RSN Updates

Read our updates to learn more about RSN’s work.

Tuesday
Apr042017

Repeal and Replacement of Conflict Minerals Rule 1502 Undermines Peace and Stability in the Congo

Co-written with Patricia Jurewicz, Director, Responsible Sourcing Network

Originally posted on Huffington Post.

DID YOU KNOW? The cell phone in your pocket or laptop you may be reading this on could contain minerals used to fund militia groups and war in the Democratic Republic of the Congo (DRC). The conflict is ongoing and only last week, American UN researcher Michael Sharp, his Swedish colleague, and their interpreter were all found murdered. This in the same central DRC region where 42 police officers were beheaded a few weeks ago.

One of the few glimmers of hope that the Congolese people have had in recent years has been the ‘Conflict Minerals Section 1502’ of the Dodd-Frank Act – passed in the U.S. in 2010 with the aim of reducing revenue flows to DRC militia groups. The law helps create demand by multinational corporations to only source certified “conflict-free” minerals, thereby driving momentum for mines in the DRC to de-militarize and cease funding to the militia groups fueling conflict.

Dismantling 1502

Unfortunately however, a Congressional Hearing this week is part of a concerted attempt by current decision makers in Washington to dismantle 1502. Acting head of the Securities and Exchange Commission (SEC), Michael Piwowar has unilaterally called for a reconsideration of it (hundreds of comments were submitted), an amendment was passed in the House to defund the enforcement of 1502, and a draft Executive Order to suspend it for two years was leaked in February.

We believe many of the arguments cited for repealing and replacing Section 1502 are misinformed.

For example, one major argument for the repeal are the costs of implementation. However, Elm Sustainability recently reported that actual compliance costs of the Rule’s implementation have “dropped significantly” in large part due to innovations and efficient tools available to issuers and suppliers at no cost. Furthermore, an audit fund, supported by corporations, reduces some of the cost of audits to smelters by paying for 100% of first-time audits. In 2016, the Initial Audit Fund covered 37 initial audits, significantly reducing the barrier to entry of smelters undergoing the validation process. Indeed, the costs of implementation seem to be a small price to pay to protect companies and investors from the potential reputational, financial, and legal risks associated with being linked to egregious human rights abuses.

A second reason stated by Acting Chairman Piwowar for the potential repeal is that it is unclear if the 1502 rule has reduced the control of armed gangs or eased human suffering in the Congo. Again this is misinformed, as great strides have been achieved.

The most recent study conducted by the International Peace Information Service (IPIS) found that 79% of tin, tantalum, and tungsten miners surveyed now work in conflict-free mines; 204 mines have been officially certified as conflict-free; and 75% of smelters/refiners worldwide for the four conflict minerals have passed audits by the Conflict-Free Sourcing Initiative (CFSI) or associated programs. All of the momentum from the past six years will be lost if companies no longer feel the pressure to source responsibly because they don’t have to submit annual mandatory disclosures.

Investor and corporate support

On March 7, 129 investors and investor groups managing total assets close to $5 trillion, called upon the SEC and Congress to continue widespread and comprehensive implementation of Section 1502. Lead signatories included Boston Common Asset ManagementInterfaith Center on Corporate Responsibility (ICCR), Mercy Investment Services, Inc.Responsible Sourcing Network (RSN), Trillium Asset Management, and US SIF: The Forum for Sustainable and Responsible InvestmentEngaged with the implementation of the law since it was first passed in 2010, investors expressed their support in a statement to the SEC, specifically calling on the agency to pursue robust enforcement of the requirements to achieve maximum impact.

Given that companies and their global supply chains are under increasing scrutiny and regulation on conflict minerals from the DRC including the EU’s Conflict Minerals Law, lead U.S. investors were joined by asset managers from around the world including APG Investment Management, Hermes EOS, Legal & General Investment Management, MN, NEI Investments, Robeco, Triodos Investment Management, and pension funds such as New York City Comptroller Scott M. Stringer, PGGM, and Sweden’s AP1, AP2, AP3 and AP4.

It is not only investors and human rights groups that support this legislation, many corporations do as well. The Washington Post printed the article in February entitled “Why Apple and Intel don’t want to see the conflict minerals rule rolled back” and Bloomberg BNA reported on additional companies’ support of 1502, including HP and AMD, regardless of a disclosure law. Numerous companies and corporate trade associations also submitted statements to the SEC supporting Section 1502 such as KEMET ElectronicsSignet JewelersCFSI, and Information Technology Industry Council (ITI).

Enforce and replicate

The 1502 rule has been the driving force for the momentum and action by corporations to research their supply chains, be transparent about their actions, and be responsible to the communities that deserve to prosper from the electronics craze sweeping across the world. As a result, U.S. companies are being more effective in addressing material risk in their supply chains while contributing to responsible economic development in the DRC.

No single law can solve all the underlying problems that are causing conflict in the DRC region, but since 2010, this law has demonstrated success in diminishing revenue flows to militia groups. Section 1502 also exemplifies the need for and benefit of transparency within investment decisions. Not only does it support companies and investors by creating a level playing field to compare company actions, such as in RSN’s Mining the Disclosures reports, but it also helps minimize violence and despair.

Now is not the time to repeal and replace but to enforce and replicate 1502 to drive responsible manufacturing and empower developing economies.

Friday
Dec232016

Peace on Earth: Support Conflict-Free Efforts this Holiday Season

As we gather to celebrate our hopes for a prosperous, peaceful 2017, many people in the eastern Democratic Republic of Congo (DRC) remain at the mercy of violent conflict. Far too often, mineral extraction is linked to violence in the DRC and other parts of the world. Yet the power to drive change is in your hands.

Whether you’re exchanging gifts, taking advantage of end of year sales, or reflecting on how you can be a more responsible consumer in 2017, we’ve listed some simple ways you can influence major brands to source responsibly.

1. Support companies that do excellent due diligence. Check out the interactive scores for Mining the Disclosures 2016 to find out which companies scored the highest in identifying human rights abuses in their supply chains, improving mining conditions in the Congo, and reporting on their actions. Some popular Christmas presents from leading companies include:

 

2. Let your favorite consumer brands know you care about responsible minerals sourcing. Take a moment to fill out their contact form and let them know you are concerned about the responsible sourcing of the minerals in your products. A few clear voices can help a company understand that this is an important issue for customers.

Some companies and products that expose you, as a consumer, to the risk of indirectly supporting armed groups in conflict zones. Here is how to contact them:

  • Wearable technology. Fitbit, a publicly-traded U.S. company that contracts Flextronics to manufacture its products, has failed to report on conflict minerals in 2016. If you’re a customer, let Fitbit know you are concerned via its online form or tweet @fitbit.

  • Drones. DJI, maker of some of the most popular drones, markets its products internationally, but fails to address responsible sourcing questions on its website. Let DJI know you are concerned via its email (citizenship@dji.com) or tweet @djiglobal.

  • Retail. Ross Stores, a popular retailer, received the lowest score out of 202 companies in RSN’s 2016 evaluation. Let Ross know you are concerned via its online form or Facebook page.  

 

         

3. Learn about the raw materials in the products you buy.Conflict minerals, a general term for tin, tantalum, tungsten, and gold from the DRC, are found in virtually every product with electrical components, as well as jewelry. Download the full Mining the Disclosures 2016 report to learn more, and check out RSN’s infographic summarizing the impact of conflict-free efforts.

Your purchases matter, and so does your voice. Stay engaged by following RSN on Facebook and Twitter, and support our efforts to encourage companies to source responsibly.

Thursday
Sep012016

Say YESS!!

I am so excited that today my organization, Responsible Sourcing Network (RSN), is announcing the launch of our newest initiative, YESS: Yarn Ethically & Sustainably Sourced! It is something I have been thinking about since writing a business plan for it back in 2014 and conducting a feasibility study last year. Parts of the approach have changed since then, based on feedback from stakeholders, but the main vision hasn’t changed. YESS aims to create an industry-wide system that will help identify and eliminate forced labor from the fashion industry…all the way down to the dirt! It is inexcusable that in the 21st century, we have people being forced to work and they cannot freely walk away from their abusive situations. 

I believe the timing to launch our YESS initiative could not be better. There is momentum due to recent anti-slavery legislation, new software technologies are providing innovative supply chain transparency, the apparel industry is becoming more collaborative through the Sustainable Apparel Coalition (SAC) and Social-Labor Convergence, and we have a great model to follow with the Conflict-Free Sourcing Initiative (CFSI). We have known for years that the cotton supply chain is opaque and complex. Although a few companies committed to 100 % organic or Fairtrade know the origin and field conditions of their cotton, this is just a small percentage of the market as a whole. According to Textile Exchange, all of the “preferred” cottons together – which includes the two just mentioned plus Better Cotton Initiative, Cleaner Cotton, Cotton Made in Africa, and e3 – comprise less than 10 percent of cotton produced today. This begs the question, what are the labor conditions in the other 90 % of conventional cotton? At a minimum, we need to make sure it does not support modern slavery.

Unfortunately, cotton produced by forced labor is currently being documented in at least nine countries. Yarn mills located in Southern India use a form of bonded labor, which exploits over 100,000 adolescent girls. And over a million Uzbek nurses, teachers, and university students are forced to pick cotton each year or risk losing their jobs or getting expelled. The issue of modern slavery is rampant and beckons a solution. RSN’s game-changing initiative YESS: Yarn Ethically & Sustainably Sourced aspires to eradicate modern slavery in cotton harvesting and yarn production by verifying that yarn spinners are identifying and eliminating forced labor. YESS will engage, educate, and enable yarn spinners to implement the OECD risk-based due diligence system to address forced labor.

Because the yarn spinning mills are the ones that open up a bale of cotton and blend it together with other cotton from multiple locations, they are considered the “pinch point” for knowing where cotton originates and under what conditions it was harvested. Often brands do not know who these spinning mills are, as brands do not buy yarn, they buy finished garments. 

Due to new reporting requirements, companies are more motivated than ever to demonstrate and report on how they ensure there is no forced labor embedded in their value chains. Though it won’t be easy, YESS can work with brands to implement and report on their commitments to achieve slave-free cotton, yarn, and textiles in an efficient, effective, and credible manner. By engaging and empowering yarn spinners in the most opaque section of the value chain, YESS will increase transparency and accountability from field to fabric.

Collaborating to Eliminate Forced Labor

There are many key players engaged with the apparel industry who are doing their best to help the hundreds of thousands of human beings imprisoned by forced labor, including Anti-Slavery International, Clean Clothes Campaign, Cotton Campaign, Ethical Trading Initiative, Fair Labor Association, Fairtrade International, Solidaridad, and SOMO  (just to name a few). YESS plans to coordinate its activities with sustainable cotton, ethical apparel, and other complementary programs to promote collaboration in implementing due diligence to identify and address forced labor. Through collaboration, brands engaged with YESS will be able to make informed purchasing decisions and encourage improved working conditions in fields and mills.

To learn more about this groundbreaking initiative that will take us one step closer to a slave-free future, check out the YESS 2-page Overview and Slide Presentation. RSN is happily accepting endorsements for a Statement of Support from brands, NGOs, and other stakeholders. For more information, contact info@sourcingnetwork.org.

By Patricia Jurewicz, Director, Responsible Sourcing Network with contributions from Natalie Coney, RSN Intern.

Wednesday
Jul202016

Mining for Human Rights Performance in 2016

Companies, consultants, and human rights advocates are actively using the thought leadership and accountability in Mining the Disclosures, an annual evaluation of conflict minerals disclosure from Responsible Sourcing Network (RSN). Mining the Disclosures has been used in an array of academic, political, and economic investor analyses of how human rights performance can be measured.

Although many stakeholders use Mining the Disclosures, the primary audience is responsible investors. Through our work with conflict minerals, we continue to push for clearer links between investor decisions and human rights impacts.

Shareholders and stakeholders play a key role in changing the way business understands human rights performance. Companies can motivate suppliers to make sourcing decisions that leave the DRC and other conflict-affected regions more peaceful, free, and prosperous.

Mining the Disclosures 2016 will evaluate over 250 companies, from 25 different industry groups including Medical Devices, Aerospace & Defense, and Farm & Construction Equipment. It is scheduled for released in early October 2016.

Are most companies sourcing conflict-free?

Defining conflict-free is tricky, because we don’t want to incentivize companies to avoid sourcing from conflict-affected regions. In 2016, RSN will introduce a binary indicator of conflict-free: companies must detail efforts to eliminate conflict-affected minerals from their supply chain, while also continuing to source from within the region.

Even companies acting in good faith often struggle to trace minerals to where the raw ores are smelted or refined. Supply chains can be very complex and likely include enormous geographic, language, and regulatory gaps. By understanding the supply chain of each industry better in 2016, we hope to give credit where it is due.

Conflict Minerals show the tip of a human rights iceberg

Human rights don’t have borders. While the SEC’s Conflict Minerals Rule does not require companies to report on conflict-affected minerals beyond the DRC, or other human rights risks such as child labor within the DRC, it does bring the OECD’s risk-based due diligence approach to mainstream U.S. companies. In our expectations and analysis, we will continue to push companies to offer responsible investors more of the information they need — and help investors act on that information so that we can champion human rights together. 

Wednesday
Jul062016

Forward, not Backward on Conflict Minerals and Human Rights

Section 1502 of the Dodd Frank Act, has helped to shed light on global supply chains, helping investors understand whether their investments are fueling human rights abuse in the DRC. Now is NOT the time to defund the conflict minerals rule, but to build on it.

We must tell members of Congress who want to defund Section 1502: We want to go forward, not backward.

  • When they called a hearing in December, their own expert witness, Jeff Schwartz, instead of testifying against 1502 actually recognized the success of the private-sector driven Conflict Free Sourcing Initiative, called for closing loopholes and better enforcement of Section 1502, and argued for strengthening rather than repealing the reporting requirement.
  • Per-Olof Loof, the CEO of KEMET Corporation, testified that the law had brought about positive outcomes for both business and society.
  • Responsible Sourcing Network submitted a letter reiterating the importance of Section 1502 to major SRI investors.

Ongoing efforts to defund Section 1502 disregard the evidence that Section 1502 is highly valuable to investors, and a critical part of disrupting human rights abuses around the world.

As investors and consumers, we must tell Congress we want to go forward, not backward, on human rights due diligence.

Do your part for a more peaceful, prosperous world and call one or more of the following members of Congress who will vote TODAY on defunding 1502 and tell them NO to defunding 1502, and YES to guidance and oversight on human rights risk in investment decisions.

You can use this link to find your member’s twitter handle. Here are sample tweets you can use to tweet at members of Congress:

.@[insert representatives’ twitter handle here] #conflictminerals rule reduced $ to armed groups in DRC & improves transparency. Vote NO on Huizenga’s amendment to HR 5485