Tesla Inc: Child and Forced Labor in Supply Chains

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WHEREAS:   As You Sow (the “Proponent) is submitting the following floor proposal (the “Proposal”) in coalition with Investor Advocates for Social Justice pursuant to the bylaws of Tesla, Inc. (the “Company”) to be presented at the 2023 annual meeting of shareholders.

In accordance with Tesla’s bylaws 2.4(i)(C), a stockholder wishing to bring business before an annual meeting must provide advance notice and fulfill the following criteria “(1) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(i) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has timely complied in proper written form with the notice procedures set forth in this Section 2.4(i).” In addition, the business brought must concern a “proper matter for stockholder action.” To comply with the requirements of advance notice contained in Tesla’s bylaws, the Proponents submit the following information.

PROPOSAL BELOW

2.4(i)(b)(1) “a brief description of the business intended to be brought before the annual meeting and the reasons for conducting such business at the annual meeting”

Resolved: Shareholders request that the Board of Directors issue a public report describing if, and how, Tesla plans to eradicate child labor and forced labor from its supply chain by 2025. The public report should explain Tesla’s supply chain tracing efforts and the concrete steps it is taking to ensure full supply chain transparency. Reporting is requested within one year from Tesla’s 2023 annual meeting.

Whereas: Tesla’s supply chain is exposed to significant human rights risks that have not been meaningfully addressed. With increased public attention on child labor and forced labor in supply chains, and the ever-expanding regulatory framework and enforcement, Tesla’s sourcing policies and practices expose the Company to significant material risk.

Child Labor

Sourcing cobalt for electric vehicle batteries from the Democratic Republic of Congo (DRC) exposes Tesla to financial, legal, and reputational risks.[1] In its 2022 opposing statement, Tesla stated “we can be more confident about where our cobalt comes from and can confirm…that we do not source from artisanal and small-scale mining (ASM), which is typically at risk of child labor.”[2] A new book, Cobalt Red, asserts that it is impossible to isolate ASM cobalt from industrial cobalt production in the DRC.[3] A February 2023 report by NYU and the Geneva School for Economics and Management echoes “it is virtually impossible to separate the flow of ASM cobalt from the larger supply of industrially mined cobalt.”[4]

Forced Labor

Tesla also faces material risks from forced labor in the Xinjiang Uygur Autonomous Region (XUAR), which is home to a significant number of Uyghur and other predominantly Muslim ethnic minority groups. The UN recently released a report detailing the numerous human rights violations committed against these minority populations, including forced labor, both within the XUAR and across China.[5]

Tesla was recently mentioned in a report, which concluded Tesla’s supply chain in the XUAR has been “substantially tainted with forced labor.”[6] The report links Tesla to a handful of its suppliers that are known to have participated in forced labor schemes. Citing the new report, the Senate Finance Committee opened an inquiry into whether Tesla and seven other automakers have been using parts or materials produced with forced labor in China’s XUAR.[7]

The report comes on the heels of the growing momentum in the U.S. to prioritize the enforcement of import bans on goods produced with forced labor. The recent entry into force of the Uyghur Forced Labor Prevention Act exposes Tesla to financial risk, as parts produced, in whole or in part, in the XUAR are presumed to be tainted by forced labor.[8]

Conclusion: It is imperative Tesla take immediate steps to trace its supply chains down to the raw materials. Additionally, Tesla should expeditiously and responsibly end its sourcing of materials or parts produced in the XUAR. Ignorance or impracticability to trace its supply chain is not an excuse.

2.4(i)(b)(2) “the name and address, as they appear on the corporation’s books, of the stockholder proposing such business and any Stockholder Associated Person (as defined below)”

2.4(i)(b)(3) “the class and number of shares of the corporation that are held of record or are beneficially owned by the stockholder or any Stockholder Associated Person and any derivative positions held or beneficially held by the stockholder or any Stockholder Associated Person”

As You Sow is a stockholder of record of 120 common shares at the time of this document (February 14, 2022) and will continue to be a stockholder of record until and after the record date, which is March 20, 2023. The shares are held by DRS in Computershare.

2.4(i)(b)(4) “whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to any securities of the corporation”

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Berkeley, CA 94704 

2.4(i)(b)(5) “any material interest of the stockholder or a Stockholder Associated Person in such business”

As outlined in 2.4(i)(b)(1), the human rights risks in Tesla’s supply chains represent a material risk for the shareholder.

2.4(i)(b)(6) “a statement whether either such stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry the proposal (such information provided and statements made as required by clauses (1) through (6), a “Business Solicitation Statement”)”

The stockholder will not deliver a proxy statement.

Andrew Behar As You Sow CEO

February 14, 2023

Resolution Details

Company: Tesla Inc

Lead Filers:

As You Sow

Year: 2023

Filing Date: 
February 2023

Initiative(s): Anti-Slavery

Status: Floor Proposal Voted

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Human Rights, Social JusticeAs You SowGovernance, Anti-Slavery, Tesla, floor, floor resolution, human rights, Racial Justice