Global X Lithium & Battery Tech ETF, also known as LIT, offers investors exposure into the lithium market. Lithium battery technology can be found in electric vehicles, renewable energy storage, and mobile devices. Electric vehicles don’t produce any direct emissions, so many people consider lithium a step in the right direction to fight climate change. Mining for lithium has been found to use up a lot of energy, but still not as much as mining for coal or gas. It would not be a good idea for everyone to switch to mining for lithium because it is still a natural resource and it would deplete the environment of lithium. Mining can be unethical and exploitative, and it is imperative to ensure sustainable mining practices. LIT invests in businesses that are dependent on lithium materials. Because Lithium mining can be energy intensive and causes damage to the environment, I have awarded this ETF a 0.9 planets.
Top holdings of thuis ETF are in Albemarle Corp, Eve Energy Co LTD-A, BYD CO LTD-H, Ganfeng Lithium CO LTD-A, and Yunnan Energy-A. Albemarle has done a few things to help even out its environmental damages with actions such as the procurement of renewable energy in the U.S. and the Netherlands and construction completion of a $100 million thermal evaporator in Chile. This ETF has an ESG rating of 28.70 which means it is a little above medium risk to long-term environmental, social, and governance factors. Within this ETF, its top holdings ESG ratings include: Albemarle’s rating of 28.8, medium risk; Tesla’s ESG rating is 28.5, also medium risk; and TDK is 18.9, low risk. These scores are average, which means it can always get better but it’s not the worst option when it comes to choosing sustainable businesses.
Demand for lithium is increasing exponentially, and it doubled in price between 2016 and 2018. Mining for lithium has caused many harmful environmental effects. It has polluted water sources, increased carbon dioxide emissions, misused gallons of water, depleted fertile land, etc. When Guillermo Gonzalez, a lithium battery expert from the University of Chile, was asked in a 2009 interview about his thoughts on lithium mining, he responded, “This isn’t a green solution – it’s not a solution at all.” There’s also a political angle to be considered when it comes to lithium mining. When Bolivia started to exploit its lithium supplies from about 2010, it was argued that its huge mineral wealth could give the impoverished country the economic and political heft that the oil-rich nations of the Middle East. Because lithium mining is detrimental to the environment and the politics of countries, it is not a solution to our clean energy hunt.
LIT is managed by a team at Global X when it comes to investing in businesses, but it is not actively managed. The professionals primarily responsible for the day-to-day management of the Fund are Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; William Helm, CFA; and Sandy Lu, CFA (“Portfolio Managers”). All of the portfolio managers write about the importance of finance in their life and their career, but none touch on any type of value relating to sustainability. They all went to very prestigious colleges for business.