Welcome back to The Electric! 

Non-Chinese electric vehicle makers are putting themselves at risk of a repeat of the semiconductor crisis: For at least the 2020s, they will be largely reliant on a single source of supply for lithium-ion battery materials—China. Today I examine a proposed strategy to address this vulnerability to a future supply disruption.

Impact investing, or making investment decisions with social and environmental impacts in mind, was once a hobbyhorse of the elite left. But such financial activism has increasingly become a feared fixture in boardrooms on both sides of the Atlantic, shaping industries such as oil, mining and automobiles.

Now political leaders and activists in the U.S. and Europe are attempting to extend this brand of lobbying even further—to the West’s cutthroat technological competition with China. The idea is to enact environmental, labor and other standards for electric vehicle batteries in the U.S. and EU—and to ban or at least shame EVs that fail to meet them.

Their hope is that Chinese-made batteries—often manufactured with supplies from pollution-spewing nickel plants in Indonesia, artisanal cobalt mines using child labor in the Democratic Republic of the Congo and other problematic ties—won’t make the cut. And that may be right, at least initially. But China, which is also ahead of the West in the cheap manufacture and adoption of green energy technology like solar panels and wind turbines, will eventually either learn to satisfy the new standards or figure out a way around them.