ESG Due
Diligence
Throughout
Global Mineral
Supply Chains

Adele Rouleau
September 2024

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nDisclaimer, copyright and intellectual property

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Contents
1. What is ESG?
2. Regulatory Trends and Themes
3. The EU CSDDD & Batteries Directive
4. Case Study – Nickel from Indonesia
5. Questions

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What is ESG?
nEnvironmento Water/Air/Soilpollution.
o Waste management
e.g. tailings andhazardous wastemanagement.
o Biodiversity.
o Carbon emissions.
o Climate change
mitigation strategy.
o Deforestation.
o Ecosystem services.
o Sites of Special
Scientific Interest(SSSI).

ooooooooo

SocialGovernance

Health & Safety.
Trade unions.
Human rights.
Gender equality.
Relations with local
communities i.e. the‘social licence tooperate’.
Local contentrequirements.
Indigenouscommunities.
Grievancemechanisms.
Artisanal mining.

o Executive
remuneration.
o Corruption and bribery.
o Board diversity andstructure.
o Internal risk
management andcompliancemanagement.
o Tax strategy andtransparency.
o Lobby groups.

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ESG Governancen

EU Corporate Sustainability Reporting
DirectiveJanuary 5th 2023

Project Financing
Requirements

Public Stock Exchange
ReportingRequirements(compulsory )International Best Practices,Guidelines and Frameworks(compulsory / voluntary)(compulsory)

ESG
National and InternationalRegulation(compulsory)

EU Corporate Sustainability Reporting
DirectiveJanuary 5th 2023

Corporate Sustainability Due Diligence
DirectiveJune 2024
Climate Corporate Data Accountability Act
October 2023

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Contents
1. What is ESG?
2. Regulatory Trends and Themes
3. The EU CSDDD & Batteries Directive
4. Case Study – Nickel from Indonesia
5. Questions

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ESG Supply Chain Due Diligence TrendsnSource: SFA (Oxford)

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European Supply Chain Due Diligence Lawsn
1. EU Directive 2014/95 on
Non-Financial Reporting(NFRD)
2. EU Conflict Minerals
regulation
3. EU Corporate Sustainability
Reporting Directive (CSRD)
4. The EU Critical Raw
Materials Act
5. EU Batteries Regulation
6. The EU Corporate
Sustainability Due Diligence
Directive
7. ‘Green Claims’ Directive

1. The NorwegianTransparency Act

1. The Finland Corporate
Responsibility Due Diligence
Memorandum

1. CSR Directive Implementation
Act (German: CSR-RichtlinieUmsetzungsgesetz, CSR-RUG)
2. German Act on Corporate Due
Diligence in Supply Chains(LkSG)

1. UK Bribery Act
2. UK Modern
Slavery Act

1. The Dutch Child Labour Due
Diligence Law
2. The Dutch Bill on Responsibleand Sustainable International
Business Conduct

1. The French Corporate Dutyof Vigilance
1. The Swiss Conflict Minerals
and Child Labour Due Diligence
Legislation

1. The Spanish Draft Bill on theProtection of Human Rights,
Sustainability and Due
Diligence in Transnational
Business Activities
Source: SFA (Oxford)

1. The Belgian Vigilance Proposal
introducing mandatory value
chain due diligence

1. Italian Implementation of EU
Directive on Disclosure of NonFinancial and Diversity
Information

1. Luxembourg
Initiative forMandatory Due
Diligence Law8Contents1. What is ESG?
2. Regulatory Trends and Themes
3. The EU CSDDD & Batteries Directive
4. Case Study – Nickel from Indonesia
5. Questions

9Recent European Union Directives with Due Diligence Requirements
nEU Batteries Regulation
17th August 2023

Aim: To create sustainable batteries throughout
their life cycle, from their sourcing to theircollection, recycling and reuse.
o Applies to all manufacturers, producers,
importers and distributors and every type ofbattery in the EU market. Includes all batteries
sold in the EU as well.
o Introduces carbon footprint declaration
requirements on certain batteries, in addition
to levels of recycled cobalt, lead, lithium andnickel used in the battery production.
o Restricts the use of certain hazardousmaterials.
o Due Diligence requirements.
o Battery recycling targets.
o Minimum recycled content for lithium, nickel,cobalt and lead.

Corporate Sustainability Due Diligence (CSDDD)
25 July 2024.
Aim: to enhance the protection of the environmentand human rights in the EU and globally.
o The directive lays down obligations on large
companies to monitor and carry out risk
assessments on the environment and humanrights throughout their supply chains; thefocus is on upstream activities and, to a lesser
extent, downstream activities, e.g. distributionand recycling.
o The rules also establish the penalties forinfringements or non-compliance. Companies
must demonstrate that their business modeland strategy align with the Paris Agreement on
climate change.

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Brief Overview – Due Diligence for Companies (CSDDD) – 1/2nIntegrate due diligence into corporate policy and risk management systems.
Identify adverse human rights and environmental impacts throughout company operations, including subsidiaries and business
partners.
Prioritise human rights and environmental risks according to severity and likelihood.
Identify adverse human rights and environmental impacts throughout company operations, including subsidiaries and business
partners.

Address negative impacts that have been/should have been identified.
Companies have to prevent and/or mitigate potential impacts. If these have already occurred, they must be ended or minimised.
Companies must provide remedies if they caused the adverse impacts or contributed to this through their acts or omissions.
As a last resort, when all previous actions have failed and where there are severe impacts, and if these impacts outweigh theforeseeable negative consequences of disengagement, companies are required to suspend or terminate the business relationship.

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Brief Overview – Due Diligence for Companies (CSDDD) – 2/2
nCompanies are also required to engage with stakeholders, i.e. consult them at stages of the due diligence process with priority
given to the identification of impacts. Quality information must be provided to stakeholders to fully participate. Companies mayuse multi-stakeholder or industry initiatives.

Companies must establish and maintain a complaints and notification procedure.

Companies must also monitor the effectiveness of their due diligence measures.

Companies must communicate publicly on due diligence according to the Corporate Sustainability Due Diligence Directive and theEuropean Sustainability Reporting Standards (some exceptions).

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Contents
1. What is ESG?
2. Regulatory Trends and Themes
3. The EU CSDDD & Batteries Directive
4. Case Study – Nickel from Indonesia
5. Questions

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INDONESIA : Electricity Generation by Fuel
Terawatt-hours

nOil
Renewables 2%
11%
Natural Gas
17%

Hydro electric
8%Country context

Coal
62%

Indonesia
EnvironmentalConsiderations
Environmental Themes

Mine site context

The government ban on
the construction of new
pyrometallurgicalsmelters.

Source: IEA, SFA (Oxford), Energy Institute▪
▪
▪
▪
▪
▪
▪
▪
▪

Water management.
Hazardous waste management e.g.
surface water runoff.
Tailings management.
Deforestation.
Decarbonisation strategy/energy
efficiency.
Protection of wildlife/biodiversity.
Mine closure and reclamation.
GHG emissions.
Environmental risk management.

15Country risk reports and jurisdiction ratingsnCase study – Community Protests on Wawonii Island
Ongoing tensions between local communities and nickel
mining operators on Indonesia’s Wawonii island in theSulawesi region of Indonesia. The local nickel mining
company PT Gema Kreasi Perdana (PT GKP) has 2
concessions on the island covering 4,450 acres with plans
to expand further. There have already been several
protests on the island along with demonstrations, riots
and arrests of protesters. One of the reasons for thesecommunity disagreements is related to poorly managed
land registers in parts of Indonesia and informalcustomary land rights (also known as ‘adat’ communityrights). Mining permits can be issued without thoroughland use or ownership checks. Although the Indonesian
government officially recognizes such rights on state
land, they still have the discretionary powers to prevent
communities from exercising them, leading to allegationsof expropriation and land grabbing.

Social Themes

News sources

Mine company reports
and policies.

Indonesia
SocialConsiderations

NGO/ Human rights reports▪ Stakeholder engagement▪ Human rights▪ Employee Grievance Mechanisms▪ Remuneration▪ Responsible business practices▪ Community development and spend.
▪ Indigenous Community Rights.
▪ Land acquisition and resettlement.
▪ Freedom of association and collective
bargaining (trade unions)▪ Child labour and working conditions.
▪ Working hours.
▪ Occupational health and safety▪ Forced labour.
▪ Discrimination and harassment.
▪ Gender equality▪ Community health and safety.
▪ Responsible sourcing and duediligence.
▪ Security and Human Rights▪ Artisanal and Small Scale Mining.
▪ Cultural Heritage

Country legal cases (national databasesand international arbitration)
Source: Mongabay

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Contents
1. What is ESG?
2. Regulatory Trends and Themes
3. The EU CSDDD & Batteries Directive
4. Case Study – Nickel from Indonesia
5. How can SFA(Oxford) assist?
6. Questions

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Questions?
Adele Rouleau
arouleau@sfa-oxford.com
www.sfa-oxford.com

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