Rainforest Foundation Norway (RFN) and AidEnvironment have released the report “Short circuits: exploring the broken links of mineral supply chain policies,” which examines the due diligence policies and practices of key players in the electric vehicle (EV) industry. According to the report, there’s a lack of commitment to deforestation in mineral supply chains across EV battery producers and automakers alike and identified “broken links” between automakers’ and battery manufacturers’ policies.
The report found that automakers that do have deforestation commitments to source batteries from battery manufacturers that do not have commitments around deforestation or biodiversity.
“The EV industry’s evident lack of control in the supply chain marks a stark contrast to its profits. Policymakers, 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,” Toerris Jaeger, executive director of Rainforest Foundation Norway said.
Although varying in degree, the research found that none of the companies in Rainforest Foundation Norway’s inquiry had sufficient policies and commitments in place for diligent sourcing of transition minerals, and there was a distinct lack of transparency and disclosure practices to enable cross-checking and verification of data.
The automakers examined were BYD, BMW, Ford Motor, Geely, General Motors, Mercedes-Benz, Nissan Motor, Renault Group, Stellantis, Tesla and Volkswagen. The EV battery manufacturers examined were CATL, Farasis Energy, LG Energy Solution, Northvolt, Panasonic, Samsung SDI, SK Innovation, and Sunwoda Electronic.
Overall, the report found that Tesla is the best performer amongst the EV manufacturers, followed by European manufacturers BMW and Mercedes-Benz.
The report concluded that companies should pay much closer attention to the environmental consequences of sourcing transition minerals. Due diligence must be put in place, thoroughly assessing the environmental impacts, particularly deforestation and biodiversity loss. Most importantly, damage mitigation and remediation must be adequately reflected in company policies and commitments.
Key findings from the report include:
- Closer attention to transition minerals such as nickel, cobalt, manganese, copper or lithium is needed in due diligence approaches;
- Increased focus on environmental impacts, particularly deforestation and biodiversity loss, in company policies and commitments;
- Enhanced protection of the rights of IP and local communities, including FPIC, as well as meaningful engagement and remediation actions;
- Improved transparency and disclosure practices to enable cross-checking and verification of data;
- Accelerated efforts in mineral recycling and circular economy approach to alleviate pressures from sourcing primary minerals;
- Mining disproportionately impacts rainforests.
The growing demand for minerals needed to aid the green transition drives expansive mining for nickel, cobalt, manganese, copper and lithium, according to the report. Many of these minerals are mined from vulnerable ecosystems and are linked to rainforest destruction and human rights abuses.
According to a WWF report published in 2023, 62% of the total direct deforestation related to mining occurred in tropical and subtropical rainforests, despite these areas only having 29% of the world’s mining areas.
On the back of these findings, a new Investor Initiative calling for responsible nickel mining practices was launched on February 19, created by Rainforest Foundation Norway (RFN) together with the Dutch Association of Investors for Sustainable Development (VBDO).
31 investors, with over $2.7 trillion in combined assets under management, have signed a statement demanding companies to enhance their environmental and social due diligence in nickel supply chains of the EV industry.
DNB and Storebrand are among the initiative’s signatories. The initiative is directed at companies in the downstream EV sector, including automakers and EV battery producers. The initiative is open to new members.
