May 9, 2024

Ford shareholders reject proposed audit of child labor in electric vehicle supply chain

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Shareholders at automaker Ford Motor Co. on Thursday rejected a proposal that would have required the company to produce a report on the use of child labor in its electric vehicle (EV) line.

According to Ford's proxy statement, the proposal, introduced by the National Center for Public Policy Research (NCPPR) at Ford's annual shareholder meeting, calls for a report to shareholders on the extent to which the company's EV supply chain involves, depends on or relies on child labor outside the U.S. NCPPR requested the report due to the prevalence of child labor in the extraction of components used to manufacture EVs, particularly cobalt, which is often sourced from the Democratic Republic of Congo (DRC). (Related article: New analysis reveals just how bad electric trucks could be for business)

NCPPR confirmed to the Daily Caller News Foundation that an overwhelming majority of shareholders voted against the proposal.

“Ford refuses to disclose whether it sources cobalt for its EVs from the Democratic Republic of Congo, where it is virtually impossible to obtain significant amounts of cobalt without resorting to child or forced labor,” Ethan Peck, an associate at NCPPR's Free Enterprise Project, told DCNF. “Ford's EV production and plans are neither profitable nor environmentally beneficial, but they are unnecessarily burdening shareholders and likely sacrificing the well-being and safety of children in the Democratic Republic of Congo because replacing fossil fuel-generated energy stored in batteries made from minerals with fossil fuel-generated energy is politically fashionable and advantageous to the Chinese Communist Party.”

According to the proxy statement, Ford's response asserts that its policies already prohibit the use of child labor by its own and its suppliers, which it verifies by assessing its supply chain, conducting “social responsibility audits,” training employees and suppliers on compliance, and conducting third-party reviews.

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“Ford provides transparency to shareholders about its sustainability efforts through a range of reports that provide detailed information about the company's efforts to prevent and address human rights issues, including child labor, in its supply chain,” Ford said in the proxy statement. “The preparation of the additional reports requested in the proposal would require significant time and expense without any additional benefit.”

Child labor is particularly prevalent in artisanal cobalt mines in the Democratic Republic of Congo, where the material, which accounts for about 30 percent of the country's cobalt supply, is often sold to processing facilities where it is mixed and often untraceable, according to a JPMorgan Chase investigation. More than 70 percent of the world's cobalt supply comes from the Democratic Republic of Congo.

“Ford has a long history and commitment to respecting human rights, including prohibiting child labor,” Ford told DCNF. “Our Corporate Human Rights Policy, Supplier Code of Conduct and Global Terms of Use all prohibit any form of child labor. Ford's strong safeguards against human rights abuses in its supply chain include conducting audits and requiring suppliers to comply with our Supplier Code of Conduct. Additionally, we actively cooperate with industry efforts against child labor.”

According to documents filed by NCPPR with the Securities and Exchange Commission, the organization to conduct Ford's “third-party review” was vetted and selected by the Responsible Business Alliance (RBA). Ford employee Sue Slaughter served as chair of the RBA's board of directors until being replaced by another Ford employee, Mary Lawton.

Cobalt is a key resource in making EV batteries, with China and the Democratic Republic of Congo effectively controlling the supply chain.

Ford said in April it was delaying the launch of a new electric model due to weak demand, following similar moves from other automakers including General Motors and Mercedes-Benz. The automaker sold just 10,000 of its all-electric Model E vehicles in the first three months of 2024, resulting in a $1.3 billion loss.

Demand for cobalt is growing as companies and the Biden administration push for a shift away from internal combustion engine vehicles toward hybrids and electric vehicles, which saw demand growth slow sharply to just 2.7% in the first quarter, dropping their market share compared to conventional vehicles to 7.1% from 7.6%.

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