Nearly 80 per cent of U.S. public companies analysed by human rights groups are failing to adequately check and disclose whether their products contain conflict minerals from Central Africa, a new report by Amnesty International and Global Witness has revealed.
Under Section 1502 of the Dodd-Frank Act firms must now submit annual reports to US regulators detailing their efforts to investigate their supply chains, such as contacting the smelters or refiners that process the minerals they use. However, more than three quarters of the 100 companies that were surveyed are failing to adequately check and disclose whether their products contain conflict minerals from Central Africa, according to the report. 2014 was the first year companies were required to file such reports.
The Democratic Republic of Congo (DRC) is an important source of minerals including tin, tungsten, tantalum and gold. For many years armed groups in the lawless eastern region of DRC have exerted control over the often artisanal mining sector, in order to finance their operations in the ongoing conflict. These minerals are used in electronic devices, such as smartphones and laptops, and companies including Apple and Intel have previously come under fire for failing to adequately investigate their own supply chains.
“Most of America’s biggest corporations have blind spots in their supply chains – leaving them oblivious to whether the products they sell contain minerals that have funded conflict”, wrote one of the report’s contributors. Many companies submitted just the bare minimum paperwork necessary, only 15% of firms indicated that they had contacted the facilities that process the minerals in their products, and more than 40% of firms did not indicate that they had a policy in place to identify the risks in their supply chain.
Companies that were identified by the report as having performed poorly included Home Depot and Costco, although Philips, General Electric and Hewlett-Packard were praised for the rigorous reports the provided.
Meanwhile, the EU’s legislative response to the problem of conflict minerals in global supply chains is on the horizon. The European Commission’s draft legislation that is slated for implementation this year was initially intended to bring European law in line with the American Dodd-Frank legislation. However, the tough proposals that many were hoping for are now looking comparatively anaemic – with reference to mandatory reporting having been dropped. What we seem to be left with is a voluntary scheme, whose power to break the link between minerals trading and the financing of arms has been diminished.
Given the scope and complexity of European and US mineral supply chains, having properly aligned legislation would have been beneficial. Although the success of Dodd-Frank has certainly been limited thus far, certain US firms such as Apple, HP and Intel have been galvanised into not only cleansing their supply chains of conflict minerals, but also increasing their overall supply chain efficiency, visibility and control. There are sound business incentives here, as well as ethical ones. Perhaps boardrooms are put off by the idea that monitoring the supply chain will be prohibitively time consuming, or expensive – this is not necessarily the case!