Tesla: Pollution Under A Low Carbon Halo
By Linda Greer, Shanshan Ding 18 June, 2021
IPE's Greer & Ding share latest report findings that pierce Tesla's green halo
Read more from Linda Greer →
Read more from Shanshan Ding →
Electric vehicles (EVs) are an essential element to a net-zero future. Tesla, the industry pioneer, has become the leader and a symbol of a green lifestyle. But is this really the case?
In a new report, “Tesla: Polluting under a low carbon halo”, the Institute of Public & Environmental Affairs (IPE) investigated Tesla’s supply chain in China and discovered numbers of pollution breaches. We talk to their Linda Greer (Senior Global Fellow) and Ding Shanshan (Green Supply Chain Director) to learn more about the report’s findings and what needs to change for Tesla and other EV producers to be actually green.
CWR: Congratulations on your recent joint report! It is definitely an eye opener on an important issue. Can you provide some background on why you came to conduct this investigative report into Tesla’s suppliers in China?
Linda Greer (LG) & DING Shanshan (DS): At the beginning of 2021, an IPE partner NGO, SIP Lvse Jiangnan Public Environment Concerned Centre (PECC), brought our attention to a pollution problem that they had discovered during an on-site investigation at a lithium battery production company in Xinyu, Jiangxi Province, China.
After PECC’s findings, using our Green Supply Chain programme, we were able to link the polluting factory as a Tesla supplier
The company had unlawfully discharged alkaline wastewater in the environment. The local Ecological and Environmental Protection Agency followed up on PECC’s investigation, finding that an equipment malfunction had led to the discharge. What’s more, authorities found that the factory had subsequently failed to test or monitor the waste discharged and had failed to notify them in a timely manner of the accident. Finally, authorities found more broadly that the company did not have an adequate “rain and sewage” diversion system, and its management of wastewater discharge was inadequate, thus allowing pollutants to be discharged into the rainwater.
IPE has a large Green Supply Chain program designed to motivate multinational and Chinese domestic corporations to take more responsibility for environmental problems at factories in their supply chain in our country. Our green supply chain team undertook some research that suggested that this factory likely supplied Tesla, a showcase EV manufacturer, with rechargeable batteries.
We reached out to Tesla but they declined to respond…
…can’t help but question Tesla’s green credentials
We then reached out to communicate with Tesla — to determine if the company was aware of the environmental problems at this facility and was requiring corrective action — but Tesla declined to respond to us. This lack of communication motivated us to us to conduct investigation into Tesla’s supply chain environmental performance in China more broadly.
In the meantime, we are happy to report that the factory itself reached out to PECC following the instructions of local Ecological and Environmental Protection Agency. The company has published its corrective actions and provided the evidence IPE seeks on environmental compliance via our Blue Map website. Thus the initial problem that sparked the investigations for our report has itself been resolved.
What remains to be resolved is the larger question of Tesla’s green supply chain policies and the extent to which the company is properly overseeing environmental performance of its lithium battery and other manufacturers to ensure compliance as a qualification for business. To this date, Tesla continues its complete silence with us on this matter.
CWR: Can you share some of your key findings? What were the major environmental breaches of the suppliers?
LG & DS: Our investigations on the broader supply chain of Tesla successfully identified a number of companies listed in mainland China’s stock market that appear to supply lithium batteries, as well as battery thermal management system, die-casting accessories of aluminum alloy, auto mold, aluminum alloy wheel, and chassis parts to Tesla. These companies were identified in their required disclosure, including their annual reports.
All in all, subsidiaries of 14 co’s suspected to supply to Tesla have breached various of enviro laws…
Although records are not sufficient to definitively identify whether they are supplying Tesla, subsidiaries of 14 companies have records indicate breach of a number of the environmental laws and regulations in China: exceeding the wastewater discharge standards, suspected discharging of wastewater in a manner to evade supervision, directly discharging exhaust gas without treatment, storing hazardous waste without protective measures and causing hazardous waste dispersion and leakage.
…one discharged wastewater 7x COD standard & got a RMB144,000 fine
One particular troubling factory – a lithium battery manufacturer that we suspect supplies to Tesla — was found to discharge wastewater containing chemical oxygen demand (COD) at a concentration of 4,000 mg/L, seven times higher than the discharge standard required – an egregious pollution problem indeed. It subsequently received a fine of RMB 144,000 ($22,500).
CWR: It is surprising that Tesla, a company that is based on being ‘clean’ with EV vehicles would be sourcing from suppliers that are polluting. Any ideas why this is? Has Tesla commented on this?
LG & DS: It is disappointing, but honestly not that surprising based on our experience that Tesla has not yet responded to us. So many companies are not focused on supply chain matters at all until they hear from us, even where that company’s own mission or sustainability rhetoric suggest they certainly would be. And there are many, many companies that keep their heads down and ignore our outreach at the outset.
Here at IPE, we have worked on the Green Supply Chain program since 2014 and we’ve put many of the multinationals who source from China in motion to reduce the pollution of their suppliers. But many ignore our advances and some require more pressure than others.
Companies that do engage begin by first identifying and mapping out their suppliers and then searching our Blue Map database on our website. Nowadays, nearly 100 brands from across textile and apparel, IT, personal care, chemistry, food, automobile, and real estate work with us in supplier oversight using our database system and tools; many employ our Blue EcoChain tool that automates oversight to enable companies to track hundreds or even thousands of suppliers in China in real time.
~100 brands use IPE’s Blue EcoChain to automate oversight suppliers in China…
…we hope Tesla will join
This big data and Internet-based solutions we provide enable motivated brands to focus on suppliers with higher environmental compliance risks via dashboard and notification systems. It also enables motivated suppliers to track their own performance and provide timely explanations publicly via the Blue Map website. Finally and importantly, brands and suppliers can both map out upstream supply chain, where the heaviest environmental impacts often lie and accordingly the risks of breaching laws and regulations is even higher.
We hope that Tesla will become motivated to respond to IPE soon and join the ranks of these leading and active companies on green supply chain matters.
CWR: Have there been any responses from the polluting suppliers? Have they changed their ways?
LG & DS: We were very pleased that the lithium battery company that our partner NGO first investigated sought communication with them after the local Ecological and Environmental Protection Agency received the NGO investigation and confirmed the findings. We congratulate this company for stepping forward, publishing the details of its corrective actions, and providing the necessary evidence of environmental compliance via IPE’s Blue Map website in March.
The initial polluting factory has stepped up but the others have yet to rectify their breaches
The rest of the polluting suppliers covered in our investigation are yet to issue public explanations via their own or Blue Map website. We are thus unaware that they have remediated their violations. This lack of progress underscores the important role that Tesla could play in requiring its suppliers to be in compliance with the law and putting an oversight system in place that assures compliance as a matter of doing business with them.
CWR: And what about regulatory bodies, have they commented on the pollution breaches? Especially since the polluting suppliers are located in some of China’s key economic and environmental zones and China has its War on Pollution.
LG & DS: All of our desktop research and information on non-compliance is based on the Orders and Penalties issued and published online by the local Ecology and Environment Bureaus, where Tesla’s suspected suppliers are located; regulatory bodies found them breaching laws and regulations during their inspections and subsequently required them to remediate the violations and pay the fines. Thus, the necessary documentation is in hand to drive action.
However, the cost of violations can still be low and rarely do these companies disclose their corrective actions publicly. That’s why we think multi-stakeholder engagement, esp. that from brand to its supplier is essential to environmental protection.
CWR: What are your thoughts on the future of EV given your findings? Do you have plans for further investigations?
LG & DS:
We definitely believe that EVs will contribute importantly and substantially to combating climate change in China and worldwide! However, there is no contradiction between fulfilling this mission and taking responsibility for the environmental impact and the greenhouse gas emissions of manufacturing these vehicles.
EVs are important to combating climate change so we will continue investigating
…brands need to start or step up efforts
EV brands clearly need to start or step up their efforts to manage their supply chain environmental performances. Brands like Tesla should make use of the publicly accessible environmental data in China and the Internet-based tools like the Blue EcoChain and integrate environmental issues and carbon emissions into their supplier assessment process. This will provide extra motivation to suppliers to improve their environmental performance and reduce their greenhouse gas emissions during the production process.
IPE will continue our investigation into the EV supply chain in China. In the meantime, we’d like to seek communication with other EV brands to understand where they are in managing their own supply chain environmental performance as well.
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