Lithium Industry ESG Thematic Report, 2023

Environmental, Social, and Governance (ESG) in the Lithium industry

The incorporation of Environmental, Social, and Governance (ESG) factors within the financing and governing processes leads to advancement in responsible investing. For the past decade, the investment in ESG has increased and similarly, the lithium industry has been seen as a dynamic tool for attaining certain ESG goals across the globe. The market has observed a greater infusion of investment capital over the recent years due to its positive and negative impact on the planet.

Prominent leaders in the lithium sector are aware of the commitments of the Paris Agreement to reach net-zero greenhouse gas emissions (GHG) by 2050, which could be enhanced by controlling the emissions from transportation which account for approximately 15% of total GHG emissions in 2019. This is a shift from traditional fossil fuel vehicles to battery-powered electric vehicles (EVs), which will help attain objectives related to climate change.

Since the global Covid-19 pandemic in 2020, EV sales have escalated by 54% annually, and this might expand to 1030% by 2030 against the baseline year 2020. Lithium is an essential component in Li-ion batteries which power electronic devices like mobile phones, cameras, speakers, laptops, and others and have lower weight, greater energy storage capability, and are smaller in size. Therefore, the lithium sector offers an opportunity to address the escalating global emissions by decreasing it and has received enhanced recognition from investors fascinated with ESG impact investing.

Key lithium companies researched in this theme have built on this market position to develop multiple sustainable strategies targeting to create a positive ESG impact within this sector.

ESG Trends

The ‘E’ in the ESG – the environmental criteria, attracts investment in this sector. Companies in the industry promote a decrease in the reliance on fossil fuels through innovative solutions. More notably, this focuses on environmental and social impacts concerning both biodiversity and community resources.

Leading companies and organizations in the lithium space help in establishing sustainable approaches both in the supply chain and research and development practices. Moreover, this sector also helps in encouraging target setting for lowering harmful emissions such as GHG emissions, NOx, Sox emissions, and other effluents, hence remaining competitive in the evolving business landscape. 

The lithium sector is absolute, as it provides added advantages in achieving the United Nations - Sustainable Development Goals (UN – SDGs). A few of the major SDGs that come into the center are Affordable and Clean Energy, Industry, Innovation and Infrastructure, Sustainable Cities and Communities, and Climate Action. Companies in the lithium sector are also striving to practice operational best methods for waste management, air emissions, ensuring health and safety practices, and for ESG reporting in executive remuneration and skills diversity at the board level.

The industry promises other environmental benefits such as phasing out hazardous chemicals, conservation of water resources, adoption of reusing, recycling, and disposal activities, and prevention of air, water, and soil contaminations that could, later, have effects on biodiversity and communities.

ESG Challenges

Despite the major advantages provided by the industry, this sector also faces some major challenges in the demand and supply chain. For instance, leading companies in this sector have already started facing shortages of lithium which has led to the hampering of production. While considering the environmental impacts, the amount of water used in the extraction and production of lithium has already depleted the water sources that species and local communities depend on.

Moreover, the release of toxic chemicals in the separation process such as hydrochloric acid could result in affecting the water and air quality of the surroundings. Now and then, indigenous and tribal communities have taken legal proceedings over multiple lithium projects’ breach of their rights of free, prior, and well-informed assent. To this, prominent companies operating in the lithium industry that are a part of this thematic report have initiatives aimed at improving their efforts related to environmental and social impacts which are further discussed in detail within the market thematic report. 

Growth of the Lithium Market

In 2021, the global lithium market size was valued at USD 6.83 billion and is expected to expand at a compound annual growth rate (CAGR) of 12.0% from 2022 to 2030. For the FY 2021, the Asia Pacific market recorded the largest share of greater than 57.0% resulted due to the promptly growing automotive, consumer goods, and glass industries in multiple countries like Japan, India, China, and South Korea. The enhanced production of EVs in Europe escalated the growth of the market in this region.

In India, a strategic partnership called Khanij Bidesh India Ltd. (KABIL) was signed between NALCO, Mineral Exploration, and Hindustan Copper with Jujuy Energia y Mineria Sociedad del Estado (JEMSE) in the FY 2020, for manufacturing and exploration of lithium.

Key Companies in this theme

    • Albemarle Corp.

    • Ganfeng Lithium Co., Ltd.

    • SQM S.A.

    • Tianqi Lithium Corporation

    • Livent Corp.

    • Pilbara Minerals

Scope of the Lithium Industry ESG Thematic Report:

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key benefits of Lithium Industry ESG Thematic Report:

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the lithium sector, globally

    • Key insights into Infrastructure developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment