Who said the U.S. government is not pro-business? Next month, the government is launching a new Public-Private Alliance for Responsible Minerals Trade (PPA), creating a ‘conflict free’ certification program for electronics companies in the Democratic Republic of Congo.
This initiative was introduced last week when U.S. Under Secretary for Democracy and Global Affairs Maria Otero visited the Democratic Republic of Congo. The aim of the PPA is not just to help companies source conflict-free minerals from Congo, but also to recalibrate the Dodd-Frank law, which has brought about a de facto embargo on the minerals mined in Congo, so that it stops unintentionally hurting the same people it was designed to help in the first place.
As we discussed in detail in the past (see here and here), one of the results of the historic Dodd-Frank Wall Street Reform and Consumer Protection Act is a new requirement of the SEC that companies disclose the use of conflict minerals from Congo in their products. This requirement will only be enacted next year, but electronics companies are already taking measures and some of them are putting a hold on their purchases of tin, tungsten, tantalum and other minerals from Congo.
These steps led to what journalist David Aronson called in a New York Times Op-Ed piece “unintended and devastating consequences.” Aronson pointed out that many artisanal miners and small-scale purchasers were hurt by this de-facto embargo, while war barons who were the target of the law keep benefiting from mining, as they smuggle the minerals outside of Congo.
The goal of the conflict-minerals provision of the Dodd-Frank law wasn’t to create an embargo on Congo and hurt the Congolese people, but to “cut off funding to people who kill people,” as Representative Barney Frank explained. The problem is that it is much easier for companies to completely stop sourcing from Congo than to determine by themselves which Congolese minerals are conflict-free, exposing themselves this way to both legal and PR risks. This is exactly the void the new initiative is trying to fill by creating a legally safe option that will keep companies sourcing from Congo.
The PPA will focus on three goals:
- Assisting with the development of pilot supply chain systems that will allow businesses to source minerals from mines that have been audited and certified to be ‘conflict-free.’
- Providing a platform for coordination amongst government, industry, and civil society actors seeking to support conflict-free sourcing from the DRC.
- Establishing a website designed to serve as a resource for companies seeking information regarding how to responsibly source minerals from the DRC.
Among the current 21 participants in the initiative are large electronics companies like AMD, HP, Intel, Nokia, Motorola and Sprint. There are also a number of NGOs and groups involved such as Enough Project, Electronic Industry Citizenship Coalition (EICC), Global e-Sustainability Initiative (GeSI) and the Responsible Sourcing Network. The funding for the new initiative comes both from federal funds and the private sector – The U.S. Agency for International Development (USAID) will invest approximately $3.2 million and companies and industry associations are expected to invest $2 million or more in funding by the end of 2012.
One company that is surprisingly missing is Apple. Apple stopped sourcing conflict minerals last April backing another voluntary initiative. The Conflict-Free Smelter (CFS) program, which as we reported on here in April, identifies smelters through independent third party auditors, who can assess which raw materials did not originate from sources that profit off the conflict in Congo. In the past Apple was the target of protests of groups pressing the company to commit to using conflict-free minerals in its iPhones and iPads. It’s not clear yet why Apple hasn’t decided to join, but hopefully it will as its participation can certainly help to popularize this initiative among both manufactures and consumers.
There are still many issues that need to be cleared such as the identity of the auditing and certifying body and how independent it will be. It also remains to be seen how many companies will collaborate with the PPA and agree to source certified conflict free minerals. I guess it depends both on the price and the value of doing so – if it will be cheaper comparing to other mineral sources (in Asia for example), it shouldn’t be a problem. Yet, if these certified minerals will be more expensive, which might be the case, then it depends very much on the success of companies to market the added value of this practice to their customers and how much customers will care and value it.
The launch of the PPA might not necessarily “break the link between the minerals trade and armed groups,” as it aspires to, but it’s definitely a step in the right direction and we can only hope it will work to benefit the people of Congo.
Raz Godelnik is the co-founder and CEO of Eco-Libris, a green company working to green up the book industry in the digital age. He is also an adjunct professor in the University of Delaware’s Alfred Lerner College of Business and Economics.