BP and Spotify were among companies who bought carbon credits at risk of being implicated in potential Uyghur forced labour, an investigation has found.
The credits were sourced from the Bachu carbon project, which was developed by South Pole, the world’s largest carbon consultancy. The project focussed on a biomass power plant in Xinjiang, China, which said it would lower global carbon emissions by using waste cotton stalks from nearby fields to generate electricity.
South Pole, whose chief executive, Renat Heuberger, stood down on Friday, marketed credits for their employment benefits for women and minority ethnic people and support for the UN sustainable development goals, with the claims often echoed by companies that bought them to offset their carbon footprints. In the advertising literature for the Bachu project, the company said the scheme involved “local farmers who collect cotton stalks and burn them to generate carbon neutral power. This activity both creates sustainable electricity and creates an additional income stream for rural people in the project area, boosting the local economy.”
But the Guardian and Follow the Money, a Dutch investigative newsroom, analysed project documents and satellite imagery of the power plant and its surrounding area, looked at leaked South Pole data and spoke to several experts on the Chinese government’s treatment of Uyghur Muslims. One of the academics spoken to by the team found potentially coercive labour transfers that involved hundreds of people at two locations within 50km (30 miles) of the project, the radius within which the project collects cotton stalks.
The investigation found that South Pole was aware of the risk of forced labour linked to the scheme in 2021. South Pole did not raise its concerns with with the certification body Gold Standard, the Guardian understands. Companies that had bought the credits also said they were not alerted. South Pole said it stopped selling the credits after due diligence concerns were raised in 2021.
The Guardian understands that the risk that forced labour might be linked to the project was raised by prospective clients and internally at South Pole in 2021. In South Pole’s internal system seen by the Guardian, a note says not to offer credits from the scheme to clients. It says “DON’T OFFER TO KAMs – DD issues”. KAM stands for key account managers; DD means due diligence.
Credits had been sold by South Pole since 2014, according to internal sales data. Analysis of the sales figures shows that credits were bought from the Chinese partner for an average of €0.39 and sold by South Pole for an average price of €4.28 to companies trying to meet their environmental commitments, generating €657,529 in sales. This data may not be definitive.
BP bought the most carbon credits from the project, according to the figures, using it as part of its 2020 portfolio for the BP Target Neutral scheme, which offers people the chance to offset their emissions from driving. BP declined to comment and still lists the project on its Target Neutral website at the time of publishing.
WWF, Spotify, the tennis player Dominic Thiem, Ecologi and Hilton Hotels were among others that bought credits from the project, according to the Gold Standard registry and South Pole sales data. Not all were directly sold the credits by South Pole. WWF and Ecologi stopped supporting the scheme in 2019, Spotify in 2020, they told the Guardian. Thiem and Hilton Hotels did not respond to questions.
In a statement responding to the investigation’s findings, South Pole said: “We have never owned or managed this project on the ground so our ability to gather real-time and granular information was relatively limited.
“When a client expressed a concern about the potential for labour issues at this project we launched a specific review of the situation. Our review could not identify any material issues of concern, but we remained generally uncomfortable about unrelated media reporting on the allegations of forced labour in Xinjiang. As a result we took a prudent decision to halt the sale of carbon credits from this project in 2021.”
Gold Standard said it appreciated “the scrutiny that investigative journalism can bring”, and welcomed “contributions that help the voluntary carbon market improve and deliver on its potential to drive change where it matters most”. It confirmed that South Pole had not raised concerns about Bachu with it at any point. The power company that runs the plant did not respond to questions.
Bachu, a power plant on which construction began in 2008, is situated in Kashgar prefecture in Xinjiang in north-west China. It burns biomass – mostly cotton stalks and wood from the surrounding area in straw boilers – to generate electricity that feeds into the Chinese grid.
Concerns about forced Uyghur labour in Xinjiang have been raised around the world in recent years. The UN estimates that about one million people have been housed in detention camps used to oppress Uyghurs and other ethnic minorities that differ from the Han majority since 2017. Experts say forced labour of Uyghurs and forced land transfers are common, often linked to the agricultural industry, including the cotton sector.
Open source analysis of satellite footage of the area around the plant uncovered a fortified facility in the same region that has been linked by researchers to the mass detention of Uyghur Muslims in Xinjiang. There is no evidence this facility is linked to the cotton industry or to Bachu biomass facility.
The Guardian asked Adrian Zenz, a German academic who is one of the foremost experts on forced labour in Xinjiang’s cotton picking industry, to analyse government propaganda and news reports on the region. Zenz, who has had three papers on forced labour published in peer reviewed journals this year alone, found evidence of two farms involved in potentially coercive labour transfers within the 50km radius of the project since 2011.
One farm had been named in two different local news reports about labour relocations. The first, in 2016, described how cadres had identified 400 people capable of picking cotton in a village and mobilised them to a number of destinations including the farm in question. In the second, in 2018, 930 people were relocated to the same farm.
Another farm within the 50km radius of the biomass facility had been named in a 2020 news report as the destination, in this case, of 345 villagers who were being organised to pick cotton.
It is impossible to independently verify the reports on the ground due to safety concerns, or to determine whether these farms supplied the plant. The power company did not reply to our questions over how it sourced its material.
Zenz said the news reports, which have been widely used by experts as evidence for forced labour in Xinjiang, indicated the area was at a high risk. This claim and the news reports have been checked with other experts on the Chinese government’s treatment of Uyghur Muslims.
“You can’t find a more risky spot in Xinjiang. There’s probably no way you find a more risky spot for state-imposed forced labour in the world than this location,” he told the Guardian.
“This is a systemic situation. The fact that we only have a couple of examples within the 50km radius, somebody could say: ‘Oh, there’s only a couple.’ But I think it’s symptomatic of what we’re looking at here … So often with state enforced labour, it’s not possible to link a specific batch of a product to a particular coercive labour mobilisation. And the reason that you can’t do that is because the state doesn’t provide or disclose information, you can’t go there and audit it. You can’t ask Uyghurs because if they don’t say the right thing, they end up in a camp.”
Responding to the reports of potentially coerced labour transfers, Darren Byler, an American anthropologist who specialises in the treatment of Uyghurs by the Chinese government, said: “In general, cotton and textiles is one of the primary industries where assigned or unfree labour is utilised in Xinjiang.
“There’s no means of resisting, especially in this context, where any sort of resistance to government intervention or management when it comes to what they call poverty alleviation is a sign of resistance and can result in you being detained. Almost everyone in these areas knows people that have been detained, maybe their own family members. So that threat is really ubiquitous,” he said.
The Chinese government says that labour transfer programmes are a poverty alleviation tool. Xinjiang has higher rates of poverty than other parts of China. A 2020 government white paper said that between 2017 and 2019, surplus labour programmes in Kashgar and the nearby Hotan prefecture helped 135,000 people find jobs. Between 2014 and 2019, an average of 1.68 million people a year were relocated through surplus labour programmes in southern Xinjiang, according to the white paper.
A spokesperson for the Chinese embassy in London said the “so-called ‘forced labour’ in Xinjiang is a lie propagated by anti-China forces. It is the complete opposite of the fact that the labour rights and interests of the people of all ethnic groups in Xinjiang are effectively protected.
“Chinese governments at all levels fully respect the will of the people of all ethnic groups with regard to employment and provide necessary vocational training for those who sign up for relevant jobs. The smiles on the face of the people of all ethnic groups in Xinjiang who got rid of poverty after finding jobs are the best and most effective rebuttal to the relevant lies and rumours.
The spokesperson added that Adrian Zenz “makes a living by fabricating rumours on Xinjiang and slandering China and has no credit or academic integrity whatsoever”. They pointed out that Zenz is currently being sued by some Xinjiang enterprises and residents, and strongly rejected his analysis.
‘Forced labour has existed in Xinjiang for a really long time’
According to experts, labour transfer programmes often involve coerced labour, especially since 2017 and the threat of detention in a re-education camp for failing to comply with government programmes. Chinese government documents state that refusal to cooperate with poverty alleviation programmes, such as labour transfer programmes, is a potential sign of extremism. This puts a person at risk of being detained in a re-education facility.
Experts say that it is impossible to know whether these schemes are participated in voluntarily and that there is a high risk of coercion. It is very difficult for international stakeholders to conduct independent due diligence on this process. The US government takes the position that goods from Xinjiang are made with forced labour unless it can be proven otherwise.
Nyrola Elimä, an independent researcher, said it was highly possible the cotton was “tainted by forced labour”. “It’s very difficult for a Uyghur to say no. And since 2017, it’s become impossible to say no, because the alternative is you go to the reeducation camp.”
There are also concerns about the environmental integrity of the carbon credits linked to this project, as it is unclear whether the plant relied on carbon revenue for its construction. For a carbon credit to have worth, it must represent a benefit to the climate that would not have happened anyway. The term used to describe this is called “additionality”.
Danny Cullenward, a senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania, said: “The methodology used to issue credits to this project does not assess project additionality, which is assumed rather than analysed. That omission might have made sense in the 1990s, but it isn’t credible today to assume that these kinds of projects are commercially infeasible without income from carbon credits,” he said.
The findings come amid growing scrutiny of South Pole’s role as a carbon project developer. Recent news reports have raised concerns about one particular scheme in Zimbabwe called Kariba, which has reportedly generated about $100m (£80m) in revenue but had financial due diligence issues.
In a statement, the company said it was “determined to learn from the experience of working with the Kariba REDD+ project in Zimbabwe. At the core of this commitment is a focus on enhancing … group-wide quality and risk controls, and due diligence processes.” Heuberger said it had been his life’s privilege “to have helped build this stellar team united by a drive to deliver scalable positive climate impact”.
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This article was amended on 14 November 2023 to include additional detail about Adrian Zenz’s publishing in the area of forced labour.
