The COVID-19 pandemic has caused significant disruption to supply chains around the world. The raw materials sector has been hit particularly hard, with factories closing, mine sites mothballed, prices crashing, and consumer purchasing flattening.
But as concerns over security of supply begin to mount, will the environmental, social and governance (ESG) commitments readily advocated by mining companies, processers, traders and manufacturers alike over the past several years be revealed as core commitments or fair-weather aspirations?
In times of global financial uncertainty, we are all occasionally guilty of cutting back on our spending, prioritising staples over luxuries in an effort to conserve.
Companies tend to behave very similarly in times of crisis, which serves to expose the departments, projects or initiatives they will most readily furlough as well as the standards that are most freely lowered. For efforts to achieve sustainability, it is a moment of truth.
The world was a very different place when we participated in the Mining Indaba at the start of February. Optimism was as abundant as the sunshine, with lengthy and passionate discussions of how to improve mining in 2020 drawing large crowds.
I led several of them myself, convening a breakfast roundtable to discuss responsibly sourced raw materials and sitting on one of the programmed panels to discuss the new generation of solutions for responsible mining. Over that week, there was only one word on everyone’s lips: sustainability.
In the months since, the COVID-19 pandemic has taken hold of the world’s economy, health and security and the outlook couldn’t be more different.
Read more about COVID-19
Sustainability is once again the hot topic of discussion, but this time for very different reasons as the appetite for progress – exemplified by coalitions like the Mining Indaba – risks losing the momentum built since the introduction of the United Nations Sustainable Development Goals (SDGs) five years ago.
In a speech given at the Petersburg Climate Dialogue last month, German Chancellor Angela Merkel, urged the international community not to lose sight of climate, sustainability and environmental goals urging countries to “push commitments forward strongly, because this is essential for us to have a global success.”
The Chancellor’s intervention acts as a timely reminder for businesses too, emphasising that concerns over security of supply provide no justification for abandoning the standards we have worked so hard as an industry to institute.
Put simply, environmental, social and governmental considerations cannot be dependent on economic stability. This is true for many industries, but the sustainability measures in the raw materials sector have been especially hard fought and would be especially hard to recapture. So, what is at stake and why would it be such a mistake to let standards slide?
To answer this question, it helps to clarify the ubiquity of the raw materials supply chain in everyday life. In 2019, figures show Apple sold more than 850 000 iPhones every day and creating each one required upward of 20 individual raw materials and more than 60 individual elements.
The same is true of much of the technology on which modern life is built. So, if you are reading this on a smartphone, use a laptop for work, or if you own an electric vehicle, you are holding the end product of one of the longest and most complex supply chains in the world.
However, the supply chains that manufacturers rely on for mined raw materials have been beset with a range of serious issues, from child labour to environmental degradation. But because of this complexity, it has been close to impossible for manufacturers and consumers to ensure that the production of these materials haven’t involved such damaging practices.
It’s true that some certificates do exist for raw materials in the same way coffee or cocoa beans can be marked ‘Fairtrade’, but there is virtually no consistency between each certificate which means there are wide margins for error in how sustainability is defined. This is the problem that the CERA programme has set out to solve.
CERA certification scheme unpacked
CERA is the first universal and comprehensive certification scheme for determining the sustainability of raw materials. CERA is applicable for every raw material and every country, allowing a single definition of sustainability to be used for the entire value chain.
Working with CERA offers mining companies, processors, commodity traders and manufacturers alike a guarantee of sustainability in the products they handle. CERA not only provides the value chain with the tools to work in a way that doesn’t carry human or environmental risk, it also helps responsible value chain actors to demonstrate that such an approach is possible.
The COVID-19 pandemic has revealed the fragility within the raw materials supply chain, and shown that harmonisation of certification, traceability and ESG criteria is more essential than ever – but striking the right balance is always going to be a consideration.
Speaking recently with Tyler Gillard, head of sector projects and legal adviser in the Responsible Business Conduct Unit of the Organisation for Economic Co-operation and Development ‘s investment division, he told me that “the global supply chain disruptions caused by COVID-19 and related adverse impacts on workers and communities spanning health, livelihoods, human rights and business integrity pose serious challenges to certification schemes. Travel restrictions may make verification of responsible business practices more difficult.
More importantly, certification alone is often inadequate to mitigate identified risks, or to build the capacity of suppliers to conduct strong due diligence, a weakness that may be amplified by the disruptions and changes to supply chains brought about by COVID-19.
With the right support from governments, business and civil society, however, certification schemes can function as points of entry for assisting impacted producing communities and managing the changing risk landscape.
Throughout these efforts, businesses sourcing raw materials and certification schemes should balance maintaining integrity and flexibility in their due diligence practices to cope with the current situation.”
In these conditions, we have an excellent opportunity to rethink how we approach certification and a perfect chance to institute CERA as a new programme that provides the value with a consistent standard, regardless of location, material or process.
The world will be very different post-COVID, but this means we also have a responsibility to reshape it for the better. The value we will now place on adequate personal protective equipment only reiterates the importance of preserving the health and safety of employees, which is a central concern of ESG commitments.
Any reversal or lessening of these commitments would be devastating in the mining sector, so in this period we must redouble our endeavour to make every aspect of raw materials sustainability and certification as simple, consistent and transparent as possible.
Democratic Republic of Congo pilot project
At the end of last year, I visited the DRC – one of the world’s largest cobalt producers – as part of CERA’s pilot project stage and met with local initiatives, government agencies and representatives from the financial sector.
The DRC offers an excellent case study for the importance of traceability, sustainability and certification in raw materials supply. The country’s raw materials sector has already faced numerous allegations of human rights and environmental abuses, some justified, some unjustified.
With the DRC’s mines now supplying 60% of the world’s cobalt supply there is an acute need to distinguish sustainable sources from unscrupulous ones, and even legitimate concerns from spurious or fanciful ones – both of which can be solved by an appropriate certification.
In the wake of COVID-19, more than 20 major mining projects in the region have already suspended their operations and due diligence programmes protecting workers and enforcing regulations are likely to follow suit. For small-scale and independent miners, this presents a serious issue as their route to market may be blocked if they cannot satisfy sustainability or due diligence criteria.
This shows the value of CERA’s methodology having been designed to be as applicable to small-scale and artisanal mining sources as it is to junior and major mining players.
The DRC is just one example and CERA can be applied with every raw material, in every country and throughout the entire value chain.
Dr Andreas Hucke, project director, CERA
Head of raw materials sustainability at DMT
ABOUT THE AUTHOR
Since 1989, Dr Andreas Hucke has held a variety of roles at Germany-based international independent engineering and consulting company DMT. Currently the head of raw materials sustainability, Hucke also holds the following roles within DMT: senior engineer geologist, accredited expert for rockburst prevention and supervisor of the “Testing of Support Elements, Monitoring and Physical Modelling” team. Since 2016, Andreas has also been responsible for the Strategy Project Transparency at DMT, through which the CERA project first originated.