BERKELEY, CA—OCT. 9, 2019—Today, Responsible Sourcing Network released its annual report, Mining the Disclosures 2019: An Investor Guide to Conflict Minerals and Cobalt Reporting in Year Six. The report analyzes 215 companies’ supply chain due diligence efforts regarding 3TG conflict minerals — tin, tantalum, tungsten, and gold. Disappointingly, the results show an average company score of 40 points out of 100, the same as last year, showing a global lack of desire to improve due diligence practices.
The report also ranks 27 companies on efforts to address child labor and other human rights abuses in their cobalt supply chains. The average score for cobalt — 26.4 — demonstrates a corporate risk that is deplorable.
The three bottom-performing industries were, for a second year in a row, integrated oil & gas, steel, and business services. However, building materials gained an average of eight points, moving it to 17th place up from 23rd. Although some innovative companies increased participation in on-the-ground initiatives and established risk assessments, compared to 2018, a majority of indicators reflecting long-term engagement declined.
“The fact that a large majority of the companies disregard their corporate responsibility on conflict minerals and cobalt is the result of the U.S. administration’s policies, but also reflects internal business decisions,” said Raphaël Deberdt, author of the Mining the Disclosures 2019 report. “Companies should not consider 3TG due diligence a fad. Pawning off responsibilities to the smelters and refiners prevents any meaningful on-the-ground changes. We hope that companies will reassess and ramp up their engagements in 3TG, as well as improve their efforts on responsible cobalt mining.”
Deberdt noted that President Trump’s threat in 2017 to suspend Section 1502 of the Dodd-Frank Act and the subsequent decision of the U.S. Securities and Exchange Commision (SEC) not to enforce the law encourages companies to neglect 3TG supply chain due diligence.
The technology sector, once again, outperformed all others with a 3TG average score of 54.2 (+1.2 points from 2018), and a cobalt average score of 46.2. Even though the average score slightly increased in this sector, companies like Intel, Apple, Microsoft, Ford, HP, Dell Technologies, Royal Philips, Alphabet, and Acer demonstrate that implementing measures to reduce risk and harm in all levels of its supply chains can be done successfully.
“It is to be hoped that the findings in this report can inspire collective action to draw greater levels of investor attention to these important issues,” said Richard Butters, an ESG analyst at Aviva Investors.
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 electric vehicle and technology sectors should trigger red flags in compliance departments, including risks with environmental degradation, safety, human rights, and community impacts. The upcoming EU regulation will necessitate increased due diligence from importers of 3TG, not only from the Congo region, but from conflict-affected and high-risk areas globally.
“The majority of results in this year’s report demonstrate complacency,” said Patricia Jurewicz, vice president of Responsible Sourcing Network. “Companies need to constantly improve their due- diligence efforts to ensure the materials in their products are not causing harm to the planet or people. Otherwise, companies will lose their social license to operate in mining communities and access to raw materials.”
Responsible Sourcing Network (RSN) is dedicated to ending human rights abuses and forced labor associated with the raw materials found in products we use every day. RSN builds responsible supply chain coalitions of diverse stakeholders including investors, companies, and human rights advocates. RSN is a project of As You Sow.