Mercuria CSR Report 2021 - Flipbook - Page 79
2021 Corporate Social Responsibility
clients if their needs don’t fit the new “acceptable” world? How will financing change and at what cost?
What will my market look like? And most importantly, how do I move with the evolution? Corporates
are looking at how they will achieve high ethical standards in sustainability, traceability and social
governance throughout their activities. With change comes opportunity and there is real potential for
those who embrace the change and stay at the forefront of it.
The move away from fossil fuels requires the development of new transition technologies to transform
industry, to heat our homes and power our cars. The problem with renewable energies is the
intermittency, we cannot choose when the sun shines or when the wind blows! The solution is storage,
provided largely by numbers of enormous batteries to help to regulate the distribution of power. The
battery market is anticipated to be worth US$100 billion by 2025. Ironically however, if we don’t convert
in the right way the move towards cleaner fuels could result in unintended harm to our environment
and human beings. Cobalt, a key component in battery technology, is well known for the exploitive
conditions under which it is mined by adults and children. It is widely reported that forced labor, child
labor, debt bondage and sexual assault are serious realities associated with cobalt mining, particularly
in the DRC. Amnesty International has documented violations of the human rights of indigenous people
living near lithium (a key battery component) mines, communities are not given enough information
about how damaging mining activities can be to their water sources.
Increasing mandatory due diligence
Supply chain due diligence by market participants is therefore key when sourcing these new technology
metals. Regulators play their part in forcing high standards of due diligence to ensure that companies
and their financiers are scrutinising the entities from whom they are sourcing and we are seeing lots
of movements in this regard. In Europe, the Non-Financial Reporting Directive (NFRD) which requires
large public interest companies with more than 500 employees to disclose environmental, social and
employee related matters will be replaced by the Corporate Sustainability Reporting Directive (CSRD),
which will extend the obligation to more entities, introduce more detailed reporting requirements
and require audits of reported information. In Switzerland, following an unsuccessful vote on the
proposed
Responsible Business Initiative, the indirect Counter-Proposal will automatically enter into force in the
coming months. The Swiss Criminal Code and the Swiss Code of Obligations will impose extensive nonfinancial reporting obligations on large public interest companies and financial institutions particularly
in relation to environmental, social and employment related matters, respect for human rights as well
as the fight against corruption. Additionally, due diligence obligations will be imposed on companies.
For some companies this type of due diligence will already be in place to some extent, for others it may
require new processes.
In order for these human rights violations to improve it is imperative that we work together as
stakeholders. Governments, NGOs, financiers and the private sector can be so much more effective
when they collaborate. The more we are able to force high ethical standards to be necessary for a
company’s success, closing the opportunities for less scrupulous companies to frustrate ethical
improvements, the faster these situations will improve. The LME has been a market leader in this
regard and taken a bold step forward with its responsible sourcing requirements, which we welcome as
a strong step towards improving conditions for many miners.
A balanced transition
At this time of innovation and development we should also be taking the time to really think about the
implications of how we transition to a greener world and ensure that we move forward in a way that
improves not just the climate but also the social issues which need addressing. We must be cautious
not to exasperate the human rights violations in certain industries as both climate and human rights
need to go hand in hand. Technology and transparency can help in the fight against these human rights
abuses. It is clear that the necessary energy transition is dependent on “transition metals” and so the
need to source them is a very real one. Companies along with other shareholders therefore need to
work to address these issues together with their suppliers and partners.
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