This is how Amnesty International is working with companies to cut supply chain abuses

SAN FRANCISCO — Cobalt is a key component of the lithium-ion battery, the rechargeable battery of choice for portable electronics and, increasingly, electric cars. Artisanal miners — a term for impoverished workers who mine by hand — are responsible for 20 percent of the world’s cobalt production. And from child labor to tunnel collapses to lung disease, the growing demand for this mineral, which is expected to double by 2025, comes at a high human cost. In a new report called Time to Recharge, Amnesty International ranks electronics and car companies according to steps they have taken to improve cobalt sourcing practices. As the demand for rechargeable batteries grows, the focus of human rights organizations is shifting to the Democratic Republic of Congo, where more than half of the world’s cobalt supply originates, and to the extractives industry. Nearly two years after an Amnesty International investigation exposed links between batteries and child labor in the central African country, progress has been slow in stopping human rights abuses in cobalt supply chains, according to the report. On Tuesday, Devex attended a roundtable in San Francisco with Shalil Shetty, secretary general of Amnesty International; Danielle Cass, who recently left the U.S. Agency for International Development to work on Silicon Valley engagement for Amnesty; and a range of other industry leaders, activists, and journalists. They discussed the individual performance of companies, explaining, for example, how Apple is engaging with the Chinese processing company Huayou Cobalt, both of which were represented at the meeting, to address child labor. On several occasions, the group looked at page 78 of the report, which features overall company ratings, in a conversation that demonstrated how advocacy organizations can go beyond naming and shaming companies to partnering with them to change their practices. “We want to encourage companies to use their expertise and their technology to help people enjoy their human rights around the world,” Cass told Devex in an email. “But Amnesty’s most important asset is its independence, and we will always speak out when companies or governments are ignoring or abusing human rights.” In producing the report, Amnesty reached out to 29 companies with cobalt supply chains. Downstream companies — from consumer-facing electronics companies such as Apple to car manufacturers such as Tesla — process or use materials containing cobalt after it goes through the smelting or refining process. As a result, the focus is often on companies earlier in the chain, such as smelter Huayou Cobalt, whose wholly owned subsidiary in the DRC has been a major buyer of artisanal cobalt, according to the report. “While Huayou Cobalt is moving in the right direction and demonstrating to its peers that it is possible to strengthen due diligence in a short amount of time, there is significant scope for improvement,” the report reads. “This is vital to enable the downstream companies and consumers to ensure that the cobalt supply chain is free from abuse.” The organization drew upon the United Nations Guiding Principles on Business and Human Rights, and adapted the following questions from the Organisation for Economic Co-operation and Development’s due diligence framework: 1.Has the company taken steps to mitigate human rights risks or remediate harms related to its cobalt supply chain? 2. Has the company disclosed information about the human rights risks and abuses in its supply chain? 3. Has the company taken action to identify “choke points” and identify human rights risks and abuses? 4. Does the company have robust policies and systems in place for detecting human rights risks and abuses in its cobalt supply chain? 5. Has the company investigated its supply links to the DRC and Huayou Cobalt? According to the report, 22 companies presented substantive responses, but discussions on Tuesday made it clear just how complex it is to follow the origins of cobalt. For example, cobalt from artisanal mining can be mixed into large-scale mining operations. In a letter to Amnesty, Huayou Cobalt talked about poverty as a cause of child labor and pointed to their initiatives in the DRC to build schools and provide microcredit. While Bryce Lee, head of corporate social responsibility at Huayou Cobalt, talked about some of these initiatives at the meeting Tuesday, Shetty added that CSR is no substitute for compliance with international human rights standards as part of core business principles. “A lot of changes have happened in my company,” said Chen Hongliang, president at Huayou Cobalt, who worked in the DRC for 12 years. Speaking in Chinese, with Lee translating, he said his company has been in conversations with Apple and has learned a lot in the process. One of the barriers, he said, is a lack of common standards. “Actions have to be taken and it has to be serious,” he said. Representatives from technology companies speaking with Devex after the meeting said it is a complex problem that companies cannot solve alone, and highlighted the importance of nongovernmental organizations working in countries like the DRC. Amol Mehra, executive director of the International Corporate Accountability Roundtable, said he appreciated the Time to Recharge report and the clever way it captures performance. The report uses the same visuals that indicate battery life on a cell phone, with four bars being full battery or adequate performance. None of the companies surveyed hit those marks across all five questions. But Mehra said he wanted to hear from companies not only about their supply chain information, but also their human rights risk assessment, the steps they are taking on mitigation, and their risk assessment disclosure. “We’re trying to assess companies’ compliance to international standards, but we can’t assess effectiveness of practices without more transparency and disclosure,” said Seema Joshi, head of business and human rights at Amnesty International. She said she doesn’t buy the argument that it takes time for companies to align themselves with international standards. “It shouldn’t be the case [that] we do pieces of research highlighting issues in the public domain in order for companies to act,” she said. On Tuesday, Shetty explained to the companies present that the reputational risk is high, and that they don’t want to be on the wrong side of the conversation. “The basic methodology of Amnesty has remained the same for a long time,” Shetty told Devex. He talked about the importance of building an evidence base, then starting a dialogue, and applying more external pressure through public campaigns when necessary. While the organization tends to focus more on the responsibility of governments, in the case of cobalt production in the DRC, it is focusing mostly on corporate action and inaction. The report follows a January 2016 investigation that found a majority of companies were unable to answer basic questions about the sources of the cobalt in their products. “This level of poverty and deprivation and suffering is happening in the face of a massive boon in terms of demand for cobalt,” Shetty said. “A lot of people are making a lot of money.” The corporations represented around the table on Tuesday were hesitant to answer questions about their plans for changes, such as whether they would be willing to pay more for cobalt they could guarantee was clean. A representative from BMW said upfront investments are required for sustainability that will pay off in the long term; while a representative from Dell said it will take time and effort for all the due diligence that needs to be done. A representative from Apple said she was there primarily as an observer, and that she would refer media questions to someone in a better position to answer. Amnesty International plays a key role in defining the challenge and asking what can be done to solve it, Mehra said. He pointed to Marianna Smirnova, project manager of the Responsible Minerals Initiative at the Responsible Business Alliance, who sat a few seats beside him, as an example of how stakeholder groups can push their members to take responsibility. She talked about the ways her group encourages members to improve their due diligence practices, and emphasized the value of coordinated and collective action. While the United States has passed a conflict minerals law, cobalt is not included among the four minerals whose supply chains are now subject to inspection by independent auditors. Apple has said it will start to treat cobalt like a conflict mineral; the report described Apple as an industry leader for cobalt sourcing — but said the bar is low. No country legally requires that companies publicly report on their cobalt supply chains, allowing human rights abuses to continue. At one point Tuesday, Cass mentioned that she would send around a 360 degree video on conditions in the mines. With technology, Shetty explained, there are threats and opportunities. When it comes to policy and advocacy, Amnesty International is focused mostly on threats. But he and Cass told the group to expect more events in Silicon Valley exploring not only the threats but also the potential of technology to advance human rights. Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you free every business day.