Week of 2 November 2020
Are companies mining with meaning, i.e., are they managing their human rights risks in the shift to clean energy? No – is the answer from a recent study
The race towards renewable energy is helping the world meet our necessary climate goals – but it’s also increasing human rights and environmental risks linked to mining of minerals needed for the energy transition. Laws like the French Duty of Vigilance law should be helping companies, policymakers and human rights advocates to identify and mitigate these risks more effectively, but NGO Sherpa says that companies’ reporting is coming up short in terms of transition minerals.
- As the climate crisis grows in urgency, governments around the world are calling for a large-scale shift away from fossil fuels towards renewable energy. In many cases, governments are incentivising the development of the renewable energy sector in an effort to meet climate goals in line with the 2015 Paris Agreement goal to limit global warming to 1.5°C.
- But the energy transition has its own risks and impacts: the development of renewable energy technology like batteries, wind turbines, solar panels and electric engines requires a substantial amount of raw minerals. Those minerals that cannot be sourced as recycled must be newly mined, increasing the likelihood of human rights and environmental impacts in resource extraction.
- The EU has added many of these minerals to its list of raw materials critical to the European economy and in September released a plan to secure critical raw minerals for the energy transition, including through mining.
- At the same time, European regulations are increasingly requiring companies to disclose their social and environmental risks and due diligence measures, for example the French Duty of Vigilance Law, the forthcoming European Conflict Minerals Regulation, and the EU Directive on Mandatory Human Rights and Environmental Due Diligence currently under development.
In response to these trends, human rights legal and advocacy organisation Sherpa assessed how well companies are reporting on how they are managing their transition minerals risks through the French Duty of Vigilance framework. In its report, Mining With Meaning: Protecting Human Rights and the Environment in the Shift to Clean Energy, Sherpa reviewed the vigilance plans of nine companies involved in different aspects of the renewable energy transition:
- Mining company Imerys
- Mining company Eramet
- Renewable energy companies Electricité de France (EDF)
- Renewable energy company Engie
- Energy transition tech company Nexans
- Energy transition tech subsidiaries of oil and gas company Total S.A.
- Technology manufacturer and mineral transportation company Bolloré
- Electric/hybrid car manufacturer PSA Automobiles SA
- Electric/hybrid car manufacturer Renault
- “Some companies confuse vigilance with reporting”—that is, many of the companies analysed fail to disclose adequate due diligence measures, instead relying on existing reporting through pure disclosure regimes like the EU Non-Financial Reporting requirement.
- “The risks associated with the use of minerals are often ignored.” Most companies do not mention the human rights and environmental risks associated with the extraction of minerals needed for renewable energy technology, with the exception of references to conflict minerals. Sherpa believes that most of the companies’ risk maps lack sufficient detail on the real impacts of mining beyond narrowly-defined conflict minerals reporting, whether in their own operations, subsidiaries or supply chains.
- “Vigilance measures are vague and unrelated to the risks associated with using minerals.” Sherpa finds that the limited detail companies provide on human rights and environmental risks results in companies establishing mitigation measures that are not effective to address the actual impacts on the ground. Sherpa calls on companies to provide more detail on their vigilance plans, including their approach to stakeholder engagement.
- Sherpa reports that some companies rely too heavily on “references to multi-stakeholder initiatives” like the Responsible Minerals Initiative in lieu of taking robust actions to mitigate human rights and environmental risks. Sherpa further points out that some of these initiatives have been criticised as ineffective in promoting human rights in mineral supply chains for the electronics sector.
- “Very limited traceability of minerals used.” Most companies only have traceability to their “direct suppliers,” although a few have taken measures all the way to Tier 3 suppliers (usually via audits of these suppliers). As a result—and due to the complexity of many mineral supply chains—there is limited traceability to the mine or country or origin.
- “Vigilance workarounds: use of pre-existing audit and certification practices.” Companies are relying on audits and certifications as evidence of their vigilance measures. However, the inherent limitations of audits and certifications make it difficult to assess their effectiveness as due diligence measures. Further, only a few of the companies Sherpa analysed disclose the results of their audits.
Sherpa shares four core recommendations for companies subject to the French Duty of Vigilance Law that source minerals used in the clean energy transition:
- “Draw up detailed risk maps by taking into account risks and violations associated with the use of minerals used for the energy transition.”
- “Implement value chain assessment measures aimed at ensuring the traceability of these minerals in order to know their origins and therefore take appropriate vigilance measures.”
- “Limit and assess the use of audit systems and certifications. These assessments should apply to the frequency of execution, the independence of the companies performing the audits and certifications, the content of their specifications, and the training of auditors, especially in the area of the Duty of Vigilance law. Should these assessments find deficiencies in the effectiveness or relevance of the audit system or certification, appropriate corrective measures should be specified. Lastly, when these assessments are performed, they should ensure that workers are protected, particularly against retaliation and the conduct of interviews without the presence of management.”
- “Assess the multi-stakeholder initiatives to which the company is affiliated using the same criteria as the audit system and certification assessments. These assessment procedures should ensure that the measures implemented as part of these initiatives are relevant to the appropriate vigilance initiatives within the meaning of the Law.”
Read the full report here: Sherpa, Mining With Meaning: Protecting Human Rights and the Environment in the Shift to Clean Energy (November 2020)