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The global automotive industry is undergoing a profound transformation as it shifts from internal combustion engine (ICE) to electric vehicles (EVs). This transition is not only transforming the cars we drive, but is also propelling a far-reaching overhaul of automotive supply chains. As automakers work to build out new supply chains for EVs, they face a range of ESG risks and opportunities that will have significant implications for these companies and the value they create for shareholders.

The supply chains needed to manufacture the growing number of EVs are a significant source of material risk to automotive companies and their shareholders. When these risks are inadequately managed, they can result in penalties, lengthy litigation processes, operational disruptions and reputational harm. On the flip side, effective supply chain ESG management by automakers can unlock new business opportunities for long-term value creation. Furthermore, automotive supply chains represent a strategic lever for advancing the ESG goals of investor stewardship strategies, providing opportunities for institutional investors to advance their human rights, climate and environmental commitments across multiple industries within their portfolios.

A 2021 survey of 1,000 investment managers in the United States and the United Kingdom showed a broad recognition by investors of these risks, with 84% of respondents stating that risks related to supply chain sustainability and ESG standards are a financial threat to their investments, and 88% responding that supply chain sustainability standards will be a key criterion for investment decisions over the next ten years. However, the surveyed investment managers also expressed low levels of confidence in companies’ ability to meet the sustainability standards they have set for their supply chains, particularly when it comes to scope 3 emissions and labor practices.

As the EV transition accelerates, investors have a crucial role to play in bridging this gap within the automotive sector in order to ensure that automakers more effectively manage the ESG risks and opportunities within their supply chains. By constructively engaging with automotive companies on these issues, setting expectations for supply chain ESG risk management and disclosure, and allocating capital in ways that drive the industry towards greater sustainability, investors can mitigate financial risks and drive long-term value, as well as positive social and environmental outcomes, across their portfolios.

This briefing by the Lead the Charge network provides an overview of the different sources of risk and opportunities within automotive value chains that can affect the financial and ESG performance of investments. It also includes a selection of illustrative examples of effective investor engagement on supply chain ESG, from the automotive industry and beyond. Finally, it explains how the Lead the Charge Leaderboard can support investors to identify risks and opportunities in automakers’ supply chains, and offers a series of recommendations for investors that would like to proactively engage automotive companies to improve their supply chain ESG management.

Active Engagement with Automakers On the Impacts of their Supply Chains Can Mitigate Risks, Drive Long-Term Value, and Promote Positive Social and Environmental Outcomes

The Lead the Charge network launched a briefing for investors examining the risks and opportunities embedded within automotive supply chains as the industry transitions to electric vehicles. 

“Investors deeply care that automakers uphold their human rights responsibilities to respect the human rights of workers, communities, and Indigenous Peoples throughout their supply chains, as these can ultimately impact their bottom line,” said Aaron Acosta of Investor Advocates for Social Justice, a nonprofit organization representing faith-based investors. 

“This briefing by Lead the Charge is a useful tool for automotive investors seeking to navigate the emerging and complex landscape of ESG risks within EV supply chains.”

Lead the Charge, a global coalition of partners working for an equitable, sustainable, and fossil-free auto supply chain, made headlines with their leaderboard, an annual evaluation of the efforts by the world’s leading automakers to eliminate emissions, environmental harms, and human rights violations from their supply chains. 

This briefing shines a light on a range of ESG risks within EV supply chains that can impact the financial performance of automotive companies. It also examines how effective supply chain ESG management can unlock opportunities for long-term value creation and drive positive environmental and social outcomes across multiple industries within investment portfolios. 

“Ultimately, supply chains riddled with abuses present serious material risks to investors and can slow down the transition to EVs,” said Xavier Sol of Transport & Environment (T&E), the leading European advocacy group for clean transportation. “Investors, equipped with knowledge of best practices, can steer automakers in the right direction so that they can mitigate the risks and capitalize on the financial opportunities linked to supply chain sustainability.”

Rainforest Foundation Norway, another member of Lead the Charge, works with investors to address risks of deforestation and to the rights of Indigenous and forest peoples within global supply chains. They say that proactive investor action is key. 

“Automakers’ supply chains frequently threaten and pose risks toward Indigenous Peoples’, their local communities, their livelihoods, and the environments they depend on,” said Jasmine Puteri, a senior supply-chain expert at Rainforest Foundation Norway.

“Investors have a critical role in ensuring that companies respect these rights and minimize environmental damage. Proactive investors who address this issue, as well as the climate impacts and deforestation within supply chains and their investment portfolios will benefit more in the long run by minimizing these risks.”

The Lead the Charge network includes partners who work across multiple geographies and issues, with expertise in climate, environmental justice, human rights, Indigenous rights, heavy industry, ESG and more.

Today members of the Lead the Charge network sent a letter to the CEOs of ICMM, MAC, Copper Mark and the World Gold Council, expressing concerns over efforts to create a new mining audit and certification standard through the Consolidated Mining Standard Initiative.

People and the environment suffer when mining companies are allowed to self-regulate with weak voluntary standards. Read our letter to leaders in the mining industry below.

Rohitesh Dhawan, President and CEO, ICMM.
Pierre Gratton, President and CEO, MAC.
Michèle Brülhart, Executive Director, Copper Mark.
David Tait, CEO, World Gold Council.

Re: Civil society elevates concerns over the Consolidated Mining Standard Initiative and the risk it will drive a race to the bottom by the mining industry at the expense of communities

Dear Mr. Dhawan, Mr. Gratton, Ms. Brülhart, and Mr. Tait,

In September 2023, our network of community organizations, labor unions, and Indigenous, environmental, and human rights groups wrote expressing our concerns over your efforts to create a new mining audit and certification standard through the Consolidated Mining Standard Initiative.

One year later, we are even more doubtful that the Initiative will develop a rigorous standard with meaningful participation from mining affected communities, workers, labor unions, and nongovernmental organizations, that holds companies accountable to a high level of social and environmental performance.

People and the environment suffer when companies are left to self-regulate with weak voluntary standards. Voluntary standards and certification schemes, regardless of their strength, will never be a substitute for mandatory legal frameworks, accompanied by strong enforcement capacity. We recognize that strong voluntary standards can help drive improved mining industry human rights and environmental performance if they have the level of transparency and rigor necessary to provide credible information and require companies to continuously improve based on independent audit findings.

Strong voluntary standards that support such progress contain the following minimum criteria – noting that mining companies must be accountable for compliance with these requirements, and not just States or other entities:

1. A multistakeholder co-governance model with equal decision-making which gives equal power to rights holders, NGOs and workers through co-creation of the system at the outset and ongoing equal governance;

2. Clear-cut, full protection of Indigenous Peoples and their rights, including the right to self-determination and the right to Free, Prior, and Informed Consent (FPIC), as put forward in UNDRIP, for which mining companies and States are both accountable;

3. Evaluation of mining operations based on robust standards with comprehensive, detailed criteria based on best practices for upholding Indigenous Peoples’ rights, labor rights, worker health and safety, and human rights; ensuring responsible environmental safeguards to protect water, land, ecosystems, biodiversity, wildlife and health; and securing financial guarantees for safety, closure and reclamation;

4. A design that fosters and maintains continuous progress, disclosure, and transparency of activities by participating companies;

5. Strong mechanisms to ensure audit robustness and credibility, including requirements for on-the-ground audits, independence of audit firms, financial separation between audit firm and mining company, auditor training, public publication of detailed audit results, quality audits with sufficient time to interview workers and rights holders, encouraging their participation through independent outreach by the auditors, and time-bound corrective action plans based on audit results that are informed by rights holders; and

6. Robust, accessible and safe grievance mechanisms for rights holders to report and remedy harm, and for those to be managed independently.

There are existing standards, notably IRMA, that meet many of these criteria.

The participating schemes in the Consolidated Mining Standard Initiative have so far failed to meet many of these criteria Notably, it is not co-created between business and rights holders. Instead, it merges existing schemes, developed and led by industry, where evaluations have repeatedly demonstrated an absence of multistakeholder shared co-governance, divergences in assessment quality, and dearth of transparency.

The mining industry designing the system, standard and accountability mechanisms to evaluate its own social and environmental performance undermines the credibility of the Initiative.

In your response to our September 2023 letter, you acknowledged that this approach ‘results in an inherent asymmetry.’ The proposed ongoing consultation of Industry and Stakeholder Advisory Groups—which organizations from civil society, labor and private sector have exited over legitimacy concerns—and public comment opportunities on the draft Standard are insufficient to address this fundamental misalignment.

Moreover, assurances that the Standard will drive a much needed race to the top by companies and promises that the Standard will have multi-stakeholder governance have not been backed by recent activities.

Notably, ICMM’s process to revise its Indigenous Peoples & Mining Position has been contested by Indigenous leaders and allies for lacking transparency, conducting insufficient consultations with Indigenous Peoples, and not meaningfully integrating feedback gathered through consultation with Indigenous Peoples and other stakeholders.

The final position reflects such exclusion. The Securing Rights in the Green Economy, or SIRGE Coalition has strongly critiqued the final position as a “deeply flawed position [that] allows the continuation of harm to Indigenous Peoples by mining operations and calls into question ICMM’s stated commitment to respecting Indigenous Peoples’ rights.”

Because the majority of all energy transition minerals globally (sometimes called critical minerals) are located on or near the lands of Indigenous and other land-connected Peoples, Indigenous Peoples will be disproportionately impacted by the Consolidated Standard under development.

The weakening of ICMM’s Indigenous Peoples & Mining Position demonstrates a negligence and deeply concerning lack of commitment by ICMM— and Copper Mark, World Gold Council and MAC’s Towards Sustainable Mining (TSM) by association as Consolidated partners—to center the needs of rights holders in its expectations of member companies.

We believe this process to be deeply problematic and are concerned that it runs the risk of creating a race to the bottom at a time when the mining sector so urgently needs to make significant improvements to its social and environmental performance. We request your organizations and those associated with the process to evaluate whether the Consolidated Standard effort is fit for purpose as a system that drives improvements in more responsible mining practices.

We request a response from your groups on the content of this letter and welcome the opportunity for dialogue on the serious concerns raised in it.

Signed,

Batani Foundation
Business and Human Rights Resource Centre
Center for Science in Public Participation
Climate Rights International
Earthworks
Friends of the Earth US
Geology in the Public Interest
Global Witness
Great Basin Resource Watch
Human Rights Watch
Imperial Valley Equity and Justice Coalition
IndustriALL Global Union
Jubilee Australia Research Centre
Lead the Charge
Malach Consulting
Mennonite Central Committee U.S.
Mighty Earth
Public Citizen
Publish What You Pay (PWYP)
Rights and Accountability in Development (RAID)
Securing Indigenous Rights in the Green Economy (SIRGE) Coalition
Sierra Club
Society for Threatened Peoples, Switzerland
The Revolving Door Project
The Sunrise Project
Transport & Environment (T&E)

The term ‘green steel’ gets thrown around a lot lately – but what qualifies as truly green steel? 

Investors and policymakers have an essential role to play in determining what is green steel and what is greenwashing of conventional steel production. It will be up to investors to decide which decarbonization strategies are worth investing in, and which companies are leading the market on steel decarbonization. And it will be up to policymakers and regulators to decide which types of steel production should be eligible for public subsidies and tax credits. 

A new survey of investors from the Australasian Centre for Corporate Responsibility (ACCR) shed some light on this question, finding that 81% of investors agree that ‘green steel’ cannot be produced with fossil fuels.

This might seem obvious, but steelmakers have already been caught out trying to greenwash their conventional steel production as sustainable. POSCO has been called out for greenwashing by Solutions for Our Climate, for example, because they characterize products made in coal-fired blast furnaces as ‘green steel.’ 

POSCO is also under fire for plans to reline coal-fired blast furnaces, prolonging the life of polluting, coal-intensive steelmaking infrastructure. This is in direct conflict with investor expectations, according to the ACCR survey. The majority of investors surveyed (68%) foresee a transition away from metallurgical coal in steelmaking.

Nissan and Toyota have also made claims about using ‘green steel’ in their cars, despite the fact that the steel in question is still produced with coal-fired blast furnaces. This new survey shows that investors can see right through these claims, and want to invest in companies using truly fossil-free green steel.

Automakers don’t need to take on the reputational risk that comes along with making false claims about the sustainability of their supply chains. Truly green steel is becoming more affordable every day, and automakers can play an important role in bringing costs down by investing in the infrastructure needed to create a fossil-free global steel industry.

A recent report on green steel economics from Transition Asia, Solutions for Our Climate and Global Efficiency Intelligence found that green H2-DRI steelmaking will soon be cost-competitive with traditional primary steelmaking, as the cost of producing green H2 is expected to significantly decrease by 2030. Even today, building cars with green steel adds only 1% to the cost of production. 

Another recent report from Transport and Environment put the cost of transitioning to 40% green steel at just €57 per electric vehicle in 2030. By 20240 using 100% green steel will cost only €8 per vehicle compared to using conventional steel, due to carbon pricing policies and the falling costs of green steel production.

The International Council on Clean Transportation (ICCT) came to similar conclusions in their recent report, ‘Technologies to reduce greenhouse gas emissions from automotive steel.’ They found that automakers can eliminate more than 95% of greenhouse gas emissions from producing steel for passenger vehicles by switching to fossil fuel-free steel. Doing so would reduce overall vehicle manufacturing emissions by up to 27%.

As in other studies, the ICCT concluded that using fossil fuel-free steel in vehicle production increases cost by only $100–$200, less than 1% of the price of an average new vehicle. Leading experts across the world arrive at the same estimate of the cost of using green steel in auto production – $100-200 dollars per vehicle or 1% of the cost of production.

The debate is settled: green steel in auto production is already affordable enough that many consumers would gladly accept a 1% green premium on an electric vehicle in exchange for the knowledge that their vehicle is made from fossil-free steel. One recent study from McKinsey of consumer preferences in food and beverage sales found that companies making ESG (environmental, social and governance) claims about their products experienced significantly greater growth than similar companies, demonstrating that consumers are willing to spend more for environmentally-friendly products – particularly relatively affluent and environmentally-conscious consumers in the market for an electric car.

To achieve the huge emissions reductions that are possible from decarbonizing the global steel supply chain, we must invest in green steel infrastructure to bring down costs even further. Automakers are perfectly positioned to do just that as some of the largest buyers of steel in the world. 

Automakers can support the decarbonization of the steel industry by undertaking equity investments, joint ventures, offtake agreements and other contractual agreements with suppliers to catalyze investment in and production of green steel. They can also set publicly disclosed targets to increase the quantity of fossil-free steel used in their production cycles and disclose progress towards these targets. Many automakers, including Mercedes and Volvo have already joined demand-side multi stakeholder initiatives such as Steel Zero, Responsible Steel and the First Movers Coalition, which help to unlock investment in fossil-free steel by creating confidence in the scale of future markets.

Automakers should also support the increase in scrap-based steel production by setting targets to increase the amount of scrap steel in their production cycles, disclosing their progress towards achieving these targets, and developing closed loop processes to improve the recyclability of steel. They should also implement stringent environmental and human rights due diligence requirements for their steel suppliers to ensure that, from mining to manufacturing, the steel used in their vehicles does not cause other negative environmental and human rights impacts.

The transition to fossil-free steel is an opportunity for automakers to distinguish themselves as leaders on climate at little cost. Investors, especially climate-aware investors, are watching closely to see how automakers will respond.

While EVs are important in decarbonizing passenger road transportation, they are mineral-intensive. EV batteries require hundreds of pounds of minerals, such as cobalt, lithium, and nickel, which are almost exclusively mined or extracted from the ground today at great cost to communities and the environment.

“As we seek to reduce emissions from road transport, the priority has been on switching from fossil-fuel-powered cars to EVs,” said Elsa Dominish, the report’s lead researcher. “But we can reduce emissions much more rapidly if we focus not just on switching one technology for another, but on changing our transport systems so we are less reliant on private vehicles. Transitioning to active and public transport not only requires far less minerals than EVs and produces less emissions, but it also  creates many other benefits, including equitable access to mobility, increased safety for pedestrians, improved health, and better quality of life.”

The impacts of mining related to the energy transition and EVs are becoming more widely understood, yet little research exists on what can be done to reduce these impacts. The report, based on in-depth data, case study analysis, and interviews with experts from around the world, shows that there are a number of practical, accessible strategies available to minimize the mining impacts associated with EVs. It includes six case studies demonstrating how technology and strategies to reduce mineral demand exist and are already being implemented worldwide.

The report emphasizes that a socially just transition is essential, ensuring the benefits of low-emission transport are equitably shared and do not disproportionately impact vulnerable communities. It identifies five practical pathways to transition road passenger transportation to net-zero emissions in a way that minimizes mineral demand and mitigates mining impacts:

• Reduce Car Dependence: Redesign cities to promote public transport, walking and cycling, reducing the need for private vehicles.
• Smaller and More Efficient EVs: Shifting to smaller EVs and batteries and more efficient battery designs could reduce cumulative material demand for batteries by up to 25% between now and 2050.
• Intensive Use of Vehicles and Batteries: Encourage reusing, remanufacturing, and repurposing EV batteries to extend their lifespan and reduce new mining needs.
• Close the Loop on Battery Materials: Improve recycling processes to recover minerals from end-of-life batteries, decreasing the demand for new raw materials.
• Responsible Sourcing of Minerals: Ensure mining practices respect human rights and environmental standards, particularly Free Prior and Informed Consent (FPIC) for Indigenous Peoples.

“For a truly just and equitable energy transition, we must consider the impacts on communities along the entire electric vehicle supply chain, from the extraction of minerals to their processing, use, and end-of-life,” said Payal Sampat, Earthworks Mining Program Director. “This research gives us a roadmap for meeting our climate goals without compromising human rights or ecosystem protection.”

The report concludes that the technologies to support most of these strategies are readily available, and while some face political and/or social or economic barriers, many interventions can make swift impacts. These could include policy interventions, such as incentivizing smaller batteries, mandating battery recycling, and extending subsidies to e-bikes and second-hand EVs. There are also innovative circular economy business models, such as battery swapping and vehicle refurbishment.

For more information, visit earthworks.org/campaigns/just-clean-energy

Media Contact:

Gabriella Deyi, gabbyd@theworkeragency.com, 510-322-0744
Brendan McLaughlin, bmclaughlin@earthworksaction.org, +1 206 892 8832
Amber McCulloch, Amber.McCulloch@uts.edu.au, +61 405 205 987

POSCO, South Korea’s leading steel manufacturer, is on the brink of a decision that could lock in coal dependency for decades. Instead of transitioning to cleaner production methods, POSCO is currently relining a coal-powered blast furnace facility in Pohang and has announced plans to reline a second facility at the world’s largest integrated steelworks, POSCO Gwangyang. This move would extend the production of steel using coal by 15-20 years, potentially emitting over 199 million tonnes of CO2. A global group of 19 civil society organizations is calling on leading German automakers who purchase on POSCO products to be true leaders on green cars and green steel procurement supply chain decarbonization by preventing this setback. 

For POSCO to proceed with its plan to reline the coal-powered blast furnaces at two of its largest South Korean plants signals a commitment to coal-based steel production well into the future. This stance contradicts global efforts to decarbonize heavy industries, significantly hindering South Korea’s ability to meet its climate targets and contributing to global greenhouse gas emissions.

Since October last year, POSCO has been facing civil society pressure to reconsider its approach. Local and global civil society groups have been vocal about the need for POSCO to phase out blast furnace technology, or at least present a clear plan for transitioning to cleaner production methods. Last year, 24 groups sent a joint letter to POSCO’s CEO urging action but received no response. This lack of engagement from POSCO underscores the urgent need for external pressure to catalyze change.

In a strategic move to ensure a greener steel production, 19 global civil society groups have come together to call on the three leading German automakers—BMW, Mercedes-Benz, and Volkswagen to take action. As global leaders in the automotive industry, these companies have pledged to reduce emissions across their supply chains. By continuing to source steel from POSCO, these German automakers risk undermining their own stated decarbonization goals. The letters from civil society groups call on these automakers to adopt a clear stance against POSCO’s reliance on coal-powered steel production.

As leaders in the automotive industry, BMW, Mercedes, and Volkswagen can set a precedent for cleaner supply chains and demonstrate a commitment to environmental stewardship. By asking suppliers to provide transparent phase-out plans for their coal facilities and refusing to purchase steel from suppliers who rely on outdated, high-emission processes, these automakers can drive demand for more sustainable steel production methods. This, in turn, can push major steel manufacturers like POSCO to innovate and adopt cleaner technologies, aligning their practices with global climate targets. A greener transition is possible, if automakers hold suppliers accountable. To reach climate targets, it is essential for global automakers to use their purchasing power by shifting away from coal and towards cleaner alternatives, thereby fostering green steel making technologies like hydrogen reduction and electric-arc-furnaces powered by renewables.

Global automakers Honda and Mercedes are facing allegations that they have engaged in illegal union-busting activities in the U.S. Honda has been accused by the National Labor Relations Board of violating the rights of workers at a Greensburg, Indiana, factory by illegally cracking down on union organizing. Mercedes, meanwhile, has been accused by the UAW of engaging “in a relentless anti-union campaign” including the firing of employees who were pro-union and holding frequent captive-audience meetings to spread anti-union views, according to the filing.

A new report by Global Witness has documented the harmful impacts of illegal rare earth mining in Myanmar, linked to the supply chains of major automakers – including Volkswagen, Toyota, Tesla, Nissan, Ford and Hyundai.

The regulatory landscape for automakers operating in Europe just changed dramatically with the passage of the EU Corporate Sustainability Due Diligence Directive (CSDDD). With the passage of the CSDDD, automakers must act to address supply chain impacts or be held accountable for actions up and down the supply chain.

​​The Council of the European Union approved the CSDDD after over four months of debate, creating a standard on sustainability issues including climate, environment and human rights. According to the Council of the EU, “the directive requires companies to ensure that human rights and environmental obligations are respected along their chain of activities. If a violation of these obligations is identified, companies will have to take the appropriate measures to prevent, mitigate, bring to an end or minimize the adverse impacts arising from their own operations, those of their subsidiaries and those of their business partners in their chain of activities. Companies can be held liable for the damage caused and will have to provide full compensation.”

The CSDDD isn’t perfect, and comes after a long debate among EU lawmakers and in the wake of several similar laws passed at the national level. Advocates are applauding the CSDDD for its inclusion of both major EU companies and international companies with substantial revenue made in the EU, and because it imposes more robust due diligence obligations on human rights, labor, and environmental standards. It also includes requirements for measures to prevent and mitigate abuses, enforcement mechanisms for companies that fail to comply, and new requirements for corporate climate action, including a requirement to develop and report on climate transition plans. Those plans should include action on supply chain decarbonization, and we expect to see companies that have already taken action to achieve cleaner and more equitable supply chains benefit from the CSDDD since competitors will have to hurry to catch up. 

The CSDDD did come after a long period of debate, however, and the final version was significantly watered down by policymakers . The original draft of the CSDDD would have applied to many more companies than the much more narrow final version. However, most major automakers still meet the requirements for inclusion, so this watering down of the CSDDD will have minimal impact on the auto industry. The final version of the CSDDD also excludes due diligence obligations related to climate change impacts specifically, meaning that companies can’t be held accountable for impacts of climate change that they are causing with their own emissions. And regrettably, the CSDDD largely excludes the finance industry, disappointing analysts and advocates. 

The CSDDD still has to be transposed into national law, and is only a baseline for local regulation. The European Coalition for Corporate Justice is calling on national governments to go even farther than the CSDDD by:

• Closing loopholes: Expand the reach of the directive to cover the entire value chain and include all sectors and more companies.  
• Strengthen access to justice: Reverse the burden of proof to make it easier for victims to hold corporations accountable. 
• Ensuring robust enforcement: Allocate adequate resources to investigate corporate misconduct and impose meaningful sanctions. 

Many companies are welcoming the CSDDD. Despite some new obligations for companies that this legislation introduces, the CSDDD is widely supported by companies across Europe and should be embraced by the automotive sector as an opportunity to drive better performance across the industry. The World Business Council for Sustainable Development said that the CSDDD will support companies in conducting ‘risk assessment and impact analysis of their supply chains” and provides “businesses with a clear and consistent sustainability due diligence framework across the EU.” They urged their members to vote in support of implementing the CSDDD.

The CSDDD will strongly benefit those companies that have made greater investments in clean and equitable supply chains while disadvantaging those that have failed to make progress in this area. Companies that continue to fail to make progress on clean and equitable supply chains should expect a much less welcoming regulatory environment in the EU for environmental harm and human rights abuses in auto supply chains. 

One of the biggest challenges in our global fight against climate change is that energy transition requires mining for battery minerals, which disproportionately impacts tropical rainforests, which protect the climate. Deforestation causes about 10% of climate change, and forest loss is on the rise because of growing demand for battery minerals. 

According to a 2023 World Wildlife Fund report, 62% of deforestation related to mining occurred in tropical and subtropical rainforests, despite these areas only having 29% of the world’s mining areas.  Deforestation linked to mining looks set to increase as the energy transition accelerates, without significant action from automakers, battery manufacturers, policymakers and investors to stop it. 

Rainforest Foundation Norway and AidEnvironment released a report last week called “Short circuits: Exploring the broken links of mineral supply chain policies in the electric vehicle industry“ which looked, for the first time, at the efforts of companies in the EV supply chain to mitigate deforestation impacts. Their report examined the commitments, policies and practices of major automakers and battery manufacturers in three main areas:

1. Deforestation and biodiversity;
2. Overall human rights and environmental due diligence for their mineral supply chains; and
3. Ensuring respect for the rights of Indigenous peoples in supply chains.

The report found a disturbing lack of commitments on deforestation in mineral supply chains across EV battery producers and automakers alike. It identified ‘broken links’ between automakers’ and battery manufacturers’ policies, finding that the automakers that do have deforestation commitments tend to source batteries from battery manufacturers that do not have commitments around deforestation or biodiversity, undermining the automakers’ commitments.

Overall, Tesla and Mercedes were the top scorers in the Rainforest Foundation Norway and AidEnvironment’s report, similar to the annual Lead the Charge leaderboard wherein Tesla and Mercedes scored third and second, respectively. These higher scores are not only a reflection of these companies’ above average performance on biodiversity and deforestation criteria specifically, but also their above average performance when it comes to Indigenous rights and mineral due diligence. 

Ford, the current top scorer in the Lead the Charge leaderboard, performed poorly in Rainforest Foundation Norway and AidEnvironment’s evaluation, coming in eighth place. Ford’s strong performance on mineral due diligence overall was not enough to bring them higher up the rankings, due to their lack of policies, commitments and action on deforestation, Indigenous rights and biodiversity. When the evaluation was carried out, the company had no policy or commitment to deforestation or biodiversity at all. Ford also scored very low – only 7% – on Indigenous rights in the leaderboard. It is encouraging to see that Ford has started to address this gap in their latest sustainability report. Hopefully Ford will also update their policies to address the gap with regards deforestation and biodiversity.

Among battery makers studied, Samsung SDI is clearly in the lead. They scored points by:

• Incorporating Free, Prior and Informed Consent from impacted Indigenous Peoples as a requirement in their supplier code of conduct;
• Mentioning the UN Declaration on the Rights of Indigenous Peoples in their supplier code of conduct;
• Being the only battery maker studied with a deforestation commitment including policies that emphasise preventing deforestation and/or ecosystem conversion in accordance with applicable laws (i.e., illegal deforestation)
• Providing a mineral-specific or supply chain-specific grievance mechanism for violations of their policies. 

Another interesting finding in the report is the relatively strong performance of two Chinese battery makers: Farasis Energy and, in particular, CATL. Both of these companies outperformed several automakers (Nissan, Geely and BYD) and also several battery competitors – not only in China but also in South Korea, Japan, and Europe. The evaluation found that these companies had strong commitments on responsible mineral sourcing, biodiversity and Indigenous Peoples’ rights, including by introducing requirements for their suppliers to respect their Free, Prior and Informed Consent. Both companies also scored relatively well against the implementation and management criteria, but their overall scores were brought down by the disclosure indicators. Nonetheless, this promising progress lays the foundations for these companies to further improve their performance and become industry leaders on these issues.

“The EV industry’s evident lack of control in the supply chain marks a stark contrast to its profits. Policy makers, investors, and consumers place a lot of trust in the companies that fuel the green transition. The company owners must understand their responsibility and take it seriously,” said Toerris Jaeger, executive director of Rainforest Foundation Norway. 

Deforestation and biodiversity outcomes are crucial to keeping climate change under 1.5 degrees of warming. That’s why Lead the Charge will be incorporating criteria like those Rainforest Foundation Norway and AidEnvironment used in their report into our annual leaderboard, ensuring that our rankings reflect efforts by automakers to protect forests and biodiversity. Automakers should move quickly to ensure that their supply chains are free from deforestation and biodiversity impacts, given the high visibility of these issues among consumers – particularly EV consumers.

Tesla released their annual sustainability report ahead of their annual general meeting. The report details the company’s commitment and actions to ensure that its supply chain can “maximize positive environmental and social impact,” including by leveraging Tesla’s “market power to make mining and refining better,” setting the stage for “supplier-specific decarbonization,” and optimizing the “the recyclability of battery inputs.”

Experts from Lead the Charge, a network of local, national, and global advocacy partners working for an equitable, sustainable, and fossil-free auto supply chain, have conducted a preliminary analysis of the report, finding some encouraging steps from the automaker on responsible mineral sourcing, Indigenous Peoples’ rights and battery decarbonization, but minimal progress in other areas, including steel and aluminum decarbonization,  workers’ rights, biodiversity and deforestation.

INDIGENOUS RIGHTS

Building on Tesla’s commitment to respect the rights of Indigenous Peoples to grant or withhold free, prior, and informed consent, this is the first time Tesla has mentioned exploring the need for the establishment of a no-go zone for mining to respect Indigenous Rights, particularly the rights of Uncontacted tribes. They are also the only car company to take this first step, setting them apart. Tesla should build on this momentum by making a firm commitment to not source minerals from territories of Uncontacted tribes or Indigenous Peoples in voluntary isolation.

Vuyisile Ncube from EarthWorks says Tesla is doing more than other automakers to respect the rights of Indigenous Peoples impacted by mining for EV batteries – but they need to go even farther. 

HUMAN RIGHTS & RESPONSIBLE SOURCING

It’s noteworthy that five mines in Tesla’s lithium, nickel and graphite supply chains have undergone, or committed to undergoing an IRMA audit, which is widely recognized as the most robust third-party scheme, and these results are being used by suppliers to close the identified gaps in their operations. Tesla should build on this momentum by setting a clear timeline to make IRMA auditing a requirement for all its mining suppliers.

In terms of biodiversity and deforestation risks, Tesla mentions operationalizing biodiversity management plans in their lithium supply chains as a result of IRMA audits, but there is still a lack of adequate risk prevention and mitigation measures for other raw materials, including nickel.

In terms of battery recycling, while Tesla discloses the absolute totals (in mt) of recovered nickel, cobalt, copper and lithium, future reports should disclose recovery rates (%) so Tesla’s progress can be better assessed, and these rates should be linked to specific targets to increase overall recovery rates of minerals used in Tesla’s batteries.

WORKERS’ RIGHTS

When it comes to workers’ rights, Tesla’s  progress  includes increased disclosure on worker health and safety of its employees and its contracted workers. Tesla’s efforts to combat forced labor have also seen some progress, as it has included case studies that explain how the company identifies, mitigates, and remediates instances of forced labor in its supply chain. Also noteworthy are Tesla’s new disclosures around the operation of their grievance mechanism and their attempts to remediate harms caused by their supply chain, including ending involuntary wage deduction detected in their interiors accessories supply chain

Despite this progress, Tesla still remains a laggard when it comes to freedom of association and collective bargaining, reporting that none of its US employees are part of a union, and that some international employees are under a collective bargaining agreement, but “only to the extent required by law.” Similarly, the company does not explain whether it engages with trade unions on workers’ rights in its supply chain, and does not mention any commitment to ensuring workers in its supply chain are paid a living wage.

SUPPLY CHAIN DECARBONIZATION – STEEL, ALUMINUM AND BATTERIES 

With regards to supply chain decarbonization, Tesla continues to be the only automaker that discloses disaggregated scope 3 emissions for its steel, aluminum and battery supply chains. Tesla’s impact report details how they have improved data collection on GHG emissions in their supply chain and that they now require suppliers in their battery supply chain to provide science-aligned GHG reduction targets set at the cell, cathode, and refining/smelting levels. It is also encouraging to see that Tesla’s 2023 impact report has a new chapter on steel and iron, which details the work the company has done on GHG emissions mapping for this supply chain.

However, it is disappointing that Tesla has still not disclosed public targets for the decarbonization of its steel, aluminum and battery supply chains, making it difficult to judge the company’s actual progress in reducing emissions across these key supply chains. This is particularly the case for steel and aluminum, where the company only provides broad statements about engaging suppliers on emissions reductions, without providing any examples of specific actions they have taken to accelerate steel and aluminum decarbonization. This is in contrast to industry leaders on this issue, such as Volvo and Mercedes, who have been far more proactive in supporting the development of decarbonized steel and aluminum production.

Maricela Gutierrez from Industrious Labs says Tesla is leading the auto industry by publishing Scope3 emissions – but to live up to its goal to ‘accelerate the world’s transition to sustainable energy’ the company needs to invest in green steel.

As a top scorer in the Lead the Charge annual leaderboard this year, Tesla plays a key role in building clean and equitable auto supply chains, and their report offers insight into emerging trends in supply chain sustainability. Our network of policy experts at Lead the Charge are reading through the document as we speak, analyzing Tesla’s sustainability commitments for its supply chain, and the communities it impacts.

Nissan says it will use low CO2 emission aluminium parts made from green or recycled aluminium in new and current models from fiscal year 2024 onward and aims to complete the full transition to such parts by 2030.

Aluminium accounts for approximately 10% of vehicle weight. By using low CO2 emission aluminium, Nissan says it aims to take a significant step towards achieving carbon neutrality.

It wants to achieve carbon neutrality in the entire lifecycle of its vehicles by 2050.

Green aluminium is produced using non-fossil fuel-derived electricity and can reduce CO2 emissions during production by approximately 50%.

Additionally, recycled aluminium can reduce CO2 emissions by approximately 95%. Nissan has been purchasing low CO2 emission aluminium sheets for vehicle panels produced in Japan from Kobe Steel, Ltd. and UACJ Corporation.

Some called 2023 the year of the auto worker thanks to huge victories by the UAW. Despite these historic wins, our 2024 leaderboard shows a lack of progress from automakers in ensuring respect for the rights of workers. In fact, nearly half of automakers we studied demonstrated zero progress on addressing workers’ rights issues in their supply chains. 

At our press event launching the 2024 leaderboard, Patrick Dexter from the UAW noted that for the most part, unionized companies score higher in the leaderboard overall. He argued that there’s no better solution to the environmental problems that plague the auto supply chain than to give a voice to the workers who work in facilities that emit pollution and produce hazardous waste.

He also reminded us of one of the origin stories of the US environmental movement: the solidarity that arose in Detroit between auto workers and community members who lived nearby auto manufacturing facilities, because they were all impacted by industrial pollution from auto manufacturing. 

Building a cleaner and more equitable auto supply chain cannot be achieved without supporting workers. But nearly half (44%) of the automakers evaluated in 2023 and 2024 made no improvement at all on workers’ rights, and the average score among automakers improved by just 3 percentage points from one year to the next.

The only area where automakers showed marginal improvement was related to living wage commitments. In the 2023 edition of the leaderboard, none of the automakers assessed had made any kind of commitment to a living wage. In the 2024 leaderboard, Ford and Volvo are credited for adding explicit commitments to a living wage in their human rights policies, although neither company disclosed a specific method for calculating a living wage. BMW also became the only automaker to include a specific requirement in its supplier code of conduct for suppliers to pay employees a living wage.

In 2024, autoworkers are coming together across the US south to unionize Hyundai and Mercedes facilities, and anyone who cares about cleaner auto supply chains and a just transition should be supporting them. The UAW also has their eye on Tesla’s non-union facilities where workers have faced well-documented incidents of harassment and an unsafe work environment. Tesla is a leader overall in the leaderboard, ranking #3 in 2024, but #10 for workers’ rights.

With powerful worker organizing in the U.S. leading to big gains for workers of the Big 3 – it’s time for the whole auto industry to respect the rights of workers up and down the supply chain, not just in the facilities where cars are assembled. A recent study of the U.S. automotive manufacturing landscape found that the manufacturing of battery electric vehicles requires more labor hours than the manufacturing of internal combustion engine vehicles. That’s great news for US workers who hope to find living wages in the unionized US auto industry. 

But a lot of the new jobs created will be in battery manufacturing, the most labor-intensive part of building an EV. Some automakers have attempted to create a tiered labor system separating their auto assembly workers and battery workers, even when their batteries are manufactured at companies wholly owned and operated by automakers themselves. But thanks to UAW’s 2023 strikes, important wins were achieved for these battery workers, whilst progress is also being made at the facilities of other battery manufacturing companies. 

Automakers can support a just transition away from extractive internal combustion engine vehicles to clean electric vehicles by proactively supporting and ensuring respect for workers rights by their suppliers. A truly ‘clean’ auto supply chain would include fair wages and respect for workers’ rights from the factory all the way to the mine.

When we released our 2024 leaderboard ranking automakers on their efforts to ensure equitable, sustainable supply chains, we were heartened by a lot of the progress we saw. But in one very important area, automakers have made very little progress: respecting Indigenous rights. 

More than half of the resources needed to power the energy transition are located on or near Indigenous Peoples’ lands. But far too often, projects linked to auto supply chains, and extraction projects specifically, are conducted on Indigenous Peoples’ territories without their consent, sometimes even displacing them from their ancestral lands. Extractive projects also pollute natural resources, which affects these communities’ right to food, water, livelihoods, and culture. As the transition to electric vehicles accelerates, it is critical that activities across the auto supply chain respect Indigenous Peoples’ right to self-determination and to Free, Prior and Informed Consent (FPIC).

According to our leaderboard, in 2023 over 70% of automakers made no progress on Indigenous Peoples’ rights. Only three companies (Tesla, Volvo and Volkswagen) increased their scores and 61% of automakers continued to score 0% on this issue. Only 31% of automakers score zero on the steel indicators, demonstrating a failure among automakers to prioritize Indigenous rights among supply chain issues. 

“It is imperative to recognize that any missteps in this transition could potentially inflict harm upon Indigenous Peoples, affecting their livelihoods, cultural connections to ancestral lands, and the biodiversity they have responsibly stewarded for centuries,” said Galina Angarova, Executive Director of Securing Indigenous Peoples’ Rights in the Green Economy (SIRGE) Coalition upon launch of the leaderboard. “Recognition, respect, and upholding of Indigenous Peoples’ right to self-determination, operationalized through the full implementation of Free, Prior and Informed Consent (FPIC), stands as the cornerstone for a truly just and equitable energy transition benefiting all.”

Essential actors like the US government also fail to meet the standard of FPIC, with recent DoD grants being awarded to mining projects opposed by Indigenous groups. GM also recently announced a  $650 million investment in the Thacker Pass lithium mining project, opposed by the Reno Sparks Indian Colony, Berns Paiute Tribe, Summit Lake Paiute Tribe, and People of Red Mountain.

Angarova described this dynamic in a recent blog post, writing: “As the world undergoes the energy and digital transition, the demand for electric vehicles and minerals such as lithium, cobalt, copper, and nickel will continue to grow as well. Companies rushing to secure their supply of these minerals are causing an increase in pressure on Indigenous Peoples’ lands, conflicts, and numbers of Indigenous Peoples affected by mining. These effects include pollution, man camps, loss of biodiversity, disease, displacement, loss of culture, and growing numbers of Missing and Murdered Indigenous Women. While mining efforts are viewed as vital to a transition to a so-called green economy, the harmful effects and lack of consent by Indigenous Peoples do not create a just transition.”

The only hopeful sign for Indigenous Peoples’ rights in the leaderboard was Tesla’s improved score, which rose from 5% to 26%, enabling the company to take the top spot for this subsection from Mercedes. The company has introduced an updated requirement on FPIC, stating that: “For all raw material extraction and processing used in Tesla’s products, we expect our suppliers to engage with legitimate representatives of Indigenous communities and respect their right to grant or withhold free, prior, and informed consent for their operations.” 

Indigenous-led organizations aren’t waiting for automakers to act – they’re actively advocating for policymakers and industry actors to commit to respecting FPIC. Just this month representatives from Indigenous rights advocacy groups including members of the SIRGE coalition – which is itself a member of the Lead the Charge network – met in New York ahead of the UN Permanent Forum on Indigenous Issues. Organizations including Indigenous Peoples Rights International, Right Energy Partnership with Indigenous Peoples, and Business and Human Rights Resource Center released a Declaration on issues surrounding the transition to renewable energy and impacts on Indigenous Peoples’ communities. They wrote:

“We are experiencing an increasing trend of criminalization and attacks against Indigenous Peoples Human Rights Defenders (IPHRDs), who speak out against the impositions of mining and energy projects that violate our rights. This is happening on both ends of the renewable energy value chain, including the mining of transition minerals and renewable energy projects. The lack of legal recognition and respect of Indigenous Peoples’ rights, including the requirement to respect our Free, Prior and Informed Consent (FPIC), exacerbates land and resource dispossession, displacement, destruction of our livelihoods, disintegration of our communities, and disempowerment of Indigenous women and youth in the energy transition.”

The Indigenous Peoples Global Coordinating Committee with members representing all seven socio-cultural regions of the world, in partnership with and support from the SIRGE Coalition, are also planning for an Indigenous-led Summit – JUST TRANSITION: Indigenous Peoples’ Perspectives, Knowledge and Lived Experiences this October in Geneva, Switzerland. The summit will examine the impacts of the energy transition on Indigenous Peoples and will challenge mainstream interpretations and implementations of how a just transition to a “Green Economy” is being defined, centering Indigenous Peoples’ priorities and solutions.

Automakers have a long way to go on respecting Indigenous rights. Automakers like Tesla and Mercedes have begun to make moves toward requiring FPIC, but no company we studied scored any points on the remedy indicator, which requires companies to demonstrate they have a process for investigating and remedying breaches of FPIC in their supply chain.

Last week Standards Australia convened the second of three workshops of the 45th International Workshop Agreement (IWA 45) for sustainable critical minerals supply chains. Going into this workshop, a key concern I had as a civil society (CSO) representative was that, yet again, industry was at the table to write its own rules.

The disproportionate influence of industry and lack of non-industry voices has characterized the IWA process to date. In fact, the absence of civil society was so notable that improving CSO participation for workshop two was recommended in the workshop summary from Standards Australia. 

Public Citizen and Earthworks participated to advocate for our Civil Society Guiding Principles and Priorities for a Credible, Rights-Respecting ISO Critical Minerals Supply Chain Standard. 

What is the IWA 45 and why does it matter?

The IWA 45 is a process in which members of the International Organization for Standardization (ISO) and other invited groups convene to develop recommendations to inform an ISO standard–in this instance, ISO members were scoping existing sustainability frameworks related to mineral supply chains. 

ISO is an international body that establishes technology, management, and manufacturing standards. With some exceptions, like ISO 26000 on social responsibility, standards are often highly technical and industry-specific, covering topics such as water quality and mineral purity requirements.

Governments and regulators around the world rely upon ISO standards to inform policy and regulation, resulting in standards that have tangible impacts on people and the planet. For instance, the US Food and Drug Administration (FDA) uses ISO 13485 to assess medical device manufacturers’ compliance with safety and effectiveness requirements under the Federal Food, Drug, and Cosmetic Act.  

The IWA 45 process will result in a brief report and set of non-binding recommendations to inform a standard on sustainable raw material management in minerals and metals supply chains, currently being developed by Germany’s national standard body, ISO/PC 348.

Who attended IWA 45? 

Public Citizen was one of two civil society organizations (CSOs) that participated in the workshop, although other groups attended virtually. Other attendees included representatives from the mining industry, national standards-setting bodies, US government agencies, and auditors. Notably absent from the table was a critical stakeholder group: impacted communities.

While decisions are made by consensus, the ISO system is not designed to be easily accessible or automatically inclusive of civil society organizations, human rights advocates, and rights-holders. National standards bodies, which represent the majority of ISO members, have the responsibility to recruit and engage stakeholders. However, participation in the process is not free, and cost can be a major barrier for entry. Unless ISO, the national government, or standards-setting bodies can cover these costs, it excludes critical stakeholder groups like civil society and impacted communities.

The majority of energy transition mineral deposits used in batteries are on Indigenous lands throughout the world. When the ISO fails to actively include Indigenous Peoples and their advocates in these discussions, their sovereignty, rights, and the biodiversity they steward are exposed to serious health and environmental risks. 

Further limiting participation, the final standards are posted behind a paywalll. This underscores exclusivity and a lack of transparency behind the standards-setting process and will disproportionately affect Indigenous Peoples and other mining-affected communities around the globe who are often neglected by their governments and excluded from the decision-making process.

Rights holders and CSOs play a crucial role in holding companies and governments accountable to strong standards enforcement. How can these stakeholders play this important role if it costs money just to read the standard in the first place? ISO’s failure to effectively convey the relevance of its standards-setting process to civil society groups and affected communities, coupled with financial barriers, thwarts meaningful participation.

ISO is increasingly proposing and developing international standards, and inclusive engagement with diverse stakeholders must be prioritized. Conversations with EU and US regulators and legislators have made clear that the finalized ISO/PC 348 will be considered a new baseline for regulating raw materials supply chains and the industries that drive them. This will have profound implications for human rights, communities, and the environment as we continue in the energy transition. To ensure the standards foster sustainable development and broader social improvements, adequate stakeholder engagement is imperative. 

What was Industry saying?

Some of the most vocal industry participants were representatives from the International Council on Mining and Metals (ICMM) and CopperMark, two of the weakest industry auditing and certification schemes. They are also two of the four groups leading a new global consolidated standard for the mining industry that has already drawn criticism from civil society groups. 

Unsurprisingly, industry emphasized that the IWA 45 and Germany’s proposed standard are unnecessary. Company representatives argued that there is increasing alignment between different mining standards and that ISO should instead focus on gaps in supply chain standards. In their view, standard consolidation, like their initiative, is the better path forward.

This argument entirely misses the very real problems with the vast majority of these voluntary schemes, including an absence of multistakeholder shared governance, the divergence in assessment quality, and the dearth of transparency. These issues have persisted for decades and industry-led schemes have been criticized as being tools for greenwashing. Consolidation, then, isn’t real progress if it is consolidating low standards that will continue rubber-stamping business as usual, rather than improving outcomes for rights holders.

These industry arguments were intended to distract from real issues and stall conversations at IWA 45 that should have instead centered on defining effective criteria for an initiative to be legitimate, credible, and rights-respecting, and therefore recommended for consideration to ISO/PC 348. Fortunately, the few NGOs that were able to overcome the financial, transparency, and technical barriers raised these issues to challenge industry’s misleading arguments.  

The path forward

Despite a lack of diversity in stakeholder participation and industry’s overrepresentation, several positive outcomes emerged from the session.

For example, CSOs shifted the conversation on multi-stakeholder representation from a focus on the importance of engagement to the need for equal, shared governance, a principle backed by the Initiative for Responsible Mining Assurance (IRMA).

Civil society groups also brought to the forefront the limitations of environmental, social, and governance (ESG) frameworks to protect human rights and the need for due diligence to be centered in the recommendations, aligned with the Organization for Economic Cooperation and Development (OECD) due diligence guidelines and the United Nations Guiding Principles on Business and Human Rights (UNGPs).

And finally, CSOs elevated discussions surrounding the importance of materials circularity, not just recyclability, and the rights of Indigenous Peoples, particularly to Free, Prior, and Informed Consent (FPIC), not mere consultation.

The IWA 45 process will continue for about another month. Between now and April 30, Public Citizen will lead CSO input and recommendations on the current draft report and will attend the final session that will be held virtually in May.

Public Citizen is working with colleagues at Earthworks, Transport & Environment (T&E), and the Environmental Coalition on Standards (ECOs) to build a joint US-EU coalition with shared demands which we plan to put forward in the ISO PC/348 working group process that will begin this summer. This is a key space for CSO engagement because governments will use this space to consider a new baseline for related supply chain issues.

If you are interested in being a part of the developing coalition and our advocacy, please fill out this form and we will get back to you.

Yesterday, Ford released its annual sustainability report, which demonstrates important progress on ensuring respect for the rights of Indigenous Peoples and workers in its supply chain but, disappointingly, falls short of expectations of civil society groups in the Lead the Charge network, with regards to clean steel and aluminum. 

“It is commendable that Ford now has a policy that explicitly references the rights of Indigenous Peoples as prescribed by the UN Declaration of the Rights of Indigenous Peoples (UNDRIP) and ensures the right to Free, Prior and Informed Consent (FPIC). This policy commitment, including the expectation that suppliers obtain FPIC, are a good first step. With the demand for transition minerals near and on Indigenous Peoples lands ramping up, as SIRGE, we look forward to seeing how these commitments are implemented and how Ford’s suppliers will begin to operationalize these expectations,” said Galina Angarova, Executive Director of the SIRGE Coalition.

On human rights, Lead the Charge experts observed positive progress where Ford updated their human rights policy with an explicit commitment to respecting the United Nations Declaration on the Rights of Indigenous Peoples, in addition to adding a requirement in their Responsible Materials Sourcing Policy that their raw material suppliers respect Indigenous Peoples’ right to Free, Prior and Informed Consent. Ford has also incorporated the living wage commitment announced in last year’s report as a requirement in its supplier code of conduct so that it applies to Ford’s suppliers as well as Ford itself.

“Sourcing from an IRMA-audited mine is a step in the right direction, but Ford can and should do more to leverage its influence to safeguard its supply chain from human rights and environmental harms. The next step for Ford is to publicly disclose its timeline for demanding that all mines in its supply chain undergo IRMA audits.” said Vuyisile Ncube, Corporate Advocacy Coordinator for the Making Clean Energy Clean campaign, Earthworks.

“Ford stands out as one of only a few automakers to explicitly support a living wage. While we are pleased to see Ford’s support of a living wage, we would like to see more information on how the company defines living wage and on how it plans to implement it throughout its value chain. The ILO’s recent living wage report provides a clear definition of living wage and a set of key principles that companies should abide by when creating and implementing a living wage policy. This can serve as a crucial starting point for Ford as it operationalizes its support for a living wage,” said Aaron Acosta, Program Director at Investor Advocates for Social Justice.

Disappointingly, however, Ford has demonstrated almost no progress on building cleaner steel and aluminum supply chains since announcing that it had joined the First Movers’ Coalition sector groups on these metals, which entails committing to ensuring at least 10% of their annual steel and aluminum procurement volumes by 2030 are near-zero emissions. In the report, Ford disclosed no new agreements with steel or aluminum suppliers to support greater investment in, and production of, clean steel and aluminum, disappointing analysts and experts who have been hoping for Ford to take more aggressive action on cleaning up these supply chains since joining the First Movers’ Coalition. The report does mention 3 MOUs with European steel makers which were previously announced.  

“The report from Ford today was a missed opportunity to renew its commitment to decarbonize its steel supply chain and lead the auto industry towards fossil-free supply chains. We were encouraged to see Ford Motor Company announce three Memoranda of Understanding with European steel suppliers in 2022 for low carbon steel, but the company’s progress has stalled,” said Carly Oboth, senior supply chain campaigner with Public Citizen’s Climate Program.  

The report includes positive news detailing increased reclamation of aluminum from transmissions and engines. However, progress on expanding the company’s “closed-loop recycling system” for aluminum appears stalled. Ford repeated similar figures on recycling aluminum in previous years despite increased auto sales in 2023 and likely increases in production.

As the top scorer in the Lead the Charge annual leaderboard, which was highlighted in the report, including in the CEOs letter, Ford plays a key role in building clean and equitable auto supply chains, and their report offers insight into emerging trends in supply chain sustainability. 

“The Ford Motor Company made significant commitments in late 2022 to increase the procurement of sustainably-manufactured aluminum. While these were accounted for in the Lead the Charge leaderboard for 2023, there was very little further progress from Ford in the last calendar year. This comes despite Ford’s increased production and sales in 2023. Moreover, the new sustainability report sidestepped concerns raised in March 2023 around deforestation and environmental harms in Brazil’s Amazon rainforest tied to ore mining that supports aluminum used in the Ford F-150 Lightning. We look to Ford to build on its commitments in 2022 and make substantive and ambitious agreements with aluminum producers that would provide more direction and assurance to its suppliers and metals industry at large,” said Yong Kwon, Senior Policy Advisor of the Industrial Transformation Campaign,  Sierra Club.

GAIA has strong concerns about the current practices of battery lifecycle management. The unchecked production of toxic batteries with premature obsolescence, current end-of-life processing techniques (or “recycling”), and risks of waste colonialism are key environmental justice challenges to be addressed in the transition to BEVs. 

Little is known about the fates of batteries retired from EVs, beyond a few references about less than 5% of them being recycled. Today, the most common industry “recycling” proposal – whether industry labels it as pyrometallurgy or hydrometallurgy – is a combination of thermal treatment, followed by acid-leaching (hydrometallurgy). The thermal treatment can either be pyrometallurgy smelting which is done at a temperature ranging from 1400C to 1700C, or lower-temperature incineration or pyrolysis which is done at a temperature around or below 600C. Both types of thermal treatment must be followed by hydrometallurgy as a second step in order to recover cobalt, copper, and nickel from the alloy or slag. In case of pyrometallurgy smelting, lithium is not recovered as it’s lost during the smelting process and too costly to separate from slag. 

The reliance on thermal processing of batteries raises serious concerns about toxicity and carbon intensity. Treating batteries with high-heat thermal processing results in toxic emissions, ash and other byproducts, in particular carcinogenic emissions generated from burning nickel and cobalt compounds and other toxic gasses such as benzene (C6H6), hydrogen cyanide (HCN), and formaldehyde (CH2O), acid gas species hydrogen fluoride (HF), and hydrogen bromide (HBr) released at ambient temperature and upon heating. Burning fluorinated polymers in batteries can also generate per- and polyfluoroalkyl substances (PFAS), also known as ‘forever chemicals,’ with fluorine coming from decomposition of the electrode binder (PVDF) and electrolyte (LiPF6). All too often, such facilities are sited in environmental justice communities, exposing frontline communities and workers to toxic emissions. Risks of PFAS release were for example a key factor in a grassroots victory in defeating a proposal for a low-temperature pyrometallurgy facility in Endicott, New York. 

Additional concerns include low rates of material recovery and significant greenhouse gas emissions: for every tonne of battery processed, approximately an astonishing four tonnes of carbon dioxide will be emitted during the smelting process. The pyrometallurgical process can also generate carbon tetrafluoride, a particular compound that is estimated to be 6630 times more potent than carbon dioxide.

Current methods of burning batteries for “recycling” are not an answer, and regardless, recycling should only be considered as the last resort in a material’s  life cycle.  Safe and effective recycling further requires a host of significant barriers to be resolved in practice and policy, including robust collection systems, and addressing the high costs of transportation and logistics. All possible measures should be immediately taken in battery design and policy to ensure repairability of EV batteries, putting an end to the status quo of EV batteries with an artificially limited life in the vehicle. Immediate policy measures must also be taken to require battery design and accessible battery health and history information to enable EV batteries to be reused or repurposed when taken out of the vehicle at 80% of its initial capacity, thereby extending their life for 6 to 30 years for different second-life applications. 

As Standards Australia convenes the second workshop around an International Workshop Agreement (IWA 45) for sustainable critical minerals supply chains, the signed US and EU civil society organizations (CSOs) are calling on the International Organization for Standardization (ISO) to raise the bar to ensure proposed mineral supply chain standards and related processes protect rights-holders and lock-in best practices, rather than protect business interests at the expense of rights-holders.

For decades, the mining, processing, and manufacturing industries in mineral and fossil fuel supply chains have disproportionately operated under voluntary, industry-led standards and schemes. These initiatives have been repeatedly and rightly criticized by affected communities and civil society organizations as enabling business as usual rather than protecting people and the planet.

The energy transition is critical. It must also be just, fair, and truly sustainable.

Mandatory legal frameworks, accompanied by strong enforcement capacity, remain the best mechanism to ensure that mineral supply chains do not harm Indigenous Peoples and lands, communities, workers and the environment.

Because ISO standards are non-binding, they should not and cannot replace the need for strong laws and requirements on companies to respect human rights. However, there are fundamental criteria that standards must include to be credible and effective at protecting people and the planet.

The Initiative for Responsible Mining Assurance (IRMA) contains these elements and more, which is why there is broad consensus within civil society that IRMA is the strongest mining standard and should serve as the baseline for any global guideline on critical mineral supply chains.

We therefore urge ISO and standardizers to consider the following principles in the development of the IWA:

• Require the supply chain standard to have equal and shared governance with affected rights holders and civil society organizations. Effective and credible equal governance requires the full participation and decision-making power of rights-holders, their representatives, and civil society organizations. Proactive measures are crucial to avoid the risk of co-option or capture of non-industry groups, and to ensure that independent nongovernmental organizations are not replaced by groups effectively representing industry interests, such as international financial institutions, trade associations, or nongovernmental organizations that are funded or sponsored by mining companies. Equal and shared co-governance establishes the foundation necessary to work towards a comprehensive standard, a rigorous audit methodology that supports effective participation in the audit process from Indigenous peoples, affected communities and workers, and public and detailed audit reports. Any scheme that does not provide guarantees for this will always be at risk of industry capture and greenwashing.  

• Require the explicit, full protection of Indigenous Peoples and their rights, including the right to Free, Prior, and Informed Consent (FPIC). Violations of Indigenous rights are a constant, high-risk human rights concern in mineral, raw materials and other extractive supply chains, yet many mining companies lack adequate due diligence policies, processes, or commitments for preventing or addressing abuses. Indigenous Peoples are at increased and disproportionate risk in the energy transition: globally, more than half of minerals are located underneath or near Indigenous territories. Standards must require and in no case contravene explicit and full protections and respect for Indigenous Peoples’ rights, including their right to Free, Prior, and Informed Consent (FPIC), as defined under the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Proposals to require ‘consultation’ do not meet this standard and are neither legitimate, credible, nor capable of upholding the state and corporate responsibilities to respect and uphold these rights.

• Require human rights and environmental due diligence (HREDD) aligned with the United Nations Guiding Principles on Business and Human Rights (UNGPs) and Organization for Economic Cooperation and Development (OECD) Guidance for Responsible Business Conduct. Traditional industry due diligence and environmental, social, and governance (ESG) frameworks do not constitute human rights due diligence. HREDD is an ongoing, iterative process that centers potential and actual adverse impacts to rights-holders from business activities in the processes of risk identification, assessment, mitigation, management, and harm remediation. It includes rights-holders throughout the process, therefore addressing the most salient risks, and the information is used by companies to shape their management systems accordingly. In contrast, traditional industry due diligence emphasizes financial, legal, and reputational risks that would affect company profitability. On the rare occasion when industry considers human rights, it typically only focuses on one part and may not be equally weighted with these other factors. ESG frameworks emphasize easily quantifiable, select social measures that incentivize companies to pick and choose metrics where their systems are most capable of achieving, rather than addressing the most salient human rights risk and impacts from operations.

• Bolster the integrity of auditing and accreditation schemes by requiring shared governance, transparency, and participation safeguards. Audits and certification schemes cannot guarantee a company’s respect for human rights, or environmental performance. When assurance schemes are governed by diverse stakeholders, and include independent, publicly available, third-party auditing, they can serve as a useful, but not the sole, tool for downstream companies, policy makers and investors by providing credible data points regarding the performance of a company, project or facility at any given time. ISO standards must require that any audits or certification schemes have equal and shared governance with CSOs and affected rights-holders, that the results of the audit be transparent and that rights-holders be included in the process. 

• Set strong environmental standards and a lifecycle approach to facility environmental management. To ensure maximum environmental benefits and minimal environmental harm within critical minerals supply chains, ISO should, at a minimum, require the same standards set out by IRMA, which include full lifecycle assessment and responsible management of tailings waste, mine reclamation and closure. ISO can also provide guidance to  reduce greenhouse gas emissions associated with the critical minerals supply chain by requiring users to make binding, time-bound commitments to phase out of fossil-fuel energies during smelting and refining, transition to renewable energy, use zero-carbon chemicals during processing, and report on their Scope 1, 2, and 3 emissions. Robust monitoring of biodiversity loss and requiring net- positive solutions are also a must.
• Standardize and embed minerals circularity as a requirement for sustainable mineral supply chains. Circularity is a win-win-win solution for communities, industry, and the planet. It supports resilient supply chains by prioritizing reused, repaired, refurbished, or recycled products; maximizes environmental benefits through the use of full lifecycle cost methodologies; and upholds human rights by reducing the demand for new mines and therefore the harms associated with mining. Strong circular design requirements should ensure durability, reusability, and repairability of equipment and components that contain critical raw materials (CRMs). These will ultimately contribute to extending product lifetime and keeping CRMs longer in use. These requirements have to be supported by horizontal standards which aim at assessing the performance and durability of CRM containing products, components and equipment, but also technical specifications to facilitate repair, reuse and recycling of CRM containing products, components and equipment. More specifically, standards should provide clear labeling of CRMs in products and the declaration of CRM content to ease its recovery, set clear and robust definitions for the use of recycled content, better define rules for environmental footprint, as well as minimum design requirements to ease disassembly, and finally, ensure a high-quality recycling. Horizontal standards will ideally be complemented by more detailed product- or material-specific standards.

Indonesia produces 48.8% of the world’s nickel, a quantity expected to grow further as demand for electric vehicles increases. With rising demand, companies are turning to lower-grade laterite nickel which must be processed into higher-quality, battery grade nickel, a process which can produce as much as twice the carbon emissions of the industry average. While electric vehicles are a necessary piece of solving the climate crisis, the nickel industry must improve extractive and processing practices to protect the people and biodiversity of Indonesia. 

Links to Deforestation and Biodiversity Destruction

In an analysis of 329 nickel mining concessions, Mighty Earth found associated operations have driven up to 378,970 acres of deforestation in Indonesia since 2000. Of the top nickel deforesters, many are clearing land in High Carbon Stock forest and Key Biodiversity Areas, and over 1.2 million acres of forest are at risk inside nickel concessions in Indonesia. Sulawesi, a biodiversity hotspot, contains 3.7 million acres of forested, mineral-rich land and 36% of these acres are occupied by nickel concessions. As mines operate in ecologically valuable rainforest and easily disrupted island ecosystems, nickel mining poses significant biodiversity risks to Indonesia, which would impact its forests’ ability to act as a carbon sink.

Increased Emissions & Captive Coal

Mining and refining yields high emissions due to  fossil fuel use and land use change. Because Indonesian laterite nickel ore is low-quality, processing it into battery grade nickel is carbon intensive, with roughly two to five times more emissions than processing sulfide nickel ore mined in temperate countries, like Canada and Russia.  

Nickel industrial parks are largely dependent on captive coal, meaning  coal is burned solely to feed industrial operations and does not connect to the country’s electricity grid. As more nickel smelting facilities are built, more captive coal plants are being built in Indonesia. Continued use of captive coal plants in nickel mining will lead to  Indonesia’s ranking  as one of the world’s biggest emitters. Coal consumption in Indonesia increased 33% from 2021 to 2022, contributing to a 20.3% increase in the country’s greenhouse gas emissions in just one year. The Indonesia Morowali Industrial Park alone has as much coal power capacity as Pakistan or Mexico. Environmental groups are advocating for the early retirement of coal-fired power plants in Indonesia, including captive coal plants, in order to mitigate climate impacts.    

Toxic Waste and Harms to Communities

The Indonesian nickel industry is increasingly turning to High Pressure Acid Leaching (HPAL), a toxic process that leaves behind a massive amount of waste. In some cases, this waste is dumped directly into rivers, lakes, and oceans, through a process known as submarine tailings disposal. Toxic runoff from mining and smelting operations contaminates drinking water for communities who rely on nearby aquifers and rivers. In Sulawesi, water pollution from the Indonesia Morowali Industrial Park reduces available fish, impacting the community’s livelihoods. On Halmahera Island, drinking water for local communities is threatened by excessive pollution from companies like PT Weda Bay Nickel. While Indonesian environmental laws should protect against pollution of this sort, Climate Rights International highlights that the laws lack sufficient enforcement while the national government prioritizes industrial development over environmental protection. The Indonesian government is currently barring nickel companies from dumping waste into the sea, but their on-land storage alternative may not be safer. 

Tailings facilities are used to house leftover waste from the mining process. If tailings are not stored properly, facility failures can be catastrophic, exemplified by a 2019 mine tailings dam collapse in Brazil which killed 272 people. At these facilities, pollution and dust increase health risks, such as tuberculosis and respiratory infections, in nearby communities. In 2022, coal-fired power plants in Indonesia were responsible for 10,500 deaths and $7.4 billion USD in health costs.  

Ongoing Violations of Indigenous Peoples’ Rights

Nickel mining and refining in Indonesia poses significant threats to the rights of Indigenous Peoples, including the right to provide Free, Prior, and Informed Consent (FPIC). For example, the Hongana Manyawa, an uncontacted tribe, is threatened by nickel mining as their customary territory was non-consensually granted by the Indonesian government to mining companies who are encroaching on their land. The traditional livelihood of the Hongana Manyawa tribe is dependent on the forest, and any contact from outsiders threatens their health and safety due to the risk of violence and a lack of common immunity from disease.  

Future of Nickel Mining in Indonesia

The Indonesian nickel mining industry threatens land and people via economic incentives that drive deforestation, systemic corruption, and legal amnesty for problematic mining practices in protected forest areas. Moreover, the Indonesian nickel industry currently operates without traceability and transparency; there is no production data or traceability for individual mines or standards for producer disclosure.  

Environmental groups and US government officials are pushing for strong social, environmental and labor protections in the Indonesian nickel mining industry. In October 2023, a bipartisan letter from U.S. Senators warned against a potential critical minerals agreement (CMA) with Indonesia, citing concerns over labor and community protections, biodiversity impacts, and CO2 emissions. Indonesian civil society groups and US NGOs also released letters expressing concerns about a CMA, pushing for binding environmental and social safeguards in any agreement to expand access to nickel or other critical minerals.  

Guidelines and standards, such as the Initiative for Responsible Mining Assurance, exist to help mines adopt best practices. Transport & Environment recommends dedicated biodiversity conservation practices, in addition to dry stacking as a form of tailings management. Earthworks’ “Safety First: Guidelines for Responsible Mine Tailings Management” include recommendations that ban dangerous tailings facilities, bolster safety regulations and adopt comprehensive evacuation and emergency plans. 

Climate Rights International’s “Nickel Unearthed” report documents human rights and environmental abuses related to nickel mining and smelting in North Maluku, and provides recommendations, focused on protecting the environment, climate, and human rights, to mining and smelting companies, the Indonesian government, EV companies, and foreign governments. 

The Indonesian government and companies sourcing Indonesian nickel must ensure that people, forests, biodiversity, and the climate are not devastated by harmful mining and processing practices. 

General Motors announced in January 2023 that it will invest $650 million in Lithium Americas Corp. and will help the company develop its Thacker Pass lithium mining project, with the aim of ensuring a supply of lithium for its electric vehicles. However, the Thacker Pass project is proposed on Peehee Mu’huh, a sacred site on Paiute, Shoshone and Bannock lands in Northern Nevada. This landscape holds significant spiritual value to Paiute, Shoshone and Bannock peoples, in part, because this is the site of two massacres resulting in many ancestors’ bodies being buried in the land. The Reno Sparks Indian Colony, Berns Paiute Tribe, Summit Lake Paiute Tribe, and People of Red Mountain do not consent to the project and have filed lawsuits in opposition to the Thacker Pass mining site.

Peehee Mu’huh, which translates to “rotten moon”, is the site of two massacres which gave the sacred site its name. During the second massacre in September 1865, the U.S. government attempted to exterminate the region’s Indigenous Peoples, including children, by attacking a camp at the base of the pass. This attack was part of the broader pattern of federal policy to open up western lands for Euro-American settlers and to promote the growth of industries, including mining. Lithium Americas is able to propose a mine at Thacker Pass today because of this historical context of violence and dispossession of Indigenous lands. 

Despite GM’s Human Rights Policy, which includes a commitment to the UN Declaration on the Rights of Indigenous Peoples and to Free, Prior, and Informed Consent (FPIC), it has not paused its investment to assess its Indigenous Rights risk, nor has it required Lithium Americas to assure that it has obtained consent in line with FPIC standards. This comes after the People of Red Mountain and Securing Indigenous Rights in the Green Economy (SIRGE) sent an open letter addressed to GM, calling for it to require Lithium Americas, and its other suppliers, to implement FPIC policies in accordance with UNDRIP, and to rescind its investment where its suppliers fail to do so. 

People of Red Mountain, a group of traditional Paiute, Shoshone and Bannock peoples with ancestral ties to the area and allies have asked GM to meet and the company has not done so, nor even responded to the multiple requests.

March 29, 2024 – Hyundai Motor Company has announced its withdrawal from its Memorandum of Understanding (MoU) to purchase aluminum from a new 1.1GW coal power plant-powered smelter in North Kalimantan, Indonesia, with Adaro Minerals, a subsidiary of Adaro, the second largest coal mining company in the country.

This statement comes a year after fan-driven climate platform Kpop4Planet’s “Hyundai, Drop Coal” campaign launched in March 2023. More than 11,000 K-pop fans signed a petition calling on Hyundai to back out of the agreement and procure materials produced from renewable energy, focusing on solar and wind, for their car production in Indonesia instead.

On March 26 2024, Hyundai Motor Company headquarters in Seoul stated by email to Kpop4Planet:

“Following the expiry of the MoU at the end of 2023, both companies have decided not to renew it and to explore other opportunities independently. Hyundai Motor Company remains steadfast in its dedication to the responsible and sustainable sourcing of materials, ensuring the utmost transparency in our manufacturing processes.”

The production of Adaro’s aluminum is powered by coal from a newly constructed coal power plant, despite the smelter being part of a so-called ‘green industrial park’ in Kalimantan, Indonesia.

The coal plant would emit an estimated 5.2 million tonnes of CO2 equivalent per year, according to Market Forces, a climate activist group focused on engaging investors.

If Hyundai continues the plan to purchase 50,000 – 100,000 tonnes of aluminum a year from this smelter, as stated in the original MoU, Hyundai’s Scope 3 emissions would increase by 3-6%, according to Market Forces. Hyundai has set a public target to achieve carbon neutrality by 2045.

K-pop fans who partook in the campaign say this is a major win, including ARMY Indonesia, who took part as BTS is the brand ambassador for Hyundai’s Ioniq EVs.

“We are profoundly grateful for the solidarity shown by ARMY in supporting the people of Indonesia, particularly supporting those in North Kalimantan,” said Shifra Lushka, Community Leader of BTS ARMY Indonesia Amino, one of the supporters of the campaign. “We hope Hyundai will continue its collaboration with BTS, advocating for truly sustainable EVs that don’t use fossil fuels harming our Earth.”.”

BTS fans have collaborated closely with Kpop4Planet to collect more than 11,000 petition signatures from K-pop fans in over 68 countries. Through an offline action in Hyundai Motorstudio in Jakarta last year, the group delivered a petition and an open letter from fans to Hyundai’s headquarters, as BTS hits “Mic Drop” and “Dynamite” played in the background.

“We welcome Hyundai Motor’s firm stance to end the MoU with Adaro, but we won’t stop here,” said Nurul Sarifah, Kpop4Planet’s campaigner in Indonesia.

“We, along with K-pop fans who care about our climate and future, will closely monitor Hyundai’s sourcing to see if the company continues on the right path towards its commitment to carbon neutrality. Dropping coal and using clean renewable energy, particularly solar and wind, is the only option to secure future customers.”

About Kpop4Planet: Launched in 2021, Kpop4Planet is a climate movement led by K-pop fans for K-pop fans who love the earth and their favourite K-pop stars.

Tailings, the waste created after the ore is processed, are usually stored behind earthen dams. Tailings dams are some of the largest engineered structures on the planet. Research shows that tailings dams are failing with increasing frequency and severity. A 2019 tailings dam failure in Brazil killed 272 people, destroyed buildings, and contaminated the local water sources. Slow and chronic contamination from tailings can further damage the surrounding water systems, air and soil.

With an estimated 20 to 30 thousand tailings facilities globally, many communities face risks and harms caused by poor tailings disposal. This can be clearly seen in the Jequitinhonha Valley of Brazil. The area, named by politicians and corporations as “Lithium Valley,” is also the ancestral land of dozens of Indigenous and traditional communities who have a deep connection to the land and have traditionally relied on its resources for their livelihoods. Sigma Lithium operates one of the lithium mines in the region,  estimated to produce enough lithium for 600,000 electric vehicles in its first year with promises to increase yearly production threefold. The company even brought the state’s governor to the New York Stock Exchange to ring the opening bell and promote the idea of the “Lithium Valley.” 

This projected lithium boom has communities concerned about the potential impacts of mining and tailings, on their traditional way of life. They claim that their water streams, essential for their crops, are disappearing and the main rivers are contaminated. They raise significant concerns over the potential for community displacement and the lack of adequate consultation and respect for their right to Free, Prior and Informed Consent. 

Communities have raised concerns about mining activity encroaching closer to homes and population centers. The lack of planning and local community participation has caused costs to skyrocket and severely hampered the flow of goods, water, and transportation in the region, rendering those communities unable to cope with the challenges in the short term. Sigma Lithium claims they are not building tailings dams and instead storing tailings in a drier form, but the 2022 failure of a similar facility in the very same region of Brazil shows that this method is not without risk. 

In Papua New Guinea, the Ramu nickel and cobalt mine and processing plant provides another example of the disastrous impacts of irresponsible tailings practices. The plant, which processes nickel for EV battery chemicals, dumps millions of tons of waste into the ocean each year, decimating coastal ecosystems and damaging the health and livelihoods of thousands of local residents. In August 2019, tailings from the Ramu facility overflowed, turning waters of the Basamuk Bay red, providing a small glimpse of scope of the toxic sludge being pumped into the ocean day in and day out.

Communities around the world are calling for safer tailings practices and an end to dumping mine waste into oceans and rivers. They demand the right to say no to tailings facilities and Free, Prior and Informed Consent from Indigenous Peoples. Mining companies and regulators must take significant steps to improve tailings safety and purchasers of metals and minerals should fully understand the risks posed by tailings in their supply chains. 

One of the markers of progress we utilize with our annual Leaderboard is tracking how automakers are advancing the decarbonization of the steel and aluminum they use to produce vehicles. Automakers have the purchasing power to drive steel and aluminum producers to decarbonize their manufacturing processes, as some of the biggest industrial consumers of those metals.

If all the automakers we track were to commit to using 100% fossil-free steel and aluminum within ambitious timeframes, and set up advance purchase agreements with suppliers to buy it, steel and aluminum producers would respond by moving away from polluting, fossil fuel-dependent manufacturing processes and rapidly adopt emerging green steel and aluminum production technologies. 

If the steel and aluminum industries were to decarbonize, under pressure from vital customers such as automakers, the impact on our climate would be enormous. Decarbonizing steel and aluminum production worldwide would reduce climate-altering emissions three times as much as taking every single plane out of the sky. Without rapidly accelerating the decarbonization of  steel and aluminum production, climate experts estimate that we will not be able to stay under 1.5 degrees of warming, a critical benchmark for human and environmental health.

The 2024 Leaderboard found notable progress on steel and, to a slightly lesser extent, aluminum decarbonization. In 2023, over half of automakers scored 0% on steel and over three quarters scored less than 10%. But in 2024, this reversed: two thirds of automakers have now taken initial steps on steel decarbonization. Pressure from civil society (like the recent SteelZero initiative from Climate Group), investors, and regulators over the past few years has likely helped put steel decarbonization on the agenda for automakers, with tangible results. 

Movement on disclosing emissions from steel helped to fuel Tesla’s ascent from joint last place last year to the third spot in 2024. The jump was due entirely to the progress that the company has made regarding its scope 3 emissions disclosures. In an industry first, Tesla is now the only company to disclose disaggregated GHG emissions specifically for its steel supply chain. The company discloses that steel emissions constitute 8% of its Scope 3 emissions for categories 1 (purchased goods and services) and 4 (upstream logistics).

Volvo remains the industry leader for clean steel, scoring 49% in that category, nearly double the score of second place Mercedes (25%). The gap in aluminum sourcing was closer with Volvo edging Mercedes by 5%.

GM and Ford also achieved significant score increases on steel, jumping from 0% to 17%. GM and Ford’s improvements came on the back of better target setting for fossil-free steel: both companies are now members of the First Movers Coalition’s sector group on steel and have accordingly set targets to ensure that at least 10% of all their steel purchased per year will be near-zero emissions by 2030. The automakers also scored points for entering into formal agreements with suppliers to incentivize investment in fossil-free steel.

East Asian automakers, however, are falling behind: with Honda, Toyota, BYD, GAC and SAIC all scoring 0%. Hyundai and Kia also scored very low – having made minimal progress on recycled steel and aluminum, but no progress on decarbonizing the primary steel and aluminum used in their vehicles.

With companies scoring an average of just 11% on the steel indicators, there is still much room (and need) for improvement. Only Volvo and Geely scored points for setting targets to increase the amount of recycled steel used in their vehicles. Very few automakers collaborate with key multi-stakeholder initiatives (SteelZero, First Movers Coalition, and ResponsibleSteel) to drive greater production of fossil-free and environmentally responsible steel: GM, Ford, Volvo, and Mercedes were the only automakers to have joined these initiatives.

To meet the scale of the climate challenge we face, automakers need to accelerate efforts on green steel and aluminum. By doing so, they have the opportunity to distinguish themselves as leaders on climate – for the cost of only $100-200 per vehicle. 

EU Battery regulation

In August 2023 the landmark European Battery Regulation went into force, setting product and end of life obligations for batteries placed on the EU market.

The law is a turning point in fostering responsible sourcing practices, clean manufacturing via carbon footprint obligations and recycling and recycled content obligations for batteries, among other measures.

On responsible sourcing, companies placing batteries on the market will have to identify, prevent, mitigate and address environmental and social impacts in the supply chains of lithium, cobalt, nickel and natural graphite via due diligence obligations. Automakers are already doing preparatory work related to these obligations, which will become enforceable mid-2025, as seen also in the scorecard.

In relation to carbon footprint, companies placing batteries on the market will have to first calculate and report the carbon footprint of each battery model per manufacturing plant. As a next step the EU will grade batteries according to different carbon performance classifications, after which a mandatory carbon threshold will prevent the dirtiest batteries from being placed on the EU market at all.

Finally, to encourage closed loop recycling systems, the law sets out material recovery targets for lithium, cobalt, nickel and copper which go up to 80% by 2031 for lithium and up to 95% for the rest. Further, the law sets out minimum recycled content targets for key raw materials which will start only in 2031. 

EU Critical Raw Materials Act

The European Critical Raw Materials act was agreed at the end of 2023, and represents Europe’s best effort to sustainably secure the minerals for its green transition. The law includes key benchmarks, including:

• 10% of the transition minerals Europe will need by 2030 to come from local extraction activities; 
• 40% of the transition minerals processed in Europe, and
• 25% of the volumes of transition minerals in waste to be recycled. 

One of the most tangible new provisions is the creation of ‘Strategic Projects’ across mining, refining, processing and recycling of critical minerals. The first set of projects will be selected in 2024 and will benefit from faster permitting on the condition that high environmental and social standards are met, and a proper engagement plan with communities is in place.

Projects in third countries can also apply to become a ‘Strategic Project’, if they obtain or commit to obtain sustainability credentials via a third-party certification scheme.

Lateefah Simon and State Senator Josh Becker joined members of Lead the Charge to highlight findings from the organization’s second annual Auto Supply Chain Leaderboard and discuss California’s opportunity to exert pressure on automakers and their suppliers to clean up their supply chains as they transition to electric vehicles (EVs).

Photo credit: Halisi Norfleet

“Climate Change is our greatest challenge. It’s the 21st century’s equivalent to mobilizing during World War 2. As this site attests, we met that challenge with the might of California manufacturing, and we have a once in a lifetime chance to do it again,” said State Senator and Chair of the Bay Area Caucus Josh Becker. “We’re working to turn the Bay Area into a hub of battery manufacturing that, manufactures without degrading the environment, sources ethically, and collaborates with labor”

“We are in an exciting moment where auto workers across the country are demanding that jobs throughout the EV supply chain are good union jobs. California has an opportunity to lead by ensuring that public funding for the EV transition goes to companies that accelerate the EV transition by bargaining collectively with their workers so that society can collectively fight climate change,” said Mike Miller, Director, UAW Region 6

The 2024 edition of the leaderboard struck a tone of guarded positivity highlighting a surge ahead by American automakers (most notably Ford and Tesla), human rights due diligence, and steel decarbonization. The positive news was tempered by poor scores and little progress on ensuring respect for worker’s rights in auto supply chains. Most discouraging was the fact that virtually no progress was made, as an industry, on indigenous rights. 11/18 companies scored 0 in that category and all but 3 automakers failed to improve their scores from last year.

“As a leader in the shift to electric vehicles, California has the opportunity to ensure we don’t repeat the mistakes of the fossil fuel era,” said Jared Naimark, California Mining Organizer for Earthworks. “Before lithium extraction at the Salton Sea can proceed, we must ensure that the rights of Indigenous Peoples will be respected and sacred landscapes protected.”

Speakers used the report to highlight the need for California to harness its tremendous buying power and nationwide policy influence to act as a leader in cleaning up battery, steel and aluminum supply chains.

“As automakers develop new supply chains as part of the transition from combustion engines to electric vehicles, we are in the middle of a once in a generation opportunity to force automakers to ensure they are sourcing clean metals and minerals,” said Erika Thi Patterson, auto supply chain campaign director at Public Citizen. “Even the companies with the most egregious supply chain practices, like Toyota, are vulnerable to market pressure if consumers emphatically demand change.”

Other speakers sounded a cautious note, discussing the importance of centering communities impacted by the extraction, combustion and processing of materials needed to build the supplies and infrastructure needed to combat climate change.

“Our communities still feel the fallout from environmental racism over the last century,” said Lateefah Simon. “Lead the Charge is leading the effort to make sure that our collective fight against climate change doesn’t harm indigenous communities, workers, communities of color and folks all over the world who sacrifice their health and their lives for our steel, aluminum, and batteries.”

The automotive industry employs millions of Americans and the fast-growing battery industry will soon employ hundreds of thousands. Whether these industries create quality jobs or if they participate in the race-to-the-bottom being driven by low road employers will determine to a large degree how much the public supports policies to accelerate the green transition.

In theory, creating quality jobs in these industries should be simple. Automotive and battery assembly are highly mechanized and automated industries, in which labor costs represent a small fraction of the overall costs when compared to materials and equipment. Companies can therefore raise wages and staffing levels without impacting prices too significantly.

But the electric vehicle and battery industries are currently dominated by low-road employers like Panasonic and Tesla. These companies maintain notoriously dangerous working conditions and their low wages and poor benefits drive down standards throughout the entire sector. Their factories are also some of the largest polluters in the green economy. Low road employers like this exacerbate a well-documented workforce shortage in emerging, green industries that require a highly-skilled workforce.

The United Auto Workers (UAW) union is leading the charge to correct these problems via its partnership with Sparkz, Inc., a next-generation battery maker opening a facility in Rancho Cordova, California. UAW and Sparkz have reached a card check neutrality agreement, meaning that Sparkz has committed to letting its future workforce form a union via the card check process instead of an onerous National Labor Relations Board  election. The organizations will also partner to  create the nation’s first battery apprenticeship program as part of a workforce development program. Building a high-road alternative to existing battery and EV companies will empower workers to improve their working conditions throughout the entire sector.

By forming a union and building a worker-centered training program, Sparkz workers will be on the forefront of the green transition. They will also be following the lead of unionized UAW workers at Ultium Cells in Ohio, which is currently the only unionized battery factory in the United States. As battery workers across the country seek union representation, the story of the Sparkz workers will be powerful. Workers can build on this example and ensure that sustainable new technologies create sustainable communities nationwide.

Japanese automakers Toyota and Honda are at the bottom of the Second Annual Lead the Charge Industry Leaderboard, released today, falling way behind sector leaders Ford, Mercedes, and Tesla on greenhouse gas emissions reductions, environmental protection, and elimination of supply chain human rights violations. 

Japanese automakers Toyota and Honda are at the bottom of the Second Annual Lead the Charge Industry Leaderboard, released today, falling way behind sector leaders Ford, Mercedes, and Tesla on greenhouse gas emissions reductions, environmental protection, and elimination of supply chain human rights violations.

Ford topped this year’s ranking due to its industry-leading responsible minerals policy and due diligence processes, surpassing last year’s winner, Mercedes. Meanwhile Tesla received the largest overall score increase, moving from ninth to third in the leaderboard, due to it being the first automaker to disclose disaggregated Scope 3 supply chain emissions, as well as its work strengthening performance on battery recycling, and improving human rights due diligence and responsible transition mineral sourcing processes (1).

Honda and Toyota are not only the worst performers on the transition to electric vehicles, they are also performing poorly on supply chain decarbonization indicators and ensuring respect for human rights. Toyota was the only company that did not achieve a score increase across any of the four subsections of the fossil-free and environmentally sustainable supply chains section of the Leaderboard. Toyota’s lack of progress within the year saw its ranking drop from 12 to 15. Honda also ranked near the bottom with a total score of 8% compared to Toyota’s 7%. Nissan performed slightly better, but lagged behind the European and American automakers.

“With every American, European and Korean automaker outperforming Honda and Toyota, we hope this ranking serves as a wakeup call to the Japanese Auto Industry. If Toyota and Honda don’t start taking action to clean up their supply chains, they risk being overtaken by rapidly improving Chinese automakers in addition to those in Korea, the US and Europe, who are already well ahead,” said Chris Alford with the Sunrise Project. (1)

There was also notable momentum to decarbonize the steel used in automakers’ vehicles. Steel continues to be one of the highest polluting industries, responsible for between 7-9% of global GHG emissions, and in 2024, over two-thirds of automakers took steps towards green steel. Honda and Toyota were not among them, scoring zero on decarbonizing their steel supply chain. Automakers won’t meet their climate goals unless supply chain emissions are also tackled with urgency, and Japan’s steel industry remains wedded to coal (2).

“The decisions made by Japan’s steel industry this decade will either be a great asset, or a tremendous liability for Japan’s automakers,” said Toko Tomita, SteelWatch Campaigns Director. “The key question is whether Nippon Steel and others will continue to rely on polluting coal-based steel production, giving Toyota and Honda the choice of looking beyond Japanese suppliers, or failing to decarbonize and becoming shut out of changing global markets. Japan’s automakers and steelmakers will either evolve together or stagnate together.”

###

Link to the report: https://leadthecharge.org/resources/2024-report-leading-the-charge/

Media Contact

Shiori Matsumoto
Asia Communications and Research Officer of SteelWatch
media@steelwatch.org, 070-8411-0256

Notes

1. Chinese automakers are rapidly adapting to EU regulations, including the European Due Diligence regulation and Carbon Border Adjustment Mechanism (CBAM). This underlines the fact that time is running out for the Japanese auto industry. As world efforts to hold climate change under 1.5 C ramp up, Japanese export markets will shrink if automakers don’t move.
2. “Auto industry risks missing climate goal by 75% -industry-backed study.” Reuters. Feb 8, 2023. https://www.reuters.com/business/autos-transportation/auto-industry-risks-missing-climate-goal-by-75-industry-backed-study-2023-02-08/

Hyundai and Kia score low on supply chain decarbonization and due diligence, according to the second annual “Lead the Charge” leaderboard.

While South Korean automakers are focused on the EV market in the U.S., competing for the top spot with Tesla and having taken the lead over GM and Ford in 2023, Hyundai and Kia find themselves languishing near the bottom of the list of 18 global automakers in the Second Annual Lead the Charge Industry Leaderboard released this week.

The Leaderboard analyzes publicly available reporting from 18 of the leading automotive manufacturers in the world. It ranks their efforts to eliminate emissions, environmental harms, and human rights violations from their supply chains.

The results show that South Korean automakers are trailing behind industry frontrunners Ford, Mercedes, and Tesla in critical sustainability metrics, including greenhouse gas emissions reductions, environmental protection, and the eradication of supply chain human rights violations.

Ford topped this year’s ranking due to its industry-leading responsible minerals policy and due diligence processes, surpassing last year’s winner, Mercedes. Meanwhile, Tesla received the largest overall score increase, moving from ninth to third in the leaderboard, due to it being the first automaker to disclose disaggregated Scope 3 supply chain emissions, as well as its work strengthening performance on battery recycling, and improving human rights due diligence and responsible transition mineral sourcing processes.

Hyundai moved from 11th in 2023 to 10th position this year. This tepid progress is a result of its disclosure of workers’ rights risks by location, a step in the right direction but overshadowed by a lack of substantial improvements in critical areas.

Despite an increase in EV production, Hyundai’s overall standing is marred by its failure to address emissions and environmental impacts from its steel, aluminum, and battery supply chains. The company’s lack of improvement in responsible sourcing of transition minerals and Indigenous rights is particularly glaring.

“Hyundai and Kia are quickly catching up in the global EV race. But their failure to strengthen the due diligence processes for their supply chains may soon pose a major roadblock. Their competitors in the US and Europe are increasingly adopting policies for more sustainable and equitable manufacturing of EVs. This includes transitioning to green steel, which will become a crucial factor in industrial competitiveness as climate regulations become more stringent,” said Heather Lee, Steel Lead at Solutions for Our Climate (SFOC).

While touting sustainable materials innovation with its EV9, Kia’s performance in the ranking paints a bleaker picture,  with a meager 2% score increase in 2023, placing the company near the bottom of the leaderboard once again in 2024. Last year they were in 11th position, this year they dropped to 13th.

This lack of substantial improvement underscores Kia’s weak commitment to vital sustainability categories, receiving a dismal 0% score in fossil-free and environmentally responsible aluminum and Indigenous Peoples’ rights. Scores below 10% in steel, batteries, and responsible sourcing of transition minerals further highlight the company’s struggle to align with global sustainability standards.

As Hyundai and Kia grapple with their disappointing standings, it is evident that both companies must undertake substantial efforts to rectify their shortcomings in environmental responsibility, human rights, and sustainable practices. The 2024 Leaderboard serves as a stark reminder of the pressing need for these automakers to recalibrate their priorities and demonstrate a genuine commitment to a more sustainable and responsible automotive future.

“Ford taking the top spot, partially by leading on workers’ rights, shows us that companies and unions can and must be partners in cleaning up their supply chain. There is already a race to the top that is leaving some automakers behind such as Toyota and other East Asian automakers behind, who yet again have come out as laggards when it comes to building a clean and equitable supply chain,” said Erika Thi Patterson, Auto Supply Chain Campaign Director of Public Citizen.

Solutions for Our Climate (SFOC) is an independent non-profit organization that works to accelerate global greenhouse gas emissions reduction and energy transition. SFOC leverages research, litigation, community organizing, and strategic communications to deliver practical climate solutions and build movements for change.  

 Lead the Charge is a diverse network of local, national, and global advocacy partners working for an equitable, sustainable, and fossil-free auto supply chain. Network members work across multiple geographies and issues, with expertise in climate, environmental justice, human rights, Indigenous rights, heavy industry, ESG and more.

 For media inquiries, please reach out to:

Korean: Euijin Kim, Solutions for Our Climate, euijin.kim@forourclimate.org

English: William Fitzgerald, Lead the Charge, william@theworkeragency.com

The 2024 Lead the Charge leaderboard is here, and the results reveal so much about the progress automakers have made (and where they’re falling behind) on building equitable, sustainable supply chains.

One trend highlighted by our leaderboard findings is that U.S automakers, led by Tesla, are speeding up in the race for a clean auto supply chain. Tesla achieved the largest overall score increase (18%) causing the company to jump from 9th place overall in 2023 to 3rd in 2024. Tesla’s improvement over just one year shows that rapid action on clean and equitable supply chains is possible.

Other US automakers also sped up their progress on cleaning up supply chains this year, with Ford and GM achieving large score improvements (8% and 7%). These improvements, coupled with inertia from some European automakers (who achieved an average score increase of just 2%), resulted in North American auto companies overtaking their European peers in our leaderboard.

One factor impacting the competition for clean supply chains among EU and US automakers is the changing regulatory environment, particularly in the EU. In 2023 the EU made progress on passing historic regulations that impact auto supply chains, including sustainable battery regulations and the Carbon Border Adjustment Mechanism, as well as reaching a provisional agreement on the Corporate Sustainability Due Diligence Directive.

These new regulations appear to already be having an impact on automakers, particularly in the area of human rights due diligence. Chinese automakers all scored 0% on these indicators in 2023. But in 2024, all Chinese automakers except SAIC achieved notable score increases on human rights. Geely was the strongest performer, increasing its score to 16% in the general human rights due diligence section.

This year’s leaderboard also showed notable progress on the decarbonization of the steel and aluminum used to manufacture vehicles. Pressure from civil society, investors, and regulators over the past few years has helped put steel decarbonization on the agenda for automakers, with tangible results.

GM and Ford made notable improvements to their steel sourcing by setting targets for sustainable steel and entering formal agreements to incentivize investment in fossil free steel. But East Asian automakers are falling behind on green steel and aluminum, with Honda, Toyota, BYD, GAC and SAIC all scoring 0% on this metric.

Two companies continue to stand out as the climate laggards of the auto industry – Toyota and Honda.

Toyota and Honda continue to be amongst the worst performing automakers in the industry on the EV transition – with EV sales constituting just 1% of their total vehicle sales in the period evaluated. They also scored just 5% and 4% respectively on the climate and environment indicators of the leaderboard, with Toyota being the only automaker not to increase its score against these indicators. Toyota received the lowest score of the auto industry (with Honda a close second) from InfluenceMap for their anti-climate lobbying practices.

The trend we’re most concerned by when we look closely at the leaderboard results is a lack of action and commitment by automakers to a just transition. Average scores across the indicators on the responsible sourcing of transition minerals, Indigenous Peoples rights and workers’ rights – three essential components of a just transition to electric vehicles – have risen by just 2%.

Particularly concerning is the issue of Indigenous Peoples’ rights: during 2023, over 70% of automakers made no progress on Indigenous Peoples’ rights and 61% of automakers continued to score 0% on these indicators. Stay tuned for a post exploring this important issue in more depth.

Nearly half of automakers demonstrated no progress on addressing workers’ rights issues in their supply chains. With powerful worker organizing in the U.S. leading to big gains for workers of the Big 3 – it’s time for the industry to turn its attention to workers’ rights in its supply chain.

Lead the Charge’s annual Leaderboard shows progress on auto supply chains, despite major gaps and continued areas for improvement

Lead the Charge–a global coalition of leading climate, environment, and human rights organizations–released their second annual Auto Supply Chain Leaderboard and report today. The Leaderboard found a surge ahead by American automakers, progress on human rights due diligence and steel decarbonization, along with evidence that EU regulations are having a positive effect on automakers worldwide. 

Specifically, Ford topped the Leaderboard with a score of 42%, surpassing last year’s winner, Mercedes. Tesla achieved the largest score increase, jumping from ninth to third place. However, the report shows major gaps in the automakers’ human rights practices, particularly on Indigenous rights, where no progress was made, even by the highest-scorers such as Ford and Mercedes.  

The Leaderboard analyzes publicly available reporting from 18 of the leading automotive manufacturers in the world. It ranks their efforts to eliminate emissions, environmental harms, and human rights violations from their supply chains. 

These findings come at a crucial time, as leading industry experts call for automakers to disclose and tackle their supply chain emissions as part of their climate strategies. It is now clear that automakers won’t meet their climate goals unless supply chain emissions are also addressed with urgency.

“Ford taking the top spot, partially by leading on workers’ rights, shows us that companies and unions can and must be partners in cleaning up their supply chains.” said Erika Thi Patterson, auto supply chain campaign director at Public Citizen. “There is already a race to the top that is leaving  behind automakers like Toyota, which still lags far behind when it comes to building a clean and equitable supply chain.”

One of the dismal findings in the report was an almost industry-wide inaction on ensuring a just and equitable transition across automotive supply chains. Average scores on the responsible sourcing of transition minerals, Indigenous Peoples’ rights, and workers’ rights have risen by only 2%, with 11 out of the 18 automakers remaining at 0% on Indigenous Peoples’ rights. 

“Recognition, respect, and upholding of Indigenous Peoples’ right to self-determination, operationalized through the full implementation of Free, Prior, and Informed Consent (FPIC), stands as the cornerstone for a truly just and equitable energy transition benefiting all. It is imperative to recognize that any missteps in this transition could potentially inflict harm upon Indigenous Peoples, affecting their livelihoods, cultural connections to ancestral lands, and the biodiversity they have responsibly stewarded for centuries. Said Galina Angarova, Executive Director of Securing Indigenous Peoples’ Rights in the Green Economy (SIRGE) Coalition. “In this context, companies must proactively establish comprehensive procedures to identify and prevent any adverse impacts on the rights of Indigenous Peoples across their entire supply chains. Upholding the principles of FPIC ensures that Indigenous communities actively participate in the decision-making processes that directly affect their lives and territories, and fosters a transition that respects their autonomy and well-being.”

Ford’s top ranking was due to its progress on steel and aluminum decarbonization, as well as its industry-leading performance on responsible transition mineral sourcing. Ford’s 86% in the transition minerals category is the highest score of the Leaderboard, besting Tesla and Mercedes which scored 22% and 44%, respectively However, Ford only achieved 42% overall, demonstrating that even the industry leader still has a long way to go in cleaning up its supply chains.  

Tesla’s significant improvements were driven by becoming the first automaker to disclose disaggregated scope 3 emissions for its steel, aluminum, and battery supply chains. The company also made notable progress on the responsible sourcing of transition minerals and Indigenous Peoples’ rights, for which it attained the highest score, although this was only at 26%. 

Additionally, Tesla improved its workers’ rights policies but criticisms of the company’s opposition to collective bargaining rights indicate that it has not yet improved its practices. Nonetheless, the company’s progress demonstrates that rapid improvements on clean and equitable supply chains are achievable. 

There was also notable momentum to decarbonize the steel used in automakers’ vehicles. In 2024, over two-thirds of automakers have taken steps towards green steel, in stark contrast to 2023 when over half had made no steps at all. East Asian automakers are now being left behind in the race towards cleaner steel. The steel industry continues to be one of the highest polluting industries, responsible for 7% to 9% of the world’s annual greenhouse gas emissions.

“This year’s Leaderboard clearly shows that automakers need to take quick and proactive action to secure climate leadership and remain competitive. As major automakers in the U.S. and Europe begin shifting to green steel, South Korea’s Hyundai and Kia risk losing their hard-earned global market share of EVs as they remain heavily reliant on coal-based steel with no concrete plan for decarbonization”, said Heather Lee, Steel Lead at Solutions for Our Climate (SFOC). 

2023 was a good year for government regulation as advances in EU legislation appear to be having an impact on the supply chain practices of automakers. Notable was the improved performance on human rights due diligence by Chinese automakers that want to expand exports to the EU market. Geely, BYD, and GAC went from 0% on human rights and responsible sourcing to scoring on several indicators in the general human rights due diligence and transition minerals sections. Geely is the strongest performer, increasing to 16% in the general human rights due diligence section. As this year progresses, implementation and monitoring will play a key role in ensuring all automakers abide by EU regulations. 

“It was disappointing to see the little progress made by EU automakers, who achieved an average score increase of just 2%. This resulted in North American automakers overtaking their European peers. As European automakers transition to electric vehicles, and traceability rules for battery metals come into force, they need to take more specific steps to clean up their supply chains,” said Cecilia Mattea, Battery and Supply Chains Policy Manager of Transport & Environment.

For more information, contact William Fitzgerald, william@theworkeragency.com, +1-650-772-1236

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Photo credit: Lenny Kuhne on Unsplash

This report is based on an analysis of the second edition of the Lead the Charge Leaderboard, which aims to establish a new expectation – and competitive advantage – for what a clean car really is. Not just an EV, but an EV with an equitable, fossil-free and environmentally sustainable supply chain. The leaderboard covers two main sections: climate and environment, and human rights and responsible sourcing.

Companies are given a percentage score enabling  an assessment of both how close each automaker is to the scorecard’s expectations of what constitutes a clean car and comparisons between automakers. The Lead the Charge scorecard is in its second year meaning company progress can also be tracked. 

Key Findings

This year showed steady progress across the industry, in particular on fossil-free steel and human rights due diligence. U.S. automakers are making the fastest progress, led by Tesla who shot up in the rankings from #9 to #3 in one year – the biggest increase of all autos by far. Moreover, across many of the indicators individual companies are making the grade, laying down the challenge for the rest to catch up with the best. 

However, progress by the industry as a whole is lackluster when compared to the scale of the challenge ahead: nearly half of the automakers evaluated have still taken no concrete action on steel and aluminum, whilst average scores across the indicators on responsible sourcing of transition minerals, Indigenous Peoples rights and workers’ rights have risen by just 2%. 

The global market for green steel, or steel that is processed without relying on burning coal or energy derived from fossil fuels, is showing real promise with technological innovation slashing emissions from production and a growing number of major companies demanding low-emission steel. However, in order to accelerate the decarbonization of the industry, increased investment and stronger net zero commitments from steelmakers are required this year.

Shifting to clean steel will require steel users to demand it. Since the automotive industry accounts for 12% of global steel demand, automakers will play a crucial role in speeding up the shift to clean steel. SteelZero, an initiative led by Climate Group, is working with demand side companies to set industry ambition, showcase leadership and shape best practice. In the automotive sector, Volvo Cars, Polestar and SKF have made the SteelZero commitment to use 50% low-emission steel by 2030 and 100% net zero steel by 2050, alongside over 40 other global companies including Maersk, Iberdrola, Mace, Lendlease and CIMC TCREA. 

Steel producers are listening to their customers. up to 32 companies have launched green steel projects already. But the number of projects needs to be more than doubled by 2030. Meanwhile, agreements between steel buyers and producers, such as Volvo Cars and SSAB showcase how demand can drive action.

Policy is catching up as well. The EU implemented its Carbon Border Adjustment Mechanism (CBAM) that will slap higher costs on imported steel with higher emissions than domestic steel.

This is expected to cover cars and other steel-containing products in the future. Negotiations around the Global Arrangement on Sustainable Steel and Aluminum (GASSA) between the EU and the US could see barriers to prevent higher emission steel being imported into the US. Meanwhile, China has introduced incentives to increase the electrification of domestic steel production and improve scrap use. 

With demand for clean steel growing at pace and favorable global policy facilitating a shift in the market, automakers need to get on board now or risk falling behind.

Today, across a variety of sectors connected to the automotive industry, there is a proliferation of third-party assurance and accreditation schemes. In the last few years, specifically in the raw minerals space, there has been a proliferation of industry-led initiatives such as Nickel Mark and a proposed “consolidated” mining standard led by four mining industry associations. This has been accompanied by an increasing trend of policymakers relying on voluntary schemes, with regulations in the EU and proposals for new regulations in the United States incorporating the use of such schemes.

These schemes develop voluntary standards with specific performance criteria on human rights, environmental and/or climate issues that companies can be evaluated against. They then assess, or facilitate the assessment of, companies or facilities against this standard, typically with the support of third-party auditors. Some schemes then issue certifications to companies stating that this assessment has determined that the company is conformant with their standard. These assurance and accreditation processes are widely used by automakers and other downstream companies as tools for their responsible sourcing practices, particularly when the assessments relate to individual mining sites, smelters, refiners or manufacturing plants in their supply chains.

However, with the proliferation of these schemes has come increased scrutiny with respect to the assurance that they claim to provide regarding company performance against international human rights, environmental and climate standards. Civil society organizations have questioned the credibility of specific schemes with regards to the assurance they claim to provide for end-users in relation to company performance on human rights and environmental issues, as well as emissions reductions, while other assessments have compared multiple schemes and found that they contribute to very different extents towards implementing due diligence obligations.

These assessments have identified common problems across third-party assurance schemes, including the lack of robust multi-stakeholder governance systems; inadequately detailed and comprehensive performance criteria; reliance on flawed social audit processes that do not adequately involve affected rights-holders; insufficient requirements to implement corrective measures; and inadequate levels of transparency. Ultimately, these schemes are therefore inappropriate substitutes for broader due diligence responsibilities and, “at best, should be seen as one source of information about a company’s practices.”

Nonetheless, when assurance schemes are governed by multiple stakeholders, and include independent, publicly available, third-party auditing, they can serve as a useful, but not the sole, tool for downstream companies, policy makers and investors by providing credible data points regarding the performance of a company, project or facility at any given time.

A new analysis evaluates credibility and quality of third-party assurance schemes

As third-party auditing and accreditation schemes are gaining a foothold as a due diligence tool used by automakers, government officials, and regulators, Lead the Charge—an international coalition of human rights and environmental groups—exposed wide discrepancies in the standards used by eight schemes in certifying the human rights, environmental and climate performance of mining sites, smelters, refiners, steel and aluminum plants, and other facilities in an assessment released today.  

The analysis examined the assurance and accreditation processes of Responsible Steel, the Initiative for Responsible Mining Assurance (IRMA), Aluminium Stewardship Initiative (ASI), Responsible Minerals Initiative (RMI), Copper Mark, Towards Sustainable Mining (TSM), International Council on Mining and Metals (ICMM), and Global Steel Climate Council (GSCC). 

It found that the majority of the schemes showed a lack of transparency, applied varying quality of auditing procedures, and failed to establish systems for meaningful multi-stakeholder governance and rights-holder and community participation.

“Strong, enforceable laws and regulations are the best means of ensuring companies respect human rights and the environment,” said Payal Sampat, mining program director at Earthworks. “Where mandatory requirements are absent or inadequate, voluntary assurance systems could be a useful tool for automakers – if these systems offer strong standards, multi-sector governance and oversight, and independent, third-party auditing. This assessment shows that many assurance schemes for minerals and mining simply fall short.”

Automakers frequently use these schemes to ensure their supply chains are free of environmental and human rights violations. 

“This assessment spotlights a series of significant flaws across the growing industry of third- party assurance schemes that severely inhibits companies’ ability to drive meaningful change on human rights, climate and environmental issues,” said Cecilia Mattea, Battery and Supply Chains Policy Manager at Transport & Environment. “Automakers should approach new initiatives with skepticism, and use their influence to raise the bar, for example on ensuring equal, multistakeholder governance.”

These accreditation schemes also play an influential role among government officials, who are beginning to incorporate these into regulatory frameworks governing the auto industry.

“The stakes of the voluntary accreditation of raw material manufacture are high, and growing,” said Chelsea Hodgkins, senior EV policy advocate with Public Citizen’s Climate Program. “Actors from across these industries seem intent on using voluntary accreditation schemes from third parties as a rubber stamp for business as usual, to gloss over potential serious shortcomings by suppliers, rather than address them. Multi-stakeholder governance in schemes is fundamental to safeguard against industry-self regulation and secure the best possible outcomes for rights-holders. The auto industry must use its influence to drive a race to the top between third-party schemes to certify raw materials while undertaking the due diligence necessary to ensure cleaner and more just supply chains.” 

According to the analysis, the IRMA scheme was the top performer, earning 88 percent based on the report’s criteria on governance, credibility and transparency, the role of impacted communities and corrective action plans, the presence of a grievance mechanism, and adherence to human rights and environmental standards. Responsible Steel, which ranked second, scored 63 percent in the analysis, while GSCC placed last at 3 percent. 

ICMM’s Performance Expectations Validation process scored very low, meeting only 16 percent of the minimum criteria for effective governance and auditing. RMI, ASI, TSM, and CopperMark demonstrated significant flaws, resulting in scores between 38 percent to 59 percent. 

On February 5 at the Mining Indaba 2024 conference in Cape Town, three of the weakest performing schemes—ICMM, TSM and CopperMark—along with the World Gold Council (not evaluated in this assessment given that gold is out of scope) announced the goal of consolidating their existing standards to “simplify the landscape for customers, investors, civil society and the mining industry.” However, civil society groups have raised concerns that this “consolidated standard” will protect the interests of the mining industry, also noting that while some civil society entities have been invited to join a stakeholder advisory group, decision making rests with the mining industry trade associations and certification schemes. 

“Consolidating three of the weakest standards into a single standard will result in a lowest common denominator effect that might serve the mining industry but does not serve Indigenous communities, workers or environmental protection,” added Payal Sampat.  

The assessment was developed as part of the upcoming second edition of the Lead the Charge Leaderboard, which evaluates efforts of automakers to eliminate fossil fuels, human rights abuses and environmental harms from their supply chains and will be released later in February 2024. 

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About Lead the Charge 

Lead the Charge is an international coalition of climate, human rights, and advocacy groups, who have come together to work towards an equitable, sustainable, and fossil-free auto supply chain. It is represented by Cultural Survival, Earthworks, First Peoples Worldwide, Inclusive Development International, Industrious Labs, Investor Advocates for Social Justice, Mighty Earth, Public Citizen, Rainforest Foundation Norway, Sierra Club, Society for Threatened Peoples, Solutions for Our Climate, the Sunrise Project, and Transport & Environment. 

leadthecharge.org  I    LinkedIn    I  X/Twitter:  @Lead_theCharge

A massive, multi-billion-dollar nickel industrial complex in North Maluku and nearby nickel mining is violating the rights of local communities, including Indigenous Peoples, causing significant deforestation, air and water pollution, and emitting massive amounts of greenhouse gases from captive coal plants, Climate Rights International said in a report. 

For the 124-page report, “Nickel Unearthed: The Human and Climate Costs of Indonesia’s Nickel Industry,” Climate Rights International interviewed 45 people living near smelting operations at the Indonesia Weda Bay Industrial Park (IWIP) and nearby nickel mines on the island of Halmahera. Local residents explained how companies, in coordination with Indonesian police and military personnel, have engaged in land grabbing, coercion, and intimidation of Indigenous Peoples and other communities, who are experiencing serious and potentially existential threats to their traditional ways of life.  

Electric vehicle companies such as Tesla, Ford, and Volkswagen that have contracts to source nickel from Indonesia, including from companies with operations at IWIP, should immediately use their leverage to push suppliers to address harms to local communities and the environment, and if necessary, suspend sourcing nickel from companies responsible for such abuses. 

One of the central messages that we convey to automakers and other large-scale purchasers of battery minerals is the importance of ensuring that their suppliers’ mining projects operate with the highest human rights and environmental standards possible. One of the biggest risks to the security and stability of any supply chain are poor environmental and human rights practices.

This month two mines were shut down by courts in Guatemala and Panama, proving this point better than any study. In Panama, the Supreme Court invalidated the lease of the Cobre Panama copper mine, which supplied 1.5 percent of the world’s copper, a key mineral for the energy transition. The public resistance to this project, which caused devastating water pollution and failed to deliver fair returns for the people of Panama, led Panamanian lawmakers to close the mine and ban all future mining projects.

Just weeks later, the Fenix mine in eastern Guatemala (the country’s largest nickel mine – another key battery mineral) was closed because of a court order from the Inter-American Court of Human Rights. The court found that the Guatemalan government had violated the rights of the Indigenous Q’eqchi’ people to property and consultation by allowing mining on lands where they had resided for centuries.

Both of these cases are likely to result in enormous losses for the governments of Panama and Guatemala – Panama faces shocking arbitration claims of up to $50 billion, potentially the largest arbitration claim in world history – as well as for the companies that held the leases for these mines. The people of Panama who fought back against the degradation of their water supply face a loss of up to five percent of their GDP. And companies that rely on the minerals sourced from these mines can expect disrupted supply chains and rising mineral costs.

Amazon Watch highlights even more examples of the legal and financial risks of ignoring Indigenous rights, writing that: “The continuation of projects without obtaining FPIC can result in major delays due to domestic or international court decisions requiring a corporation to regress to an earlier stage in the development of the project or to perform additional environmental analysis to adequately consult affected communities.”

Everyone benefits when strong responsible mineral sourcing standards are in place. The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals provides a standard that all mining companies should follow. The OECD recently published a briefing memo on the risks faced by mining companies and their customers and how responsible sourcing practices can protect companies from disruptions to the supply chain. Their analysis highlighted how growing demand for battery minerals is putting pressure on mining companies and mineral-rich nations alike, and urged companies to practice the highest standards of environmental and human rights protections, as a business decision. According to the OECD memo:

“Any perceived benefit in deprioritising short-term or localised risks is likely to diminish over time as the increased costs of ad hoc deal-making and corruption manifest into larger conflicts, impede investment, adversely impact communities and lead to unpredictable supply disruptions. This represents a significant cost, with a major mining project estimated to suffer costs of roughly US$20 million for every week production is delayed.”

There is a wealth of guidance available for mining companies and their customers on how to minimize risk to their operations. The Initiative for Responsible Mining Assurance Standard for Responsible Mining offers the only independent, third-party assessment of industrial-scale mine sites that is governed equally by the private sector, local communities, civil society, and workers. As well as assessment tools, the comprehensive IRMA standard also offers a blueprint for what responsible mining looks like in practice.

Lead the Charge also demands that mining companies obtain the Free, Prior and Informed Consent (FPIC) from Indigenous Peoples for mining projects on or near their lands. Doing so minimizes the risk of losses like the Solway Investment Group saw in the Fenix mine closure in Guatemala, and protects mineral consumers (like automakers) from reputational risk and supply chain disruptions. To avoid the reputational risk of harm to Indigenous communities and lands, automakers must publicly commit to ensuring that all their suppliers respect the right to FPIC.

If mining companies and their customers invest the time to obtain a social license to operate by ensuring that communities’ voices are heard, that mining projects actually benefit local communities, and that strict environmental and human rights standards are upheld, then everyone can benefit from the mining of the minerals needed for our collective transition to clean energy. Otherwise, as the OECD puts it:

“Without taking appropriate steps, the booming demand coupled with increased levels of tension and conflict globally will mean that it will become more difficult for companies to find accessible sources of supply of transition minerals and widen the investment gap…A zero-sum approach to securing mineral supplies can lead to a race to the bottom, involving heightened trade tensions, bidding wars, resource nationalism, protectionism and lowering of environmental, social and governance (ESG) standards that ultimately can undermine the security of these supply chains.”

This week we’re reading Greenpeace East Asia’s 2023 Automobile Environmental Guide, which evaluates the world’s biggest automakers on their decarbonization efforts. 

The report looks at the big picture of decarbonizing the auto industry, including the pace and ambition of specific automakers in their transition to EVs. But they also looked deeply at decarbonization of steel and other materials in the auto supply chain, with some interesting findings.

Greenpeace noted up front that just cleaning up tailpipe emissions isn’t enough to address the scale of the problem:

“Automakers have neglected the critical role that supply chains and materials play in decarbonisation. The automakers’ decarbonisation strategies tend to center around curbing tailpipe emissions by producing and selling more EVs. Industry-wide, there is insufficient emphasis placed on emissions that originate from the supply chain, materials, and production, such as the energy consumed in manufacturing plants and upstream emissions from steel procurement. Ultimately, omitting to include lifecycle energy consumption for ZEVs could lead to unchecked emissions.”

They also looked at what automakers are doing to decarbonize their steel supply chains:

“BMW, General Motors, Ford, and Mercedes-Benz are the best performing carmakers (on steel decarbonization) and have issued pledges to switch a portion of their steel consumption to low-carbon steel. Their commitments to steel decarbonisation are reinforced by a series of partnership projects with low-carbon producers. Ford and General Motors are among the few carmakers with the modest low-carbon steel procurement target of minimum 10% low-carbon steel, and other carmakers should follow suit.

Stellantis and Hyundai-Kia’s performance in steel decarbonisation is mixed. Stellantis has targeted to meet 25% of its steel consumption with low-carbon steel by 2025 – one of the most ambitious short-term timelines for steel decarbonisation among the top 15 carmakers. Hyundai-Kia is recognised for its steel consumption volume disclosure and its quantification of the use of secondary metals. Hyundai-Kia’s partnership with POSCO to produce low-carbon steel through direct reduced iron (DRI) process with green hydrogen marks the carmaker as the forerunner of steel decarbonisation in East Asia, although Hyundai-Kia has not disclosed any information about the supply timeline and volume.”

Unfortunately, Hyundai-Kia’s partnership with POSCO is also problematic due to the latters plans to reline several outdated and polluting blast furnaces, so a deeper commitment from the company is needed here.

The report also looked at efforts by automakers to improve recycling of materials:

“Disappointingly, there has been miniscule improvement in carmakers’ resource use efficiency targets in the past year. Nissan is the only carmaker with tangible targets for reducing its raw materials consumption. Nissan aims for materials that are not made from newly mined resources to account for 70% of material use in each vehicle by 2050. As of 2023, General Motors uses secondary or recycled steel from Nucor Corp. and US Steel, albeit with no clear scale of supply…

All carmakers except Changan, Great Wall, and SAIC have demonstrated some level of initiative or effort in investing in various solutions for the reuse and/or recycling of decommissioned EV batteries. Most carmakers now have various recycling schemes in place to extract critical minerals and other metals from EV batteries, but the sector’s reuse solutions are generally inadequate. Mercedes-Benz, Renault, and Toyota have the strongest performance in this category as their initiatives combine a focus on the reuse of EV batteries for energy storage purposes with an explicit priority of reuse over recycling and, most importantly, an aim to reach a large scale of energy storage. All three are building energy storage systems with a capacity upwards of 80 megawatt-hours (MWh). Volkswagen’s target to recycle 3,600 EV batteries per year in the scheme’s pilot stage is also noteworthy.”

Check out the full report from Greenpeace East Asia for more on how automakers are decarbonizing their supply chains.

This week we’re commending three US automakers (Ford, GM and Rivian) and a number of other companies that wrote to the Department of Energy (DOE) to call for US federal investment in clean primary aluminum.

As buyers of primary aluminum, these companies want to see a better domestic supply, and they are asking the DOE to invest in the necessary infrastructure via funds available from the Inflation Reduction Act.

Aluminum production in the US has been declining since the early 2000s, largely because aluminum is a very energy-intensive material to produce, and the US has relatively high energy costs compared to other countries where aluminum production is expanding. These companies want to see a revitalization of the US aluminum industry, which according to them means the DOE should:

“Prioritize decarbonization of primary aluminum, and the deployment of low-cost carbon-free energy that the industry critically needs to produce clean aluminum as you implement the Inflation Reduction Act.”

Decarbonizing aluminum production in the US would lower costs for industries like the auto industry, and allow the US to compete in a global environment where demand for aluminum is projected to skyrocket. It’s a triple win for US industry and consumers: decarbonizing aluminum production would create jobs, lower prices for consumer goods, and protect the climate at the same time. 

Thank you to the automakers and companies from Pepsi to Sunpower that are leading on this critical issue. Companies that are big consumers of materials like steel and aluminum have a huge opportunity right now to influence the decarbonization of heavy industry, and this is exactly the type of leadership we love to see.

Pollution from industry in the US has a huge impact on public health, clean air and water, and the global climate. A recent report from the Sierra Club, Coming Clean on Industrial Emissions, took a close look at the emissions from four industries: steel, aluminum, met coke and cement.

Since automakers are key end consumers of three of those four products, Lead the Charge dove deep into Sierra Club’s numbers to understand better how the emissions from auto suppliers are impacting public and environmental health across the US. We learned that automakers have a huge opportunity to transform these polluting industries, protect clean air and water, and save lives.  

The report found that an estimated 1071 to 2425 deaths annually in the US could be avoided by cleaning up fine particle pollution from steel, aluminum and met coke production. Steel and met coke facilities are especially polluting sources of tiny particles that enter people’s lungs and blood systems, leading to thousands of ER visits and over a hundred thousand missed work days every year. These facilities release additional pollutants that are currently insufficiently tracked by the Environmental Protection Agency. 

In the US, the auto sector accounts for approximately 35% of demand for aluminum and 26 percent of demand for steel, and is the single largest private sector consumer of steel made from the combustion of met coke in blast furnaces. That means that at minimum, hundreds of these needless deaths of US residents every year can be directly attributed to pollution from the value chain for car manufacturing. 

And that’s only accounting for particle pollution in the steel, aluminum and met coke manufactured outside of automakers’ facilities, not including industrial pollution from auto manufacturing facilities themselves. 

These impacts are not borne equally by people in the US. Communities where met coke and steel facilities are located tend to be lower income, have higher rates of unemployment, and include more people of color than the US average. These communities experience worse air quality, including air toxics cancer risk. People living near met coke facilities, a key material for producing the steel used in vehicles, have a 1.5 times higher air toxics cancer risk than average.

The report had a lot of hopeful news too. Transitioning to fossil-fuel-free steel manufacturing will eliminate the need for met coke in the steelmaking process. And significant emissions reductions could be achieved just by bringing up polluting steel and aluminum facilities to industry standard. For met coke alone, a nearly 30% reduction in emissions could be achieved if every facility reached average emissions intensity for their industry. 

But even top performers must accelerate emissions reductions to avoid a worse climate outcome, so just bringing the industry up to its current average standard isn’t enough. Sierra Club wrote: “Deeper emissions cuts will require a much more aggressive shift in industry emissions that comes from the current top performers in terms of emissions in addition to those that are currently the most emissions-intense.”

The report also looked at the emissions from electricity used to produce steel, aluminum and met coke. Transitioning these industries to low-emissions electricity sources can dramatically reduce the emissions from producing these materials, and thus reduce the emissions needed to manufacture vehicles. 

When producing aluminum, most of the emissions come from the electricity used in the process. In the steel industry, clean electricity can also have a substantial impact on overall emissions due to the electricity-intense EAF production process used to make steel, including some automotive steel.

Even aside from decarbonizing the electricity used by these industries, many new technologies are in development to reduce pollution from production of steel and aluminum. The Sierra Club wrote:

“Further, leading scientists, government agencies, and industry experts expect an assortment of emerging technologies will contribute to improvements in emissions. For example, a peer-reviewed 2022 paper identifies 86 “potentially transformative” technologies for the steel and iron industry.”

This report highlights the importance of cleaning up auto supply chains, and the opportunity that automakers have to lead heavy industry in the US to transition away from polluting, dangerous manufacturing processes. For more information, read the full report at the Sierra Club website. 

Hong Kong, 5 September 2023 – Transition Asia, a Hong Kong-based non-profit think tank that focuses on driving 1.5oC-aligned corporate climate action, today published a research report on the integration of green steel into China’s decarbonisation strategy for the automotive industry. Leveraging publicly accessible data from Geely Automobile Holdings, a leading Chinese automaker, along with Transition Asia’s proprietary Green Steel Premium (GSP) Model, the study aims to uncover potential cost advantages linked to adopting green steel. This analysis is particularly relevant given the rising trend of new electric vehicle (NEV) development in China.

Shifting from internal combustion engine (ICE) vehicles to battery electric vehicles (BEVs) is the most effective decarbonisation strategy in the auto industry. At this stage, in terms of the full life cycle carbon emissions of a vehicle, the average emissions level of an ICE is 39.7 tons of CO2, while a BEV is 22.4 tons, which means that 17.3 tons of CO2 (43.6%) are expected to be reduced if an auto company replaces one ICE with a BEV. However, shifting to BEVs also means much higher expenditures for auto companies because the production cost of BEVs is currently 45% higher than ICE. This unsubsidised cost difference is still expected to be 9% higher in 2030. 

Examining Geely Automobile as a case study, Transition Asia examined the effect of green steel procurement on the automaker’s decarbonisation effectiveness focusing on vehicle carbon intensity to reach Geely Automobile’s 2025 carbon reduction target. By integrating green steel into their supply chain, Transition Asia’s analysis indicates that the auto sector can achieve emissions reductions in a more cost-efficient manner by utilising green steel. Based on Transition Asia’s study into GSPs, the China-specific decarbonisation cost ($/tCO2) for scrap-electric arc furnace (EAF) and green hydrogen DRI-EAF in 2023 is  around $75 and $89, respectively, whereas the unit decarbonisation cost of shifting to BEVs in 2023 exceeds $350. Before 2030, the unit decarbonisation cost of green steel procurement is projected to be at least 50% lower than shifting from ICE and Plug-in hybrid vehicles (PHEVs) to BEVs.

For the full report, visit the Transition Asia website.

(Cleveland, Ohio)—Following calls from advocates to abandon its plan to reline a blast furnace in Burns Harbor, Indiana, and instead invest in green steel, U.S. steelmaker Cleveland-Cliffs announced that it is pushing this project by one year to 2026. During the same Q2 Earnings Call, it also announced that the blast furnace at its Middletown, Ohio plant would be next in line for relining as early as 2027. 

Cleveland-Cliffs is the largest supplier of steel to the automotive industry in North America. As steel makes up about 65% of the current average vehicles, automakers can leverage their purchasing power to ensure steel suppliers, like Cleveland-Cliffs, step away from harmful steel production and lean into clean and equitably made steel.  

“Delaying the relining in Burns Harbor is an opportunity for Cleveland-Cliffs to show that it’s listening to demands from automakers like GM and climate advocates to invest in green steel. Relining blast furnaces is a red line for the climate. We will be watching closely,” said Margaret Hansbrough, SteelWatch Campaign Lead. 

Blast furnaces make iron from iron ore at high temperatures using coking coal, which releases significant pollution. The process of manufacturing steel is responsible for up to around 8% of current global greenhouse gas emissions. Blast furnace relining, an investment that can cost hundreds of millions of dollars, is necessary for the continuous operation of current dirty integrated steel plants. Relining extends a coal-burning steel plant’s life by an estimated 18 years, pushing the sector further away from the trajectory required to decarbonize. Based on EPA data, Industrious Labs estimates that these two relines would result in more than 128 million tonnes of CO2e over the lifetime of the projects, equivalent to burning more than 705,000 railcars of coal. 

“We urge Cleveland-Cliffs to reconsider its decision to double down on dirty steelmaking by pursuing relining,” said Ben Inskeep, Program Director at Citizens Action Coalition of Indiana. “Cleveland-Cliffs must end its assault on Hoosier communities who have endured decades of its harmful pollution and invest in clean steelmaking in Indiana today.” 

In addition to climate pollution, blast furnaces emit toxic air pollution into neighboring communities, including heavy metals and particulate matter, leading to adverse health outcomes. The Burns Harbor plant is Indiana’s highest industrial emitter of the health-harming pollutants NOx, SO2 and PM2.5. Similarly, the Middletown steel mill ranks among Ohio’s top three industrial emitters of these hazardous substances. Residents in the communities nearby

Cleveland-Cliffs facilities have expressed concerns about the air pollution impacts of investments in coal-powered steelmaking. 

“Heavy metals, horrific odors and particulate matter are constantly spewed into the homes, schools, and businesses near Middletown Works,” said Donna Ballinger, a Middletown, Ohio resident. “Cleveland-Cliffs’ plan to extend the life of its dirty blast furnace is deeply disheartening, as it will exacerbate pollution in our community, despite the historic funding available to clean up and modernize the steel industry.” 

Cliffs also announced “Cliffs H” a $40 per ton surcharge for all their blast furnace steel which uses hot briquetted iron (HBI), a form of solid iron ore that can be used as a feedstock in steelmaking. Cliffs currently makes HBI with methane gas, but they are charging more for it because of the “role that HBI has played in our carbon reduction goals.” Cliffs has not released an Environmental Product Declaration to demonstrate any emissions reductions. Cliffs CEO Lourenco Goncalves suggested this price premium could be absorbed by Cliffs’ automotive customers, who account for more than a third of Cliffs’ customers. 

“Instead of greenwashing dirty blast furnace steel, Cleveland Cliffs should offer genuinely fossil-free steel,” said Erika Thi Patterson, auto supply chain campaign director with Public Citizen’s Climate Program. “Switching from coal to fossil gas doesn’t absolve Cleveland Cliffs or its auto industry buyers from the impacts this steel manufacturing process will have on our climate. The only green steel is steel made without fossil fuels.” 

Automakers are uniquely positioned to pressure Cleveland-Cliffs and other steel manufacturers towards green steel. By leveraging their immense steel purchasing power, automakers can hold manufacturers accountable and establish a new, greener standard for the industry as a whole. 

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About Industrious Labs: 

Industrious Labs is focused on scaling campaigns and building a movement to clean up heavy industry through network and capacity building, research and analysis, data-driven campaigns and sharp communications.

Mercedes-Benz and H2 Green Steel have signed a binding agreement for the delivery of about 50.000 tonnes of green steel to the car maker’s European production annually. In a pioneer move Mercedes-Benz has also signed a memorandum of understanding with H2 Green Steel for the potential supply of green steel produced in North America.

(Washington, D.C. )—- Mighty Earth has released a report documenting how General Motors (GM), a global leader in the automobile industry, is facilitating the violation of Indigenous Peoples’ right to self-determination with its investment in Lithium Americas’ Thacker Pass lithium mine in Nevada. The report “GM Wants “Everybody In” on Greenwashing” also shows how the auto manufacturer is, from multiple perspectives, failing on protecting people and climate.

The report sheds light on a litany of examples revealing how GM is failing to live up to its own stated ambitions to achieve carbon neutrality and ensure that human rights are not violated in its value chain. Furthermore, the report finds how GM continues to fall behind competitors like Ford, Stellantis, and Volkswagen on cleaning up its supply chain. The report shows that there is a massive disconnect  between the company’s climate and human rights commitments that it communicates to its investors and consumers, and the actual actions that GM is taking to ensure these goals and commitments are fulfilled.

“As the largest carmaker in the U.S., GM has a unique opportunity to be an industry leader in the responsible transition to EVs. However, its failure to take adequate action to decarbonize its supply chain and to respect Indigenous Peoples and their ancestral lands shows GM consistently chooses public relations tactics over meaningful commitments. If GM is serious about commitments it has made,it can start by ensuring Lithium Americas respects the rights of Indigenous Peoples.” said Matthew Groch, Senior Director at Mighty Earth

The report highlights specific cases where GM’s actions have clashed with its public commitments:

Thacker Pass lithium mine on Indigenous People’s land

GM has invested $650 million in Lithium Americas Corp to help the company develop its Thacker Pass lithium mine project, which violates Indigenous Peoples’ rights and free, prior, and informed consent (FPIC). Federal permitting was fast-tracked for the Thacker Pass project and members of the public didn’t have sufficient time to weigh in before the plan to mine this land was approved, this violates the right of the local Indigenous People to self-determination. GM has a policy that claims its committed to ensuring respect of Indigenous Rights and FPIC specifically related to its supply chain, but at this time they have taken no action to ensure that this commitment is fulfilled with regards to this project, despite receiving multiple communications from organizations and the affected Indigenous communities.

“The consultation was never adequate. There are several Tribes with direct ties to Thacker Pass who weren’t included in OR give any Free, Prior and Informed Consent, including the Shoshone Paiutes of the Duck Valley Indian Reservation. GM should check that. Massacre sites and dirty mining history plague Indian Reservations. Consultations with everyone would have produced substantial evidence to affirm that Thacker Pass wasn’t properly processed. The People of Red Mountain call for accountability.” said Gary Mckinney, of The People of Red Mountain.

Human rights: Forced Labor and Child Labor

The report also criticizes GM for failing to take adequate action in response to research reports that have linked GM’s supply chain to forced labor and child labor. These damning revelations are in stark contrast to an initiative GM announced last year asking global suppliers to join the company in a commitment to carbon neutrality, the development of social responsibility programs and implementation of sustainable procurement practices in their supply chain operations. It’s clear this commitment and the process underpinning it is clearly failing.

Dirty Steel and Aluminium

The steel and aluminum industries produce around 10% of the 2% of the world’s annual greenhouse gas emissions – more than the whole of the European Union. And despite their significant impact, GM has yet to announce how it intends to decarbonize its North American steel and aluminum supply chains. Moreover, GM’s relationship with Cleveland-Cliffs is antithetical to its decarbonization commitments and continues the assault on communities near its facilities. Just this April, Cleveland-Cliffs announced it plans to reline a blast furnace at its Burns Harbor, Indiana facility in 2025. Blast furnace relining is incompatible with a climate-safe future and represents a major economic and climate decision that will extend the life of a blast furnace-powered plant for an estimated 18 years.

Automotive companies are key demand-drivers for both industries: they are the largest global consumer of aluminum and a top global consumer of steel, with automotive steel being the highest value-added major segment of the global steel market, selling for more than 50% more than conventional steel. “Lead the Charge”, an industry leaderboard published earlier this year, that analyzed publicly available official reporting of 18 of the leading automotive manufacturers in the world, ranking their efforts to eliminate emissions, environmental harms, and human rights violations from their supply chains, published earlier this year found that GM ranked 8 out of 18 automakers.

The report calls on GM to take immediate action to address these shortcomings and align its actions with its stated ambitions. Specific demands include:

• Pause investment in the Thacker Pass Mine to conduct due diligence on their Indigenous Rights risk exposure in the project. Require suppliers and partners to implement FPIC policies in accordance with UNDRIP.

• Commit to ending sourcing from any steel or aluminum supplier connected to human rights violations or the exploitation of Indigenous lands or people.

• Adopt specific annual targets for purchases of carbon-free aluminum, reaching zero-carbon aluminum emissions by 2030.

• Commit to transition to using 50% low-carbon steel by 2030.

• Join global initiatives supporting value chain emission reductions, including ResponsibleSteel, SteelZero, and the Aluminum Stewardship Initiative

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For more information or to arrange an interview contact:

William Fitzgerald, william@theworkeragency.com, 650-772-1236

About Mighty Earth

Mighty Earth is a global advocacy organization working to defend a living planet. Our goal is to protect Earth for Nature and secure a climate that allows life to flourish. We are obsessed with impact and aspire to be the most effective environmental advocacy organization in the world. Our team has achieved transformative change by persuading leading industries to dramatically reduce deforestation and climate pollution throughout their global supply chains in palm oil, rubber, cocoa, and animal feed, while improving livelihoods for Indigenous and local communities across the tropics. www.mightyearth.org

A report released by Mighty Earth highlights GM’s $650 million investments in Lithium Americas Corp to help the company develop its Thacker Pass lithium mine project, which has proceeded without obtaining Indigenous Peoples’ rights and free, prior, and informed consent (FPIC) and is widely opposed by the People of Red Mountain.

ArcelorMittal North America said on Tuesday the steelmaker will supply General Motors (GM.N) with recycled and renewably produced steel, which substantially lowers CO2 emissions.

Material will be supplied from ArcelorMittal Dofasco in Hamilton, Ontario and shipments are expected to begin in the second quarter of 2023, the company said. The terms of the deal were not disclosed.

During the first few months of 2023, several automakers have made announcements of investments and / or progress made on new battery chemistries that promise to reduce their demand of high-intensity minerals such as cobalt, nickel and lithium. In March, the JAC Group’s joint venture with Volkswagen in China made history by introducing the world’s first electric vehicle (EV) powered by a sodium-ion battery – a battery technology that, according to the IEA, “has the potential to completely avoid the use of critical metals.” BYD has also said that it plans to use sodium-ion batteries in its vehicles later in the year. In May, Stellantis announced an investment in lithium-sulphur battery developer Lyten, working on a novel three-dimensional graphene material platform that is free from nickel, cobalt, and manganese.

TOKYO – Carmakers are pushing the planet past the critical 1.5C heating threshold by not decarbonizing their steel supply chains, according to a new Greenpeace East Asia report. Steel production for the world’s automakers is responsible for an estimated 573 million tonnes of CO₂ emissions per year, approximately equivalent to the annual emissions of Australia, according to Greenpeace estimations.

“Automakers are steering us toward climate catastrophe by failing to decarbonize their steel supply chains. Automotive steel has a massive carbon footprint, but major automakers like Hyundai, Volkswagen, and Toyota have not disclosed their steel emissions. We need automakers to both consume less steel and to drive the transition to zero-carbon steelmaking,” said Greenpeace East Asia Senior Analyst Wenjie Liu.

Findings

– In 2022, the 16 largest automakers in the world used at least 39 million tonnes of steel, generating an estimated minimum 74 million tonnes of CO₂  emissions. In 2022, Toyota used the most steel of all 16 automakers, or at least 6.3 million tonnes, which resulted in an estimated minimum 12 million tonnes of CO₂ emissions. Toyota was followed by Volkswagen and Hyundai-Kia, which used at least 5.2 million and 4.2 million tonnes of steel, respectively. [1]

–Automakers have not taken sufficient steps to decarbonize their steel supply chains. To date, no major automaker has set a specific target to reduce steel consumption and associated emissions. In addition, none of the 16 automakers have specifically disclosed emissions associated with steel.

-In some cases, automakers and steelmakers have partnered in low-carbon steel initiatives, particularly in Europe. However, existing steel decarbonization initiatives lack pathways to adopt renewable energy. In addition, automakers have not announced large-scale steel decarbonization projects and in certain instances have not disclosed the scale of the initiatives at all.

–Low-carbon steel partnerships between automakers and steelmakers are comparatively absent in East Asia. One notable exception is that Hyundai has developed a partnership with POSCO to produce DRI steel made from hydrogen. In China, Mercedes-Benz and BMW have also initiated collaborations with Baosteel and HBIS, respectively.

“If they are serious about decarbonization, by 2030, automakers must halve their emissions from steel. The first step is the disclosure of steel-related emissions, but we unfortunately haven’t seen this happen yet. Automakers should also issue green steel procurement commitments, which would signal steelmakers to invest in new technology. In the longer term, automakers must achieve net zero emissions across their supply chains, both via reduced use of steel and a full transition to zero-carbon steel,” said Liu.

Notes

Report available here.

[1] Calculations are based on sales data at the group level from Marklines (retrieved in May 2023), the average weight of 13 vehicle types, the share of steel in each vehicle type’s weight (50-65%), and the global average CO₂ emissions per tonne of steel produced (1.91 tonnes of CO₂). The estimation of steel consumption does not include sales of unclassified car types or cars produced but not sold. Therefore, actual steel usage is likely to be higher than our calculated steel usage.

​​
Media Contact

Erin Newport, International Communications Officer, Greenpeace East Asia, Taipei, +886 958 026 791, erin.newport@greenpeace.org

Originally published on the website of Greenpeace East Asia. 

As the globe transitions to cleaner sources of energy, the human rights abuses in electric vehicle (EV) battery supply chains must be urgently addressed. In a new report published today (16 May 2023), the Business & Human Rights Resource Centre found salient human rights risks in the supply chains of nickel, an essential component of EV batteries.

Human rights abuses were identified in two important nickel supply chains in the Philippines and Indonesia – and linked these abuses to companies such as Panasonic, Tesla and Toyota. The report provided evidence to hold end-user companies accountable, however, the opacity of EV battery supply chains makes it difficult to do this. Without supply chain transparency, companies and investors appear distanced from the abuses lower down the value chain and can get away with not addressing these risks.

The case studies included in the report are the Rio Tuba Nickel Mining Corporation (Rio Tuba) in the Philippines and two Chinese companies operating in Indonesia (Zhejiang Huayou Cobalt and CNGR Advanced Materials). The report stressed the urgent need for government regulation over these supply chains, as well as robust human rights due diligence and engagement by mining companies, EV companies and their investors.

In a bid to save our planet from climate crisis-related destruction, global efforts to meet emissions targets will see the demand for EVs increase more than four-fold, accounting for 18% of global car sales in 2023. As the globe transitions to these cleaner sources of energy, companies must recognise their role in mitigating the endemic human rights issues in EV battery supply chains – and must use their leverage to hold suppliers accountable for risks in their value chains.

Pochoy Labog, Southeast Asia Researcher, Business & Human Rights Resource Centre, said: “Responding to the climate crisis is the most urgent priorities of our time, with a shift to renewable energy at the forefront of this. The globe has already begun transitioning to cleaner sources of energy, with decarbonised transport seeing significant investment. The US, EU and China have already introduced incentives to increase the automobile market share of electric vehicles and rising oil prices across the globe will also continue to contribute to this increased demand.

“While this shift to greener sources of energy must be encouraged, now is the time to start asking serious questions about the human rights abuses in electric vehicle supply chains. Our research has already revealed the extent to which the extraction of nickel, one of the essential components of electric vehicles, is riddled with abuses. But the opacity of these supply chains makes it difficult to identify, understand and remediate these abuses. Without supply chain transparency, battery manufacturers, end-user companies and investors can get away with not addressing these risks.

“The positive momentum towards electric vehicles risks being derailed by these unaddressed abuses, which have been known to delay projects and bring about unexpected costs. The human rights abuses in electric vehicle supply chains needs to be urgently interrogated and mitigated if a just transition to renewable energy is to be achieved – and supply chain transparency and accountability must be at the heart of this.”

Press release originally published on the website of the Business & Human Rights Resource Centre.

Hyundai-Kia, now the world’s third largest automaker, has been making headways in the transition to electric vehicles. In 2022, its EV sales climbed to 316,821 according to EV volumes, representing 8% of its total sales – an increase of 3% over 2021. Its EVs are also winning many prestigious awards – with the Ioniq 5 taking home awards such as the World Car of the Year and EV of the Year. The Ioniq 6 already seems to be set to continue this trend – it has already taken home the 2023 World Car of the Year, World Electric Vehicle of the Year and World Car Design of the Year awards. It is encouraging to see Hyundai’s investments in the EV transition and its success with EV manufacturing to date demonstrates that the future of the company is clearly electric. 

Hyundai also appears keen to position itself as an industry leader on sustainable supply chains. It claims that “sustainability is the center of IONIQ’s brand vision,” and that the Ioniq 6 showcases Hyundai’s commitment to “environmental responsibility”, with “sustainable materials applied throughout,” including “eco-process leather”, “recycled PET fabric” and “bio paint.” It is commendable that Hyundai wants to reduce the environmental impacts of the materials used in its EVs. However, its actions to date miss the bigger picture and its claim that the Ioniq brand is “answering the call for sustainability” is, at best, highly questionable. What Hyundai doesn’t address is how they are cleaning up the impacts of some of the most environmentally impactful materials used to manufacture its vehicles: steel, aluminum and batteries.

The efforts of Hyundai, and its subsidiary Kia, to eliminate emissions, environmental harms and human rights abuses from their supply chains were recently evaluated as part of the Lead the Charge Leaderboard, which revealed that Hyundai Motor Group is falling far behind many of its peers on clean and equitable supply chains. This briefing explains these findings in greater depth, highlighting some examples of the harmful consequences of Hyundai’s failings for the climate, environment and human rights.

 Hyundai’s Sustainability Claims: Missing the Big Picture, and Opportunity

Hyundai Motor Group has set a target for carbon neutrality by 2045, and claims that efforts to achieve this target include electrification and actions to achieve a “net-zero automotive parts supply chain.” This prioritization of automotive supply chains is welcome: a recent report commissioned by Polestar and Rivian showed that electrification alone won’t be enough for the automotive industry to achieve 1.5 degree-aligned climate goals by 2050: it must also reduce its supply chain emissions by 81% reduction by 2032. 

However, Hyundai’s approach to supply chain sustainability thus far misses the bigger picture – and opportunity. It is estimated that, together, steel, aluminium and batteries constitute approximately 70% of an electric vehicle’s upstream supply chain emissions – making them clear priorities for supply chain emissions reductions. The mining, refining and manufacturing needed to produce steel, aluminium and batteries also has a troubling track record of negative environmental impacts across the globe, including air and water pollution, deforestation and the destruction of natural habitats for endangered species. 

The Lead the Charge supply chain Leaderboard found that Hyundai has made some progress on recycled aluminium, steel and batteries – a key intervention for reducing the emissions and broader environmental impacts of these supply chains. Hyundai discloses the amount of recycled steel and aluminum used in its production cycle, and provides information on the closed loop processes it has developed for recovering and recycling steel and batteries. These are positive steps and should be further strengthened, in particular by setting concrete targets to increase the amount of recycled steel, aluminium and batteries used in its production cycle. 

Nonetheless, the Leaderboard shows that, overall, Hyundai is failing to take adequate action to reduce the emissions and environmental impacts of these key supply chains. Hyundai scored just 6% for efforts to clean up its steel supply chain: it has not disclosed any targets or progress with regards to increasing the volume of low carbon or fossil free steel in its production cycle and, with the exception of a recent announcement regarding research and development into low-carbon steel, has not disclosed any evidence of using its significant purchasing power to incentivize investment in, and greater production of, fossil-free steel. Hyundai’s failure to prioritize cleaning up its steel supply chain is also exemplified by the fact that it is not a member of ResponsibleSteel or SteelZero, two highly-regarded multi-stakeholder initiatives aiming to reduce the climate and environmental impacts of steel production worldwide.

Hyundai scored even lower for efforts to address the emissions and environmental impacts of its aluminum and battery supply chains, receiving just 4% for both categories. As with steel, Hyundai has failed to set targets or disclosed any progress on increasing the volume of low-carbon aluminum in its production cycle, has not disclosed any efforts to incentivize greater production of fossil-free aluminum, and is not a member of key demand side initiatives aiming to decarbonize the aluminium industry, such as the First Movers Coalition. On batteries, Hyundai has not developed a pathway or targets to reduce the emissions of its battery supply chains or to reduce its reliance on energy intensive minerals, and did not disclose any actions it is taking to reduce the negative environmental impacts of extracting these minerals.  

Given Hyundai’s lack of attention to these critically important supply chains for emissions reductions, their commitment to, and ability to achieve, their stated goal of carbon neutrality by 2045 is dubious, especially given that Hyundai’s 2045 carbon neutrality goal has not yet been independently verified by the Science-based target initiative. 

Materials that “take care of people”?

Another one of Hyundai’s claims with regards to its Ioniq series is that the Ioniq 6 includes “materials that take care of people.” The Lead the Charge Leaderboard shows that this claim is also problematic: Hyundai scored just 13% on its efforts to ensure that the human rights of local communities, workers and Indigenous Peoples are respected across its supply chain. 

It is encouraging that Hyundai has taken some initial steps to ensure respect for human rights in its supply chain. These include developing a standalone human rights policy, explicitly referencing respect for human rights in its supplier code of conduct, auditing its suppliers for compliance with its supplier of conduct, beginning some rudimentary actions to identify human rights risks in its supply chain, and putting into place a human rights grievance mechanism. 

However, Hyundai falls far short on the details, particularly in relation to its efforts to ensure the responsible sourcing of transition minerals. The company ​has developed a responsible minerals policy that applies to minerals from conflict-affected and high-risk areas, cobalt and other minerals that “pose human rights violations or environmental destruction issues,” but it disclosed almost no evidence of actions that it is undertaking to ensure this policy is implemented effectively across its supply chain. It therefore received a meager 8% score for this category.

A similar picture emerged on Hyundai’s performance with regards to upholding workers’ rights in its supply chain. Although Hyundai’s Human Rights Policy and Supplier Code of Conduct both commit to the ILO Declaration on Fundamental Principles and Rights at Work, the Leaderboard found very little evidence of concrete due diligence measures that Hyundai should be undertaking in order to ensure that this commitment is realized. Overall, Hyundai scored just 13% for its efforts to ensure respect for workers’ rights across its supply chain. 

Finally, Hyundai scored 0% on the category of Indigenous Peoples’ rights, demonstrating a lack of awareness of the risks that growing EV supply chains present to the rights of Indigenous Peoples around the world. 

Real-world impacts

One need not look far for examples of how Hyundai’s poor performance with regards to its supply chains is translating into harmful consequences for people and planet. 

Hyundai Steel, a subsidiary of Hyundai Motor Group and a major supplier of the steel used in Hyundai’s vehicles (including the Ioniq series), operates 3 out of the 11 coal-fired blast furnaces in South Korea and is the company with the third largest greenhouse gas emissions in the country.¹Yumi Kim (2023), “State Firms and Chaebols Dominate South Korea’s Emissions”, Bloomberg New Energy Finance, March 15, 2023. Recent research by Solutions for our Climate and the Center for Research on Energy and Clean Air showed that the air pollution from these 11 blast furnaces was related to approximately 506 premature deaths in 2021. The research also estimated that the air pollution from these 11 coal-fired steel blast furnaces could cause 19,400 premature deaths by 2050 under a current policy scenario, illustrating the deadly consequences of the failure of companies like Hyundai Motors to seize the initiative and map out a 1.5 degree-aligned pathway to reduce the emissions from their steel supply chains. 

There are also multiple examples of the consequences of Hyundai’s failure to take action on the climate and environmental impacts of the aluminium used in its vehicles. Hyundai recently signed a Memorandum to purchase aluminium from PT Adaro Minerals, the second largest coal miner in Indonesia, at an early production stage. Hyundai claims that this aluminium would be classified as “green” or “low-carbon aluminium” because it will be powered using hydroelectric power generation. 

However, Market Forces have revealed that Hyundai fails to mention that hydroelectric power will only meet the smelter’s power needs at a later stage, with the early stage being powered by new coal-fired power plant capacity. Market Forces state that the “new coal power capacity needed for the smelter will create massive pollution that would contravene with Hyundai’s Carbon Neutrality Principles.” The International Energy Agency (IEA) has made it clear that we can have no new coal fired power plants if we want to achieve net-zero by 2050. 

Hyundai has also been called out by Human Rights Watch and Inclusive Development International over the environmental and human rights impacts of its aluminium supply chain. The organizations’ research identified links between the bauxite used to manufacture the aluminium in Hyundai’s vehicles and the destruction of farmland and natural habitats in Guinea, in addition to damaging impacts on the water resources used by local communities. Disappointingly, Hyundai was one of only three companies contacted by the organizations who did not respond to requests for information – reinforcing the findings of Leaderboard on Hyundai’s poor performance with regards to effective environmental and human rights due diligence. 

Finally, investigative reporting by Reuters uncovered child labor “throughout Hyundai-Kia’s supply chain in Alabama.” The investigation found that “at least four major suppliers of Hyundai Motor Co and sister Kia Corp have employed child labor at Alabama factories in recent years… and state and federal agencies are probing whether kids have worked at as many as a half dozen additional manufacturers throughout the automakers’ supply chain in the southern U.S. state.” 

Hyundai recently announced that it will divest from its Alabama subsidiary following the revelations and that it is “implementing extensive new corporate measures” to prevent this from occurring again. Nonetheless, the revelations by Reuters lay bare the pernicious consequences of Hyundai’s failures to institute effective due diligence processes to ensure that its suppliers respect workers’ rights. 

Time for Hyundai to Lead the Charge on Clean Supply Chains 

Hyundai’s award-winning clean vehicles deserve better than dirty supply chains producing greenhouse gas emissions, environmental harms and human rights abuses. If Hyundai wants their claim on sustainable materials to ring true, they will have to up their game and start taking robust measures to clean up their steel, aluminium and battery supply chains. 

Fortunately, Hyundai is well placed to achieve this and to become an industry leader on the manufacturing of truly clean cars: to achieve impact, they only need to look inwards to their own steel subsidiary, and then next door to major Korean partners like POSCO, as well as battery manufacturers LG and SK. 

Footnotes

• 1
  Yumi Kim (2023), “State Firms and Chaebols Dominate South Korea’s Emissions”, Bloomberg New Energy Finance, March 15, 2023.

At Mercedes annual ESG Conference 2023, Mercedes announced further supply chain priorities, plans, and investments across several areas.

Mercedes set “the goal of a green steel supply chain from 2039 at the latest,” including “low-CO2” steel from scrap already part of their vehicles, further details on their partnerships with H2 Green Steel and SSAB, including prototyping parts that contain “almost fossil-free direct-reduced iron,” and their intention to launch models from 2025 that use “almost CO2-free” steel. Like BMW, Mercedes also stated they see themselves as “promoting the transformation of the steel industry.”

Regarding aluminum, Mercedes stated they are working on decarbonization, however did not provide specific targets or milestones. They did state that “a third of the aluminium used in Europe” for EVs will be made with renewable energy, and that they are testing aluminum from Hydro with a minimum 25% scrap content, with the aim of it being incorporated into production this year. Each results in 50% and 70% lower CO₂ emissions, respectively. Also with Hydro, Mercedes plans to pilot “very low CO₂” aluminum by 2030.

Mercedes’ new battery recycling factory will increase their operations and achieve a recycling rate of more than 96%, with the potential to recycle “2,500 tonnes of battery modules per year.” They are also working with partners in China on recyclable materials. Additionally, Mercedes are aiming to reduce the CO2 footprint of battery cells by 40% with further emissions reductions’ possible with renewable energy to produce and refine raw materials.

Mercedes also shared further details on their timeline and milestones to assess 24 raw materials with elevated human rights risks: 70% by 2025 and completed by 2028. They also stated that this year, they plan to “establish risk mitigation measures for all raw materials affected by the future EU battery regulation.”

Today Mercedes released new sustainability goals in which they announced new targets on emission reduction, human rights, governance, and green financing. Included in their new targets statement, Mercedes promoted their ranking in the Lead the Charge leaderboard where they received the leading score of all automakers, affirming that the leaderboard is quickly becoming industry standard for leading automakers.

Mercedes has embraced the Electric Vehicle (EV) transition and taken multiple positive steps to improve their supply chain: they are driving demand for production of fossil free steel, increasing the recycling and reducing the mineral content of their batteries, and have implemented strong policies for effective human rights due diligence. In their new sustainability goals, they have also announced a goal of achieving a green steel supply chain by 2039. Steel makes up 8% of all global greenhouse gas emissions and it’s imperative that the auto industry moves as quickly as possible to clean up their steel supply chains. 

“We welcome Mercedes’ new sustainability targets and their decision to include the Lead the Charge supply chain leaderboard ranking as proof that they’re on the right track. In particular, it is encouraging to see Mercedes state that they are pursuing the goal of transforming the steel industry – highlighting the vital role that automakers can play in decarbonizing this critically important heavy industry” said Cecillia Mattea, Batteries and Supply Chain policy manager at Transport & Environment, and member of the Lead the Charge coalition. “However, there’s still a lot of work to do. Mercedes scored just 37% overall in the Leaderboard. If Mercedes wants to remain in the lead, there are some clear priorities for improving their performance, including setting concrete targets for reducing the emissions of their aluminium supply chain and implementing strong policies to ensure respect for the rights of Indigenous Peoples across their supply chain.“

The leaderboard found that, while the automotive industry still has a long way to go, action to ensure clean and equitable supply chains is not only possible, but is already underway. 

This Lead the Charge leaderboard is part of a new global campaign called “Lead The Charge”, which seeks to raise awareness of the human rights, climate, and environmental impacts that occur throughout auto supply chains, focusing in particular on steel, aluminum and batteries, and to encourage automakers, as they make the transition to EVs, to also radically transform their supply chains to be equitable, sustainable and 100% fossil free.

As part of their value chain-wide climate neutrality by 2050 goal, BMW stated their focus on CO₂-intensive materials, including aluminum and steel.

On steel, from 2026, more than one third of BMW’s steel worldwide will be “CO₂-reduced steel,” eliminating approximately 900,000 tonnes of CO₂ annually. They state that this is based on contracts with suppliers in Europe, China, and the US. BMW also noted that they see their efforts as “promoting the transformation of the steel industry.”

On aluminum, BMW have signed a declaration of intent with Rio Tinto in Canada for “significantly CO₂-reduced” aluminum from 2024. BMW states that compared to conventional methods, “the process avoids around 70% of CO₂ emissions.” This aluminum will be used exclusively in vehicle production at BMW’s Spartanburg plant in the US.

Executive Summary
Lead the Charge is a collaborative new initiative bringing together diverse local, national, and global organizations calling on automakers to radically transform their supply chains to be equitable, sustainable and 100% fossil free. Tailpipe emissions are on their way out, but if we’re to stay on a 1.5°C emissions pathway and not repeat poor business-as-usual practices, from mining to manufacturing, we need to urgently focus on the auto supply chain too. The EV transition presents an unprecedented opportunity we cannot let pass us by to rebuild supply chains for the better – for local communities, workers, Indigenous Peoples, the environment, and the climate.

Our supply chain leaderboard shows there is action already underway:

• Mercedes leads the charge overall with many of the best human rights policies and practices, and fossil-free and environmentally sustainable supply chain investments;
• Volvo is the stand-out steel and aluminum leader, and overall on fossil-free and environmentally responsible supply chains; and
• Ford shows affordable automakers can do it too, ranking top on transition minerals and worker rights, plus some initial announcements on fossil free and environmentally sustainable steel and battery metals.
• VW, as a top 2 global auto, has important targets and policies overall, but has not shown as many concrete specifics as others. But there is still a long way to go:
• Toyota, the other top 2 global auto and former green darling now biggest EV laggard, is way behind on their supply chain too.
• Tesla, the original and still EV leader, has been making progress on batteries and responsible sourcing, including one of the few automakers acknowledging Indigenous rights, but is falling short elsewhere – with their sustainable energy mission, fossil-free and sustainable supply chains are a significant opportunity for Tesla to lead all over again.

A diverse coalition of leading climate, environment, and human rights organizations announced today the launch of an auto supply chain industry Leaderboard and global campaign calling on automakers to capitalize on the unprecedented opportunity offered by the electric vehicle (EV) transition to clean up their supply chains. The Leaderboard analyzes the publicly available official reporting of 18 of the leading automotive manufacturers in the world, ranking their efforts to eliminate emissions, environmental harms, and human rights violations from their supply chains. 

The leaderboard  found that, while the automotive industry still has a long way to go, action to ensure clean and equitable supply chains is not only possible, but is already underway. The leaderboard ranks Mercedes as leading the charge overall—demonstrating that automakers can take effective action on both emissions and human rights in their supply chains—while Volvo is leading the way on clean steel and aluminum, and Ford on human rights. However even these industry leaders still have a lot of work to do and many other automakers are lagging far behind. Toyota, the original green leader now EV laggard, is even further behind on supply chains, and while EV leader Tesla has been taking some positive steps on battery supply chains, they are behind overall. No company scored well on the rights of Indigenous Peoples, with two thirds of automakers scoring 0%.

“Auto manufacturers must be held accountable to not only deliver zero-emission vehicles but also to ensure that their supply chains respect human rights, protect the environment, utilize more recycled materials, and adopt fossil free manufacturing processes and practices. The Lead the Charge’s Leaderboard reveals the progress the auto industry has made — and how far we urgently have to go,” said Hebah Kassem, Director of Sierra Club’s Living Economy program. “Automakers and their suppliers must avoid continuing the harms of the fossil fuel industry and instead chart a new course toward socially and environmentally sustainable supply chains.”

This leaderboard is part of a new global campaign called “Lead The Charge”, which seeks to raise awareness of the human rights, climate, and environmental impacts that occur throughout auto supply chains, focusing in particular on steel, aluminum and batteries, and to encourage automakers, as they make the transition to EVs, to also radically transform their supply chains to be equitable, sustainable and 100% fossil free. 

“The auto industry is going through a moment of huge industrial transformation as a result of the long overdue transition to electric vehicles. This transformation presents automakers with an unprecedented opportunity to rebuild their supply chains so  their vehicles are built without fossil fuels, environmental harms or human rights abuses.” said Julia Pioliscanova, Senior Director Vehicle and Emobility, Transport and Environment. “A transition to truly clean cars means ditching not only the tailpipe but also the often dirty, abuse-ridden supply chains that came with it.”

The transition to EVs is eliminating the biggest source of transport emissions, the tailpipe. However, as the EV transition accelerates, the emissions profile of the auto industry shifts to supply chain emissions. It is clear that automakers won’t meet their climate goals unless supply chain emissions are also tackled with urgency. At the same time, the industry must tackle human rights abuses from mining, refining, and manufacturing in their supply chains. These practices not only harm workers, local communities, and Indigenous Peoples, but also pollute local ecosystems and exacerbate the climate crisis. 

“As the world scrambles to address the climate crisis, a new ‘green’ economy is rapidly emerging. However, in this transition, Indigenous Peoples are facing a new wave of extractivism for transition minerals such as copper, nickel, cobalt, and lithium, which are key in battery development for electric vehicles and other technologies. Indigenous lands, territories, and resources are under direct threat as the demand for these minerals increases. Indigenous Peoples also want to see an end to the climate crisis, but this needs to be achieved in a way that respects their rights.” said Galina Angarova (Buryat), Executive Director of Cultural Survival. “For decades, auto supply chains have been riddled with climate, environmental and human rights abuses. The EV transition is an opportunity to change that, but so far it’s still business-as-usual for their supply chains, which continue to harm people and the planet. Automakers can stay ahead of the curve by acting now to transform their supply chains and ensure the rights of Indigenous Peoples, and all rights-holders, are respected.”

The coalition’s campaign will engage the automotive industry and supply chain decision-makers, investors, and policy stakeholders. The coalition also plans to raise the awareness of  consumers, and the public at large  and build momentum for change.

“Automakers wield a huge amount of influence and purchasing power in global supply chains. It’s time to use this leverage to shift the steel, aluminum and battery industries away from fossil-fuels and towards practices that benefit workers, Indigenous Peoples, and local communities. Lead the Charge’s Leaderboard shows exactly which supply chain issues and what timelines are needed for the auto makers to demonstrate urgent climate leadership.” said Anna Song, Steel Lead, from the Korean climate NGO, Solutions For Our Climate.

Lead the Charge is a diverse network of local, national, and global advocacy partners working for an equitable, sustainable, and fossil-free auto supply chain. Organizations that have contributed to its development include Cultural Survival, Earthworks, First Peoples Worldwide, Industrious Labs, Investor Advocates for Social Justice, Mighty Earth, Public Citizen, Sierra Club, Solutions for our Climate (SFOC), Transport and Environment (T&E), The Sunrise Project and others.

For more information about the campaign, visit Lead the Charge’s website, Twitter account and LinkedIn account. 

Press contact: William Fitzgerald, william@theworkeragency.com, +1-650-772-1236

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Lead the Charge Leaderboard key findings:

• Mercedes leads the charge with many of the best human rights policies and practices and some of the more comprehensive mapping of their transition minerals supply chain.
• Volvo is the stand-out steel and aluminum leader and overall on fossil-free and environmentally sustainable supply chains – but disappointingly came out lower on human rights, including insufficient attention to workers rights and no reference to Indigenous Rights at all.
• Ford shows affordable automakers can do it too, ranking top on human rights overall, principally due to its scores on human rights due diligence, responsible sourcing of transition minerals and worker rights. 
• Toyota, the former green darling now biggest EV laggard, is way behind on their supply chain too.  Toyota’s supply chain targets and claims seem token at best and as the lowest ranked automaker for their climate lobbying record by InfluenceMap, they get dragged down even more. 
• Tesla, the original and still EV leader, has some problems piling up.  They already have new competitors snapping at their heels, a fluctuating stock price, investor discontent, and SEC and worker rights investigations – but they also have significant gaps in disclosure and action on fossil free and environmentally sustainable supply chains.
• Warren Buffet-backed BYD and #2 EV maker, despite their vertical integration, is also far behind.  With their extensive overseas market ambitions, BYD is quickly grabbing market share but the further BYD reaches, the more they will be exposed to new regulations and expectations, particularly in Europe.  
• Hyundai-Kia, now the third-largest automaker in the world and snapping up EV market share, makes sustainable material claims but misses the bigger picture – and opportunity.  Sadly, despite slightly outperforming EV leader Tesla in some areas, Hyundai-Kia are trailing overall and have a host of supply chain issues bubbling up, including child labor at suppliers and a subsidiary in the US, and air pollution from steel manufacturing in Korea. 
• Lack of disclosure from Chinese automakers meant they scored very low overall – but Geely shows a glimmer of what could be on fossil-free and environmentally sustainable supply chains.  They are the leader amongst East Asian automakers on fossil free and environmentally responsible supply chains, on which they also outperform several of their competitors in Europe and the U.S. 
• Importantly,  while there is some movement by incumbents, like Mercedes and GM, and EV leader Tesla, automakers across the board are falling far short on Indigenous Rights. Mercedes was the company with the highest score, but scored only 17%. With a new era of industrial expansion underway, respecting Indigenous Peoples’ self-determination and right to Free, Prior, and Informed Consent is more important than ever given how many transition minerals are located on or near Indigenous lands. 

Hyundai Steel says it has become the first steelmaker globally to produce high-strength steel plates by using an electric arc furnace, which helps reduce carbon emissions drastically during the whole process… part of the company’s carbon neutrality initiative, dubbed “Hy-Cube,” with a goal of switching completely to hydrogen-based steel production by 2030.

VW has taken a stake in 24M Technologies whose battery technology claims to require 40% less production area, is more efficient for recycling, and reduces the CO2 footprint of battery production. VW has also signed agreements for “low-CO2” steel from the end of 2025 with Salzgitter and for lithium with Vulcan Energy Resources. Their process claims to use less land, groundwater and energy.

The Business and Human Rights Resource Center has documented multiple allegations of human rights abuses against VW, including forced labor, union busting and health impacts linked to its emissions scandal. Nikkei Asia also reported on environmentally damaging nickel mining in Indonesia that identified VW as an end consumer.

The Business and Human Rights Resource Centre has linked cases of multiple human rights and environmental harms to Toyota’s supply chains, including allegations of pollution and deforestation, forced labour and violations of workers’ rights.

Mercedes will procure “low-carbon aluminum” from Norsk Hydro, launched a partnership with SSAB to “introduce fossil-free steel into vehicle production as early as possible,” their China operations (Beijing Benz Automotive, BBAC signed an MoU with Baosteel for reduced-emissions steel and, in the future, green steel, and signed a lithium supply agreement with Rock Tech Lithium Inc. that will include creating a roadmap to achieving “CO₂ neutral production” of lithium hydroxide by the end of 2030. It also requires that all lithium hydroxide shall be sourced from mining sites audited by the Initiative for Responsible Mining Assurances (IRMA). Mercedes also recognized an established supplier, Big River Steel, with a sustainability award.

According to TechCrunch, “Panasonic battery cells made at the Gigafactory it operates with Tesla will use more recycled materials by the end of 2022 as part of an expanded partnership with startup Redwood Materials.

Panasonic said Tuesday at the 2022 CES tech trade show that Redwood Materials will start supplying it with copper foil produced from recycled materials, a critical component of the anode side of a battery cell. Redwood will begin producing the copper foil in the first half of the year; the copper foil will then head to Panasonic where it will be used in cell production by the end of the year.”

The Business and Human Rights Resource Center has documented allegation that implicate Mercedes’ supply chains in forced labor and human rights violations in rare earth mining.

The Business and Human Rights Resource Centre documents multiple allegations of human rights violations in Tesla’s supply chains, including pollution, forced labor, violations of workers’ rights, and failings to ensure effective human rights diligence. Nickel sourced by Tesla from Indonesia has also been linked to pollution affecting local communities. 

Stellantis has taken an equity stake in Vulcan Energy Resources that plans to mine lithium with zero greenhouse gas emissions, using a direct lithium extraction (DLE) method that uses less land and groundwater. Stellantis has also signed an offtake agreement for “low-carbon lithium” with Controlled Thermal Resources Ltd in the Salton Sea area of Southern California. (Note that there have also been local community concerns raised about this project.)

Allegation have been raised against Stellantis over workers’ rights violations in their auto parts plants, human rights violations in their rare earth supply chains, and forced labor.

From January 2023, Nissan announced plans to use “low-CO₂” steel and green aluminum from Kobe Steel.  Kobenable steel claims to significantly reduces CO2 emissions in the blast furnace process and is “the first time Kobenable Steel will be used in mass-produced vehicles.” They state that the aluminum will be made with solar power only and use recycled aluminum.

According to the Business and Human Rights Resource Centre, Hyundai-Kia’s supply chains have been linked to child labour and workers’ rights violations. Reports also implicate Hyundai-Kia’s supply chains with air pollution and premature deaths in South Korea and environmental contamination in Indonesia.

Hyundai Motor Company also signed an MoU to purchase aluminium from Adaro in Indonesia, which would be powered by new coal-fired power plants.

The Business and Human Rights Resource Centre has documented allegations of forced labor in Nissan’s supply chains.

In November 2022, GM and Cirba extended an agreement for the recycling “of lithium-ion batteries and cell scrap generated by manufacturing and research at select GM facilities through 2024.”

In December 2022, workers at a battery plant of GM supplier Ultium voted overwhelmingly in favor of union representation by the United Auto Workers Union. 

According to the Business and Human Rights Resource Centre, GM’s supply chains have been implicated in forced labour, environmental damage and workers’ rights violations.

Geely, together with Volvo, own a majority stake in the carmaker Polestar which has set an ambitious target of producing a completely climate neutral production car that fully eliminates greenhouse gases from production by 2030. Polestar has also partnered with Circulor to use blockchain technology to track a wide range of raw materials and achieve more sustainable supply chains. With the new partnership, Polestar and Circulor have set a progressive scope and ambition that aims to entail a range of raw materials, focusing on those with identified risks in either environmental and/or human rights, such as nickel, mica, manganese, graphite and lithium, amongst others. 

BYD’s Changsha factory has faced allegations of damaging pollution, which left citizens and children unwell, with 600 children near the factory reporting repeated nosebleeds according to reports.

BMW has signed agreements with Salzgitter AG in Europe, Steel Dynamics (SDI) and Big River Steel in the U.S. and HBIS Group in China for low-carbon steel to be used in its production cycles. In February 2023, BMW also signed an agreement to source reduced CO2 aluminum from Rio Tinto for its US vehicle production.

The Business and Human Rights Resource Centre has documented allegations against BMW’s supply chains for being implicated in environmental harms affecting the rights of Indigenous Peoples and forced labor. Reports also link BMW’s nickel supply chain with pollution in Indonesia.

The steel sector alone produces about 7-9% of the world’s annual greenhouse gas emissions. As a top consumer of steel globally, the auto industry has an opportunity and responsibility to use its outsized leverage on this industry to clean up its emissions.

The are several strategies for decarbonising steel production that can be supported by automakers, including:

• Increasing scrap-based production – scrap-based production “requires only around one-tenth of the energy of primary steel production.” According to the Mission Possible Partnership, increased scrap-based production will therefore “play an increasingly important role in decarbonising the sector, both as an input to secondary steelmaking (which relies heavily on electricity and will decarbonise in tandem with the decarbonisation of the power sector) and as an input to primary steelmaking that can help lower the carbon intensity of production.”
• Using zero-emissions electricity — As the RMI outlines, “incorporating renewables in manufacturing processes will further reduce scrap-based emissions due to the large and increasing portion of this material that is processed in electric-arc furnaces.”
• Deploying new technologies that advance the industry to fossil free steel — Incorporating low-and zero-emissions technologies such as green hydrogen-based reduction and iron ore electrolysis will result in significant emissions reductions for primary steel production, and can help move the industry towards the ultimate goal of eliminating fossil fuels and emissions altogether.

Although it’s essential for automakers to support the growth of secondary, or scrap-based, steel production by increasing the amount of recycled steel used in their production cycles, it is also essential that they use their purchasing power to incentivize investment and production of low and zero-emissions technologies for primary steel production. This is because, the Mission Possible Partnership outlines, “even in a more circular economy, over one billion tonnes per annum of primary steel (using iron ore feedstock as opposed to scrap) will be needed globally by 2050. Under a business-as-usual scenario, the increase in demand would result in 2.8 billion tonnes of annual CO2 emissions from the steel sector in 2050. This figure greatly exceeds the remaining carbon budget for the steel industry envisioned by the IEA’s beyond 2°C scenario, and the more stringent net-zero emissions target advocated by an increasing cohort of observers and countries… It is therefore critical that low-and eventually zero-carbon technologies are developed and deployed for primary steel production.”

Such technologies are increasingly coming online and commercially viable, but are not yet at scale and further development is needed in some technologies. However, they “must be brought to commercial scale by 2030 at the latest to enable fast deployment across the world in the 2030s and 2040s.”

As top consumers of steel globally, the auto industry can use its outsized leverage on these industries to spur innovations and investment in the breakthrough technologies that are required to keep these industries climate goals on a 1.5 degree pathway, while also providing the opportunity to reap the benefits of access to fossil free materials in a fast moving market.

What can automakers do?

Automakers can spur investment in and the deployment of the breakthrough technologies that are required to decarbonise steel by:

• Undertaking equity investments, joint ventures, offtake agreements and other contractual agreements with suppliers to catalyze investment in and production of fossil free steel.
• Setting publicly disclosed targets to increase the quantity of fossil-free steel used in their production cycles and disclose progress towards these targets.
• Joining demand-side multi stakeholder initiatives such as Steel Zero, Responsible Steel and The First Movers Coalition. By aggregating the commitments of multiple steel consumers, such multi-stakeholder initiatives can unlock investment in fossil free steel by creating confidence in the scale of future markets.
• Using their voices publicly to send demand signals to the market with regards to the auto industry’s commitment to purchase these materials.

Automakers should also support the increase in scrap-based steel production by setting targets to increase the amount of secondary / scrap steel in their production cycles, disclosing their progress towards achieving these targets, and developing closed loop processes to improve the recyclability of steel.

Finally, automakers should implement stringent environmental and human rights due diligence requirements for their steel suppliers to ensure that, from mining to manufacturing, the steel used in their vehicles does not cause other negative environmental and human rights impacts.

Government legislation and regulations are a crucial way to drive up climate, environmental and human rights standards across the auto industry and its supply chains. As InfluenceMap’s research demonstrates, “overall, ambitious climate legislation is a key driver for road transport electrification and a requirement for decarbonization.”

Consequently, as they transition to electric vehicles and set targets for carbon neutrality, automakers should support such legislation as a way to create a level playing field across the auto industry and its supply chains by ensuring that all automakers and their suppliers comply with robust standards on emissions, environmental protection and respect for human rights.

What can automakers do?

• Support legislation and stronger regulations for the decarbonization of the automotive sector and its supply chains
• Support legislation and stronger regulations on human rights and environmental due diligence
• Support stronger regulations and laws governing mining operations in the jurisdictions in which they operate or source supply chain components or materials.

Automakers have the responsibility to ensure respect for the rights of workers not only directly within their own business operations, but also across their supply chains. 

Ensuring respect for workers’ rights means implementing processes to identify, prevent, mitigate, account and remedy abuses of workers’ rights in their supply chain, in particular in relation to the ILO’s Five Fundamental Principles and Rights at Work:

• freedom of association and the effective recognition of the right to collective bargaining;
• the elimination of all forms of forced or compulsory labor;
• the effective abolition of child labour;
• the elimination of discrimination in respect of employment and occupation; and
• a safe and healthy working environment.

Beyond a commitment to, and recognition of, the relevant unions up the supply chain, companies should seek a positive relationship with the relevant trade unions as a core part of their processes to ensure that workers can join unions and collectively bargain without company interference, as well as to prevent, mitigate and remedy workers’ rights abuses, up to, and including, forced labor. For example, in the U.S., labor law permits employees to organize a labor union by majority sign-up of union authorization cards. Automakers should therefore agree to recognize and bargain in good faith with the union when a majority of workers sign the cards. 

What can automakers do?

• Publicly commit to respecting workers’ rights, including specific commitments to each of the five ILO principles, and extend these commitments to their Tier 1 suppliers and beyond (for example, through their supplier codes of conduct and contractual arrangements with suppliers). 
• Prohibit the payment of recruitment fees throughout their supply chain
• Publicly commit to a living wage
• Implement processes to assess and disclose salient workers’ rights risks in their supply chains, in consultation with trade unions. 
• Actively collaborate with workers’ and their representative organization(s) of their own choosing to promote workers’ rights and prevent abuses in their supply chains.
• Develop processes to respond to non-conformances associated with its workers’ rights policy occurring in its operations or supply chains and work with relevant trade unions and/or worker representative organizations to verify the implementation of corrective actions pertaining to workers’ rights.
• Develop grievance and remedy mechanisms that formally include workers and their representative organizations

It is estimated that more than half of the minerals required for the energy transition are located on or near Indigenous Peoples’ territories. The sourcing of these minerals therefore entails risks to the rights of Indigenous Peoples, including their right to self-determination over their lands, resources and economic, social and cultural development, as recognised in the UN Declaration on the Rights of Indigenous Peoples. Automakers have the responsibility to ensure that these rights are respected throughout their supply chains.

One of the most important ways to ensure this is by respecting Indigenous Peoples’ right to provide their Free, Prior and Informed Consent (FPIC) on projects and activities in auto-supply chains to be carried out on their lands and territories. This includes the right to meaningful dialogue and the right to say “yes” or “no” to a project, and is a process that Indigenous People-owned and led that companies engage in, rather than being owned and decided by companies.

“Consent” is the collective decision made by Indigenous Peoples, which is reached through customary decision-making processes. In order to comply with international standards on FPIC, consent must be:

• Free – Consent is given voluntarily and without coercion, intimidation or manipulation. The process is self-directed by the community from whom consent is being sought and unencumbered by externally imposed expectations or timelines.
• Prior – Consent is sought sufficiently in advance of any authorization or commencement of activities, and allows the time necessary for Indigenous Peoples to undertake their own decision-making processes.
• Informed – Consent is properly solicited when Indigenous Peoples are given objective and accurate information related to the proposed activity in an accessible manner and form.

FPIC must be understood as a continuous process, in the sense that it should allow for consent to be withdrawn at any time and that it should ensure information is continually provided so as to meet the baseline for “informed.”

As with human rights due diligence processes in general, strong FPIC policies can also help automakers to mitigate brand and financial risks in their supply chains.

Automakers must commit to Indigenous Peoples’ right to Free, Prior and Informed Consent and require their suppliers to do the same. They should also develop effective due diligence processes in order to ensure that this commitment is realized across their supply chain.

What can automakers do?

• Publicly commit, through their human rights policy and/or in a standalone indigenous rights policy, to respecting the rights of Indigenous Peoples as established by the  United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), including their right to Free, Prior and Informed Consent
• Extend their commitments to the rights of Indigenous Peoples to their Tier 1 suppliers and beyond, for example through their supplier codes of conduct and / or responsible sourcing policies. This entails also providing additional information on the practices by which suppliers must obtain FPIC and requiring that any such processes to obtain FPIC reach and engage impacted Indigenous Peoples.
• Put in place processes to assess risks to the rights of Indigenous Peoples impacted by their supply chains to the point of extraction.
• Participate in multi-stakeholder groups such as IRMA that include the participation of Indigenous communities to promote and ensure respect for their rights.
• Put in place processes to investigate, respond to and remedy breaches of FPIC in their supply chains that include a formal role for impacted Indigenous groups.

The transition to electric vehicles requires significant quantities of minerals such as cobalt, nickel, lithium, copper, manganese, and zinc. The sourcing of these materials carries significant human rights and environmental risks, including damage to water, land and other natural resources that local communities depend on. Some of these minerals are also sourced from areas characterized by armed conflict, otherwise known as conflict-affected or high risk areas (CAHRAs).

In order to address and mitigate these risks, automakers should develop and implement responsible mineral sourcing policies, which should include measures to identify, prevent, mitigate, account and remedy abuses in their supply chains caused by the sourcing of minerals.

The OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, together with their Due Diligence Guidance for Responsible Business Conduct and the UN Guiding Principles on Business and Human Rights, can provide a framework for such responsible sourcing policies that can be applied to all minerals in EV supply chains.

One important initiative in this area that should be supported by automakers is the Initiative for Responsible Mining Assurance (IRMA), the only third-party certification of industrial-scale mine sites for all mined materials that is governed equitably by the private sector, local communities, civil society, and workers. Automakers can support this initiative by joining it directly but also by prioritizing sourcing from mines audited by IRMA and requiring their own suppliers to be audited by IRMA.

What can automakers do?

• Develop standalone responsible minerals sourcing policies and/or include sections on responsible sourcing of transition minerals and metals in their human rights policies, that apply to all salient minerals and metals in their supply chains.
• Include human rights clauses in contractual arrangements with suppliers and require them to undertake due diligence in accordance with the OECD Due Diligence for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas, and put in place processes to monitor / audit suppliers for compliance with these diligence requirements and to respond with corrective measures if non-conformances are found.
• Put in place processes to map their supply chains back to the point of extraction.
• Disclose the transition minerals risks in their supply chain and where they are located.
• Engage smelters and refiners so as to build their capacity to conduct due diligence.
• Become members of IRMA, require their suppliers to be audited by IRMA and disclose commitments to source minerals from IRMA audited mines.
• Put in place grievance and remedy mechanisms that are easily accessible to rights-holders impacted by their transition mineral supply chains

Access to remedy is one of the three core pillars of the UN’s Guiding Principles on Business and Human Rights and an essential part of effective human rights due diligence. Access to remedy means that when human rights abuses occur in a company’s supply chain, they should provide for or cooperate in providing fair and just remedy.

For access to remedy to be effective, company grievance mechanisms are essential. Automakers should work individually and collectively to establish formal mechanisms whereby external stakeholders across their supply chains can raise grievances regarding adverse human rights impacts in their supply chain to an impartial entity.

Robust industry grievance mechanisms can be one of the main contributions that automakers can make to solving human rights abuses that occur in their supply chains. They can also serve as crucial early warning systems for companies and can provide invaluable information for broader human rights due diligence processes. This can enable problems to be addressed early before they escalate as well as helping to identify patterns over time, thus helping a company to manage risks effectively.

What can automakers do?

• Put in place formal mechanisms whereby workers, suppliers, suppliers’ workers (in any tier) and other external rights-holders can raise grievances regarding adverse human rights impacts in their supply chain to an impartial entity. These mechanisms should be easily available to rights-holders across the company’s supply chain.
• Disclose data about the practical operation of their grievance mechanisms, such as the number of grievances filed, addressed, and resolved, or an evaluation of the effectiveness of the mechanism.
• Put in place remedy processes that enable them to determine appropriate remedy for human rights abuses that occur in their supply chain
• Disclose information about how their remedy processes operate in practice (for example quantitative information regarding the types of allegations raised and qualitative case studies of the process in action).
• Involve impacted stakeholders in the determination of remedy.

All companies have the responsibility to respect human rights in their own operations and throughout their supply chains. Rights violations also risk operational disruption to automakers, as well as reputational damage: research demonstrates that opposition to projects and “the risk of human rights violations can have significant financial implications for investors and project development.” 

Effective human rights due diligence is therefore one of the most important processes through which companies can meet their obligation to ensure respect for human rights across their supply chains whilst also reducing their exposure to risk.

For automakers, human rights due diligence entails proactively identifying, assessing and disclosing salient human rights risks in their supply chains, and then taking measures to prevent, mitigate, account for and remedy these human rights impacts. An essential component of human rights due diligence is meaningful engagement with impacted stakeholders, particularly rights-holders such as employees, community members, Indigenous Peoples, human rights defenders, supply chain workers.

What can automakers do?

• Proactively identify, assess and disclose salient human rights risks and high risk supplier categories in their supply chains. 
• Assess and mitigate risks when entering into contracts with individual suppliers. 
• Incorporate contractually binding standards governing human rights due diligence and environmental management in suppliers contracts.
• Monitor and audit compliance of suppliers with company supplier codes of conduct during contract periods
• Implement corrective measures in cases of non-conformance and track the effectiveness of these measures in order to assess that they are working
• Ensure meaningful engagement of rights-holders in due diligence processes
• Develop and implement effective grievance and remedy mechanisms 

Automakers can and should play a proactive role in reducing the environmental impact of their suppliers across their supply chains. This includes impact on water, biodiversity, land, and forests. As with human rights due diligence, supply chain environmental due diligence is essential for risk management.

Automaker supply chains can be made up of thousands of suppliers, operating across dozens of countries and multiple continents. Automakers are therefore uniquely placed to raise the sustainability standards of their suppliers through enforceable supplier mandates governing effective environmental due diligence and management. As the head of procurement at Audi explains: “If we have our suppliers enforce our sustainability ratings to their suppliers, we’re talking about 14,000 direct partners in 60 countries multiplied by ‘N’ acting on it. When we look across the group, it is 60,000 suppliers. This is a power we are aware of. We want to use our supply chain as a force for good.”

According to the OECD, taking action to minimize and address the environmental impacts of their suppliers also brings multiple benefits to downstream companies, as it can “help an enterprise maximise positive contributions to society and sustainable development, improve stakeholder relationships, protect its reputation, and create more value by reducing operational costs by, for example, finding ways to use less water or energy. Due diligence processes can also help prevent supply chain blockages and delays, and reduce the time it takes to bring new assets onstream, which is of critical importance when delivering the digital and low-carbon energy transitions. Comprehensive due diligence processes can also help an enterprise meet legal requirements on labour, environmental, corporate governance and anti-bribery requirements.”

What can automakers do?

• Explicitly take environmental and water management into consideration in their tendering and contract processes for new suppliers.
• Include stringent environmental protection requirements in contracts with suppliers, for example by requiring suppliers to disclose their environmental, biodiversity and water impact assessments and plans.
• Implement mechanisms to audits and monitor suppliers for compliance with their plans and targets to minimize environmental impacts.
• Require suppliers to be audited or certified by credible schemes, such as the Initiative for Responsible Mining Assurance. 
• Publicly adopt a moratorium on deep seabed mining and ensure no deep sea tailing disposal or upstream tailings dams are present within their supply chain.
• Ensure responsible tailings management is implemented throughout their supply chains.
• Support government legislation and regulation, for example mining law reform and regulations, to raise environmental protection standards across the industry.
• Implement grievance and remedy mechanisms to ensure that environmental harms are remedied if they occur in their supply chains.

The circular economy is a critical leverage point for auto supply chains across the board – including steel, aluminium and battery supply chains. Circular economy interventions can significantly reduce emissions, as well as demand for new mining and its associated environmental harms and risks of human rights abuses. Furthermore, recycling can also significantly reduce production costs for automakers. 

The potential for reduction in emissions and raw material demand through recycling, reuse, material efficiency and other strategies is huge. One ton of recycled steel saves 1.49 tons of iron ore and avoids burning more than half a ton of coal over the production of new steel; recycling aluminium uses 95% less energy than producing primary aluminium. In the case of batteries, recycling can reduce GHG emissions by 38% and holds the potential for 25-55% reductions in mining demand by 2040 for cobalt, copper, lithium, and nickel. 

Automakers must maximize the benefits that increasing the recycled content of their vehicles can bring by implementing comprehensive circular economy interventions across their steel, aluminium and battery supply chains.

What can automakers do?

• Set and disclose targets on the recovery rates and the use of secondary/scrap metals in their production cycles.
• Integrate circular design and improved recyclability of steel, aluminium and batteries into their automobile design and manufacturing processes.
• Implement efficient closed loop processes to maximize the amount of recycled metals used in their manufacturing processes.
• Implement and support broader circular economy and material efficiency interventions, including lightweighting vehicles, fabrication loss reduction and lifetime optimization through repair, refurbishment and other strategies.

Automakers are the largest consumer globally of batteries and many of the minerals needed to produce them, including lithium and cobalt. The auto industry is also a major global consumer of other battery minerals such as nickel. It therefore has an opportunity to use its outsized leverage to clean up the emissions and wider environmental impacts of battery supply chains, from mining to manufacturing. 

This means taking actions at the level of battery manufacturing but also, since how battery materials are produced and sourced can have a significant impact on the overall carbon footprint of a battery and can also cause other negative environmental impacts, at the level of mineral extraction and refining. 

What can automakers do?

At the level of battery manufacturing, automakers can: 

• Set targets to reduce, and ultimately eliminate, emissions from their battery supply chains, as well as to reduce their reliance on energy intensive minerals in battery production.
• Require battery manufacturers to use 100% renewable energy. 
• Support and invest in Research and Development into new battery chemistries that are less emissions and mineral intensive, such as solid state batteries, which have a lower carbon footprint from the outset than today’s chemistries and could be manufactured without cobalt or nickel, and sodium-ion batteries, which have “the potential to completely avoid the use of critical metals.” 
• Implement closed loop processes and broader material efficiency strategies to increase recycling, recovery rates and reuse of batteries and battery minerals, which will reduce both emissions and demand for critical minerals. 

Automakers should also use their outsized leverage in global battery supply chains to reduce the emissions and broader impacts of battery mineral extraction and refining by: 

• Undertaking equity investments, joint ventures, offtake agreements and other contractual agreements with suppliers to catalyze investment in and production of zero-carbon or, at the very least, low-carbon extraction and refining technologies. 
• Implementing stringent environmental and human rights due diligence requirements for their suppliers to ensure that extraction of these minerals do not cause other negative environmental and human rights impacts.

The aluminum sector produces about 2% of the world’s annual greenhouse gas emissions. As the largest consumer of aluminum globally, the auto industry has a responsibility to use its outsized leverage over the industry to clean up its emissions. 

There are several crucial levers for decarbonizing aluminium manufacturing that can be supported by automakers: 

• Switching to zero-emissions electricity as a top priority, given indirect emissions from power generation account for 70% of aluminium production’s total (direct and indirect) emissions. Fortunately, as the IEA explains, because “about 55% of the power consumed by the industry globally is self-generated rather than purchased from the grid, many of these emissions are within the control of the industry itself.” 
• Deploying near zero-emission technologies for refining and smelting that advance the industry towards zero-carbon aluminium production. This is another critical lever since aluminium refining and smelting make up 90% of the industry’s direct emissions. Fuel switching to alternatives such as electric and hydrogen boilers, and substituting carbon anodes for inert anodes are some of the options being developed to achieve this that have the potential to abate 100% of direct emissions. 
• Strategies for material efficiency and increasing the proportion of recycled aluminium production. On average, producing a tonne of secondary aluminium generates only about 3% of the emissions associated with a tonne of primary aluminium. 

As is the case with steel, “more aluminium will be required than was produced in the past, so scrap availability will remain insufficient to meet demand purely with recycled production, even if collection rates are maximised” (IEA). Demand-side interventions that can support and scale the deployment of the breakthrough technologies needed to decarbonise primary aluminium production will therefore be essential, and automakers have a critical role to play in this regard. 

Action needs to be taken now to support these breakthrough technologies to reach the market at scale. This is because, the IEA explains, “for heavy industry, the year 2050 is just one investment cycle away… The challenge is to ensure that innovative near-zero emissions industrial technologies that are at large prototype and demonstration stage today reach markets within the next decade, when around 30% of existing assets will have reached 25 years of age and thus face an investment decision. If these innovative technologies are not ready, or not used even if ready, this would have a major negative impact on the pace of emissions reductions or risk an increase in stranded assets… The critical window of opportunity from now to 2030 should not be missed.”

What can automakers do?

Automakers can spur investment in and the deployment of the breakthrough technologies that are required to decarbonize aluminium by:

• Undertaking equity investments, joint ventures, offtake agreements and other contractual agreements with suppliers to catalyze investment in and production of low and, eventually, zero-carbon aluminium. 
• Setting publicly disclosed targets to increase the quantity of low/zero-carbon aluminium used in their production cycles  and disclose progress towards these targets. 
• Joining and disclosing purchasing commitments with demand-side multi stakeholder initiatives such as The First Movers Coalition and the Aluminum Stewardship Initiative. By aggregating the commitments of multiple steel consumers, such multi-stakeholder initiatives can unlock investment in low/zero carbon aluminum by creating confidence in the scale of future markets. It should be noted, however, that multi-stakeholder initiatives can come with limitations. For example, the Aluminum Stewardship Initiative’s certification process has been criticized by Human Rights Watch with regards to its robustness. Nonetheless, automakers can use their influence in these spaces to raise such concerns and drive up standards within them.
• Using their voices publicly to send demand signals to the market with regards to the auto industry’s commitment to purchase these materials. 

Automakers should also support the increase in secondary aluminium production by setting targets to increase the amount of secondary / scrap aluminium in their production cycles, disclosing their progress towards achieving these targets, and developing closed loop processes to improve the recyclability of aluminium in their production cycles. 

Finally, automakers should implement stringent environmental and human rights due diligence requirements for their aluminium suppliers to ensure that, from mining to manufacturing, the aluminium used in their vehicles does not cause other negative environmental and human rights impacts. 

The transition from ICE vehicles to EVs means that emissions drop overall but that the lifetime emissions profile of the car shifts. Embodied emissions can represent up to 90% of the total lifetime emissions from electric vehicles, making it the single most important area for emissions reductions for EVs. For automakers to meet their climate commitments and keep emissions within a 1.5 degree pathway, they must therefore set scope 3 science-based targets for emissions reductions that include upstream/purchased goods and services. 

As the Science-Based Target Initiative details, automakers who act now on Scope 3 targets stand to benefit. Greenhouse gas-intensive segments of a value chain are inherently more vulnerable to risk from increasing resource prices, such as increasing production costs of key suppliers, tightening efficiency standards for products, or taxation on carbon emissions. Setting targets to reduce Scope 3 emissions is therefore an essential component of strategic risk management and can help reduce cost. With investors, regulators and civil society increasingly turning their focus to scope 3 emissions, automakers who take proactive action now can stay ahead of the curve. 

Setting and monitoring Scope 3 emissions targets can also unlock new business opportunities for the auto industry. As the global economy decarbonizes, “the map of GHG emission hotspots created through scope 3 accounting can dramatically improve companies’ ability to forecast these changes and thus identify emerging business opportunities, as well as at-risk business segments, early.”

Automakers can use their outsized leverage in global supply chains to drive up standards for emissions reductions in the industries their supply chains depend on.

What can automakers do?

• Set science-based scope three targets that include upstream/purchased goods, and that include a 2050 and an interim year target(s).
• Require their suppliers to provide science-based targets to reduce their own GHGs, and disclose the current percentage of suppliers that are doing this, which will ensure automakers’ own targets have credibility.

For automakers to successfully eliminate emissions, environmental harms and human rights abuses from their supply chains to the point of extracton, they must first “know and show” what is happening across their supply chains.

As automakers ditch the tailpipe for EVs, the emissions profile of their vehicles car shifts. Although absolute lifecycle emissions drop dramatically, embodied emissions from supply chains can grow to represent up to 90% of the total lifetime emissions from electric vehicles, making it the single most important area for emissions reductions for EVs. Discerning and disclosing these emissions is an essential prerequisite for automakers to effectively reduce and, ultimately, eliminate them.

Transparency and disclosure of where and under what conditions the metals and minerals used in their vehicles are extracted, refined and used in their manufacturing processes is also essential for automakers to be able to ensure that environmental harms and human rights abuses do not occur in their supply chains.

With the focus of regulators increasingly turning to scope 3 emissions disclosures, such as the EU’s Corporate Sustainability Reporting Directive and proposed rules by the SEC on climate-related disclosures, automakers should act now to stay ahead of the curve.

Traceability and transparency of supply chains is also essential for risk management, enabling automakers to identify problems before they impact parts deliveries. Robert Bosch, the world’s largest auto supplier, now views transparency as the “No. 1 priority” in its relationships with suppliers and automakers.

What can automakers do?

• Map their supply chains to the point of extraction
• Disclose their scope 3 GHG emissions which result from purchased goods and services
• Disaggregate their scope 3 emissions by supply chain, including steel, aluminum and batteries.
• Disclose supply chain emissions beyond GHG to include other significant emissions that pollute the environment, as well as water usage.

Ford has established agreements for “low carbon” steel, ”low-carbon” battery and other metals, and a program to help suppliers eliminate their emissions.

Ford’s supply chains have been implicated in alleged worker rights violations, forced labor and environmental pollution affecting the health of local communities: see BHRRC for details and automaker responses.