Unethical firms face consequences in EU supply chain crackdown
A proposed European Union crackdown on ethical issues including human rights abuses and environmental breaches is being unveiled this week. According to Bloomberg News, the rules, targeted at 4,000 international businesses and 13,000 inside the bloc will allow victims of unethical practices to sue for compensation if companies continue to violate the rules.
The measures mean that companies must prove that they are checking on labor violations, health and safety, child workers or environmental breaches within their processes, as well as supplier processes. If their duty of care is not fulfilled, sanctions such as compensation lawsuits are possible. The rules are aimed at EU companies with revenues of over 150 million euros and at least 500 employees, as well as “high-impact” industries including clothing.
EU spokesman Christian Wiegand said “the transformation to a more sustainable economy is a key political priority for this commission,” The proposal “is about fostering long-term, viable and responsible business models, which incorporate climate and environmental considerations and are in line with human rights.”
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Shipping industry faces price increases
The price of the biggest expense in the shipping industry, fuel, is rising, which is adding more inflationary pressure to already strained global supply chains. The surging costs of petrol and diesel are impacting the industry, as the cost of marine fuel in Rotterdam peaked at the highest level since late 2019 at the start of this week, an increase of 23% since the beginning of the year.
The fuel needed to power ships can be produced from some of the same ingredients that refiners can also add to diesel and petrol. Increasing margins of petrol and diesel are making their production more attractive, which is leaving the shipping sector with tighter supplies. As well as this, environmental rules implemented in 2020 have helped to push up costs.
The prices of crude oil have risen recently, but in Europe, prices of fuel known as Vlsfo (a very low Sulphur fuel oil) have climbed much quicker. According to Mark Williams, an oil product and refining analyst at Wood Mackenzie, this is due to tight supplies, due to the region’s strong diesel market. Commenting on the price increase, he said “it’s one more reason why global commodity prices and inflation are so high.”
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U.S. announces steps to strengthen critical mineral supply chain
The Biden Administration has announced plans to reinforce the supply chain for rare earths and other critical minerals used in technologies from household appliances and electronics to defense systems. The actions, taken by the federal government and private industry, will reduce the United States’ dependence on China, one of the main producers of these elements.
The steps proposed by Biden include a $35 million contract to MP Materials to process heavy rare earth elements at the company’s Californian production site. The goal of the Administration is to become reasonably self-sufficient for some key essential industries including auto and network equipment for national security and competitiveness, according to Jen-Yi Chen, associate professor of operations and supply chain management at Cleveland State University.
The White House has also made other announcements surrounding the topic, including having partnerships with Ford and Volvo for the collection and recycling of end-of-life lithium-ion batteries, a $140 million pilot project to recover rare earth elements and critical minerals from mine waste, and a $3 billion investment in refining and recycling battery materials.
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