Infyos, a UK-based artificial intelligence risk assessment specialist, has released alarming findings that up to three-quarters of global lithium-ion battery supplies could be banned in the U.S. and other Western nations due to forced and child labor abuses. The study reveals that the battery industry, which powers both hybrid and battery-electric vehicles (BEVs), is deeply entangled with human rights violations, particularly in China and other resource-rich but politically unstable countries.
Widespread Human Rights Violations in Battery Supply Chains
Infyos’ research highlights that 75% of lithium-ion battery suppliers have links to supply chains involving companies accused of severe human rights abuses. The study was based on nearly 20,000 data points from government databases, NGO reports, news articles, and social media sources covering the period from December 2022 to June 2024.
The abuses range from forced labor in lithium refining facilities to children as young as five working in hazardous conditions mining cobalt in the Democratic Republic of Congo and Madagascar. Many of these violations occur upstream in the supply chain, especially in the raw-material mining and refining stages, making it challenging for companies to identify and mitigate these risks.
Impact of New Regulations and Global Scrutiny
The sourcing of battery materials is under growing scrutiny, particularly in Europe and the U.S., where non-compliance with human rights regulations could lead to severe consequences. The U.S. Uyghur Forced Labor Prevention Act (UFLPA), for instance, prohibits the import of goods made with forced labor from the Xinjiang region of China. Violations of this act can result in severe penalties, including blocked vehicle imports and significant reputational damage.
The European Union has introduced its Battery Regulation, which includes stringent requirements on supply chain transparency and ethical sourcing. Meanwhile, the U.K. is considering increasing fines for non-compliance with its Modern Slavery Act to 4% of a company’s global annual turnover. As regulations tighten, companies that fail to address these issues risk losing market access in major economies.
AI-Driven Solutions for Supply Chain Oversight
Infyos has developed AI technology specifically for the battery industry to automate data collection, cleansing, and classification of unstructured data related to human rights abuses. The AI-driven platform provides users with insights into supply chain complexities, allowing them to take proactive measures to identify and mitigate risks. This technology assigns confidence ratings to allegations of human rights abuses, offering a level of accuracy and speed that was previously unattainable.
Tony To, co-founder and CTO of Infyos, stated: “Our platform is designed to provide users with insights into the complexities of the battery supply chain so they can take proactive measures to identify and mitigate risks. By leveraging AI, we’ve created a system that delivers accurate data despite the complexity of the battery industry and provides users with simple, actionable steps to collaborate with their suppliers to address risks.”
Sarah Montgomery, co-founder and CEO of Infyos, added: “The relative opaqueness of battery supply chains and the complexity of supply chain legal requirements mean that current approaches like ESG audits are out of date and don’t comply with new regulations. Most battery manufacturers and their customers, including automotive companies and grid-scale battery energy storage developers, still lack complete supply chain oversight.”
Addressing the Hidden Risks in Battery Supply Chains
The battery industry’s connections to human rights abuses often stem from unethical business practices, such as sourcing components from suppliers with questionable reputations or entering business relationships masked by complex ownership structures. Infyos’ platform aims to unravel these complexities, providing companies with actionable insights to improve the sustainability and ethical compliance of their supply chains.
With legislation tightening in major markets, companies in the battery industry must prioritize ethical sourcing to continue selling their products. Infyos’ AI technology offers a path forward, allowing companies to identify risks early and take corrective actions that align with evolving legal and ethical standards.
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