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Due to Child Labor Issues, Hyundai Divesting Subsidiary

Due to Child Labor Issues, Hyundai Divesting Subsidiary

Feb. 24, 2023
The company will divest supplier SMART, whose third-party staffing agency "falsely certified that they had screened and cleared underage individuals as being of legal age."

Hyundai has taken definitive action with regard to child labor issues that were found in its supply chain. 

Earlier this month, 33 US lawmakers called upon the company to rid its supply chain of child labor, as we reported. 

On Feb. 23 Jaehoon (Jay) Chang, President and CEO of Hyundai Motor Company (HMC) issued a letter to shareholders. After assuring the investment community that HMC " does not tolerate any form of unlawful employment," the company said it will "implement new, more stringent workforce standards throughout its supply chain following an investigation into supplier labor practices after discovering two Alabama suppliers had each employed an underage worker. The investigation found that Hyundai’s U.S. tier 1 suppliers were in full compliance with underage labor laws. As a result, Hyundai is confident there are no current underage labor issues at these suppliers."

They provided an executive summary of the investigation which can be read here.

The company did, however,  find issues with "third-party staffing agencies that provided false documentation to these suppliers." The company said that two of its suppliers SL Alabama and SMART "have terminated their relationships with the third-party staffing agencies who falsely certified that they had screened and cleared underage individuals as being of legal age. SL Alabama also agreed to the appointment of an audit committee specially appointed by Hyundai to ensure its continued compliance with labor laws and best practices going forward." 

The company is in the process of divesting its ownership interest in SMART. 

HMC said that "ultimately, the responsibility is with Hyundai to make sure all our suppliers understand and meet our high global workforce standards. The results of the investigation show that our suppliers are now in full compliance with underage labor laws, and we are committed to making sure they remain in compliance." 

HMC also noted that it investigated 29 tier-one suppliers, which included dozens of interviews and site visits,  and that based on that the company is working with the US Department of Labor on a compliance training program. "This includes understanding Hyundai’s zero tolerance for violation of underage labor laws, validating applicant identification documents, reinforcing our Business Partner Code of Conduct, installing anonymous tip hotlines, discouraging the use of third-party staffing agencies, and other measures".

The training program will begin in March.

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