Addressing the Human and Environmental Cost of Transition Mineral Supply Chains for Electric vehicles

As the world shifts toward renewable energy to combat the climate crisis, electric vehicles (EVs) are considered as one of the key solutions. With their potential to drastically reduce carbon emissions, EVs are rapidly gaining momentum in the global market. However, a new report from Climate Rights International (CRI) brings to light a troubling issue that threatens to undermine the ethical and environmental promise of electric vehicles: the human and environmental cost of transition minerals.

Transition minerals—such as nickel, lithium, copper, and cobalt—are critical components in the production of Electric Vehichles batteries and renewable energy technologies like solar panels. While these minerals are essential for the renewable energy revolution, the way they are sourced has ignited growing concerns about human rights violations, environmental degradation, and the impact on local communities in regions rich in these resources.

Nickel Mining in Indonesia: A Case of Local Harms for Global Ambitions

Indonesia, the world’s largest producer of nickel, plays a key role in supplying this crucial mineral for EV batteries. However, CRI’s January 2024 report, Nickel Unearthed: The Human and Climate Costs of Indonesia’s Nickel Industry, uncovers the heavy toll nickel mining takes on communities in places like North Maluku.

According to the report, mining activities there have led to widespread pollution of air and water, deforestation, land grabbing, and a marked decline in local residents’ quality of life.

For locals like 29-year-old activist Adlun Fikri from the coastal village of Sagea in North Maluku, the cost of nickel mining is personal and devastating. “In the upstream area where they mine, it’s destructive—degrading forest, destroying land, and causing human rights violations,” Fikri told CRI. “The local residents here bear the cost for global ambition [of net zero]. Western people enjoy the electric vehicle, and meanwhile, we get the negative impact.”

Fikri’s words resonate with a broader concern: while the EV industry is primarily driven by countries such as the United States, China, Germany, and France, the environmental and human rights abuses in supply chains often remain hidden from view, concentrated in distant, resource-rich regions. This disconnect between the clean energy goals of EV manufacturers and the ground-level realities of mining communities demands urgent attention.

The Responsibility of EV Companies

In response to these findings, CRI has called on electric vehicle companies to take concrete, time-bound steps to prevent and mitigate climate, human rights, and environmental harms in their mineral supply chains.

The organization wrote to 19 of the world’s largest automakers, seeking transparency and information on their due diligence practices regarding the sourcing of transition minerals. Shockingly, only a few companies responded.

Tesla, Ford, and Volkswagen, three major automakers sourcing nickel from Indonesia, were contacted before the release of the Nickel Unearthed report. While Ford responded promptly and continues to engage in discussions, Tesla has only engaged in discussions without providing a written response, and Volkswagen responded in writing after the report’s release but has only participated in limited dialogue.

In a more recent outreach effort in April and May 2024, CRI contacted 16 additional electric vehicle companies. Of these, only General Motors, Mercedes-Benz, BMW Group, and Renault provided responses, highlighting their policies for addressing human rights and environmental concerns in their supply chains. The other 12 companies—BYD, Honda, Hyundai, Kia, Nio, Nissan, and Volvo, among others—did not respond, indicating an apparent reluctance to provide basic transparency about their supply chain practices.

Electric Vehicles Companies’ Efforts: Policies and Gaps

While it is encouraging that some EV companies have implemented policies to address the risks associated with their supply chains, there remain significant gaps in how these policies are enforced and monitored.

– Renault shared that its human rights vigilance plan focuses on cobalt and minerals from conflict zones and aims to align with global human rights standards. However, as of May 2024, the policy did not yet cover all battery minerals, including nickel—an oversight they plan to rectify by the end of the year.

– Mercedes-Benz conducts raw material assessments based on the UN Guiding Principles on Business and Human Rights. They aim to identify and mitigate risks through increased transparency and proactive measures in supply chains.

– BMW Group has created a closed-loop system to reuse key materials like nickel, lithium, and cobalt from old batteries, reducing the demand for freshly mined raw materials. The company monitors its supply chain compliance with risk filters and media analyses.

– General Motors emphasizes supplier training and engagement to ensure responsible human rights management, but the scope of their supplier code of conduct remains unclear when it comes to indirect suppliers further upstream.

While these initiatives are a step in the right direction, they often fall short in terms of transparency and enforcement. Policies are only as effective as their implementation, and without independent audits, clear consequences for non-compliance, and full transparency of the entire supply chain, it is difficult to assess whether meaningful change is occurring on the ground.

Urgent Steps Forward

CRI outlines several key steps that EV companies must take to ensure their supply chains are free of human rights abuses and environmental destruction. These include:

– Requiring direct suppliers to disclose their full list of suppliers and ensure that company policies on human rights and environmental due diligence are upheld across the supply chain.

– Conducting regular, independent audits of mines and facilities to verify compliance with human rights and environmental standards.

– Increasing supply chain transparency by making public the names of all companies involved in mining, refining, and battery production.

– Setting clear, time-bound goals to decarbonize the supply chain and holding suppliers accountable for progress.

– Using corporate leverage to push suppliers to address harms to local communities and ecosystems—and stopping the sourcing of minerals from companies that fail to meet standards.

“The electric vehicle industry touts itself as reducing emissions and making the world a more environmentally sustainable place,” said Krista Shennum, a researcher at CRI.

“But those words ring hollow when communities suffer. Given the environmental consciousness of its customer base, the EV industry fails to ensure their supply chains are free of human rights abuses and environmental harms at its own peril.”