Brazilian lithium pitched as ‘carbon neutral’ relied on offset project linked to deforestation – Dialogue Earth

Report on Sigma Lithium’s Sustainability Claims and Operational Realities in Brazil

Introduction: An Analysis of “Green Lithium” in the Context of Sustainable Development Goals

This report examines the sustainability assertions of Sigma Lithium, a Canadian mining company operating in Brazil. The company markets its product as “Quintuple Zero Green Lithium,” positioning itself as a leader in environmentally and socially responsible mining. However, an investigation reveals a significant discrepancy between these claims and the company’s practices, particularly concerning its carbon neutrality strategy. This case highlights critical challenges in achieving several Sustainable Development Goals (SDGs), including SDG 13 (Climate Action), SDG 12 (Responsible Consumption and Production), and SDG 15 (Life on Land).

Sigma Lithium’s “Quintuple Zero” Framework and its Relation to SDGs

Sigma Lithium’s marketing is centered on its “Quintuple Zero” production model, which it claims sets a new standard for the mining industry. This model is presented as a direct contribution to sustainable development.

The Five Pillars of “Quintuple Zero”

• Zero Potable Water: The company states it uses treated and recirculated wastewater, aligning with principles of SDG 6 (Clean Water and Sanitation).
• Zero Tailings Dams: Waste is reportedly sold or recycled for road paving, addressing environmental risks associated with traditional mining and contributing to SDG 12 (Responsible Consumption and Production).
• Zero Carbon-Intensive Electricity: Operations are powered by renewable energy sources, a key component of SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action).
• Zero Toxic Chemicals: The use of a dense media separation method is claimed to eliminate harmful chemicals from the process.
• Zero Carbon Emissions: The company claims to achieve net-zero carbon emissions, primarily through the use of carbon offsets. This claim is central to its contribution to SDG 13 (Climate Action).

This branding strategy has enabled Sigma Lithium to command premium prices for its product, framing it as an essential component for a sustainable electric vehicle supply chain, thereby influencing patterns under SDG 12.

Carbon Neutrality Claims and the Unitor REDD+ Project Controversy

A core component of Sigma Lithium’s sustainability narrative collapsed following revelations about the carbon credits used to certify its operations as carbon neutral.

Achieving “Net-Zero” Through Carbon Offsets

In July 2023, Sigma Lithium announced its inaugural shipment of 30,000 tonnes of lithium was carbon neutral. This was achieved by purchasing 59,000 carbon credits from the Unitor REDD+ Project in the Brazilian Amazon. The stated goal of this REDD+ project was to prevent deforestation, directly aligning with the objectives of SDG 15 (Life on Land) and SDG 13 (Climate Action).

Failure of Due Diligence and Contradiction of SDG Principles

The integrity of Sigma’s climate action claim was compromised by serious issues with the Unitor project.

1. Criminal Investigation: The project became the subject of a Brazilian Federal Police investigation, “Operation Greenwashing,” for alleged involvement in illegal deforestation, public land grabbing, and corruption. These activities are in direct opposition to the conservation goals of SDG 15.
2. Project Suspension: The international certifier, Verra, suspended the Unitor project in June 2024, invalidating the environmental integrity of the credits purchased by Sigma Lithium.
3. Impact on Corporate Credibility: By using credits from a project under investigation for environmental crimes, Sigma Lithium’s claim of supporting climate action is undermined. This raises significant questions about corporate due diligence and the effectiveness of voluntary carbon markets in contributing to SDG 13.

In response to inquiries, Sigma Lithium stated it has not used carbon credits since 2024 and is now focused on direct emissions reduction. However, the company has not publicly addressed the problematic nature of the credits used for its 2023 shipments.

Socio-Environmental Impacts on Local Communities

Beyond the carbon credit controversy, Sigma Lithium’s operations have been criticized for their negative impacts on local communities, challenging the company’s commitment to social sustainability and related SDGs.

Community Grievances and Regulatory Scrutiny

• Environmental Degradation: Local communities have reported increased noise, dust, and cracks in homes, along with health problems. These impacts detract from the goal of SDG 11 (Sustainable Cities and Communities) to ensure safe and resilient human settlements.
• Lack of Consultation: The Federal Public Ministry (MPF) of Brazil has highlighted a failure to conduct free, prior, and informed consultation with 258 traditional communities affected by lithium mining in the region. This oversight contravenes principles of justice and inclusion central to SDG 16 (Peace, Justice and Strong Institutions).
• Calls for Suspension: Citing these impacts, the MPF recommended the suspension of lithium exploration and extraction authorizations in the area, signaling a failure to balance economic activity with social and environmental protections.

Conclusion: A Disconnect Between Marketing and Sustainable Development

The case of Sigma Lithium demonstrates a significant gap between corporate sustainability marketing and the on-the-ground realities of its operations. While the company’s “Quintuple Zero” narrative aligns with the language of the Sustainable Development Goals, its reliance on compromised carbon credits and the documented negative impacts on local communities reveal a failure to uphold the principles of these goals.

This report concludes that the company’s claims of contributing positively to SDG 13 (Climate Action) and SDG 12 (Responsible Consumption and Production) are questionable. The investigation into the Unitor project highlights systemic risks in the voluntary carbon market and underscores the need for greater transparency and accountability in corporate supply chains to prevent “greenwashing” and ensure that the transition to a green economy does not undermine other critical development goals, particularly those related to environmental justice and the protection of ecosystems (SDG 15 and SDG 16).

Analysis of Sustainable Development Goals (SDGs) in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 6: Clean Water and Sanitation

  The article mentions Sigma Lithium’s claim of using “cero agua potable” by treating and recirculating all water used in its operations. This directly connects to the sustainable management of water resources.

• SDG 7: Affordable and Clean Energy

  Sigma Lithium’s “quíntuple cero” model includes using “cero electricidad carbono intensiva,” stating that all its energy comes from renewable sources. This aligns with the goal of increasing the share of renewable energy in the global energy mix.

• SDG 9: Industry, Innovation, and Infrastructure

  The company promotes its mining model as a “new standard for mining” based on technological innovation, such as using “separación de medios densos” to avoid toxic chemicals and retrofitting its industry to be sustainable. The financing from Brazil’s National Bank for Economic and Social Development (BNDES) for a new processing unit also points to investment in sustainable industrial infrastructure.

• SDG 12: Responsible Consumption and Production

  This is a central theme. Sigma Lithium’s marketing of “litio verde quíntuple cero” is based on sustainable production claims, including “cero presas de relaves” (zero tailings dams) by recycling waste. However, the article’s investigation into the company’s “greenwashing” through questionable carbon credits directly challenges the integrity of these sustainable practices and corporate reporting.

• SDG 13: Climate Action

  The company’s primary claim of being “cero carbono” or achieving “cero emisiones netas de carbono” is a direct response to climate action. The article critically examines this claim by revealing that Sigma Lithium achieved this status by purchasing 59,000 carbon credits from a project under investigation for environmental crimes, thus questioning the effectiveness and integrity of its climate mitigation strategy.

• SDG 15: Life on Land

  The carbon credits purchased by Sigma Lithium came from the Unitor REDD+ Project, which aimed to prevent deforestation in the Brazilian Amazon. The investigation revealing that this project is suspected of illegal deforestation, land grabbing, and corruption directly connects the article’s core issue to the protection of terrestrial ecosystems.

• SDG 16: Peace, Justice, and Strong Institutions

  The article highlights the lack of justice for local communities. It mentions a recommendation from the Public Prosecutor’s Office (MPF) to suspend mining licenses due to the failure to conduct “consulta libre, previa e informada” (free, prior, and informed consultation) with 258 affected traditional communities. This points to failures in ensuring inclusive decision-making and access to justice.

• SDG 17: Partnerships for the Goals

  The case involves a complex network of global actors: a Canadian mining company (Sigma), a Brazilian operation, a US-based certifier (Verra), a Chinese buyer (Yahua), and international investors (like Norway’s Norges Bank). The breakdown in this partnership, where fraudulent carbon credits were certified and sold, underscores the challenges in creating effective and transparent partnerships for sustainable development.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 6: Clean Water and Sanitation

   • Target 6.3: By 2030, improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and materials. Sigma’s claim of using “cero químicos tóxicos” and treating all its water relates to this target.
   • Target 6.4: By 2030, substantially increase water-use efficiency across all sectors. The company’s assertion of using “cero agua potable” and recirculating its water is a direct claim of high water-use efficiency.

2. SDG 7: Affordable and Clean Energy

   • Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. Sigma’s claim that it uses “cero electricidad carbono intensiva” because its energy is 100% renewable directly addresses this target.

3. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes. Sigma’s “Greentech” plant and its “quíntuple cero” model are presented as examples of this.

4. SDG 12: Responsible Consumption and Production

   • Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources. The entire “green lithium” concept is based on this principle.
   • Target 12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse. The claim of having “cero presas de relaves” by selling or recycling waste for paving roads is a specific example.
   • Target 12.6: Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle. Sigma Lithium actively reports on its sustainability, but the article questions the veracity of these reports, highlighting the challenge of “greenwashing.”

5. SDG 13: Climate Action

   • Target 13.3: Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning. Sigma’s public campaign about its “cero carbono” lithium is an attempt to influence the market and consumers, but its flawed execution undermines genuine climate action.

6. SDG 15: Life on Land

   • Target 15.2: By 2020, promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation globally. The failure of the Unitor REDD+ project, which was supposed to prevent deforestation but is now investigated for causing it, shows a direct failure to meet this target.

7. SDG 16: Peace, Justice, and Strong Institutions

   • Target 16.7: Ensure responsive, inclusive, participatory and representative decision-making at all levels. The article states that the Public Prosecutor’s Office found that affected communities were not properly consulted (“consulta libre, previa e informada”), indicating this target is not being met.

8. SDG 17: Partnerships for the Goals

   • Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources. The article illustrates a multi-stakeholder partnership that failed in its due diligence, from the certifier (Verra) to the buyer (Sigma) and its investors.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicators for SDG 6 & 7 (Targets 6.3, 6.4, 7.2)

   • Qualitative Claims: The company’s public statements serve as indicators of its stated goals: “cero agua potable,” “cero químicos tóxicos,” and “cero electricidad carbono intensiva.” These are binary (yes/no) claims that would require independent verification.

2. Indicators for SDG 12 (Targets 12.5, 12.6)

   • Waste Management Metric: The claim of “cero presas de relaves” is a specific, measurable indicator of waste reduction and recycling efforts.
   • Sustainability Reporting: The existence of sustainability reports and press releases marketing “green lithium” is an indicator of corporate reporting (Target 12.6). The investigation’s findings serve as a counter-indicator, measuring the gap between claims and reality (greenwashing).

3. Indicators for SDG 13 (Climate Action)

   • Carbon Offsetting Volume: A precise quantitative indicator is mentioned: the purchase of 59,000 carbon credits to offset an equivalent tonnage of CO2 emissions for its first shipment.
   • Net Emissions Status: The company’s declaration of achieving “cero emisiones netas de carbono” is a key performance indicator it uses. The subsequent suspension of the carbon credits used is an indicator of the failure to genuinely achieve this status.

4. Indicators for SDG 15 (Life on Land)

   • Project Status: The official status of the Unitor REDD+ project on the Verra registry, which was changed to “en pausa” (on hold) and later “suspendido” (suspended), is a clear indicator of problems with the project’s environmental integrity.
   • Legal Investigations: The existence of the Federal Police’s “Operación Greenwashing” and the indictment of 31 people are strong indicators of illegal activities, including deforestation, linked to the carbon offset project.

5. Indicators for SDG 16 (Peace, Justice, and Strong Institutions)

   • Number of Affected Communities: The Public Prosecutor’s Office identified 258 traditional communities affected by mining operations in the region, providing a quantitative indicator of the scale of the social impact.
   • Official Recommendations and Complaints: The formal recommendation by the MPF to suspend mining licenses and the letter of complaint signed by 68 civil society entities are qualitative indicators of institutional responsiveness and social conflict.

4. Table of SDGs, Targets, and Indicators

Source: dialogue.earth