Rivian IPO Facing Major Human Rights Questions

While it is true that when it comes to daily operation, electric vehicles are much better for the environment than vehicles powered by fossil fuels, that doesn’t necessarily mean that EVs are 100% “clean.” Critics of electric cars have questioned the impact that lithium-ion battery production has on the environment. Just before the Rivian IPO, the EV truck maker is being made to answer those questions.

Advisor questions environmental impact of batteries and human rights issues ahead of Rivian IPO

Rivian R1T electric truck in silver, parked on hill crest with dirt on tires. The Rivian IPO is expected to raise $8 billion  for the EV truck maker
Rivian R1T electric truck | Rivian

According to Reuters, a pension fund advisor told Reuters that it is going to grill Rivian on human rights and environmental concerns with the company’s battery supply chain. This development comes just before the highly anticipated Rivian IPO.

The advisor, SOC Investment Group, sent a letter to Rivian board member Rose Marcario asking the company to “commit to a rigorous human rights assessment of Rivian and its value chain” before it files the regulatory documents necessary to launch its IPO.

“Failure to address potential human rights abuses and environmental harms associated with the battery life cycle exposes Rivian to significant regulatory, litigation and reputational risks,” stated the letter written by SOC Executive Director Dieter Waizenegger. The letter asks Rivian to respond by November 3rd, 2021.

This letter is part of a growing movement by investors to hold electric vehicle makers accountable for the mining practices of materials used in EV batteries, such as lithium and cobalt. Investors want to ensure that the automakers they back are sourcing their materials responsibly.

Rivian contends that it is committed to environmental and social responsibility

Blue Rivian R1T parked in a forest
Rivian R1T | Rivian

Serious issues such as potential human rights abuses coming to light just before an initial public offering is not a great situation for Rivian to find itself. Rivian’s brand image is all about adventuring outdoors to enjoy and respect the environment. Its R1T truck is available with vegan leather, and the company has an internal program called “Forever,” which allocates 1% of equity toward environmental preservation.

However, Waizenegger was confused to see that the self-proclaimed socially responsible company did not address how the EV maker ensures its battery supply chain is free of human rights abuses in Rivian IPO documents.

“It just was baffling to us when we were looking through the S-1 that they’re completely silent on that,” said Waizenegger. “The (battery) supply chain and production is rife with human rights risks.”

Rivian responded to address the advisor’s concerns by stating that they take steps to monitor for any potential human rights issues.

“Working with materials suppliers and supply chain partners on ethical sourcing practices is a critical piece of that,” the truck maker said in a statement. “As we’ve laid out in our IPO filing documents, we’re committed to responsible environmental, social, and governance practices and that includes thorough reporting and disclosure.”

Rivian plans to eventually bring EV battery production in-house

Rivian R1T EV truck on a production line. Rivian is planning to make their own EV batteries in house.
Rivian R1T EV truck production | Rivian

The Rivian IPO revealed that the company eventually plans to bring battery production in-house to make itself less reliant on third-party suppliers. Currently, Rivian has a relationship with Samsung SDI to supply batteries for its trucks, upcoming SUV, and its Amazon EV delivery van.

If it comes to light that there are any human rights issues in the battery supply chain, it could mean that Rivan will have to cut ties with Samsung and accelerate its plans to produce its own batteries.

We wouldn’t be surprised if Rivian is currently auditing Samsung SDI to make sure nothing will arise that could threaten the upcoming IPO. Rivian is hoping to raise $8 billion from the public offering, so there is a lot at stake financially and socially as it tackles this issue.

It remains to be seen how this recent development will look in the eyes of investors once the IPO launches.

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