Lack of adequate biodiversity and deforestation policies in EV mineral supply chains.

EV industry must take responsibility

"The EV industry's evident lack of control in the supply chain marks a stark contrast to its profits. Policy makers, investors, and consumers place a lot of trust in the companies that fuel the green transition. The company owners must understand their responsibility and take it seriously," says Toerris Jaeger, executive director of Rainforest Foundation Norway.

Although varying in degree, the research found that none of the companies in Rainforest Foundation Norway’s inquiry had sufficient policies and commitments in place for diligent sourcing of transition minerals, and there was a distinct lack of transparency and disclosure practices to enable cross-checking and verification of data.

Tesla, BMW and Mercedes-Benz best overall performers

The automakers examined are BYD, BMW, Ford Motor, Geely, General Motors, Mercedes-Benz, Nissan Motor, Renault Group, Stellantis, Tesla, and Volkswagen. The EV battery manufacturers examined are CATL, Farasis Energy, LG Energy Solution, Northvolt, Panasonic, Samsung SDI, SK Innovation, and Sunwoda Electronic.

Overall, Tesla is the best performer amongst the EV manufacturers, followed by European manufacturers BMW and Mercedes-Benz.

The report concludes that companies must pay much closer attention to the environmental consequences of sourcing transition minerals. Due diligence must be put in place, thoroughly assessing the environmental impacts, particularly deforestation and biodiversity loss. Most importantly, damage mitigation and remediation must be adequately reflected in company policies and commitments.

Mining disproportionately impacts rainforests

The growing demand for minerals needed to aid the green transition drives expansive mining for nickel, cobalt, manganese, copper and lithium. Many of these minerals are mined from vulnerable ecosystems and are linked to rainforest destruction and human rights abuses. Mining activities disproportionately impact tropical rainforests.

According to a WWF report published in 2023, 62% of the total direct deforestation related to mining occurred in tropical and subtropical rainforests, despite these areas only having 29% of the world’s mining areas. Deforestation linked to mining will increase if no significant action is taken to stop it.

Mining poses direct threat to Indigenous Peoples and local communities

Moreover, mining activities pose a direct threat to Indigenous Peoples and local communities (IP & LCs). More than half of the minerals needed for the energy transition are located on or near the lands of Indigenous Peoples and local communities.

The lack of consultation and breaches of principles on free, prior, and informed consent (FPIC) exacerbates human rights and environmental abuses associated with mining operations, underscoring the need for more robust safeguards.

"We cannot accept that amid the green transition lies ecosystem destruction and human rights violations. Neither will curb global warming but rather exacerbate it. Companies should adopt time-bound commitments to have deforestation-free mineral supply chains,” says Toerris Jaeger, executive director of Rainforest Foundation Norway.

Investors call for responsible mining

On the back of these findings, a new Investor Initiative calling for responsible nickel mining practices was launched on February 19, created by Rainforest Foundation Norway (RFN) together with the Dutch Association of Investors for Sustainable Development (VBDO).

31 investors, with over USD 2.7 trillion in combined assets under management, have signed a statement demanding companies to enhance their environmental and social due diligence in nickel supply chains of the electric vehicle (EV) industry.

DNB and Storebrand are among the initiative's signatories. The initiative is directed at companies in the downstream EV sector, including automakers and EV battery producers. The initiative is open to new members.