Responsible businesses must implement sustainable procurement to be accountable, transparent, and ethical in their ways of doing business. For several industries, including technology, medical services, jewelry, and automotive, there is a specific requirement to be mindful of the procurement of Tin, Tungsten, Tantalum, and Gold (3TG), more popularly known as “conflict minerals”. Exploring how these minerals are extracted, and the devastating human rights implications that come along with the production reveals why this is the case.
How conflict minerals are used
This article that you are currently reading makes use of conflict minerals. Moreover, if you are accessing it from a mobile device, then chances are you are making use of the resources from tantalum (which is used to store electricity in the battery), tungsten (which enables your phone to vibrate), tin (which helps to solder the circuit board) and gold (which coats the wiring).
The 3TGs supply chain, encompassing all involved from miner to end-consumer, is complex and multifaceted. In it, refiners and smelters primarily located on the Asian continent process minerals into raw materials which manufacturers around the world utilize to embed into their products. Finally, these products reach the hands of the end consumer. No matter the industry or actor in the supply chain, the traceability of the minerals is an issue of concern.
Regulatory Compliance
At the beginning of 2021, the EU adopted the conflict minerals regulation in a united effort to manage supply chains and increase clarity between players in the conflict minerals industry. Currently, EU importers of tin, tungsten, tantalum, and gold must perform assessments of their supply chain guided by a five-step structure.
- Guarantee efficient corporate governance by building dependable management structures.
- Identify any potential dangers in the supply chain.
- Strategize an appropriate solution to counter any associated risks.
- Initiate a comprehensive, third-party audit to evaluate the legitimacy of the supply chain due diligence.
- Ensure supply chain due diligence annual report.
Upstream companies are directly subject to the regulation. However, downstream companies will inevitably be affected, as they can now demand proof of a due diligence system from their suppliers, irrespective of their authority and leverage.
Best Practices offered by consulting services for downstream Companies
ComplianceXL, an example of conflict minerals consulting services, provides the necessary resources to help companies take the initial steps in guaranteeing that the minerals used in their operations are conflict-free.
Proper Supply LabelFor optimal supply chain transparency, start by providing clear labels for goods. To keep track of any complex supply chain information, it is essential to maintain an updated database that includes details of suppliers.
- Know the “Risk” suppliers
An analysis of supplier risk, in combination with a comprehensive database, facilitates the determination of relevant suppliers to assess for conflict minerals. Thorough research into the potential presence of 3TG minerals in sourced materials is crucial, as these can often be disguised in other materials, such as tin typically being contained in white iron.
- Supplier assessment
Transparency when dealing with conflict minerals can be established by utilizing the free and uniform CMRT template. This useful tool facilitates the sharing of information between supply chain participants and helps determine the origin of the minerals, the smelters, and refiners in use.
- Establish proper boundaries
To ensure conflict minerals responsibility from the suppliers, boundaries were established. Also, audits are conducted to make the process more efficient.
- Formalize everything into a policy.
To navigate through the intricacies of due diligence, it is essential to establish a set of rules. These policies should contain the organizational aims and commitments regarding conflict minerals and clarify who holds which responsibilities and is accountable to internal and external stakeholders.
Conclusion
A significant issue with conflict minerals is the lack of knowledge most companies possess on whether their supply chain contains the 3TGs. Conflict minerals compliance services offer guidance and set up protocols to assist companies in confirming the minerals they utilize are conflict-free. Additionally, their services equip businesses with best practices and teach them how to go about the proper procedures.
Read More :- Conflict Mineral Reporting
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