The Elements of Innovation Discovered
The Elements of Innovation Discovered
Metal Tech News - September 18, 2024
Infyos's platform has been developed for its customers to track their supply chain and mitigate exposure risk to human rights abuses, compiling data from across the global battery supply chain.
The Uyghurs, a cultural minority in China, have been subject to religious persecution, indoctrination, forced labor, and other human rights violations by the government.
Electric vehicle and battery manufacturers oversee a complex supply chain from mines to chemical refineries and automotive manufacturers. Human rights abuses frequently occur in upstream stages, notably at poorly documented raw material mining and refining points.
An AI-driven supply chain risk assessment platform by Infyos has discovered evidence that many of the world's largest automotive, energy storage, consumer electronics, and heavy industry companies are using lithium-ion batteries tainted by human rights abuses in one or more areas of their supply chain.
Infyos has been working with some of the world's largest renewable energy and automotive companies to combine open-source and proprietary data and identify which companies a customer may be connected to across the supply chain and where there is exposure to or allegations of abuses.
The company's AI-driven supply chain risk analysis platform meticulously analyzes and verifies its information against in-depth data confidence criteria – thousands of government datasets, NGO reports, news articles, and social media sources – in a process developed specifically to aid the battery industry in automating the gathering and classification of unstructured data to identify and assign confidence ratings regarding human rights abuses with unprecedented accuracy and speed.
"Our platform is designed to provide users with insights into the complexities of the battery supply chain so they can take proactive measures to identify and mitigate risks," said Infyos Chief Technical Officer Tony To. "By leveraging AI in our technology we've created a system that delivers accurate data despite the complexity of the battery industry and most importantly provides users with simple actionable mitigations to collaborate with their suppliers to address risks and improve the sustainability of the industry."
The Uyghurs, a cultural minority in China, have been subject to religious persecution, indoctrination, forced labor, and other human rights violations by the government.
Lack of supply chain visibility is likely covering extensive breaches in the United States Uyghur Forced Labor Prevention Act (UFLPA), which prohibits the import of goods made with forced labor in the Xinjiang region of China, and the EU Battery Regulation, which was designed to make the battery industry more sustainable and accountable.
Violations of these laws could mean countless battery products being blocked from the market as regulators, banks, and lenders further mandate increased supply chain visibility and risk data.
Responsible and transparent sourcing of batteries is essential to the energy transition, effectively delivering on net-zero targets, and per a recent whitepaper by Infyos, an irrefutable spotlight has been thrown on the systemic issue of widespread slave and child labor abuses, which require fundamental changes to the supply chain to eliminate.
The Infyos research has compiled evidence identifying 75% of the global battery market as being represented by companies in business relations with one or more corporations proven or facing allegations of severe human rights abuses along the supply chain.
Most major battery manufacturers have been exposed, including many of the world's largest automotive, energy storage and electronics brands.
The range of claims includes forced labor in lithium refining facilities to children mining cobalt materials out of the ground in hazardous conditions. Incidents occur globally, especially in resource-rich countries with weak or corrupt governments like the Democratic Republic of Congo and Madagascar.
Most of the human rights abuses identified have involved companies mining and refining raw materials in Xinjiang Uyghur Autonomous Region in northwest China, where the battery, automotive and solar industry has been repeatedly hit with reports of widespread forced labor by journalists, government agencies and nonprofit organizations.
Electric vehicle and battery manufacturers oversee a complex supply chain, dealing with 10,000 suppliers or more across any one company's network, from mines to chemical refineries and automotive manufacturers.
Human rights abuses frequently occur in the distant and often muddied upstream stages, notably at poorly documented raw material mining and refining points, making it difficult for companies purchasing batteries to identify their supply chain risks.
Manufacturers sourcing components or materials from unethical companies in their supply chain network or entering business relationships, joint ventures or equity investments hidden in complex and changing ownership structures easily conceal the reality.
However, missing and incomplete records amidst public outcry are an obvious red flag.
"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," said Infyos CEO Sarah Montgomery. "Most battery manufacturers and their customers, including automotive companies and grid-scale battery energy storage developers, still don't have complete supply chain oversight."
Electric vehicle and battery manufacturers oversee a complex supply chain from mines to chemical refineries and automotive manufacturers. Human rights abuses frequently occur in upstream stages, notably at poorly documented raw material mining and refining points.
European and U.S. scrutiny of sourcing has intensified, risking damage to "clean" credentials within the battery industry. Failure to address human rights violations means companies could be in breach of current and future regulations, losing funding and investor trust, hampering investment into a global market promising a value of nearly $500 billion by 2030.
"Companies manufacturing or purchasing batteries are at risk of having their products blocked at the market, further delaying and increasing the costs of renewable energy projects or tarnishing their reputation because of human rights risks," Infyos, Head of Sustainability Jeff Williamson said.
With legislation such as the EU Battery Regulation and the updated UFLPA being implemented in the U.S., action must be taken to stay in business. U.S. Senate Finance Committee Chair Ron Wyden had strong words for companies making slow progress in this regard.
"Automakers are sticking their heads in the sand and then swearing they can't find any forced labor in their supply chains," the Oregon senator said. "Somehow, the Finance Committee's oversight staff uncovered what multi-billion-dollar companies apparently could not: that BMW imported cars, Jaguar Land Rover imported parts, and VW AG manufactured cars that all included components made by a supplier banned for using Uyghur forced labor. Automakers' self-policing is clearly not doing the job. I'm calling on Customs and Border Protection to take a number of specific steps to supercharge enforcement and crack down on companies that fuel the shameful use of forced labor in China."
The U.S. Department of Homeland Security and Customs and Border Protection have been urged to take further measures to strengthen enforcement, including placing Contemporary Amperex Technology Co., Limited (CATL) – a Chinese technology company and the world's largest battery cell manufacturer – on a list of companies banned due to their connection to forced labor.
Europe is following suit with its forced labor ban, while a proposal has been submitted to increase the fines for non-compliance with the UK's Modern Slavery Act to 4% of global annual turnover.
"We have already seen how forced labor incidents in supply chains for the solar industry have blocked the largest solar suppliers from the US market and slowed down the transition to clean energy: as the battery industry faces the paradigm shift to electrification, the lessons learnt in solar must be applied to the battery industry if the energy transition is to stay on track," Montgomery said.
Regulations specific to the industry within Europe are also becoming more stringent. New EU Battery Regulations coming into effect between now and 2036 require much more rigorous supply chain visibility and risk management starting in 2025, with non-compliance leading to products being blocked from the European market.
These strict Western supply chain requirements, which many in the industry are struggling to comply with, are integral to the highly anticipated EU battery passports coming in 2027. The UFLPA and EU Battery Regulation are widely seen as the battery industry gold standard owing to their due diligence and supply chain visibility requirements, and many companies operating outside of the regions are voluntarily aiming to meet their requirements.
For those industry leaders within the bounds of regulatory influence, addressing issues within their supply chain will soon mean the difference between avoiding costly fines and having a license to operate. Additional pressure is coming from big investors, who are demanding deeper supply chain risk management and visibility as a condition of lending or investment to minimize their own financial risk.
While financial and regulatory pressures are increasingly focused on human rights abuses in battery supply chains, more industry action is needed to address these violations and drive a sustainable energy transition forward, ensuring 2050 net-zero emissions targets don't end in disaster.
Following the outpouring of interest in Infyos' research publications on supply chain risk, it will host a webinar on human rights risks in the battery supply chain on Oct. 3.
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