This year, companies need to go “beyond audits” when it comes to social compliance, and a recent event hosted by the Electronic Industry Citizenship Coalition (EICC), which founded the Conflict-Free Sourcing Initiative (CFSI) and Conflict-Free Smelter Program, explained how. Co-hosed by CSR Europe, the January 26th event brought corporations, service providers, NGOs, and other stakeholders to Brussels to discuss the path forward for responsible minerals sourcing.
Nearly 2/3 of CFSI members are outside of the electronics industry, and this year, the organization is looking to go “beyond audits,” said EICC Executive Director Rob Lederer, to look at issues like ethical recruiting of labor, chemical management, and helping factories find solutions to these challenges. As CSR Europe Executive Director Stefan Crets said, “Sourcing for good is the new norm,” but with that comes increased expectations and monitoring.
In November, EICC launched the Responsible Raw Materials Initiative, which seeks to promote understanding and contributing to mitigating the salient social and environmental impacts of extraction and processing of raw materials in supply chains, leveraging partnerships, and using international standards as guideposts. Today, there are more risks than just tungsten, tantalum, tin, and gold—or 3TG—and the RRMI will act as a “control tower” to prioritize and act on issues, explained EICC Vice President of Social & Environmental Responsibility Bob Mitchell. In particular, this year, the organization will focus on issues like cobalt, eradicating child labor, and developing risk assessment tools down to the mine level. And companies need to do more than just ensure compliance; they need “vision and leadership” in the company to integrate these principles into their business.
Shivani Kannabhiran of the Organization for Economic Cooperation & Development (OECD) encouraged companies to utilize OECD Guidelines for Responsible Business Conduct. At the request of the business community, the OECD is developing more concrete “guidance,” and she encouraged companies to utilize the guidelines and guidance and not “reinvent the wheel,” as these will be the international standards. (As a reminder, the OECD will launch the Garment & Footwear Due Diligence Guidance next week in Paris.) Kannabhiran also noted that the OECD is putting together a mineral risk handbook, and in the future, a real-time database.
Speakers from corporations, NGOs, and investors discussed best practices and pitfalls in responsible minerals sourcing. Karen Hayes, Technical Director of the PACT Mines to Markets Initiative, which provides health, safety, human rights, and economic empowerment programs in mining communities, reminded attendees that its actually illegal for children to work in the DRC—and auditors won’t find children in the mines, so you need in-country partners “to get to the granular level.” Other speakers noted the collaborative approach is important, but individual companies also have a responsibility to be transparent. Apple is a great example of a company that uses influence in the supply chain—as well as BMW, which manufactures 31 million parts per day and believes that top management needs to be convinced of the need to do these things to have an impact. Investors agree—you “don’t have to perfect the process,” said Christine Chow of Hermes Investment Management, but you do need to have a plan with aspirational targets, and be transparent about how your supply chain works.
Rein Nieland, Policy Officer at the European Commission, provided an update on the EU’s conflict minerals regulation, which he said has broad support by the Council and Parliament. He expects the regulation to become law in May, with entry into force in June—though companies will have until 2021 to prepare the due diligence. The regulation requires importers of metals to trace to the smelter, and importers of minerals to trace to the mine, and due diligence will be dependent on the origin of the product. Of note, the EU will publish a list of smelters and refiners that comply with the regulation, and the EU expects to recognize industry standards already working with the OECD and include those smelters on the list so as not to double audit costs.
The day wound down with a look at combatting forced labor in supply chains. Eric Paul-Schat of NXP Semiconductors, which won the Thomson Reuters Foundation’s Stop Slavery Award in 2016, provided concrete tips for companies:
- Test new standards in your own factories before going into your supply chain.
- Experiment—try something new.
- Be hands on. Do not relinquish responsibility. Follow the EICC and OECD guidelines, but do your own audits.
- Do not allow factories to simply pass or fail—work with them to improve.
- Provide ample training to your employees.
As USFIA prepares to launch our Social Compliance & Sustainability Committee, we look forward to working with EICC and CFSI to bring more best practices and information on responsible minerals sourcing to our members.