Investors worldwide call for responsible mining practices in nickel industries

31 investors, with over USD 2.7 trillion in combined assets under management, have signed a statement expecting companies to enhance their environmental and social due diligence in nickel supply chains of the electric vehicle (EV) industry. They are calling for incorporating responsible mining requirements into their mineral supply chain policies. Companies should also adopt time bound commitments to have deforestation-free nickel supply chains.

EV industry to drive nickel demand

The energy transition will require critical minerals like copper, lithium, nickel, cobalt and graphite. Nickel is a transition mineral used to produce the cathode material of lithium-ion batteries, which are used to power electric vehicles. The single-largest growth in the demand of nickel in the next two decades is expected to come from the electric vehicle (EV) industry.

Environmental and social impacts of nickel mining worry investors

At the same time, a rising number of reports on the negative environmental and social impacts of nickel mining activities in South-east Asia countries including Indonesia and the Philippines, have worried investors. Common issues include deforestation, water and air pollution, conflicts with local communities and biodiversity loss.

Investors call for responsible supply chains to stop deforestation

Now, 31 investors have signed a statement initiated by the Dutch Association of Investors for Sustainable Development (VBDO) and Rainforest Foundation Norway, to incorporate responsible mining practices and higher standards for environmental and social impact in nickel supply chains.

"The energy transition also requires nickel, but we as investors must contribute to it being supplied in a responsible manner." says DNB Asset Management.

First collaborative investor initiative for nickel supply chains

This is the first collaborative investor engagement initiative for nickel supply chains, and it is supported by several national and international NGOs, including Earthworks, Transport and Environment (T&E), Mighty Earth, Madani Berkelanjutan, Auriga Nusantara, Fern, Climate Rights International, Forest Watch Indonesia, Satya Bumi, IUCN-NL and Aidenvironment.

Among others, investors expect automakers and EV battery manufacturers to introduce requirements for Free, Prior, and Informed Consent (FPIC) of Indigenous Peoples and local communities in mining operations, as well as to include third-party, independent auditing using transparent social and environmental standards during risk and impact assessments of mining and refining sites.

Supply chains must respect rights of Indigenous peoples and local communities

‘We acknowledge the importance of the EV-industry for the energy transition. At the same time, companies that depend on minerals for their products should adhere to social standards and respect the rights of Indigenous Peoples and local communities, also in their supply chains. Therefore, PME calls for responsible mining practices in the nickel industries and we will engage companies within our investment portfolio on this issue," says Eric Uijen, chairman of the executive board of Dutch pension fund PME Pensioen.

Angélique Laskewitz, executive director of VBDO explains:

"Environmental impacts are often overlooked in the downstream mineral supply chain policies of EV battery producers and EV manufacturers. The requirement to respect the rights of Indigenous Peoples, as recognized in the UN Declaration on the Rights of Indigenous Peoples, is also often neglected. We don’t just need an energy transition, we need a responsible one."

Laskewitz continues:

"We expect companies to conduct enhanced due diligence for biodiversity, pollution, climate change and IPLC rights risks as well as adopt a time bound commitment to have deforestation-free nickel supply chains."