It’s well documented that consumers are increasingly in the spotlight for their environmental, social, and governance (ESG) practices and stances – a 2018 survey by Accenture Strategy found that more than a third of consumers in the UK will walk away from a brand when disappointed with its social stances.
For renewable energy, the issue is compound: people don’t want to materially support companies with perceived unethical business practices and consumers are generally distrusting of companies that purport to have a role in green transitions while turning a blind eye to humanitarian or ecological abuses in their supply chains.
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By GlobalDataNo longer a tucked away logistics issue, the supply chain has taken a more front-facing role that can be a marketable advantage over competitors. And while companies can adopt their own ESG commitments, there is a recognition that some of the major supply chain issues – forced labour, corruption, or lack of oversight – can be better tackled as a collective.
Solar companies urged to move out of Xinjiang
Following the allegations directly linking the solar industry to forced labour practices among the Uyghur population in Xinjiang, US industry body the Solar Energy Industries Association (SEIA) said that it was “disgusted by these practices, and forced labour has no place in the solar industry”.
An estimated 50% of the global supply of polysilicon, a critical component of solar modules, is produced in the Xinjiang region. The industry in Xinjiang has quadrupled in size since January 2018 and credible reports link polysilicon manufacturers in the region to forced labour.
The SEIA underscored its commitment to ensuring responsible practices in its supply chains and in late 2020 launched a proactive effort against forced labour in the solar supply chain. This includes creating traceability protocols for products in the solar supply chain and updating expectations for how solar companies should operate throughout the value chain.
The association also secured the signatures of 175 solar companies collectively stating their opposition to forced labour in the solar supply chain.
“We hereby commit to helping ensure that the solar supply chain is free of forced labour and raising awareness within the industry on this important issue,” the pledge reads.
“To assist in these efforts, we support the development of an industry-led solar supply chain traceability protocol as a tool for identifying the source of primary raw materials and inputs and tracking their incorporation into finished products, including solar modules.”
US solar company SunPower was among those signatories. Suzanne Leta, head of policy and strategy at SunPower, said: “SunPower is committed to making human rights a central issue throughout our supply chain and implore others to do the same. Signing the Forced Labor Prevention Pledge was a meaningful first step; now we must be vigilant about continuing to lead our industry to do the right thing.”
Cleaning up cobalt
Cobalt has been a particular pain point for battery manufacturers. An essential material for a transition to green energy, cobalt is predominantly mined in the Democratic Republic of the Congo (DRC), where even conservative estimates suggest that mining operations’ use of child labour is widespread.
The Fair Cobalt Alliance (FCA) represents cobalt supply chain actors across the major cobalt-consuming industries. Members are working together to invest in the professionalisation and support of existing artisanal and small-scale (ASM) cobalt sites including, where necessary, supporting the transition of illegal or unsustainable operations to alternative operations.
David Sturmes, senior director of programmes and operations for the FCA, explains that voluntary sustainability standards such as the DRC’s Certified Trading Chain Standard allow companies to use their brand logo only once the company is in full compliance with all criteria – a process that can take up to two years to achieve.
“While this might provide assurance to buyers, it can also lead to the categorical exclusion of operators that lack the capacity, understanding and resources to meet the respective standard’s criteria immediately,” Sturmes says.
“Many ASM operators over the world fall into this second category. If followed, this ‘compliance first’ route means that downstream brands effectively ban ASM material from global supply chains and inhibit resources reaching the very communities that need it the most.
“Currently, there is no ‘officially’ certified responsible cobalt standard and therefore no certified cobalt available. Excluding ASM does not improve conditions in mining communities, and downstream brands are no closer to being able to implement and demonstrate their credentials associated with responsible sourcing strategies. A new approach is needed.”
The FCA enters into a binding agreement with ASM cobalt sites, through which operators commit to the timely implementation of continuous improvement plans, while the FCA commits to supporting the operator through the provision of capacity building and investments funded by its members.
Over time, ASM operators benefit from assistance to improve their mines, and downstream buyers are able to demonstrate that they are managing risk while making a positive impact upstream.
The alliance counts Tesla, Glencore, and Huayou Cobalt among its members.
Pressure on biofuels
The biofuels industry has long been criticised for its environmental harms – a 2020 study suggested that the biofuels policies of the EU and other regions will massively increase deforestation over the next decade. This increase in deforestation would release an estimated 11.5bn tons in CO2 emissions. Bioenergy projects also require the largest land footprint of any renewable energy subsector, making land grabs a particular point of concern.
But the biofuels industry has been wrestling a quieter problem. A report from the Business & Human Rights Resource Centre found that companies involved in bioenergy projects are particularly at risk for abuses of indigenous peoples’ rights – including projects lacking free, prior, and informed consent – and causing or contributing to displacement and loss of livelihoods. The industry has also been linked as contributing to violence, intimidation, and threats in host communities.
Additional research has flagged concerns over labour rights in the biofuels space. In 2018, the Business & Human Rights Resource Centre surveyed bioenergy companies and found that a third did not have a human rights commitment in place.
Indigenous peoples’ organisations working with human rights and environmental activists, farmers’ unions, and others, have lobbied the European Commission over several years, warning of the impact of the palm oil industry on the environment and for the industry’s human rights violations. Palm oil forms an essential part of many biofuels and there has been pressure to improve the industry’s record as bioenergy demand grows.
Neste, a producer of renewable diesel and sustainable aviation fuels, has been one company to commit to sustainably produced, certified, and traceable palm oil in its portfolio. Palm oil accounts for about 20% of Neste’s annual renewable raw material inputs – the company does not own palm oil plantations itself, but sources the commodity from Malaysia and Indonesia.
In collaboration with NGOs, Neste has worked to tackle challenges related to human rights and labour issues in the industry.
“Although we do not own any oil palm plantations, nor operate any palm oil refineries, we have strong business relationships with our suppliers and therefore have the leverage to make an impact. I believe we should use our influence to help improve the lives of those who are most vulnerable,” said Neste sustainability director Johan Lunabba in a statement.
The company committed to auditing palm oil companies’ human rights practices, including workers’ rights, use of child labour, and forced labour, as part of its due diligence before selecting suppliers.
