September 27, 2024: Research conducted by supply chain risk platform, Infyos, claims that three quarters of the world’s battery supply chain is at risk of violating laws on forced labour.

The new industry data, compiled from evidence on Infyos’ AI supply chain risk platform using thousands of government datasets, NGO reports, news articles and social media sources, has identified that the global battery firms concerned have connections to one or more companies in the supply chain facing allegations of severe human rights abuses.

Most major battery manufacturers are exposed, including many of the world’s largest car, energy storage and electronics brands.

Much of this abuse appears to be concentrated in resource-rich countries where raw materials such as lithium and cobalt are mined and refined for lithium-ion batteries.

These abuses, particularly involving forced and child labour, were found to be most prevalent in the early stages of the supply chain, notably during the extraction and processing of these critical materials.

EV and battery manufacturers have a multifaceted supply chain, sometimes with thousands of suppliers across their network, from mines to chemical refineries and car manufacturers.

Human rights abuses often occur upstream, notably at the raw material mining and refining stages, making it difficult for companies purchasing batteries to identify their supply chain risks.

The widespread human rights abuses identified, range from people being forced to work in lithium refining facilities under the threat of no or minimal pay to five-year-old children mining cobalt materials out of the ground in hazardous conditions.

Severe human rights incidents are occurring globally, especially in resource-rich countries with fragile and corrupt governments such as the Democratic Republic of Congo and Madagascar.

The demand for lithium-ion batteries has surged in recent years primarily due to the increased production of EVs, the growth of energy storage systems, and the expansion of portable electronic devices like smartphones and laptops. Governments and industries pushing for decarbonisation and net-zero emissions targets have also further driven this demand.

“Our platform is designed to provide users with insights into the complexities of the battery supply chain so they can take proactive measures to identify and mitigate risks” said Tony To, co-founder and CTO.

“By leveraging AI in our technology we’ve created a system that delivers accurate data despite the complexity of the battery industry and most importantly provides users with simple actionable mitigations to collaborate with their suppliers to address risks and improve the sustainability of the industry.”

Sourcing is coming under growing scrutiny, particularly in Europe and the US, where failure to address the issues means companies could be in breach of current and future regulations, hampering investment in the global battery market forecast to be worth nearly $500 billion in 2030.

Legislation including the EU Battery Regulation and the US’s Uyghur Forced Labour Prevention Act (UFLPA) is being phased in over the next 12 years to address human rights and environmental impacts in the battery supply chain. Rigorous visibility will become a stringent requirement, but many firms are already struggling to comply with the new rules.

It’s a pressing issue for the industry and pivotal to the much-talked-about battery passports in 2027.

“Companies manufacturing or purchasing batteries are at risk of having their products blocked at the market, further delaying and increasing the costs of renewable energy projects or tarnishing their reputation because of human rights risks” said Jeff Williamson, head of sustainability, Infyos.

Sarah Montgomery, CEO and co-founder of Infyos, said: “The relative opaqueness of battery supply chains and the complexity of supply chain legal requirements means current approaches like ESG audits are out of date and don’t comply with new regulations.

“Most battery manufacturers and their customers, including automotive companies and grid-scale battery energy storage developers, still don’t have complete supply chain oversight.”