RSN Updates

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

Thursday
Sep252014

RSN Director Patricia Jurewicz Discussing Conflict Minerals with HP's Jay Celorie

Institute for Supply Management

Hosted by the Institute for Supply Management, this podcast on conflict minerals in corporate supply chains features RSN Director Patricia Jurewicz and Jay Celorie, the global program manager for conflict minerals for HP, who directs programs to conduct due diligence in HP’s supply chain and coordinates with industry and stakeholders.

Listen to the podcast below, or download the mp3.

Friday
Sep122014

Introducing the Spinner Verification Initiative

Responsible Sourcing Network invites companies to attend an interactive presentation introducing the Spinner Verification initiative. Hosted by Patricia Jurewicz, Director of RSN, the webinars will outline an exciting new initiative designed to help companies responsibly source cotton.

The Spinner Verification initiative will establish a verification system for slave-free cotton yarn spinners and textile mills. It is often a challenge for home goods and apparel companies to know the country of origin of the cotton in the yarn or textiles they use, and therefore understand where they are exposed to human rights risks.

Since spinning mills are the point of entry for raw cotton into the global textile industry, the goal of this initiative is to provide verification for mills that are not using cotton picked with forced labor. Auditing and verifying yarn spinners as clean of slave-labor will drive the market away from this abusive practice. Companies can then better identify and source materials from truly responsible spinning mills.

These two webinars will take place on September 18th, 2014, 10:00 AM ET, and October 1st, 2014, 12:00 PM ET.

To RSVP to attend one of the presentations, or if you’d like more information about the Spinner Verification initiative, please contact Natalia Alvarez at natalia*sourcingnetwork.org.

Look to our website in the weeks to come for more information on the development of the Spinner Verification initiative.

Wednesday
Sep102014

Annual Cotton Harvest with Forced Labor Begins in Uzbekistan

The annual cotton harvest in Uzbekistan has officially begun as of Monday, September 8. Mass mobilization of civilians being forced to pick cotton is expected to begin on September 15.

Nearly million citizens will be forced to return to the fields to pick cotton under threat of punishment. Citizens are paid very little, and some are forced to pay transportation and housing fees while working, ending up indebted to the state. Conditions are often strenuous, with irregular access to food, water, shelter, and sanitation.

Students ages 16 to 18 are being mobilized to work, with parents being forced to sign a contract that indicates the children “volunteered” to perform agricultural work during the school year in order for their children to remain enrolled. Although the Government of Uzbekistan claims that child labor under the age of 15 has been eradicated, it is difficult to confirm independently, and it’s unlikely that the practice has been ended altogether. Teachers have also been forced to sign up for work in the cotton harvest or resign their positions.

To end this coercive system of forced labor, action must be taken from a variety of sources. Retail and apparel companies can influence the government of Uzbekistan by refusing to source Uzbek cotton and making a commitment to determining the origin of the cotton in their products to ensure it is free of forced labor.

By not speaking out against forced labor in Uzbekistan, companies risk violating their principles and hurting their reputations. One high-profile example is Daewoo International, a subsidiary of the multi-national steel company Posco, which has come under consumer pressure and criticism for knowingly sourcing forced labor cotton from Uzbekistan. Read the Wall Street Journal article

The time to end state-orchestrated modern-day slavery in Uzbekistan is now. Apparel brands and retailers have a responsibility to do their part to end cotton crimes around the world.

Friday
Aug152014

Connecting the Dots on Conflict Mineral Disclosures

Two months ago, 1,314 conflict mineral reports poured into the US Securities and Exchange commission. The Responsible Sourcing Network (RSN) has been working to connect the dots between expectations and results for this historic first-round of disclosures required by section 1502 of the Dodd-Frank Act. (No small task: you would need 450 to 700 hours to read all the disclosures back-to-back.) Despite initial rumors that few of the disclosures were any good, and notwithstanding last-minute court rulings, there is a wealth of valuable information in these reports. Many of the disclosures we are reading show thoughtful methodology and good faith effort. There is, of course, room for improvement, and RSN is in the process of preparing a report that will identify best practices in more detail.

The conflict mineral disclosures confirm the extent to which tin, tantalum, tungsten, and gold are found in everyday products. As expected, the greatest concentration of reports came from manufacturers of electronic devices and technology, from processors to smartphones. Yet the scope of the rule was broad. Conflict minerals can be found in eyeglass lenses and fine-jewelry (Wal-Mart), refining catalysts (ExxonMobil, Chevron), metal working and cutting tools, jewelry, highway transportation equipment, apparel and building products (Berkshire Hathaway), automobiles and car parts (Ford, General Motors). And that’s just a sampling of top Fortune 500 companies required to file disclosures under the new 1502 disclosure rule.

Missing the big picture?

Unfortunately, many companies are not connecting the dots to “conflict-free from the DRC”. The purpose of the law (Dodd-Frank, 1502) is to promote peace in the Democratic Republic of Congo (DRC) and neighboring countries, not to discourage trade in the region. Contrary to RSN’s shortlist of expectations, some major companies have explicitly stated that their risk-management strategy is to ask suppliers to completely avoid the DRC region.

In contrast, some companies promote a conflict-free minerals trade in the DRC as a central part of their approach to the challenge. Some initiatives to go above and beyond the letter of the rule include:

Companies that connect the dots internally will have the best disclosures in 2015.

Better reporting starts with company management systems. Auditing firm KPMG recommends: “Set a compliance strategy, create a dedicated team, involve all departments, communicate consistently, and garner support from executives.” Professional services network PwC has advice for companies on how to take advantage of strategic business opportunities presented by the conflict minerals rule, and Forbes similarly argues for the inherent value of “knowing your supply chain”.

The Organization for Economic Co-operation and Development (OECD) has published extensive guidelines on how to establish company management systems, and develop risk-management strategies.

Finally, look out for updated “best practices” on conflict minerals reporting from RSN in the near future.

If your organization would like to support RSN’s research, please contact Patricia Jurewicz, Executive Director, at patricia@sourcingnetwork.org.

Ready to pick up a conflict minerals report? Shareholders can look out for a few key attributes.

  1. If the company filed only a Special Disclosure (SD) Form without an attached Conflict Minerals Report, does the Form SD clearly describe a good-faith reasonable country of origin inquiry, product risk-exposure, and company risk-management systems?
  2. Is the report easy to find on the company’s website? The US Securities and Exchange Commission (SEC) requires that the issuer place its Conflict Mineral Report on its website – but while some companies place their report front-and-center, others bury it deeper in the site. Many companies have additional information on their websites that is not listed in the conflict minerals report.
  3. Is the report readable? Does it make sense, or does it leave you asking questions like, “How did they come up with this number? What is the extent of risk-exposure (ex: description of products, percentage of spend, percentage of smelters or refiners that are certified conflict free)?”
  4. This first round presents a “trial-run” of the rule. Does the company identify specific steps to improve its due diligence processes and reporting methods for 2015?
Thursday
Jun262014

Trafficking in Persons Report Keeps Uzbekistan at Lowest Ranking

For the second year in a row, Uzbekistan has been placed in the lowest ranking possible in this year’s Trafficking in Persons (TIP) report released by the United States Department of State. Uzbekistan has not demonstrated to the U.S. government that it is making a significant effort to change its noncompliance with minimum trafficking standards. As a result, it faces possible punishment of sanctions.

This ranking sends a message to Uzbekistan that even though forced labor of children under the age of 16 has largely been eradicated, more must be done to dismantle the system of that forces a million of its own citizens to harvest cotton every year.

“While the decision is an important step to curb forced labor, further pressure will still be needed,” said Nadejda Atayeva, president of the Association for Human Rights in Central Asia. “Tashkent’s well-established pattern of breaking its international commitments means that the Obama administration should be ready to follow through with the consequences set out in the legislation, including travel restrictions on Uzbek officials who organize and profit from forced labor.”

Pressure must continue to be applied from a multitude of sources. The United States government recognizes the atrocities happening in Uzbekistan and is taking action to demonstrate practices by the Uzbek government are unacceptable. It is time for retail companies, consumers, investors, and lending institutions to take similar actions. It is of utmost importance that retail companies understand from where their cotton originates to be certain it was not picked from forced hands in the fields of Uzbekistan.