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24 May 2023

Human Rights Watch

EU: Flawed reliance on audits for raw materials rules

European governments risk relying too much on voluntary audit and certification initiatives to protect rights in European Union minerals supply chains, Human Rights Watch said in a question-and-answer document released today. EU laws, including the draft Critical Raw Minerals Act released in March 2023, need to recognize that compliance with voluntary standards is no substitute for rigorous regulatory scrutiny and enforcement.

Audit and certifications initiatives purport to assess and certify companies' respect for human rights and the environment by auditing their compliance with a voluntary standard. The draft Critical Raw Materials Act, which aims to secure a sustainable supply of strategic materials for the EU, relies on audit and certifications to verify whether new mines, refineries, and other projects are sustainable enough to merit government support. Research has shown, however, that third-party audits have inherent limitations and that voluntary initiatives frequently lack the detailed criteria and rigorous methodology needed to properly evaluate companies’ compliance with human rights or environmental standards...

The mining, refining, and processing of minerals has a long track record of human rights abuses, including violations of Indigenous peoples’ right to free, prior, and informed consent for decisions affecting their land and resources; child labor; unsafe working conditions; forced displacement; land loss; and devastating waste spills. Due to skyrocketing demand for minerals for new energy technologies, such as electric cars and solar panels, mining is expanding into new regions and communities, creating new risks of human rights abuses and threats to the environment.

Increased recognition of the human rights and environmental risks in mineral supply chains has led to a proliferation of voluntary audit and certification initiatives. Some initiatives conduct on-the-ground audits of mines and other facilities in minerals supply chains, while others focus on auditing the sourcing practices of companies that purchase raw materials. Several initiatives do both.

In addition to the draft Critical Raw Materials Act, the EU has also integrated audits and certifications into the Conflict Minerals Regulation, which entered into force in 2021, and a forthcoming Batteries Regulation.

Human Rights Watch work, and research by other civil society organizations, has shown the serious shortcomings of voluntary audit and certification initiatives. Many standards were developed and are governed primarily by mining companies and industry groups, which can compromise their ability to develop strong standards and audit processes...