With recent headlines about the Democratic Republic of the Congo (DRC) broadcasting strong claims like “Break the Link Between Laptops and War” and “Death by Gadget,” it’s easy to get the impression that the information and communications technology (ICT) sector is solely responsible for the violence in that country. These articles generally focus on the association between “conflict minerals” (tin, tantalum, tungsten, and gold) used in ICT supply chains and the ongoing violence in the eastern DRC that has contributed to the deaths of more than five million people during the past 15 years.
Several key points get swept aside in this focus on ICT supply chains. First, it’s not just an ICT problem: Significant amounts of these minerals are used in a wide range of products, from high-tech goods like medical devices and jet engine components, to basic manufactured items like cutting tools and canned goods. And second, this is far more than a supply chain problem: If all conflict minerals were eliminated from supply chains, this would not address many of the underlying causes of conflict in the DRC.
Nonetheless, it is clearly in companies’ long-term interests to establish stable, secure sources of critical materials, including minerals from the DRC. This requires addressing the conflict in that region, which ultimately destabilizes supply chains and can result in significant swings in minerals prices.
If companies are to support an end to the region’s conflict, an approach that includes all relevant industries is needed to understand and strategically address the root causes of these problems. When confronted with the need for systemic change in other areas, such as poor supply chain labor practices in Asia, the following four elements have been critical to developing stable, long-term solutions:
- Alignment of company activities
- Broader ownership of the issue
- Empowerment of the intended beneficiaries
- Engagement with policymakers and governments
HOW CONFLICT MINERALS ARE ADDRESSED TODAY: SUPPLY CHAIN RISK MANAGEMENT
Before considering new opportunities to address concerns about conflict minerals, it’s important to look at the current risk-management approaches that companies often take to the issue. The conflict minerals reporting requirements in the new U.S. financial reform legislation and resulting regulation being developed by the U.S. Securities and Exchange Commission (SEC) may cause companies to adopt a risk-management approach that attempts to eliminate all mineral sourcing from the DRC and surrounding countries to ensure that their supply chains can be declared “conflict free.” Such a tack may reduce some reputational risks, but it disregards the harm that would be done to millions of people in the region who depend on the mining industry, most of whom have nothing to do with armed conflict.
Even “responsible” supply chain approaches that attempt to clearly identify and use conflict-free mines and trade routes in the region will not address key underlying causes of conflict. Much of the funding for armed groups comes from sources other than conflict minerals (for some groups, minerals revenues may be 15 percent or less of their total revenues), and without addressing the underlying issues, including the need for strengthened and legitimate central government authority, conflicts are likely to continue.
A PATH TO SUPPLY CHAIN RESPONSIBILITY
Moving beyond risk management, global companies can contribute to systemic change by working with relevant stakeholders—such as local development groups and governments—to strategically address the root causes of problems.
The four elements that follow summarize this approach:
Alignment of company activities: Activists focused on conflict minerals have pointed out inconsistencies between the commercial and social objectives of companies that purchase conflict minerals or their derivatives. For example, some companies may develop supply chain transparency efforts even as they lobby against legislation that would require disclosure of conflict minerals. Alternatively, companies may focus exclusively on supply chain transparency, without considering how such efforts can be complemented by activities that support community development, help shape and support government policies, and work with suppliers on a variety of issues beyond just transparency. To better support an end to conflict in the DRC, companies should instead identify how they can align their activities, potentially including government and industry engagement, supplier training, community support, and the use of their own products and services to contribute to systemic solutions.
Ownership of the issue: Several ICT companies and others clearly recognize that they can help address the issue of conflict minerals. But because these minerals are undifferentiated commodities easily transferred among industry supply chains, it is essential for more companies to take action if real improvements are to be made. Business involvement in the conflict minerals issue has generally been limited in three ways:
- By industry: With some exceptions, non-ICT companies have been largely absent from efforts to address conflict minerals. While the ICT industry has faced the brunt of public pressure on this issue, and the sector does use most tantalum produced and about half of the world’s tin, significant amounts of these metals—as well as most of the world’s production of tungsten and gold—are also used in other industries. Without involvement from all industries using these materials, conflict minerals prevented from entering electronics supply chains would almost certainly move to other, less transparent chains.
- By geography: The need for broader involvement also holds true for geography, as only a limited number of companies outside of North America and Europe have been active on this issue. Without such broader involvement, conflict minerals will migrate to goods sold by companies based in other regions.
- By stage in the supply chain: Component and metals suppliers often have a limited and reactive response to addressing conflict minerals. Supply chain surveys such as one conducted recently for the ICT industry typically produce limited responses, and suppliers may take action only in response to customer demands. However, these suppliers are often best suited to address concerns about conflict minerals by designing monitoring systems that are more effective and fit with their own business models better than external systems.
Empowerment of beneficiaries: Ensuring that beneficiaries, including miners, traders, and local communities in the Great Lakes region of Africa, have a voice in the development of solutions will help ensure that such solutions address root causes and are supported locally. Efforts in this area may range from supporting miner- and community-led due diligence activities to funding anti-violence and civil-society-strengthening programs.
Engagement with policymakers and governments: Governments play a significant role in both addressing conflict minerals and in supporting solutions to end the conflict in the DRC, whether through regulation focused on supply chain transparency efforts, diplomatic efforts to promote peace, or international aid programs. Companies with a strong understanding of supply chains, and those that have relationships with organizations and businesses in the DRC, have opportunities to help improve these government efforts. In particular, there may be opportunities for government and business to support each other in efforts to address conflict in the region.
Given the new U.S. legislation and the growing NGO and investor efforts focused on conflict minerals, companies face a choice: Pursue only basic supply chain due diligence approaches, or embrace more systemic solutions that include better internal alignment, support for broader ownership and empowerment, and engagement with governments. These systemic efforts will have a much greater chance of addressing root causes of conflicts and creating real improvement for those most in need, while also supporting the stable supply chains that industries need.