US Uyghur Forced Labor Prevention Act (UFLPA) Potential Move
With about six weeks until the self-implementing effective date for prohibiting importation of polysilicon, cotton and tomatoes originating from the Xinjiang Uyghur Autonomous Region (XUAR) under the UFLPA, the Biden administration is signaling keen interest in another product to add to the list.
According to the Financial Times:
The US is moving towards imposing hard-hitting sanctions on Hikvision, the Chinese surveillance camera company accused of enabling human rights abuses, in a decision that would affect cities from New York and London to Singapore. The Biden administration is laying the groundwork to place human rights-related sanctions on Hikvision, according to four people familiar with the internal discussions. While a final decision has not been taken, the White House wants to target the company in what would amount to the first time the US has imposed such sanctions on a big Chinese technology group…
Hikvision is the world’s largest manufacturer of surveillance equipment.
Our view: It seems worth repeating that the FLPA importation ban begins June 21, 2022 – just over a month from today. It is unclear what the impact will be on companies in the polysilicon, cotton and tomato supply chains. Hopefully, any potentially affected company has completed their review and determined appropriate actions by now.
While the article only addresses adding the company to the US Treasury Departments list of Specially Designated Nationals And Blocked Persons, it isn’t a big step that the administration could consider adding surveillance equipment to the list of “high-priority sectors for enforcement” under the FLPA to be addressed by the Forced Labor Enforcement Task Force.
I really can’t conclude my post on surveillance equipment without this: “Here’s looking at you, kid.”
Germany Drops ESG Rules for Now
Bloomberg reported yet another shoe dropped in the tug of war between ESG and the energy situation in the EU resulting from Russia’s invasion of Ukraine:
Germany’s financial regulator has shelved planned rules for classifying investment funds as sustainable, after Russia’s invasion of Ukraine sent shockwaves through global energy markets.
‘Against the backdrop of the dynamic situation in regulation, energy and geopolitics, we have decided to put our planned directive for sustainable investment funds on hold,’ BaFin President Mark Branson said Tuesday at a press conference in Frankfurt. ‘The environment isn’t stable enough for permanent regulation.’
Our view: This is an interesting development that highlights the complexity of ESG. It comes almost the same day that the EU formally proposed banning the importation of Russian energy (an action considered pro-ESG) and that German-based Volkswagen announced they are extending the use of coal at their Wolfsburg manufacturing facility because of the “ongoing tensions between Russia and Europe” (an action considered anti-ESG but resulting from a pro-ESG catalyst). Time will tell how Germany ultimately takes up the matter again as there are indications of anti-ESG backlash that could gain momentum.