Ensuring responsible sourcing in battery supply chains for Volvo Cars

Volvo Cars has a steadfast commitment to ensuring human rights, protecting the environment, and ethical sourcing practices in its supply chain. Subsequently, Volvo Cars is following a path to ensure that its sub-suppliers across battery supply chains (cobalt, lithium, nickel, graphite, and mica) meet responsible sourcing requirements.

Challenge

In addition to Volvo Car’s own commitments, EU legislation (such as the EU Battery Regulation and the EU CSDDD) mandates that to maintain EU market access; downstream companies need to ensure their suppliers significantly ramp up and scale due diligence efforts to mitigate risks around ESG issues.

However, the complex and diverse nature of these mineral supply chains, which span the globe, means that achieving high levels of transparency among all suppliers is often challenging. For this reason, Volvo Cars sought support from RCS Global Group (part of SLR) to audit its supply chain and ensure responsible sourcing commitments are upheld. Moving beyond audits, Volvo Cars is also committed to collaborating on improving sustainability with supplier improvement interventions.

Volvo Cars also wanted to directly support the continuous improvement of working and living conditions in cobalt, copper, tantalum, tin and tungsten ASM communities. Learning more about the ASM sector was also of central interest.

Solution

Acquired over several years, RCS has extensive expertise in responsible sourcing, especially in auditing upstream treatment units and mine sites for minerals like cobalt, lithium, and nickel in high-risk regions against comprehensive ESG criteria. This expertise equipped our team with the necessary tools and training to carry out this project successfully for Volvo Cars.

RCS Global Group’s Audit and Mapping team conducted independent second-party audits of Volvo Cars’ supply chains, evaluating their suppliers’ conformance with relevant standards and frameworks. The project further included corrective action plan monitoring and supplier training on industry best practices, allowing Volvo Cars to actively collaborate on improving sustainability standards throughout the supply chain.

• RCS provided comprehensive support to Volvo Cars in executing the responsible sourcing audit program. 41 audits of suppliers in the cobalt, lithium, nickel, and mica supply chains were conducted between 2019 and 2022. In 2023, 20 audits were conducted, and the scope of the audit program was expanded to include the graphite supply chain, further enhancing Volvo Cars’ due diligence efforts.
• All audits for Volvo Cars were conducted in accordance with the OECD Due Diligence Guidance. For mine sites, RCS also assessed their conformance with the Initiative for Responsible Mining Assurance (IRMA) Standard for Responsible Mining (30 Critical Requirements) or equivalent schemes to better understand the environmental and human rights performance of the sites identified in their supply chain. The audit results were summarised for Volvo Cars in detailed reports, including instances of non-conformities and the agreed corrective actions for suppliers.
• RCS collaborated closely with Volvo Cars and its suppliers to monitor whether corrective actions were implemented within the agreed timeframe. In cases where suppliers were not taking the agreed corrective actions, discussions were initiated to understand the root cause(s) and identify ways to support suppliers to close gaps. RCS providedon the OECD Diligence Guidance or ESG criteria.

To contribute to the continuous improvement of working and living conditions in ASM communities, Volvo Cars is collaborating with RCS Global’s Better Mining program. An assurance and impact program, Better Mining is mineral-agnostic and currently the only Upstream Mechanism (UM) accredited by the Responsible Minerals Initiative (RMI), with a methodology aligned with the OECD Guidelines for Responsible Sourcing. Better Mining operates actively in the Democratic Republic of the Congo and Rwanda and is recognised for its track record of impact and transparency in improving conditions in ASM communities. The program will soon be implemented in Madagascar to also cover the ASM mica supply chain.

• Trained monitoring agents are permanently deployed at the sites, gathering information and identifying risks. The data is verified and analysed by experts who ensure completeness and consult with agents on risks. To mitigate identified risks, monthly Corrective Action Plans are reviewed with local stakeholders, and implementation is overseen by Better Mining agents and project teams. Better Mining’s Risk Management Protocol outlines a robust process for identifying, measuring, and managing reported risks.

Impact

Through conducting rigorous audits and monitoring the implementation of corrective action plans, RCS enabled Volvo Cars to achieve greater transparency in its supply chains and contributed to the continuous improvement of the ESG performance of sub-suppliers. The RCS Global Group’s Audit and Mapping team and the Better Mining program help Volvo Cars in continuously gaining a better understanding of battery raw materials supply chains’ environmental and human rights performance. Consequently, this knowledge enables Volvo Cars to work in line with their ambitions and helps them more efficiently meet stakeholders’ expectations for upstream due diligence and regulatory requirements. Furthermore, the development of targeted training for auditees in the battery supply chain has increased awareness and knowledge of audit standards.

By supporting Better Mining, Volvo Cars goes beyond compliance and drives real, measurable and positive change in ASM supply chains and the mining communities in which they originate. Volvo Cars also receives reports on risk data of the mine sites covered by the program, contextual updates, assigned Corrective Action Plans (CAPs), and their implementation progress and development every quarter.