Investor group, unions push Hyundai to address child labor at U.S. suppliers

SL

19/10/2022 11:00

By Mica Rosenberg and Kristina Cooke
       NEW YORK/SAN FRANCISCO, Oct 19 (Reuters) - A group that
works with union pension funds is pressing Hyundai Motor Co
 005380.KS  to respond to reports of child labor at U.S. parts
suppliers, warning of potential reputational damage to the
Korean automaker.
    SOC Investment Group, which works with union pension funds
that have more than $250 billion in assets, sent a sharply
worded letter on Wednesday to company chairman Euisun Chung,
saying investors were concerned in the wake of a July
investigation by Reuters that found child labor at a Hyundai
subsidiary in Alabama. In addition, the letter cited a recent
federal and state investigation into children working at another
Hyundai supplier in the state.  urn:newsml:reuters.com:*:nL1N2Z22LS  urn:newsml:reuters.com:*:nL1N31C1YL
    "Child labor and poor workplace health and safety have
regulatory and legal repercussions for Hyundai in the U.S. and
can cause reputational damage across the globe," said the letter
from the group, which advises on corporate accountability
issues.
    The letter urged Hyundai's board of directors to oversee the
company's response and called for several actions including an
independent assessment of human and labor rights risks in the
supply chain with publicly released results and ongoing
monitoring. 
    Reuters first documented child labor practices at
Hyundai-owned SMART Alabama LLC earlier this year. Then in
August, authorities found children as young as 13 working at
Alexander City, Alabama-based SL Alabama, a Korean-operated
parts supplier and unit of Korea's SL Corp  005850.KS , and the
company entered in to a settlement with the U.S. Department of
Labor.  urn:newsml:reuters.com:*:nL1N2ZZ02J
    Hyundai spokesperson Ira Gabriel said the company
appreciated the federal settlement reached between the U.S.
Department of Labor and SL Alabama, and noted that the supplier
changed its leadership and introduced additional screening of
its labor practices. Gabriel also said SMART Alabama severed all
ties with a third-party staffing company.
    "Hyundai will continue to closely review the labor
operations of its suppliers to ensure full compliance with all
local, state and federal laws," Gabriel said in an email.    
    SOC's letter to the company comes after a public rebuke last
week from leaders of the United Autoworkers union (UAW) and a
September letter to the company from more than two dozen local
and national advocacy groups and unions calling for an end to
child labor practices. 
    The Washington, D.C.-based SOC, which said the funds it
works with hold an estimated 27,000 shares in Hyundai, has taken
a more activist approach to call out worker mistreatment and
other social issues, including pressing major companies like
Apple Inc  AAPL.O  and Tesla Inc  TSLA.O  to make corporate
changes, said Dieter Waizenegger, the group's executive
director.
    "In the U.S. system, oftentimes  the monetary risk for labor
rights violations is relatively small so it might be seen as a
cost of doing business," Waizenegger said. "I think investors
like us need to step out and say, 'the value of the fines is not
capturing your risk even remotely. Your product might be tinged
for a long time.'"
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
EXCLUSIVE-Hyundai subsidiary has used child labor at Alabama
factory     urn:newsml:reuters.com:*:nL1N2Z31MP
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Mica Rosenberg in New York and Kristina Cooke in
San Francisco
Additional reporting by Joshua Schneyer in New York
Editing by Matthew Lewis)
 ((Kristina.Cooke@thomsonreuters.com))