Conflict minerals are proving difficult to deal with. But there are positive signs that awareness of and demand for responsibly sourced products and raw materials are increasing at both the consumer and corporate levels.
There remain, however, tough problems in many industries where responsible sourcing is an issue, certain types of artisanal mining being a particularly obvious example.
Diamonds and gold sales continue to finance conflict in chaos-ridden Central African Republic, which has illegally exported an estimated 140,000 carats worth $24 million this year[1] despite international efforts to clamp down on illicit trade. A UN report[2] unveiled in November of last year warned that an export ban on raw gems from the African nation imposed in 2013 is not working as had been hoped. Another report[3], this one from Enough Project, released in May of 2014 indicates that many of the country’s diamonds have been crossing its borders to be illicitly sold to traders in Sudan, Chad, Cameroon and the Democratic Republic of Congo. Thierry Vircoulon, the chairman of the Kimberley Process, has even submitted a written request to the UN Security Council to alert neighbouring countries to the presence of diamond contraband[4].
Recent developments in the Democratic Republic of Congo further demonstrate the potential obstacles to the prevention of the flow of irresponsibly sourced raw materials into developed markets. Tucked away in the Dodd-Frank Act[5], a piece of financial regulation reform[6], was a rather obscure measure that was passed by US lawmakers in 2010 seeking to cut off a lucrative source of funding for violent militias in DRC by compelling US firms to audit their supply chains to ensure they are not using conflict minerals. However, as it sought to comply with the law, Congo’s government shut down the mining industry for months. A process was then launched to certify the country’s minerals as conflict-free, but this, according to The Guardian, is unfolding at a glacial pace, marred by a lack of political will, corruption and bureaucratic and logistical delays. This has led foreign companies to avoid buying the minerals, which has driven down prices[7].
Problems with the implementation of responsible sourcing are not limited to artisanal resource extraction in areas of weak governance. Even the mighty Apple has been struggling with the reputational impact of revelations[8] that conditions for workers involved in its value chain, and manufacturing its devices, are often poor or inhumane – including allegations of child labour in Indonesian tin mines. Finally, a report published in World Development appears to mirror the troubling findings from DRC, suggesting that Indonesian coffee farmers are suffering as a result of the imposition of ‘responsible’ practices. By requiring farmers, processors, traders and exporters in the supply chain to provide proof of ethical practices, multinational companies are imposing costs on their suppliers, causing a demand for farmers at the end of the supply chain to reduce their prices[9]. Both cases seem to suggest that responsible sourcing schemes are not easy to implement, and there are difficult questions to be answered concerning what exactly we mean by ‘responsible’ or ‘ethical’ practices in value chains.
But there are positive signs of progress – responsible sourcing is becoming ever more important to global consumers as well as corporations. Apple has responded to the allegations made against it vociferously, declaring not only its pre-existing concern for responsible sourcing and business practices, but also its intention to do more to improve, particularly in the areas of human rights and the sourcing of minerals[10]. Openness and cooperation on transparency in the Apple supply chain can be reasonably expected to improve in the near future. According to a 2009 Havas Media study, 48 percent of consumers surveyed across nine countries expressed a willingness to pay a 10 percent premium for goods or services produced in an environmentally and socially responsible way[11]. Even more encouragingly, there are indications that China, the nation with the world’s largest population, is seeing a slowly increasing level of market demand for responsibly sourced products. China consumes a huge amount of soy (consumption of the crop has doubled there in the last decade). The figure in 2009 was 55 million tons, 41 million of which was imported[12]. In recent decades, pressure from European consumers and environmental groups has helped to check the spread of soy agriculture into some vulnerable ecosystems, but such pressure from China has traditionally been weak or non-existent. However, according to Sibyl Anwander, Executive Director of the Pro-Terra Foundation[13], domestic demand for certified soy is increasing among the new urban middle classes. She told feednavigator.com that “some consumers [in China] are beginning to cast a critical eye over the way the feed ingredient is being sourced”[14].
It is likely to remain extremely difficult to deal with and completely stem the flow of conflict minerals, for example, through traditional legislative approaches alone. But the increasing demand for responsibly sourced products in the West (and soon China, with its burgeoning middle class), coupled with more robust approaches to traceability to establish the provenance of products and raw materials, may mean that the days of walking out of an electronics shop with a slight twinge of guilt are numbered.
Indeed there are many responsible sourcing initiatives that are already making a difference in a variety of areas, including: RTRS (soya bean); RSPO (palm oil); FSC and PEFC (forestry); RJC, ASI and CFSI (minerals); MSC (fisheries); BSI (sugarcane), to name a few.
As a company involved in the area of product traceability and provenance, at TRG we are excited by its potential: for positive social and environmental change based on a transformation of consumption habits; but also for the inevitable future growth and cooperation it represents for businesses like ourselves and other value chain actors as production and distribution of responsibly sourced products is scaled up.
[1] http://www.mining.com/blood-diamonds-still-at-central-african-mining-sectors-heart-88883/?utm_source=digest-en-africa-141119&utm_medium=email&utm_campaign=digest
[2] http://af.reuters.com/article/centralAfricanRepublicNews/idAFL6N0SU3FH20141105?sp=true
[3] http://www.enoughproject.org/news/new-report-central-african-republic-enough-project-finds-diamonds-oil-ivory-and-regional
[4] http://www.miningweekly.com/article/ungoverned-central-african-republic-is-new-blood-diamond-country-2014-11-18
[5] http://www.gpo.gov/fdsys/pkg/PLAW-111publ203/pdf/PLAW-111publ203.pdf
[6] http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act
[7] http://www.theguardian.com/world/2014/dec/02/conflict-minerals-law-congo-poverty
[8] http://www.bbc.co.uk/news/technology-30548468
[9] http://www.elsevier.com/atlas/story/people/sustainable-coffee-could-be-fuelling-poverty-among-farmers
[10] https://www.apple.com/uk/supplier-responsibility/labor-and-human-rights/
[11] http://www.bsr.org/en/our-insights/bsr-insight-article/a-strategic-approach-to-responsible-sourcing
[12] http://www.feednavigator.com/Regulation/Responsible-soy-sourcing-China-could-be-about-to-enter-the-fray-says-ProTerra
[13] http://www.proterrafoundation.org/
[14] http://www.feednavigator.com/Regulation/Responsible-soy-sourcing-China-could-be-about-to-enter-the-fray-says-ProTerra