More Regulatory Enforcement Needed to Urge Corporate Due Diligence on Conflict Minerals
Oakland, California—Oct. 18, 2018—Today, Responsible Sourcing Network released its Mining the Disclosures 2018: An Investor Guide to Conflict Minerals Reporting in Year Five report, which analyzes 206 companies’ supply chain due diligence efforts regarding conflict minerals, including tin, tantalum, tungsten, and gold, or 3TG. In the fifth consecutive year of analyzing companies’ conflict minerals compliance and reporting, the report shows that a large number of the companies’ scores stayed flat or decreased.
The technology sector outperformed all others, while laggard industries included integrated oil & gas, steel, business services, and building materials. Innovative companies showed constant improvements, including increased participation in on-the-ground initiatives, proactive risk assessments, and comprehensive risk mitigation measures. However, compared to 2017, a majority of companies’ scores that reflect alignment with the OECD’S Conflict Minerals Guidance declined. The results show a global lack of desire to improve due diligence practices over the last few years.
These results aren’t too surprising since the Trump administration’s contempt for regulations has become more and more visible. For example, in February last year, President Trump threatened to suspend Section 1502 of the Dodd-Frank Act, which requires companies on the U.S. stock exchange to trace the minerals used in their supply chains and declare whether they are conflict-free.
“The disregard of corporate responsibility for conflict minerals during the Trump administration is concerning,” said Raphaël Deberdt, author of the Mining the Disclosures 2018 report. “The increasing neglect of the conflict minerals legislation from some companies over the past few years has been a source of human rights abuses in the Democratic Republic of the Congo. And these abuses extend beyond the 3TG sphere.”
Companies involved in mineral supply chains — from mines to retailers — now face additional challenges that must be integrated into corporate risk mitigation frameworks. The increasing importance of cobalt, lithium, and nickel in the automotive and technology sectors should trigger red flags in compliance departments in a broader risk context, including environmental degradation, organizational health and safety, human rights, and community impacts. Similarly, the upcoming EU regulation will necessitate increased due diligence from importers of 3TG, not only from the Congo region, but from all conflict-affected and high-risks areas.
“The results of this year’s report demonstrate the need for an increase in regulatory enforcement and investor engagement that urge companies to undertake proactive due diligence efforts,” said Patricia Jurewicz, vice president of Responsible Sourcing Network. “These programs must continuously improve to address and mitigate the evolving material risks associated with conflict mineral supply chains.”
Despite the overall decrease in scores, leading companies like Intel, Microsoft, Apple, Qualcomm, Ford, Royal Philips, and HP demonstrated that implementing measures to reduce risk and harm in all levels of their supply chains can be done successfully. These companies prove that taking a due diligence approach to reduce harmful impacts on the communities producing the raw materials in our electronics is an achievable and beneficial business model.
For more information, visit sourcingnetwork.org/mining-the-disclosures.
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