Sustainable Supply Chains Becoming the Hot Topic

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supply chain chart
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Life sometimes springs happy coincidences on us.

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Sustainable supply chains have become increasingly important, as companies assess the economic damage to their brand of exposure to bad news from their supply chains.

Social media has made the dissemination of such information faster, easier and instantly global in nature, rather than being limited to those who read the papers or are industry insiders.

A chance introduction to Daniel Perry from EcoVadis one evening earlier last week was an education in how sophisticated the assessment and auditing of supply chains has become — and not just for Fortune 500s in the public eye. Supply chains have also become more complicated for small- and medium-sized enterprises (SMEs) keen on growing the bottom line, but also on building an ethical business.

Where was the coincidence, you may ask, apart from the one data point of meeting Perry?

The Financial Times FT  ran an interesting article entitled “Clean electric cars are built on pollution in Congo” and it reminded me that every step forward can come at a price.

We can make consumer choices, but we do not always see the consequences.

Electric cars have barely scratched the surface in overall automotive demand, yet they are held up as a key component of the future for a cleaner, more environmentally sustainable world. Already lithium-ion batteries used in electric cars are consuming 42% of the cobalt produced each year. With major European car markets like Britain and France already signaling a total switch to electric by 2040, demand is set to soar over the coming two decades.

Yet herein lies an ironic twist — some 60% of the world’s cobalt comes from the Democratic Republic of Congo, where widespread illegal mining has spread corruption, unrest, persecution and environmental devastation on a massive scale. The article suggests it is not just illegal mining, it also points the finger at foreign mining companies in general who it says have extracted billions in gold, diamonds, tin, coltan (an ore yielding niobium and tantalum), copper in addition to cobalt, while leaving per capita income in the DRC at just $800 compared to nearly $7,000 in China.

The article lays as much blame at the door of Western mining firms as it does the artisanal or illegal miners. Yet, in a country like the DRC, even guaranteeing the original source of material is bedeviled with uncertainty. This is particularly true for Western firms buying components made in places like China or Vietnam, where supply chain audit and verification are, to put it politely, not always what they could be.

But the success in recent years of firms like EcoVadis does underline that manufacturers and service companies of all sizes, shapes and industries, are willing to expend hard-earned dollars to better understand their supply chain, and increasingly not just for brand image.

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This evaluation of supply chains for ethical as much as economic reasons could have more profound consequences for the metals industry than for agriculture, pharmaceuticals or service industries (to name but a few). The global scope of the metals industry and multi-tiered nature of metal consuming manufacturing supply chains makes gaining full transparency a major challenge. It will not be achieved overnight, but with time and the development of suitable technologies to aid the process, the industry is acquiring the tools to right many of its past failings.

Comment (1)

  1. Great article Stuart. Indeed the sustainability mandate goes beyond the ‘what’ is in your products, down to knowing ‘Who’ you are buying from – how mature are they on sustainability topics like environment, labor and ethics? These rare metals are a particularly tough case, but other industries & commodities see similar issues (palm oil, textiles, and so on). That’s why we’re here 😉

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