companies should further step up efforts in mapping and disclosing their supply chains down to the raw materials, to ensure thorough compliance and strengthen traceability.
Uzbekistan is said to be among the top global cotton producers and is increasing its production capacity.
Official figures show production of 3.8 million tons of cotton in 2023, up from 1 million tons in 2013. The interim head of the Uzbek Textile Association has set a target for exports to reach $10 billion by 2030.
Exports of textile products were valued at about $1.7 billion in 55 countries, including Germany and Europe, in the first half of 2024, accounting for 11.8% of Uzbekistan’s total export value.
Germany is Uzbekistan’s seventh most important direct trading partner.
Data from the Center for Economic Research and Reforms shows that trade between Germany and Uzbekistan exceeded the €1 billion mark in 2023. Since the beginning of 2024, German companies have invested approximately €800 million in Uzbekistan.
In May, the Cotton Campaign urged the Uzbek government and the cotton sector to publicly commit to independent oversight of labor rights following the attack on Umida Niyazova.
UzTextilProm was unable to comment at the time of writing.
“Report Raises Human Rights Concerns for German Companies Sourcing Uzbek Cotton” was originally prepared and published by Just Style, a brand owned by GlobalData.
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