Investment Institute

Understanding and responding to the human cost of the green energy transition

  • 12 July 2023 (15 min read)

Key points:

  • The transition to a low-carbon world has become a political and public priority, putting pressure on all economic players to turn greener and requiring the massive expansion of renewable energy
  • The necessary development of solar panels and wind turbines as well as the lithium-ion batteries used in electric vehicles and consumer electronics, relies on so-called ‘critical’ minerals such as copper, lithium, nickel, and cobalt
  • With demand accelerating, the intensified mining of these minerals is set to exacerbate environmental and social concerns, in a sector historically plagued by accusations of abusive or unsustainable practises
  • This paper highlights how transition minerals differ from fossil fuels, and explores the collateral effects on workers, communities and the environment, issues that will need to be addressed by responsible investors concerned that efforts to support the transition do not create new harms
  • This paper looks closely at child labour in cobalt extraction to highlight how reputational and regulatory risks can be dispersed, undetected, across the many sectors relying on rechargeable batteries
  • We believe responsible investors can help collaborative efforts to drive more sustainable practices and sourcing policies, both in the extractives industry and along the supply chain
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