Green, Equitable and Just Transition: Cobalt’s Role in Transitioning to a Net Zero World in a Rights-Respectful Manner
Susannah McLaren, Head of Responsible Sourcing & Sustainability
“The transition to net zero is urgent, and the role cobalt plays within that transition is critical. The central question now becomes: how do we navigate the transition ahead for cobalt – in a way that ensures people are not harmed in the process?” Anna Triponel, Human Level
The World Meteorological Organization (WMO) recently concluded that there is a 50:50 chance of global temperature temporarily crossing the 1.5 degree threshold in the next five years. The severe adverse consequences to natural and human systems of reaching such a threshold, in a short period of time, are clearly stated in a Special Report of the IPCC.
Decarbonizing transportation through electrification is absolutely necessary to reach net zero by 2050 and keep 1.5 degrees within reach – but these efforts will only succeed if people are not left behind in the transition. The supply of electric vehicles cannot happen without cobalt, a critical component in lithium-ion batteries that provides durability and high energy density. Indeed, EVs became the major driving force for cobalt demand growth in 2021.
Whilst cobalt is a commodity that is essential to the green transition, its crucial that the private sector contributes towards large-scale systems transformation in ways that are environmentally sustainable, economically fair, and socially inclusive – that is, in a way that is ‘just’. To help spark a conversation around what a just transition means for the cobalt industry specifically, the Cobalt Institute brought together cobalt players with other key stakeholders in a session at its annual conference in Zurich last May. In this blog, we capture the key messages from the panel.
“A lot of environmental risks and environmental impacts on communities quickly evolve and degenerate into human rights abuses, and are also tied to corruption issues in terms of efforts to conceal environmental risks and prevent any accountability from being achieved. Companies – especially those producing and sourcing critical minerals – should understand these interlinkages as demand for transition minerals scales up; the concept of just transition offers a way in which to build those interlinkages in practice. The forthcoming OECD handbook on environmental due diligence in mineral supply chains, will also help address these linkages as a complement to the OECD Due Diligence Guidance on Responsible Mineral Supply Chains.” Benjamin Katz, OECD
The concept is gaining momentum across the investor community
A total of 161 investors representing US $10.2 trillion in assets have committed to take action to support a just transition by integrating the workforce and social dimension in their climate practices, and expect the same of their investee companies. And this extends beyond the “sunset industries”, those that will need to wind down to meet the Paris Agreement, to all industries that are part of the transition ahead. In other words, just transition needs to be full spectrum, it is not just a “transition out” but also a “transition in”. This includes the cobalt industry.
There is a ready framework for companies to benchmark their contribution to a just transition
In light of the crucial role the private sector has to play in achieving a low carbon world, the World Benchmarking Alliance (WBA) launched a framework for benchmarking companies on their contribution to advancing a just climate transition. The non-profit organization intends to cover 450 of the world’s most influential companies from a range of sectors by 2023 by assessing their alignment with the goals of the Paris Agreement alongside their approach to addressing the social challenges of a low carbon transition. A pilot Just Transition Assessment covering 180 companies across three sectors (including 30 automotive manufacturers) was undertaken in 2021. These assessments will increasingly become a critical mechanism to hold companies accountable, and we expect to see downstream companies filter down these expectations to their supply chains.
“Companies should look both to lowering their emissions and to creating green and decent jobs that are inclusive and ensure equality of opportunity.”
Charlotte Hugman, WBA
‘People’ considerations are not a nice-to-have; people must be at the centre of the transition
A transition to a low carbon economy will not be sustainable or effective if people are left out or considered as an afterthought to climate mitigation activities. The just transition has been pioneered over decades by the trade union movement, rightfully putting workers at the centre of the conversation as stakeholders who stand to lose or gain depending on how companies and governments choose to transition. But, there are also many other stakeholders at risk.
Companies should engage in social dialogue both with workers and also with other affected stakeholders, such as communities and consumers, as they map their own contribution to the net zero transition. This will help ensure they have taken consideration of and are able to mitigate and address adverse impacts on these at risk groups.
A value chain approach must be applied to ensure a just transition
A value chain approach is required which takes into account the different human rights risks that emerge at different parts of the value chain and in different geographies. All cobalt players need to care about achieving a just transition; whether they’re in the upstream, refining or smelting, manufacturing, or in the downstream of products. The highly interconnected nature of the cobalt industry means that companies acting alone cannot hope to achieve a just transition.
Earlier this year, the Cobalt Institute released the outcome of its cobalt value chain mapping which provides a detailed overview of all stages of cobalt production and the actual and potential human rights and environmental risks related to them. The mapping aims to help the cobalt industry to identify and assess risks, and to seek opportunities to use its sectoral leverage to achieve impact-oriented outcomes.
“It’s best to think of it as a bit of a pathway. So firstly, thinking ambitiously about the outcomes we’re collectively targeting: low or zero emissions, guaranteed social protection, decent work for all, poverty elimination, and thriving and resilient communities. Then work backwards from that to chart your path as a company, as part of the wider ecosystem of actors, as well, and what that path should be to make the concept of justice within the conversation real.” Haley St.Denmis, IHRB
Human rights norms and due diligence standards provide ‘guardrails’ for an equitable transition to a low carbon economy
International human rights frameworks, like the UN Guiding Principles on Business and Human Rights (UNGPs) which is increasingly being embedded into hard law (such as the EU’s Corporate Due Diligence Directive), can help light the way for companies on the path to a just transition. First and foremost, companies need to understand their responsibility to respect human rights and embed a ‘risks to people’ approach into organisational culture, systems and relationships with the UNGPs as the established global baseline for conducting human rights due diligence. Companies need to consider how to mainstream human rights due diligence within net zero commitments and initiatives.
The minerals space is seeing renewed focus on the human rights agenda within conversations of responsible sourcing and due diligence. In fact, alignment with the UNGPs is a key consideration in the current revision of the Responsible Minerals Initiative (RMI) and the Copper Mark’s Risk Readiness Assessment (RRA). This includes a stronger focus on engaging stakeholders, embracing a broader concept of rights-holders and providing effective remedy and grievance mechanisms.
“The Responsible Minerals Initiative (RMI) hears a strong call to mainstream the UNGPs into existing standards. Likewise, companies have a desire for guidelines and benchmarks against which they can demonstrate their efforts to respect a broad spectrum of workers’ rights and human rights.” Anna Stancher, RBA
The Cobalt Institute is taking a just transition lens to the industry
The Cobalt Institute is exploring what a just transition means in practice for the Institute’s membership as well as the broader cobalt industry. We are seeking to help drive the green economy in a way that respects human rights and the environment; creating new opportunities for social and economic development whilst placing agency in the hands of workers and communities throughout the whole value chain.
Earlier this year the Cobalt Institute launched The Cobalt Environment, Human Rights and Just Transition Group (“The Cobalt Learning Group”) in partnership with business and human rights experts Human Level. This peer learning group was convened to build the capacity of our members to meaningfully improve their environmental and human rights due diligence efforts in accordance with international frameworks. Through the Group, we are also purposefully exploring and looking to define what a just transition means for participating companies and how they should be responding in a rights-respecting way, taking stakeholder views into consideration. We are delighted to support our members on this journey and strive for leadership in the sector.
Artisanal and small-scale mining (ASM) in the cobalt industry
Research shows that the most corrosive impact within and between economies is growing inequality. Without adequate intervention, these fundamental inequalities further complicate the prospect of a truly just transition, threatening to perpetuate the same dynamics as we try to resolve the climate crisis…
“ASM miners in places like the Democratic Republic of the Congo—already facing high risks to their health, safety, well-being and standard of living—are likely to be left behind in the just transition if they are not deliberately included in the process.” Assheton Stewart Carter, Fair Cobalt Alliance
Considering the example of ASM cobalt communities in the Democratic Republic of the Congo – already facing high risks to their health, safety, well-being and livelihood – are likely to be left behind if they are not deliberately included in the just transition. Despite the role of ASM as an employment engine for some of the most vulnerable populations, ASM mining is almost categorically classified as a high-risk “no-go” for companies sourcing minerals. Rather than excluding the ASM sector from markets, a truly just transition would bring these workers and communities along by promoting formalization, capacity building, professionalization of mining techniques, and fair trading practices, among other drivers to improve outcomes for ASM communities.
The Cobalt Institute is an active contributor to important multi-stakeholder initiatives, including the Global Battery Alliance and the Fair Cobalt Alliance, set up to raise standards on the ground in the DRC and address the root causes of the complex issues associated with ASM.