US Corporate Complicity in China's Genocide: Creating Genocide-Free Portfolios

Abstract

Environmental, social, and governance (ESG) standards avoid investments in companies complicit in modern slavery (PRI 2021, 4). Responsible investors have long recognized modern slavery, including forced labor, child labor, sweatshops, migrant worker abuses, human trafficking—and still more undeniably, genocide—is incompatible with basic legal, social, and religious mores of any civilized nation. Nevertheless, state-imposed labor is an everyday condition for more than a million people of Turkic ethnic origins in the Xinjiang Uyghur Autonomous Region (Xinjiang) of the People’s Republic of China (PRC or China). According to credible government and nongovernmental organization (NGO) sources, the PRC’s unrelenting and inhumane treatment of these people constitutes genocide. Investing in companies complicit in genocide is neither ethically nor morally responsible, contravenes commonly accepted notions of social justice and ESG best practices, and may result in disappointing financial performance for complicit companies. Investors should shun these companies and seek to invest, instead, in genocide-free portfolios. We show it is possible to create portfolios that are not only free of links to China’s genocide, but also demonstrate acceptable tracking errors to popular benchmarks.