Maker of leather car seats targeted in congressional probe

Aug 30, 2023

The maker of leather seats for some of the world’s largest automakers is the latest target of expanding congressional probes into environmental and human rights abuses in the supply chains that fuel production of cars and SUVs.

Senate Finance Committee chair Ron Wyden (D-Ore.) on Monday sent a letter to the Lear Corporation, the world’s biggest supplier of leather car seats, demanding that the company account for its relationships with firms suspected of engaging in Amazon deforestation and forced labor. In the letter, Wyden expressed skepticism of Lear’s claims that it meticulously monitors the practices of the Brazilian cattle firms that supply it, with a list of pointed questions about how Lear polices those businesses.

Lawmakers are taking aim at industry policies that boast of accountability and sustainability but allow suppliers to use what critics say are bookkeeping tactics to mask abuses. Big automakers and the firms they contract with often do not aggressively enforce their ethics policies on businesses that sell to other companies up the supply chain before those parts and materials make their way to the carmakers. It creates a loophole, critics say, through which unscrupulous suppliers — and, by extension, big auto companies — are able to exploit forced labor and ignore environmental rules.

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Wyden wrote in his letter to Lear chief executive Ray Scott that his committee is investigating hide producers the company buys from that are “known to source cattle from areas of the Amazon that have been illegally used for cattle production and which receive weak oversight from the Brazilian government.” Wyden cited a 2022 report from the nonprofit Environmental Investigation Agency that traced transport permits to show thousands of cattle were illegally ranched in one of the most protected areas of the Amazon.

Weak oversight in Brazil, Wyden wrote, has resulted in the proliferation of slave labor in deforested areas, leading the U.S. Department of Labor’s Bureau of International Labor Affairs to place Brazilian cattle on a list of products produced by forced or child labor.

Michigan-based Lear — which last year was recognized by General Motors as a top global supplier — said in a statement that its “comprehensive supply chain management system” requires compliance with the company’s sustainability, human rights and anti-deforestation policies. “If a supplier violates our policies or requirements, we investigate and respond accordingly, up to and including termination of contract,” the statement said.

In the letter, Wyden accused a major supplier to Lear, Brazil-based JBS, best known for its meat business, of “turning a blind eye as parts of its supply chains burn down the Amazon, push the world toward climate catastrophe, and undercut American ranchers who play by the rules on international trade.” Wyden was unpersuaded by the testimony of a JBS official before his committee last month that the firm has no tolerance for deforestation and is implementing aggressive monitoring and tracking programs that will root it out.

The senator cites what he says is evidence of systematic “cattle laundering” through which independent researchers have found companies give the appearance of fixing the problem while remaining linked to illegal ranching networks.

“The company is in no way turning a blind eye to illegal deforestation in the Amazon,” JBS said in a statement, pointing to its policies to stop deforestation and forced labor. “This work is a top priority for the company, which has resulted in blocking nearly 12,000 potential supplier farms suspected of illegal deforestation and violations for our procurement policy, and we are investing significantly in innovative resources, technology and partnerships to help ensure sustainable cattle production.”

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GM wrote in a statement that it enforces a strict environmental and human rights code of conduct on its direct suppliers and “expects that its suppliers will cascade similar expectations through their own supply chains.”

“We are monitoring the situation you cited and will take any necessary steps at the appropriate time,” the statement said.

The Wyden letter is just the latest from a high-ranking member of Congress demanding a detailed accounting of what large auto companies and their multinational suppliers are — and are not — doing to stop exploitation and abuse in their troubled supply chains.

Those demands for accountability cut across party lines, and they come at an inflection point for automakers. The transition to electric vehicles is upending their supply chains, as the companies scramble to source massive amounts of new materials and components, many of them right now being mined and produced by companies that do not adhere to the high-minded sustainability policies the automakers tout. At the same time, the burgeoning market of buyers for electric vehicles is focused on the impact of the product on the planet, bringing unprecedented attention to the business relationships of carmakers.

The GOP chairs of the House Ways and Means Committee and select committee on China last week intensified their investigation of Ford’s partnership with Chinese battery manufacturing giant CATL. The two companies recently announced a $3.5 billion venture through which Ford would make battery cells developed by the Chinese firm at a Michigan plant.

The letter to Ford, first reported by the New York Times, says “newly discovered information raises serious questions” about Ford’s statements that the collaboration will lead to thousands of new American jobs and bolster Ford’s commitment to sustainability and human rights. The committee chairs pointed to a “troubling connection between CATL, the Chinese Communist Party (CCP), and forced labor in Xinjiang” and wrote that “there are reasons to question whether the structure of Ford’s deal will in fact contribute to the promised advancements in domestic battery technology.”

CATL has reported that it divested earlier this year from lithium companies expanding into Xinjiang. But the letter says continued corporate ties suggest otherwise. “We have taken notice of the matter, and the cooperation with Ford is progressing as normal,” Fred Zhang, a CATL spokesman, wrote in an email.

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The letter comes as Ford and other automakers are being targeted by congressional investigators for their business relationships with companies linked to what the U.S. government labels genocide in the Xinjiang province of China. Under the recently enacted Uyghur Forced Labor Prevention Act, products made with any materials or components sourced from the province are prohibited from import to the United States. The Senate Finance Committee had earlier sent automakers two rounds of detailed questions about materials they are using that researchers warn are coming from companies operating in Xinjiang.

Ford spokeswoman Melissa Miller wrote in an email that the company is reviewing the letter from the House committee chairs and has no comment at this time. She wrote that “there has been a lot of misinformation about Ford’s new battery plant in Marshall, Michigan” and that Ford “will own and run this plant in the United States, instead of building a battery plant elsewhere or exclusively importing LFP [lithium iron phosphate] batteries from China like our competitors do.”