Over the past decades, companies have seen the world change quite significantly. Maximizing profit is no longer the only objective of C-suite executives. Many companies are also focused on concepts such as sustainable development and environmental and social responsibility (see, for example, the World Economic Forum’s Global Risk Report 2020). This comes as no surprise. In line with rising global concerns about climate change and the environmental and social footprint of human activities, citizens and consumers are asking new questions about the provenance of products. This has lead to increased demand for FSC (Forest Stewardship Council)-certified paper and pieces of furniture; fair-trade and/or locally sourced food and clothes; certified sustainable seafood; etc.
However, in recent years, this trend has moved into industrial sectors such as mining. Consumers want to know the impact of the products they buy all along the value chain. This is especially true in the context of increasing demand for critical minerals to feed a rising global demand for battery-powered electric vehicles. In its 2019 report on key trends in the mining industry, Deloitte mentioned that “as customer demand for battery minerals rises, so too does the demand for transparent provenance. This is exposing miners to increased scrutiny as socially conscious consumers question the origin of raw materials in products ranging from cell phones to electric vehicles. As a result, downstream customers – such as automotive manufacturers and tech giants – are demanding ethically sourced minerals. This is driving the adoption of technologies to enhance the traceability of commodities.”
New standards do not mean full transparency
To demonstrate compliance with environmental, social and governance (ESG) best practices, the industry has developed many new initiatives, tools, standards, and certifications. These include: the Global Reporting Initiative; OECD’s Due Diligence Guidance for Responsible Supply Chains; UN’s Global Compact Principles; the Initiative for Responsible Mining Assurance; and the Responsible Minerals Initiative.
These initiatives and standards are increasingly being driven by end-users. Companies such as Tesla, Volkswagen and Daimler recently adopted policies and/or announced purchase agreements focusing on ESG integration and reduced carbon footprint in the wake of increased scrutiny by consumers, especially when it comes to battery minerals powering a green transition of transportation.
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