- An analysis of 215 companies’ mineral supply chains has found many have fallen short of their obligations under the Conflict Minerals Rule.
- In a report published this month by the Responsible Sourcing Network (RSN), the group analysed corporate compliance under the legislation, which requires public companies in the United States to disclose the use of tin, tungsten, tantalum and gold (3TG).
- While some companies increased participation in efforts to address the conflict minerals issue, most indicators studied by RSN showed a decline in long-term engagement and “deplorable” levels of risk.
- In 2017, U.S. President Donald Trump threatened to suspend Section 1502 and the U.S. Securities and Exchange Commission subsequently decided not to enforce the law.
An analysis of 215 companies’ mineral supply chains has found many have fallen short of their obligations under the Conflict Minerals Rule, also known as Section 1502 of the Dodd-Frank Act, regarding their sourcing from the Democratic Republic of Congo.
In a report published this month by the Responsible Sourcing Network (RSN), the group analysed corporate compliance under the legislation, passed by the Obama administration in 2010, which requires public companies in the United States to disclose the use of tin, tungsten, tantalum and gold (3TG) in their products and determine if they have been sourced ethically.
The analysis showed an average company score of less than 40%, on par with last year. The report also ranked 27 companies on efforts to address child labor and other rights abuses in their cobalt supply chains, with firms scoring 26.4%. The worst performing industries remained integrated oil and gas, steel and business services.
While some companies increased participation in efforts to address the conflict minerals issue, most indicators studied by RSN showed a decline in long-term engagement and “deplorable” levels of risk regarding child labor and other abuses, it said.
“The majority of results in this year’s report demonstrate complacency,” Patricia Jurewicz, vice president of RSN, said in a statement. “Companies need to constantly improve their due-diligence efforts to ensure the materials in their products are not causing harm to the planet or people. Otherwise, companies will lose their social license to operate in mining communities and access to raw materials.”
In 2017, U.S. President Donald Trump threatened to suspend Section 1502 and the U.S. Securities and Exchange Commission subsequently decided not to enforce the law which removed the incentive for companies to abide by it, RSN said.
“The fact that a large majority of the companies disregard their corporate responsibility on conflict minerals and cobalt is the result of the U.S. administration’s policies, but also reflects internal business decisions,” Raphaël Deberdt, author of the report, said in a statement. “Companies should not consider 3TG due diligence a fad. Pawning off responsibilities to the smelters and refiners prevents any meaningful on-the-ground changes. We hope that companies will reassess and ramp up their engagements in 3TG, as well as improve their efforts on responsible cobalt mining.”
A U.S. government spokesperson did not respond to a request for comment.
Despite the overall trend of stagnation and decline, RSN noted that the technology sector was an exception, scoring 54.2% for 3TG and 46.2% for cobalt. “[C]ompanies like Intel, Apple, Microsoft, Ford, HP, Dell Technologies, Royal Philips, Alphabet, and Acer demonstrate that implementing measures to reduce risk and harm in all levels of its supply chains can be done successfully,” RSN said in a statement.
The group also noted that increasing demand for cobalt, lithium and nickel to make electric vehicles and other technology “should trigger red flags in compliance departments”.
