RARE METALS SUPPLY CHAINS - CHALLENGES FOR A SUSTAINABLE ENERGY TRANSITION ENGAGEMENT RESULTS
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Asset Management RARE METALS SUPPLY CHAINS CHALLENGES FOR A SUSTAINABLE ENERGY TRANSITION ENGAGEMENT RESULTS July 2021
Created in 2017, Shareholders for scribes itself primarily as a “facilita-
Change is a European network for tor platform”.
shareholder engagement, composed Its 12 members are based in seven
of institutional investors represent- different countries:
ing over €30 billion in assets under Germany (Bank für Kirche und Caritas
management. eG), Austria (Fair-finance Vorsorgeka-
Its members are highly involved sse), Spain (Fundacion Finanzas Eti-
in shareholder engagement at the cas), France (Meeschaert AM, Ecofi
local level, participating jointly in and Sanso IS), Italy (Etica Sgr and
general meetings, co-signing let- Fondazione Finanza Etica), Switzer-
ters to businesses and meeting with land (ABS - Alternative Bank Schweiz,
companies to discuss their respec- Ethos Foundation and Forma Futura),
tive commitments. The network de- UK (Friends Provident Foundation).
2 Rare metals supply chainsRARE METALS SUPPLY CHAINS
Challenges for a sustainable energy transition
ENGAGEMENT RESULTS
July 2021
Introduction 4
Overview of SfC engagement on rare metals 5
• Wind energy 5
• Automotive manufacturers (Electric Vehicles) 6
• Chemical companies 7
The “Rare metals” engagement with each of the 12 analysed companies 8
• Wind energy 8
• Automotive manufacturers 13
• Chemical companies 17
Engagement results 3INTRODUCTION
SfC - Shareholders for Change is a Euro- The report identified twelve companies • Audits are very rarely extended be-
pean investor network for shareholder potentially exposed to risks related to yond Tier 1 suppliers, which are gen-
engagement, created in December 2017. the extraction and use of rare metals erally only brokers of materials ex-
It currently has twelve members from and rare earths. Five in the wind energy tracted by other companies;
seven countries and represents a total of sector: Vestas, Siemens-Gamesa, Or-
over €30bn AUM (www.shareholders sted, Iberdrola and Nordex; four in the • Recycling of rare earths and rare met-
forchange.eu). automotive sector: PSA, Renault, Daim- als is at a very early stage and specific
The network’s engagement priorities ler and BMW; and three in the chemical recycling targets are generally miss-
are climate related issues, workers and sector (Johnson Mattey, Umicore and ing;
human rights and tax transparency. Solvay).
SfC has completed two engagement • Details on detected cases of non-com-
projects so far, based on its own research, Each of these companies was engaged pliance by suppliers are not disclosed,
focussed on so-called “orphan issues”, by SfC members between November while information on corrective meas-
that are still marginal in investor en- 2019 and June 2021, in particular with ures are limited;
gagement strategies: tax avoidance in questions on:
the European telecommunication sector • The sourcing of cobalt, especially
and the ESG risks linked to the extrac- • the scope of supplier audits’ coverage from Congo (DRC), remains a source
tion of rare metals. (Tier 1, Tier 2, etc.); of potential controversies for some of
• procedures in case of non-compli- the engaged companies.
In May 2019, Meeschaert Asset Man- ance;
agement, one of SfC’s founding mem- • the recovery and recycling of materi- Beginning from September 2021, SfC’s
bers, published the report “Rare metal als; engagement on rare metals will enter its
supply chains” (https://bit.ly/3klL7sL), • the sourcing of cobalt. “second phase”. While the “first phase”
on behalf of Shareholders for Change, has been primarily based on “disclo-
evidencing potential social and envi- The engagement was done in behalf of sure”, the “second phase” will focus on
ronmental controversies in the supply the whole SfC network and led by indi- specific “commitments” by companies.
chains of rare earths (such as Neodymi- vidual SfC members. So far we have just asked companies to
um and Praseodymium) and rare metals The current engagement report pre- disclose more information on certain as-
(such as cadmium, cobalt, chromium, sents the main results of the engage- pects of their supply chain management
lithium, magnesium, palladium, rhodi- ment process, that was terminated on and on recycling. From now on we will
um, etc.) the 30th of June 2021. ask them to commit to precise actions or
These are fundamental components of targets, with the advice of leading inter-
the energy transition to an economy national experts.
with low greenhouse gas emissions. I Main results of the engagement One of them is Julie Klinger, assistant pro-
They are found in wind turbines, electric fessor at the Department of Geography
car batteries, photovoltaic panels and The 12 companies were generally cooper- and Spatial Sciences, University of Dela-
energy-saving light bulbs. ative and engaged in a dialogue with SfC, ware and author of the book “Rare Earth
However, they have at least two main providing “good” or “very good” answers Frontiers”. Prof. Klinger, who will accom-
problems: they are extracted and mar- in more than 80% of cases. Only one com- pany SfC in the “second phase” of the rare
keted mainly by China, which operates pany, the automotive group PSA (today metals engagement project, held a webi-
in a quasi-monopoly situation, or from Stellantis) did not reply to the network’s nar on rare metals during the SfC Summer
countries at risk for human rights, such questions, while the Spanish wind giant Meeting in June 2021: “Rare earth supply
as the Democratic Republic of Congo Ibedrola replied in a very generic way. chains. Persistent myths, policy challenges
(cobalt). And they are exposed to a num- and possible pathways forward” (link:
ber of risks, both for the environment The engagement identified some prob- https://youtu.be/5YmHbwywxSY).
(groundwater pollution, soil erosion, lems that appears to be structural and
toxic wastewater discharge) and for common to nearly all companies across
workers (lack of protection). the three industries:
4 Rare metals supply chainsOVERVIEW OF SFC ENGAGEMENT
ON RARE METALS
WIND ENERGY
Questions
- Scope of coverage of supplier audits.
- Recovery and recycling of rare metals.
- Supply chain security and sustainability.
Sector/Companies Engagement Leader Quality of answers Room for improvement
Vestas Etica Sgr Good Extend audits beyond Tier 1
suppliers
Specific targets on rare metals’
recycling are missing
Siemens-Gamesa Ethos Good Extend audits beyond Tier 1
suppliers
Specific targets on rare metals’
recycling are missing
Orsted Etica Sgr Very good Extend audits beyond Tier 1
suppliers
Specific targets on rare metals’
recycling are missing
Iberdrola Fundacion Finanzas Eticas Poor No reference to a specific policy
on rare metals
Nordex Alternative Bank Schweiz Good -
Engagement results 5AUTOMOTIVE MANUFACTURERS (ELECTRIC VEHICLES)
Questions
- Impact of EV development on the supply of rare metals.
- Respect for human and environmental rights in cobalt procurement.
- Sanctions to non-compliant suppliers.
- Traceability in rare metal and battery supply chains.
- Scope of supplier audits coverage.
- Recycling of batteries.
Sector/Companies Engagement Leader Quality of answers Room for improvement
PSA Meeschaert Asset Management Very poor -
(no reply)
Renault Ecofi Good More details on environmental
criteria applied to suppliers and
on battery recycling are needed.
Information about the scope
of supply chain monitoring
is missing.
Daimler Ecofi Good The company has not given
a clear answer on a possible stop
to the import of Congolese cobalt.
Supply chain monitoring should
be extended beyond Tier 1.
BMW Bank für Kirche und Caritas Good Details on detected cases
of non-compliance are not
disclosed yet.
A “Tier-N” monitoring down
to the last level of the supply
chain is still missing.
6 Rare metals supply chainsCHEMICAL COMPANIES
Questions
- Scope of rare metals supplier audits’ coverage. Procedure in case of non-compliance.
- Disclosure of recycling rates per each metal.
- Geographical mapping of rare metals mines.
- Mapping of cobalt supply chain.
Sector/Companies Engagement Leader Quality of answers Room for improvement
Johnson Matthey Etica Sgr Very good More information on
the procedure for supporting
non-compliant suppliers would be
needed.
Umicore Forma Futura Very good More information on
the procedure for supporting
non-compliant suppliers would be
needed.
Disclosure of recycling rates per
each metal is still missing.
Solvay Meeschaert Asset Management Good More information could be
disclosed about corrective actions
or reasons for low score of rare
earth metals suppliers.
Limited information on recycling
and on geographical mapping
of rare metals mines.
Engagement results 7THE “RARE METALS” ENGAGEMENT
WITH EACH OF THE 12 ANALYSED COMPANIES
I Wind Energy • Engaged companies: half of offshore wind turbines are us-
ing direct-drive technology, which em-
Vestas, Siemens-Gamesa, Orsted, Iber-
ploys rare-earth elements like neo-
drola, Nordex.
dymium and dysprosium. Therefore,
actors in the wind turbine value chain
• Economic context
have a responsibility to conduct rea-
The European Union wants 32% of its sonable checks on their suppliers to
energy mix to come from renewable identify, prevent and reduce any nega-
energy by 2030 (compared with 22.7% tive impacts. This responsibility is all
today). Depending on the scenario, re- the greater because there are only a
newable energy and hydropower are small number of companies in the
expected to account for 65% to 81% of market, which therefore have a strong
Europe’s energy mix by 2040, includ- potential to influence over the entire
ing 30% to 35% wind power. Since 2020, supply chain.
1. VESTAS WIND SYSTEMS A/S
• Location: Aarhus, Denmark - Optimisation of recovery and recy- magnets, and also in the magnets used
cling rates. in the towers make a negligible contri-
• Revenue 2020: €14.82bn - Supply chain security and sustainabil- bution to total resource depletion, con-
ity in risk mapping. tributing below 0.1% of total life cycle
• Employees: 29,230 - EROEI (energy returned on energy impacts.
invested rate) of the company’s tur- The field of recycling composites is not
• Onshore/offshore positioning: bines. mature and is an emerging area regard-
Mainly onshore. Offshore development ing recycling technology available and
via “MHI Vestas Offshore Wind” (100% • How the company answered technology readiness levels.
owned since October 2020). The quality of the company’s answers
Vestas is involved in the Wind Europe
was good.
• Level of exposure to rare metals: Dismantling Task Force – to develop in-
dustry guidelines for end-of-life.
Neodymium and dysprosium used in Monthly performance dialogue meet-
Targets to limit product waste by 7% to-
the towers of all models of wind turbines ings with suppliers.
wards 2020 compared to baseline from
and in the permanent magnet genera- Detailed monitoring in global procure-
2017. No specific target on rare metals.
tors of older models. ment on approximately 160 suppliers
with scorecard monitoring.
• What can be improved?
• Engagement leader: Etica Sgr Proactive Risk Management is an inte-
gral part of Global procurement. It is not clear whether Tier 2, 3, etc. sup-
• Engagement period: Compared to older permanent-magnet pliers are covered or not.
generators, the new EnVentus generator The names of suppliers are not dis-
November/December 2019
uses less light rare-earth material per closed.
MW and has eliminated use of heavy Specific targets on rare metals’ recy-
• Questions/areas of engagement:
rare earth materials altogether. cling are missing.
- Consideration of higher tier suppliers, The contribution of rare earth ele-
further upstream in the supply chain. ments used in the turbine generator
8 Rare metals supply chains2. SIEMENS GAMESA RENEWABLE ENERGY SA (SGRE)
• Location: Zamudio, Spain the company’s CSR plan? In the company’s sustainability report
- How many suppliers are monitored? (January 2021), SGRE mentions rare
• Revenue 2020: €9.91bn - Optimisation of recovery and recy- earths for the first time as “high risk
cling rates. from a sustainability point of view”.
• Employees: 25,950 - Target rates for recovery and recycling. The company formally commits to re-
- Supply chain security and sustainabil- duce or eliminate the use of heavy rare
• Onshore/offshore positioning: ity in risk mapping. earths such as dysprosium and terbium.
Onshore and Offshore.
• How the company answered • What can be improved?
• Level of exposure to rare metals: The quality of the company’s answers The names of suppliers are not disclosed.
Neodymium used in NdFeB magnets. was good. The company should conduct unan-
nounced audits.
• Engagement leader: Ethos Foundation The company explained that its five sup- ‘Tier 2’ suppliers should be covered too.
pliers of rare metals have signed a code of The company needs more specific tar-
• Engagement period: conduct and a set of environmental re- gets on rare metals’ recycling.
quirements. However, monitoring stops
May 2020/March 2021
at the first level of the supply chain, the
so-called ‘Tier 1’: the company’s direct
• Questions/areas of engagement:
suppliers, that are only intermediaries.
- How are rare metals taken into account SGRE commits to extending the re-
in the “Responsible Supply Chain” of quirements to ‘Tier 2’.
Engagement results 93. ORSTED A/S
• Location: Fredericia, Denmark - Supply chain security and sustainabil- However, this is relevant and needed
ity in risk mapping. only in few occasions.
• Revenue 2020: €6.84bn - Is the Company planning to develop a In January 2020 Orsted started the de-
product life cycle assessment meth- velopment of a “Metals and Minerals
• Employees: 6,310 od? Programme” to address and minimize
the social and environmental risks re-
• Onshore/offshore positioning: • How the company answered lated to the extraction of key metals (in-
Onshore and Offshore. cluding rare earth metals). The Pro-
The quality of the company’s answers
gramme is initially focused on the
was very good.
• Level of exposure to rare metals: offshore portfolio but will be extended
to all business areas, including energy
Mainly exposed to the use of neodymi- Risk screenings to identify suppliers for
storage.
um through its turbine suppliers, in- further engagement based on spend,
Orsted is working with key supplier to (i)
cluding Siemens Gamesa. country, and category risks. On-site vis-
map the use of these metals, (i) identify
its to assess adherence with the compa-
the current social and environmental
• Engagement leader: Etica Sgr ny’s Code.
risks and (iii) developing ways to miti-
Improvements plans and dialogue with
gate the risks. This last step also includes
• Engagement period: suppliers.
identifying opportunities to recycling or
Only less than 0.2% of suppliers are
June 2020/December 2020 substituting these metals and the poten-
based in high risk countries.
tial risks associated with that.
In 2019 the company identified some
• Questions/areas of engagement:
risks in the supply chain, mainly related
• What can be improved?
- Scope of coverage of suppliers’ audits. to poor working conditions. All issues
- Monitoring of risks linked to the use have been addressed satisfactorily by Specific targets on rare metals’ recy-
of rare metals. the suppliers. cling are missing.
- Is impact management applied to Initial focus on Tier 1 suppliers. Screen- The monitoring of the supply chain is
storage battery production? ing also on selected Tier 2 suppliers. still largely limited to Tier 1 suppliers.
10 Rare metals supply chains4. IBERDROLA SA
• Location: Bilbao, Spain • Engagement period: areas for improvement and proposes a
customised action plan.
January-February 2021
• Revenue 2020: €33.81bn Suppliers that do not manage to adapt to
ESG requirements within a reasonable pe-
• Employees: 38,300 • Questions/areas of engagement:
riod of time are excluded from future ten-
- Monitoring of risks associated to rare ders.
• Onshore/offshore positioning: metals. With regard to wind blades, between 2014
Mainly onshore. Offshore wind farm pro- - Recycling of rare metals components. and 2016, Iberdrola developed the Life
jects are under development. - How broad is the coverage of supplier BRIO project, which demonstrated the fea-
audits and the scoring system? sibility of a route for the reuse of wind blade
• Level of exposure to rare metals: materials. The fibrillar material obtained
• How the company answered from the mechanical recycling of wind
Exposure to technologies that use neo- blades can be used, among other things, as
dymium and dysprosium, through fu- The quality of the company’s answers
a reinforcement fibre in precast concrete.
ture offshore projects, supplied mainly was poor.
by Vestas and Siemens Gamesa. • What can be improved?
Iberdrola is committed to ensuring that
• Engagement leader: 70% of its main partner companies (those No reference to a specific policy on rare
with a turnover with the company of more metals was made in the answers.
Fundacion Finanzas Eticas than €1m) comply with environmental, It is not clear whether Tier 2, 3, etc. sup-
social and governance objectives by 2022. pliers are covered or not.
• Co-lead:
The company provides suppliers that No reference to any specific targets for
Friends Provident Foundation obtain a low score with support to detect the recycling of rare metals.
Engagement results 115. NORDEX SE
• Location: Hamburg, Germany • Engagement period: box and a double-fed asynchronous gen-
erator. This type of generator does not
June 2020
• Revenue 2020: €4.94bn contain any rare earth magnets.
The Nordex Group is and remains a
• Employees: 8,390 • Questions/areas of engagement:
pure onshore manufacturer (and won’t
- Plans to develop offshore technologies. thus make us of rare earth metals in the
• Onshore/offshore positioning: - Monitoring of lithium supply risks for future either).
Onshore only. lithium-ion storage batteries. Nordex technology is not based on any
- Scope of supplier audits coverage. kind of lithium-ion batteries. The elec-
• Level of exposure to rare metals: trical pitch technology is equipped with
• How the company answered lead batteries.
The company is developing its own The audit coverage is focussing on di-
asynchronous turbine technology that The quality of the company’s answers
rect suppliers and in some individual
does not involve the use of permanent was good.
cases on sub-suppliers. The individual
magnets. The development of an off- cases depend on the outsourced pro-
shore strategy could potentially expose The use of rare earth materials in Nor-
cess/component at the sub-supplier.
it to the use of rare metals. dex wind turbines is very limited.
Very few rare earth materials are used in
• What can be improved?
• Engagement leader: motors, batteries and electronic compo-
nents in the auxiliary power supply sys- Considering the very low exposure to
ABS - Alternative Bank Schweiz tem of the wind turbine. rare metals, this question does not apply
The drive train concept consists of a gear- to Nordex.
12 Rare metals supply chainsI Automotive manufacturers • Engaged companies: batteries of an electric car, per Mega-
watt (MW) of installed capacity.
PSA, Renault, Daimler, BMW.
Until now, the rare earths market has
been led by the wind power sector. How-
• Economic context
ever, it has to be considered that, in the
The electrification of road transport is a coming years, the number of wind tur-
key step in limiting global warming and bines will not increase at the same rate
improving air quality. In its “2°C scenar- as that of electric cars, the market for
io”, the International Energy Agency pre- which is starting now, while the wind en-
dicts a very strong growth in road trans- ergy market is already consolidated.
port electrification by 2060; for example, Therefore, in order to understand the
the number of light electric vehicles is rare earth market in the future, we need
expected to reach 1.25 billion worldwide. to focus on the evolution of the electric
Wind turbines use quantities of neo- car market.
dymium and praseodymium that are 40 Electric cars also use rare metals for their
times higher than those needed for the batteries, such as cobalt and lithium.
6. GROUPE PSA (PEUGEOT SA)
• Location: Paris, France tery. PSA’s electric best seller in 2020 - Battery technologies envisaged, as-
was Peugeot 208 EV with 31,550 units. sociated rare metals.
• Revenue 2020: €74.7bn
• Engagement leader: • How the company answered
• Employees: 209,000
Meeschaert Asset Management The company never answered to Mee-
In January 2021 the group merged with schaert’s questions.
FCA to create Stellantis. • Engagement period: 2020
• What can be improved?
• Exposure to rare metals: • Questions/areas of engagement:
Not applicable.
Hybrid or electric version of all new car - Impact of EV development on the
models from 2019. By 2021: launch of 8 supply of rare metals.
plug-in hybrid models and 7 EVs (elec- - Traceability in rare metal and battery
tric vehicles). 50 kWh lithium-ion bat- supply chains.
Engagement results 137. RENAULT SA
• Location: Boulogne-Billancourt, France • How the company answered tions would be very precise. However,
Renault has not provided details of the
The quality of the company’s answers
• Revenue 2020: €43.47bn criteria used nor of water consumption
was good.
and wastewater production.
• Employees: 170,160 Renault did not provide sufficient infor-
In 2019, approximately 20 audits were
mation on battery recycling.
• Exposure to rare metals: carried out on cobalt suppliers. Renault
The company is a member of the Re-
did not find any significant case of
Nearly 118,900 EVs sold in 2020 (6.7% of sponsible Cobalt Initiative.
non-compliances. Currently the audits
sales). 25% of market share in Europe. are not very effective because the com-
Renault’s Zoe was the best-selling elec- • What can be improved?
pany is obliged to announce the audits
tric car in Europe in 2020 (99,610 units). to the suppliers some days in advance. Details on the environmental criteria
The company plans to make agreements applied to suppliers and on battery recy-
• Engagement leader: Ecofi with some competitors to perform joint cling are missing.
audits. In addition, the cobalt supply No information about water consump-
• Engagement period: 2020 chain is particularly complicated to be tion and wastewater production in co-
monitored because it is often composed balt mining activities.
• Questions/areas of engagement: of small suppliers that close down, No information about the scope of sup-
- Respect for human and environmen- change frequently and therefore strug- ply chain monitoring.
tal rights in cobalt procurement. gle to meet the set of criteria required by
- Research and development of less co- a group like Renault.
balt-dependent solutions. The internal environmental policy is
- Recycling of batteries. also imposed on suppliers. The ques-
14 Rare metals supply chains8. DAIMLER AG
• Location: Stuttgart, Germany - Sanctions to non-compliant suppliers. define measures for addressing 100% of
- Monitoring of supply-chain risks for raw materials linked to high risk of hu-
• Revenue 2020: €158.10bn rare metals. man rights violations by 2028.
- Dialogue with critical stakeholders. Daimler prefers to dialogue with the
• Employees: 288,060 suppliers and to train them, instead to
• How the company answered put in place commercial sanctions.
• Exposure to rare metals: Daimler’s suppliers are more than
The quality of the company’s answers
Mercedes-Benz Cars sold more than 15.000. In 2019 Daimler audited more
was good.
160,000 plug-in hybrids and all-electric than 1,100 suppliers, but not just on hu-
vehicles (xEVs) in 2020. xEV share of man rights.
According to its policy (“Daimler Supplier
Mercedes-Benz Cars increased to 7.4% in The dialogue with critical stakeholders
Sustainability Standards”), in the con-
2020 (from 2% in 2019). 2025 outlook: is generally good.
tracts that Daimler signs with its direct
15% to 25% of turnover generated by The company is a member of several in-
suppliers (Tier 1), the company asks to
sales of all-electric models. itiatives in the industry: Responsible
control sub-suppliers (Tier 2, etc.), but at
Cobalt Initiative, EconSense, Responsi-
the moment it doesn’t go further than that.
• Engagement leader: Ecofi ble Steel, VDA, Aluminium Stewardship
The company explained to have charged
Initiative.
• Co-lead: an external firm, in 2019, with a three-
year audit of its cobalt supply chains for
Bank für Kirche und Caritas, Fondazione • What can be improved?
the battery cell suppliers of Mercedes-
Finanza Etica. Benz AG. The program covers both On some issues, such as a possible stop
downstream (from battery manufactur- to the import of Congolese cobalt, asso-
• Engagement period: 2020 ers to refineries) and upstream suppli- ciated to a high risk of human rights
ers (from mines to refineries). abuses, the company has not given a
• Questions/areas of engagement: Moreover, Daimler has committed to clear answer.
- Auditing of cobalt supply chain be- evaluate 70% of suppliers of all high-risk Supply chain monitoring should be ex-
yond Tier-1. raw materials by 2025, while it aims to tended beyond Tier 1.
Engagement results 159. BAYERISCHE MOTOREN WERKE AG (BMW)
• Location: Munich, Germany • Questions/areas of engagement: supply chain, it works closely together
with its direct suppliers. BMW requires
- What sustainability requirements do
• Revenue 2020: €102.52bn the supplier to implement immediate cor-
BMW’s supplier location audits in-
rective action to stop the violation. Addi-
• Employees: 126,020 clude?
tionally, the company applies a “multi-step
- There were 193 cases of non-compli-
escalation process” which can ultimately
• Exposure to rare metals: ance in 2018. Do any of these cases
lead to the exclusion of the supplier.
include rare metals suppliers?
During the twelve months of 2020, BMW None of the 193 cases of non-compli-
- Is there a specific audit policy on rare
Group delivered a total of 192,646 plug- ance reported for 2018 included rare
metals?
in cars (EVs and hybrid; up 31.8% year- metals suppliers, since the company
- Sourcing of cobalt from Congo (RDC).
over-year), which accounts for 8.3% of the doesn’t source these materials directly.
- Scope of supplier audits coverage.
total volume of 2.32 million. For the same reason, a specific audit pol-
In Europe, where most of the plug-ins icy on rare metals is not in place.
• How the company answered
were sold (over 135,000), the plug-in Supplies from Congo DRC have ceased
The quality of the company’s answers due to the high ESG risks. Preference is
share is at 15%. 2025 outlook: 15% to 25%
was good. now given to Australia and Morocco,
of turnover generated by electric vehi-
cles, thanks to the launch of 25 electric which are considered less risky.
BMW specified that it uses (and moni- Despite this, the company continues to
models. tors) only “indirect” suppliers of rare be involved in the “Cobalt for Develop-
metals (Tier 1, i.e. brokers). For the time ment” project in Congo.
• Engagement leader:
being, it does not monitor who actually
Bank für Kirche und Caritas extracts the materials (Tier 2, 3, etc.).
• What can be improved?
However, the company’s “Tier 1” suppliers
• Co-lead: Ecofi have to implement processes to forward Details on detected cases of non-com-
sustainability requirements to their own pliance are not disclosed yet.
• Engagement period: 2020 supply chain. In case BMW becomes A “Tier-N” monitoring down to the last
aware of any violations in its whole tier-N level of the supply chain is still missing.
16 Rare metals supply chainsI Chemical companies • Engaged companies: Cathodes, for example, are vital compo-
nents of electric vehicle batteries and cat-
Johnson Matthey, Umicore, Solvay.
alytic converters, which reduce the pollu-
tion caused directly by vehicles with
• Economic context
combustion engines. Thanks to their in-
Chemical manufacturers play a key novation capacity and their position in the
role in the energy transition of other supply chain, chemical manufacturers are
sectors. Chemicals are used to make able to improve technologies to shift to-
components that promote energy effi- ward recycling and substitution materials.
ciency and low-carbon energy develop- The sector’s supply chain comprises
ment. mines, smelters and metal refineries.
10. JOHNSON MATTHEY PLC
• Location: London, United Kingdom • How the company answered from secondary sources (i.e. recycled) is a
very important source of input. During
• Revenue 2020: €18.35bn The quality of the company’s answers
2019/20 the company implemented a re-
was very good.
sponsible platinum and palladium guid-
• Employees: 13,560 ance for all material handled through its
The company does evaluate suppliers
UK and US refineries, which includes us-
• Exposure to rare metals: further upstream in the supply chain.
ing third party experts to implement a
For example, with battery material prod-
The company manufactures catalysts value chain due diligence program on
ucts, Johnson Matthey (JM) is commit-
and cathodes (LFP/eLNO) for the auto- the sources of all input feeds to refineries.
ted to using only raw materials that have
motive sector and recycles metals. 1.5% JM engages its suppliers through its
been ethically sourced and ensure it
of turnover from EVs’ supply chain. “Supplier Code of Conduct” to ensure re-
knows the provenance of the critical met-
sponsible behaviours. JM may conduct
als back to mine: cobalt, lithium and nick-
• Engagement leader: Etica Sgr periodic assessments, surveys or audits
el. The company has partnered with an
of the supplier’s systems, products and
independent audit company who special-
• Engagement period: 2020 processes to ensure that they meet re-
ises in working in the cobalt supply chain.
quirements. The supplier may also be
In early 2020 the company joined the Glob-
• Questions/areas of engagement: asked, on occasion, to participate in JM
al Battery Alliance and agreed to ten guid-
training on ethics and sustainability.
- Are higher tier suppliers, further up- ing principles for a creation of sustainable
stream in the supply chain, consid- battery value chains globally by 2030.
• What can be improved?
ered in the company’s monitoring? For operations using pgms (platinum
- Is there a procedure for supporting group metals), Johnson Matthey uses More information on the procedure for
suppliers that do not comply with the metal from its own refineries, other in- supporting non-compliant suppliers
company’s Code? dustrial suppliers and the market. Metal would be needed.
Engagement results 1711. UMICORE SA
• Location: Bruxelles, Belgium - Geographical mapping of rare metals consisting of more than 20 different cri-
mines. teria.
• Revenue 2020: €20.71bn - Mapping of cobalt supply chain. Mitigating actions are systematically
reported to the management, corre-
• Employees: 13,320 • How the company answered sponding to the respective strategic ob-
jectives and identified risks. However,
• Exposure to rare metals: The quality of the company’s answers
these specific risks and mitigation ac-
was very good.
The company manufactures NMC cath- tions are not public as they constitute an
odes and catalysts for the automotive essential part of the supply strategy of
Umicore has a specific policy regarding
sector; it recycles materials. 36% of turn- the company’s business units.
responsible global supply chain of min-
over generated by EVs’ supply chain. The company tracks the origin of all of
erals from conflict-affected and high-
its cobalt raw materials to the level of
risk areas.
• Engagement leader: the mine through mass balance and a
In the area of cobalt sourcing, Umicore
chain of custody documentation.
Forma Futura has implemented a “Sustainable Pro-
Umicore certifyies to customers that its
curement Framework for Cobalt”.
products do not contain any artisanally
• Co-lead: Specific recycling rate per metal are not
mined cobalt units and are free of any
disclosed. However, the company does
Etica Sgr child labour.
indicate the origins of its raw materials
input. In 2018 it disclosed that 42% of
• Engagement period: 2020 • What can be improved?
its input came from primary sources
and 58% from secondary (i.e. recycled) More information on the procedure for
• Questions/areas of engagement: material sources, including end of life supporting non-compliant suppliers
- Rare metals supplier audits’ coverage. products. would be needed.
Procedure in case of non-compliance. With respect to critical raw materials, Disclosure of recycling rates per each
- Disclosure of recycling rates per each every business unit has its dedicated ap- metal is still missing.
metal. proach which is based on a risk matrix
18 Rare metals supply chains12. SOLVAY SA
• Location: Bruxelles, Belgium • Questions/areas of engagement: suppliers, 70% have 3rd party assess-
ment completed to date.
- Supply chain alert mechanism.
• Revenue 2020: €9.63bn The company specified that only one
- Scope of suppliers’ audits.
out of its six rare earth suppliers
• Employees: 23,000 - Recycling measures in place.
achieved an audit score above 45 (the
- Geographical mapping of rare metals
minimum threshold). Corrective actions
• Exposure to rare metals: mines.
would be in place for the five, low per-
Produces fluorine and rare earth formu- • How the company answered forming suppliers. On top, a quality au-
lations for automotive applications. Bat- dit was performed in 2020 for all rare
tery component sales account for 0.5% The quality of the company’s answers earth suppliers.
of turnover but are growing strongly. was good. At present, the company recycles and
valorises Neodymium and Praseodymi-
Solvay operates three sites that process um tailings from past activities in France.
• Engagement leader:
rare earths: France, Japan and China. It
Meeschaert Asset Management has multi-year contracts, including ca- • What can be improved?
pacity reservation, for all main raw ma-
• Co-lead: terials. Its main sources (for rare earths) More information could be disclosed
are China and Australia but it has iden- about corrective actions or reasons for
Fondazione Finanza Etica
tified viable alternatives outside China low score of rare earth metals suppliers.
that can be 2nd or 3rd sources of supply. Limited information on recycling and
• Engagement period:
All critical suppliers are under contract on geographical mapping of rare metals
2020-2021 (letter and escalation to AGM) and audited regularly. Of its 450 core mines.
Engagement results 19Published in July 2021 by SfC - Shareholders for Change www.shareholdersforchange.eu
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