An analysis revealed that global ESG funds invested at least $1.4 billion in 14 electric vehicle and solar companies tied to forced labor in Xinjiang, China. The majority of the investment, $1.1 billion, is in Contemporary Amperex Technology Co. Limited (CATL), the world’s largest EV battery manufacturer. Allegations against CATL, including forced labor and human rights abuses, have caused concern among politicians and human rights organizations, highlighting flaws in ESG screening processes. ​Financial Times

Missing Controls:

• Weak Human Rights Due Diligence: No proper assessment of supply chains for forced labor risks.
• Failure in Supplier ESG Compliance Monitoring: Companies lacked mechanisms to verify ethical sourcing.
• No Clear Investment Screening Process: ESG funds invested in high-risk companies without proper risk analysis.
• Absence of Stakeholder Engagement: No mechanisms for investors to challenge fund managers on ESG compliance.

How D360 Can Help:
Deploy enhanced supplier due diligence tools to track forced labor risks.
Implement blockchain-based supply chain monitoring for greater transparency.
Strengthen investment risk screening mechanisms for ESG funds.
Develop investor education programs to raise awareness of ESG fund risks.