In Year Six, RSN is Expecting High Quality Conflict Minerals Disclosures
In early June, Responsible Sourcing Network (RSN) started looking at corporate disclosures for Section 1502 of the Dodd-Frank Act. For the sixth consecutive year, we will provide investors, companies, and consumers with a detailed analysis of companies’ efforts to tackle human rights abuses in their tin, tantalum, tungsten, and gold (3TG) supply chains. RSN will release its Mining the Disclosures (MtD) 2019 report near the end of October, which will continue to provide an inside look at how companies are addressing abuses that impact Congolese children and adults.
The conclusion of the MtD 2018 report highlighted a trend of stagnation demonstrated by the lack of change in companies’ scores; barely increasing, or decreasing. For example, in 2018 RSN found that 88 percent of the 206 companies analyzed was below 60 points out of 100; in 2017, 85 percent scored below 60 points. It was a bit of a surprise that scores did not decrease more in 2018, especially following the uncertainty imposed by the Trump administration and the U.S. Securities and Exchange Commission (SEC) with their unwillingness to enforce the law and require 1502 robust reporting. A regrettable conclusion of the MtD 2018 report was the absence of continuous improvement, a concept at the core of OECD Due Diligence Guidance, and in all environment, social, and governance (ESG) long-term strategies.
However, highlighting only the negative performance of laggards would not show the complexity of 3TG supply chain due diligence and especially would hide the good performance of several companies in 2018. This is particularly true from the information and communication technology (ICT) sector, where companies such as Intel, Microsoft, Apple, and Qualcomm dominated the ranking. Influencing the whole industry by adopting proactive, innovative, and in-depth due diligence systems, these companies are leaders in conflict minerals responsible sourcing, and will shape its future. Ford Motor Company, which despite a lower performance in 2017, heard stakeholders’ concerns and also achieved one of the highest MtD scores in 2018.
In the last two years, 3TG due diligence has suffered from the minimization of interest from the responsible sourcing community, with its attention turning to a new focus on the sustainability of battery minerals. While RSN fully supports the eradication of child labor in Congolese artisanal mining, and increased expectations against corruption and environmental damages in global cobalt supply chains, we request that companies do not abandon 3TG progress achieved and more that still needs to be accomplished. Thankfully, we are starting to see increased momentum around 3TG responsible sourcing concerns with a public procurement law being voted on in Oregon and diversification of traceability systems ensuring on-the-ground information sharing in the Democratic Republic of Congo and neighboring countries. Similarly, the Responsible Minerals Initiative (RMI) partnership with the Global Reporting Initiative (GRI) to develop and release new conflict minerals reporting guidelines is expected to bear fruit. As RSN continues to analyze 200+ companies’ 2019 disclosures and their publicly available information on conflict minerals, we hope to see continuous improvement and good faith efforts becoming the norm.
With 25 indicators and more than 70 sub-indicators divided in three main categories, Mining the Disclosures has presented a consistent snapshot since initial reporting in 2014of the largest U.S. traded companies’ due diligence efforts. RSN’s goal as a stakeholder in supply chain management is to disseminate information to investors and consumers so they are aware of — and encourage the increase of — responsible sourcing actions by companies. After six years of 1502 implementation, RSN researchers will be unwavering on the quality of our MtD 2019 expectations for information provided by companies. However, we simultaneously welcome productive discussions directly with companies during and after MtD’s research and writing to provide expertise, promote good practices, and support responsible and sustainable 3TG sourcing from the Democratic Republic of Congo.