Managing Cobalt Supply Chain Risks: Investor Strategies for Responsible Sourcing and Compliance
The report titled "Bridging ESG Silos: The Intersection of Climate Change and Modern Slavery" by Walk Free and AllianceBernstein aims to assist investors in comprehending and addressing the interconnectedness of material risks associated with climate change, the shift to renewable energy, and modern slavery.
Investors face growing exposure to both the tangible threats of climate change, such as extreme weather events and escalating natural disasters, and transitional risks as societies and economies undergo decarbonization. The report emphasizes the evident connections between climate change, the transition to renewable energy, and the heightened vulnerability to human rights abuses like human trafficking and modern slavery.
Presently, conscientious investors incorporate relevant environmental, social, and governance (ESG) factors into their investment decisions. However, ESG integration often operates in isolation, overlooking crucial interconnections between various issues. Notably, significant connections exist between environmental and social factors, such as the relationship between climate change and modern slavery.
The report utilizes seven case studies to illustrate how investors might be exposed to modern slavery risks arising from climate change and the energy transition. It also offers key insights for investors to address actual or potential impacts and introduces new tools to manage and disclose climate-related modern slavery risks, including a climate-reporting supplement and investor stewardship guidance.
CASE STUDIES
Investor Key Takeaways:
Assess and monitor whether operations and/or supply chains are situated in regions prone to sudden-onset climate-related events.
Investors face growing exposure to both the tangible threats of climate change, such as extreme weather events and escalating natural disasters, and transitional risks as societies and economies undergo decarbonization. The report emphasizes the evident connections between climate change, the transition to renewable energy, and the heightened vulnerability to human rights abuses like human trafficking and modern slavery.
Presently, conscientious investors incorporate relevant environmental, social, and governance (ESG) factors into their investment decisions. However, ESG integration often operates in isolation, overlooking crucial interconnections between various issues. Notably, significant connections exist between environmental and social factors, such as the relationship between climate change and modern slavery.
The report utilizes seven case studies to illustrate how investors might be exposed to modern slavery risks arising from climate change and the energy transition. It also offers key insights for investors to address actual or potential impacts and introduces new tools to manage and disclose climate-related modern slavery risks, including a climate-reporting supplement and investor stewardship guidance.
CASE STUDIES
Investor Key Takeaways:
Assess and monitor whether operations and/or supply chains are situated in regions prone to sudden-onset climate-related events.
- Examine whether labor considerations are taken into account in these high-risk areas, such as the risk of large-scale migration following sudden-onset climate-related events.
- Evaluate if labor-intensive components of operations and/or supply chains are located in regions susceptible to generating or receiving a large number of climate migrants.
- Understand if due diligence is conducted in these high-risk areas and within labor-intensive segments to identify modern slavery risks, work to mitigate them, address adverse impacts, track and measure progress, and report any findings.
Transition Risk Case Study
Investor Insights
- Assess the alignment of a cobalt responsible sourcing policy with pertinent elements of the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, and examine the implementation of this policy.
- Gain an understanding of the percentage of cobalt originating from the Democratic Republic of the Congo (DRC) within a supply chain that is linked to artisanal and small-scale mining.
- Evaluate whether a supplier code of conduct adheres to applicable international standards, such as the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work, encompassing aspects like child labor, and analyze how supplier compliance is evaluated.
Companies