Nike Canada is one of two companies being investigated by the Canadian watchdog
The watchdog's probes stem from complaints filed by a coalition of human rights groups.
Nike says they no longer have ties to the companies accused of using Uyghur forced labour.
Dynasty Gold says these allegations arose after they left the region.
A United Nations report in 2022 found China had committed "serious human rights violations" against Uyghurs, an ethnic Muslim minority population living in the region of Xinjiang, that "may constitute international crimes, in particular crimes against humanity". Beijing denies the accusations.
This is the first such investigation announced by the Canadian Ombudsperson for Responsible Enterprise (CORE) since it launched its complaint mechanism in 2021.
The agency alleges that Nike Canada Corp has supply relationships with several Chinese companies that an Australian think tank identified as using or benefiting from Uyghur forced labour.
In 2020, the think tank, Australian Strategic Policy Institute (ASPI), published a report estimating that over 80,000 Uyghurs had been transferred to work in factories across China.
The report says the company has not taken "any concrete steps to ensure beyond a reasonable doubt that forced labour is not implicated in their supply chain".
Nike says they no longer have ties with these companies and provided information on their due diligence practices.
According to the report, Nike turned down meetings with the ombudsman, but sent a letter saying "we are concerned about reports of forced labour in, and connected to, the Xinjiang Uyghur Autonomous Region (XUAR)".
"Nike does not source products from the XUAR and we have confirmed with our contract suppliers that they are not using textiles or spun yarn from the region."
The report on Dynasty Gold suggests it benefited from the use of Uyghur forced labour at a mine in China in which the gold mining company holds a majority interest.
The mining company says it does not have operational control over the mine and that these allegations arose after it left the region.
Dynasty's CEO Ivy Chong told the CBC the initial report was "totally unfounded".
CORE has a mandate to hold Canadian garment, mining, and oil and gas companies working outside of Canada accountable for possible human rights abuses that arise from their operations, including in their supply chains.
"On their face, the allegations made by the complainants raise serious issues regarding the possible abuse of the internationally recognized right to be free from forced labour," Ombudsperson Sheri Meyerhoffer said in a copy of her initial assessment, made public Tuesday.
"It is our mission to resolve human rights complaints in a fair and unbiased manner in order to help those impacted and to strengthen the responsible business practices of the companies involved."
The watchdog looked into complaints filed by a coalition of 28 civil society organisations in June 2022.
There were 11 other complaints, besides the ones against Nike and Dynasty Gold, which CORE will release reports on soon.
The BBC has reached out to both companies for comment.
-- Courtesy of BBC Sport