Jump down to beginning of page content

Blog


Marshall Chase

Marshall Chase, Associate Director, Advisory Services

Publication Date

June 29, 2010

Share



Conflict Minerals and Supply Chain Scrutiny

Two recent events on opposite sides of the United States will have significant implications for industries ranging from high-tech electronics and aircraft engines to commodities like cans and cutting tools, whose supply chains source minerals like gold and ores containing tantalum, tin, and tungsten. In Washington, D.C., the financial reform legislation passed by a House-Senate conference committee early June 25 included a provision requiring companies to publicly report on their use of so-called “conflict minerals” from the Democratic Republic of the Congo (DRC) and neighboring countries. And in California’s Silicon Valley, the trustees of Stanford University have voted to support shareholder resolutions on the same subject.

These regulatory and investor actions demonstrate that stakeholder campaigns focused on the eastern DRC—the site of the world’s deadliest conflict since World War II—are gaining increasing attention. The region’s trade in minerals used as raw materials in many products plays a critical role in funding armed groups in the DRC, and the use of these minerals in the information and communications technology (ICT) sector has been the focus of several NGO campaigns.

In part due to the NGO focus on the ICT sector, that industry may be the best prepared to handle any new supply chain transparency requirements. Already, ICT industry efforts are underway to develop supply chain verification procedures for “conflict free” tantalum and tin. However, the lion’s share of conflict minerals (except for tantalum) are used outside of ICT, and increased investor pressure and government legislation, if passed into law, will force many companies in other industries to address this issue.

As companies come to grips with the demands being placed on them, it’s important to keep the bigger picture in mind: The goal is not to eliminate minerals sourced from the eastern DRC. The goal, ultimately, is to end the conflict and the resulting suffering faced by those in the region. One of the ways that companies can support this goal is by developing transparent and verifiably conflict-free supply chains for minerals from the region, which will support the economic development and security that the region needs.

Merely attempting to stop the use of minerals from the region is likely to do little to accomplish the broader goal, for at least two reasons: First, it is nearly impossible, at present, to guarantee a “conflict-free supply chain,” because verification programs are only starting to be implemented and will take time to develop and perfect. Second, a blanket ban on all minerals from the region would affect miners, traders, and others who do not contribute to the conflict, and these individuals—as well as the millions of people in the region who depend on the minerals trade—would face significant hardship if their business were cut off.

Companies now facing pressure on this issue should also consider a strategic approach that goes beyond a focus on supply chain transparency, and may include things like participation in industry or multi-stakeholder groups, support for development programs in the region, and perhaps encouragement of diplomatic efforts to end the conflict. Broader approaches can complement and ensure the success of supply chain efforts, while speeding the stabilization of the region.

Publications

Blog

Opinions, ideas, and notes from the field from BSR staff members around the world.

BSR Insight

A weekly member-only email newsletter, providing members with expert insights, tools, and analysis on timely global sustainability topics.

BSR Review

A collection of articles, research reports, and opinion pieces written or developed by BSR Sustainable Investment in China Newsletter: Helping investors support sustainable businesses, and helping businesses attract and engage these investors.

Case Studies

Snapshots of our impact working with business to create a just and sustainable world.

Research Reports

Independent, business-critical research to help you stay ahead of the curve and advance corporate responsibility.

Sustainable Investment in China

A quarterly newsletter will help investors in China understand how sustainable investing can mitigate business risk and create opportunities for greater financial as well as social and environmental returns.

Sustainability Matters 

Snapshots of our impact working with business to create a just and sustainable world.

 BSR member-only content; valid login required.

Share Your Thoughts

Please note, all comments are subject to moderation.



About the Author(s)

Marshall Chase

Marshall Chase , Associate Director, Advisory Services

Marshall leads BSR’s work with manufacturing companies headquartered in the Americas, in addition to supporting BSR’s information and communications technology and transport & logistics practices... Read more →