A groundbreaking AI-powered study has uncovered alarming human rights issues within the global battery supply chain, potentially impacting 75 per cent of the world’s battery market.
This revelation comes at a critical time as lithium-ion batteries play a pivotal role in the transition away from fossil fuels.
The research, conducted by AI supply chain risk platform Infyos, highlights the intricate nature of battery supply chains, which can involve over 10,000 suppliers.
These networks span from raw material extraction to chemical refinement and manufacturing processes.
The study identified a range of human rights violations, including:
- Forced labour in lithium refining facilities
- Child labour in cobalt mining, with children as young as five working in hazardous conditions
- Widespread abuses in resource-rich countries with unstable governments, such as the Democratic Republic of Congo and Madagascar
Many of the severe human rights allegations are linked to companies mining and refining raw materials in China, particularly in the Xinjiang Uyghur Autonomous Region (XUAR).
This area has been the subject of numerous reports of forced labour from journalists, government agencies, and non-profit organisations.
The battery industry is facing increasing scrutiny and regulation:
- The US Uyghur Forced Labour Prevention Act (UFLPA) has led to the blocking of vehicle imports found to violate the regulations
- The EU Battery Regulation, to be phased in between 2024 and 2036, will require more rigorous supply chain visibility and risk management
- Proposals in the UK aim to increase fines for non-compliance with the Modern Slavery Act to 4 per cent of global annual turnover
Sarah Montgomery, CEO & Co-Founder of Infyos, warns: “The relative opaqueness of battery supply chains and the complexity of supply chain legal requirements means current approaches like ESG audits are out of date and don’t comply with new regulations.”
As the global battery market is forecast to reach nearly $500 billion by 2030, addressing these human rights concerns is crucial for the industry’s clean credentials and future growth.
Companies must take immediate action to ensure compliance with current and upcoming regulations, maintain their license to operate, and meet the growing demands of socially conscious investors.
The battery industry now faces the challenge of balancing rapid growth and innovation with ethical sourcing and production practices to support the global transition to clean energy.
