Thermo Fisher

Objective

The objective of our engagement with Thermo Fisher was to address human rights concerns linked to the sale of genetic sequencing equipment used by Chinese public security agencies in Xinjiang, and to assess whether Thermo Fisher’s actions were adequate in preventing future misuse of their products. The aim was also to understand the discrepancies in how Sustainalytics and ISS flagged the company's human rights compliance.

Background

We became aware of a human rights concern after learning about a Sustainalytics flag on Thermo Fisher related to allegations from The New York Times. The report claimed that between 2019 and 2021, Thermo Fisher’s products were used by Chinese public security agencies in Xinjiang for the forced assimilation of Uyghur Muslims. Despite Thermo Fisher ceasing sales of human identification products in the region in 2019, there were reports that its equipment was still being accessed. While ISS rated the issue less severely, Sustainalytics flagged it as a Human Rights norm breach, prompting us to investigate the matter more thoroughly.

Actions

We initiated a direct engagement with Thermo Fisher, focusing on four key areas:

1 Steps taken to minimize misuse of products: Thermo Fisher confirmed that its DNA products cannot be used to identify ethnicity. The company ceased sales of human identification products to Xinjiang bureaus in 2019 and implemented a multi-level purchasing process to prevent unauthorized sales.

2 Monitoring and auditing of distributors: Thermo Fisher monitors public tenders and has improved auditing processes, particularly in China, to track the sale of human identification products and ensure compliance with its policies.

3 Risk management in other sensitive regions: Thermo Fisher is currently reviewing its policies related to selling products in other regions with potential human rights concerns, such as Tibet.

4 Engagement with rating agencies: Thermo Fisher made efforts to engage with Sustainalytics to clarify its actions, but was unsuccessful in removing the flag. However, ISS’s assessment was more aligned with Thermo Fisher's response

Outcomes and Next Steps

We concluded that Thermo Fisher has significantly improved its risk management practices, monitoring, and oversight in response to human rights concerns. While Sustainalytics still flags the company, we considers the issue to be managed appropriately. Our engagement reached "Milestone 4," indicating that Thermo Fisher provided sufficient evidence that the issue is being managed in line with its policies. Going forward, we will continue to monitor the situation, particularly regarding potential changes in Tibet and further actions to engage with rating agencies.

ISS Norms Report on Thermo Fisher

Under observation: Alleged failure to conduct human rights due diligence in China.

The ISS report on Thermo Fisher highlights concerns raised in a June 2021 New York Times article, which claimed that the company’s genetic sequencing equipment was being sold to Chinese public security agencies responsible for human rights violations against Uyghurs and other Muslim minorities in Xinjiang. Despite Thermo Fisher ceasing sales of human identification products to the region in February 2019, procurement documents showed that Chinese companies continued selling Thermo Fisher equipment to these agencies between 2019 and 2021.

Thermo Fisher responded by detailing its multi-level purchasing process designed to prevent sales to Xinjiang authorities, and stated that the distributors identified in the New York Times article were not part of their authorized network. However, during a U.S. Senate hearing in June 2021, concerns were raised about the company's role in China’s crackdown on Uyghurs.

ISS ESG remains vigilant on the issue, evaluating the situation in the context of international human rights guidelines, including the UN Global Compact and the OECD Guidelines for Multinational Enterprises. These frameworks emphasize human rights due diligence and responsible business practices, reinforcing the need for Thermo Fisher to ensure it isn't indirectly contributing to human rights abuses.