This PRI-supported collaborative engagement on responsible cobalt sourcing ran between 2018 and 2020 with companies in the electronics and automotive sector. A total of 46 institutional investors, representing approximately US$6.4trn in assets under management, engaged with 16 companies on their cobalt sourcing practices. The objective was to improve companies’ performance and impact in three focus areas:
- human rights risk assessment and comprehensive due diligence efforts;
- impact monitoring and corrective action, including on-the-ground remediation; and
- collaboration on systemic issues.
Investors assessed companies’ practices and progress in these areas at the beginning and the end of the engagement. A report was published at the end of the engagement, summarising the results of this engagement and recommendations for investors on responsible cobalt sourcing practices going forward.
Why investors should care
Systemic human rights violations in cobalt supply chains originating in the mines of the Democratic Republic of Congo (DRC) have become a risk for companies that rely on this mineral for their products. Reasons include:
- increasing regulatory risks associated with legislation around sourcing of minerals;
- reputational risk associated with investigations and media attention on poor corporate practices in cobalt supply chains;
- consumer expectations;
- potential negative impact, on operations and material availability.
As well as mitigating risk,good management of cobalt supply chains can contribute to a company’s competitive advantage, and strengthen its long-term financial stability. Benefits include:
- cost savings through improved efficiency and working conditions as well as risk management;
- mproved relationships with stakeholders including suppliers and consumers;
- improved ability to preserve reputation.
Engagement focus companies
Apple, BMW, Daimler, General Motors, HP, Infineon, Johnson Matthey, LG Chem, Microsoft, Panasonic, Renault, Samsung SDI, TDK, Tesla, Toyota Motor and Volkswagen