In PR, as in life, the best medicine is usually the preventative kind. That’s why, after more than a few decades in this business, I keep my focus as much as possible on the horizon. But I wonder: Do companies in the green economy, and throughout the supply chain that support it, see the same looming vulnerability that I do?
What I see coming is a massive PR risk and an exposure to reputational damage that’s already present and bound to grow. Huge amounts of resources like lithium, cobalt, manganese, copper and nickel will be required to sustain this transition toward sustainability, to feed the demand from manufacturers of key technologies like EVs, lithium batteries and solar panels.
If the world is going to achieve a sustainable level of carbon emissions by the middle of the century, the International Energy Agency estimates that to make it possible, we’ll need to raise our level of resource inputs sixfold by the year 2040.
Finding Rocks In Hard Places
Driving that is the fact that, for the mining companies at one end of this supply chain, the easy stuff is gone—or going fast. The minerals that remain in the ground—being finite as they are—are getting harder and harder to find and access.
It means that at the same time as the need for securing those minerals is getting more and more urgent, the physical, logistical and environmental impacts of extracting those minerals are getting more and more severe. It also means that as these minerals get harder to find, mining companies have their hands tied when it comes to what countries or communities they can source from.
Cobalt, for example, is currently an essential raw material needed to produce batteries for electric vehicles, among other things. But more than 70% of the world’s supply of cobalt comes from the Democratic Republic of the Congo. If your business relies on cobalt, you don’t have many options other than to do business in or with a country with well-known social and political issues—from child labor to corruption to security concerns.
But it’s not just the mining companies whose businesses now rely on this: It’s everyone in the green supply chain, from top to bottom. If you’re a manufacturer of electric vehicles or batteries and issues come to light about the mine in the Congo where your cobalt comes from, will the public believe that the metaphorical blood is on the hands of the mining company alone, or will it spill over onto you?
In this situation and those like it, I see a reputational risk that won’t be able to be contained—the kind that’s both very real and potentially existential.
End User Beware
As these parallel pressures grow, and the search for resources goes into countries that are unstable corners of the world that suffer from oppression or dubious governance, or communities that refuse to give mining companies the necessary social license, I see this risk getting bigger.
Just like Nike had its moment of change when it was held to account by activists and public opinion regarding sourcing materials from sweatshops, so too are the companies at the top of the green supply chain vulnerable to what happens at the bottom.
Who better to target publicly, to make your point about the issue, than the major company that makes the products we all buy, use, drive, enjoy, etc.?
The fact that these PR pitfalls will present themselves more and more often seems to me inevitable because of the twin trend affecting both the importance and scarcity of key metals.
Cover Your Reputational Assets
Like climate change itself, this risk isn’t a mystery yet to be understood—it’s entirely man-made. The industry opens itself up to this risk by not having a single, independent, third-party way of reliably knowing whether the resources being relied on are mined with best practices in mind, or if what you have is the battery equivalent of “blood diamonds.”
Yes, many corporations have done good work in creating and promoting ESG strategies, but that’s not good enough. Why? Because rating organizations’ methods vary depending on who’s doing the measuring and who’s paying for it. Researchers at MIT’s Sloan School of Management measured the divergence in ESG ratings among six providers, examining 709 indicators in 64 categories. They concluded that the correlation among ratings for individual companies ranged from 38%-71%. But most importantly, ESG data is dependent on self-reporting by companies.
The construction industry has the LEED certification to verify its energy efficiency. The forestry industry has third-party certifications known as PEFC and FSC. Blood diamonds have been largely rooted out thanks to measures like the Kimberly Process that help suppliers demonstrate they were sourced conflict-free. In Canada and the U.S., even the food on our plates has been certified by a government or agency—such that sometimes the one with the best grades at the table is your steak.
Bring Closure To The Exposure
This situation to me represents a vulnerability because it creates an opening for opponents of resource projects, environmental organizations or other players to come after the companies we represent in the public domain. By putting pressure on the companies that create demand for the minerals that our resource companies mine, these actors might be able to effectively “cancel” a company, whether it’s deserved or not.
Without a way to future-proof against these kinds of situations, where PR practitioners would be left scrambling on the defensive, companies like the ones we represent will be leaving themselves more and more exposed. Green-sector firms need to take these risks to their reputation seriously.
In the public sphere, where PR practitioners earn our keep, the atmosphere and attention around these issues are charged to the point where any misstep, however small or seemingly unjustified, is never one a company can afford.
