Conflict Minerals: Cleaning the Supply Chain AND Solving the Problem?

Speakers

• Jennifer Prisco, Legal Counsel, Global Chain, TE Connectivity
• Robert Leet, Co-chair, EICC-GeSI Extractives Work Group and Materials and EHS Engineer Supply Chain Code of Conduct Program Manager, Intel Corporation
• Monique Oxender, Global Manager, Supply Chain Sustainability, Ford Motor Company
• Assheton Carter, Senior Vice President for Global Engagement and Strategy, Pact Inc.
• Marshall Chase, Manager, Advisory Services, BSR (Moderator)
• Sasha Radovich, Manager, Advisory Services, BSR (Moderator)

Highlights

• Tackling issues related to conflict minerals in a company’s supply chain is a challenge. Many companies have difficulty monitoring upstream in their supply chains because of limited resources available to tackle these issues and the lack of finalized rules about what they should be reporting on with regard to tin, tantalum, tungsten, and gold.
• Given the complexity of this issue, companies need to collaborate and partner with peer companies in their industry as well as in other industries to figure out how to address conflict minerals in their supply chains. One company will not be able to solve this issue on its own.
• Companies need to be transparent in the way they are communicating about conflict minerals and acknowledge that, even if they don’t have all of the answers about the minerals used in their products, they are making strides to address the issue.
• The Dodd-Frank legislation, OECD guidelines, and the upcoming Securities and Exchange Commission (SEC) rules provide important frameworks for how companies can address this issue, but companies should not wait for the finalized rules to figure out how to take action on traceability throughout their supply chains.

Memorable Quotes

“One of the biggest challenges we are facing is how to develop a holistic approach to addressing conflict minerals that could scale effectively in the DRC [Democratic Republic of the Congo] and throughout the region.” —Assheton Carter, Pact Inc.

“We are trying to figure out not just how to address [conflict minerals] through compliance, but also how to provide meaningful information to our customers, the public, and investment community about what we are doing and how responsible we are in this area. It’s going to take more than a series of questionnaires. It’s going to take collaboration and collective effort.” —Jennifer Prisco, TE Connectivity

“It’s difficult to get support internally for extensive or costly actions, while expectations are still being defined with regard to conflict minerals. But regardless of what happens with the SEC legislation, the problem of conflict minerals is not going to go away. Business cannot provide solutions to all of the problems in the DRC, but there are certainly some concrete steps the private sector can take to improve the situation.” —Monique Oxender, Ford Motor Company

Overview

Chase opened the session by providing a brief overview of recent developments around conflict minerals and the challenges that companies face with regard to how to track and report on tin, tantalum, tungsten, and gold in their supply chains. He provided a brief overview of the Dodd-Frank legislation, the OECD framework, and forthcoming SEC rules that provide guidance for how companies should trace and report on the minerals throughout their supply chains. He then highlighted three key areas for discussion: due diligence, traceability, and transparency.

Next, Chase introduced the speakers, each of whom represents an organization at a different point in the supply chain. Carter discussed Pact’s role in tackling conflict minerals issues in the Democratic Republic of the Congo (DRC). One challenge that Pact faces is actually identifying mines in the DRC that risk being controlled by rebel forces, and building the capacity of local organizations in the DRC to ensure that they have responsible certification and traceability systems in place.

Leet then provided a brief overview of the partnership between the Electronic Industry Citizenship Coalition and Global e-Sustainability Initiative Extractives Work Group, which aims to develop tools to trace tin, tantalum, tungsten, and gold through the supply chain.

To further the discussion, Prisco spoke about the need to collaborate with external stakeholders on solutions for how to address conflict minerals issues throughout the supply chain. She outlined several partners—including the U.S. Department of State and the SEC, along with various other groups and industry associations—that TE Connectivity is working with to trace the origin of all minerals used in their products.

Finally, Oxender stressed that companies should not wait for the SEC legislation to be finalized before they take action on this issue. She then spoke about due diligence processes and emphasized the importance of developing an approach that is tailored to each company. Ford’s approach is to engage a cross-functional team to address conflict minerals in its supply chain. She suggested that other companies consider a similar approach to gain buy-in and ensure that conflict minerals are being addressed in all parts of the organization.

The attendees then broke out into smaller groups to discuss the following challenges:

• How do companies establish traceability?
• What schemes are relevant to address conflict minerals for multiple sectors? How can industries share information with one another?
• How can companies create due diligence and reporting schemes for customers?
• How do original equipment manufacturers (OEM)/brands implement due diligence in line with the OECD guidelines?

Each group then reported back on the issues they covered. One group stressed the need for companies to be transparent about the issues that they are facing. Currently, no company can claim that they are completely “conflict-free” because there isn’t enough data out there yet to back this up. That said, companies should not be shy in acknowledging that they may not have all the answers. Instead, they should focus on communicating what they are doing to tackle this issue in their supply chains, and what they hope to do in the future.

In addition, companies need to collaborate with one another to make progress on this issue. There was a lot of interest from companies to develop both industry-specific and cross-industry working groups to tackle conflict minerals, and there was demand for organizations to intervene and facilitate this kind of dialogue and action.

It is clear that companies have a finite set of resources to devote to conflict minerals and this is just one issue among many that a company faces with regard to its supply chain. Given this, Prisco suggested that companies build communications chains, so that each link of a company’s supply chain can push back on the link before it to get the information, since it’s too much of a resource burden for companies to conduct all of this work by themselves.

Finally, it is crucial that companies define what success looks like and who within their companies should be responsible for leading work on conflict minerals.