Conflict Minerals and Global Trends in Responsible Sourcing

February 8, 2012
  • Sasha Radovich

    Former Manager, BSR

Note: This is the third blog in a three-part series highlighting the critical issues that risk getting lost in the rush to implement due diligence on conflict minerals. Our first blog discussed the local impacts of supply chain policies. The second blog focused on the importance and relevance of local labor and environmental issues outside the conflict.

When it comes to addressing concerns about conflict minerals in company supply chains, it is important to consider the broader trends related to supply chain transparency. After all, the U.S. Securities and Exchange Commission’s imminent reporting regulation is only one of many demands coming from regulators, consumers, investors, and NGOs that are increasing pressure on companies for more disclosure on and accountability over supply chain practices. In California, for instance, a new lawrequires retailers and manufacturers to disclose their efforts to eradicate slavery and human trafficking in their direct supply chains. Consumers and other stakeholders are also demanding information about products’ supply chain environmental and social impacts—and those demands are being met by websites such as Sourcemap and GoodGuide.

Rather than approaching each transparency request in isolation, companies that implement systems to manage risks holistically will be better equipped to respond to current and future demands.

This is apparent when we consider the many demands on companies to address conflict minerals: The U.S. regulation requires only that companies disclose efforts to understand where the minerals in their products come from. But investors, civil society, and consumers are asking companies to go beyond this and report on whether they are contributing to the ongoing human rights abuses taking place, what they are doing to address those risks, and how they are supporting a more legitimate minerals trade.

This kind of transparency in complex, overlapping supply chains is only possible when companies work together to offer clear guidance to suppliers, create standard questionnaires for ease of data collection, and provide resources that aid in compliance (and beyond compliance) with the law. Several industry initiatives are already starting to do this. The Conflict-Free Smelter program allows companies to identify conflict-free smelters in their supply chains, the Auto Industry Action Group has shared its approach to supplier communications and data collection with other industries, and companies from a range of industries have joined the U.S. State Department and USAID to pool financial and technical resources to improve conflict-free sourcing from the Congo’s Great Lakes Region through the Public-Private Alliance for Responsible Minerals Trade.

In the end, a holistic supply chain due diligence practice can reward companies with cost savings, increased market share, realized efficiencies, and even opportunities to understand and manage the “next conflict mineral” issue. By shining a light on a complex system, transparency is the first and best step toward making real improvements in conditions for workers, our environment, and our communities. In addressing conflict minerals and other supply chain issues, though, we shouldn’t lose sight of the purpose of transparency: It isn’t just about seeing what is going on but contributing solutions for some of the most pressing and endemic challenges we face in supply chains.

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