Responsible sourcing: The key to a low carbon future
This article is sponsored by International Copper Association.
We are on the path toward a low carbon future. Growth in renewables continues, with 2018 being the fifth consecutive year global clean-energy investment exceeded $300 billion. Meanwhile, the number of electric vehicles (EVs) on the road is expected to reach 125 million by 2030, according to the International Energy Agency, compared to 3.1 million in 2017.
A low carbon society with more renewables, more energy efficiency and more EVs will bring greater demand for natural resources, especially metals. The World Bank’s 2017 report (PDF) on "The Growing Role of Minerals and Metals for a Low Carbon Future" states we could see a tenfold rise in demand for metals by 2050 if there is a significant shift to a more decarbonized economic system. Demand for copper alone is expected to rise by up to 40 percent by 2035.
This transition will bring challenges, but also some great opportunities. If managed in the right way, increased demand for resources such as copper can bring significant wealth to countries where these resources are found. Countries such as Chile have been able to harness their copper resources and invest in infrastructure and new technology to further develop the industry. This has enabled Chile to benefit economically from its copper resources through exports, inclusive growth and diversifying wealth generated by mining into other sectors of the economy.
In order to create a more sustainable future we need to learn lessons from the past, and we must incorporate responsible sourcing into the low carbon economy. We recently explored this very topic in the "Responsible Sourcing for a Low Carbon Future" workshop at GreenBiz 19. With the great opportunity an increased demand in resources can bring countries comes great responsibility for the economic actors to instill responsible sourcing at the core of their company policy.
Additionally, civil society is paying increasing attention to what products are made out of, and where these materials are sourced from. This has become clear in the consumer electronics industry as well as for electric vehicles.
Industries are responding by recognizing their responsibility and trying to meet the increased expectations of consumers, society and governments. We are already seeing some positive trends developing. Companies such as Ericsson have taken the initiative to ensure they have environmental requirements for their suppliers and a code of conduct.
Global mining group — and International Copper Association member — Rio Tinto already has demonstrated action in this area. It launched a supplier code of conduct in 2016 to list its expectations in terms of human rights, labor rights, safety and the environment, and have set up procedures to better identify risks presented by new suppliers. When Rio Tinto had to develop a new supply chain at the Oyu Tolgoi copper mine in Mongolia, it worked with local communities to reach an agreement on a business-development program that would increase the commercial skills of local businesses to make it more sustainable — the first such agreement in Mongolia.
Responsible sourcing does not stop with materials — the social aspect also needs to be considered so local communities benefit from the resources found in their regions. Philips supports local communities through a commitment to conflict-free sourcing and reducing CO2 emissions throughout its supply chain. Meanwhile, mining company Teck has built relationships with indigenous peoples in regions where it has operations. Many of the company’s operations in Canada, Chile and the United States are found within or adjacent to indigenous people’s territories. As such, Teck created a company policy to ensure respect for the rights, cultures, interests and aspirations of indigenous peoples, built collaboratively with their input and guidance.
As the demand for copper and other materials necessary for the development of a low carbon society increases, the importance of these responsible sourcing actions grows. Responsible sourcing is a way of extending the benefits of this demand in materials to local communities.
With global copper demand expected to grow alongside the roll out of energy-efficiency measures and uptake of renewable-energy sources, it is clear that we as an industry collectively need to address societal expectations. The World Bank’s 2017 report on the growing role of minerals and metals states, "The shift to low carbon energy will produce global opportunities with respect to a number of minerals," and that limiting climate change to a global increase of 1.5 or 2 degrees Celsius will require radical changes to drive this increased demand.
Copper is used in a range of products requiring high-performance conductivity, from grid infrastructure to EVs, air conditioning and cooling of food to consumer electronics, where demand is growing and will continue to do so in the coming years, even decades, as we continue to electrify the economy and lift people out of poverty and into the growing middle class. As an industry, we are committed to continuing on our path toward more responsible sourcing, doing what is necessary to propel this positive momentum into even more effective action so natural resource rich countries and communities can reap the benefits of a low carbon future.