GB590 Unit 8 Global Labor Standards Analysis Example

Cobalt Four Tiers Back: A Unit 8 Global Labor Standards Analysis for an E-Bike Brand

[Student Name]

Purdue University Global

GB590: Ethics in Business and Society

Unit 8 Global Labor Standards Analysis

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[Date]

The brand, its suppliers and every figure are composite and illustrative; the standards, laws, reports and cases cited are real.

The Supply Chain

The brand designs e-bikes in Denver and sells about 48,000 a year through bike shops and its own website. A contract manufacturer in Shenzhen assembles its battery packs from lithium-ion cells made by a large Chinese cell maker. The cells use a nickel, manganese and cobalt chemistry, with about 0.3 kilograms of cobalt in each pack. The cell maker buys cobalt from two refiners in China, and both refiners source much of their cobalt from the Democratic Republic of the Congo, which produces about three-quarters of the world's supply. Most Congolese cobalt comes from large industrial mines, but a substantial share comes from artisanal miners digging by hand, and traders mix that ore with industrial output before it reaches refiners.

Evidence, Labeled by Strength

The brand has asked its suppliers for information, and the evidence it holds falls into three grades.

Documented by audit. One of the two refiners has been assessed as conformant under the Responsible Minerals Assurance Process, an industry audit program that checks whether refiners carry out due diligence on their sources. The other has not been assessed.

Reported by investigators. Amnesty International (2016) documented children as young as seven working at artisanal cobalt sites in southern Congo, carrying sacks of ore and working without protective equipment, and traced ore from those areas to a Chinese refiner and on to battery makers. Later reports by journalists and nongovernmental groups have described similar conditions, though some sites have since been formalized.

Inferred. The brand cannot determine whether any of the cobalt in its packs came from artisanal sites. The unassessed refiner's customer disclosures describe sourcing from traders in the Kolwezi area, where artisanal mining is common, so the risk cannot be ruled out.

The Standards

Child labor. The ILO's Convention No. 182 identifies work likely to harm children's health or safety, including hazardous mining, as one of the worst forms of child labor, and Convention No. 138 sets minimum ages for employment. Artisanal cobalt mining as documented fits the hazardous category.

Due diligence. The OECD's due diligence guidance for mineral supply chains asks companies at every tier to identify risks, respond to them, verify their suppliers' practices and report publicly (OECD, 2016). It treats downstream companies, like the brand, as responsible for pressing their suppliers, not for policing mines themselves.

Responsibility of businesses. The UN's 2011 principles for business conduct say a company should avoid contributing to human rights harms and should seek to prevent or mitigate harms directly linked to their products through business relationships, even when they did not cause them (United Nations, 2011). The brand's link to artisanal child labor, if it exists, is of the second kind.

The Law

United States law prohibits importing goods made with forced labor, including forced child labor, and customs authorities can detain shipments under that provision. No finding of that kind has been made against the brand's suppliers. The conflict minerals rule enacted in 2010 covers tin, tantalum, tungsten and gold, not cobalt, so it does not apply. The European Union's battery regulation will require due diligence on cobalt for batteries sold in Europe, which the brand does not do, but its cell maker does, so the cell maker will need better records in any case.

The Corruption Question

Labor conditions are not the only way a supply chain can carry harm. In 2022, the commodity trader Glencore pleaded guilty in the United States to bribery charges that included payments to officials in the Congo, as part of a resolution of more than $1 billion (U.S. Department of Justice, 2022). The case showed that mining rights in the Congo have sometimes been obtained through corruption, which diverts revenue that could fund schools and health care, including in the communities where children mine. The brand cannot trace whether its cobalt came from such concessions. But the question it faces is the same as with child labor: how far its responsibility runs through intermediaries it does not control. Under the Guiding Principles, the answer is that it should use whatever influence it has, however limited, to press for clean sourcing.

The brand did not dig the ore or pay the bribes, but its demand for cheap cobalt is part of why both happen.

What the Brand Can Actually Influence

The brand's position in the chain limits what it can do. It buys perhaps a fraction of one percent of its cell maker's output, so a demand from the brand alone is unlikely to change a refiner's sourcing. Its influence grows in three ways. It can choose which cell makers to buy from, and some publish their refiner lists while others do not. It can join an industry initiative, such as the one that runs the refiner audit program, which gives small buyers a collective voice. And it can tell its customers what it knows, which costs little and creates pressure for competitors to do the same. The analysis below treats each option as a test of how the brand uses this limited influence, not as a choice between doing nothing and fixing the whole chain.

Options

Demand traceability and audits. Require the cell maker to buy only from refiners conformant with the assurance program and to disclose its smelter list annually. This builds on existing systems and costs little, but it relies on audits that can miss conditions at specific sites.

Switch chemistries. Lithium iron phosphate cells contain no cobalt or nickel. They are heavier for the same range, by about 15 percent at the pack level, but cheaper and widely available from Chinese cell makers. For commuter bikes, where weight matters less than for performance models, the switch is practical.

Stop sourcing from the Congo. Requiring cobalt from other countries would remove the brand's link to artisanal mining, but it would also cut income for miners who have few other options, a result the OECD guidance warns against. Disengagement should be a last resort.

Recommendation

The brand should move its commuter models, about 60 percent of volume, to lithium iron phosphate cells within two years. For performance models that keep cobalt chemistries, it should require refiners conformant with the assurance program and publish its smelter list. And it should contribute to a program that supports formalization and child labor remediation at artisanal sites, at about $2 per bike sold, roughly $96,000 a year. The combination reduces the brand's cobalt use by more than half, raises standards for the rest and puts money toward the people most affected.

References

Amnesty International. (2016). "This is what we die for": Human rights abuses in the Democratic Republic of the Congo power the global trade in cobalt.

OECD. (2016). OECD due diligence guidance for responsible supply chains of minerals from conflict-affected and high-risk areas (3rd ed.). OECD Publishing. https://doi.org/10.1787/9789264252479-en

United Nations. (2011). Guiding principles on business and human rights: Implementing the United Nations "protect, respect and remedy" framework. Office of the High Commissioner for Human Rights.

U.S. Department of Justice. (2022, May 24). Glencore entered guilty pleas to foreign bribery and market manipulation schemes [Press release].