Supply chain disruption cost the US and EU economy roughly $3 trillion USD in 2020, equivalent to the size of the whole German economy. For downstream companies such as car makers, the effects of limited supply chain visibility are both financial and ethical. This was highlighted in June 2021 when one of the world’s largest solar panel material mining companies Hoshine Silicon Industry received sanctions from the US due to evidence of forced labour in their supply chain, therefore shutting down their US sales overnight and leading to millions in lost revenue. This has led to huge concerns for buyers of solar panels worldwide around their exposure to social issues in their supply chain and the subsequent reputational and financial risk. Like in the solar industry, the lack of visibility in the battery supply chain creates supply chain risk and limits the ability for positive change.
On the ethical side, whilst electric vehicles promise a cleaner future for mobility, the supply chain of electric vehicle batteries faces a myriad of supply chain challenges which threaten to prevent a clean and just mobility transition. Car makers are facing increased pressure to ensure supply chain resilience and improve the environmental and social impact of the battery supply chain. Given the complex network of these supply chains, individual players have limited visibility to understand and limited power to do anything about their impact.
A UK startup has launched a solution for the car makers, with the visibility and tools they need to improve their battery supply chains, which creates wide ranging financial and sustainability benefits. They integrate data from various sustainability organisations with modern technology (blockchain). There are a few players in this field offering some form of a solution with regards to the visibility of the supply chain. With the most innovative being blockchain technology solutions that focus on enabling traceability and data capture. Whilst this is an important starting point for improving supply chain practices, it is criticised by sustainability organisations and NGOs because it doesn’t in itself improve supply chain impact. The UK company are partnering with industry bodies and sustainability organisations to validate the solution, drive industry adoption, and gain relevant know-how including the sustainability standards’ organisation. This includes the leading mining sustainability standard IRMA, the leading industry consortium for sustainable supply chains at the World Economic Forum's Global Battery Alliance, and the international NGO Pact to enable supply chain players to take collaborative action on the ground.
The result brings a list of benefits to the car makers:
(1) Respond to shareholder, regulatory and consumer pressure to measure and improve sustainability impact and demonstrating contribution to the United Nations Sustainable Development Goals (SDG);
(2) Meaningfully solve complex and systemic supply chain challenges and reduce exposure to supply chain risk and bottlenecks which could harm reputation, share price and profitability;
(3) Comply with tightening regulation around supply chain due dilligence, environmental responisbility, modern slavery and human rights (partically around the mining of critical materials from high conflict regions);
(4) Increase resource security by securing supply of limited raw materials as demand for electric vehicles and therefore their raw materials increase;
(5) Improve ease of measuring, auditing and reporting on environmental and social impact of supply chain for internal and external purposes;
(6) Independent assurance of supply chain and sustainability data to support positioning as a sustainability leader and sell more to environmental conscious consumers.
They are looking for car and battery maker partners for technical co-operation to pilot the new solution and thereby to improve the partners' and their supply chains' visibility.