This post is by Amol Mehra and Katie Shay
Today the Enough Project released “Taking Conflict Out of Consumer Gadgets: Company Rankings on Conflict Minerals 2012,” its second report ranking company progress toward responsible and conflict-free supply chains. The report shows that the majority of companies surveyed have made great strides in eliminating conflict minerals from their supply chains since first being evaluated in 2010.
This progress was largely prompted by the inclusion of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed specifically to address the ongoing humanitarian crisis in the Democratic Republic of Congo (DRC), where minerals necessary to produce common electronics are abundant. Because of the high value of these minerals, there exists intense competition over access to them, resulting in egregious acts of violence and human rights abuses including gender-based violence such as sexual slavery, forced recruitment, forced prostitution, and rape. In August 2010 alone, more than 300 civilians were raped by armed groups in an incident that took place in three villages located close to mining sites.
Section 1502 is based on the recognition that companies from around the world, including in the United States, buy minerals from the DRC and use them to produce high-tech components that go into computers, mobile phones and other devices. It requires companies to examine their supply chains and disclose to the Securities and Exchange Commission (SEC) whether they source tin, tungsten, tantalum, or gold from conflict-mines in the DRC or surrounding countries. If the company is sourcing from this region, they are then required to disclose the steps they have taken to ensure that conflict minerals aren’t entering their supply chain. The SEC is expected to announce its final rules for the implementation of Section 1502 on August 22, 2012.
NGOs, investors, and companies such as HP and AMD have urged the SEC to promulgate strong, clear rules that will ensure the maximum effectiveness of the law, and provide clear guidance to companies on how to comply. According to the Enough Project, a number of advancements have improved the humanitarian situation in the DRC and have paved the way for additional companies to more easily examine and report on their supply chains.
Some of the significant successes include:
- Intel, HP, and GE cofounded a smelter incentive program, which pays for smelter audits.
- Intel was the first company to publicly commit to producing a fully conflict-free product – a microprocessing chip that will be produced by 2013.
- HP has actively engaged to help Congo develop a clean minerals trade, as has Motorola Solutions.
- Apple was the first to identify the number of smelters in its supply chain (175); since doing so, several companies have followed suit.
- SanDisk published the names of each of its smelters and has begun auditing its suppliers.
- Toshiba, Apple, HP, and Nokia implemented policies to require their suppliers to use only audited, conflict-free smelters, once enough are available.
- Nokia, Panasonic, Philips, AMD, HP, and Microsoft have piloted internationally agreed-upon due diligence guidance on conflict minerals in line with the Organization for Economic Co-operation and Development due diligence model.
These companies should be applauded for their efforts. Not only is this good for the people of the Congo, but it also evidences clear leadership in corporate social responsibility. With the coming release of final rules, stragglers in implementation will soon be forced to catch up. The efforts of these leaders have paved the way for them to do so.
