Supply chain justice is the next green frontier

Newsletter #22

Bandung, Indonesia (2019). Photo by Muhammad Rizal Fahmi on Unsplash (the 1955 Bandung Conference eventually led to the now-forgotten yet very topical Non-Aligned Movement)

Will 2022 be the year where we reconcile going green with the social agenda?

Nobody really knows how to do this, but we’re finally going to try, it seems.

This newsletter zooms in on a few of these issues: the “S” of ESG which concerns supply chain risks but really invites us to think more deeply about the shape of the “new world order” that’s emerging.

Highlights from Green and Sustainable Finance

Moody’s put out a report earlier this month on ESG themes for 2022, and it contains quite a striking number:

Citing their own research covering around 4,400 large companies across the world, they found 42% of assessed companies have set emissions targets, but only 17% refer to “net zero”. Furthermore, only 3% of assessed companies are aligned with a future of net zero by 2050 based on their emissions reductions targets. So it’s not surprising that we’re seeing a hiring spree for CSO roles as well as growing demand for consultancies advising on how to design net zero plans.

👉 If 2021 was the year of the Sustainable Finance Taxonomy, 2022 will be a big year for the social agenda.

Recent research from Moody’s found that over 2020 and 2021 supply chain controversies had increased by 237% to an annual average of 185, up from an average of 78 cases per year between 2016 and 2019.

Poor management of social and environmental risks in supply chains will compound ongoing operational resilience issues that have proliferated over the course of the pandemic.

👉 The EU’s much-delayed Sustainable Corporate Governance legislative proposal is one to follow this year, as it may include mandatory human rights due diligence. For background, check out our previous podcast episode on Modern slavery in the supply chain with researcher Mike Rogerson.

Can mining be clean and green?

“Green extractivism” is a relatively new term describing the dark side of the energy transition. According to a 2019 OECD report, global resource extraction is projected to more than double between 2011 and 2060 under business as usual conditions, and the rate of growth is MUCH higher for metals and minerals.

Lithium, for example, is an essential component for rechargeable batteries in electric vehicles, and the IEA predicts that lithium demand will grow by 4,200 percent by 2040.

I have to confess that I find this stuff hard to read at times. It is like a new form of climate anxiety - after decades of progress watching the flow of translation from climate science to policy, business and society - these mining numbers can induce a numbing sense of despair.

Mining companies, for their part, are working hard to portray this extractive bonanza as “smart” or “clean”. Some academics and NGOs are increasingly concerned that unless we act early to tackle this problem systemically, we will end up replacing the fossil curse with another one.

Thea Riofrancos, an associate professor of political science at Providence College, published a piece in Foreign Policy last week that takes aim at a new push by countries from the global North to “onshore” such mining activities back home.

She writes:

For decades (…) the governments of global north countries increasingly offshored manufacturing and extraction to the global south and replaced those sectors with services, real estate, and finance, all while starving their own states’ industrial capacity. Now, they are scrambling to catch up with an ascendent China, with its dense ecosystems of green technology manufacturing and innovation, and its access to the world’s raw materials through firms with interlocking state and private ownership.

U.S. and EU agencies, as well as EU member states, are providing lucrative incentives for lithium companies, ranging from fast-tracking permitting processes to subsidies, direct financing, and “de-risking” (public policies that shield investors from financial or political risk).

But the assumption that things will go better if we just re-locate the activities to OECD countries is flawed, she argues.

For example, Spain and Portugal, where lithium expansion plans are underweay, have some of the world’s weakest regulations on safety protocoals for toxic mining waste storage. Environmental justice research has long shown that any kind of p;ollution disproportionally affects marginalized groups.

So what can/should we do?

👉 Mine less, prioritize public transport over private cars, put supply chain justice at the heart of the energy transition.

👉 Mandatory recycling and materials recovery

👉 Enforce rights to community consent (in particular, Indigenous peoples’ right to prior consultation and consent—as recognized in multiple international conventions—before decisions are made).

But in this moment of global upheaval and uncertainty, it is vital that social movements, progressive politicians, and policy experts question the consensus on critical minerals before it congeals into orthodoxy. And it is equally vital to envision a different renewable energy transition, with supply chain justice at its center.

IPCC Sixth Assessment report releases

The virtual approval session for the IPCC’s Working Group 2 on impacts, vulnerability & adaptation opened this Monday, the final report is out on February 28, there will be a press conference livestreamed at 10 am CET, I assume on the IPCC YouTube channel.

Working Group 3 which focuses on mitigation, starts approval sessions March 21 - with an expected launch for April 4.

Chap 15 of WG3 contains the latest literature on investment and finance and Chap 16, which is headlined “Innovation, technology development and transfer” is the geo-engineering part.

Comment: This will be the last big science assessment from the IPCC for this decade, so whatever they say now is the reference.

From and beyond the podcast

🎧 For all our new subscribers, welcome! If you enjoyed today’s newsletter, stay tuned for a series of upcoming podcasts that will go deeper on critical minerals, and recent developments on indigenous communities and the renewable energy transition. There’s also a relevant previous episode on Rio Tinto which digs into the entanglement of politics, law and mining in Western Australia. You can find New Climate Capitalism wherever you get your podcasts.

Until next month,

Denise