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Commodities Markets Are Broken. Responsible Supply Chains Can Fix Them.

By Stephen Lezak and Paolo Natali et.al

The headwaters of global supply chains are opaque and turbulent. Because of the way raw materials such as iron ore, aluminum, and lithium are produced, bought, and sold, most consumer-facing manufacturers lack the faintest idea about the provenance of their inputs. 
But now, for the first time in history, it is possible to see how this could change. Some companies have already demonstrated that real-time, complete visibility into the origins of their materials is achievable. On this foundation, a market-based system that rewards better sourcing choices can fix a paradigm that has been broken for centuries.Whether it be the exorbitant carbon footprint of the less efficient aluminum smelters, or child labor in cobalt mining, many of the world’s most reprehensible industrial practices take place in dark corners of the global economy. These mineral supply chains are long and poorly integrated; as a result, they effectively launder away negative externalities. Out of sight and out of mind, they attract a sliver of the attention given to more visible issues. (Consider, for instance, the hullabaloo over plastic straws in recent years.) 
Past efforts to account for the environmental harms from these extractive industries have mostly failed, occasionally in tragic fashion. In 2010, the U.S. Congress passed the Dodd-Frank Act, which issued rules requiring companies to disclose their use of “conflict minerals,” so named because of their ties to war criminals and human rights violations. But several years after the law took effect, 80% of the companies reporting conflict mineral purchases to the U.S. Securities and Exchange Commission conceded that they did not know the country of origin of their cobalt or gold, let alone the conditions under which those materials were extracted. Meanwhile, the planetary impacts from these sectors keep growing. The joint annual emissions from steel and aluminum production are roughly equal to the emissions from all global aviation and passenger road transit — every car, bus, taxi, and motorcycle on planet Earth — combined. 
But narratives that categorically decry these industries as irresponsible are mistaken. Many mines and smelters operate responsibly, and some are leading innovators in renewable energy. Anglo American, a British mining company and major producer of platinum, diamonds, nickel, and more, operates 290-ton haul trucks powered by hydrogen. 
 

Source : mit.edu

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