Costco Dodges Allegations That Its Supply Chain May Utilize Slave Labor

Costco Dodges Allegations That Its Supply Chain May Utilize Slave Labor
PublicDomainPictures / Pixabay

Washington, D.C. – Costco leaders sidestepped suggestions yesterday that the company’s Chinese supply chain may involve Uyghur Muslim slave labor. Craig Jelinek, CEO of the big box wholesaler, instead offered no explicit denial of the forced labor accusation, while claiming the company has internal methods to handle the issue.

Play Quizzes 4

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q4 2020 hedge fund letters, conferences and more

The Allegations of Slave Labor

"Costco investors and customers have reason to be suspicious about the lack of conclusive evidence given by the company in reference to allegations of slave labor in its supply chain," said Davis Soderberg,  Free Enterprise Project (FEP) Associate at the National Center for Public Policy Research, who participated in the company's virtual annual shareholder meeting and submitted a more pointed question to Jelinek. "Shareholders deserve more coherent answers, especially in light of previously tepid answers on this topic by Costco officials in an interview with the Associated Press."

How A Weakening PE Market Serves As Another Sign Of A Weakening Economy

InvestAmid the turmoil in the public markets and the staggering macroeconomic environment, it should come as no surprise that the private markets are also struggling. In fact, there are some important links between private equity and the current economic environment. A closer look at PE reveals that the industry often serves as a leading indicator Read More

Soderberg submitted this question:

The Chinese Communist Party is engaged in unconscionable treatment of its minority Uyghur Muslim population. Through rape and forced labor camps, it is systematically trying to eradicate the Uyghur people and their culture. In March 2020, a bill  advanced in the U.S. Senate that listed Costco as a company potentially profiting from these slave labor camps. The Senate's action followed a 2019 Associated Press report noting that Costco was selling clothing that was made by "ethnic minorities locked in an internment camp to sew clothes against their will." At the time, Costco's response was tepid. Has the company fully audited its supply chain, and what tangible evidence can you provide to shareholders that the company's products are all free of slave labor?

How Is Costco Addressing Slave Labor In Supply Chains From China?

Rather than taking Soderberg's question head-on, Jelinek was presented with a related, softball version of the question: "What is Costco doing to address the issue of slave labor in supply chains from China and other countries?"

Jelinek replied:

We take our code of conduct very seriously, and we do many audits, not only our suppliers, make sure that they're doing audits, but we also as a company do audits.... We also have the ability for a whistleblower line for anybody to bring this to our attention.

If Costco did find proof of slave labor, Jelinek claimed that it would "discontinue the supplier."

National Center General Counsel and FEP Director Justin Danhof, Esq., criticized this vague answer as well as the avoidance of the topic throughout the meeting:

Shareholders deserve actual evidence, not just lip service, regarding the company's potential use of Uyghur slave labor in the company's supply chain. A company the size of Costco should not sit back and wait for whistleblower complaints regarding forced labor to make its products, especially as it relates to the Chinese Communist Party and its record of dishonest dealings. That's absurd. Shareholders deserve an honest accounting and proactive measures from Costco's management. That's not what was on display at yesterday's shareholder meeting.

Soderberg's entire question, as prepared for delivery, is available here. Audio of the question and answer is available here.

About Free Enterprise Project

Launched in 2007, the National Center's Free Enterprise Project focuses on shareholder activism and the confluence of big government and big business. Over the past four years alone, FEP representatives have participated in over 100 shareholder meetings – advancing free-market ideals about health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers' rights and other important public policy issues. As the leading voice for conservative-minded investors, it annually files more than 90 percent of all right-of-center shareholder resolutions. Dozens of liberal organizations, however, annually file more than 95 percent of all policy-oriented shareholder resolutions and continue to exert undue influence over corporate America.

FEP activity has been covered by media outlets including the New York Times, Washington Post, USA Today, Variety, the Associated Press, Bloomberg, Drudge Report, Business Insider, National Public Radio and SiriusXM. FEP's work was prominently featured in Wall Street Journal writer Kimberley Strassel's 2016 book The Intimidation Game: How the Left is Silencing Free Speech (Hachette Book Group).

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 60,000 active recent contributors. Contributions are tax-deductible and may be earmarked for the Free Enterprise Project. Sign up for email updates here.

Follow us on Twitter at @NationalCenter for general announcements. To be alerted to upcoming media appearances by National Center staff, follow our media appearances Twitter account at @NCPPRMedia.

Updated on

Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
Previous article Silver, One System Isn’t Enough
Next article These Are The Ten Best Performing Stocks Of 2020

No posts to display