By Peter Seligmann
August 24, 2018

A rush is on for cobalt, a relatively rare metal that powers technologies like Tesla vehicles and iPhones. About 65% of the global supply comes from one of the world’s poorest countries, the Democratic Republic of the Congo, or DRC, where an entrenched culture of corruption and violence makes mining operations and oversight difficult. But most disturbing is that Congolese children are involved in mining cobalt, as detailed in an exclusive Fortune report published Thursday.

The difficulty of weighing supply against demand—and against human rights—was illustrated last fall, when Volkswagen failed to secure a long-term cobalt supply for its electric car batteries. Its talks with mining giant Glencore broke down over not only supplies and cost, but also transparency and sustainability. Now, Volkswagen is racing against phone and automobile manufacturers to secure multiyear contracts directly with cobalt miners amid fears of a material shortage.

Of particular concern to companies like Volkswagen is ensuring that the products of child labor don’t commingle with “clean” cobalt. That’s possible, so long as they make strides in the following areas:

Sustainable innovation

Businesses need to learn how to convert natural materials into products that humanity needs without creating unintended consequences, such as harming public health or the environment. Companies are rethinking entire production processes to achieve real sustainability.

The depletion of cobalt mines means replacement technology is essential. Right now, scientists are learning how to recycle metals from faulty lithium-ion batteries, a cheaper and more efficient alternative to mining. Meanwhile, automakers such as Toyota, Honda, and Volkswagen plan to create electric vehicles using solid-state batteries, reducing the need for cobalt and other metals.

Full transparency

Full transparency requires a more sophisticated accounting of the true costs of production. When designing and rethinking their business models, companies will have to anticipate the total costs of goods beyond the monetary amount. Take, for example, production of commodities like cotton and natural gas, which require vast quantities of water. The cost of water might not be incorporated into the product’s price, but its use creates a social impact around the water’s source.

When problems arise in a product’s supply chain, journalists and citizens are increasingly holding companies accountable through social media and other public platforms. Businesses can no longer simply neutralize their harmful actions through corporate social responsibility or philanthropy efforts. They need to fundamentally reexamine whether they are being open enough about their business practices.

Supply chain blockchain

Blockchain is becoming an increasingly powerful tool for monitoring supply chains. In the diamond industry, a gem receives a digital “fingerprint” tracked by the distributed ledger at each step, providing assurance that its past was free of bloody conflict.

In the DRC, Amnesty International is examining blockchain as a way to ensure mined cobalt hasn’t been the product of child labor. The country’s ongoing conflict and corruption ensure that traceability will remain a challenge. But companies utilizing cobalt should nonetheless pursue a blockchain system, as it could ensure the supply chain integrity consumers are demanding.

Peter Seligmann is the chairman of Conservation International and the founding CEO of Nia Tero, a global collaborative with a mission to advance indigenous peoples and local community stewardship of vital ecosystems around the world. Follow him on Twitter.

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