Three quarters of global battery supply chain at risk of labour law violations says Infyos

Companies accounting for 75% of the global battery market, including its penetration in the automotive and energy sectors, have connections to one or more companies in the supply chain facing allegations of severe human rights abuses.

This is according to research by London-based AI supply chain risk platform Infyos, finding that most major battery manufacturers and end batteries applications are exposed, including many of the world’s largest automotive, energy storage and electronics brands.

These companies were found to have connections to one or more companies in the supply chain facing allegations of severe human rights abuses.

The 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.

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Allegations of human rights violations

According to the platform, most of the allegations of severe human rights abuses involve companies that are mining and refining raw materials in China that end up in batteries around the world.

This is particularly the case in Xinjiang Uyghur Autonomous Region (XUAR) in northwest China, where the battery, automotive and solar industries have been hit with public allegations of widespread forced labour from journalists, government agencies and non-profit organisations.

EV and battery manufacturers have a complex supply chain, sometimes with over 10,000 suppliers across their network, says Infyos, from mines to chemical refineries and automotive manufacturers.

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

The battery industry’s connections to these incidents stem from manufacturers sourcing components or materials from unethical companies in their supply chain network or entering business relationships, including joint ventures or equity investments hidden in complex and changing ownership structures, which conceal the reality of the unethical connections.

EU Battery regulation

Infyos adds that 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.

With more legislation such as the EU Battery Regulation and the US’s Uyghur Forced Labour Prevention Act (UFLPA) being phased in, says Infyos, action must be taken now so companies can still sell their products.

In Europe specifically, new EU Battery Regulations are coming into effect between 2024 and 2036, which require much more rigorous supply chain visibility and risk management starting in 2025 with non-compliance leading to products being blocked from the European market.

According to the company, these pressing supply chain requirements, which many in the industry are struggling to comply with, are foundational to the much-talked-about battery passports in 2027. The UFLPA and EU Battery Regulation are widely seen as the battery industry gold standard due to their strict requirements on due diligence and supply chain visibility and many companies operating outside of the regions are voluntarily aiming to meet their requirements.

Infyos data

Infyos’ data was compiled from evidence on their AI supply chain risk platform using government datasets, NGO reports, news articles and social media sources.

According to the company, their technology is developed specifically for the battery industry to automate the gathering, cleansing and classification of unstructured data to identify and assign confidence ratings to allegations of human rights abuses.

Commenting in a release was Tony To, co-founder and CTO of Infyos: “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.

“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.”

Added Sarah Montgomery, CEO and co-founder of Infyos: “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.”