Governing the Security-Sustainability Nexus in Critical Raw Materials: The Role of Human Rights and Environmental Due Diligence

The quest for a decarbonized world has dramatically increased the demands for critical raw materials (CRMs), with potentially significant consequences for socio-environmental sustainability in producing sites. Mitigating the trade-offs between increased extraction and socio-environmental sustainability is of utmost importance. Recently, there has been a proliferation of supply chain regulations in the European Union (EU) that build on a human rights and environmental due diligence (HREDD) approach. These regulations obligate companies to assess and address the risks throughout their supply chains and could thus potentially contribute to mitigate socio-environmental harms associated with CRM extraction. In this article, we seek to understand to what extent and how HREDD regulations can help reconcile the tensions between increased CRM extraction and socio-environmental sustainability. First, we begin by introducing the role of HREDD in the emerging regulatory landscape of CRMs in the EU. Second, with a focus on implementation processes in global supply chains, we zoom in on the French Duty of Vigilance law, the first HREDD legislation in the world to establish the legal liability of large companies for adverse impacts abroad. Based on corporate documents, NGO reports, newspaper articles, and qualitative interviews, we comparatively analyze how nine companies subject to this law, and whose activities are connected to the energy transition, comply with their HREDD obligations. Third, with a focus on HREDD and CRM governance within Europe, we analyze the implications of HREDD for the Swedish state-owned company LKAB, which holds Europe’s largest deposit of rare earth elements. This case study is based on field research and the use of qualitative methods. Our research into French and Swedish company activities shows that the implementation of HREDD is hindered by a lack of traceability, poor transparency and overreliance on private voluntary standards to demonstrate compliance, which altogether, make it challenging to hold companies accountable. By providing an in-depth analysis of HREDD in law and practice, we advance theoretical and empirical knowledge of the role of new supply chain regulations in governing the trade-offs associated with the energy transition; therein also shedding light on persisting challenges. Our research shows that as global demand for CRMs increases, the tensions between ensuring supply security and limiting negative impacts are becoming more pronounced. We argue that for HREDD rules to effectively address the problems at the ground in extraction sites, they must be better integrated into policies regulating CRM supply chains. Our findings contribute with a better understanding of the opportunities and limitations of new supply chain regulations to mitigate the conflictual goals at the heart of the energy transition.