Forced labour polluting ESG credentials of lesser-known energy transition materials
by Jess Middleton,
The role of forced labour in the extraction of metals, including cobalt in places like DR Congo, is increasingly well documented. But a host of other vital, albeit less-heralded, energy transition materials are also exposed to forced labour, threatening to dilute the ESG value of technologies such as electric vehicles and solar panels.
Take graphite, the dominant anode material in commercial lithium-ion batteries. According to the International Energy Agency (IEA), the electric mobility and low-carbon energy sectors will demand 25-times more graphite per year by 2040. And yet, any optimism around graphite’s association with ‘clean’ energy is dampened by its proximity to human rights abuses.
More than 97% of graphite production takes place in countries rated high or extreme risk in the latest edition of our Forced Labour Index (FLI). This is primarily a result of the human rights risks associated with the world’s top graphite producing country – China (responsible for 79% of global output).
It is a similar story for platinum, which may play a vital role in the low-carbon economy should the production of green hydrogen and hydrogen fuel cells reach their full potential. South Africa (responsible for 70% of global production) is rated high risk on the FLI, driven in part by evidence of forced labour in the country’s mining sector. Neighbouring Zimbabwe, which produces 8% of the world’s graphite, is rated extreme risk.
Two-thirds of the world’s silver – which plays a key role in clean energy through its use as a conductor within solar panels – is produced in countries rated high or extreme risk for forced labour. This includes the world’s largest producer, Mexico (responsible for 23% of global output), as well as Peru (14%) and China (13%).
Most incidents of forced labour in Mexico are reported in the agricultural sector, and large mining operators adhere to Mexico’s domestic legal framework and international standards to prevent association with abuses, despite the country’s weaknesses in their implementation. But the risk of forced labour entering the value chain cannot be ruled out, particularly via small projects and artisanal mining.
These mined materials play an increasingly vital role in the production of alternatives to the carbon economy. But unless inherent forced labour risks are addressed within key producing countries, the green transition will become increasingly polluted, in turn leaving corporates and investors exposed to material damages stemming from a growing list of human rights due diligence laws.