As part of the global mission to reduce emissions and live sustainably on this planet by meeting the UN Paris Climate Agreement, the electric vehicles (EV) industry has grown significantly in recent years. EVs emitted around 30% less emissions than petrol and diesel vehicles in 2023 on average. With the switch to electrification, the EV sector will form a crucial and essential part of our drive to limit global temperature rises.
The EV sector sits at the crossroads of where human rights and environmental issues meet
The EV sector, with its reliance on minerals, sits at the crossroads of where human rights and environmental issues meet. Stakeholder collaborative platforms like the Global Battery Alliance exemplify this.
Alongside the growth of the EV industry, complaints of human rights abuses in the mining sector are rising. EVs require six times as many minerals as cars that run on fossil fuels. The long-term environmental benefits of switching to EVs are well-known, but the rare minerals that are required to make them, like cobalt, copper, lithium and nickel, are often sourced from mining operations with low oversight, and high risk of human rights abuses. Back in 2021, mining drove 45% of the global economy. As a result of the rapid growth of the electric vehicles sector (EV), that figure is set to increase. According to the International Energy Agency, demand for minerals will increase nine-fold from 2024-2050, placing huge stress on the sector to meet rising demand.
With regulations on supply chain human rights incoming, companies in the sector will be held accountable by governments, journalists, stakeholders and the public. But the sector’s recent success can be the catalyst for change and impact. As the sector grows there is an opportunity to change the narrative and transition towards a sourcing model that works for workers, and helps suppliers to implement compliant and sustainable labour and human rights policies.
Low visibility, regulations and immature policies create a perfect storm for human rights risks
ESG remains a serious consideration in boardrooms around the globe. Failure to comply with human rights due diligence obligations can lead to fines, civil liability, a revocation of a license to operate, and reputational damage. In the last year, a major benchmarking report from Amnesty International and findings from the Business and Human Rights Resource Centre transition minerals tracker, have confirmed concerns.
From 2010-2022, there were 630 human rights related allegations in the extractive industries sector.
From 2010-2022, there were 630 human rights related allegations in the extractive industries sector. In Amnesty International’s assessment of 13 leading EV brands, it was found that almost half of companies made no or very minimal commitments to engage with stakeholders on the ground to assess human rights risks or develop solutions. There was “very little evidence” of companies obtaining free, prior and informed consent (FPIC). The world’s largest EV producer, China’s BYD, scored lowest at 11 points out of a potential 90 in Amnesty’s benchmarking report.
“Environmental damage, forced evictions, dangerous working conditions, and violations of Indigenous Peoples’ rights are just some of the abuses identified by people affected by industrial mining.” – Recharge for Rights, Amnesty International
40% of reported violations in 2023 were related to labour violations. The figures also included 53 work-related deaths. While Tesla has a “zero-tolerance” child labor policy, the vast majority of the world’s cobalt comes from the Congo, which has a significant informal mining sector where child labor is rife. Despite these risks, the vast majority of companies are not engaging with stakeholders, not obtaining consent for operations, and not monitoring and reporting against the impacts of their sourcing decisions on human rights. They don’t have consistent remediation policies, nor are they publicly communicating the policies they do have in place. Civil society is taking note, with multiple NGOs and journalists writing to major EV companies for comment on significant human rights scandals. EV companies are feeling the pressure.
However, that’s not to say the sector is doing nothing. Ford, Mercedes-Benz and Tesla have been praised for making progress. Ford has the strongest due diligence policy, and has made a commitment to a living wage. Mercedes-Benz has strong policies in place for workers rights, set clear targets, and makes transparency efforts with regards to sustainable sourcing. The industry wide evolution from life-of-mine plans towards life-of-community plans is a promising new approach.
Regulations give Worker Voice the Green Light
Human rights due diligence (HRDD) laws are changing the global regulatory approach to human rights risks in the supply chain. These laws take their lead from the UN Guiding Principles on Business and Human Rights. The latest generation of HRDD laws require companies to identify, assess, mitigate and report on human ri
Regulations require companies to engage with workers and stakeholders on the ground
ghts risks in the supply chain. The EU Batteries Regulation and the Forced Labor Regulation place even more responsibility on EV companies to carry out effective due diligence.
Compliance with HRDD laws such as the EU’s CSRD and the CSDDD, which will affect four out of five companies involved in the extractive industries, will require companies to get a head start on risk by getting closer than ever to their sourcing locations and the workers there. These regulations require companies to engage with workers and stakeholders on the ground to monitor human rights and labour risks. Pressing issues include health and safety, fair remuneration, discrimination and more. They also need to implement policies that address these issues, and demonstrate the impact of these policies in year-on-annual reports.
Failure to comply can lead to fines, removal of market access, civil liability, and in the proposed laws in South Korea and the Netherlands, criminal liability. Japan, another major EV producer, is looking closely at these issues. At the time of writing, there are 24 enacted and tabled HRDD laws across major global economies, from the US, to South Korea, Europe and beyond.
Putting the EV Industry in Pole Position for Responsible and Sustainable Business Conduct
The growth of the EV sector and the increased demand for global mineral production means that companies are no longer forced to go to the same high-risk areas for their sourcing operations. Increased choice means increased competition, and an opportunity to raise industry standards.
Advances in stakeholder-voice technology now allow companies to directly engage workers and communities, gathering real-time data on emerging human rights and labour risks at mineral mines at scale in a cost-effective manner. Companies can use the data they gather to begin implementing a human rights due diligence (HRDD) process driven by worker and rights holders’ needs and hard evidence, improving their ability to predict and prevent risks, and comply with regulations.
By using stakeholder-voice technology, EV companies can future-proof their HRDD efforts
Ulula’s stakeholder engagement tools, multilingual surveys and information-sharing features are designed to help companies to build prior and informed consent with local communities, foster dialogue, and maintain a social license to operate. Through Ulula’s platform, community members can raise concerns anonymously, which means companies can be certain that the data they use in their reports reflects the reality of the situation on the ground.
Traditional mechanisms for tracking human and labour rights risks, like hotlines and suggestion boxes, aren’t enough to protect workers on the ground. Ulula bolsters this approach by enabling companies to send alerts directly to community members’ mobile phones and gather real-time feedback on consultations. Workers and stakeholders can engage in a two-way dialogue with an assigned officer, in private, facilitating deeper insights and, consequently, more effective and targeted risk reduction solutions.
The EV industry is growing fast. It’s imperative that EV companies start gathering continuous data on community perceptions and environmental impacts now so they can resolve concerns before they escalate.
By using stakeholder-voice technology, EV companies can future-proof their HRDD efforts, meet due diligence obligations, and maintain strong relationships with workers and communities. For more information, fill out the form below and someone from our team will be in touch with you shortly.