The January 1, 2021, deadline for the European Union (EU) Conflict Minerals Regulation is approaching quickly, and companies in scope are preparing to meet its requirements.
While the data burden weighs heavily on direct importers, any company with a commitment to responsible sourcing — regardless of business location — should be adjusting their due diligence programs as well. If your company places products on the EU market or sells into an assembly that is later placed on the EU market, it’s only a matter of time before your distributor or client asks you for due diligence details related to conflict minerals sourcing for their own data management purposes.
The legislation will introduce new regions and conflict zones to the list of sources thought of as “high risk.” While a U.S.-based company may not have a direct requirement to manage risk associated with conflict minerals sourced outside of the Democratic Republic of the Congo and its neighboring regions, the market expectation will be for companies to address sourcing risk, as determined by the global conflict-affected and high-risk areas (CAHRAs), regardless of where your company is based. Companies cannot afford to selectively choose which zones present a risk.
Given that a great deal of the business risk associated with conflict minerals is reputational, you can’t take a single-region approach to compliance. Even if you don’t have clients in the EU, domestic consumers still care about how their products are sourced. An adverse media report can damage your company’s reputation, impede investment, and void your contracts as swiftly as an enforcement action.
One way or another, you’re going to have to report on this — and doing so proactively is more cost-efficient. Here are your next three steps to building a responsible minerals program that works.
Look at the Origin of Conflict Minerals Sources
It may seem counterintuitive, but many companies don’t yet know the full breadth of where their materials are coming from. Some of them have hundreds or even thousands of metals vendors, and compiling accurate supplier information is a time-consuming process that only a few have a 100-percent response rate for.
In most cases, they only know whether the smelter has conformed to an auditing standard such as the Responsible Minerals Assurance Process (RMAP). This is not enough data to comply with the EU legislation. Your first order of business will be to gather detailed Reasonable Country of Origin (RCOI) data, even for the suppliers that don’t trigger risk criteria according to today’s standards.
Build Supply Chain Transparency
The data you acquire from your suppliers has broad applications across your programs, and you can use this to further identify risk. Even if it appears your vendors are compliant, evaluate your data to determine:
- Have they performed a broad risk analysis?
- What auditing protocols are they using?
- How are their results verified?
- How do their standards stack up against new EU conflict minerals requirements?
- How does their data align with how your company wishes to be perceived?
Evaluating your sources in this way helps you gain a more realistic understanding of their value to your company.
Find out how Assent’s responsible minerals solution evaluates origin data and smelter information to secure ethical mineral sources for your company.
Create a Reporting Plan
Last, determine how you wish to report on your efforts. To comply with the legislation, your plan should include mandatory reporting under conflict minerals regulations, such as disclosures and reports, as well as website statements. Make three central assertions:
- What did your program plan to accomplish?
- How do you rate your performance?
- How do you intend to improve in the coming year?
Answering these questions will help you determine what story your company should be sharing with its stakeholders on an annual basis.
Assent Can Help You Get Started
Conflict minerals legislation reflects the expectations of consumers and companies around the world: that their purchasing habits do not contribute to global human rights violations. Nevertheless, few (if any) of the world’s largest manufacturers can say they are risk free. For this reason, many companies are still hesitant to report on conflict minerals.
A supply chain data solution can help you acquire conflict minerals data in streamlined, reportable formats, so you can prove your efforts to consumers, enforcement bodies, and other stakeholders. This contributes to sustainable revenue growth and helps you engage client values, regardless of your program’s starting point.
Assent can help you acquire and manage data to build transparency into your supplier network, so you can efficiently report on your efforts to mitigate supply chain risk. For more information on how Assent helps companies build responsible minerals programs in alignment with current global best practices, contact us.