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.