“The company is open to dialogue and is in the process of making improvements in supplier audits”
During 2020 SfC – Shareholders for Change, under the lead of Bank für Kirche und Caritas and the support of Ecofi, engaged with the German automotive company BMW on issues related to the sourcing of rare metals. This was done through the exchange of information via mail and in a conference call with the company.
BMW, a major user of cobalt (a rare metal) for electric-car production is one of the 12 companies analysed in the research “Rare metal supply chains. Challenges for a sustainable energy transition“, carried out by Meeschaert Asset Management on behalf of Shareholders for Change and published in May 2019.
“Based on the research, SfC members are engaging companies in the automotive, chemical and renewable energies sectors on the sourcing of rare metals, which is associated to environmental and human rights risks“, explains Tommy Piemonte, Head of Sustainable Investment Research at Bank für Kirche und Caritas. “During the conference call and in our mails we have asked questions about the sustainability requirements applied to rare metals suppliers, in particular in Congo, where most cobalt is sourced, and the audits of suppliers“.
BMW specified that it does not audit rare metals suppliers directly, because they are “indirect suppliers”. However, the company’s direct suppliers “have to implement processes to forward sustainability requirements to their own supply chain“. In case BMW becomes aware of any violations in its whole tier-N supply chain, it “works closely together with direct suppliers and applies an escalation process, if necessary“.
Regarding Congo, BMW answered that it is not purchasing cobalt from Congo any more: “we have changed our purchasing strategy because of the ESG-risks in the country“. The rare metal is now purchased from Australia and Morocco. Nevertheless, the company is still engaged in the industry initiative “Cobalt for Development” that tries to set a sustainability standard in Congo.
“We are generally satisfied with the engagement, the company responded to all questions and is open to a dialogue with value-based investors and NGOs“, says Cesare Vitali, Head of ESG research at Ecofi. “However, there are still some points where we ask the company to improve its strategies: we would like BMW to report about the number of non-compliances along the audits and internal assessments as well as the reasons for non compliance. Moreover, audits should be expanded to an end-tier supplier level as planned by BMW as quickly as possible and to report on them“.
We will analyse the developments and continue the engagement that is flanked also by AKI (Arbeitskreis Kirchlicher Investoren), the German coalition of evangelical church investors, as needed also in 2021.