February 01, 2013
Many Industry Sectors Unprepared for Conflict Minerals Rule
by Robert Kropp
A report from the Responsible Sourcing Network finds that leading companies in the information and
communications industry have undertaken initiatives to ensure that their supply chains are free of
conflict minerals, but few other industry sectors have done so.
The ultimate fate of the Dodd-Frank provision requiring that US corporations disclose whether their
products contain conflict minerals smuggled out of the Democratic Republic of the Congo (DRC)
remains unclear. Although the Securities and Exchange Commission (SEC) adopted rules mandating
disclosure in August, a lawsuit filed by industry trade groups argues that ensuring supply chains
free of conflict minerals would amount to an overly burdensome cost to companies.
In November, a multi-stakeholder group
led by the Responsible Sourcing
Network, a project of As You Sow, spoke
out strongly in defense of the rule. "The violence and abuse in this region of the world must end,"
the group stated. "An important part of the solution is the efficient and responsible minerals
Found in many electronic devices and other consumer goods, conflict
minerals are smuggled out of the DRC, and armed groups use payments for them to fund a conflict
which has resulted in the loss of more than five million lives.
group advocating in defense of the rule includes many prominent companies from the information
technologies sector whose products rely on the minerals exploited by armed groups and whose own
industry associations—the Electronics Industry
Citizenship Coalition (EICC) and the Global
e-Sustainability Initiative (GeSI)—have successfully developed programs advancing the
responsible sourcing of minerals.
A new report by the
Responsible Sourcing Network singles out the information and communications (ICT) industry for its
initiatives, stating that many leading companies "are committed to finding solutions and developing
programs contributing to smelter auditing, traceability, and development projects."
industry sectors, however, still have far to go to ensure that conflict minerals are not entering
their corporate supply chains. Although the automotive industry formed the Automotive Industry
Action Group (AIAG) in 1982 "to establish a seamless, efficient and responsible supply chain," only
Ford has taken significant steps to address conflict minerals thus far. Other car companies, the
report states, "have not done much more and are encouraged to take further action."
industries fare even worse in the Network's analysis. "The aerospace/defense industry has not been
very active regarding conflict minerals. And "the food packaging, medical device, retail, apparel
and footwear, tooling, and toy industries have made little or no progress."
On the other
hand, the jewelry industry "should…begin to make more progress," the report states. And the
smelter/refiner and mining industries "have an opportunity to contribute to local economic
The report recommends that companies go beyond merely reporting to
the SEC and implement supply chain traceability as well as engage with key stakeholders, which, the
report argues, "is a critical component towards implementing industry-wide standards for
conflict-free mineral sourcing and achieving a peaceful, stable, and prosperous Congo." The only
way to ensure that supply chains are 100% free of conflict minerals is by ending the conflict in
"Investors are looking for companies to take actions that will minimize their
material and reputational risks as well as be fiscally responsible," the report concludes.
"Sustainable and responsible investors want companies to source their minerals from the DRC and
neighboring countries in a certified ethical and sustainable way so they contribute towards
building a conflict-free environment."
The Network also recommends that investors sign
onto an Investor
Statement, whose current signatories manage a total of almost $200 billion in assets.
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