The dark side of ESG investing has the potential to undermine a whole generation of clean-tech strategies.
Adam Matthews, chief responsible investment officer at the Church of England Pensions Board, said the risks posed to the renewables boom via the mining industry aren’t getting nearly enough attention. The upshot, according to the 47-year-old, is that portfolios intended to uphold environmental, social, or good governance principles may end up being exposed to human rights abuses and environmental damage via supply chains.
and metals than combustion-powered technology. The World Bank estimates that by mid-century, the amount of raw materials necessary for the green transition will soar 500%. And with new legislation such as the US Inflation Reduction Act turbo-charging demand for clean tech, that pressure is set to soar.
Some companies are trying to reduce their exposure to risks by either looking for ways around raw materials, or taking direct control of supply lines. Tesla Inc. is redesigning batteries to avoid cobalt and nickel. General Motors Co. recently invested $650 million in Lithium Americas Corp., which is developing a mine in Nevada.
In South America, meanwhile, mining has had a devastating impact on local populations. In 2019, a mining waste dam at a Vale SA iron-ore mine in the town of Brumadinho, Brazil, collapsed, killing 270 people. Vale subsequently agreed to pay $7 billion to the state of Minas Gerais, which will be used in socioeconomic and environmental programs to repair the damage caused by the dam collapse.
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