Achieving conflict-free minerals in a supply chain is a goal mandated by ethics, as well as law. Arriving at that end requires many steps along the way. In its latest report, Apple takes credit for achieving milestones on the way.
In February, Apple released its ninth annual supplier responsibility progress report. It is introduced by Jeff Williams, Apple's Senior Vice President of Operations, who applauds the improvements in labor conditions and material sourcing. A key concern for Apple is the elimination of conflict minerals from its supply chain, a problem for which the company has come under fire in the past.
Apple is one of the more than 200 companies and industry associations that make up the members of Conflict-Free Sourcing Initiative (CFSI), which created the Conflict-Free Smelter Program (CFSP) It "uses an independent third-party audit to identify smelters and refiners that have systems in place to assure sourcing of only conflict-free materials.
CFSI was established in 2008, though it took another couple of years for the issue of conflict-minerals to gain real legal attention. It did so when President signed the U.S. Dodd–Frank Wall Street Reform and Consumer Protection Act into law in July 2010. The law includes a "conflict minerals" provision from Senator Sam Brownback.
The list of "conflict minerals" includes gold, tin, tantalum, and tungsten. Those minerals from particular sources contribute to the funding of armed militias identified as human right violators in the Democratic Republic of Congo (DRC). The law placed the responsibility of not contributing to the support of "conflict minerals" on the companies that use those minerals in production. It is of particular concern to companies like Apple because those minerals are essential components in many electronic devices, including cell phones.
Apple claims its concern extends beyond legal mandates. It started checking for conflict minerals in 2009 and by 2010 had begun "to map [its] supply chain for the use of these minerals down to the level of the associated smelters and refiners." It's a large undertaking, not just because the suppliers are scattered around the globe, but because the minerals pass through so many different contractors from point of origin until the point of production.
In 2011, Apple called on the smelters that supply its minerals to comply with the CFSP or a similar audit program. At the beginning of last year, Apple told the smelters that they had until the end of the year to achieve verification or at least in process toward that end. If they failed to meet that deadline, they were to be removed from the list of suppliers. Consequently, at the beginning of this year, Apple announced that it has put four smelters that did not cooperate with audits on notice of removal.
That doesn't mean that all the other smelters have verified that all their minerals are conflict-free. To date, Apple boasts of 135 verified conflict-free smelters. The company sees that number as proof of real progress, as it is more than double the 57 audited in 2013. Apple also takes credit for an additional 64 smelters currently undergoing verification. With respect to one of the minerals in question, Apple claims 100% success in achieving verified conflict-free smelters for tantalum in its supply chain.
Clearly, Apple has adopted a slow and steady strategy for setting standards for its supply chain. Do you think that approach would work well for other electronic companies?