Three years ago, a groundbreaking rule mandated conflict mineral monitoring in corporate supply chains. Today, 70 percent of companies still cannot determine if their supply chains are conflict-mineral free, showing how much progress still needs to be made before we achieve ethical supply chains, Bloomberg reported last month.
Conflicts minerals are not new. Since the early 2000s, companies around the world were aware that several of the key minerals used in their products are often sourced from regions where there is active conflict, with the sales of said minerals often funding war atrocities.
In 2010, Congress passed the Dodd-Frank Act, which, among many other things, required U.S.-listed companies to investigate their supply chains for four conflict minerals – tin, tantalum, tungsten and gold. The law went into effect three years ago, and many hoped it would usher in an era of increased transparency.
Instead, we’ve seen little change in most industries. The lack of progress on conflict minerals is disappointing, to say the least. From Bloomberg:
“[T]here is a long way to go to reach full compliance with the SEC rules … According to the analysis, 31 companies missed the deadline to file their conflict minerals reports on time, 77 didn’t name the due diligence framework they used, 656 companies failed to disclose their suppliers’ country of origin, and 228 companies didn’t offer a conclusional statement.”
Some industries are doing a better job. Semiconductors, led by Intel, is one of the just 19 companies that underwent an audit to support claims of a completely conflict-mineral-free supply chain. Other industries are lagging, like – surprise – oil and gas, which had the lowest response rate to requests for information.
Eliminating conflict minerals is, of course, just one step in creating a truly ethical supply chain. In fact, conflict minerals are only the most egregious form of dirty minerals in a supply chain. Even non-conflict minerals can have huge environmental, social and human rights costs. As we speak, massive mining is seriously degrading the Tibetan plateau, the source of water for nearly 1 billion people, and where a long, lingering human rights tragedy is taking place. Yet, those are not considered, by many, to be conflict minerals, and it is likely that many Tibetan minerals end up on so-called “clean” electronics company’s supply chains.
The solution? Truly transparent supply chains. We’re long past the era of companies hiding behind their complex supply chains. Technology is making traceability easier. The only thing often missing is not capability, but the will of companies to invest in ensuring they now only know their supply chain, but have the tools and systems in place to ensure compliance with best practices.
Moreover, there is true market potential for products produced using the right materials from a fully transparent supply chain. Look at the mobile industry. Right now, the only smartphone that can be considered truly ethical is the European-produced Fairphone, which is not only 100% free of conflict minerals, but also used fair manufacturing practices, clean energy, and allows for simple recycling of old phones.
The Fairphone has been beating sales expectations since it was launched, showing that there is real consumer demand for ethical products. Other companies, like Hewlett-Packard, who has ranked highly in Greenpeace’s electronics rankings (which does take into consideration conflict minerals) are making marked progress. But far too many companies are not.
Image credit: Brian Voon Yee Yap via Wikimedia Commons