In the mainstream world, the term conflict minerals conjures up mental pictures of blood diamonds. In the electronics industry, though, awareness is acute that smartphones and other gadgets that use materials mined in war-torn Africa transgress against human rights as well. Getting to divestment, though, is an uphill battle.
Congress passed the Dodd-Frank Act in 2010, putting public companies in the United States on notice that they would be required to publicly disclose whether or not they use minerals from the Congo in products or manufacturing processes. The deadline for adherence to the requirements came due earlier this month.
The intervening months between passage of the legislation and this latest deadline has proved to organizations that compliance will take more effort than they imagined. Even for large organizations, drilling down through the supply chain to get information about where sources originated it time consuming, expensive, and difficult.
Last year, about one quarter of organizations were in the early stages of compliance, with 26% finalizing scoping and planning and s performing reasonable country of origin inquiry (RCOI), a PwC survey found. Meanwhile, 11% reported being in the product scoping stage.
At the same time, electronics OEMs are becoming cognizant of the benefits in terms of risk mitigation of having deeper visibility into the supply chain. According to a report from KPMG:
Organizations could become exposed to a range of risks, including reputational, operational, legal and others, if they do not know who their business partners are, how they operate, how they source their materials, how they manufacture, and so on. It is more important than ever that companies buying products to understand their source in order to manage associated risks.
Clearly, the push toward compliance is significant. Legislative requirements are being paired with clear business benefits for organizations. Meanwhile, consumer awareness is on the rise, which may translate into more customers pushing for good human rights practices from their favorite brands.
The infographic below from Source 44 outlines some of the basics of conflict minerals. Take a look and then let us know about the challenges and successes that your organization has encountered on the road to conflict mineral compliance.