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Climate and Environment
Human Rights & Responsible Sourcing
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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.