Lithium-ion batteries, essential for transitioning away from fossil fuels, face sustainability challenges. The mining process for materials used in these batteries has been linked to both pollution and human rights abuses, particularly forced and child labor. Ensuring an ethical supply chain is crucial for both society and business.
Infyos Research Highlights Supply Chain Risks
New research by Infyos, an AI-powered supply chain risk platform, revealed that 75% of the global battery market is tied to companies involved in human rights violations. Many incidents occur in resource-rich countries, especially in China’s Xinjiang Uyghur Autonomous Region (XUAR), where forced labor and exploitation are reported. Some children, as young as five, are involved in hazardous cobalt mining.
Complex Supply Chain Structures
Battery manufacturers often unknowingly source materials from unethical companies. Complicated ownership structures can obscure connections to these violations, making supply chain oversight difficult. Sarah Montgomery, CEO of Infyos, emphasized the need for greater transparency and monitoring in the industry.
Impact on the Market and Business Risks
Human rights abuses in supply chains carry significant consequences for businesses. Companies risk losing access to key markets like the EU, which is introducing new regulations aimed at ensuring that batteries sold in the region are free from human rights abuses and environmental harm. Non-compliance can lead to market restrictions, fines, and damaged reputations.
ESG Pressure and Investor Concerns
Businesses also face growing pressure from investors to address environmental, social, and governance (ESG) issues. A PwC survey found that 49% of investors are willing to divest from companies that fail to take sufficient action on ESG concerns. As the market demands greater transparency, companies that neglect these issues may struggle to maintain investor interest and meet net-zero targets dependent on lithium-ion technology.
Source: thenextweb.com
